Document:

ccmhex10-3.htm

 

Exhibit 10.3

 

 

 

 

Relocation Policy

 

 

 

 

 

 

 

 

 

Clear Channel 

Tier 3

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

TABLE OF CONTENTS

 

	
Policy Component

	
Introduction

	
 

	  	
Benefits at a Glance

	
 

	  	
Before You Get Started

	
 

	  	
Expense Management

	
 

	  	
Rental Assistance

	
 

	  	
Home Finding Assistance

	
 

	  	
New Home Purchase Assistance

	
 

	  	
Temporary Housing

	
 

	  	
Home Marketing and Home Sale Assistance

	
 

	  	
Home Sale Incentive Bonus

	
 

	  	
Movement of Household Goods

	
 

	  	
Final Trip to the Destination Location

	
 

	  	
Miscellaneous Expenses

	
 

	  	
Tax Liability Assistance

	
 

  

  

  

INTRODUCTION

	
Congratulations!

	
Congratulations on your relocation with Clear Channel!

 

On behalf of all your colleagues, we want to thank you for your willingness to make this change. We hope that it will lead to personal growth, further career development, and prove to be mutually beneficial.

 

Our intent is to provide our mobile employees and their families with the tools and assistance to help them relocate in a timely and cost-effective manner. While there are many benefits available to you, you will be responsible for managing costs associated with your move, and you will be expected to keep relocation costs to a minimum.  We will adhere to Company policy and legal regulations, and will treat all employees in an ethical manner. It is our shared responsibility to communicate openly and honestly and to cooperate with one another during the relocation process. Furthermore, we are committed to ensuring that our service partners meet our requirements for efficient, customer-oriented service delivery.

 

This Relocation Policy (Policy) is designed to provide information to make your move as smooth and easy as possible. Please read this material carefully so that you understand the comprehensive assistance that is available to you.

 

The Company has selected SIRVA Relocation LLC (SIRVA), a relocation management company, to assist in your transition. SIRVA is a globally recognized firm that specializes in assisting corporations and their transferring employees in all aspects of the relocation process. Once your relocation authorization has been received by SIRVA, you will receive an e-mail that will include instructions to register with SIRVA’s online relocation tool. Once registered, you will automatically be logged into your personal online relocation portal. You will use this portal to access and complete information required to finalize the initiation process with SIRVA. After you have completed the information in the online relocation tool, you will be contacted by SIRVA to discuss your relocation benefits.

	  	  
	
 

 

	
SIRVA provides a Web site titled “MoveOurHome” that offers helpful tools and resources to guide you through the relocation process. The MoveOurHome Web site is separated into four functional areas: find, plan, move, and live. You will find multiple functions available within each area. The MoveOurHome Web site is at your fingertips at www.moveourhome.com.

	  	  
	
Important Notice

	
In order to take maximum advantage of the relocation program benefits, do not contact any real estate agents/rental companies before first talking to your SIRVA Relocation Counselor. This includes registering for “relocation services” on the Internet. Your Relocation Counselor will discuss with you the selection of real estate agents when listing your current home and purchasing a new home.

 

SIRVA selects brokers on the basis of defined criteria and retains them on the basis of measurable performance relative to SIRVA’s metrics. SIRVA picks the highest performing brokers and establishes relationships with them based exclusively on service delivery and cost performance.

 

 

Preferred brokers are prescreened to meet the following criteria:

 

§ Recent customer service evaluations completed by Relocation Counselors and transferring employees

 

 

§ Demonstrated marketplace expertise

 

 

§ List-to-sell ratios (listing agents)

 

 

§ Days-on-market performance (listing agents)

 

 

§ Sales closed in the past year (listing agents)

 

 

§ Performance of the agent relative to the market average

 

 

§ Creativity/marketing and sales techniques

 

 

§ Service orientation of the agent from a relocation perspective

 

 

§ Overall professionalism, as established by:

 

 

- Full-time status

 

 

- Professional associations

 

 

- Years in business

 

 

- Continuing education

 

 

§ Willingness to participate in a referral program

 

 

§ Attention to detail/accurate and timely completion of weekly reports

 

 

§ Company culture/norms/approach to service delivery and recovery

 

Both you and the Company will benefit by using a real estate agent that is referred by SIRVA. The Company will be able to minimize costs, while ensuring that you work with a real estate agent that understands your needs and objectives.

 

 

  

  

BENEFITS AT A GLANCE

Below are the highlights of the relocation benefits available to you. For additional information and details, please refer to the body of this Relocation Policy.

 

	
Policy Component

	
Description

	
Rental Assistance

	
 

§ SIRVA will provide assistance in helping you locate a home to rent

 

 

§ The Company will reimburse certain expenses for 1 home finding trip for up to 7 days for you and 1 family member age 13 or older

 

 

§ The Company will reimburse a lease cancellation charge up to an amount equal to 2 months’ rent

 

 

§ The Company will reimburse lease acquisition fees up to $300

 

	
Home Finding Assistance for Homeowners

	
 

§ SIRVA will provide assistance in helping you locate a home to purchase

 

 

§ The Company will reimburse certain expenses for 1 home finding trip for up to 7 days for you and 1 family member age 13 or older

 

	
New Home Purchase Assistance

	
 

§ The Company through SIRVA and in conjunction with SIRVA Mortgage, will provide a no closing cost loan program if you sell your home through SIRVA’s Home Sale Assistance program

 

 

§ The Company will reimburse 1 general home inspection (up to $500) on the home you plan to purchase

 

 

§ If you choose not to participate in the no closing cost loan program, you will receive reimbursement of normal and customary non-recurring closing costs; this payment will be tax assisted (grossed-up)

 

	
Temporary Housing

	
 

§ SIRVA will provide assistance in locating temporary housing accommodations

 

 

§ The Company will reimburse certain temporary housing expenses for up to 60 days for you and your family members

 

	
Home Marketing and Home Sale Assistance

	
 

§ SIRVA will provide assistance with helping you market your home including:

 

 

- Ordering 2 Broker Market Analyses (BMAs) immediately

 

 

- Averaging the Most Probable (likely) Sales Price listed on the 2 BMAs and listing the home at no more than 105% of this average; the Most Probable (likely) Sales Price listed on the BMAs must be within 5% of each other or a third BMA will be ordered and the 2 closest values averaged together

 

 

- Assisting with a marketing strategy

 

 

§ SIRVA will provide assistance with helping you sell and close on your home

 

 

- SIRVA will close with you when a qualified buyer has been secured and the Option to Purchase has been executed

 

 

- SIRVA will then close the sale with the outside buyer

 

 

§ An equity advance of up to 80% based on a bona fide outside offer can be provided to you for a down payment on a new home

 

	
Home Sale Incentive Bonus

	
 

§ If you are eligible, the Company will provide a Home Sale Incentive Bonus based on the following:

 

 

- If you accept a bona fide outside offer on or between days 1 and 60 of the marketing period you will receive a bonus equal to 2% of the sale price; or

 

 

- If you accept a bona fide outside offer on or between days 61 and 90 of the marketing period you will receive a bonus equal to 1% of the sale price

 

 

§ The maximum Home Sale Incentive Bonus will be $5,000

 

 

§ This payment will not be tax assisted (grossed-up)

 

	
Movement of Household Goods

	
 

§ The Company, through SIRVA, will arrange for the movement of your household goods with a professional van line

 

 

§ The van line will pack, load, transport, and unload goods, including normal appliance servicing

 

 

§ Additional services include:

 

 

- Partial unpacking services

 

 

- Storage for up to 60 days

 

 

- Shipment of 2 automobiles if the distance to the destination location is greater than 400 miles

 

	
Final Trip to the Destination Location

	
 

§ The Company will reimburse certain en route expenses from the departure location to the destination location incurred by you and your family members

 

 

§ The Company expects you to travel a minimum of 400 miles per day by the most direct route

 

	
Miscellaneous Expenses

	
 

§ The Company will reimburse up to $5,000 for miscellaneous expenses; receipts are required

 

 

§ This payment will be tax assisted (grossed-up)

 

	
Tax Liability Assistance

	
 

§ The Company will pay the estimated federal, state, local and FICA tax liability (gross-up) that arises from the taxable but generally non-deductible portion of Company-reimbursed expenses, unless otherwise indicated in this Policy

 

 

 

  

  

  

BEFORE YOU GET STARTED

	
Objective

	
The Company’s relocation benefits are intended to:

 

§ Facilitate your timely transition to the destination location.

 

§ Minimize your out-of-pocket expenses while effectively managing the Company’s costs.

 

§ Comply with Internal Revenue Service (IRS) regulations.

	  	  
	
Scope of Benefits

	
These benefits are designed for the sole purpose of providing support for relocations within the United States. The Company reserves the right to amend, modify, suspend or terminate the relocation benefits and programs described at any time without advance notice. The Company retains the right to establish separate employee relocation policies and/or benefit packages in the event of unusual or uncommon circumstances.

 

The Company will have the final right of decision when interpreting the terms of the relocation benefits and programs or in any communication with you. This Policy is not an offer, a contract, or part of either.

 

This Policy describes the provisions of the Company’s policy effective October 5, 2010.

	  	  
	
Program Administration

	
The Company will authorize your relocation with SIRVA. Your SIRVA Relocation Counselor will assist you throughout your transition and will answer any relocation questions that you may have. During the relocation process, you must act and make decisions that are both prudent and reasonable in nature.

	  	  
	
Eligibility

	
This Policy applies to full-time employees who are hired or transferred at the request of the Company and who are selected by the Company to participate in the benefits described in this Policy.

 

When family members are entitled to relocation benefits within this Policy, the following definition of “family” will apply:

 

“The employee’s spouse/domestic partner and dependent(s) who reside with the employee at the time of acceptance of transfer and who will reside with the employee at the destination location.”

 

If the Company employs both you and your spouse/domestic partner, only one set of benefits will apply.

 

To be eligible for the benefits outlined in this Policy, the move must be completed within 12 months of the effective date of the relocation. The effective date is defined as the official date of transfer/position change for current employees or the official start date for new hire employees. Benefits cease upon termination of employment.

	  	  
	
Exceptions

	
Although the Policy is comprehensive, relocation involves so many individual circumstances that the Policy cannot be all-inclusive. The Miscellaneous Expense benefit is designed to offset costs not specifically covered by this Policy.

 

Any requests for exceptions to the Policy must be submitted in writing to Human Resources—before the expense is incurred— for consideration. All exceptions require the final approval of Human Resources before a commitment can be made. Failure to follow this process may result in personal expense or inconvenience to you.

 

To implement a consistent Policy, there will be no substitution or cash-equivalent payments provided for unused benefits or portions thereof.

	  	  
	
Post Move Surveys

	
After your relocation is complete, you will receive post-move surveys from SIRVA and other vendors that assisted with your move. Surveys, which may be done via telephone, e-mail or regular mail, are very important tools to ensure the programs and providers are meeting with the Company’s expectations. The Company will receive a copy of these evaluations in order to assess the services provided to you. Your participation in the surveys is very important and the Company requests that you be candid in your assessment and complete all surveys as quickly as possible.

	  	  
	
Repayment Agreement

	
To be eligible for relocation benefits, you are expected to remain with the Company for two years from your effective date of transfer or hire, unless you are transferred again at the request of the Company. If you voluntarily terminate employment or are terminated for cause prior to the expiration of the two-year period, you must:

 

§ Repay 100 percent of the relocation expenses previously reimbursed or paid by the Company if you leave during the first year; or

 

§ Repay 50 percent of all incurred costs if you leave during the second year.

 

The Repayment Agreement must be signed and returned to the Company prior to the initiation of any relocation benefits.

 

  

  

  

EXPENSE MANAGEMENT

	
Expense Management Process

	
The Company will assist with relocation expenses in the following ways:

 

§ Pay service providers directly for the relocation assistance that you receive.

 

§ Reimburse you for acceptable expenses that you have previously paid.

 

§ Provide a per diem for meals during the home finding trip(s) and final trip.

 

Eligible expense reimbursements should be submitted through SIRVA’s MoveOurHome Web site. Submit your relocation expense report online at www.moveourhome.com. Your Relocation Counselor will provide additional instructions regarding the use of this site.

 

The following are important factors related to the MoveOurHome Web site:

 

§ After you have submitted your expenses online, print out the On-line Submittal Form.

 

§ Match your actual receipts against it. Receipts (originals) are required for all reimbursable expenses.

 

§ Attach all of the receipts to the On-line Submittal Form and mail it to the address provided on the front page within 30 days of incurring the expense.

 

§ If you wish to expedite payment, you may simultaneously fax copies of your receipts to SIRVA’s Client Finance Department.

The On-line Submittal Form will be received by SIRVA’s Client Finance Department. After SIRVA receives the form, the expenses will be checked for accuracy and consistency with the Company’s Policy. Under no circumstances should relocation expenses be submitted through the normal business expense process. Funds will be deposited directly to an account (through ACH) designated by you unless you notify your SIRVA Relocation Counselor of an alternate deposit process.

 

The Company understands that everyone may not have access to a computer and the Internet. In this event, while it is not preferable, you may request a SIRVA Relocation Expense Reporting Form from your Relocation Counselor, attach all receipts, and submit for reimbursement via mail.

 

If at any time you are unsure whether or not an expense is reasonable in nature, appropriate and/or eligible for reimbursement under this Policy, you should contact SIRVA prior to incurring the expense.

	  	  
	
Provisions

	
It is important to remember:

 

§ Relocation expenses must be separate and distinct from business expenses. During the period in which relocation expenses are incurred, regular business (travel and entertainment) must not be reported with relocation expenses. You must submit those expenses through the normal business expense process.

 

§ You must complete the expense process, taking care to include a complete address/location. Omission of this data can slow your reimbursement.

 

§ You cannot use your Company credit card for relocation expenses.

 

§ Credit card statements cannot be used in lieu of receipts.

 

 

 

§ You should keep records and receipts of all your expenses, whether they are reimbursable under this Policy or not, as this will assist in the completion of your federal and state tax returns at year-end.

 

Use of the Company’s direct ticket billing, travel system, or expense-reporting system is strictly prohibited for relocation expenses.

	  	  
	
Per Diems

	
Per diems will be provided to assist with daily expenses for meals during the home finding trip, and the final trip to the destination location. The Company will provide a per diem of $35 per family member age 13 and older and $15 per family member age 12 and under. To receive monies for per diems, enter each family member’s name, the amounts, and the appropriate number of days when submitting for expenses. Receipts do not need to be submitted when per diems are provided.

  

  

  

RENTAL ASSISTANCE

	
Benefit Description

	
SIRVA specializes in helping you locate the right rental property or apartment in the right neighborhood quickly and easily. Your Relocation Counselor will contact you to review the program and associated benefits and to discuss housing and community needs at the destination location. After this discussion, your Relocation Counselor will use the information acquired to recommend a real estate agent or rental agency to provide additional assistance.

 

Upon authorization, SIRVA will:

 

§ Contact you to perform a review of your benefits and a needs analysis regarding your lifestyle and housing.

 

§ Counsel you on areas of consideration during the rental process such as:

 

- Rental applications

 

- Rental deposits

 

- Security considerations

 

- Lease considerations

 

- Renters insurance

 

SIRVA does not provide legal advice with respect to the assistance with rental considerations or any lease review. SIRVA will provide a general review of key areas of attention based upon its experience in the market and understanding of lease terms.

	  	  
	
Home Finding Trip

	
The Company will reimburse expenses for you and one eligible family member age 13 or older for one home finding trip, for up to seven days, to locate living accommodations at the destination location. This timeframe includes travel time.

 

It is expected that you will exercise good judgment when incurring home finding expenses. All travel should be booked through the Company’s designated travel agency and in accordance with the Company’s travel policy. If you and your family member travel by air, you should use any available discounts (including weekend discounts) and make reservations far enough in advance to get the lowest possible airfare.

	  	  
	
Reimbursable Trip Expenses

	
The Company will reimburse the following acceptable expenses:

 

§ Airfare (in lieu of mileage)

 

- Seven-day advance purchase is required

 

- Coach or economy class fare with a Saturday night stay

 

- Transportation to and from the terminal

 

- Parking at the terminal for one automobile

 

- Airline luggage charges (one bag per person)

 

§ Lodging

 

§ Meals

 

- A per diem of $35 for you and your family member (each)

 

- Receipts are not required

 

§ Mileage (in lieu of airfare)

 

- To/from the departure and destination locations

 

- Incurred during the home finding trip(s)

 

- Reimbursed at the current Company rate

 

§ Parking and tolls

 

§ Rental car (if airfare is utilized)

 

- Mid-size automobile and gasoline at the destination location

	  	  
	
Securing a New Lease

	
In order to avoid any future penalties to either you or the Company, a transfer clause should be inserted into any lease that you sign at the new location. The following clause is recommended:

 

“In the event the renter is transferred, or decides to purchase or build a home during the term of this lease, this lease may be terminated upon thirty (30) days written notice to landlord with no penalty to renter. Renter will provide a copy of the employer’s relocation authorization.”

	  

  

  

  

 

 

	
Reimbursable Lease Acquisition Fees

	
The Company will reimburse lease acquisition fees (i.e., application fees and credit check fees) up to a maximum of $300, when you secure a new lease if it is a customary charge for the area.

	  	  
	
Reimbursable Lease Cancellation Fees

	
The Company will reimburse lease cancellation penalty fees up to a maximum amount equal to two months’ rent if you rented your primary residence at the departure location and a lease cancellation charge is unavoidable. No reimbursement will be made for forfeiture of a lease deposit as a result of negligence by you or for penalties arising from damage repair, painting, or cleaning costs.

 

In cases where you share an apartment with someone other than a spouse/domestic partner, the fee will be reimbursed on a prorated basis. Your name must be on the lease in order to be eligible for reimbursement.

 

You should not discuss the Company’s lease cancellation reimbursement policy with the landlord.

	  	  
	
Reimbursement Process

	
To receive reimbursement, the following are required:

 

§ Documentation from your landlord detailing charges due to obtaining the new lease.

 

§ Copy of the lease and/or a letter, receipts and/or cleared checks, from your landlord detailing the terms and conditions of early termination of your lease.

 

§ Verification of rental amount (from copy of old lease or letter from landlord).

 

§ Documentation stating when the 30-day notice for breaking the lease was given (your letter to landlord).

	  	  
	
Tax Impact

	
All Rental Assistance reimbursements and costs covered by the Company will be reported as additional compensation. The Company will provide tax assistance (gross-up).

 

 

  

  

  

HOME FINDING ASSISTANCE

	
Benefit Description

	
SIRVA specializes in helping you locate the right home in the right neighborhood quickly and easily. To assist the Company in controlling relocation costs, you must allow SIRVA to make the first contact with the real estate agent(s) in the destination location. SIRVA only recommends knowledgeable agents with a proven track record of successfully finding homes. If you have a real estate agent you would like to recommend, it is important that you do not contact the agent. Instead, let your Relocation Counselor know who the agent is and where he/she can be reached. Your Relocation Counselor will then contact the agent to obtain his/her credentials and, if qualifications are acceptable, will select that agent to assist you in searching for a new home.

 

You, members of your immediate family or other Company employees may not directly or indirectly benefit financially from the fees that the Company pays for services or other costs related to your relocation. It is for that reason that the Company will not reimburse you, an immediate family member, another relative, or another Company employee (or his/her spouse/domestic partner) for any fees for services performed as a real estate agent or broker for the purchase of your new primary residence.

	  	  
	
Relocation Counselor Assistance

	
Your Relocation Counselor will contact you to review the program, explain the benefits and offer assistance. This assistance includes:

 

§ Conducting a telephone interview with you to discuss your housing needs and wants at the destination location. After this discussion, the Relocation Counselor will use the information acquired to recommend a real estate agent who is a relocation specialist in the destination area and who is knowledgeable regarding homes within the price range you have requested.

 

§ Explaining “agency” and clarifying who the real estate agent is representing and why.

 

§ Discussing real estate agent expectations so you fully understand what the real estate agent is expected to do for you and in what time frame.

 

§ Reviewing purchase guidelines to help you make a good decision on the home you decide to purchase.

 

§ Explaining comparable market analysis and encouraging you to have the real estate agent assist you in putting one together on the home you are purchasing. This will help you determine the best price for the property and eliminate purchasing an overpriced home.

 

§ Assisting with negotiations—it can be very helpful to have the opinion of an uninvolved specialist when you are negotiating the purchase price of a new home.

 

§ Reviewing the purchase agreement (contract). The Relocation Counselor will be available to look over the purchase agreement to help determine if it is written in your best interest.

 

§ Encouraging you to be pre-qualified with a lender. In many markets, sellers are requiring buyers to be pre-qualified at the time the offer to purchase is made. The Company has made lender arrangements through SIRVA Mortgage.

	  	  
	
Home Finding Trip

	
The Company will reimburse expenses for you and one eligible family member age 13 or older for one home finding trip, for up to seven days, to locate living accommodations at the destination location. This timeframe includes travel time. You are encouraged to seek pre-approval for a mortgage from SIRVA Mortgage before departing on a home finding trip.

 

It is expected that you will exercise good judgment when incurring home finding trip expenses. All travel should be booked through the Company’s designated travel agency and in accordance with the Company’s travel policy. If you and family member travel by air, you should use any available discounts (including weekend discounts) and make reservations far enough in advance to get the lowest possible airfare.

	  	  
	
Reimbursable Trip Expenses

	
The Company will reimburse the following acceptable expenses:

 

§ Airfare (in lieu of mileage)

 

- Seven-day advance purchase is required

 

- Coach or economy class fare with a Saturday night stay

 

- Transportation to and from the terminal

 

- Parking at the terminal for one automobile

 

- Airline luggage charges (one bag per person)

 

§ Lodging

 

§ Meals

 

- A per diem of $35 for you and your family member (each)

 

- Receipts are not required

 

§ Mileage (in lieu of airfare)

 

- To/from the departure and destination locations

 

- Incurred during the home finding trip(s)

 

- Reimbursed at the current Company rate

 

§ Parking and tolls

 

§ Rental car (if airfare is utilized)

 

- Mid-size automobile and gasoline at the destination location

	  	  
	
Future Relocation

	
The new home you select today may affect your benefits for future relocations. Please refer to the Home Marketing and Home Sale Assistance, Ineligible Properties section for homes that do not qualify for Home Sale Assistance, should you be transferred again by the Company.

	  	  
	
Reimbursement Process

	
To receive reimbursement, eligible expenses accompanied by appropriate documentation/receipts and per diem amounts must be submitted through SIRVA’s MoveOurHome Web site.

	  	  
	
Tax Impact

	
All reimbursements will be reported as additional compensation. The Company will provide tax assistance (gross-up).

  

  

  

NEW HOME PURCHASING ASSISTANCE

	
Benefit Description

	
SIRVA will, through its affiliate, SIRVA Mortgage, provide various mortgage-related services for you if you currently own a home and will be purchasing a home in the destination location. The assistance will include:

 

§ Counseling on various types of loan programs available and the impact of those programs based upon your specific financial situation and relocation mortgage benefits.

 

§ Pre-approval for mortgage financing, including credit review, so you are more aware of the value of a home you can acquire in the destination location. You are encouraged to be pre-approved before embarking on a home finding trip. This benefit is without cost or obligation.

 

SIRVA Mortgage is a national mortgage banker, specializing in relocation lending. SIRVA Mortgage offers a wide variety of mortgage products through the nation’s leading lenders. SIRVA will shop rates and programs through its multi-lender approach to find the most competitive rate for your mortgage loan.

	  	  
	
No Closing Cost Mortgage with SIRVA Mortgage

	
Non-recurring closing costs normally paid by you when purchasing a new home are eliminated through this Policy. Included in your Policy is a no closing cost loan program, which is provided to the Company by SIRVA in conjunction with SIRVA Mortgage. Policy requirements include that:

 

§ You must be a homeowner in the departure location and sell your home through SIRVA’s Home Sale Assistance program.

 

§ The residence purchased must be the permanent residence of you and your family.

 

§ The home purchased cannot be a mobile home or boat.

 

§ You must be responsible for recurring costs such as prepaid interest, real estate taxes, and private mortgage insurance (PMI).

	  	  
	
Lender Other Than SIRVA Mortgage

	
If you choose not to participate in the no closing cost loan program, you will receive reimbursement of normal and customary non-recurring closing costs, and these costs will be grossed up. In order to receive reimbursement, you must include appropriate documentation (e.g., a copy of the final signed settlement statement).

	  	  
	
Normal and Customary Non-Recurring 

Closing Costs

	
Typically, the following items are considered to be normal and customary non-recurring closing costs:

 

§ A loan origination charge which includes a loan origination fee up to one percent of the mortgage amount and lender fees (application fees, underwriting fee, processing fee, etc., capped at $525)

 

§ Normal and customary title services fee.

 

§ Normal and customary escrow or closing fees charged by the title company and/or lender to close the sale. This does not include items such as taxes and insurance that must be paid in advance into escrow accounts.

 

§ Normal and customary attorneys’ fees.

 

The Company will not pay for a charge made by a lending agency as inducement for it to take a mortgage or participate in buydown points or a loan discount rate. Any additional seller’s costs that you agree to will be at your own expense.

	  	  
	
General Home Inspection

	
A general home inspection, appropriate for the area and age of the home, will be recommended by your Relocation Counselor to help you assess the prospective home’s overall condition. The Company will cover the cost of this inspection up to $500.

	  	  
	
New Construction

	
In some areas, it is customary for buyers to incur closing expenses in connection with a building or construction loan. These costs will not be reimbursed.  You may obtain a no closing cost mortgage after the completion of your home as end-loan financing. End-loan financing is the final mortgage loan to the ultimate purchaser of a property, as opposed to a construction loan or other form of interim financing. The transaction must be completed within one-year of your transfer or start date. If you choose not to use SIRVA Mortgage for your financing you will not be reimbursed for end-loan financing.

	  	  
	
Reimbursement Process

	
If you participate in the no closing cost loan program, reimbursement of closing costs is not applicable.  If you have chosen to find a lender on your own, reimbursable home purchase costs accompanied by appropriate documentation (copy of the signed HUD-1 Settlement Statement) must be submitted through SIRVA’s MoveOurHome Web site.

	  	  
	
Tax Impact

	
Tax assistance (gross-up) is not applicable if you participate in the no closing cost loan program through SIRVA Mortgage.

 

If you elect to choose a lender on your own and closing costs are reimbursed, the costs will be reported as additional compensation. The Company will provide tax assistance (gross-up), however in most states, full gross-up is not necessary for loan origination charge/discount point reimbursement as the sum is subject only to FICA taxes. Medicare and social security (if applicable) gross-up will be provided on the origination fee reimbursement.

 

The general home inspection will be reported as additional compensation. The Company will provide tax assistance (gross-up).

  

  

  

TEMPORARY HOUSING

	
Benefit Description

	
The Company will provide temporary housing accommodations if you are needed to report to work at the destination location and are unable to move into your new permanent residence. Expenses listed below will be reimbursed for up to 60 days for you and, if applicable, your family members. In order to be eligible for the temporary housing benefit, you must be responsible for a residence in the departure location (a house that has not yet been sold or closed, or a rental unit that has not yet been vacated) during the same timeframe. Temporary housing accommodations will be coordinated through SIRVA.

	  	  
	
Housing Period

	
The temporary housing period begins on the day of your arrival in the destination location and ends with whichever of the following occurs first:

 

§ You have closed on your new home or have moved into your rental home.

 

§ Your household goods have been delivered.

 

§ The temporary housing period expires.

 

You will be responsible for any additional temporary housing costs that result from your decision to build a home in the new location.

	  	  
	
SIRVA Assistance

	
Upon authorization from the Company, SIRVA will:

 

§ Contact you to determine your needs in regard to the length of stay and housing requirements.

 

§ Contact the appropriate resource to determine availability of units and leasing terms.

 

§ Provide you with the name(s) and location(s) of available unit(s) for your selection.

 

Upon notification from you of an acceptable unit, SIRVA will:

 

§ Assist in negotiating the terms of the lease in accordance with the appropriate reimbursement guidelines and your requirements.

 

§ Advise you on what documents need to be completed and billing procedures.

 

§ Maintain contact with you throughout the temporary housing period to coordinate changes or resolve issues.

	  	  
	
Reimbursable/ Expenses

	
The Company will cover the following acceptable expenses:

 

§ Lodging

 

- Corporate lodging with cooking and laundry facilities should be used when possible

 

§ Transportation (to the temporary housing facility)

 

- Airfare (coach or economy class) and rental car (for up to 7 days) if you travel via airplane

 

- Mileage if you travel via automobile; you are encouraged to drive your automobile to the temporary housing location; if the distance is greater than 400 miles, the Company will ship your automobile ahead of time for use during temporary housing (See the Movement of Household Goods, Automobiles section)

 

All travel should be booked through the Company’s designated travel agency and in accordance with the Company’s travel policy.

	  	  
	
Trips Home

	
The Company will reimburse transportation costs for return trips home.  If your family remains at the departure location the Company allows one trip home for every two weeks of temporary housing up to a maximum of five trips. If you are accompanied by your family, the Company allows one trip per month up to a maximum of five trips if necessary. Reimbursable transportation costs include coach airfare and airport parking or automobile mileage at the current Company rate to the departure location only. All travel should be booked through the Company’s designated travel agency and in accordance with the Company’s travel policy.

 

Optionally, a family member may travel to the new location instead of you making a trip home. However, any additional lodging and meal costs will be at your expense.

	  	  
	
Reimbursement Process

	
To receive reimbursement, eligible expenses (that have not been direct-billed), accompanied by appropriate receipts must be submitted through SIRVA’s MoveOurHome Web site.

 

Note: Some of your temporary housing expenses may be direct-billed to the Company.

	  	  
	
Tax Impact

	
Temporary Housing payments or reimbursements will be reported as additional compensation. The Company will provide tax assistance (gross-up).

 

  

  

  

HOME MARKETING AND HOME SALE ASSISTANCE

	
Confidential information—absolutely may not be distributed or used without the prior written consent of SIRVA Relocation LLC.

	  	  
	
Benefit Description

	
The Home Sale Assistance program is designed to provide professional assistance to secure a sale on your home in the shortest period of time, at a fair market value, and with the least amount of inconvenience. In addition, the process provides the most favorable tax treatment to both you and the Company. The steps that will occur are different from a typical real estate transaction. Your Relocation Counselor will explain the process and provide all necessary information regarding the home sale program and will be your advocate throughout your move.

	  	  
	
Qualifications for the Program

	
To qualify for Home Sale Assistance, your name must appear in the title to the property and it must be your principal residence at the time of the transfer. In addition:

 

§ The program procedures outlined by this Policy and SIRVA must be followed.

 

§ You must warrant that you own and occupy the residence and that it is classified as a single-family residence, condominium, or townhouse with no adverse conditions that will prevent its marketability.

	  	  
	
Ineligible Properties

	
The following kinds of properties do not qualify for Home Sale Assistance:

 

§ Cooperative units

 

§ Farms

 

§ Homes valued at $1,000,000 or more, as determined by the average of the Broker Market Analyses, may be ineligible subject to SIRVA’s evaluation to determine inclusion in the home sale policy

 

§ Homes with acreage in excess of five acres

 

§ Homes with acreage that does not conform to the immediate area

 

§ Houseboats

 

§ Income producing properties (other than two family duplexes owned by the employee, one unit of which is occupied by the employee)

 

§ Manufactured/Mobile homes whether on owned or leased lots

 

§ Multi-family dwellings (except a two-family residence when one part is the principal residence of the employee)

 

§ Properties containing or located by hazardous, toxic or potentially hazardous or toxic containers, materials, chemicals or gases (including but not limited to, radon, underground storage tanks, mold, UFFI, carcinogens, irritants, corrosives, environment hazardous and the like)

 

§ Properties in which inspections conducted disclose defects which rendered the property unmarketable and/or the employee does not resolve to the satisfaction of SIRVA

 

§ Properties not zoned by 1-4 family residential

 

§ Properties that are not insurable under SIRVA’s property and general insurance liability coverage for relocation homes

 

§ Properties that have been converted (not originally residential)

 

§ Properties on which clear title cannot be delivered

 

§ Properties that have EIFS (Exterior Insulating Finishing Systems), also known as synthetic stucco

 

§ Properties that do not qualify for conventional mortgage financing

 

§ Properties that have been on the market at any time within six months of the date of the employee’s initiation into the program (subject to exception between the Company and SIRVA)

 

§ Properties with building materials commonly known as “Chinese Drywall” or other drywall material with similar characteristics

 

§ Residences acquired for commercial or speculative purposes

 

§ Residences containing or located near hazardous materials (e.g. lead, Urea Formaldehyde Foam Insulation [UFFI], asbestos)

 

§ Residences that are not Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) approved

 

§ Residences undergoing renovation or construction

 

§ Resort properties

 

§ Shared ownership properties (i.e., timeshares)

 

§ Summer/vacation homes

 

§ Vacant land

 

If any inspection discloses a significant problem, SIRVA reserves the right to exclude the home from the Home Sale Assistance program. In such event, you may be eligible for direct reimbursement of certain home selling expenses.

	  

  

  

  

 

 

	
Real Estate Agent Selection and Market Analysis

	
The Relocation Counselor will select two real estate agents who have a documented record of successfully selling homes in the immediate neighborhood and within the general price range of the home. These real estate agents will independently inspect the home and complete a Broker’s Market Analysis (BMA) to establish the Most Probable (likely) Sales Price.

 

You, members of your immediate family or other Company employees may not directly or indirectly benefit financially from the fees that the Company pays for services or other costs related to your relocation. It is for that reason that the Company will not reimburse you, an immediate family member, another relative of the employee, or another Company employee (or his/her spouse/domestic partner) for any fees for services performed as a real estate agent or broker for the sale of your primary residence.

 

If you have a real estate agent you would like to recommend, it is important that you do not contact that agent. Instead, let the Relocation Counselor know who the agent is and where the agent can be reached. The Relocation Counselor will then contact the agent to obtain their credentials and, if qualifications are acceptable, will select that agent as one of the agents to prepare and present a marketing plan.

 

The brokers will send the completed BMAs to the Relocation Counselor who will review the results for thoroughness, accuracy, and logic of conclusions. Once the Relocation Counselor approves of the BMAs, the Most Probable (likely) Sales Prices listed on the BMAs are averaged together and the home will be listed at no more than 105 percent of this average. If the Most Probable (likely) Sales Prices are not within five percent, a third analysis will be ordered. The two closest Most Probable (likely) Sales Prices will be averaged together and the home will be listed at no more than 105 percent of this average. The Relocation Counselor will then review the results with you, at which time you and SIRVA shall agree to proceed with the Option to Purchase.

	  	  
	
Option to Purchase

	
You will enter into an Option to Purchase with SIRVA instead of listing your home under your name. This agreement enables SIRVA to list the property in SIRVA’s name, facilitate the move and defray many relocation costs. Once the property is listed for sale, SIRVA will pay you a small monetary consideration as determined by SIRVA (“option payment”) for your signing the Option to Purchase. Upon the sale of the home to SIRVA, the option payment will be credited to the purchase price. The option will last for six months and is renewable at the end of that period of time with your consent. During this option period SIRVA will expose the home to the marketplace. Most typically, the home will be listed with a real estate agent by SIRVA who will, through exposure to the public, determine what a buyer will pay at arm’s length for the home. The Option to Purchase must be executed and returned to SIRVA prior to proceeding with the program.

	  	  
	
Seller’s Disclosure Statement and Title Report

	
You will be responsible for complying with all federal, state and local disclosure requirements associated with the sale of your home. This includes the completion of all real estate disclosure forms that may be required. Along with the Option to Purchase, you will be given a SIRVA Seller’s Disclosure Statement for execution. This document must be executed prior to proceeding with the program.

 

Additionally, SIRVA will order a title report on the home and advise you of the results. In the event the title report indicates a cloud on title, you will be responsible for properly clearing title before selling the home to SIRVA. SIRVA may be able to assist you in clearing clouds on title. A cloud on title is defined as any outstanding claim, lien, encumbrance, document or condition usually revealed by a title search which impairs the title and the marketability of a property.

	  	  
	
Listing the Property

	
The choice of the listing agent and the price at which the home is listed are subjects that the Relocation Counselor will discuss with you. Although SIRVA will list the home for sale (if that is mutually desired) your input with regard to the agent and the list price will be given great consideration by the Relocation Counselor. The home will be listed at a price not to exceed 105 percent of the average of the Most Probable (likely) Sales Prices as determined from the Broker Market Analyses.

 

Setting a proper and realistic list price is crucial to the success of selling a home in a reasonable period of time and for the highest possible price. The determination of the initial list price is based on a number of factors such as location, competition, the condition of the property, and the time of year the home is listed. Over-listing a home only benefits the competition, generally extends the marketing time of the property, and may result in a lower final sales price than if the property had been marketed more realistically from the start.

	  	  
	
Marketing Strategy

	
Your Relocation Counselor will discuss the best strategy for marketing the home, suggesting any repairs, maintenance, and/or decorating that you may want to do to maximize the home’s value and expedite the marketing process. The Company will not reimburse these costs.

	
 

Exposure of the Home to the Marketplace

	
 

SIRVA will be responsible for marketing the home, generally by listing the home with a real estate agent. Your Relocation Counselor will monitor all sales activity on the property to ensure that all of the best marketing procedures are being used for maximum exposure to the marketplace. Your Relocation Counselor and the real estate agent will keep you informed of all activity and feedback on the house during the marketing process.

	  	  
	
Inspections

	
In general, SIRVA does not order nor pay for inspections on your home although inspections may be ordered and paid by an outside buyer to assist in determining if he/she should purchase your home. If there is a reason to believe inspections are necessary on your home in order to determine if the home is eligible for the home sale program, SIRVA will order and pay for inspections including but not limited to, a general home, pest, and well and septic, if applicable. If any additional inspections such as EIFS, structural, hardboard siding, etc. are required as a result of the general inspection or SIRVA’s due diligence, you may be responsible for those inspection costs. SIRVA follows the Worldwide Employee Relocation Council’s (ERC) Statement of Use: Relocation Property Assessment that identify structural, safety and inoperable items, regardless of local/state codes. All final reports must be satisfactory.

 

You will be solely responsible for rectifying or repairing any adverse items that appear in any inspections obtained prior to closing with SIRVA. Your Relocation Counselor will discuss with you all aspects so you can make an informed decision.

	  	  
	
Offer to Purchase

	
At the point that SIRVA believes it has established fair market value based on a bona fide outside offer, the Relocation Counselor will notify you of the amount of the offer. If you agree that the amount constitutes fair market value, SIRVA will exercise its Option to Purchase at that amount. You may decide that the amount being offered is not sufficient for fair market value. In that event, SIRVA will continue the exposure of the home to the marketplace in order to determine whether there is a more accurate definition of fair market value.

	  

  

  

  

 

 

	
Closing the Sale

	
Once SIRVA has exercised the Option to Purchase, a closing will be scheduled with you approximately three days prior to closing with the outside buyer. You will be responsible for all costs and risks associated with the home up to and including the date of closing with SIRVA. These include but are not limited to: pro-rations for taxes, interest on the mortgage, utilities, homeowner’s insurance, agreed upon repairs required from any inspections, and any other costs associated with the ownership of the home. After the date of the closing, SIRVA will be responsible for all of those items regarding the home.

 

If after all contingencies of the sale of your home to SIRVA have been met and the property remains eligible for the relocation program, and the sale of the home to the outside buyer falls through, the Contract of Sale between you and SIRVA will still be honored.

 

At the closing between SIRVA and you, SIRVA will provide a Promissory Note for the amount of equity due to you as set forth in the Contract of Sale. You will receive the final net proceeds (the equity) in the property within approximately 10 business days from the date of the Promissory Note. Net proceeds are defined as the sales price of the home minus liens, mortgages, appropriate pro-rations, and less any equity advance already received by you. As provided in the Contract of Sale, there are no real estate commissions or other standard closing costs that will be deducted from the proceeds.

 

 

If the mortgage company submits funds to you that were previously paid by SIRVA (i.e. escrow payments or additional interest payments), you must immediately return the funds to SIRVA or they will revert to a loan, requiring interest and a payroll deduction.

 

You are responsible for disclosing all known conditions and defects of the property. If you fail to disclose, you may be responsible for all costs incurred by SIRVA as a result of the non-disclosure.

 

IMPORTANT NOTE: At the closing with you, SIRVA does not actually take title to your home or pay off your mortgage. Instead, SIRVA takes full responsibility for making your mortgage payments, and ultimately paying off the mortgage when a sale between SIRVA and an outside buyer closes. Until a sale between SIRVA and an outside buyer closes, the title and mortgage remain in your name and will continue to appear on your credit report. SIRVA assumes all responsibility for the care and maintenance of the home once you close with SIRVA under the provisions of the Home Sale Assistance program. SIRVA will assist you if any questions should arise in regard to this process.

	  	  
	
Equity Advance

	
In the event you require a portion of your equity for a down payment or closing on your new home, provided you will close your home through SIRVA’s home sale assistance program, SIRVA will advance up to a maximum of 80 percent of your estimated equity based on the bona fide outside offer less the following:

 

§ Any estimated unpaid balances on all mortgages, equity lines of credit, liens, assessments, or other encumbrances.

 

§ One-year’s property taxes.

 

§ One month’s mortgage payment for each mortgage or equity line.

 

Contact your Relocation Counselor to request an advance. SIRVA will send you a Promissory Note stating the amount advanced. The Promissory Note must be signed by you and all owners of record and returned to SIRVA prior to advancing any funds. The advance is non-interest bearing prior to its due date. The amount advanced will be repaid to SIRVA as a deduction from your final equity payment. Equity advances generally require 7-14 days to process. The Promissory Note amount must be paid back in the event the relocation is not completed. All equity advance(s) must be repaid/reconciled within six months of being issued.

	  	  
	
Vacating the Property

	
In the event you are unable to vacate the property at the time of closing with SIRVA, the home may be leased back to you during the approximate three day period prior to closing with an outside buyer, at a minimum per diem of $50. A $500 security deposit will be withheld from the net proceeds and will be returned after SIRVA inspects the home following the vacate date. Under the lease, you would be responsible for utilities, general maintenance and insurance on household goods through the date of vacating and/or transfer of possession to SIRVA. The Relocation Counselor will provide instructions for transferring utilities, keys, etc.

	  	  
	
Obligations in the Contract of Sale with SIRVA

	
Your obligation to SIRVA with regard to the condition of the home at closing will be similar to that which would occur in the sale to any other buyer. In fact, in the event that SIRVA sells the property and incurs any expenses, costs, or liabilities with regard to a condition of the property that existed at the date of the closing with SIRVA, you may be held responsible for those items.

	  	  
	
Bona Fide Offer Definition

	
A bona fide offer generally includes the following requirements:

 

§ The purchase price represents fair market value at the time of closing.

 

§ The buyer is financially qualified and capable of purchasing the property utilizing common and ordinary terms, conditions, and contingencies (which may not include a contingency for the sale of the buyer’s property) and which will be contingent on favorable results of inspections, if any, and the closing date cannot be beyond 60 days.

 

§ The property satisfies generally accepted and applicable industry criteria for a mortgage loan at standard market rates as determined by a reputable institutional lender (e.g. a bank, savings bank or mortgage company authorized to conduct business in the area). Generally accepted and applicable industry criteria for mortgage loans shall include loans eligible for repurchase under guidelines established by organizations such as "Fannie Mae" and "Freddie Mac.” The availability of financing by a particular lender such as a local portfolio lender or other non standard lending arrangement does not constitute generally accepted and applicable industry criteria for a mortgage loan.

	  	  
	
Home Sale Assistance through SIRVA

Tax Impact

	
If you sell your home through SIRVA’s Home Sale Assistance program, expenses incurred are not considered additional compensation to you; therefore tax assistance (gross-up) is not applicable.

	  	  
	
Independent Sale

	
Because the Company has provided a Home Sale Assistance program that allows for a tax protected transaction, an Independent Sale is not recommended for properties which are eligible for the Home Sale Assistance program. However if you elect the Independent Sale option, you will be eligible to receive reimbursement of normal and customary home sale closing costs, including:

 

§ Brokerage or agent commission on sale (maximum 6 percent of sale price)

 

§ Normal and customary home sale closing costs, including:

 

- Attorney/escrow fees

 

- Customary federal, state and local transfer taxes

 

- Filing and notary fees

 

- Legal fees

 

Discount points and special financing costs will not be reimbursed.

 

If you elect the Independent Sale option, you will not be eligible for the Home Sale Incentive Bonus.

	  	  
	
Independent Sale

Tax Impact

	
If you elect not to participate in the Home Sale Assistance program, expenses reimbursed will be considered additional compensation. This payment will not be tax assisted (not grossed-up).

 

If your home is ineligible for the Home Sale Assistance program, expenses reimbursed will be considered additional compensation. This payment will be tax assisted (grossed-up).

 

 

  

  

  

HOME SALE INCENTIVE BONUS

	
Benefit Description

	
The Company will provide a Home Sale Incentive Bonus up to a maximum of $5,000 if you accept a bona fide outside offer on your home.  The bonus percentage is dependent upon when you secure the offer.  If you secure a bona fide offer on or between days:

 

§ 1 and 60 of the marketing period the bonus will be equal to 2% of the sale price; or

 

§ 61 and 90 of the marketing period the bonus will be equal to 1% of the sale price.

 

In order to be eligible for the bonus you must:

 

§ Participate in the SIRVA Home Sale Assistance program.

 

§ Not enter into a listing agreement with any broker without first consulting your Relocation Counselor.

 

§ List the home at no more than 105 percent of the average of the two BMAs’ Most Probable (likely) Sales Price (if the BMAs are not within five percent of each other, a third BMA will be ordered and the two closest values will be averaged).

 

§ Work with your SIRVA Relocation Counselor and the real estate agent throughout the marketing period of the home.

 

§ Close your home sale through SIRVA.

	  	  
	
Payment Process

	
The Home Sale Incentive Bonus will be processed by SIRVA once you have a bona fide offer and the contract has been fully executed and guaranteed by SIRVA.

	  	  
	
Tax Impact

	
The Home Sale Incentive Bonus payment will be considered additional compensation. This payment will not be tax assisted (not grossed-up).

  

  

  

MOVEMENT OF HOUSEHOLD GOODS

	
Benefit Description

	
The Company will provide, through SIRVA, a moving company to assist you with the movement of household goods.  SIRVA will select the van line and will coordinate the details. The moving company selected will:

 

§ Provide all required packing materials.

 

§ Crate and uncrate necessary household items as recommended by the movers.

 

§ Perform normal appliance servicing at origin and destination locations.

 

§ Perform all packing, loading, transporting, and unloading.

 

§ Provide partial unpacking services.

 

§ Remove debris upon completion of the move (includes one pickup by the carrier of all cartons unpacked by you and must be within 30 days of delivery); make sure during any unpacking that you inspect every carton and all packaging material so that no item is accidentally discarded.

 

Special arrangements for shipping antiques or other items of exceptionally high value must be approved in advance and supporting documentation such as insurance appraisals is required for verification.

	  	  
	
Excluded Items, Services and Costs

	
The Company will not cover the cost to move certain items. This list includes, but is not limited to:

 

§ Aerosol products or flammable materials

 

§ Any items requiring excessive or special van accommodations

 

§ Farm equipment or trailers

 

§ Firewood, logs, patio blocks or other construction materials

 

§ Frozen foods or other perishables

 

§ Jewelry, money, personal papers, records, tickets, securities or legal documents

 

§ Liquors or carbonated beverages

 

§ Pets

 

§ Plants

 

§ Stamps, coins or other valuable collections

 

§ Yard items that are large and require additional labor for dismantling and re-assembly (i.e. swimming pools, spas, storage sheds, satellite antennas, etc.)

 

In addition to the above list, the Company will not cover the cost of certain services and extra charges. This list includes, but is not limited to:

 

§ Cost of appraisals

 

§ Draining of waterbeds

 

§ Exclusive use of the van or expedited service

 

§ Housecleaning, maid service or janitorial services at either your new or departure location

 

§ Overtime charges for weekend or holiday moves

 

§ Removal or installation of draperies, wall-to-wall carpeting or related items

 

§ Restocking of freezer

 

§ Movement of items related to secondary businesses

 

§ Tips to the moving crew

 

You may use your Miscellaneous Expense benefit for the movement of excluded items or services.

	  	  
	
Valuation

	
Replacement value protection is provided through the selected moving company. Any item(s) lost or damaged while in the carrier’s custody, will be either repaired or replaced with a similar kind or the carrier will pay the replacement value of such item(s). The maximum liability for loss or damage is $125,000 (does not include automobiles). If this amount of coverage is not adequate, additional coverage may be purchased by contacting the moving company.

	  	  
	
Pre-Move Survey

	
Prior to the start of packing, the moving company representative will complete a survey, by phone or in person, of those household goods you will be moving. This survey is used to determine what services, materials and equipment will be required to complete your move. If, after the survey has been completed, you decide to move additional items of significant size or weight, you must notify the moving company representative so that the proper materials are available and proper space is allowed on the moving van.

	  

  

  

  

 

 

	
Packing and Partial Unpacking of Goods

	
The Company will cover a full pack of your household goods. Please allow the movers to pack all of your goods. Any item that is not packed by the movers may not be covered by valuation. The movers will need to either inspect or repack self-packed items to ensure they will be covered by valuation.

 

The Company will cover a partial unpacking service, which includes:

 

§ Unload the moving van and place furniture and boxes in specific rooms in the home per your instructions.

 

§ Unpack mattresses and assemble beds.

 

§ Unpack dresser mirrors and similar items and reassemble.

 

§ Reassemble any item disassembled by the mover to facilitate transportation. Exceptions include any item needing professional expertise to reassemble, such as a slate pool table, major appliances, etc.

 

§ Remove any cartons and debris from items you or mover unpacked on the day of delivery.

 

You will be asked to check items off the mover's inventory to ensure all items arrived. Items can be repositioned upon request.

	  	  
	
Inventory List

	
Read the inventory list prepared by the movers very carefully before you sign the document. You will want to be sure it is accurate and includes all goods intended for shipment. When your goods arrive, you or a responsible family member must be present to check off every item brought into your home.

	  	  
	
Damaged Goods

	
If you discover any damage to your goods, set the damaged goods and container aside and immediately notify your Relocation Counselor for directions on how to file a claim. The moving company will provide you with the proper claim forms and procedures. Cost consideration is not given for sentimental value you may have for your item(s).

	  	  
	
Storage In-Transit

	
If you must vacate your previous residence before you have procured permanent housing at the new location, the Company will pay for storage costs of household goods for up to 60 days. Storage costs are figured on a daily basis.

 

Although storage is provided, the Company recommends that you attempt to coordinate the shipment to be transported directly from your old home to your new home to avoid excessive handling of your household goods. The Company does not cover the cost of accessing items that have been placed in storage.

 

Your mover will designate an agent to arrange storage of your goods. Make sure you obtain the name, address, and telephone number of the warehouse where your goods will be stored.

 

The costs of damage to your goods due to acts of nature (hurricanes, tornados, etc.) are not covered.

	  	  
	
Automobiles

	
The Company will provide, through SIRVA, shipment of up to two automobiles if the distance to the destination location is greater than 400 miles. The automobiles must be in working order and their value must exceed the cost of shipping. Insurance coverage will be provided on your automobiles. If the mile restriction is met, one automobile may be shipped in advance for use during the temporary housing period.

 

If the distance is less than 400 miles or you choose to drive to the destination location, the Company will reimburse mileage based on the current Company reimbursement rate. See the Final Trip to the Destination Location. The Company covers up to a total of two automobiles, whether by shipping (if eligible) or mileage reimbursement, or a combination of the two.

 

In order to be eligible for insurance coverage, do not pack any personal/household goods items in an automobile(s) to be shipped.

	  	  
	
Reimbursement Process

	
The cost of moving household goods from your former residence to your new home will be paid directly by the Company on your behalf. Any additional pick-ups and deliveries, or other special situations, will be at your expense.

	  	  
	
Tax Impact

	
The cost to move your household goods and up to 30 days of storage is not taxable; therefore tax assistance (gross-up) does not apply. The Company will provide tax assistance (gross-up) on any additional days of storage provided. See the Tax Liability Assistance section for additional information.

  

  

  

FINAL TRIP TO THE DESTINATION LOCATION

	
Benefit Description

	
The Company will reimburse actual and reasonable en route expenses from the departure location to the destination location incurred by you and your family members. All travel should be booked through the Company’s designated travel agency and in accordance with the Company’s travel policy.

	  	  
	
Reimbursable Expenses

	
The Company will reimburse the following acceptable expenses:

 

§ Airfare

 

- Seven-day advance purchase is required

 

- Transportation by coach or economy class fare

 

- Transportation to the terminal

 

- Airline luggage charges (one bag per person)

 

§ Lodging

 

- One night per location while en route

 

§ Meals

 

- A per diem of $35 per family member age 13 and over and $15 per family member age 12 and under; receipts are not required

 

§ Mileage

 

- Reimbursed at the current Company rate for up to two automobiles

 

- The Company covers up to a total of two automobiles, whether by shipping (if eligible) or mileage reimbursement, or a combination of the two

 

- See the Movement of Household Goods, Automobiles section

 

§ Parking and tolls

 

To limit lodging and meal expenses, the Company expects you to travel a minimum of 400 miles per day. Your trip must be made by the most direct route—no vacation, extended trips, personal side trips, or leisure travel will be covered.

	  	  
	
Reimbursement Process

	
To receive reimbursement, eligible expenses accompanied by appropriate receipts and per diem amounts must be submitted through SIRVA’s MoveOurHome Web site.

	  	  
	
Tax Impact

	
Lodging (one night in the departure location, nights en route, and one night in the destination location), airfare, and mileage expenses within the IRS guidelines are not taxable; therefore tax assistance does not apply. The Company will provide tax assistance (gross-up) on any meal per diems and mileage reimbursements that exceed the IRS guidelines, which are considered taxable. See Tax Liability Assistance for additional information.

  

  

  

MISCELLANEOUS EXPENSES

	
Benefit Description

	
The relocation process may create expenses for you not specifically covered by some other provision of this Policy, or create a need for additional monetary assistance for a current benefit provided. To compensate for these expenses, the Company will reimburse miscellaneous expenses up to $5,000. Receipts are required for reimbursement.

 

Miscellaneous expenses include, but are not limited to:

 

§ Auto registration(s)

 

§ Child/family care

 

§ Club membership or dues payments

 

§ Driver’s license

 

§ Home staging costs

 

§ Homeowner’s property insurance if cost is excessive

 

§ House cleaning services

 

§ Household goods services not covered by policy

 

§ Installation of appliances, carpeting, window treatments, etc.

 

§ Laundry/dry cleaning

 

§ Overnight mail or postage charges

 

§ Phone, utility or cable deposits and installation fees

 

§ Piano tuning

 

§ Professional tax services

 

§ Shipment or boarding of pets

 

§ Tax consulting or preparation

 

§ Tips to movers

	  	  
	
Payment Process

	
To receive reimbursement, eligible expenses accompanied by appropriate receipts must be submitted through SIRVA’s MoveOurHome Web site.

	  	  
	
Tax Impact

	
These reimbursements will be reported as additional compensation. The Company will provide tax assistance (gross-up).

 

  

  

  

TAX LIABILITY ASSISTANCE

	
Benefit Description

 

 

	
The Internal Revenue Service (IRS) considers all relocation reimbursements made by the Company to you or on your behalf, “compensation for services” and will be taxable income to you. If the IRS “criteria” for moving has been met, the cost for the shipment of household goods, storage-in-transit for up to 30 days, and travel to the new location (excluding meals and mileage over the IRS excludable rate) will be considered “moving expenses” and therefore excludable from your W2 income. Taxable relocation reimbursements or payments made on your behalf will be included in your income for the year in which the payment was made or recorded. Therefore, if some of your expenses carry over into the following year, those expenses will be included in your W2 income the following year. Generally, reimbursements processed in December will be recorded in the following calendar year due to reporting timing restraints. You are solely responsible for maintaining all records and receipts necessary to claim allowable federal (and where applicable, state and local) income tax deductions.

	  
	  	  	  
	
Internal Revenue Service Regulations

	
The Revenue Reconciliation Act of 1993 resulted in a number of changes in how moving expenses are to be treated and which of those expenses will continue to be tax deductible. 

 

To begin with, the following criteria must be met:

 

§ The commute from your departure residence to the new work place must be at least 50 miles farther than the commute from your departure residence to the old place of work by the shortest, most commonly traveled route.

 

§ You must be employed full time for 39 weeks. The 39 weeks must occur during a 12-month period that begins when you arrive at the new location. This requirement is waived in case of death, disability, involuntary termination or retransfer at the Company’s request.

 

§ Except for some circumstances that involve your ability to move your family to the new location, the requirement calls for expenses to be incurred within one year of arrival in the general area of the new job location.

 

§ Any expense that you incur must be “reasonable” in nature to be deductible. Expenses that are excessive will not be deductible.

 

§ The move itself must be related to either continuing work at a new job location or starting a new job at a new location.

	  
	  	  	  
	
Definition of Moving Expenses

	
After the above criteria have been met, the IRS recognizes the following as “moving expenses.”

 

§ Costs related to the movement of household goods and personal effects from the former residence to the new residence.

 

§ The cost of transportation (mileage is limited to the current IRS rate) and lodging for you and your family during the final move from the former residence to the new residence.

 

Payment of these “moving expenses,” either directly or through reimbursement from the Company, will be excluded from your reported income.

 

Other moving expenses that are either reimbursed or paid directly by the Company will be reported as taxable income. These expenses may include such items as:

 

§ Reimbursement for meals, lodging, transportation and other expenses that occur while house hunting, traveling, or residing in temporary housing.

 

§ Reimbursement or direct payment by the Company for expenses relating to the purchase of a new residence.

 

§ Reimbursement for expenses relating to the sale of the departure residence when you do not accept or were not eligible for the Home Sale Assistance program.

 

§ The payment of charges that are by law or custom the responsibility of the Seller (such as a transfer tax) even when such charges are paid as part of the home sale program (check with your personal tax advisor).

	  
	  	  	  
	
Tax Gross-up

	
Unless otherwise indicated in this policy, the Company will pay the estimated federal, state, local and FICA tax liability (gross-up) that arises from the taxable, but generally not deductible, portion of Company-reimbursed expenses associated with a Company-requested relocation. Taxable expenses which are generally deductible, such as the loan origination charge/discount point on a new home loan, will be subject to only a FICA gross-up and, where appropriate, a state income tax gross-up. The estimated tax liability (including tax on the tax, or full gross-up) will take into consideration your marital status, number of dependents, and your Company earned income (annual salary).

 

The amount of tax gross-up will be remitted by the Company directly to the appropriate revenue agency and reported as withheld taxes on your W-2 Wage and Tax Statement.

The determination of whether an item is or is not deductible by you on your individual income tax return is a personal decision you must make. The way that an item is treated by the Company for purposes of income tax withholding does not constitute tax advice and you should consult a personal tax advisor.

 

Note: Taxable expenses are those that are considered taxable income and therefore included in your income and subject to Federal, State, FICA, Medicare and Local taxes. Deductible expenses are those that are included in your taxable income for which you are entitled to claim a federal or state tax deduction. Excludable expenses are those moving expenses or reimbursements that the IRS considers non-taxable. These amounts are not included in your taxable income.

	  
	  

  

  

 

 

 

	  
	
Section 409A of the Internal Revenue Code of 1986

	
To the extent any reimbursements or in-kind benefits under this Policy constitute “non-qualified deferred compensation” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, (i) all such expenses or other reimbursements under this Policy shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by you, (ii) any right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

	  
	  	  	  
	
Gross-Up Table

	
The chart below indicates which relocation expenses are excludable from your W2 income if IRS criteria are met. If the expense is taxable and therefore will appear as income on your W2, the chart indicates if the Company will provide tax assistance (gross-up) on the expense.

	  
	  	
Policy Component

	
Excludable

	
Tax Assisted (Grossed-up)

	  	
Rental Assistance

	
No

	
Yes

	  	
Home Finding Assistance for Homeowners

	
No

	
Yes

	  	
New Home Purchase Assistance:

- Employee participates in no closing cost loan program

- Employee does not participate in no closing cost loan program

	
 

N/A

No

	
 

N/A

Yes

	  	
General Home Inspection

	
No

	
Yes

	  	
Temporary Housing

	
No

	
Yes

	  	
Home Sale Assistance through SIRVA

	
N/A

	
N/A

	  	
Home Sale Incentive Bonus

	
No

	
No

	  	
Home Sale – Independent

- Employee chooses not to participate

- Employee’s home is ineligible for the program

	
 

No

No

	
 

No

Yes

	  	
Movement of Household Goods:

- Van line services

- Valuation

- Storage of household goods up to 30 days

- Storage of household goods after 30 days

- Automobile(s)

	
 

Yes

Yes

Yes

No

Yes

	
 

N/A

N/A

N/A

Yes

N/A

	  	
Final Trip to the Destination Location:

- Airfare

- Meals

- Lodging

- Mileage reimbursed to current IRS excludable amount

- Mileage reimbursed above current IRS excludable amount

	
 

Yes

No

Yes

Yes

No

	
 

N/A

Yes

N/A

N/A

Yes

	  	
Miscellaneous Expenses

	
No

	
Yes

	  	
* In most states, full gross-up is not necessary for loan origination charge/discount point reimbursement as the sum is subject only to FICA taxes. Medicare and social security (if applicable) gross-up is provided on the origination fee reimbursement.

N/A = Not applicableexhibit_4-2.htm

EXECUTION COPY

 

 

 

 

 

 

 

 

 

 

SECOND SUPPLEMENTAL INDENTURE

 

 

HEALTHSOUTH CORPORATION

 

 

7.250% SENIOR NOTES DUE 2018

 

 

THE BANK OF NOVA SCOTIA

 

 

TRUST COMPANY OF

 

 

NEW YORK,

 

as Trustee

 

 

 

 

 

 

Dated as of October 7, 2010

 

 

 

  

  

  

TABLE OF CONTENTS

 

Page

 

ARTICLE I

 

Establishment of New Series

 

	SECTION 1.01.	Establishment of New Series	 1

 

ARTICLE II

 

Definitions

 

	SECTION 2.01.	Definitions	 2

 

ARTICLE III

 

The Securities

 

	SECTION 3.01.	Form	 22

 

ARTICLE IV

 

Amendment Of Base Indenture

 

	SECTION 4.01.	Amendment of Article I of Base Indenture	22 
	SECTION 4.02.	Amendment of Article III of Base Indenture	22 
	SECTION 4.03.	Amendment of Article IV of Base Indenture	22 
	SECTION 4.04.	Amendment of Article V of Base Indenture	22 
	SECTION 4.05.	Amendment of Article VI of Base Indenture	23 
	SECTION 4.06.	Amendments of Article VII of Base Indenture	34 
	SECTION 4.07.	Amendment of Article XI of Base Indenture	37 
	SECTION 4.08.	Amendment of Article XII of Base Indenture	37 
	SECTION 4.09.	Amendment of Article XIII of Base Indenture	39 
	SECTION 4.10.	Amendment of Article XIV of Base Indenture	40 

 

ARTICLE V

 

Subsidiary Guarantees

 

	SECTION 5.01.	Guarantees	42 
	SECTION 5.02.	Limitation on Liability	43 
	SECTION 5.03.	Successors and Assigns	43 
	SECTION 5.04.	No Waiver	43 
	SECTION 5.05.	Modification	43 
	SECTION 5.06.	Release of Subsidiary Guarantor	43 
	SECTION 5.07.	Contribution	44 

 

ARTICLE VI

 

Miscellaneous

 

	SECTION 6.01.	Integral Part	44 
	SECTION 6.02.	Adoption, Ratification and Confirmation	44 
	SECTION 6.03.	Counterparts	44 
	SECTION 6.04.	Severability	45 
	SECTION 6.05.	Governing Law	45 
	SECTION 6.06.	Trustee Makes No Representation	45 

 

EXHIBIT A:  Form of Note

EXHIBIT B:  Form of Guaranty Agreement

i  

  

  

SECOND SUPPLEMENTAL INDENTURE dated as of October 7, 2010 (this “Supplemental Indenture”), between HEALTHSOUTH CORPORATION, a Delaware corporation (the “Company”), the SUBSIDIARY GUARANTORS (as defined herein) party hereto and THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK, a New York trust company (the “Trustee”).

 

W I T N E S S E T H:

 

WHEREAS the Company has heretofore entered into a senior indenture, dated as of December 1, 2009 (the “Base Indenture”), with the Trustee;

 

WHEREAS the Base Indenture, as supplemented by this Supplemental Indenture, is herein called the “Indenture”;

 

WHEREAS, pursuant to Section 3.01 of the Indenture, the form and terms of a new series of Securities may at any time be established by a supplemental indenture executed by the Company and the Trustee;

 

WHEREAS the Company proposes to create under the Indenture a new series of Securities;

 

WHEREAS additional Securities of this series and other series hereafter established, except as may be limited in the Indenture as at the time supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified; and

 

WHEREAS all conditions necessary to authorize the execution and delivery of this Supplemental Indenture and to make it a valid and binding obligation of the Company and the Subsidiary Guarantors have been done or performed.

 

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

ESTABLISHMENT OF NEW SERIES

 

SECTION 1.01.   Establishment of New Series.  (a)  There is hereby established a new series of Securities to be issued under the Indenture, to be designated as the Company’s 7.250% Senior Notes due 2018 (the “Securities”).

 

(b)           On the Issue Date, the Trustee shall authenticate and deliver $275,000,000 of the Securities and, at any time and from time to time thereafter, the Trustee shall authenticate and deliver Additional Securities for original issue in accordance with Section 3.14 of the Indenture in an aggregate principal amount specified in the applicable resolution of the Board of Directors and Officers’ Certificate.  Further, from time to time after the original issue date, Securities shall be authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of other Securities as set forth in the Indenture.

 

(c)           The Securities shall be issued initially in the form of one or more Global Securities in substantially the form set out in Exhibit A hereto.  The Depositary with respect to the Securities shall be The Depository Trust Company.

 

(d)           Each Note shall be dated the date of authentication thereof and shall bear interest as provided in the form of Note in Exhibit A hereto.  The date on which principal is payable on the Securities shall be as provided in the form of Note in Exhibit A hereto.

 

(e)           The record dates for the Securities and the manner of payment of principal and interest on the Securities shall be as provided in the form of Note in Exhibit A hereto.

 

  

  

  

(f)           If and to the extent that the provisions of the Base Indenture are duplicative of, or in contradiction with, the provisions of this Supplemental Indenture, the provisions of this Supplemental Indenture shall govern, but solely with respect to the Securities.

 

ARTICLE II

 

DEFINITIONS

 

SECTION 2.01.  Definitions.  For purposes of the Indenture, but only with respect to the Securities, and the Securities, the following terms have the meanings indicated below.  All capitalized terms used herein and not otherwise defined below shall have the meanings ascribed thereto in the Base Indenture.

 

“Additional Assets” means (1) any property or assets used in a Related Business; (2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or (3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary; provided, however, that any such Restricted Subsidiary described in clause (2) or (3) above is primarily engaged in a Related Business.

 

“Additional Securities” means Securities issued under the terms of this Indenture subsequent to the Issue Date, and in compliance with Sections 3.14 and 6.03, it being understood that any Securities issued in exchange for or replacement of any Security issued on the Issue Date shall not be an Additional Security.

 

“Adjusted Treasury Rate” means, with respect to any redemption date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication that is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after October 1, 2014, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, in each case calculated on the third Business Day immediately preceding the redemption date, and in each case of (1) and (2), plus 0.50%.

 

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. No Person (other than the Company or any Subsidiary of the Company) in whom a Receivables Entity makes an Investment in connection with a Qualified Receivables Transaction will be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of such Investment.

 

“Applicable Premium” means, with respect to a Security at any redemption date, the greater of (1) 1.00% of the principal amount of such Security and (2) the excess of (A) the present value at such redemption date of (i) the redemption price of such Security on October 1, 2014 (such redemption price being set forth in paragraph 5 of such Security, exclusive of any accrued interest), plus (ii) all required remaining scheduled interest payments due on such Security through October 1, 2014 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate, over (B) the principal amount of such Security on such redemption date.

 

“Asset Disposition” means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a

 

  

2

  

merger, consolidation or similar transaction (each referred to for the purposes of this definition as a “disposition”), of:

 

(1)           any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary);

 

(2)           all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary; or

 

(3)           any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary;

 

other than, in the case of clauses (1), (2) and (3) above,

 

(A)           a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary;

 

(B)           for purposes of Section 6.06 only, a disposition that constitutes a Restricted Payment (or would constitute a Restricted Payment but for the exclusions from the definition thereof) that is not prohibited by Section 6.04 or that constitutes a Permitted Investment;

 

(C)           a disposition of all or substantially all the assets of the Company in accordance with Section 5.01;

 

(D)           a disposition of Capital Stock or other assets with a Fair Market Value of less than or equal to $10,000,000;

 

(E)           sales of damaged, worn-out or obsolete equipment or assets in the ordinary course of business that, in the Company’s reasonable judgment, are no longer either used or useful in the business of the Company or its Subsidiaries;

 

(F)           the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof;

 

(G)           sales of accounts receivable and related assets of the type specified in the definition of “Qualified Receivables Transaction” to a Receivables Entity;

 

(H)           transfers of accounts receivable and related assets of the type specified in the definition of “Qualified Receivables Transaction” (or a fractional undivided interest therein) by a Receivables Entity in a Qualified Receivables Transaction;

 

(I)           leases or subleases to third Persons in the ordinary course of business that do not interfere in any material respect with the business of the Company or any of its Restricted Subsidiaries;

 

(J)           a disposition of cash or Temporary Cash Investments; and

 

(K)           the creation of a Lien (but not the sale or other disposition of the property subject to such Lien).

 

“Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate implicit in the lease, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby shall be determined in accordance with the definition of “Capital Lease Obligation”.

 

  

3

  

“Average Life” means, as of the date of determination, with respect to any Indebtedness, the quotient obtained by dividing:

 

(1)           the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of or redemption or similar payment with respect to such Indebtedness multiplied by the amount of such payment by

 

(2)           the sum of all such payments.

 

“Capital Lease Obligation” means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.  For purposes of Section 6.09, a Capital Lease Obligation shall be deemed to be secured by a Lien on the property being leased.

 

“Capital Markets Indebtedness” means any Indebtedness:

 

(1)           in the form of, or represented by, bonds (other than surety bonds, indemnity bonds, performance bonds or bonds of a similar nature) or other securities or any Guarantee thereof; and

 

(2)           that is, or may be, quoted, listed or purchased and sold on any stock exchange, automated trading system or over-the-counter or other securities market (including, without prejudice to the generality of the foregoing, the market for securities eligible for resale pursuant to Rule 144A under the Securities Act).

 

“Captive Insurance Subsidiary” means HCS, Ltd., a Cayman Islands entity, and any successor to it, and any other Subsidiary formed for the purpose of facilitating self-insurance programs of the Company and its Subsidiaries.

 

“Change of Control” means the occurrence of any of the following events:

 

(1)           the Company becomes aware that any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or has become the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company;

 

(2)           at any time during any period of up to 24 consecutive months, commencing on the Issue Date, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office;

 

(3)           the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution; or

 

(4)           the merger or consolidation of the Company with or into another Person or the merger of another Person with or into the Company, or the sale of all or substantially all the assets of the Company (determined on a consolidated basis) to another Person, other than a transaction following which (i) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and (ii) in the case of a sale of assets transaction, each transferee becomes an obligor in respect of the Securities and a Subsidiary of the transferor of such assets.

 

  

4

  

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Securities from the redemption date to October 1, 2014, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to October 1, 2014.

 

“Comparable Treasury Price” means, with respect to any redemption date, if clause (2) of the Adjusted Treasury Rate is applicable, the average of two, or if not possible, such lesser number as is obtained by the Company, Reference Treasury Dealer Quotations for such redemption date.

 

“Consolidated Amortization Expense” means, for any Person for any period, the amortization expense of such Person and its Restricted Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income of such Person), determined on a consolidated basis in accordance with GAAP, excluding amortization expense attributable to a prepaid item that was paid in cash in a prior period.

 

“Consolidated Coverage Ratio” as of any date of determination means the ratio of (a) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days prior to the date of such determination to (b) Consolidated Interest Expense for such four fiscal quarters; provided, however, that:

 

(1)           if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness (and the application of the proceeds thereof) as if such Indebtedness had been Incurred on the first day of such period;

 

(2)           if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period and as if the Company or such Restricted Subsidiary had not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness;

 

(3)           if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, EBITDA for such period shall be reduced by an amount equal to EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to EBITDA (if negative), directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);

 

(4)           if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction requiring a calculation to be made hereunder, that constitutes a hospital or other health care-related business or all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition had occurred on the first day of such period; and

 

(5)           if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such

 

  

5

  

period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition had occurred on the first day of such period.

 

For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company (and shall include any applicable Pro Forma Cost Savings).  If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness).

 

If any Indebtedness is incurred under a revolving credit facility and is being given pro forma effect, the interest on such Indebtedness shall be calculated based on the average daily balance of such Indebtedness for the four fiscal quarters subject to the pro forma calculation to the extent that such Indebtedness was incurred solely for working capital purposes.

 

“Consolidated Depreciation Expense” means, for any Person for any period, the depreciation expense of such Person and its Restricted Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income of such Person), determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Income Tax Expense” means, for any Person for any period, the provision for taxes based on income and profits of such Person and its Restricted Subsidiaries to the extent such provision for income taxes was deducted in computing Consolidated Net Income of such Person for such period, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Interest Expense” means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, net of interest income of the Company and its consolidated Restricted Subsidiaries (other than interest income of any Captive Insurance Subsidiary that is a Restricted Subsidiary), plus, to the extent not included in the calculation of total interest expense, and to the extent incurred by the Company or its Restricted Subsidiaries, without duplication:

 

(1)           interest expense attributable to Capital Lease Obligations;

 

(2)           amortization of debt discount;

 

(3)           capitalized interest;

 

(4)           non-cash interest expense;

 

(5)           commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

 

(6)           net payments made or received pursuant to Hedging Obligations;

 

(7)           dividends accrued in respect of all Disqualified Stock of the Company and all Preferred Stock of any Restricted Subsidiary, in each case held by Persons other than the Company or a Wholly Owned Subsidiary (other than dividends payable solely in Capital Stock (other than Disqualified Stock) of the Company); provided, however, that such dividends shall be multiplied by a fraction the numerator of which is one and the denominator of which is one minus the effective combined tax rate of the issuer of such Preferred Stock (expressed as a decimal) for such period (as estimated by the chief financial officer of the Company in good faith);

 

(8)           interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets of) the Company or any Restricted Subsidiary; and

 

  

6

  

(9)           the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust.

 

“Consolidated Net Income” means, for any period, the net income of the Company and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income:

 

(1)           any net income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that:

 

(A)           subject to the exclusion contained in clause (4) below, the Company’s equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (3) below); and

 

(B)           the Company’s equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Company or a Restricted Subsidiary;

 

(2)           any net income (or loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction (or any transaction accounted for in a manner similar to a pooling of interests) for any period prior to the date of such acquisition;

 

(3)           any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that:

 

(A)           subject to the exclusion contained in clause (4) below, the Company’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause); and

 

(B)           the Company’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income;

 

(4)           any gain (or loss) realized upon the sale or other disposition of any assets of the Company, its consolidated Subsidiaries or any other Person (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain (or loss) realized upon the sale or other disposition of any Capital Stock of any Person;

 

(5)           any net income or net losses from discontinued operations;

 

(6)           extraordinary gains or losses; and

 

(7)           the cumulative effect of a change in accounting principles,

 

in each case, for such period.  Notwithstanding the foregoing, for the purposes of Section 6.04 only, there shall be excluded from Consolidated Net Income any repurchases, repayments or redemptions of Investments, proceeds realized on the sale of Investments or return of capital to the Company or a Restricted Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or returns increase the amount of Restricted Payments permitted under clause (a)(3)(D) or (a)(3)(E) of Section 6.04.

 

  

7

  

“Consolidated Secured Debt Ratio” as of any date of determination, means the ratio of (a) Indebtedness of the Company and its Restricted Subsidiaries, determined on a consolidated basis, secured by Liens, to (b) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days prior to the date of such determination, in each case with such pro forma adjustments to consolidated total Indebtedness and EBITDA as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Consolidated Coverage Ratio.”

 

“Consolidated Tangible Assets” as of any date means the total assets of the Company and its Restricted Subsidiaries (excluding any assets that would be classified as “intangible assets” under GAAP) on a consolidated basis at such date, as determined in accordance with GAAP, less (i) all write-ups subsequent to the Issue Date in the book value of any asset owned by the Company or any of its Restricted Subsidiaries and (ii) Investments in and assets of Unrestricted Subsidiaries.

 

“Convertible Preferred Stock” means the Company’s Series A Convertible Perpetual Preferred Stock issued and outstanding on the Issue Date.

 

“Credit Agreement” means the Credit Agreement dated as of March 10, 2006, as amended as of the date of the Indenture, by and among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders and agents party thereto from time to time, together with the related documents thereto (including the term loans and revolving loans thereunder, any guarantees and security documents), as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement (and related document) governing Indebtedness incurred to Refinance, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or group of lenders (including by means of sales of debt securities to institutional investors).

 

“Currency Agreement” means any foreign exchange contract, currency swap agreement or other similar agreement with respect to currency values.

 

“Designated Noncash Consideration” means noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Disposition that is designated by the Company as Designated Noncash Consideration, less the amount of cash or cash equivalents received in connection with a subsequent sale of such Designated Noncash Consideration, which cash and cash equivalents shall be considered Net Available Cash received as of such date and shall be applied pursuant to Section 6.06.

 

“Disqualified Stock” means, with respect to any Person, 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 at the option of the holder) or upon the happening of any event:

 

(1)           matures or is mandatorily redeemable (other than redeemable only for Capital Stock of such Person which is not itself Disqualified Stock) pursuant to a sinking fund obligation or otherwise;

 

(2)           is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock; or

 

(3)           is mandatorily redeemable or must be purchased upon the occurrence of certain events or otherwise, in whole or in part;

 

in each case on or prior to the date that is 91 days after the Stated Maturity of the Securities; provided, however, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to purchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” occurring prior to the date that is 91 days after the Stated Maturity of the Securities shall not constitute Disqualified Stock if the “asset sale” or “change of control” provisions applicable to such Capital Stock

 

  

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are not more favorable to the holders of such Capital Stock than the terms applicable to the Securities under Sections 6.06 and 6.08.

 

The amount of any Disqualified Stock that does not have a fixed redemption, repayment or repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or repurchased on any date on which the amount of such Disqualified Stock is to be determined pursuant to this Indenture; provided, however, that if such Disqualified Stock could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price shall be the book value of such Disqualified Stock as reflected in the most recent financial statements of such Person.  The Convertible Preferred Stock, based on the terms thereof in effect on the Issue Date, shall not be Disqualified Stock.

 

“EBITDA” of any Person for any period means Consolidated Net Income of such Person for such period plus, without duplication, the sum for such Person of the following to the extent deducted in calculating Consolidated Net Income for such period:

 

(1)           Consolidated Income Tax Expense,

 

(2)           Consolidated Depreciation Expense,

 

(3)           Consolidated Amortization Expense,

 

(4)           Consolidated Interest Expense,

 

(5)           all other non-cash items or non-recurring non-cash items reducing Consolidated Net Income of such Person and its Subsidiaries, determined on a consolidated basis in accordance with GAAP (including non-cash charges incurred as a result of the application of FASB Accounting Standard Codification 718, Compensation—Stock Compensation); provided that cash expenditures made in respect of items to which the charges referred to in this clause (5) relate in an aggregate amount in excess of $10,000,000 for any period of four consecutive fiscal quarters shall be deducted in determining EBITDA for the period during which such expenditures are made,

 

(6)           any restructuring charges in respect of legal fees associated with the government, class-action and shareholder derivative litigation described in the Company’s Report on Form 10-K for the fiscal year ended December 31, 2009,

 

(7)           fees, costs and expenses related to the offering of the Securities and the other Refinancing Transactions,

 

(8)           any losses from discontinued operations and closed locations, and

 

(9)           costs and expenses related to the settlement of the Shareholder Litigation,

 

in each case determined on a consolidated basis in accordance with GAAP, less all unusual noncash items or nonrecurring noncash items to the extent increasing Consolidated Net Income of such Person and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, in each case for such period.  Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and noncash charges of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion, including by reason of minority interests) that the net income or loss of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders.

 

  

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“Equity Offering” means any public or private sale of Capital Stock (other than Disqualified Stock) of the Company, other than public offerings with respect to the Company’s common stock registered on Form S-8 under the Securities Act and other than issuances to any Subsidiary of the Company.

 

“Fair Market Value” means, with respect to any asset or property, the price that could be negotiated in an arm’s-length, free market transaction, for cash, between a willing and able buyer and an unaffiliated willing seller, neither of whom is under undue pressure or compulsion to complete the transaction, as such price is determined in good faith by (1) the Chief Financial Officer, the Treasurer or the Chief Accounting Officer of the Company (unless otherwise provided in this Indenture) for transactions valued at, or below, $10,000,000, or (2) the Board of Directors of the Company (unless otherwise provided in this Indenture) for transactions valued in excess of $10,000,000.

 

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

 

(1)           to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or

 

(2)           entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

 

provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning.

 

“Guaranty Agreement” means an agreement, in substantially the form of Exhibit B hereto or another form satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor guarantees the Company’s obligations with respect to the Securities on the terms provided for in this Indenture.

 

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

 

“Incur” means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary.  The term “Incurrence” when used as a noun shall have a correlative meaning.  Solely for purposes of determining compliance with Section 6.03:

 

(1)           amortization of debt discount or the accretion of principal with respect to a noninterest bearing or other discount security;

 

(2)           the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument or the payment of regularly scheduled dividends on Capital Stock in the form of additional Capital Stock of the same class and with the same terms; and

 

(3)           the obligation to pay a premium in respect of Indebtedness arising in connection with the issuance of a notice of redemption or making of a mandatory offer to purchase such Indebtedness

 

will not be deemed to be the Incurrence of Indebtedness.

 

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

 

(1)           the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such

 

  

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Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable;

 

(2)           all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person;

 

(3)           all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding any accounts payable or other liability to trade creditors arising in the ordinary course of business);

 

(4)           all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following payment on the letter of credit);

 

(5)           the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock of such Person or, with respect to any Preferred Stock of any Subsidiary of such Person, the principal amount of such Preferred Stock to be determined in accordance with this Indenture (but excluding, in each case, any accrued dividends);

 

(6)           all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee;

 

(7)           all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such property or assets and the amount of the obligation so secured; and

 

(8)           to the extent not otherwise included in this definition, Hedging Obligations of such Person.

 

Notwithstanding the foregoing, in connection with the purchase by the Company or any Restricted Subsidiary of any business, the term “Indebtedness” will exclude indemnification, purchase price adjustment, holdback and contingency payment obligations to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 60 days thereafter.

 

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all obligations as described above; provided, however, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time.

 

“Independent Qualified Party” means an investment banking firm, accounting firm or appraisal firm of national standing; provided, however, that such firm is not an Affiliate of the Company.

 

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement with respect to exposure to interest rates.

 

“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person.  If the Company or any Restricted Subsidiary issues, sells or otherwise disposes of any Capital Stock of a

 

  

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Person that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no longer a Restricted Subsidiary, any Investment by the Company or any Restricted Subsidiary in such Person remaining after giving effect thereto will be deemed to be a new Investment at such time.  The acquisition by the Company or any Restricted Subsidiary of a Person that holds an Investment in a third Person shall be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person at such time.  Except as otherwise provided for herein, the amount of an Investment shall be its Fair Market Value at the time the Investment is made and without giving effect to subsequent changes in value.

 

For purposes of the definition of “Unrestricted Subsidiary”, the definition of “Restricted Payment” and Section 6.04:

 

(1)           “Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

 

(2)           any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.

 

“Issue Date” means October 7, 2010.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

 

“Moody’s” means Moody’s Investors Service, Inc., and any successor to its rating agency business.

 

“Net Available Cash” from an Asset Disposition means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other non-cash form), in each case net of:

 

(1)           all legal, title and recording tax expenses, commissions and other fees and expenses incurred (including legal, accounting and investment banking fees and commissions), and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Disposition;

 

(2)           all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition;

 

(3)           all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Disposition;

 

(4)           the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition; and

 

(5)           any portion of the purchase price from an Asset Disposition placed in escrow, whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Asset Disposition or otherwise

 

  

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in connection with that Asset Disposition; provided, however, that upon the termination of that escrow, Net Available Cash shall be increased by any portion of funds in the escrow that are released to the Company or any Restricted Subsidiary.

 

“Net Cash Proceeds”, with respect to any issuance or sale of Capital Stock or Indebtedness, means the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.

 

“Obligations” means, with respect to any Indebtedness, all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, and other amounts payable pursuant to the documentation governing such Indebtedness.

 

“Officer” means the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the Company.

 

“Officer’s Certificate” means a certificate signed by an Officer and delivered to the Trustee and “Officers’ Certificate” means a certificate signed by two Officers and delivered to the Trustee.  Each such certificate shall include the statements provided for in Section 16.01 if and to the extent required by the provisions of such Section.

 

“Permitted Investment” means an Investment by the Company or any Restricted Subsidiary in:

 

(1)           the Company, a Restricted Subsidiary or a Person that shall, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business;

 

(2)           another Person if, as a result of such Investment, such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person’s primary business is a Related Business;

 

(3)           cash and Temporary Cash Investments;

 

(4)           receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

 

(5)           payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

 

(6)           loans or advances to officers, directors and employees made in the ordinary course of business of the Company or such Restricted Subsidiary;

 

(7)           stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments;

 

(8)           any Person to the extent such Investment represents the non-cash portion of the consideration received for (A) an Asset Disposition as permitted pursuant to Section 6.06 or (B) a disposition of assets not constituting an Asset Disposition;

 

(9)           any Person where such Investment was acquired by the Company or any of its Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of a foreclosure by the Company or

 

  

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any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

 

(10)           any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Company or any Restricted Subsidiary;

 

(11)           any Person to the extent such Investments consist of Hedging Obligations otherwise permitted under Section 6.03;

 

(12)           any Person to the extent such Investment exists on the Issue Date, and any extension, modification or renewal of any such Investments existing on the Issue Date, but only to the extent not involving additional advances, contributions or other Investments of cash or other assets or other increases thereof (other than as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investment as in effect on the Issue Date);

 

(13)           Investments made by the Captive Insurance Subsidiary in the ordinary course of business and in accordance with applicable law;

 

(14)           a Receivables Entity, or any Investment by a Receivables Entity in any other Person in connection with a Qualified Receivables Transaction, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Transaction or any related Indebtedness; provided, however, that any Investment in a Receivables Entity is in the form of a purchase money note, contribution of additional receivables or an equity interest; or

 

(15)           Persons to the extent such Investments, when taken together with all other Investments made pursuant to this clause (15) and outstanding on the date such Investment is made, do not exceed 10% of Consolidated Tangible Assets, as determined based on the consolidated balance sheet of the Company as of the end of the most recent fiscal quarter ending at least 45 days prior thereto.

 

“Permitted Liens” means, with respect to any Person:

 

(1)           pledges or deposits by such Person under worker’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, performance bonds or obligations of a like nature or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;

 

(2)           Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review and Liens arising solely by virtue of any statutory or common law provision relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided, however, that (A) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board and (B) such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution;

 

(3)           Liens for taxes, assessments or other governmental charges or claims, in each case not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings;

 

(4)           Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness;

 

  

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(5)           minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

 

(6)           Liens securing Indebtedness Incurred to finance the construction, purchase or lease of, or repairs, improvements or additions to, property, plant or equipment of such Person; provided, however, that the Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries at the time the Lien is Incurred (other than assets and property affixed or appurtenant thereto), and the Indebtedness (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the later of the acquisition, completion of construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien;

 

(7)           Liens to secure Indebtedness permitted pursuant to Section 6.03(b)(1); provided, however, that if (x) on the date the secured Indebtedness is Incurred, and after giving pro forma effect to the Incurrence thereof, the Incurrence of such Indebtedness would result in the Consolidated Secured Debt Ratio exceeding 3.75 to 1.0, as determined based on the consolidated balance sheet of the Company as of the end of the most recent fiscal quarter ending at least 45 days prior thereto, then (y) the total amount of Indebtedness that may be secured pursuant to this clause (7) shall not exceed the greater of (i) the maximum amount of Indebtedness that could be Incurred on such date without such ratio being so exceeded and (ii) an amount equal to the maximum amount of Indebtedness that could then be incurred pursuant to Section 6.03(b)(1), less the amount of Indebtedness secured by Liens Incurred pursuant to clause (18) below and outstanding on such date;

 

(8)           Liens existing on the Issue Date (other than Liens referred to in the foregoing clause (7));

 

(9)           Liens on property or shares of Capital Stock of another Person at the time such other Person becomes a Subsidiary of such Person; provided, however, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);

 

(10)           Liens on property at the time such Person or any of its Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Subsidiary of such Person; provided, however, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);

 

(11)           Liens securing Indebtedness or other obligations of a Subsidiary of such Person owing to such Person or a Wholly Owned Subsidiary of such Person;

 

(12)           Liens securing Hedging Obligations so long as such Hedging Obligations are permitted to be Incurred under this Indenture;

 

(13)           any Lien on accounts receivable and related assets of the types specified in the definition of “Qualified Receivables Transaction” incurred in connection with a Qualified Receivables Transaction;

 

(14)           Liens in favor of the Company or the Subsidiary Guarantors;

 

(15)           leases, subleases, licenses or sublicenses granted to third parties entered into in the ordinary course of business which do not materially interfere with the conduct of the business of the Company and the Restricted Subsidiaries and which do not secure any Indebtedness;

 

(16)           Liens securing judgments, decrees, orders or awards for the payment of money not constituting an Event of Default in respect of which the Company shall in good faith be prosecuting an appeal or proceedings for review, which appeal or proceedings shall not have been finally terminated, or in respect of which the period within which such appeal or proceedings may be initiated shall not have expired;

 

  

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(17)           Liens to secure any Refinancing (or successive Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clause (6), (8), (9) or (10); provided, however, that:

 

(A)           such new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Indebtedness (plus improvements and accessions to, such property or proceeds or distributions thereof); and

 

(B)           the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clause (6), (8), (9) or (10) at the time the original Lien became a Permitted Lien and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement; and

 

(18)           other Liens securing Indebtedness (other than Subordinated Obligations) to the extent the Incurrence of such Indebtedness, when taken together with all other Indebtedness secured by Liens Incurred pursuant to this clause (18) and outstanding on the date such other Lien is Incurred, and after giving pro forma effect to the Incurrence of such Indebtedness, would not result in the Consolidated Secured Debt Ratio exceeding 3.75 to 1.0, as determined based on the consolidated balance sheet of the Company as of the end of the most recent fiscal quarter ending at least 45 days prior thereto; provided, however, notwithstanding whether this clause (18) would then be available to secure Indebtedness, any Lien securing Indebtedness originally secured pursuant to this clause (18) may secure Refinancing Indebtedness in respect of such Indebtedness, as long as such Lien does not extend to any property other than all or part of the same property and assets that secured or, under the written agreements pursuant to which such original Lien arose, could have secured the original Indebtedness (plus improvements and accesssions to, such property or proceeds or distributions thereof), and such Refinancing Indebtedness shall be deemed to have been secured pursuant to this clause (18).

 

Notwithstanding the foregoing, “Permitted Liens” will not include any Lien described in clause (6), (9) or (10) above to the extent such Lien applies to any Additional Assets acquired directly or indirectly from Net Available Cash pursuant to Section 6.06.  For purposes of this definition, the term “Indebtedness” shall be deemed to include interest on such Indebtedness.

 

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

 

“principal” of a Security means the principal of the Security plus the premium, if any, payable on the Security which is due or overdue or is to become due at the relevant time.

 

“Pro Forma Cost Savings” means, with respect to any period, the reduction in costs that were:

 

(1)           directly attributable to an asset acquisition and calculated on a basis that is consistent with Regulation S-X under the Securities Act in effect and applied as of the Issue Date, or

 

(2)           implemented by the business that was the subject of any such asset acquisition within the six months prior to or following the date of the asset acquisition and that are supportable and quantifiable by the underlying accounting records of such business, as if, in the case of each of clause (1) and (2), all such reductions in costs had been effected as of the beginning of such period.

 

“Prospectus Supplement” means the Prospectus Supplement dated September 28, 2010, and used in connection with the offering of the Securities.

 

“Purchase Money Indebtedness” means Indebtedness (1) consisting of the deferred purchase price of property, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations and obligations in respect of industrial revenue bonds or similar Indebtedness, in each case where the

 

  

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maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and (2) Incurred to finance the acquisition by the Company or a Restricted Subsidiary of such asset, including additions and improvements, in the ordinary course of business, provided, however, that any Lien arising in connection with any such Indebtedness shall be limited to the specific asset being financed or, in the case of real property or fixtures, including additions and improvements, the real property on which such asset is attached; provided, further, however, that such Indebtedness is Incurred within 180 days after such acquisition of such assets.

 

“Qualified Receivables Transaction” means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to:

 

(1)           a Receivables Entity (in the case of a transfer by the Company or any of its Restricted Subsidiaries) or

 

(2)           any other Person (in the case of a transfer by a Receivables Entity),

 

or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Restricted Subsidiaries, and any assets related thereto, including all collateral securing such accounts receivable, all contracts and all Guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable; provided, however, that the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the chief financial officer of the Company).

 

The grant of a security interest in any accounts receivable of the Company or any of its Restricted Subsidiaries to secure Indebtedness permitted pursuant to Section 6.03(b)(1) shall not be deemed a Qualified Receivables Transaction.

 

“Quotation Agent” means one of the Reference Treasury Dealers selected by the Company.

 

“Receivables Entity” means (a) a Wholly Owned Subsidiary of the Company that is designated by the Board of Directors (as provided below) as a Receivables Entity or (b) another Person engaging in a Qualified Receivables Transaction with the Company, which Person engages in the business of the financing of accounts receivable, and in either of clause (a) or (b):

 

(1)           no portion of the Indebtedness or any other obligations (contingent or otherwise) of such entity

 

(A)           is Guaranteed by the Company or any Subsidiary of the Company (excluding Guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings),

 

(B)           is recourse to or obligates the Company or any Subsidiary of the Company in any way (other than pursuant to Standard Securitization Undertakings), or

 

(C)           subjects any property or asset of the Company or any Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof (other than pursuant to Standard Securitization Undertakings);

 

(2)           the entity is not an Affiliate of the Company or is an entity with which neither the Company nor any Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms that the Company reasonably believes to be no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company; and

 

  

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(3)           is an entity to which neither the Company nor any Subsidiary of the Company has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

 

Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.

 

“Reference Treasury Dealer” means each of Citigroup Global Markets, Inc. and Barclays Capital Inc., and their respective successors and assigns.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day immediately preceding such redemption date.

 

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, purchase, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness.  “Refinanced” and “Refinancing” shall have correlative meanings.

 

“Refinancing Indebtedness” means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with this Indenture, including Indebtedness that Refinances Refinancing Indebtedness; provided, however, that:

 

(1)           such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced;

 

(2)           such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced;

 

(3)           such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced; and

 

(4)           if the Indebtedness being Refinanced is subordinated in right of payment to the Securities, such Refinancing Indebtedness is subordinated in right of payment to the Securities at least to the same extent as the Indebtedness being Refinanced;

 

provided, further, however, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary that is not a Subsidiary Guarantor that Refinances Indebtedness of the Company or a Subsidiary Guarantor or (B) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.

 

“Refinancing Transactions” means (i) this Offering and the use of the proceeds thereof to Refinance Indebtedness outstanding under the Credit Agreement, (ii) the Refinancing of the Credit Agreement prior to its scheduled maturity and (iii) the repayment prior to maturity of the Company’s 10.75% Senior Notes due 2016 (whether effected through tenders, prepayments, repurchases or otherwise).

 

“Related Business” means any business in which the Company or any of the Restricted Subsidiaries was engaged on the Issue Date and any business related, ancillary or complementary to such business.

 

  

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“Restricted Payment” with respect to any Person means:

 

(1)           the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock (other than (A) dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock), (B) dividends or distributions payable solely to the Company or a Restricted Subsidiary and (C) pro rata dividends or other distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity other than a corporation));

 

(2)           the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Capital Stock of the Company held by any Person (other than by a Restricted Subsidiary) or of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the Company (other than by a Restricted Subsidiary), including in connection with any merger or consolidation);

 

(3)           the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations of the Company or any Subsidiary Guarantor (other than (A) from the Company or a Restricted Subsidiary or (B) the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase, redemption, defeasance or other acquisition or retirement); or

 

(4)           the making of any Investment (other than a Permitted Investment) in any Person.

 

“Restricted Subsidiary” means any Subsidiary of the Company that is not an Unrestricted Subsidiary.

 

“Sale/Leaseback Transaction” means an arrangement relating to property owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person, other than leases between the Company and a Restricted Subsidiary or between Restricted Subsidiaries.

 

“Senior Indebtedness” means with respect to any Person:

 

(1)           Indebtedness of such Person, whether outstanding on the Issue Date or thereafter Incurred; and

 

(2)           all other Obligations of such Person (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of Indebtedness described in clause (1) above

 

unless, in the case of clauses (1) and (2), in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such Indebtedness or other obligations are subordinate in right of payment to the Securities or the Subsidiary Guarantee of such Person, as the case may be; provided, however, that Senior Indebtedness shall not include:

 

(A)           any obligation of such Person to the Company or any Subsidiary;

 

(B)           any liability for Federal, state, local or other taxes owed or owing by such Person;

 

(C)           any accounts payable or other liability to trade creditors arising in the ordinary course of business;

 

(D)           any Indebtedness or other Obligation of such Person which is subordinate or junior in any respect to any other Indebtedness or other Obligation of such Person; or

 

  

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(E)           that portion of any Indebtedness which at the time of Incurrence is Incurred in violation of this Indenture.

 

“Shareholder Litigation” means the Federal securities class actions and the derivative actions brought against the Company and/or certain of its former directors and officers and certain other parties in the United States District Court for the Northern District of Alabama and the Circuit Court in Jefferson County, Alabama relating to financial reporting and related activity that occurred at the Company during periods ended in March 2003.

 

“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

 

“Standard & Poor’s” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any successor to its rating agency business.

 

“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company that, taken as a whole, are customary in an accounts receivable transaction.

 

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).

 

“Subordinated Obligation” means, with respect to a Person, any Indebtedness of such Person (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Securities or a Subsidiary Guarantee of such Person, as the case may be, pursuant to a written agreement to that effect.

 

“Subsidiary Guarantee” means a Guarantee by a Subsidiary Guarantor of the Company’s obligations with respect to the Securities.

 

“Subsidiary Guarantor” means each Subsidiary of the Company that executes this Indenture as a guarantor on the Issue Date and each other Subsidiary of the Company that thereafter guarantees the Securities pursuant to the terms of this Indenture.

 

“Syndication” means the sale of partnership or other equity interests in Subsidiaries of the Company or other Persons controlled by the Company that own or operate health care facilities to (i) participating physicians, radiologists and other specialists, (ii) professional corporations and other legal entities owned or controlled by such participating physicians, radiologists and other specialists and (iii) participating hospitals and other health care providers.  For purposes of this definition, “controlled” shall have the meaning set forth in the definition of “Affiliate.”

 

“Temporary Cash Investments” means any of the following:

 

(1)           any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof;

 

(2)           investments in demand and time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any State thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $250,000,000 (or the foreign currency equivalent thereof) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor;

 

  

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(3)           repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above;

 

(4)           investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to Standard and Poor’s;

 

(5)           investments in securities issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A” by Standard & Poor’s or “A2” by Moody’s;

(6)           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 of, or evidencing the full recourse obligation of a person whose senior debt is rated, at least “A” by Standard & Poor’s and at least “A2” by Moody’s; and

 

(7)           investments in money market funds that invest substantially all their assets in securities of the types described in clauses (1) through (6) above.

 

“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.

 

“Unrestricted Subsidiary” means:

 

(1)           any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below; and

 

(2)           any Subsidiary of an Unrestricted Subsidiary.

 

The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either (A) the Subsidiary to be so designated has total assets of $1,000 or less or (B) if such Subsidiary has assets greater than $1,000, such designation would be permitted under Section 6.04.

 

The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation (A) the Company could Incur $1.00 of additional Indebtedness under Section 6.03(a) and (B) no Default shall have occurred and be continuing.  Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a certified copy of the resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

 

“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

 

“Wholly Owned Subsidiary” means a Restricted Subsidiary all the Capital Stock of which (other than directors’ qualifying shares) is owned by the Company or one or more other Wholly Owned Subsidiaries.

 

  

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ARTICLE III

 

The Securities

 

SECTION 3.01.   Form.  Provisions relating to the Securities are set forth in Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Supplemental Indenture.  The Securities and the Trustee’s certificate of authentication thereto shall be substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part of this Supplemental Indenture.  The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company).  Each Security shall be dated the date of its authentication.  The Securities shall be issuable only in registered form without interest coupons and only in denominations of $2,000 and integral multiples of $1,000.  The terms of the Securities set forth in Exhibit A are part of the terms of this Supplemental Indenture.

 

ARTICLE IV

 

AMENDMENT OF BASE INDENTURE

 

SECTION 4.01.  Amendment of Article I of Base Indenture.  Section 1.01 of the Base Indenture is hereby amended, but only with respect to the Securities, by the deletion of the definitions of the following terms: “Indebtedness”, “Mandatory Sinking Fund Payment”, “Officer’s Certificate”, “Optional Sinking Fund Payment”, “Person”, “Record Date”, “Senior Indebtedness” and “Stated Maturity”.

 

SECTION 4.02.   Amendment of Article III of Base Indenture.  Article III of the Base Indenture is hereby amended, but only with respect to the Securities, by the addition of the following new Section 3.14 at the end thereof:

 

“SECTION 3.14.  Issuance of Additional Securities.  After the Issue Date, the Company shall be entitled, subject to its compliance with Section 6.03, to issue Additional Securities under this Indenture, which Securities shall have identical terms as the Securities issued on the Issue Date, other than with respect to the date of issuance and issue price and first payment of interest.  All the Securities issued under this Indenture shall be treated as a single class for all purposes of this Indenture, including waivers, amendments, redemptions and offers to purchase.

 

With respect to any Additional Securities, the Company shall set forth in a resolution of the Board of Directors and an Officers’ Certificate, a copy of each of which shall be delivered to the Trustee, the following information:

 

(1)           the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture and the provision of Section 6.03 that the Company is relying on to issue such Additional Securities; and

 

(2)           the issue price, the issue date, the CUSIP number and the ISIN of such Additional Securities; provided, however, that no Additional Securities may be issued at a price that would cause such Additional Securities to have “original issue discount” within the meaning of Section 1273 of the Code.”

 

SECTION 4.03.   Amendment of Article IV of Base Indenture.  Section 4.02(a) of the Base Indenture is hereby amended, but only with respect to the Securities, by deleting the words “, by lot or in such other manner as the Trustee shall deem appropriate”, and replacing such deleted words with “on a pro rata basis to the extent practicable”.

 

SECTION 4.04.   Amendment of Article V of Base Indenture.  Article V of the Base Indenture is hereby amended and restated, but only with respect to the Securities, to read in its entirety as follows:

 

  

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"ARTICLE V

 

SUCCESSOR COMPANY

 

SECTION 5.01.  When Company May Merge or Transfer Assets.  The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:

 

(1)           the resulting, surviving or transferee Person (the “Successor Company”) shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by a supplemental indenture hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Securities and this Indenture;

 

(2)           immediately after giving pro forma effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary thereof as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;

 

(3)           immediately after giving pro forma effect to such transaction, (A) the Successor Company would be able to Incur an additional $1.00 of Indebtedness pursuant to Section 6.03(a) or (B) the Consolidated Coverage Ratio for the Successor Company would be equal to or greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction; and

 

(4)           the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture,

 

provided, however, that clause (3) shall not be applicable to (A) a Restricted Subsidiary consolidating with, merging into or transferring all or part of its properties and assets to the Company (so long as no Capital Stock of the Company is distributed to any Person) or (B) the Company merging with an Affiliate of the Company solely for the purpose and with the sole effect of reincorporating the Company in another jurisdiction.

 

For purposes of this Section 5.01, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

 

The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Securities.

 

SECTION 4.05.   Amendment of Article VI of Base Indenture.

 

(a)           Article VI of the Base Indenture is hereby amended, but only with respect to the Securities, by the addition of the following new Sections 6.02, 6.03, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09, 6.10 and 6.11:

 

“SECTION 6.02.  SEC Reports.  Whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC (subject to the next sentence), and provide the Trustee and Holders with, such annual and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such reports to be so filed and provided at the times specified for the filings of such reports under such Sections and containing all the

 

  

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information, audit reports and exhibits required for such reports.  If, at any time, the Company is not subject to the periodic reporting requirements of the Exchange Act for any reason, the Company shall nevertheless continue filing the reports specified in the preceding sentence with the SEC within the time periods required unless the SEC will not accept such a filing.  Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely on Officer’s Certificates).  The Company agrees that it shall not take any action for the purpose of causing the SEC not to accept such filings.  If, notwithstanding the foregoing, the SEC will not accept such filings for any reason, the Company shall post the reports specified in the preceding sentence on its website within the time periods that would apply if the Company were required to file such reports with the SEC.  At any time that any of the Company’s Subsidiaries are Unrestricted Subsidiaries, then the quarterly and annual financial information required by this paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company.

 

The Company also shall comply with the other provisions of Section 314(a) of the TIA.

 

SECTION 6.03.  Limitation on Indebtedness.  (a)  The Company shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided, however, that the Company and the Subsidiary Guarantors shall be entitled to Incur Indebtedness if, on the date of such Incurrence and after giving effect thereto on a pro forma basis the Consolidated Coverage Ratio exceeds 2.0 to 1.0.

 

(b)           Notwithstanding the foregoing paragraph (a), the Company and the Restricted Subsidiaries shall be entitled to Incur any or all of the following Indebtedness:

 

(1)           Indebtedness Incurred pursuant to the Credit Agreement; provided, however, that, immediately after giving effect to any such Incurrence, the aggregate principal amount of all Indebtedness Incurred under this clause (1) and then outstanding does not exceed $1,551,000,000 less the sum of all principal payments with respect to such Indebtedness made pursuant to Section 6.06(a)(3)(A) and in satisfaction of Section 6.06;

 

(2)           Indebtedness owed to and held by the Company or a Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon, (B) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Securities, and (C) if a Subsidiary Guarantor is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations of such Subsidiary Guarantor with respect to its Subsidiary Guarantee;

 

(3)           the Securities (excluding any Additional Securities);

 

(4)           Indebtedness outstanding on the Issue Date (other than Indebtedness described in clause (1), (2) or (3) of this Section 6.03(b)), including the Company's 7.750% Senior Notes due 2022 to the extent issued on the Issue Date;

 

(5)           Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Subsidiary was acquired by the Company (other than Indebtedness Incurred in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary or was acquired by the Company); provided, however, that on the date of such acquisition and after giving pro forma effect thereto, the Company would have been entitled to Incur at least $1.00 of additional Indebtedness pursuant to Section 6.03(a);

 

  

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(6)           Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to Section 6.03(a) or pursuant to clause (3), (4) or (5) or this clause (6) of this Section 6.03(b);

 

(7)           Hedging Obligations directly related to Indebtedness permitted to be Incurred by the Company and its Restricted Subsidiaries pursuant to this Indenture or entered into in the ordinary course of business and not for speculative purposes;

 

(8)           obligations in respect of performance, bid and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;

 

(9)           Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within three Business Days of its Incurrence;

 

(10)           Indebtedness consisting of the Subsidiary Guarantee of a Subsidiary Guarantor and any Guarantee by the Company or a Subsidiary Guarantor of Indebtedness or other obligations of the Company or any Restricted Subsidiary (other than Indebtedness Incurred pursuant to clause (5) of this Section 6.03(b)) so long as the Incurrence of such Indebtedness or other obligations by the Company or such Restricted Subsidiary is permitted under the terms of this Indenture;

 

(11)           (A) Purchase Money Indebtedness, (B) Capital Lease Obligations and (C) Attributable Debt, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount on the date of Incurrence that, when added to all other Indebtedness Incurred pursuant to this clause (11) and then outstanding, does not exceed 15% of Consolidated Tangible Assets, as determined based on the consolidated balance sheet of the Company as of the end of the most recent fiscal quarter ending at least 45 days prior thereto;

 

(12)           [Intentionally omitted];

 

(13)           Indebtedness Incurred by a Receivables Entity in a Qualified Receivables Transaction;

 

(14)           Preferred Stock issued by any Restricted Subsidiary formed to operate a single health care facility; provided that the amount of such Preferred Stock, when added to the aggregate amount of all other such Preferred Stock of Restricted Subsidiaries then outstanding, does not exceed 1% of Consolidated Tangible Assets, as determined based on the consolidated balance sheet of the Company as of the end of the most recent fiscal quarter ending at least 45 days prior thereto; and

 

(15)           Indebtedness of the Company or of any of its Restricted Subsidiaries in an aggregate principal amount that, when taken together with all other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the date of such Incurrence (other than Indebtedness permitted by clauses (1) through (14) of this Section 6.03(b) or by Section 6.03(a)) does not exceed $250,000,000.

 

(c)           Notwithstanding the foregoing, neither the Company nor any Subsidiary Guarantor shall incur any Indebtedness pursuant to Section 6.03(b) if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations of the Company or any Subsidiary Guarantor unless such Indebtedness shall be subordinated to the Securities or the applicable Subsidiary Guarantee to at least the same extent as such Subordinated Obligations.

 

(d)           For purposes of determining compliance with this Section 6.03:

 

(1)           all Indebtedness outstanding under the Credit Agreement on the Issue Date shall be treated as Incurred under clause (b)(1) of this Section 6.03;

 

(2)           in the event that an item of Indebtedness (or any portion thereof) meets the criteria of more than one of the types of Indebtedness described above, the Company, in its sole discretion, shall

 

  

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classify such item of Indebtedness (or any portion thereof) at the time of Incurrence and shall only be required to include the amount and type of such Indebtedness in one of the above clauses (provided that any Indebtedness originally classified as Incurred pursuant to any of clauses (b)(2) through (b)(15) of this Section 6.03 may later be reclassified as having been Incurred pursuant to paragraph (a) or any other of clauses (b)(2) through (b)(15) of this Section 6.03 to the extent that such reclassified Indebtedness could be Incurred pursuant to paragraph (a) or one of clauses (b)(2) through (b)(15) of this Section 6.03, as the case may be, if it were Incurred at the time of such reclassification); and

 

(3)           the Company shall be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described above.

 

SECTION 6.04.  Limitation on Restricted Payments.

 

(a)           The Company shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to make a Restricted Payment if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:

 

(1)           a Default shall have occurred and be continuing (or would result therefrom);

 

(2)           the Company is not entitled to Incur an additional $1.00 of Indebtedness pursuant to Section 6.03(a); or

 

(3)           the aggregate amount of such Restricted Payment and all other Restricted Payments since the Issue Date would exceed the sum of (without duplication):

 

(A)           50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from and including July 1, 2006 to the end of the most recent fiscal quarter ending at least 45 days prior to the date of such Restricted Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); plus

 

(B)           100% of the aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of the Company and other than an issuance or sale to an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) and 100% of any cash capital contribution received by the Company from its shareholders subsequent to the Issue Date; plus

 

(C)           the amount by which Indebtedness of the Company is reduced on the Company’s balance sheet upon the conversion or exchange subsequent to the Issue Date of any Indebtedness of the Company convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair value of any other property, distributed by the Company upon such conversion or exchange); provided, however, that the foregoing amount shall not exceed the Net Cash Proceeds received by the Company or any Restricted Subsidiary from the sale of such Indebtedness (excluding Net Cash Proceeds from sales to a Subsidiary of the Company or to an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees); plus

 

(D)           an amount equal to the net reduction in the Investments (other than Permitted Investments) made by the Company or any Restricted Subsidiary in any Person resulting from repurchases, repayments or redemptions of such Investments by such Person, proceeds realized on the sale of such Investment and proceeds representing the return of capital (excluding dividends and distributions), in each case received by the Company or any Restricted Subsidiary; provided, however, that the foregoing sum shall not exceed, in the case of any such Person, the amount of Investments (excluding Permitted Investments) previously made (and treated as a Restricted Payment) by the Company or any Restricted Subsidiary in such Person; plus

 

  

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(E)           in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is redesignated as a Restricted Subsidiary, except to the extent that the Investment in such Unrestricted Subsidiary was made by the Company or a Restricted Subsidiary pursuant to Section 6.04(b)(10) or to the extent that such Investment constituted a Permitted Investment; plus

 

(F)           $50,000,000.

 

(b)           The preceding provisions shall not prohibit:

 

(1)           any Restricted Payment made out of the Net Cash Proceeds of the substantially concurrent sale of, or made by exchange for, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) or a substantially concurrent cash capital contribution received by the Company from its shareholders; provided, however, that (A) such Restricted Payment shall be excluded from the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale or such cash capital contribution (to the extent so used for such Restricted Payment) shall be excluded in the calculation of amounts under Section 6.04(a)(3)(B);

 

(2)           any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or a Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent Incurrence of, Indebtedness of such Person that is permitted to be Incurred pursuant to Section 6.03; provided, however, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments;

 

(3)           dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with this Section 6.04; provided, however, that such dividend shall be included in the calculation of the amount of Restricted Payments;

 

(4)           so long as no Default has occurred and is continuing, the purchase, redemption or other acquisition of shares of Capital Stock of the Company or any of its Subsidiaries from employees, former employees, directors or former directors of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved or ratified by the Board of Directors under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such Capital Stock; provided, however, that the aggregate amount of such Restricted Payments (excluding amounts representing cancellation of Indebtedness) shall not exceed $5,000,000 in any calendar year (provided that (A) if the Company and its Restricted Subsidiaries make less than $5,000,000 in the aggregate of such Restricted Payments in any calendar year, the unused amount for such calendar year may be carried over to the next succeeding calendar year (but not any other calendar year thereafter) and (B) the amount payable in any calendar year may be increased by an amount up to the sum of (i) the amount of cash proceeds from the sale of Capital Stock (other than Disqualified Stock) of the Company to employees, former employees, directors or former directors of the Company or any of its Subsidiaries, to the extent that the cash proceeds from the sale of such Capital Stock have not otherwise been applied to the payment of Restricted Payments by virtue of Section 6.04(a)(3)(B), plus (ii) the cash proceeds of key man life insurance policies received by the Company or its Restricted Subsidiaries after the Issue Date, less (iii) the amount of repurchases and other acquisitions previously made with the cash proceeds described in clauses (i) and (ii) above); provided further, however, that (x) such repurchases and other acquisitions shall be excluded in the calculation of the amount of Restricted Payments and (y) cash proceeds referred to in clause (B)(i) above used to make Restricted Payments under this Section 6.04(b)(4) shall be excluded from the calculation of amounts under Section 6.04(a)(3)(B);

 

  

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(5)           (A) the declaration and payment of dividends on the Convertible Preferred Stock, and other cash payments at any time to reduce any accretion in the liquidation preference resulting from previously unpaid dividends on the Convertible Preferred Stock, in each case in accordance with the terms thereof in effect on the Issue Date and (B) the declaration and payments of dividends on Disqualified Stock issued pursuant to Section 6.03; provided, however, in each case, that at the time of payment of such dividend or other cash payment, no Default shall have occurred and be continuing (or result therefrom); provided further, however, that dividends and cash payments referred to in this clause (5) shall be excluded in the calculation of the amount of Restricted Payments;

 

(6)           repurchases of Capital Stock deemed to occur upon exercise of stock options if such Capital Stock represents a portion of the exercise price of such options; provided, however, that such Restricted Payments shall be excluded in the calculation of the amount of Restricted Payments;

 

(7)           cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of the Company; provided, however, that any such cash payment shall not be for the purpose of evading the limitation of this Section 6.04; provided further, however, that such payments shall be excluded in the calculation of the amount of Restricted Payments;

 

(8)           in the event of a Change of Control, and if no Default shall have occurred and be continuing, the payment, purchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Company or any Subsidiary Guarantor, in each case, at a purchase price not greater than 101% of the principal amount of such Subordinated Obligations, plus any accrued and unpaid interest thereon; provided, however, that prior to such payment, purchase, redemption, defeasance or other acquisition or retirement, the Company (or a third party to the extent permitted by this Indenture) has made a Change of Control Offer with respect to the Securities as a result of such Change of Control and has repurchased all Securities validly tendered and not withdrawn in connection with such Change of Control Offer; provided further, however, that such payments, purchases, redemptions, defeasances or other acquisitions or retirements shall be excluded in the calculation of the amount of Restricted Payments;

 

(9)           payments of intercompany subordinated Indebtedness, the Incurrence of which was permitted under Section 6.03(b)(2); provided, however, that no Default has occurred and is continuing or would otherwise result therefrom; provided further, however, that such payments shall be excluded in the calculation of the amount of Restricted Payments; or

 

(10)           Restricted Payments in an amount that, when taken together with all Restricted Payments made pursuant to this clause (10), does not exceed $100,000,000; provided, however, that (A) at the time of each such Restricted Payment, no Default shall have occurred and be continuing (or result therefrom) and (B) such Restricted Payments shall be excluded in the calculation of the amount of Restricted Payments.

 

The amount of any Restricted Payment that is not made in cash shall be determined in a manner consistent with the determination of the amount of an Investment as set forth in the final sentence of the first paragraph of the definition of “Investment”.

 

SECTION 6.05.  Limitation on Restrictions on Distributions from Restricted Subsidiaries.  The Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) pay dividends or make any other distributions on its Capital Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company, (b) make any loans or advances to the Company or (c) transfer any of its property or assets to the Company, except:

 

(1)           with respect to clauses (a), (b) and (c),

 

(A)           any encumbrance or restriction pursuant to applicable law, rule, regulation or order or an agreement in effect at or entered into on the Issue Date;

 

  

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(B)           any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company) and outstanding on such date;

 

(C)           any encumbrance or restriction pursuant to any amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing of the agreement referred to in clauses (A) and (B) above; provided, however, that such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing is no more restrictive, as reasonably determined by the Company, with respect to such encumbrances and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing;

 

(D)           any encumbrance or restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

 

(E)           restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

 

(F)           any limitation or prohibition on the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements, which limitation or prohibition is applicable only to the assets that are the subject of such agreements;

 

(G)           any encumbrance or restriction existing under or by reason of contractual requirements of a Receivables Entity in connection with a Qualified Receivables Transaction provided that such restrictions apply only to such Receivables Entity;

 

(H)           any encumbrance or restriction arising in the ordinary course of business, not relating to any Indebtedness, that does not, individually or in the aggregate, materially detract from the value of the property or assets of the Company and its Restricted Subsidiaries, taken as whole, or adversely affect the Company's ability to make principal and interest payments on the Securities, in each case, as determined in good faith by the Company; and

 

(2)           with respect to clause (c) only,

 

(A)           any encumbrance or restriction consisting of customary nonassignment provisions in leases governing leasehold interests to the extent such provisions restrict the transfer of the lease or the property leased thereunder; and

 

(B)           any encumbrance or restriction contained in Capital Lease Obligations, any agreement governing Purchase Money Indebtedness, security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such Capital Lease Obligations, Purchase Money Indebtedness, security agreements or mortgages.

 

SECTION 6.06.  Limitation on Sales of Assets and Subsidiary Stock.  (a)  The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Disposition unless:

 

  

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(1)           the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the Fair Market Value (including as to the value of all non-cash consideration) of the shares and assets subject to such Asset Disposition;

 

(2)           at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash or cash equivalents; and

 

(3)           an amount equal to 100% of the Net Available Cash from such Asset Disposition, other than any Asset Disposition that constitutes a Syndication or a resyndication transaction in the ordinary course of business, is applied by the Company (or such Restricted Subsidiary, as the case may be)

 

(A)           to the extent the Company elects (or is required by the terms of any Indebtedness), to prepay, repay, redeem or purchase Senior Indebtedness of the Company or a Subsidiary Guarantor or Indebtedness (other than any Disqualified Stock) of a Restricted Subsidiary that is not a Subsidiary Guarantor (in each case other than Indebtedness owed to the Company or an Affiliate of the Company) within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash;

 

(B)           to the extent the Company elects (including with respect to the balance of such Net Available Cash after application (if any) in accordance with clause (A)), to acquire Additional Assets within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; and

 

(C)           to the extent of the balance of such Net Available Cash after application (if any) in accordance with clauses (A) and (B), to make an offer to the Holders of the Securities (and to holders of other Senior Indebtedness of the Company designated by the Company) to purchase Securities (and such other Senior Indebtedness of the Company) pursuant to and subject to the conditions contained in this Indenture;

 

provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness made to satisfy clause (A) or (C) above, the Company or such Restricted Subsidiary shall permanently retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.

 

Notwithstanding the foregoing provisions of this Section 6.06, the Company and the Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section 6.06 except to the extent that the aggregate Net Available Cash from all Asset Dispositions which is not applied in accordance with this Section 6.06 exceeds $50,000,000.  Pending application of Net Available Cash pursuant to this Section 6.06, such Net Available Cash shall be invested in Temporary Cash Investments or applied to temporarily reduce revolving credit indebtedness.

 

For the purposes of this Section 6.06, the following are deemed to be cash or cash equivalents:

 

(1)           the assumption or discharge of any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet or in the footnotes thereto) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Securities) that are assumed by the transferee of such assets and for which the Company and all of the Restricted Subsidiaries have been released by all creditors in writing;

 

(2)           securities received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary within 180 days into cash, to the extent of cash received in that conversion;

 

(3)           all Temporary Cash Investments; and

 

  

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(4)           any Designated Noncash Consideration having an aggregate Fair Market Value that, when taken together with all other Designated Noncash Consideration previously received and then outstanding, does not exceed at the time of the receipt of such Designated Noncash Consideration (with the Fair Market Value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value) $30,000,000.

 

(b)           In the event of an Asset Disposition that requires the purchase of Securities (and other Senior Indebtedness of the Company) pursuant to Section 6.06(a)(3)(C), the Company shall purchase Securities tendered pursuant to an offer by the Company for the Securities (and such other Senior Indebtedness) (the “Offer”) at a purchase price of 100% of their principal amount (or, in the event such other Senior Indebtedness of the Company was issued with significant original issue discount, 100% of the accreted value thereof) without premium, plus accrued but unpaid interest (or, in respect of such other Senior Indebtedness of the Company, such lesser price, if any, as may be provided for by the terms of such Senior Indebtedness) in accordance with the procedures (including prorating in the event of oversubscription) set forth in this Indenture.  If the aggregate purchase price of the securities tendered pursuant to the Offer exceeds the Net Available Cash allotted to their purchase, the Company shall select the securities to be purchased on a pro rata basis but in round denominations, which in the case of the Securities will be denominations of $2,000 principal amount or any greater integral multiple of $1,000.  The Company shall not be required to make such an Offer to purchase Securities (and other Senior Indebtedness of the Company) pursuant to this Section 6.06 if the Net Available Cash available therefor is less than $20,000,000 (which lesser amount shall be carried forward for purposes of determining whether such an offer is required with respect to the Net Available Cash from any subsequent Asset Disposition).  Upon completion of such an Offer, Net Available Cash shall be deemed to be reduced by the aggregate amount of such Offer.

 

(c)           (i)  Promptly, and in any event within 10 days after the Company becomes obligated to make an Offer, the Company shall deliver to the Trustee and send, by first-class mail to each Holder, a written notice stating that the Holder may elect to have his Securities purchased by the Company either in whole or in part (subject to prorating as described in Section 6.06(b) in the event the Offer is oversubscribed) in amounts of $2,000 and any greater integral multiple of $1,000 of principal amount at the applicable purchase price.  The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice (the “Purchase Date”).

 

(ii)           Not later than the date upon which written notice of an Offer is delivered to the Trustee as provided below, the Company shall deliver to the Trustee an Officers’ Certificate as to (A) the amount of the Offer (the “Offer Amount”), including information as to any other Senior Indebtedness included in the Offer for repurchase, (B) the allocation of the Net Available Cash from the Asset Dispositions pursuant to which such Offer is being made and (C) the compliance of such allocation with the provisions of Section 6.06(a).  By 11:00 a.m. New York City time on the Purchase Date, the Company shall irrevocably deposit with the Trustee or with a Paying Agent (or, if the Company or a Wholly Owned Subsidiary is acting as Paying Agent, segregate and hold in trust) an amount equal to the Offer Amount to be held for payment in accordance with the provisions of this Section 6.06.  Upon the expiration of the period for which the Offer remains open (the “Offer Period”), the Company shall deliver to the Trustee for cancellation the Securities or portions thereof which have been properly tendered to and are to be accepted by the Company.  The Trustee (or the Paying Agent, if not the Trustee) shall, on the Purchase Date, mail or deliver payment (or cause the delivery of payment) to each tendering Holder in the amount of the purchase price.  In the event that the aggregate purchase price of the Securities delivered by the Company to the Trustee is less than the Offer Amount applicable to the Securities, the Trustee shall deliver the excess to the Company immediately after the expiration of the Offer Period for application in accordance with this Section 6.06.

 

(iii)           Holders electing to have a Security purchased shall be required to surrender the Security, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the Purchase Date.  A Holder shall be entitled to withdraw its election if the Trustee or the Company receives, not later than one Business Day prior to the Purchase Date, a telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of the Security that was delivered for purchase by such Holder and a

 

  

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statement that such Holder is withdrawing its election to have such Security purchased.  Holders whose Securities are purchased only in part shall be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered.

 

(iv)           At the time the Company delivers Securities to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officers’ Certificate stating that such Securities are to be accepted by the Company pursuant to and in accordance with the terms of this Section 6.06.  A Security shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering Holder.

 

(d)           The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section 6.06.  To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 6.06, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 6.06 by virtue of its compliance with such securities laws or regulations.

 

SECTION 6.07.  Limitation on Transactions with Affiliates.  (a)  The Company shall not, and shall not permit any Restricted Subsidiary to, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with, or for the benefit of, any Affiliate of the Company (an “Affiliate Transaction”) unless:

 

(1)           the terms of the Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary than those that could be obtained at the time of the Affiliate Transaction in arm’s-length dealings with a Person who is not an Affiliate;

 

(2)           if such Affiliate Transaction involves an amount in excess of $10,000,000, the terms of the Affiliate Transaction are set forth in writing and a majority of the non-employee directors of the Company disinterested with respect to such Affiliate Transaction have determined in good faith that the criteria set forth in clause (1) are satisfied and have approved the relevant Affiliate Transaction as evidenced by a resolution of the Board of Directors; and

 

(3)           if such Affiliate Transaction involves an amount in excess of $50,000,000, the Board of Directors shall also have received a written opinion from an Independent Qualified Party to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or is not less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm’s-length transaction with a Person who was not an Affiliate.

 

(b)           The provisions of Section 6.07(a) shall not prohibit:

 

(1)           any Investment (other than a Permitted Investment) or other Restricted Payment, in each case permitted to be made pursuant to Section 6.04;

 

(2)           any employment or consulting agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business or approved by the Board of Directors, and payments pursuant thereto;

 

(3)           loans or advances to employees in the ordinary course of business of the Company or its Restricted Subsidiaries, but in any event not to exceed $10,000,000 in the aggregate outstanding at any one time;

 

  

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(4)           the payment of reasonable fees or other reasonable compensation to, or the provision of customary benefits or indemnification arrangements to, directors of the Company and its Restricted Subsidiaries;

 

(5)           any transaction with the Company, a Restricted Subsidiary or any Person that would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns an equity interest in or otherwise controls such Restricted Subsidiary or Person;

 

(6)           the issuance or sale of any Capital Stock (other than Disqualified Stock) of the Company;

 

(7)           any agreement as in effect on the Issue Date and described in the Prospectus Supplement (or described in a document incorporated by reference in the Prospectus Supplement) or any renewals or extensions of any such agreement (so long as such renewals or extensions are not less favorable in any material respect to the Company or the Restricted Subsidiaries) and the transactions evidenced thereby;

 

(8)           the provision of services to directors or officers of the Company or any of its Restricted Subsidiaries of the nature provided by the Company or any of its Restricted Subsidiaries to customers in the ordinary course of business; and

 

(9)           transactions effected as a part of a Qualified Receivables Transaction.

 

SECTION 6.08.  Change of Control.  (a)  Upon the occurrence of a Change of Control, each Holder shall have the right to require that the Company purchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with Section 6.08(b).

 

(b)           Within 30 days following any Change of Control, the Company shall mail a notice to each Holder with a copy to the Trustee (the “Change of Control Offer”) stating:

 

(i)           that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date);

 

(ii)           the circumstances and relevant facts and financial information regarding such Change of Control;

 

(iii)           the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and

 

(iv)           the instructions, as determined by the Company, consistent with this Section 6.08, that a Holder must follow in order to have its Securities purchased.

 

(c)           The Company shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer.

 

(d)           The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section 6.08.  To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 6.08, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 6.08 by virtue thereof.

 

  

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(e)           Holders electing to have a Security purchased will be required to surrender the Security, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the purchase date.  Holders will be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Security purchased.

 

(f)           On the purchase date, all Securities purchased by the Company under this Section 6.08 shall be delivered by the Company to the Trustee for cancellation, and the Company shall pay the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto.

 

SECTION 6.09.  Limitation on Liens.  The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or permit to exist any Lien (the “Initial Lien”) of any nature whatsoever on any of its properties (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, securing any Indebtedness, other than Permitted Liens, without effectively providing that the Securities shall be secured equally and ratably with (or prior to) the obligations so secured for so long as such obligations are so secured.

 

Any Lien created for the benefit of the Holders of the Securities pursuant to the preceding sentence shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien.

 

SECTION 6.10.  Limitation on Sale/Leaseback Transactions.  The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless:

 

(1)           the Company or such Restricted Subsidiary would be entitled to (A) Incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to Section 6.03 and (B) create a Lien on such property securing such Attributable Debt without equally and ratably securing the Securities pursuant to Section 6.09;

 

(2)           the gross proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the Fair Market Value of such property; and

 

(3)           the Company applies the proceeds of such transaction in compliance with Section 6.06.

 

SECTION 6.11.  Future Guarantors.  (a) The Company shall cause each Restricted Subsidiary that Guarantees any Indebtedness of the Company or any Subsidiary Guarantor in respect of the Credit Agreement or Capital Markets Indebtedness (or Incurs any such Indebtedness) to, at the same time, execute and deliver to the Trustee a Guaranty Agreement pursuant to which such Restricted Subsidiary will Guarantee payment of the Securities on the same terms and conditions as those set forth in Article V of the Supplemental Indenture.”

 

(b)           Sections 6.04 and 6.06 of the Base Indenture are hereby deleted in their entirety, but only with respect to the Securities.

 

(c)           Sections 6.02, 6.03, 6.05 and 6.07 of the Base Indenture are hereby amended, but only with respect to the Securities, by renumbering such Sections 6.12, 6.13, 6.14, and 6.15, respectively.

 

SECTION 4.06.   Amendments of Article VII of Base Indenture.  ii)  Section 7.01(b) of the Base Indenture is hereby amended and restated, but only with respect to the Securities, to read in its entirety as follows:

 

“(b)           the Company (A) defaults in the payment of principal of any Security when the same becomes due and payable at its Stated Maturity, upon optional redemption, upon declaration of acceleration or otherwise or (B) fails to purchase Securities when required pursuant to this Indenture or the Securities;”

 

  

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(b)           Section 7.01(c) the Base Indenture is hereby amended and restated, but only with respect to the Securities, to read in its entirety as follows:

 

“(c)           the Company fails to comply with Section 5.01;”.

 

(c)           Sections 7.01(d), (e) and (f) of the Base Indenture are hereby amended and restated, but only with respect to the Securities, to read in their entirety as follows:

 

“(d)           the Company or any Subsidiary Guarantor fails to comply with any of its agreements contained in the Securities or this Indenture (other than those referred to in (a), (b) or (c) above) and such failure continues for 60 days after the notice from the Trustee or the Holders specified below;

 

(e)           the Company, any Subsidiary Guarantor or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

 

(A)           commences a voluntary case;

 

(B)           consents to the entry of an order for relief against it in an involuntary case;

 

(C)           consents to the appointment of a Custodian of it or for any substantial part of its property; or

 

(D)           makes a general assignment for the benefit of its creditors;

 

or takes any comparable action under any foreign laws relating to insolvency;

 

(f)           a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(A)           is for relief against the Company, any Subsidiary Guarantor or any Significant Subsidiary in an involuntary case;

 

(B)           appoints a Custodian of the Company, any Subsidiary Guarantor or any Significant Subsidiary or for any substantial part of its property; or

 

(C)           orders the winding up or liquidation of the Company, any Subsidiary Guarantor or any Significant Subsidiary;

 

or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days;”

 

Section 7.01 of the Base Indenture is hereby amended, but only with respect to the Securities, by the addition of the following new Sections 7.01(g), (h) and (i) as follows:

 

“(g)           Indebtedness of the Company, any Subsidiary Guarantor or any Significant Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $50,000,000 or its foreign currency equivalent at the time;

 

(h)           any judgment or decree for the payment of money in excess of $50,000,000 (or its foreign currency equivalent at the time) is entered against the Company, any Subsidiary Guarantor or any Significant Subsidiary, remains outstanding for a period of 60 consecutive days following the entry of such judgment or decree and is not discharged, waived or effectively stayed;

 

  

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(i)           any Subsidiary Guarantee ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guarantee) or any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guarantee; or”.

 

(d)           Section 7.01(g) of the Base Indenture is hereby amended, but only with respect to the Securities, by renumbering such section 7.01(j) and by replacing the semi-colon at the end of such section with a period.

 

(e)           The paragraph immediately following Section 7.01(g) of the Base Indenture and the last paragraph of Section 7.01 of the Base Indenture are hereby deleted, but only with respect to the Securities, and replaced with the following:

 

“The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether such Event of Default is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

 

However, a default under Section (d) of this Section 7.01 will not constitute an Event of Default until the Trustee or the Holders of 25% in principal amount of the outstanding Securities notify the Company of the default and the Company does not cure such default within the time specified after receipt of such notice.

 

The term “Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

 

The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers’ Certificate of any Event of Default under clause (g) or (i) and any event which with the giving of notice or the lapse of time or both would become an Event of Default under clause (d) or (h), its status and what action the Company is taking or proposes to take with respect thereto.”

 

(f)           Section 7.02 of the Base Indenture is hereby amended, but only with respect to the Securities, by adding the following sentences to end of the Section:

 

“The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto.

 

In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Securities pursuant to the optional redemption provisions hereof, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Securities.”

 

(g)           Section 7.07 the Base Indenture is hereby amended and restated, but only with respect to the Securities, to read in its entirety as follows:

 

“SECTION 7.07.  Limitation on Suits.  Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Securities unless:

 

  

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(a)           the Holder gives to the Trustee written notice stating that an Event of Default is continuing;

 

(b)           the Holders of at least 25% in principal amount of the outstanding Securities make a written request to the Trustee to pursue the remedy;

 

(c)           such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense;

 

(d)           the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and

 

(e)           the Holders of a majority in principal amount of the outstanding Securities do not give the Trustee a direction inconsistent with the request during such 60-day period.

 

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. In the event that the definitive Securities are not issued to any beneficial owner promptly after the Registrar has received a request from the Holder of a Global Security to issue such definitive Securities to such beneficial owner or its nominee, the Company expressly agrees and acknowledges, with respect to the right of any Holder to pursue a remedy pursuant to this Indenture, the right of such beneficial holder of Securities to pursue such remedy with respect to the portion of the Global Security that represents such beneficial holder’s Securities as if such definitive Securities had been issued.

 

SECTION 4.07.   Amendment of Article XI of Base Indenture.

 

Section 11.03 of the Base Indenture is hereby amended, but only with respect to the Securities, by deleting the words “Responsible Officer or” and replacing such deleted words with “committee of”.

 

SECTION 4.08.   Amendment of Article XII of Base Indenture.

 

Article XII of the Base Indenture is hereby amended and restated, but only with respect to the Securities, to read in its entirety as follows:

 

“ARTICLE XII

 

Discharge of Indenture; Defeasance

 

SECTION 12.01.  Discharge of Liability on Securities; Defeasance.

 

(a)           When (1) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 3.07) for cancellation or (2) all outstanding Securities have become due and payable, whether at maturity or on a redemption date as a result of the mailing of a notice of redemption pursuant to Article IV hereof and the Company irrevocably deposits with the Trustee funds in an amount sufficient, or U.S. Government Obligations the principal of and interest on which will be sufficient, or a combination thereof sufficient, to pay at maturity or upon redemption all outstanding Securities, including interest thereon to maturity or such redemption date (other than Securities replaced pursuant to Section 3.07), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 12.01(c), cease to be of further effect.  The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent set forth herein relating to the satisfaction and discharge of this Indenture have been satisfied, and at the cost and expense of the Company.

 

(b)           Subject to Sections 12.01(c) and 12.02, the Company at any time may terminate (1) all its obligations under the Securities and this Indenture (“legal defeasance option”) or (2) its obligations under Sections

 

  

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6.02, 6.03, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09, 6.10 and 6.11 and the operation of Sections 7.01(e), 7.01(f), 7.01(g) and 7.01(h) (but, in the case of Sections 7.01(e) and (f), with respect to Subsidiary Guarantors and Significant Subsidiaries only) and the limitations contained in Section 5.01(a)(3) (“covenant defeasance option”).  The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.

 

If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default with respect thereto.  If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Sections 7.01(e), 7.01(f), 7.01(g) or 7.01(h) (but, in the case of Sections 7.01(e) and (f), with respect to Subsidiary Guarantors and Significant Subsidiaries only) or because of the failure of the Company to comply with Section 5.01(a)(3).  If the Company exercises its legal defeasance option or its covenant defeasance option, each Subsidiary Guarantor, if any, shall be released from all of its obligations with respect to its Subsidiary Guarantee.

 

Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.

 

(c)           Notwithstanding clauses (a) and (b) above, the Company’s obligations in Sections 3.04, 3.06, 3.07 and 6.12 and in this Article XII shall survive until the Securities have been paid in full.  Thereafter, the Company’s obligations in Sections 11.01, 12.04 and 12.05 shall survive.

 

SECTION 12.02.  Conditions to Defeasance.  The Company may exercise its legal defeasance option or its covenant defeasance option only if:

 

(1)           the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations, or a combination thereof, for the payment of the principal of and interest on the Securities to redemption or maturity, as the case may be;

 

(2)           the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal of and interest when due on all the Securities to maturity or redemption, as the case may be;

 

(3)           123 days pass after the deposit is made and during the 123 day period no Default specified in Section 7.01(e) or (f) with respect to the Company occurs which is continuing at the end of the period;

 

(4)           the deposit does not constitute a default under any other agreement binding on the Company;

 

(5)           the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940;

 

(6)           in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (B) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred;

 

  

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(7)           in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and

 

(8)           the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article XII have been complied with.

 

Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article IV.

 

SECTION 12.03.  Application of Trust Money.  The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article XII.  It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities.

 

SECTION 12.04.  Repayment to Company.  The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time.

 

Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors.

 

SECTION 12.05.  Indemnity for Government Obligations.  The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

 

SECTION 12.06.  Reinstatement.  If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article XII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and each Subsidiary Guarantor’s obligations under this Indenture, each Subsidiary Guarantee and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article XII until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article XII; provided, however, that, if the Company has made any payment of principal of or interest on any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.”

 

SECTION 4.09.   Amendment of Article XIII of Base Indenture.

 

Section 13.01 of the Base Indenture is hereby amended and restated, but only with respect to the Securities, to read in its entirety as follows:

 

25.  “SECTION 13.01.  No Personal Liability.  No director, officer, employee, incorporator or stockholder of the Company or any Subsidiary Guarantor shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Securities, any Subsidiary Guarantee or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation.  By accepting a Security, each Holder shall waive and release all such liability.  The waiver and release shall be part of the consideration for the issue of the Securities.”

 

  

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SECTION 4.10.  Amendment of Article XIV of Base Indenture.  iii)  Sections 14.01 and 14.02 of the Base Indenture are hereby amended and restated, but only with respect to the Securities, to read in their entirety as follows:

 

26.  “SECTION 14.01.  Without Consent of Holders.  The Company, the Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities without notice to or consent of any Holder:

 

(1)  to cure any ambiguity, omission, defect or inconsistency;

 

(2)  to comply with Article V;

 

(3)  to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code;

 

(4)  to add Guarantees with respect to the Securities, including any Subsidiary Guaranties, or to secure the Securities;

 

(5)  to add to the covenants of the Company or a Subsidiary Guarantor for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or a Subsidiary Guarantor;

 

(6)  to make any change that does not adversely affect the rights of any Holder;

 

(7)  to conform the text of this Indenture or the Securities to any provision of the “Description of Notes” section of the Prospectus Supplement to the extent that such provision of the “Description of Notes” section of the Prospectus Supplement was intended to be a verbatim recitation of a provision of this Indenture or the Securities;

 

(8)  to comply with any requirement of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; or

 

(9)  to make any amendment to the provisions of this Indenture relating to the transfer and legending of Securities; provided, however, that (A) compliance with this Indenture as so amended would not result in Securities being transferred in violation of the Securities Act or any other applicable securities law and (B) such amendment does not materially and adversely affect the rights of Holders to transfer Securities.

 

After an amendment under this Section 14.01 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 14.01.

 

SECTION 14.02.  With Consent of Holders.  (a)  The Company, the Subsidiary Guarantors and the Trustee may amend this Indenture, but only with respect to the Securities, or the Securities with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange for, the Securities) and any past Default or compliance with any provisions may also be waived with the consent of the Holders of at least a majority in principal amount of the Securities then outstanding.  Notwithstanding the foregoing, without the consent of each Holder affected thereby, an amendment or waiver may not:

 

(1)  reduce the amount of Securities whose Holders must consent to an amendment;

 

  

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(2)  reduce the rate of or extend the time for payment of interest on any Security;

 

(3)  reduce the principal of or change the Stated Maturity of any Security;

 

(4)  (i) reduce the amount payable upon the redemption of any Security or (ii) change the time at which any Security may be redeemed, in each case in accordance with Article IV;

 

(5)  make any Security payable in money other than that stated in the Security;

 

(6)  impair the right of any Holder of the Securities to receive payment of principal of and interest on such Holder’s Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Securities;

 

(7)  make any change in the amendment provisions that require each Holder’s consent or in the waiver provisions;

 

(8)  make any change in the ranking or priority of any Security that would adversely affect the Securityholders; or

 

(9)  make any change in, or release other than in accordance with this Indenture, any Subsidiary Guarantee that would adversely affect the Securityholders.

 

(b)  It shall not be necessary for the consent of the Holders under this Section 14.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.

 

After an amendment under this Section 14.02 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 14.02.”

 

(b)           Article XIV of the Base Indenture is hereby amended, but only with respect to the Securities, by the addition of the following new Sections 14.07 and 14.08:

 

“SECTION 14.07.  Revocation and Effect of Consents and Waivers.  A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Security or portion of the Security if the Trustee receives the notice of revocation before the date on which the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver becomes effective upon execution of such amendment or waiver by the Trustee.

 

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture.  If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date.  No such consent shall be valid or effective for more than 120 days after such record date.

 

SECTION 14.08.  Payment for Consent.  Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to all Holders and is paid to all

 

  

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Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.”

 

SECTION 4.11. Amendment of Base Indenture.  The Base Indenture is hereby amended, but only with respect to the Securities, (a) by replacing cross-references to Sections and Articles therein to reflect the re-numbering of such Sections and Articles as amended herein and (b) so that any definitions, and any definitions included exclusively within such definitions, in the Base Indenture shall be deemed deleted or amended when all references in the Base Indenture to such definitions would be eliminated or amended as a result of the amendments effected by this Supplemental Indenture.

 

ARTICLE V

 

SUBSIDIARY GUARANTEES

 

SECTION 5.01.  Guarantees.  (a)  Each Subsidiary Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally, to each Holder and to the Trustee and its successors and assigns (i) the full and punctual payment of principal of and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under the Indenture and the Securities and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture and the Securities (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”).  Each Subsidiary Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Subsidiary Guarantor and that such Subsidiary Guarantor will remain bound under this Article V notwithstanding any extension or renewal of any Obligation.

 

(b)           Each Subsidiary Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice of protest for nonpayment.  Each Subsidiary Guarantor waives notice of any default under the Securities or the Guaranteed Obligations.  The obligations of each Subsidiary Guarantor hereunder shall not be affected by (1) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person (including any Subsidiary Guarantor) under the Indenture, the Securities or any other agreement or otherwise; (2) any extension or renewal of any thereof; (3) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Securities or any other agreement; (4) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (5) the failure of any Holder or the Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (6) except as set forth in Section 5.06, any change in the ownership of such Subsidiary Guarantor.

 

Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations.

 

(c)           Except as expressly set forth in Sections 5.02, 5.05, 5.06 and 12.01(b), the obligations of each Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise.  Without limiting the generality of the foregoing, the obligations of each Subsidiary Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under the Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Subsidiary Guarantor or would otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law or equity.

 

(d)           Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest

 

  

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on any Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise.

 

In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Obligation, each Subsidiary Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (A) the unpaid amount of such Guaranteed Obligations, (B) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by law) and (C) all other monetary Guaranteed Obligations of the Company to the Holders and the Trustee.

 

(e)           Each Subsidiary Guarantor agrees that it shall not be entitled to any right of subrogation in respect of any Obligations guaranteed hereby until payment in full of all Obligations.  Each Subsidiary Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (A) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in Article VII of the Indenture for the purposes of any Subsidiary Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (B) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article VII of the Indenture, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Subsidiary Guarantor for the purposes of this Section 5.01.

 

(f)           Each Subsidiary Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 5.01.

 

SECTION 5.02.  Limitation on Liability.  Any term or provision of the Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering the Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

 

SECTION 5.03.   Successors and Assigns.  This Article V shall be binding upon each Subsidiary Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in the Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of the Indenture.

 

SECTION 5.04.  No Waiver.  Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article V shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege.  The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article V at law, in equity, by statute or otherwise.

 

SECTION 5.05.  Modification.  No modification, amendment or waiver of any provision of this Article V, nor the consent to any departure by any Subsidiary Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice to or demand on any Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any other or further notice or demand in the same, similar or other circumstances.

 

SECTION 5.06.   Release of Subsidiary Guarantor.  A Subsidiary Guarantor will be released from its obligations under this Article V:

 

  

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(1) upon the sale or other disposition (including by way of consolidation or merger) of such Subsidiary Guarantor, including the sale or disposition of Capital Stock of such Subsidiary Guarantor, following which such Subsidiary Guarantor is no longer a Subsidiary of the Company; or

 

(2) upon the sale or disposition of all or substantially all of the assets of such Subsidiary Guarantor;

 

	
  

	
in each case other than to the Company or an Affiliate of the Company and as permitted by the Indenture and if in connection therewith the Company provides an Officers’ Certificate to the Trustee to the effect that the Company will comply with its obligations under Section 6.06 in respect of such disposition.  Upon any sale or disposition described in clause (1) or (2) above, the obligor on the related Subsidiary Guarantee will be released from its obligations thereunder.

 

	
  

	
The Subsidiary Guarantor also shall be released from its obligations under this Article V:

 

(1) upon the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the terms of the Indenture;

 

(2) at such time as any Guarantee by such Subsidiary Guarantor of the obligations under the Credit Agreement and under all Capital Markets Indebtedness has been released and discharged, except a discharge or release by or as a result of payment under such Guarantee; or

 

(3) if the Company exercises its legal defeasance option or its covenant defeasance option as described in Article XII of  the Indenture or if the Company’s obligations under the Indenture are discharged in accordance with the terms of the Indenture.

 

For avoidance of doubt, clause (2) above shall include a situation whereby the Guarantee of Capital Markets Indebtedness by a Subsidiary Guarantor, including the Securities, would be released and discharged ("released") immediately upon such release under the Credit Agreement but for the existence of one or more guarantees of other Capital Markets Indebtedness the terms of which also provide that such guarantees would be released immediately upon such release under the Credit Agreement, provided that, in each case, all conditions precedent to such release have been satisfied.

 

At the request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release.

 

SECTION 5.07.  Contribution.  Each Subsidiary Guarantor that makes a payment under its Subsidiary Guarantee shall be entitled upon payment in full of all Guaranteed Obligations under the Indenture to a contribution from each other Subsidiary Guarantor in an amount equal to such other Subsidiary Guarantor’s pro rata portion of such payment based on the respective net assets of all the Subsidiary Guarantors at the time of such payment determined in accordance with GAAP.

 

ARTICLE VI

 

MISCELLANEOUS

 

SECTION 6.01    Integral Part.  This Supplemental Indenture constitutes an integral part of the Indenture.

 

SECTION 6.02.   Adoption, Ratification and Confirmation.  The Base Indenture, as supplemented and amended by this Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed.

 

SECTION 6.03.  Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed an original; and all such counterparts shall together constitute but one and the same instrument.

 

  

44

  

SECTION 6.04.  Severability.  Should any provision of this Supplemental Indenture for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability of any of the other provisions of this Supplemental Indenture, which other provisions shall remain in full force and effect and the application of such invalid or unenforceable provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall be valid and be enforced to the fullest extent permitted by law.

 

SECTION 6.05.  Governing Law.  THIS SUPPLEMENTAL INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

SECTION 6.06.  Trustee Makes No Representation.  The Trustee makes no representation and shall not be responsible or accountable as to the validity, execution by the other parties hereto or thereto or sufficiency of this Supplemental Indenture or of the Securities.  The recitals and statements herein are deemed to be those of the Company and not of the Trustee and the Trustee shall not be held responsible in any manner whatsoever for their correctness.

 

  

45

  

IN WITNESS WHEREOF, the parties hereto have executed this Supplemental Indenture on the date first set forth above.

 

	 	HEALTHSOUTH Corporation	 
	 	 	 	 
	
 

	
By: 

	/s/        DOUGLAS E. COLTHARP	 
	 	 	Name:  Douglas E. Coltharp	 
	 	 	Title:    Executive Vice President and Chief Financial Officer	 
	 	 	 	 

 

GUARANTORS

 

Advantage Health Harmarville Rehabilitation Corporation

CMS Jonesboro Rehabilitation, Inc.

Continental Medical of Arizona, Inc.

Continental Medical Systems, Inc.

Continental Rehabilitation Hospital of Arizona, Inc.

HEALTHSOUTH LTAC of Sarasota, Inc.

HEALTHSOUTH of Austin, Inc.

HEALTHSOUTH of Dothan, Inc.

HEALTHSOUTH of Henderson, Inc.

HEALTHSOUTH of Houston, Inc.

HEALTHSOUTH of Mechanicsburg, Inc.

HEALTHSOUTH of Midland, Inc.

HEALTHSOUTH of Montgomery, Inc

HEALTHSOUTH of New Mexico, Inc.

HEALTHSOUTH of Nittany Valley, Inc.

HEALTHSOUTH of San Antonio, Inc.

HEALTHSOUTH of Sewickley, Inc.

HEALTHSOUTH of South Carolina, Inc.

HEALTHSOUTH of Spring Hill, Inc.

HEALTHSOUTH of Texarkana, Inc.

HEALTHSOUTH of Texas, Inc.

HEALTHSOUTH of Treasure Coast, Inc.

HEALTHSOUTH of Utah, Inc

HEALTHSOUTH of Yuma, Inc

HEALTHSOUTH Rehabilitation Center, Inc.

HEALTHSOUTH Rehabilitation Hospital of Manati, Inc.

HEALTHSOUTH Rehabilitation Hospital of Northern Virginia, Inc.

HEALTHSOUTH Rehabilitation Hospital of Odessa, Inc.

HEALTHSOUTH Specialty Hospital, Inc.

HEALTHSOUTH Sub-Acute Center of Mechanicsburg, Inc.

Lakeshore System Services of Florida, Inc.

Rehab Concepts Corp.

Rehabilitation Hospital of Colorado Springs, Inc.

Rehabilitation Hospital of Fredericksburg, Inc.

Rehabilitation Hospital of Nevada - Las Vegas, Inc.

Rehabilitation Hospital of Petersburg, Inc.

Rehabilitation Hospital of Plano, Inc.

SCA-Dalton, Inc.

Sherwood Rehabilitation Hospital, Inc.

Southeast Texas Rehabilitation Hospital, Inc.

[Signature Page to Supplemental Indenture for 7.250% Senior Notes due 2018]

  

  

  

Tarrant County Rehabilitation Hospital, Inc.

Tyler Rehabilitation Hospital, Inc.

Western Neuro Care, Inc.

 

 

By:  /s/ Edmund M. Fay                                                                 

Name:  Edmund M. Fay

Title:  Authorized Signatory

 

 

Beaumont Rehab Associates Limited Partnership

By: Southeast Texas Rehabilitation Hospital, Inc.

Its: General Partner

 

Collin County Rehab Associates Limited Partnership

By: Rehabilitation Hospital of Plano, Inc.

Its: General Partner

 

Lakeview Rehabilitation Group Partners

By: Continental Medical of Kentucky, Inc.

Its: General Partner

 

Rehabilitation Hospital of Nevada - Las Vegas, L.P.

By: Rehabilitation Hospital of Nevada –Las Vegas, Inc.

Its: General Partner

Southern Arizona Regional Rehabilitation Hospital, L.P.

By: Continental Rehabilitation Hospital of Arizona, Inc.

Its: General Partner

 

Western Medical Rehab Associates, L.P.

By: Western Neuro Care, Inc

Its: General Partner

 

 

By:  Edmund M. Fay

Name:  Edmund M. Fay

Title:  Authorized Signatory

 

HEALTHSOUTH Bakersfield Rehabilitation Hospital Limited

Partnership

HEALTHSOUTH Meridian Point Rehabilitation Hospital Limited

Partnership

HEALTHSOUTH Northern Kentucky Rehabilitation Hospital Limited

Partnership

HEALTHSOUTH Rehabilitation Hospital of Arlington Limited

Partnership

HEALTHSOUTH Valley of the Sun Rehabilitation Hospital Limited

Partnership

By: HealthSouth Properties, LLC, their General Partner

 

By:  /s/ Edmund M. Fay

Name:  Edmund M. Fay

Title:  Authorized Signatory

[Signature Page to Supplemental Indenture for 7.250% Senior Notes due 2018]

  

  

  

HEALTHSOUTH of Ft. Lauderdale Limited Partnership

HEALTHSOUTH of Largo Limited Partnership

HEALTHSOUTH of Sarasota Limited Partnership

HEALTHSOUTH of Tallahassee Limited Partnership

By: HealthSouth Real Property Holding, LLC, its General Partner

 

By:  /s/ Edmund M. Fay

Name:  Edmund M. Fay

Title:  Authorized Signatory

HEALTHSOUTH Rehabilitation Center of New Hampshire, Ltd.

HealthSouth Rehabilitation Hospital of New Mexico, Ltd.

By: HealthSouth Corporation

Its: General Partner

 

By:  /s/ Edmund M. Fay                                                                

Name:  Edmund M. Fay

Title:  Authorized Signatory

Advantage Health, LLC

HEALTHSOUTH Aviation, LLC

HealthSouth-Cypress Real Estate, LLC

HEALTHSOUTH Mesa Rehabilitation Hospital, LLC

HEALTHSOUTH of East Tennessee, LLC

HEALTHSOUTH of Erie, LLC

HEALTHSOUTH of Fort Smith, LLC

HEALTHSOUTH of Pittsburgh, LLC

HEALTHSOUTH of Reading, LLC

HEALTHSOUTH of Toms River, LLC

HEALTHSOUTH of York, LLC

HealthSouth Owned Hospitals Holdings, LLC

HealthSouth Properties, LLC

HealthSouth Real Property Holding, LLC

HealthSouth Real Estate, LLC

HealthSouth Rehabilitation Hospital of Desert Canyon, LLC

HEALTHSOUTH Rehabilitation Hospital of South Jersey, LLC

HEALTHSOUTH Rehabilitation Hospital of Sugar Land, LLC

HEALTHSOUTH Rehabilitation Institute of Tucson, LLC

HEALTHSOUTH Specialty Hospital of North Louisiana, LLC

New England Rehabilitation Management Co., LLC

Rebound, LLC

Rehabilitation Hospital Corporation of America, LLC

Rehabilitation Institute of Western Massachusetts, LLC

Sarasota LTAC Properties, LLC

Sugar Land Real Estate, LLC

Trident Neurosciences Center, LLC

 

By:  /s/ Edmund M. Fay

Name:  Edmund M. Fay

Title: Authorized Signatory

[Signature Page to Supplemental Indenture for 7.250% Senior Notes due 2018]

  

  

  

THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK,

as Trustee

By:   /s/ Warren A. Goshine

Name:  Warren A. Goshine

Title:  Vice President

[Signature Page to Supplemental Indenture for 7.250% Senior Notes due 2018]

  

  

  

EXHIBIT A

 

[FORM OF FACE OF SECURITY]

 

[Global Securities Legend]

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK OR A NOMINEE OF DTC, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

 

[Definitive Securities Legend]

 

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

 

NO.

 

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7.250% Senior Notes Due 2018

 

CUSIP No. 421924BH3

 

ISIN No. US421924BH35

 

HEALTHSOUTH CORPORATION, a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum of $275,000,000.00 Dollars on October 1, 2018.

 

Interest Payment Dates:  April 1 and October 1.

 

Record Dates:  March 15 and September 15.

 

Additional provisions of this Security are set forth on the other side of this Security.

 

Dated:  October 7, 2010

 

HEALTHSOUTH CORPORATION

 

 

	 	By	 	 
	 	Name:	 	 
	 	Title:	 	 

 

 

 

	 	By	 	 
	 	Name:	 	 
	 	Title:	 	 

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

Date of authentication:  October 7, 2010

 

THE BANK OF NOVA SCOTIA TRUST

COMPANY OF NEW YORK, as Trustee

 

 

	By	 	 
	 	 Authorized Signatory	 

 

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[FORM OF REVERSE SIDE OF SECURITY]

 

7.250% Senior Note Due 2018

 

1.           Interest

 

HealthSouth Corporation, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above.  The Company will pay interest semiannually on April 1 and October 1 of each year, commencing April 1, 2011.  Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from October 7, 2010.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.  The Company will pay interest on overdue principal at the rate borne by this Security plus 1.0% per annum, and it will pay interest on overdue installments of interest at the same rate to the extent lawful.

 

2.           Method of Payment

 

The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the March 15 or September 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date.  Holders must surrender Securities to a Paying Agent to collect principal payments.  The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.  Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depository.  The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

 

3.           Paying Agent and Registrar

 

Initially, The Bank of Nova Scotia Trust Company of New York, a New York banking corporation (the “Trustee”), will act as Paying Agent and Registrar.  The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice.  The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.

 

4.           Indenture

 

The Company issued the Securities under the second supplemental indenture (the “Supplemental Indenture”), dated as of October 7, 2010, to the indenture dated as of December 1, 2009 (together with the Supplemental Indenture, the “Indenture”), among the Company, the Subsidiary Guarantors and the Trustee.  The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) (the “Act”).  Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms.

 

The Securities are general unsecured obligations of the Company.  The Company shall be entitled, subject to its compliance with Section 6.03 of the Indenture, to issue Additional Securities pursuant to Section 3.14 of the Indenture.  The Securities issued on the Issue Date, and any Additional Securities, will be treated as a single class for all purposes under the Indenture.  The Indenture contains covenants that limit the ability of the Company and its subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; issue or sell capital stock of subsidiaries; engage in transactions with affiliates; create liens on assets; transfer or sell assets; guarantee indebtedness; restrict dividends or other payments of subsidiaries;

 

A-3

  

  

  

consolidate, merge or transfer all or substantially all of its assets; and engage in sale/leaseback transactions.  These covenants are subject to important exceptions and qualifications.

 

5.           Optional Redemption

 

Except as set forth below, the Company shall not be entitled to redeem the Securities.

 

On and after October 1, 2014, the Company shall be entitled at its option to redeem all or a portion of the Securities upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on October 1 of the years set forth below:

 

	
Period

	
Redemption Price

	
2014

	
103.625%

	
2015

	
101.813%

	
2016

	
100.000%

	
2017 and thereafter

	
100.000%

 

In addition, prior to October 1, 2013, the Company shall be entitled at its option on one or more occasions to redeem Securities (which includes Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities (which includes Additional Securities, if any) originally issued at a redemption price (expressed as a percentage of principal amount) of 107.250%, plus accrued and unpaid interest to the redemption date, with the net cash proceeds from one or more Equity Offerings; provided, however, that (1) at least 65% of such aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding immediately after the occurrence of each such redemption (other than Securities held, directly or indirectly, by the Company or its Affiliates); and (2) each such redemption occurs within 90 days after the date of the related Equity Offering.

 

Prior to October 1, 2014, the Company shall be entitled at its option to redeem all, but not less than all, of the Securities at a redemption price equal to 100% of the principal amount of the Securities plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date).

 

Prior to October 1, 2014, the Company shall be entitled at its option to redeem up to 10% of the outstanding Securities (including Additional Securities, if any) during any 12 month period commencing on the Issue Date at a redemption price equal to 103% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).

 

6.           Notice of Redemption

 

Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address.  Securities in denominations larger than $2,000 principal amount may be redeemed in part but only in whole multiples of $1,000.  If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.

 

7.           Put Provisions

 

Upon a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of the principal amount of the Securities to be repurchased plus accrued interest to the date of repurchase (subject to the right of holders of record

 

A-4

  

  

  

on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture.

 

8.           Guarantee

 

The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by each of the Subsidiary Guarantors to the extent set forth in the Indenture.

 

9.           Denominations; Transfer; Exchange

 

The Securities are in registered form without coupons in denominations of $2,000 principal amount and any greater integral multiple of $1,000.  A Holder may transfer or exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date.

 

10.           Persons Deemed Owners

 

Except as provided in paragraph 2 hereof, the registered Holder of this Security may be treated as the owner of it for all purposes.

 

11.           Unclaimed Money

 

If money for the payment of principal or interest on any Securities remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request at the end of the two years after such principal or interest has become due or payable, unless an abandoned property law designates another Person.  After any such payment, Holders entitled to the money must look only to the Company as general creditors and not to the Trustee for payment.

 

12.           Discharge and Defeasance

 

Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Securities and the Indenture if the Company irrevocably deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.

 

13.           Amendment, Waiver

 

Subject to certain exceptions set forth in the Indenture, (a) the Indenture and the Securities may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (b) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities.  Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Subsidiary Guarantors and the Trustee shall be entitled to amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article V of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities, including Subsidiary Guarantees, or to secure the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Subsidiary Guarantors, or to conform the text of the Indenture or the Securities to any provision of the “Description of Notes” section of the Prospectus Supplement (as defined in the Indenture) under certain circumstances, or to comply with any requirement of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder, or to make amendments to provisions of the Indenture relating to the form, authentication, transfer and legending of the Securities.

 

A-5

  

  

  

14.           Defaults and Remedies

 

Under the Indenture, Events of Default include (a) default for 30 days in payment of interest on the Securities; (b) default in payment of principal on the Securities at maturity, upon redemption pursuant to paragraph 5 of the Securities, upon acceleration or otherwise, or failure by the Company to redeem or purchase Securities when required; (c) failure by the Company or any Subsidiary Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (d) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds $50 million; (e) certain events of bankruptcy or insolvency with respect to the Company and the Significant Subsidiaries; (f) certain judgments or decrees for the payment of money in excess of $50 million; and (g) certain defaults with respect to Subsidiary Guarantees.  If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately.  Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default.

 

Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture.  The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnity or security satisfactory to it.  Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders.

 

15.           Trustee Dealings with the Company

 

Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.  Any Paying Agent, Registrar, Co-Registrar or Co-Paying Agent may do the same with like rights.

 

16.           No Recourse Against Others

 

A director, officer, employee or stockholder, as such, of the Company or the Trustee shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Security, each Securityholder waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

 

17.           Authentication

 

This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.

 

18.           Abbreviations

 

Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

 

19.           CUSIP Numbers

 

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders.  No representation is made as to

 

A-6

  

  

  

the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

20.           Governing Law

 

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

The Company will furnish to any Securityholder upon written request and without charge to the Security holder a copy of the Indenture which has in it the text of this Security in larger type.  Requests may be made to:

 

3660 Grandview Parkway, Suite 200

 

Birmingham, Alabama 35243

 

Attention: General Counsel

 

A-7

  

  

  

ASSIGNMENT FORM

 

To assign this Security, fill in the form below:

 

I or we assign and transfer this Security to

 

 

	 	 	 
	 	
(Print or type assignee’s name, address and zip code)

	 

 

 

	 	 	 
	 	
(Insert assignee’s soc. sec. or tax I.D. No.)

	 

 

 

and irrevocably appoint ___________________ agent to transfer this Security on the books of the Company.  The agent may substitute another to act for him.

 

 

 

	 	 	 	 
	DATE: 	YOUR SIGNATURE:	 	 

 

                               

	 	 	 	 
	
Sign exactly as your name appears on the other side of this Security.

	 	 

 

A-8

  

  

  

[TO BE ATTACHED TO GLOBAL SECURITIES]

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

 

The following increases or decreases in this Global Security have been made:

 

	
Date of Exchange

	
Amount of decrease in Principal  amount of this Global Security

	
Amount of increase in Principal amount of this Global Security

	
Principal amount of this Global Security following such decrease or increase

	
Signature of authorized officer of Trustee or Securities Custodian

 

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OPTION OF HOLDER TO ELECT PURCHASE

 

 

 

If you want to elect to have this Security purchased by the Company pursuant to Section 6.06 or 6.08 of the Indenture, check the box:  o

 

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 6.06 or 6.08 of the Indenture, state the amount in principal amount:  $

 

 

	Dated:	 	 Your	 	 	 
	 	 	 	 Signature:	 	 	 
	 	 	
(Sign exactly as your name appears on the other side of this Security.)

	 	 
	 	 	 	 	 	 
	Signature Guarantee:	 	 	 	 	 
	 	 	 	 	 	 

 

 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

A-10

  

  

  

EXHIBIT B

 

[FORM OF GUARANTY AGREEMENT]

 

GUARANTY AGREEMENT (this “Guaranty Agreement”) dated as of              , among [GUARANTOR] (the “New Guarantor”), a subsidiary of HEALTHSOUTH CORPORATION (or its successor), a Delaware corporation (the “Company”), the subsidiary guarantors party to the Indenture (defined below) (the “Subsidiary Guarantors”) and THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK, a New York trust company, as trustee under the indenture referred to below (the “Trustee”).

 

W I T N E S S E T H :

 

WHEREAS the Company and the Subsidiary Guarantors (the “Existing Guarantors”) have heretofore executed and delivered to the Trustee a second supplemental indenture (the “Second Supplemental Indenture”) dated as of October 7, 2010, to the indenture (together with the First Supplemental Indenture, the “Indenture”) dated as of December 1, 2009, providing for the issuance of the Company’s 7.250% Senior Notes due 2018 (the “Securities”);

 

WHEREAS Section 6.11 of the Indenture provides that under certain circumstances the Company is required to cause the New Guarantor to execute and deliver to the Trustee an agreement pursuant to which the New Guarantor shall unconditionally guarantee all the Company’s obligations under the Securities pursuant to a Subsidiary Guarantee on the terms and conditions set forth herein; and

 

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Securities as follows:

 

1.  Agreement to Guarantee.  The New Guarantor hereby agrees, jointly and severally with all Existing Guarantors, to unconditionally guarantee the Company’s obligations under the Securities on the terms and subject to the conditions set forth in Article V of the Second Supplemental Indenture and to be bound by all other applicable provisions of the Indenture and the Securities.

 

2.  Ratification of Indenture; Supplemental Indentures and Guaranty Agreements Part of Indenture.  Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Guaranty Agreement shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.

 

3.  Governing Law.  THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

4.  Trustee Makes No Representation.  The Trustee makes no representation and shall not be responsible or accountable as to the validity, execution by the other parties hereto or thereto or sufficiency of this Guaranty Agreement or the Securities.

 

5.  Counterparts.  The parties may sign any number of copies of this Guaranty Agreement.  Each signed copy shall be an original, but all of them together represent the same agreement.

 

6.  Effect of Headings.  The Section headings herein are for convenience only and shall not effect the construction thereof.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Guaranty Agreement to be duly executed as of the date first above written.

 

 

	
[NEW GUARANTOR],

	 	 	 
	 	by	 	 	 
	 	 	 	 	 
	 	 	Name:	 	 	 
	 	 	 	 	 
	 	Title:	 	 	 
	 	 	 	 	 
	HEALTHSOUTH Corporation,	 	 	 
	 	by	 	 	 
	 	 	 	 	 	 
	 	 	Name:	 	 	 
	 	 	 	 	 
	 	 	Title:	 	 	 
	 	 	 	 	 
	THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK, as Trustee	 	 	 
	 	by	 	 	 
	 	 	 	 	 	 
	 	 	Name:	 	 	 
	 	 	 	 	 
	 	 	Title:	 	 	 

 

 

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NY3 3065449.9 080198 000002 10/7/2010 11:49am

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