Encompass Health (EHC) 10-K 2005 FY Annual report

Exhibit 10.2.3

WAIVER dated as of February 16, 2006 (this “Waiver”) to the Amended and Restated Credit Agreement dated as of March 21, 2005 (the “Credit Agreement”), among HEALTHSOUTH CORPORATION (the “Borrower”), the Lenders party thereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent and Collateral Agent.

WHEREAS, the Borrower has informed the Administrative Agent that it desires to issue Capital Stock of the Borrower generating Net Proceeds of up to $400,000,000, with such issuance to be completed no later than March 31, 2006 (such issuance, the “Equity Issuance”);

WHEREAS, Section 2.10(c) of the Credit Agreement requires that the Borrower apply 50% of the Net Proceeds from the issuance of any Capital Stock of the Borrower (other than any such issuance to any Subsidiary) to prepay Borrowings and/or cash collateralize Letters of Credit under the Credit Agreement in accordance with the terms of the Credit Agreement;

WHEREAS, the Borrower is contemplating a series of transactions pursuant to which, among other things, the Borrower will (a) offer to repurchase and, to the extent tendered, repurchase substantially all of its outstanding senior notes and senior subordinated notes, (b) repay all outstanding Loans and pay all other amounts due under, and terminate, the Credit Agreement and (c) repay certain other outstanding indebtedness (the transactions referred to in clauses (a) through (c) above being called the “Debt Refinancing”);

WHEREAS, Section 2.10(g) of the Credit Agreement requires that the Borrower notify the Administrative Agent of any prepayment of Loans under the Credit Agreement (in the case of a prepayment of Eurodollar Borrowings, three Business Days before the date of such prepayment);

WHEREAS, the Borrower has requested that compliance with (i) Section 2.10(c) of the Credit Agreement be waived to the extent necessary to permit the Borrower to use 100% of the Net Proceeds from the Equity Issuance to repay certain Existing Indebtedness of the Borrower and (ii) Section 2.10(g) of the Credit Agreement be waived to the extent such Section requires irrevocable notice three Business Days prior to a prepayment of Loans under the Credit Agreement in connection with the Debt Refinancing, and the undersigned Lenders, constituting the Required Lenders, are willing, on the terms and subject to the conditions set forth herein, to grant such a waiver;

NOW, THEREFORE, in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1.Defined Terms. Capitalized terms used and not defined herein shall have meanings given to them in the Credit Agreement.

SECTION 2.Waiver. Effective as of the Effective Date (as defined in Section 5), the Lenders hereby waive compliance by the Borrower with the provisions of (i) Section

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2.10(c) of the Credit Agreement to the extent, and only to the extent, necessary to permit the Borrower to apply 100% of Net Proceeds in an aggregate amount of up to $400,000,000 from the Equity Issuance to repay Existing Indebtedness of the Borrower and (ii) Section 2.10(g) of the Credit Agreement to the extent such Section requires irrevocable notice three Business Days prior to a prepayment of Loans under the Credit Agreement in connection with the Debt Refinancing.

SECTION 3.No Amendments or Other Waivers; Confirmation. Except as expressly set forth herein, this Waiver shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders or the Administrative Agent under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances. This Waiver shall apply and be effective only with respect to the provisions of the Credit Agreement specifically referred to in Section 2 herein, and only to the extent specified in Section 2 herein.

SECTION 4.Representations and Warranties. The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that as of the date hereof:

(a) no Default or Event of Default has occurred and is continuing; and

(b) the representations and warranties of each Loan Party set forth in the Loan Documents are true and correct in all material respects on and as of the date hereof (and after giving effect to this Waiver) with the same effect as though made on and as of the date hereof (except to the extent such representations and warranties by their terms relate to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date).

SECTION 5.Effectiveness. This Waiver shall become effective on the date (the “Effective Date”) on which the Administrative Agent shall have received counterparts hereof duly executed and delivered by the Borrower and the Required Lenders.

SECTION 6.Waiver Fee. In consideration of the agreements of the Lenders contained herein, the Borrower agrees to pay to the Administrative Agent, for the account of each Lender that delivers an executed counterpart of this Waiver by 5:00 p.m., New York City time, on February 22, 2006, a waiver fee (the “Waiver Fee”) in an amount equal to .05% of the aggregate amount of such Lender’s Commitments and Term Loans on such date,provided that such Waiver Fee shall not be payable unless and until this Waiver becomes effective as provided in Section 5 above, in which case such Waiver Fee shall become immediately payable by the Borrower.

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SECTION 7.Expenses. The Borrower agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket expenses in connection with this Waiver, including the reasonable and documented fees, charges and disbursements of counsel for the Administrative Agent.

SECTION 8.Governing Law; Counterparts. (a) This Waiver and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

(b) This Waiver may be executed by one or more of the parties to this Waiver on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Waiver may be delivered by facsimile transmission electronic pdf of the relevant signature pages hereof.

SECTION 9.Headings. The headings of this Waiver are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be duly executed and delivered by their duly authorized officers as of the day and year first above written.

HEALTHSOUTH CORPORATION,
by	/s/ JOHN WORKMAN
	Name: John Workman
	Title: Executive Vice President and Chief
	Financial Officer

JPMORGAN CHASE BANK, N.A.,
individually and as Administrative Agent,
by	/s/ DAWN LEE LUM
	Name:	Dawn Lee Lum
	Title:	Vice President

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SIGNATURE PAGE FOR

WAIVER DATED FEBRUARY 16, 2006

TO THE HEALTHSOUTH CORPORATION

AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF MARCH 21, 2005

Institution:	First Commercial Bank
by	/s/ FRED R. ELLIOT
	Name:	Fred R. Elliot
	Title:	Sr. Vice President
Institution:	Merrill Lynch Capital Corp.
by	/s/ MICHAEL E. O’BRIEN
	Name:	Michael E. O’Brien
	Title:	Vice President
Institution:	Credit Suisse, Cayman Islands
	Branch
by	/s/ BARRY ZAMORE
	Name:	Barry Zamore
	Title:	Managing Director
by	/s/ MICHAEL T. WOTANOWSKI
	Name:	Michael T. Wotanowski
	Title:	Vice President
Institution:	Regiment Capital, LTD
by	Regiment Capital Management
	LLC as its Investment Advisor
by	Regiment Capital Advisors, LP
	its Manager and pursuant to
	delegated authority

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by	/s/ TIMOTHY S. PETERSON
	Name:	Timothy S. Peterson
	Title:	President
Institution:	The Foothill Group, Inc.
by	/s/ MICHAEL R. BOHANNON
	Name:	Michael R. Bohannon
	Title:	SVP
Institution:	Grand Central Asset Trust,
	BDC Series
by	/s/ MIKUS N. KINS
	Name:	Mikus N. Kins
	Title:	Attorney-in-fact
Institution:	The Hartford Mutual Funds,
	Inc., on behalf of the Hartford
	Floating Rate Fund by Hartford
	Investment Management
	Company, its sub-advisor
by	/s/ ADRAYLL ASKEW
	Name:	Adrayll Askew
	Title:	AVP
Institution:	WB Loan Funding 1, LLC
by	/s/ DIANA M. HIMES
	Name:	Diana M. Himes
	Title:	Associate
Institution:	WB Loan Funding 2, LLC
by	/s/ DIANA M. HIMES
	Name:	Diana M. Himes
	Title:	Associate

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Institution:	WB Loan Funding 3, LLC
by	/s/ DIANA M. HIMES
	Name:	Diana M. Himes
	Title:	Associate
Institution:	Spiret IV Loan Trust 2003-B
by	Wilmington Trust Company
	not in its individual capacity
	but solely as trustee
by	/s/ RACHEL L. SIMPSON
	Name:	Rachel L. Simpson
	Title:	Financial Services Officer
by	/s/ DORRI E. WOLHAR
	Name:	Dorri E. Wolhar
	Title:	Financial Services Officer
Institution:	Deutsche Bank Trust Company
	Americas
by	/s/ DIANE F. ROLFE
	Name:	Diane F. Rolfe
	Title:	Vice President
by	/s/ SCOTTYE LINDSEY
	Name:	Scottye Lindsey
	Title:	Director
Institution:	SunAmerica Life Insurance
	Company
by	AIG Global Investment Corp.,
	Its Investment Advisor
by	/s/ W. JEFFREY BAXTER
	Name:	W. Jeffrey Baxter
	Title:	Managing Director

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Institution:	SunAmerica Senior Floating
	Rate Fund
by	AIG Global Investment Corp.,
	Its Investment Sub-Advisor
by	/s/ W. JEFFREY BAXTER
	Name:	W. Jeffrey Baxter
	Title:	Managing Director
Institution:	Galaxy CLO 1999-1, Ltd.
by	AIG Global Investment Corp.,
	Its Collateral Manager
by	/s/ W. JEFFREY BAXTER
	Name:	W. Jeffrey Baxter
	Title:	Managing Director
Institution:	Oppenheimer Senior Floating Rate Fund
by	/s/ LISA CHAFFEE
	Name:	Lisa Chaffee
	Title:	AVP
Institution:	Wells Fargo Bank
by	/s/ PETA SWIDLER
	Name:	Peta Swidler
	Title:	Senior Vice President

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Institution:	TRS Quogue LLC
by	/s/ ALICE L. WAGNER
	Name:	Alice L. Wagner
	Title:	Vice President
Institution:	Citibank, N.A.
by	/s/ DAVID E. GRABER
	Name:	David E. Graber
	Title:	Attorney-In-Fact
Institution:	Citicorp North America, Inc.
by	/s/ HECTOR GUENTHER
	Name:	Hector Guenther
	Title:	Vice President
Institution:	NYLIM Institutional Floating Rate Fund, L.P.
by	New York Life Investment Management LLC, its Investment Manager
by	/s/ F. BERTHELOT
	Name:	F. Berthelot
	Title:	Director
Institution:	MainStay Floating Rate Fund, a series of Eclipse Funds, Inc.
by	New York Life Investment Management LLC
by	/s/ F. BERTHELOT
	Name:	F. Berthelot
	Title:	Director

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Institution:	TRS Callisto LLC
by	/s/ ALICE L. WAGNER
	Name:	Alice L. Wagner
	Title:	Vice President
Institution:	AG Alpha Credit Master, Ltd.
by	Angelo Gordon & Co., L.P. As Investment Manager
by	/s/ MICHAEL L. GORDON
	Name:	Michael L. Gordon
	Title:	Authorized Signatory
Institution:	Riviera Funding LLC
by	/s/ M. CRISTINA HIGGINS
	Name:	M. Cristina Higgins
	Title:	Assistant Vice President
Institution:	Western Asset Floating Rate High Income Fund LLC
by	/s/ TIMOTHY J. SETTEL
	Name:	Timothy J. Settel
	Title:	Portfolio Manager
Institution:	First Trust/Highland Capital Floating Rate Income Fund
by	/s/ JOE DOUGHERTY
	Name:	Joe Dougherty
	Title:	Portfolio Manager

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Institution:	Citadel Hill 2000 Ltd.
by	/s/ BRIAN CERRETA
	Name:	Brian Cerreta
	Title:	Authorized Signatory
Institution:	Sankaty Advisors, LLC as Collateral Manager for Prospect Funding I, LLC as Term Lender
by	/s/ JAMES F. KELLOGG III
	Name:	James F. Kellogg III
	Title:	Managing Director
Institution:	Sankaty High Yield Partners, III, L.P.
by	/s/ JAMES F. KELLOGG III
	Name:	James F. Kellogg III
	Title:	Managing Director
Institution:	Sankaty High Yield Partners, II, L.P.
by	/s/ JAMES F. KELLOGG III
	Name:	James F. Kellogg III
	Title:	Managing Director
Institution:	Goldman Sachs Credit Partners
by	/s/ PEDRO RAMIREZ
	Name:	Pedro Ramirez
	Title:	Authorized Signatory

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Institution:	TRSL LLC
by	/s/ DEIRDRE WHORTON
	Name:	Deirdre Whorton
	Title:	Assistant Vice President
Institution:	Waterville Funding LLC
by	/s/ M. CRISTINA HIGGINS
	Name:	M. Cristina Higgins
	Title:	Assistant Vice President
Institution:	Blackrock Global Floating Rate Income Trust
by	/s/ TOM COLWELL
	Name:	Tom Colwell
	Title:	Authorized Signatory
Institution:	Blackrock Limited Duration Income Trust
by	/s/ TOM COLWELL
	Name:	Tom Colwell
	Title:	Authorized Signatory
Institution:	Magnetite Asset Investors LLC
by	/s/ TOM COLWELL
	Name:	Tom Colwell
	Title:	Authorized Signatory
Institution:	Magnetite Asset Investors III LLC
by	/s/ TOM COLWELL
	Name:	Tom Colwell
	Title:	Authorized Signatory

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Institution:	Colonial Funding LLC
by	/s/ M. CRISTINA HIGGINS
	Name: M. Cristina Higgins Title: Assistant Vice President
Institution:	PPM Spyglass Funding Trust
by	/s/ M. CRISTINA HIGGINS
	Name: M. Cristina Higgins Title: Authorized Agent
Institution:	PPM Monarch Bay Funding LLC
by	/s/ M. CRISTINA HIGGINS
	Name: M. Cristina Higgins Title: Assistant Vice President
Institution:	Fidelity Puritan Trust: Fidelity Puritan Fund
by	/s/ JOHN H. COSTELLO
	Name: John H. Costello Title: Assistant Treasurer
Institution:	PPM Shadow Creek Funding LLC
by	/s/ M. CRISTINA HIGGINS
	Name: M. Cristina Higgins Title: Assistant Vice President
Institution:	Fidelity Advisor Series II: Fidelity Advisor Floating Rate High Income Fund
by	/s/ JOHN H. COSTELLO
	Name: John H. Costello Title: Assistant Treasurer

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Institution:	Fidelity Central Investment Portfolios LLC: Fidelity Floating Rate Central Investment Portfolio
by	/s/ JOHN H. COSTELLO
	Name: John H. Costello Title: Assistant Treasurer
Institution:	Birchwood Funding LLC
by	/s/ M. CRISTINA HIGGINS
	Name: M. Cristina Higgins Title: Assistant Vice President
Institution:	Raintree Trading LLC
by	/s/ M. CRISTINA HIGGINS
	Name: M. Cristina Higgins Title: Assistant Vice President
Institution:	Classic Cayman B.D. Limited
by	/s/ JANET WOLFF
	Name: Janet Wolff Title: Authorized Signatory
by	/s/ DANIEL CONLON
	Name: Daniel Conlon Title: Authorized Signatory
Institution:	Pioneer Floating Rate Trust
by	/s/ JOE DOUGHERTY
	Name: Joe Dougherty Title: Portfolio Manager

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Institution:	Highland Floating Rate Advantage Fund
by	/s/ JOE DOUGHERTY
	Name: Joe Dougherty Title: Senior Vice President
Institution:	Highland Floating Rate LLC
by	/s/ JOE DOUGHERTY
	Name: Joe Dougherty Title: Senior Vice President
Institution:	Senior Debt Portfolio
by	Boston Management and Research as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name: Michael B. Botthof Title: Vice President
Institution:	Eaton Vance Senior Income Trust
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name: Michael B. Botthof Title: Vice President
Institution:	Eaton Vance Institutional Senior Loan Fund
by	Eaton Vance Management as Investment Advisor

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by	/s/ MICHAEL B. BOTTHOF
	Name: Michael B. Botthof Title: Vice President
Institution:	Eaton Vance CDO III, Ltd.
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name: Michael B. Botthof Title: Vice President
Institution:	Eaton Vance CDO VI, Ltd.
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name: Michael B. Botthof Title: Vice President
Institution:	Grayson & Co.
by	Boston Management and Research as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name: Michael B. Botthof Title: Vice President
Institution:	Eaton Vance VT Floating Rate Income Fund
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name: Michael B. Botthof Title: Vice President

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Institution:	Eaton Vance Limited Duration Income Fund
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name:	Michael B. Botthof
	Title:	Vice President
Institution:	Tolli & Co.
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name:	Michael B. Botthof
	Title:	Vice President
Institution:	Eaton Vance Senior Floating Rate Trust
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name:	Michael B. Botthof
	Title:	Vice President
Institution:	Eaton Vance Floating Rate Income Trust
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name:	Michael B. Botthof
	Title:	Vice President

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Institution:	Eaton Vance Short Duration Diversified Income Fund
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name:	Michael B. Botthof
	Title:	Vice President
Institution:	Chatham Asset High Yield Master Fund, Ltd.
by	Chatham Asset Management, LLC, as Investment Advisor
by	/s/ ANTHONY MELCHIORRE
	Name:	Anthony Melchiorre
	Title:	Managing Member
Institution:	Wachovia Bank, National Association
by	/s/ CHRIS McCOY
	Name:	Chris McCoy
	Title:	Vice President
Institution:	Goldman Sachs Credit Partners
by	/s/ COURTNEY MATHER
	Name:	Courtney Mather
	Title:	Vice President

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Institution:	Putnam Floating Rate Income Fund
by	/s/ BETH MAZOR
	Name:	Beth Mazor
	Title:	V.P.
Institution:	Putnam Diversified Income Trust
by	/s/ BETH MAZOR
	Name:	Beth Mazor
	Title:	V.P.
Institution:	Putnam Premier Income Trust
by	/s/ BETH MAZOR
	Name:	Beth Mazor
	Title:	V.P.
Institution:	Special Situations Investing Group
by	/s/ ALBERT DOMBROWSKI
	Name:	Albert Dombrowski
	Title:	Authorized Signatory
Institution:	Eaton Vance CDO VIII, Ltd.
by	Eaton Vance Management as Investment Advisor
by	/s/ MICHAEL B. BOTTHOF
	Name:	Michael B. Botthof
	Title:	Vice President

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