EXHIBIT (4)-4
REGISTRATION RIGHTS AGREEMENT
Dated as of March 17, 1998
relating to
$500,000,000 Aggregate Principal Amount
of 3.25% Convertible Subordinated
Debentures due 2003
by and among
HEALTHSOUTH CORPORATION
and
SMITH BARNEY INC.,
BEAR, STEARNS & CO. INC.,
COWEN & COMPANY,
CREDIT SUISSE FIRST BOSTON CORPORATION,
J.P. MORGAN SECURITIES INC.,
MORGAN STANLEY & CO. INCORPORATED,
NATIONSBANC MONTGOMERY SECURITIES LLC
PAINEWEBBER INCORPORATED
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of March 17, 1998 by and among HEALTHSOUTH CORPORATION, a Delaware
corporation (the "Company") and SMITH BARNEY INC., BEAR, STEARNS & CO. INC.,
COWEN & COMPANY, CREDIT SUISSE FIRST BOSTON CORPORATION, J.P. MORGAN SECURITIES
INC., MORGAN STANLEY & CO. INCORPORATED, NATIONSBANC MONTGOMERY SECURITIES LLC,
and PAINEWEBBER INCORPORATED (together, the "Initial Purchasers"), who have
purchased $500,000,000 aggregate principal amount of 3.25% Convertible
Subordinated Debentures due 2003 (the "Debentures") of the Company pursuant to
the Purchase Agreement (as defined below).
This Agreement is made pursuant to a Purchase Agreement, dated March 17,
1998 (the "Purchase Agreement"), between the Company and the Initial Purchasers.
In order to induce the Initial Purchasers to enter into the Purchase Agreement,
the Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to
closing under the Purchase Agreement. All defined terms used but not defined
herein shall have the meanings ascribed to them in the Indenture (as defined
herein).
The parties hereby agree as follows:
13 Definitions. As used in this Agreement, the following capitalized terms
shall have the following meanings:
13.1 Act. The Securities Act of 1933, as amended.
13.2 Closing Date. The date on which all the Debentures are sold by the
Company to the Initial Purchasers.
13.3 Commission. The Securities and Exchange Commission.
13.4 Common Stock. The Common Stock, par value $0.01 per share, of the
Company.
13.5 Damages Payment Date. With respect to the Debentures or the Common
Stock, as applicable, each Interest Payment Date as defined in the Indenture.
13.6 Effectiveness Target Date. As defined in Section 4.
13.7 Exchange Act. The Securities Exchange Act of 1934, as amended.
13.8 Exempt Resales. The transactions in which the Initial Purchasers
propose to sell the Debentures inside the United States to (1) certain
"qualified institutional buyers" (as such term is defined in Rule 144A under the
Act) and (2) certain "accredited investors," as defined in Rule 501 of
Regulation D under the Act, and outside the United States in reliance on
Regulation S under the Act.
13.9 Holders. As defined in Section 2(b) hereof.
13.10 Indenture. The Indenture, dated as of March 20, 1998, between the
Company and The Bank of Nova Scotia Trust Company of New York, as trustee (the
"Trustee"), pursuant to which the Debentures are to be issued, as such Indenture
is amended or supplemented from time to time in accordance with the terms
thereof.
13.11 Interest Payment Date. As defined in the Indenture.
13.12 NASD. National Association of Securities Dealers, Inc.
13.13 Offering Memorandum. The Offering Memorandum, dated March 17, 1998,
and all amendments and supplements thereto, relating to the Debentures and
prepared by the Company pursuant to the Purchase Agreement.
13.14 Person. An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
13.15 Preliminary Prospectus. As defined in Section 3(g).
13.16 Prospectus. The prospectus included in the Shelf Registration
Statement (as defined herein), as amended or supplemented by any Prospectus
Supplement with respect to the terms of the offering of any portion of the
Transfer Restricted Securities (as defined herein) covered by the Shelf
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments, and all material which may be
incorporated by reference into such prospectus.
13.17 Prospectus Supplement. As defined in Section 5(b).
13.18 Record Holder. (1) With respect to any Damages Payment Date relating
to the Debentures, each Person who is registered on the books of the Registrar
as the holder of Debentures on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur and (2) with respect
to any Damages Payment Date relating to the Common Stock, each Person who is a
holder of record of such Common Stock fifteen days prior to the Damages Payment
Date.
13.19 Shelf Registration Statement. As defined in Section 3(a) hereof.
13.20 TIA. The Trust Indenture Act of 1939, as amended, as in effect on the
date of the Indenture.
13.21 Transfer Restricted Securities. Each Debenture and share of Common
Stock of the Company issuable upon conversion of a Debenture, until each such
Debenture or share (1) has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement covering it,
(2) is distributed to the public pursuant to Rule 144 or (3) may be sold or
transferred pursuant to Rule 144(k) (or any similar provisions then in force)
under the Securities Act or otherwise.
13.22 Underwriter. Any Underwriter, placement agent, selling broker, dealer
manager, qualified independent Underwriter or similar securities industry
professional.
13.23 Underwritten Registration or Underwritten Offering. An offering in
which securities of the Company are sold to an Underwriter or with the
assistance of such Underwriter for reoffering to the public on a firm commitment
or best efforts basis.
14 Securities Subject to This Agreement.
14.1 Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
14.2 Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.
15 Shelf Registration.
15.1 The Company shall cause to be filed with the Commission on or prior to
60 days after the Closing Date, a shelf registration statement pursuant to Rule
415 under the Act (as may then be amended, the "Shelf Registration Statement")
on Form S-1, or Form S-3 if the use of such form is then available, to cover
resales of Transfer Restricted Securities by the Holders thereof who satisfy
certain conditions relating to the provision of information in connection with
the Shelf Registration Statement. The Holders of such Transfer Restricted
Securities shall have provided the representations required pursuant to Section
3(g) hereof. The Company shall use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission on or
prior to 150 days after the Closing Date. The Company shall use its reasonable
best efforts to keep such Shelf Registration Statement continuously effective
for a period ending two years following the Closing Date or such shorter period
that will terminate when each of the Transfer Restricted Securities covered by
the Shelf Registration Statement shall cease to be a Transfer Restricted
Security. The Company further agrees to use its reasonable best efforts to
prevent the happening of any event that would cause the Shelf Registration
Statement to contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or to be not effective and usable for resale of the
Transfer Restricted Securities during the period that such Shelf Registration
Statement is required to be effective and usable.
Upon the occurrence of any event that would cause the Shelf Registration
Statement (1) to contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or (2) to be not effective and usable for
resale of Transfer Restricted Securities during the period that such Shelf
Registration Statement is required to be effective and usable, the Company shall
as promptly as reasonably practicable file an amendment to the Shelf
Registration Statement, in the case of clause (i), correcting any such
misstatement or omission, and in the case of either clause (i) or (ii), use its
reasonable best efforts to cause such amendment to be declared effective and
such Shelf Registration Statement to become usable as soon as reasonably
practicable thereafter.
Notwithstanding anything to the contrary in this Section 3, subject to
compliance with Sections 4 and 5(b), if applicable, the Company may prohibit
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement at any time if (A) (i) it is in possession of material
non-public information, (ii) the Board of Directors of the Company
determines (based on advice of counsel) that such prohibition is necessary in
order to avoid a requirement to disclose such material non-public information
and (iii) the Board of Directors of the Company determines in good faith that
disclosure of such material non-public information would not be in the best
interests of the Company and its shareholders or (B) the Company has made a
public announcement relating to an acquisition or business combination
transaction including the Company and/or one or more of its subsidiaries (i)
that is material to the Company and its subsidiaries taken as a whole and (ii)
the Board of Directors of the Company determines in good faith that offers and
sales of Transfer Restricted Securities pursuant to the Shelf Registration
Statement prior to the consummation of such transaction (or such earlier date as
the Board of Directors shall determine) is not in the best interests of the
Company and its shareholders (the period during which any such prohibition of
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement is in effect pursuant to clause (A) or (B) of this
subparagraph (a) is referred to herein as a "Suspension Period"). A Suspension
Period shall commence on and include the date on which the Company provides
written notice pursuant to Section 5(d) hereof to Holders of Transfer Restricted
Securities covered by the Shelf Registration Statement that offers and sales of
Transfer Restricted Securities cannot be made thereunder in accordance with this
Section 3 and shall end on the date on which each Holder of Transfer Restricted
Securities covered by the Shelf Registration Statement either receives copies of
a Prospectus Supplement contemplated by Section 5(b) or is advised in writing by
the Company that offers and sales of Transfer Restricted Securities pursuant to
the Shelf Registration Statement and use of the Prospectus may be resumed.
15.2 None of the Company nor any of its security holders (other than the
Holders of Transfer Restricted Securities in such capacity) shall have the right
to include any of the Company's securities in the Shelf Registration Statement.
15.3 If (1) only Debentures are to be registered in the Shelf Registration
Statement and the Holders of a majority in aggregate principal amount of the
Debentures to be registered in the Shelf Registration Statement so elect, or (2)
any shares of Common Stock issued upon conversion of Debentures are to be
included in the Shelf Registration Statement and the Holders of a majority of
the shares of Common Stock to be registered in the Shelf Registration Statement
so elect, an offering of Transfer Restricted Securities pursuant to the Shelf
Registration Statement may by effected in the form of an Underwritten Offering.
In such event, and if the Underwriter advises the Company and the Holders of
such Transfer Restricted Securities in writing that in their opinion the amount
of Transfer Restricted Securities proposed to be sold in such offering exceeds
the amount of Transfer Restricted Securities which can be sold in such offering,
there shall be included in such Underwritten Offering the amount of such
Transfer Restricted Securities which in the opinion of such Underwriters can be
sold, and such amount or number of shares shall be allocated pro rata among the
Holders of such Transfer Restricted Securities on the basis of the principal
amount or number of shares of Transfer Restricted Securities requested to be
included by such Holders. The Holders of the Transfer Restricted Securities to
be registered shall pay all underwriting discounts and commissions of such
Underwriters.
15.4 If any of the Transfer Restricted Securities covered by the Shelf
Registration Statement are to be sold in an Underwritten Offering, the
Underwriter(s) that will administer the offering will be selected by the Holders
of a majority of the aggregate principal amount of Debentures included in the
Registration Statement and/or the Holders of a majority of shares of Common
Stock included in the Shelf Registration Statement and issued upon conversion of
the Debentures; provided, however, that such Underwriter(s) shall be reasonably
satisfactory to the Company.
15.5 Each Holder whose Transfer Restricted Securities are covered by a
Shelf Registration Statement filed pursuant to this Section 3 agrees, upon the
request of the Underwriter(s) in any Underwritten Offering, not to effect any
public sale or distribution of securities of the Company of the same class as
the securities included in such Shelf Registration Statement, including a sale
pursuant to Rule 144 under the Act (except as part of such registration), during
the 10-day period prior to, and during the 90-day period beginning on, the
closing date of any such Underwritten Offering made pursuant to such Shelf
Registration Statement, to the extent timely notified in writing by such
Underwriter(s).
The foregoing provisions of this Section 3(e) shall not apply to any Holder
of Transfer Restricted Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement; provided, however,
that any such Holder shall undertake, in its request to participate in any such
Underwritten Offering, not to effect any public sale or distribution of any of
its Transfer Restricted Securities commencing on the date of sale of such
Transfer Restricted Securities unless it has provided 90 days prior written
notice of such sale or distribution to the Underwriter(s).
15.6 The Company agrees not to effect any public or private offer, sale or
distribution of Securities of the same quality and nature as the Transfer
Restricted Securities to be registered in an Underwritten Offering, including a
sale pursuant to Regulation D under the Act, during the 10-day period prior to,
and during the 90-day period beginning on, the closing date of each Underwritten
Offering made pursuant to the Shelf Registration Statement, to the extent timely
notified in writing by the Underwriter(s) (except as part of such registration,
if permitted, or pursuant to registrations on Forms S-4 or S-8 or any successor
form to such Forms), unless the Underwriter(s) shall consent in writing to a
shorter period of time; provided, however, that any such agreement shall permit
(a) the issuance by the Company of any shares of Common Stock issued to
employees of the Company or to any other eligible person pursuant to any
employee stock option plan, stock ownership plan, stock bonus plan or stock
compensation plan of the Company in effect on the date of such Underwritten
Offering, (b) the issuance by the Company of Common Stock upon the conversion of
securities, or the exercise of options or warrants, outstanding at the date of
such Underwritten Offering and (c) issuances of Common Stock (or any securities
convertible into or exercisable for Common Stock, in connection with the
acquisition of any related business.
15.7 No Holder of Transfer Restricted Securities may include any of its
Transfer Restricted Securities in any Shelf Registration Statement pursuant to
this Agreement unless such Holder furnishes to the Company in writing, within 10
business days after receipt of a
request therefor, such information as the Company may reasonably request for use
in connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus (a "Preliminary Prospectus") included therein.
16 Liquidated Damages. If (1) the Shelf Registration Statement is not filed
with the Commission on or prior to 60 days after the Closing Date, (2) the Shelf
Registration Statement has not been declared effective by the Commission within
150 days after the Closing Date (the "Effectiveness Target Date"), or (3) the
Shelf Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately by any
additional Shelf Registration Statement filed and declared effective) or usable
for the offer and sale of Transfer Restricted Securities for a period of time
(including any Suspension Period) which shall exceed 60 days in the aggregate in
any 12-month period during the period beginning on the Closing Date and ending
on or prior to the second anniversary of the Closing Date (each such event
referred to in clauses (i) through (iii), a "Registration Default"), the Company
will pay liquidated damages to each Holder of Transfer Restricted Securities who
has complied with such Holder's obligations under this Agreement, during the
first 90-day period immediately following the occurrence of such Registration
Default in an amount equal to one quarter of one percent (25 basis points) per
annum per $1,000 principal amount of Debentures and, if applicable, $2.50 per
annum per 27.30 shares (subject to adjustment in the event of stock splits,
stock recombinations, stock dividends and the like) of Common Stock constituting
Transfer Restricted Securities held by such Holder. The amount of the liquidated
damages will increase to one half of one percent (50 basis points) per annum per
$1,000 principal amount of Debentures or $5.00 per annum per 27.30 shares
(subject to adjustment as set forth above) of Common Stock constituting Transfer
Restricted Securities for any additional days during which a Registration
Default has occurred and is continuing, it being understood that all
calculations pursuant to this and the preceding sentence shall be carried out to
four decimals. All accrued liquidated damages shall be paid to Record Holders by
wire transfer of immediately available funds or by federal funds check by the
Company on each Damages Payment Date. Following the cure of all Registration
Defaults, liquidated damages will cease to accrue with respect to such
Registration Default.
All of the Company's obligations set forth in the preceding paragraph which
are outstanding with respect to any Transfer Restricted Security at the time
such security ceases to be a Transfer Restricted Security shall survive until
such time as all such obligations with respect to such security shall have been
satisfied in full.
17 Registration Procedures. In connection with the Shelf Registration
Statement, the Company will use its reasonable best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution or disposition
thereof, and pursuant thereto the Company will as expeditiously as possible
after the Closing Date:
17.1 prepare and file with the Commission a Shelf Registration Statement
relating to the registration on Form S-1, or Form S-3 if the use of such form is
then available, for the sale of the Transfer Restricted Securities in accordance
with the intended method or methods
of distribution thereof and shall include all financial statements required to
be included or incorporated by reference therein; cooperate and assist in any
filings required to be made with the NASD and use its reasonable best efforts to
cause such Shelf Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to enable the selling
Holders to consummate the disposition of such Transfer Restricted Securities;
provided, however, that before filing a Shelf Registration Statement or any
Prospectus, or any amendments or supplements thereto, the Company will furnish
to the Holders and the Underwriter(s), if any, copies of all such documents
proposed to be filed (except that the Company shall not be required to furnish
any exhibits to such documents, including those incorporated by reference,
unless so requested by a Holder in writing), and the Company will not file any
Shelf Registration Statement or amendment thereto or any Prospectus or any
supplement thereto to which (1) the Underwriter(s), if any, shall reasonably
object or (2) if there are no Underwriters and if (a) only Debentures are to be
registered in the Shelf Registration Statement and the Holders of a majority in
aggregate principal amount of the Debentures registered in the Shelf
Registration Statement shall reasonably object, or (b) any shares of Common
Stock issued upon conversion of the Debentures are included in the Shelf
Registration Statement and the Holders of a majority of the shares of Common
Stock so registered in the Shelf Registration Statement shall reasonably object,
in each such case within five business days after the receipt thereof. A Holder
or Underwriter, if any, shall be deemed to have reasonably objected to such
filing if the Shelf Registration Statement, amendment, Prospectus or supplement,
as applicable, as proposed to be filed contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading which misstatement or
omission is specifically identified to the Company in writing within such five
business days;
17.2 prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the applicable
period set forth in Section 3(a) hereof, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold; cause the Prospectus to be supplemented
by any required supplement thereto (a "Prospectus Supplement"), and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement, Prospectus or Prospectus Supplement;
17.3 if requested by the Holders of Transfer Restricted Securities, or if
the Transfer Restricted Securities are being sold in an Underwritten Offering,
the Underwriter(s) of such Underwritten Offering, promptly incorporate in the
Prospectus, any Prospectus Supplement or post-effective amendment to the Shelf
Registration Statement such information as the Underwriters and/or the Holders
of Transfer Restricted Securities being sold agree should be included therein
relating to the plan of distribution of the Transfer Restricted Securities,
including, without limitation, information with respect to the principal amount
of Transfer
Restricted Securities being sold to such Underwriter(s), the purchase price
being paid therefor and any other terms with respect to the offering of the
Transfer Restricted Securities to be sold in such offering; and make all
required filings of such Prospectus, Prospectus Supplement or post-effective
amendment as soon as practicable after the Company is notified of the matters to
be incorporated in such Prospectus, Prospectus Supplement or post-effective
amendment;
17.4 advise the Underwriter(s), if any, and selling Holders promptly and,
if requested by such Persons, to confirm such advice in writing, (1) when the
Prospectus or any Prospectus Supplement or post-effective amendment to the Shelf
Registration Statement has been filed, and, with respect to the Shelf
Registration Statement or any post-effective amendment thereto, when the same
has become effective, (2) of any request by the Commission for amendments to the
Shelf Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (3) of the issuance by the
Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted Securities
for offering or sale in any jurisdiction, or the initiation of any proceeding
for any of the preceding purposes, (4) if at any time the representations and
warranties of the Company contemplated by paragraph (m)(i) below cease to be
true and correct, and (5) of any Suspension Period or of the existence of any
fact and the happening of any event that makes any statement of a material fact
made in the Shelf Registration Statement, the Prospectus, any amendment or
supplement thereto, or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the Shelf
Registration Statement or the Prospectus in order to make the statements therein
not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Shelf Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company shall
its reasonable best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time;
17.5 promptly following the filing of any document that is to be
incorporated by reference into the Shelf Registration Statement or the
Prospectus subsequent to the initial filing of the Shelf Registration Statement,
provide copies of such document (excluding exhibits, unless requested by a
Holder in writing) to the Holders;
17.6 furnish to each Holder and each of the Underwriter(s), if any, without
charge, at least one copy of the Shelf Registration Statement, as first filed
with the Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (excluding exhibits to
documents incorporated by reference therein unless requested by such Holder);
17.7 deliver to each selling Holder and each of the Underwriter(s), if any,
without charge, as many copies of any Preliminary Prospectus and the Prospectus
and any amendments or supplements thereto as such Persons may reasonably
request; the Company consents to the use of any Preliminary Prospectus and the
Prospectus and any amendments or
supplements thereto by each of the selling Holders and each of the
Underwriter(s), if any, in connection with the public offering and the sale of
the Transfer Restricted Securities covered by any Preliminary Prospectus and the
Prospectus or any amendments or supplements thereto;
17.8 prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the Underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or Underwriter(s) may request and do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdiction of the Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however, that the Company shall not be
required (1) to register or qualify as a foreign corporation where it is not now
so qualified, (2) to take any action that would subject it to the service of
process in suits, other than as to matters and transactions relating to the
Shelf Registration Statement, in any jurisdiction where it is not now so
subject, or (3) to take any action that would subject it to taxation in any
jurisdiction in an amount greater than it would be so subject without having
taken such action;
17.9 cooperate with the selling Holders and the Underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any restrictive
legends; and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the Holders or the Underwriter(s),
if any, may request at least two business days prior to any sale of Transfer
Restricted Securities;
17.10 use its reasonable best efforts to cause the Transfer Restricted
Securities covered by the Shelf Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the Underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities, subject to
the proviso contained in clause (h) above;
17.11 if any fact or event contemplated by clause (d)(v) above shall exist
or have occurred, prepare a post-effective amendment or supplement to the Shelf
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
17.12 provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of the Shelf Registration Statement and provide
the Trustee under the Indenture and/or the transfer agent for the Common Stock
with printed certificates for the Transfer Restricted Securities which are in a
form eligible for deposit with the Depository Trust Company;
17.13 enter into such agreements (including an underwriting agreement) and
take all such other actions in connection therewith as may reasonably be
required in order to expedite
or facilitate the disposition of the Transfer Restricted Securities pursuant to
the Shelf Registration Agreement, in connection with an Underwritten
Registration, and (1) make such representations and warranties to the Holders
and the Underwriter(s), in form, substance and scope as they may reasonably
request and as are customarily made by issuers to Underwriters in primary
Underwritten Offerings and covering matters including, but not limited to, those
set forth in the Purchase Agreement; (2) obtain opinions of counsel to the
Company and updates thereof in customary form and covering matters reasonably
requested by the Underwriter(s) of the type customarily covered in legal
opinions to Underwriters in connection with primary Underwritten Offerings
addressed to each selling Holder and the Underwriter requesting the same and
covering the matters as may be reasonably requested by such Holders and
Underwriters; (3) obtain, to the extent permitted by Statement on Auditing
Standards No. 72 or any successor Statement thereto, "cold comfort" letters and
updates thereof from the Company's independent certified public accountants
addressed to the selling Holders of Transfer Restricted Securities and the
Underwriters requesting the same, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters to
Underwriters in connection with primary Underwritten Offerings; (4) set forth in
full or incorporate by reference in the underwriting agreement the
indemnification provisions and procedures of Section 7 hereof with respect to
all parties to be indemnified pursuant to said Section; and (5) deliver such
documents and certificates as may be reasonably requested by the Holders of the
Transfer Restricted Securities being sold or the Underwriter(s) of such
Underwritten Offering to evidence compliance with clause (i) above and with any
customary conditions contained in the underwriting agreement entered into by the
Company pursuant to this clause (m). The above shall be done at or prior to each
closing under such underwriting agreement, as and to the extent required
thereunder;
17.14 make available at reasonable times and in a reasonable manner for
inspection by a representative of the Holders of the Transfer Restricted
Securities, any Underwriter participating in any disposition pursuant to such
Shelf Registration Statement, and any attorney or accountant retained by such
selling Holders or any of the Underwriters, all financial and other records,
pertinent corporate documents and properties of the Company and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such Holder, Underwriter, attorney or accountant in connection
with such Shelf Registration Statement prior to its effectiveness, provided,
however, that such representatives, attorneys or accountants shall agree to keep
confidential (which agreement shall be confirmed in writing in advance to the
Company if the Company shall so request) all information, records or documents
made available to such persons which are not otherwise available to the general
public unless disclosure of such records, information or documents is required
by court or administrative order (of which the Company shall have been given
prior notice and an opportunity to defend) after the exhaustion of all appeals
therefrom, and to use such information obtained pursuant to this provision only
in connection with the transaction for which such information was obtained, and
not for any other purpose;
17.15 otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its security holders, as soon as practicable, a consolidated earnings
statement, which consolidated earnings statement shall satisfy the provisions of
Section 11(a) of the Act, for the twelve-month period
(1) commencing at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to Underwriters in a firm commitment or best efforts
Underwritten Offering or (2) if not sold to Underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Shelf Registration Statement;
17.16 cause the Indenture to be qualified under the TIA, and, in connection
therewith, cooperate with the Trustee and the Holders to effect such changes to
the Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its best efforts to
cause the Trustee to execute, all documents as may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
17.17 make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statement as promptly as
practicable.
17.18 cause all Transfer Restricted Securities covered by the Shelf
Registration Statement to be listed on each securities exchange or quotation
system on which similar securities issued by the Company are then listed if
requested by the Holders of a majority in aggregate principal amount and/or
number of shares of such Transfer Restricted Securities or the Underwriters, if
any; cause the Debentures covered by the Shelf Registration Statement to be
rated with the appropriate rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of such Debentures or the Underwriters;
and
17.19 cooperate and assist in any filings required to be made with the NASD
and in the performance of any due diligence investigation by any Underwriter
(including any "qualified independent Underwriter" that is required to be
retained in accordance with the rules and regulations of the NASD).
Each Holder as to which any Shelf Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading or necessary to cause such Shelf
Registration Statement not to omit a material fact with respect to such Holder
necessary in order to make the statements therein not misleading.
Each Holder agrees by acquisition of such Transfer Restricted Securities
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 5(d)(v) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(k) hereof, or until it is advised in writing (the "Advice") by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings with respect to the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the time period regarding the effectiveness
of Shelf Registration Statement set forth in Section 3(a) hereof shall be
extended by the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 5(d)(v) hereof to and including the date when
each selling Holder covered by such Shelf Registration Statement shall have
received the copies of the supplemented or amended Prospectus contemplated by
Section 5(k) hereof or shall have received the Advice.
18 Registration Expenses.
18.1 All expenses incident to the Company's performance of or compliance
with this Agreement (the "Registration Expenses") will be borne by the Company,
regardless whether a Shelf Registration Statement becomes effective, including
without limitation:
(1) all registration and filing fees and expenses (including filings
made with the NASD);
(2) fees and expenses of compliance with federal securities or state
blue sky laws;
(3) expenses of printing (including, without limitation, expenses of
printing or engraving certificates for the Transfer Restricted Securities
in a form eligible for deposit with Depository Trust Company and of
printing the Prospectus and any Preliminary Prospectus), messenger and
delivery services and telephone;
(4) reasonable fees and disbursements of counsel for the Company and
for the Holders of the Transfer Restricted Securities (subject to the
provisions of Section 6(b) hereof);
(5) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special audit and
"cold comfort" letters required by or incidental to the preparation and
filing of a Shelf Registration Statement and Prospectus and the disposition
of Transfer Restricted Securities);
(6) fees and expenses associated with any NASD filing required to be
made in connection with the Shelf Registration Statement, including, if
applicable, the fees and expenses of any "qualified independent
Underwriter" (and its counsel) that is required to be retained in
accordance with the rules and regulations of the NASD; and
(7) fees and expenses of listing the Transfer Restricted Securities on
any securities exchange or quotation system in accordance with Section 5(r)
hereof.
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, rating
agency fees and the fees and
expenses of any Person, including special experts, retained by the Company. The
Holders of Transfer Restricted Securities shall bear the expense of any broker's
commission or Underwriters' discount or commission.
18.2 In connection with the Shelf Registration Statement, the Company will
reimburse the Holders of Transfer Restricted Securities being registered
pursuant to such Shelf Registration Statement for the fees and disbursements of
not more than one counsel chosen by the Holders of a majority of the principal
amount of the Debentures to be included in the Shelf Registration Statement,
provided, however, that in the case of an Underwritten Offering which includes
shares of Common Stock, such counsel shall be chosen by the Holders of a
majority of the shares of Common Stock to be included in such Underwritten
Offering.
Notwithstanding the provisions of this Section 6(b), each Holder of
Transfer Restricted Securities shall pay all Registration Expenses to the extent
required by applicable law.
19 Indemnification.
19.1 The Company agrees to indemnity and hold harmless each Holder (each
such Holder an "Indemnified Holder"), each agent, employee, officer and director
of any Indemnified Holder and each person that controls each Indemnified Holder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and agents, employees, officers and directors or any such controlling person of
any Indemnified Holder from and against any and all losses, claims, damages,
judgments, liabilities and expenses (including the reasonable fees and expenses
of counsel and other expenses in connection with investigating, defending or
settling any such action or claim) as they are incurred which arise out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or the Prospectus or any amendment
or supplement thereto or any Preliminary Prospectus or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except (1) the Company shall not be liable to any Indemnified Holder in any such
case insofar as such losses, claims, damages, judgments, liabilities or expenses
arise out of, or are based upon, any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to such
Indemnified Holder or Indemnified Underwriter furnished in writing by such
Indemnified Holder to the Company expressly for use therein and (2) the Company
shall not be liable to any Indemnified Holder under the indemnity agreement in
this Section 7(a) with respect to any Preliminary Prospectus to the extent that
any such loss, claim, damage, judgment, liability or expense results solely from
the fact that any Indemnified Holder sold Transfer Restricted Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus as then amended or
supplemented, if the Company has previously furnished sufficient copies thereof
to the Indemnified Holder.
19.2 If any action or proceeding (including any governmental or regulatory
investigation or proceeding) shall be brought or asserted against any
Indemnified Holder with
respect to which indemnity may be sought against the Company pursuant to this
Section 7, such Indemnified Holder shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Holder and
payment of all fees and expenses; provided, however, that the omission so to
notify the Company shall not relieve the Company from any liability that they
may have to any Indemnified Holder (except to the extent that the Company is
materially prejudiced or otherwise forfeits substantive rights or defenses by
reason of such failure). An Indemnified Holder shall have the right to employ
separate counsel in any such action or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Holder unless (1) the Company agrees in writing to
pay such fees and expenses, (2) the Company has failed promptly to assume the
defense and employ counsel satisfactory to the Indemnified Holder or (3) the
named parties to any such action or proceeding (including any unpleaded parties)
include both the Indemnified Holder and the Company and such Indemnified Holder
shall have been advised in writing by its counsel that representation of them
and the Company by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation has been
proposed) due to actual or potential differing interests between them (in which
case the Company shall not have the right to assume the defense of such action
on behalf of such Indemnified Holder). It is understood that the Company shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for such Indemnified Holders, which firm shall be designated in writing
by the Holders of the majority of the aggregate principal amount of Debentures
and/or the number of shares of Common Stock on behalf of such Indemnified
Holders, and that all such fees and expenses shall be reimbursed as they are
incurred. The Company shall not be liable for any settlement of any such action
effected without the written consent of the Company, but if settled with the
written consent of the Company, or if there is a final judgment with respect
thereto, the Company agrees to indemnify and hold harmless each Indemnified
Holder from and against any loss or liability by reason of such settlement or
judgment. The Company shall not, without the prior written consent of each
Indemnified Holder affected thereby, effect any settlement of any pending or
threatened proceeding in which such Indemnified Holder has sought indemnity
hereunder, unless such settlement includes an unconditional release of such
Indemnified Holder from all liability arising out of such action, claim,
litigation or proceeding.
19.3 Each Indemnified Holder agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act (collectively, the "Company Indemnified Parties")
to the same extent as the foregoing indemnity from the Company to any
Indemnified Holder, but only with respect to information relating to each
Indemnified Holder furnished to the Company in writing by each Indemnified
Holder, expressly for use in the Registration Statement, Prospectus (or any
amendment or supplement thereto), or any Preliminary Prospectus. In case any
action shall be brought against any Company Indemnified Party based on the
Registration Statement, Prospectus (or any amendment or supplement thereto), or
any Preliminary Prospectus and in
respect of which indemnification may be sought against each Indemnified Holder
pursuant to this Section 7(c), each Indemnified Holder shall have the rights and
duties given to the Company by Section 7(a) (except that if the Company shall
have assumed the defense thereof, each Indemnified Holder may, but shall not be
required to, employ separate counsel therein and participate in the defense
thereof and the fees and expenses of such counsel shall be at the expense of the
Indemnified Holder) and the Company Indemnified Parties shall have the rights
and duties given to the Indemnified Holders by Section 7(b).
19.4 If the indemnification provided for in this Section 7 is unavailable
to any party entitled to indemnification pursuant to Section 7(a) or 7(c), then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, judgments, liabilities and expenses (1) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and each Indemnified Holder on the other from the
offering of the Transfer Restricted Securities or (2) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and each
Indemnified Holder on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, judgments, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and each Indemnified Holder on
the other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total net proceeds from the offering (before deducting expenses) received by
each Indemnified Holder, as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company on the one hand and each
Indemnified Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Indemnified Holder on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
19.5 The Company and each Indemnified Holder agree that it would not be
just and equitable if contribution pursuant to Section 7(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 7(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim. No
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not found guilty of such fraudulent misrepresentation.
19.6 The Company shall also indemnify each Underwriter participating in the
distribution (as described in such registration statement), their officers and
directors and each person who controls such persons (within the meaning of
Section 15 of the Securities Act or
Section 20 of the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders.
19.7 The indemnity and contribution agreements contained in this Section 7
are in addition to any liability that any indemnifying party may otherwise have
to any indemnified party.
20 Rule 144A. The Company hereby agrees with each Holder, for so long as
any of the Debentures or shares of Common Stock that are Transfer Restricted
Securities remain outstanding or, if earlier, two years from the Closing Date,
and during any such period in which the Company is not subject to Section 13 or
15(d) of the Exchange Act, to make available to the Initial Purchasers or any
beneficial owner of the Debentures or shares of such Common Stock in connection
with any sale thereof and any prospective purchaser of such Debentures or Common
Stock from such Initial Purchasers or beneficial owner, the information required
by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
21 Participation in Underwritten Registrations. No Holder may participate
in any Underwritten Offering hereunder unless such Holder (a) agrees to sell
such Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements, (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements and (c) furnishes the Company
in writing information in accordance with Section 3(g) and agrees to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act to the extent
contemplated by Section 7(c).
22 Selection of Underwriters. The Holders of Transfer Restricted Securities
covered by the Shelf Registration Statement who desire to do so may sell such
Transfer Restricted Securities in an Underwritten Offering. In any such
Underwritten Offering, the Underwriter(s) that will administer the offering will
be selected by the Holders of the Transfer Restricted Securities included in
such offering in the manner specified in Section 3(c); provided, however, that
such Underwriters must be reasonably satisfactory to the Company.
23 Miscellaneous.
23.1 Remedies. Each Holder of Transfer Restricted Securities, in addition
to being entitled to exercise all rights provided herein, and as provided in the
Purchase Agreement and granted by law, including recovery of damages, will be
entitled to specific performance of such Holder's rights under this Agreement.
The Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
23.2 No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders of Transfer Restricted Securities hereunder do
not in any way conflict with and are not inconsistent with the rights granted to
the holders of the Company's securities under any other agreements.
23.3 Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of Holders of a
majority in aggregate principal amount of the Debentures constituting Transfer
Restricted Securities affected by such amendment, modification, supplement,
waiver or departure (provided that, if any such Transfer Restricted Securities
are shares of Common Stock issued upon conversion of Debentures, consents by
Holders of such shares shall be calculated as if such conversions had not taken
place). Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders of Transfer
Restricted Securities whose securities are being sold pursuant to such Shelf
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Transfer Restricted Securities shall be valid only
with the written consent of Holders of at least 66-2/3% of the Transfer
Restricted Securities being sold, in each case calculated in accordance with the
provisions of Section 3(c).
23.4 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(1) if to a Holder of Transfer Restricted Securities, at the address
set forth on the records of the Registrar under the Indenture, with a copy
to the Registrar; and
(2) if to the Company or an Initial Purchasers, initially at its
address set forth in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in the Indenture.
23.5 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder of Transfer Restricted Securities unless and to the extent
such successor or assign acquired Transfer Restricted Securities from such
Holder; and provided further that nothing herein shall be deemed to permit any
assignment, transfer or any disposition of Transfer Restricted Securities in
violation of the terms of the Purchase Agreement. If any transferee of any
Holder shall acquire Transfer Restricted Securities, in any manner, whether by
operation of law or otherwise, such Transfer Restricted Securities shall be held
subject to all of the terms of this Agreement and by taking and holding such
Transfer Restricted Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof.
23.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
23.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
23.8 Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contacts made
and to be performed within the State of New York.
23.9 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
23.10 Entire Agreement. This Agreement together with the other Operative
Documents (as defined in the Purchase Agreement) is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
HEALTHSOUTH CORPORATION
By /s/MICHAEL D. MARTIN
-------------------------------
Title Chief Financial Officer
----------------------------
SMITH BARNEY INC.
BEAR, STEARNS & CO. INC.
COWEN & COMPANY
CREDIT SUISSE FIRST BOSTON
CORPORATION
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC MONTGOMERY
SECURITIES LLC
PAINEWEBBER INCORPORATED
[[[MARK]]]
By SMITH BARNEY INC.
By /s/WILLIAM C. MCGAHAN
--------------------------------
Title Managing Director
-----------------------------