Registration of Securities Issued in a Business-Combination Transaction — Form S-4 Filing Table of Contents
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S-4 — Registration of Securities Issued in a Business-Combination Transaction Document Table of Contents
Approximate date of commencement of proposed exchange
offers: As soon as practicable after this
Registration Statement is declared effective.
If the securities being registered on this form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, please check
the following
box. o
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer,”“accelerated
filer” and “smaller reporting company” in
Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated
filer o
Accelerated
filer o
Non-accelerated
filer þ
(Do not check if a smaller reporting company)
Smaller reporting
company o
If applicable, place an X in the box to designate the
appropriate rule provision relied upon in conducting this
transaction:
Exchange Act
Rule 13e-4(i)
(Cross-Border Issuer Tender Offer)
o
Exchange Act
Rule 14d-1(d)
(Cross-Border Third-Party Tender Offer)
o
CALCULATION
OF REGISTRATION FEE
Proposed Maximum
Proposed Maximum
Title of Each Class of
Amount to be
Offering
Aggregate
Amount of
Securities to be Registered
Registered
Price per Note
Offering Price(1)
Registration Fee
97/8% Senior
Secured Notes due 2017
$310,000,000
100%
$310,000,000
$22,103
81/2% Senior
Secured Notes due 2019
$1,500,000,000
100%
$1,500,000,000
$106,950
77/8% Senior
Secured Notes due 2020
$1,250,000,000
100%
$1,250,000,000
$89,125
71/4% Senior
Secured Notes due 2020
$1,400,000,000
100%
$1,400,000,000
$99,820
Guarantees of
97/8% Senior
Secured Notes due 2017(2)
N/A
N/A
N/A(3)
Guarantees of
81/2% Senior
Secured Notes due 2019(2)
N/A
N/A
N/A(3)
Guarantees of
77/8% Senior
Secured Notes due 2020(2)
N/A
N/A
N/A(3)
Guarantees of
71/4% Senior
Secured Notes due 2020(2)
N/A
N/A
N/A(3)
(1)
Estimated solely for the purpose of
calculating the registration fee under Rule 457(f) of the
Securities Act of 1933, as amended (the “Securities
Act”).
(2)
See inside facing page for table of
registrant guarantors.
(3)
Pursuant to Rule 457(n) under
the Securities Act, no separate filing fee is required for the
guarantees.
The Registrants hereby amend this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrants shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as
the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities, and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
$310,000,000 aggregate principal amount of its
97/8% Senior
Secured Notes due 2017, $1,500,000,000 aggregate principal
amount of its
81/2% Senior
Secured Notes due 2019, $1,250,000,000 aggregate principal
amount of its
77/8% Senior
Secured Notes due 2020 and $1,400,000,000 aggregate principal
amount of its
71/4% Senior
Secured Notes due 2020 (collectively, the “exchange
notes”), each of which have been registered under the
Securities Act of 1933, as amended (the “Securities
Act”), for any and all of its outstanding
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020 and
71/4% Senior
Secured Notes due 2020 (collectively, the “outstanding
notes”), respectively (such transactions, collectively, the
“exchange offers”).
We are conducting the exchange offers in order to provide you
with an opportunity to exchange your unregistered notes for
freely tradable notes that have been registered under the
Securities Act.
The
Exchange Offers
•
We will exchange all outstanding notes that are validly tendered
and not validly withdrawn for an equal principal amount of
exchange notes that are freely tradable.
•
You may withdraw tenders of outstanding notes at any time prior
to the expiration date of the exchange offers.
•
The exchange offers expire at 11:59 p.m., New York City
time,
on ,
2010, unless extended. We do not currently intend to extend the
expiration date.
•
The exchange of outstanding notes for exchange notes in the
exchange offers will not be a taxable event for
U.S. federal income tax purposes.
•
The terms of the exchange notes to be issued in the exchange
offers are substantially identical to the outstanding notes,
except that the exchange notes will be freely tradable.
Results
of the Exchange Offers
•
The exchange notes may be sold in the
over-the-counter
market, in negotiated transactions or through a combination of
such methods. We do not plan to list the notes on a national
market.
All untendered outstanding notes will continue to be subject to
the restrictions on transfer set forth in the outstanding notes
and in the indenture. In general, the outstanding notes may not
be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities
laws. Other than in connection with the exchange offers, we do
not currently anticipate that we will register the outstanding
notes under the Securities Act.
See “Risk Factors”
beginning on page 21 for a discussion of certain risks that
you should consider before participating in the exchange
offers.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the
exchange notes to be distributed in the exchange offers or
passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus
is ,
2010.
You should rely only on the information contained in this
prospectus. We have not authorized anyone to provide you with
different information. The prospectus may be used only for the
purposes for which it has been published, and no person has been
authorized to give any information not contained herein. If you
receive any other information, you should not rely on it. We are
not making an offer of these securities in any state where the
offer is not permitted.
The data included in this prospectus regarding markets and
ranking, including the size of certain markets and our position
and the position of our competitors within these markets, are
based on reports of government agencies or published industry
sources and estimates based on HCA Inc. (“HCA”)
management’s knowledge and experience in the markets in
which HCA operates. These estimates have been based on
information obtained from our trade and business organizations
and other contacts in the markets in which we operate. HCA
believes these estimates to be accurate as of the date of this
prospectus. However, this information may prove to be inaccurate
because of the method by which HCA obtained some of the data for
the estimates or because this information cannot always be
verified with complete certainty due to the limits on the
availability and reliability of raw data, the voluntary nature
of the data gathering process and other limitations and
uncertainties. As a result, you should be aware that market,
ranking and other similar industry data included in this
prospectus, and estimates and beliefs based on that data, may
not be reliable. HCA cannot guarantee the accuracy or
completeness of any such information contained in this
prospectus.
This summary highlights information appearing elsewhere in
this prospectus. This summary is not complete and does not
contain all of the information that you should consider to make
your decisions regarding the exchange offers. You should
carefully read the entire prospectus, including the financial
data and related notes and the section entitled “Risk
Factors.”
Unless the context otherwise requires or as otherwise
indicated, references in this prospectus to “HCA,”“the Issuer,”“we,”“our,”“us” and “the Company” refer to HCA Inc. and
its consolidated subsidiaries.
Our
Company
We are one of the leading health care services companies in the
United States. At December 31, 2009, we operated 163
hospitals, comprised of 157 general, acute care hospitals; five
psychiatric hospitals; and one rehabilitation hospital. The 163
hospital total includes eight hospitals (seven general, acute
care hospitals and one rehabilitation hospital) owned by joint
ventures in which an affiliate of HCA is a partner, and these
joint ventures are accounted for using the equity method. In
addition, we operated 105 freestanding surgery centers, eight of
which are owned by joint ventures in which an affiliate of HCA
is a partner, and these joint ventures are accounted for using
the equity method. Our facilities are located in 20 states
and England. For the year ended December 31, 2009, we
generated revenues of $30.052 billion and net income
attributable to HCA Inc. of $1.054 billion.
Our primary objective is to provide a comprehensive array of
quality health care services in the most cost-effective manner
possible. Our general, acute care hospitals typically provide a
full range of services to accommodate such medical specialties
as internal medicine, general surgery, cardiology, oncology,
neurosurgery, orthopedics and obstetrics, as well as diagnostic
and emergency services. Outpatient and ancillary health care
services are provided by our general, acute care hospitals,
freestanding surgery centers, diagnostic centers and
rehabilitation facilities. Our psychiatric hospitals provide a
full range of mental health care services through inpatient,
partial hospitalization and outpatient settings.
Certain of our affiliates provide a variety of management
services to our health care facilities, including patient safety
programs; ethics and compliance programs; national supply
contracts; equipment purchasing and leasing contracts;
accounting, financial and clinical systems; governmental
reimbursement assistance; construction planning and
coordination; information technology systems and solutions;
legal counsel; human resources services; and internal audit
services.
On November 17, 2006, we completed our merger (the
“Merger”) with Hercules Acquisition Corporation,
pursuant to which we were acquired by Hercules Holding II, LLC
(“Hercules Holding”), a Delaware limited liability
company owned by a private investor group comprised of
affiliates of Bain Capital Partners (“Bain Capital”),
Kohlberg Kravis Roberts & Co. (“KKR”),
Merrill Lynch Global Private Equity (“MLGPE”) (each a
“Sponsor”), affiliates of Citigroup Inc.
(“Citigroup”) and Bank of America Corporation (the
“Sponsor Assignees”) and affiliates of HCA founder,
Dr. Thomas F. Frist Jr., (the “Frist Entities,”
and together with the Sponsors and the Sponsor Assignees, the
“Investors”) and by members of management and certain
other investors (the “Management Participants”). The
Merger, the financing transactions related to the Merger and
other related transactions are collectively referred to in this
prospectus as the “Recapitalization.” See
“— Ownership and Corporate Structure” and
“Certain Relationships and Related Party Transactions”
for additional information regarding the Recapitalization and
its impact on our corporate and governance structure.
Our
Strengths
Largest Provider with a Diversified Revenue
Base. We are the largest investor-owned health
care services provider in the United States. We maintain a
diverse portfolio of assets with no single facility contributing
more than 2.4% of revenues and no single metropolitan
statistical area contributing more than 7.8% of revenues for the
year ended December 31, 2009. In addition, we maintain a
diversified payer base,
including approximately 3,000 managed care contracts, with no
one commercial payer representing more than approximately 8% of
revenues for the year ended December 31, 2009. We believe
our broad geographic footprint and diverse revenue base limit
exposure to any single local market. We also provide a diverse
array of medical and surgical services across different settings
ranging from large hospitals to ambulatory surgery centers
(“ASCs”), which, we believe, limits our exposure to
changes in reimbursement policies targeting specific services or
care settings.
Leading Market Positions. We maintain the
number one or two inpatient position in nearly all of our
markets, with our share of local inpatient admissions typically
ranging from 20% to 40%. Additionally, we believe we have the
leading position in one or more clinical areas, such as
cardiology or orthopedics, in many of our markets. As a result,
our hospitals are in demand by patients and large employers,
which enables us to negotiate for favorable rates and terms from
a wide range of commercial payers.
Strong Presence in Growth Markets. We have a
strong market presence in a number of the fastest growing
markets in the United States. We believe the majority of the
large markets in which we have a presence will experience more
rapid growth among the population aged 65 or older than the
national average, based on the most recently available census
data. We believe we will benefit from our presence in these key
markets due to an expected increase in hospital spending.
Well-Capitalized Portfolio of High-Quality
Assets. We have invested over $7.8 billion
in our facilities over the five-year period ended
December 31, 2009 to expand the range, and improve the
quality, of services provided at our facilities. As a result of
our disciplined and strategic deployment of capital, we believe
our hospitals are competitive and will continue to attract
high-quality physicians, maximize cost efficiencies and address
the health care needs of our local communities.
Leading Provider of Outpatient Services. We
are one of the largest providers of outpatient services in the
United States, and these outpatient services accounted for
approximately 38% of our revenues in 2009. The scope of our
outpatient services reflects a recent trend toward the provision
of an increasing number of services on an outpatient basis. An
important component of our strategy is to achieve a fully
integrated delivery model through the development of
market-leading outpatient services, both to address outpatient
migration and to provide higher growth, higher margin services.
Reputation for Quality. Since our founding, we
have maintained an unwavering focus on patients and clinical
outcomes. We have invested extensively in quality over the past
10 years, with an emphasis on implementing information
technology and adopting industry-wide best practices and
clinical protocols. As a result of these efforts, settled
professional liability claims, based on actuarial projections
per 1,000 beds, have dropped from 18.3 in 1999 to 12.6 in 2008.
We also previously participated in the Centers for
Medicare & Medicaid Services (“CMS”)
National Voluntary Hospital Reporting Initiative and now
participate in its successor, the Reporting Hospital Quality
Data for Annual Payment Update program, which currently requires
hospitals to report on their compliance with 46 quality measures
in order to receive a full Medicare market basket payment
increase. The Patient Protection and Affordable Care Act as
amended by the Health Care and Education Reconciliation Act of
2010 (“Health Reform Legislation”) further ties
payment to quality measures by establishing a value based
purchasing system and adjusting hospital payment rates based on
hospital-acquired conditions (“HACs”) and hospital
readmissions. We believe quality of care increasingly will
influence physician and patient choices about health care
delivery and impact our reimbursement as payers put more
emphasis on performance. Our reputation and focus on providing
high-quality patient care continue to make us the provider of
choice for thousands of individual health care consumers,
physicians and payers.
Proven Ability to Innovate. We strive to be at
the forefront of industry best practices and expect to continue
to increase our operational efficiency through a variety of
strategic initiatives. Our previous operating improvement
initiatives include:
•
Leveraging Our Purchasing Power. We have
established a captive group purchasing organization
(“GPO”) to partner with other health care services
providers to take advantage of our combined purchasing power.
Our GPO generated $107 million, $93 million and
$89 million of administrative fees
from suppliers in 2009, 2008 and 2007, respectively, for
performing GPO services and significantly lowered our supply
costs. Because of our scale, our GPO has a
per-unit
cost advantage over competitors that we believe ranges from 5%
to 21%.
•
Centralizing Our Billing and Accounts Receivable Collection
Efforts. We have built regional service centers
to create efficiencies in billing and collection processes,
particularly with respect to payment disputes with managed care
companies. This effort has resulted in increased, incremental
cash collections.
Demonstrated Strong Cash Flows. Our leading
market positions, diversified revenues, focus on operational
efficiency and high-quality portfolio of assets have enabled us
to generate strong operating cash flows over the past several
years. We generated cash flows from operating activities of
$2.747 billion in 2009, $1.990 billion in 2008 and
$1.564 billion in 2007. We believe expected demand for
hospital and outpatient services, together with our diversified
payer base, geographic locations and service offerings, will
allow us to continue to generate strong cash flows.
Experienced Management Team. Members of our
management team are widely considered leaders in the hospital
industry and have made significant equity investments in our
company. Richard M. Bracken was appointed our CEO and President,
effective January 1, 2009, and Chairman of the Board of
Directors, effective December 15, 2009. Mr. Bracken
began his career with us approximately 30 years ago and has
held various executive positions with the Company, including,
most recently, as our President and Chief Operating Officer
since January 2002. Our Executive Vice President and Chief
Financial Officer, R. Milton Johnson, joined us over
27 years ago, has held various positions in financial
operations at the Company and has served as a director since
December 15, 2009. In addition, we benefit from our team of
world-class operators who have the experience and talent
necessary to run a complex health care business.
Strategy
We are committed to providing the communities we serve high
quality, cost-effective health care while complying fully with
our ethics policy, governmental regulations and guidelines and
industry standards. As a part of this strategy, management
focuses on the following principal elements:
Maintain Our Dedication to the Care and Improvement of Human
Life. Our business is built on putting patients
first and providing high quality health care services in the
communities we serve. Our dedicated professionals oversee our
Quality Review System, which measures clinical outcomes,
satisfaction and regulatory compliance to improve hospital
quality and performance. We are implementing hospitalist
programs in some facilities, evidence-based medicine programs
and infection reduction initiatives. In addition, we continue to
implement health information technology to improve the quality
and convenience of services to our communities. We are using our
electronic medication administration record, which uses bar
coding technology to ensure that each patient receives the right
medication, to build toward a fully electronic health record
that will provide convenient access, electronic order entry and
decision support for physicians. These technologies improve
patient safety, quality and efficiency.
Maintain Our Commitment to Ethics and
Compliance. We are committed to a corporate
culture highlighted by the following values —
compassion, honesty, integrity, fairness, loyalty, respect and
kindness. Our comprehensive ethics and compliance program
reinforces our dedication to these values.
Leverage Our Leading Local Market
Positions. We strive to maintain and enhance the
leading positions we enjoy in the majority of our markets. We
believe the broad geographic presence of our facilities across a
range of markets, in combination with the breadth and quality of
services provided by our facilities, increases our
attractiveness to patients and large employers and positions us
to negotiate more favorable terms from commercial payers and
increase the number of payers with whom we contract. We also
intend to strategically enhance our outpatient presence in our
communities to attract more patients to our facilities.
Expand Our Presence in Key Markets. We seek to
grow our business in key markets, focusing on large, high growth
urban and suburban communities, primarily in the southern and
western regions of the United States. We seek to strategically
invest in new and expanded services at our existing hospitals
and surgery centers to increase our revenues at those facilities
and provide the benefits of medical technology advances to our
communities. We intend to continue to expand high volume and
high margin specialty services, such as cardiology and
orthopedic services, and increase the capacity, scope and
convenience of our outpatient facilities. To complement this
intrinsic growth, we intend to continue to opportunistically
develop and acquire new hospitals and outpatient facilities.
Continue to Leverage Our Scale. We will
continue to obtain price efficiencies through our group
purchasing organization and build on the cost savings and
efficiencies in billing, collection and other processes we have
achieved through our regional service centers. We are
increasingly taking advantage of our national scale by
contracting for services on a multistate basis. We are expanding
our successful shared services model for additional clinical and
support functions, such as physician credentialing, medical
transcription, electronic medical recordkeeping and health
information management, across multiple markets.
Continue to Develop Physician
Relationships. We depend on the quality and
dedication of the physicians who practice at our facilities, and
we encourage, consistent with applicable laws, both primary care
physicians and specialists to join our medical staffs. We
sometimes assist physicians who are recruited under applicable
regulatory provisions with establishing and building a practice
or joining an existing practice. As part of our comprehensive
approach to physician integration in our markets, we will
continue to:
•
expand the number of high quality specialty services, such as
cardiology, orthopedics, oncology and neonatology;
•
use joint ventures with physicians to further develop our
outpatient business, particularly through ASCs;
•
develop medical office buildings to provide convenient
facilities for physicians to locate their practices and serve
their patients;
•
focus on improving the quality, advanced technology,
infrastructure and performance of our facilities; and
•
employ physicians as appropriate.
Become the Health Care Employer of Choice. We
will continue to use a number of industry-leading practices to
help ensure our hospitals are a health care employer of choice
in their respective communities. Our staffing initiatives for
both care providers and hospital management provide strategies
for recruitment, compensation and productivity to increase
employee retention and operating efficiency at our hospitals.
For example, we maintain an internal contract nursing agency to
supply our hospitals with high quality staffing at a lower cost
than external agencies. In addition, we have developed several
proprietary training and career development programs for our
physicians and hospital administrators, including an executive
development program designed to train the next generation of
hospital leadership. We believe our continued investment in the
training and retention of employees improves the quality of
care, enhances operational efficiency and fosters our reputation
as an employer of choice.
Recent
Developments
On January 27, 2010, our Board of Directors declared a
distribution to the Company’s stockholders and holders of
vested stock options. The distribution was $17.50 per share and
vested stock option, or approximately $1.750 billion in the
aggregate. The distribution was paid on February 5, 2010 to
holders of record on February 1, 2010. The distribution was
funded using funds available under our existing senior secured
credit facilities and approximately $100 million of cash on
hand. Pursuant to the terms of our stock
option plans, the holders of nonvested stock options received a
$17.50 per share reduction to the exercise price of their
share-based awards. We refer to this distribution as the
“February 2010 distribution.”
On March 10, 2010, we issued $1,400,000,000 aggregate
principal amount of
71/4% senior
secured notes, which mature on September 15, 2020. These
71/4% senior
secured notes are among the notes subject to the exchange
offers. The terms of these notes are described in
“Description of the March 2010 Notes.”
HCA Inc. was incorporated in Nevada in January 1990 and
reincorporated in Delaware in September 1993. Our principal
executive offices are located at One Park Plaza, Nashville,
Tennessee37203, and our telephone number is
(615) 344-9551.
At December 31, 2009, approximately 97.1% of our
outstanding shares of capital stock was held indirectly by the
Investors, and the remaining approximately 2.9% was held
directly by the Management Participants and employees. Our
corporate structure was achieved through a series of equity
contributions which occurred in connection with the Merger. The
indebtedness figures in the diagram below are as of
December 31, 2009, except that we also set forth the
indebtedness incurred under our existing senior secured credit
facilities in connection with the February 2010 distribution,
the March 2010 offering of the
71/4% senior
secured notes due 2020 and the use of proceeds therefrom.
(1)
In connection with the Recapitalization, approximately
$3.776 billion of cash equity was invested by investment
funds associated with or designated by the Sponsors and their
respective assignees and approximately $950 million was
invested by the Frist Entities and their respective assignees,
of which $885 million was in the form of a rollover of the
Frist Entities’ equity interests in HCA and
$65 million was a cash equity investment. As of
December 31, 2009, investment funds associated with each of
the Sponsors indirectly owned 24.7% of our company, affiliates
of Citigroup and Bank of America Corporation (who are the
Sponsor Assignees) indirectly owned 3.2% and 1.0% of our
company, respectively, and the Frist Entities and their
assignees indirectly owned 18.8% of our company. Because it
indirectly owns MLGPE, one of the Sponsors, Bank of America
Corporation, through its affiliates, is an indirect beneficial
owner of a total of approximately 25.7% of our common stock.
(2)
Represents $125 million invested by the Management
Participants in the form of a rollover of their previously
existing equity interests in HCA to equity interests in HCA
following the Merger and through cash investments. Additionally,
on January 30, 2007, we completed an offering of
781,960 shares of our common stock to approximately 570 of
our employees for an aggregate purchase price of
$40 million. The original investment amounts have been
reduced by $18 million for stock option exercise
settlements and shares repurchased through December 31,2009. Our common stock is registered pursuant to
Section 12(g) of the Exchange Act, and as of
December 31, 2009, there were 629 holders of record.
(3)
In connection with the Recapitalization, we entered into
(i) a $2.000 billion asset-based revolving credit
facility with an original six-year maturity (the
“asset-based revolving credit facility”)
($715 million outstanding at December 31, 2009, and an
additional approximately $1.050 billion drawn in connection
with the February 2010 distribution); (ii) a
$2.000 billion senior secured revolving credit facility
with an original six-year maturity (the “senior secured
revolving credit facility”) (none outstanding at
December 31, 2009, without giving effect to outstanding
letters of credit, but approximately $600 million of which
was
drawn in connection with the February 2010 distribution);
(iii) a $2.750 billion senior secured term loan A
facility with an original six-year maturity ($1.908 billion
outstanding at December 31, 2009, and approximately
$1.618 billion outstanding after giving effect to the use
of the estimated net proceeds of the outstanding September 2020
notes); (iv) an $8.800 billion senior secured term
loan B facility with an original seven-year maturity
($6.515 billion outstanding at December 31, 2009, and
approximately $5.528 billion outstanding after giving
effect to the use of the estimated net proceeds of the
outstanding September 2020 notes); and (v) a €
1.000 billion (€394 million, or
$564 million-equivalent, outstanding at December 31,2009, and approximately €335 million, or
$479 million-equivalent, outstanding after giving effect to
the use of the estimated net proceeds of the outstanding
September 2020 notes) senior secured European term loan facility
with an original seven-year maturity. We refer to the facilities
described under (ii) through (v) above, collectively,
as the “cash flow credit facility” and, together with
the asset-based revolving credit facility, the “senior
secured credit facilities.”
(4)
Consists of (i) $1.500 billion aggregate principal
amount of
81/2%
first lien notes due 2019 issued in April 2009 (the
“outstanding 2019 notes”);
(ii) $1.250 billion aggregate principal amount of
77/8%
first lien notes due 2020 issued in August 2009 (the
“outstanding February 2020 notes”);
(iii) $1.400 billion aggregate principal amount of
71/4%
first lien notes due 2020 issued in March 2010 (the
“outstanding September 2020 notes” and, together with
the outstanding 2019 notes and the outstanding February 2020
notes, the “first lien notes”) and
(iv) $81 million of unamortized debt discounts that
reduce the aggregate principal amounts of the indebtedness.
(5)
In connection with the Recapitalization, we issued
$4.200 billion of second lien notes (comprised of
$1.000 billion of
91/8% notes
due 2014 and $3.200 billion of
91/4% notes
due 2016) and $1.500 billion of
95/8%/103/8%
second lien toggle notes (which allow us, at our option, to pay
interest in-kind during the first five years at the higher
interest rate of
103/8%)
due 2016. During 2009, we paid interest of $78 million
in-kind increasing the principal balance of the second lien
toggle notes to $1.578 billion. In February 2009, we issued
$310 million aggregate principal amount of
97/8% notes
due 2017 (the “2009 second lien notes”). The 2009
second lien notes include a $10 million unamortized debt
discount that reduces the existing indebtedness. We refer to the
senior secured notes issued in connection with the
Recapitalization as the “2006 second lien notes” and,
collectively with the 2009 second lien notes, as the
“second lien notes.”
(6)
Consists of (i) an aggregate principal amount of
$367 million medium-term notes with maturities ranging from
2010 to 2025 and a weighted average interest rate of 8.42%;
(ii) an aggregate principal amount of $886 million
debentures with maturities ranging from 2015 to 2095 and a
weighted average interest rate of 7.55%; (iii) an aggregate
principal amount of $5.407 billion senior notes with
maturities ranging from 2010 to 2033 and a weighted average
interest rate of 6.79%; (iv) £121 million
($196 million-equivalent at December 31,2009) aggregate principal amount of 8.75% senior notes
due 2010; (v) $362 million of secured debt, which
represents capital leases and other secured debt with a weighted
average interest rate of 6.84%; and (vi) $10 million
of unamortized debt discounts that reduce the existing
indebtedness. For more information regarding our unsecured and
other indebtedness, see “Description of Other
Indebtedness.”
(7)
The cash flow credit facility and the first lien notes are
secured by first-priority liens, and the second lien notes and
related guarantees are secured by second-priority liens, on
substantially all the capital stock of Healthtrust,
Inc. — The Hospital Company and the first-tier
subsidiaries of the subsidiary guarantors (but limited to 65% of
the voting stock of any such first-tier subsidiary that is a
foreign subsidiary), subject to certain exceptions.
(8)
Includes subsidiaries which are designated as “restricted
subsidiaries” under our indenture dated as of
December 16, 1993, certain of their wholly-owned
subsidiaries formed in connection with the asset-based revolving
credit facility and certain excluded subsidiaries (non-material
subsidiaries).
Bain Capital is one of the world’s leading private
investment firms, with over 20 years of experience in
managed buyouts. Headquartered in Boston, Bain Capital has
offices in New York, London, Munich, Hong Kong, Shanghai and
Tokyo. Bain Capital has a proven track record of enhancing
companies’ financial strength and strategic positions
through long-term initiatives and has demonstrated success in
the health care sector.
Kohlberg
Kravis Roberts & Co.
Founded in 1976 and led by Henry Kravis and George Roberts, KKR
is a leading global alternative asset manager with
$52.2 billion in assets under management, over
600 people and 13 offices around the world as of
December 31, 2009. KKR manages assets through a variety of
investment funds and accounts covering multiple asset classes.
KKR seeks to create value by bringing operational expertise to
its portfolio companies and through active oversight and
monitoring of its investments. KKR complements its investment
expertise and strengthens interactions with investors through
its client relationships and capital markets platforms. KKR is
publicly traded through KKR & Co. (Guernsey) L.P.
(Euronext Amsterdam: KKR).
Merrill
Lynch Global Private Equity
MLGPE is part of Bank of America Corporation’s private
equity business. MLGPE was previously the private equity arm of
Merrill Lynch & Co., Inc., which is a wholly-owned
subsidiary of Bank of America Corporation. Bank of America
Corporation is one of the world’s largest financial
institutions, serving individual consumers, small and middle
market businesses and large corporations with a full range of
banking, investing, asset management and other financial and
risk-management products and services.
On February 19, 2009, April 22, 2009,
August 11, 2009 and March 10, 2010, respectively, HCA
Inc. issued in private offerings $310,000,000 aggregate
principal amount of
97/8% Senior
Secured Notes due 2017 (the “outstanding 2017 notes”),
$1,500,000,000 aggregate principal amount of
81/2% Senior
Secured Notes due 2019 (the “outstanding 2019 notes”),
$1,250,000,000 aggregate principal amount of
77/8% Senior
Secured Notes due 2020 (the “outstanding February 2020
notes”) and $1,400,000,000 aggregate principal amount of
71/4% Senior
Secured Notes due 2020 (the “outstanding September 2020
notes” and, together with the outstanding 2017 notes, the
outstanding 2019 notes and the outstanding February 2020 notes,
the “outstanding notes”). The term “exchange 2017
notes” refers to the
97/8% Senior
Secured Notes due 2017, the term “exchange 2019 notes”
refers to the
81/2% Senior
Secured Notes due 2019, the term “exchange February 2020
notes” refers to the
77/8% Senior
Secured Notes due 2020, the term “exchange September 2020
notes” refers to the
71/4% Senior
Secured Notes due 2020, each as registered under the Securities
Act of 1933, as amended (the “Securities Act”), and
all of which collectively are referred to as the “exchange
notes.” The term “notes” collectively refers to
the outstanding notes and the exchange notes.
We also refer to the outstanding 2019 notes, the outstanding
February 2020 notes and the outstanding September 2020 notes
collectively as the “outstanding first lien notes” and
to the exchange 2019 notes, the exchange February 2020 notes and
the exchange September 2020 notes as the “exchange first
lien notes.”
General
In connection with the private offering, HCA Inc. and the
guarantors of the outstanding notes entered into a registration
rights agreement with the initial purchasers pursuant to which
they agreed, among other things, to deliver this prospectus to
you and to complete the exchange offers within 450 days
after the date of original issuance of the outstanding notes.
You are entitled to exchange in the exchange offers your
outstanding notes for exchange notes which are identical in all
material respects to the outstanding notes except:
• the exchange notes have been registered under the
Securities Act;
• the exchange notes are not entitled to any
registration rights which are applicable to the outstanding
notes under the registration rights agreement; and
• the liquidated damages provisions of the
registration rights agreement are not applicable.
The Exchange Offers
HCA Inc. is offering to exchange:
• $310,000,000 aggregate principal amount of
97/8% Senior
Secured Notes due 2017 which have been registered under the
Securities Act for any and all of its existing
97/8% Senior
Secured Notes due 2017;
• $1,500,000,000 aggregate principal amount of
81/2% Senior
Secured Notes due 2019 which have been registered under the
Securities Act for any and all of its existing
81/2% Senior
Secured Notes due 2019;
• $1,250,000,000 aggregate principal amount of
77/8% Senior
Secured Notes due 2020 which have been registered under the
Securities Act for any and all of its existing
77/8% Senior
Secured Notes due 2020; and
• $1,400,000,000 aggregate principal amount of
71/4% Senior
Secured Notes due 2020 which have been registered under the
Securities Act for any and all of its existing
71/4% Senior
Secured Notes due 2020. You may only exchange outstanding notes
in minimum denominations of $2,000 and integral multiples of
$1,000 in excess of $2,000.
Resale
Based on an interpretation by the staff of the Securities and
Exchange Commission (the “SEC”) set forth in no-action
letters issued to third parties, we believe that the exchange
notes issued pursuant to the exchange offers in exchange for the
outstanding notes may be offered for resale, resold and
otherwise transferred by you (unless you are our
“affiliate” within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided
that:
• you are acquiring the exchange notes in the ordinary
course of your business; and
• you have not engaged in, do not intend to engage in,
and have no arrangement or understanding with any person to
participate in, a distribution of the exchange notes.
If you are a broker-dealer and receive exchange notes for your
own account in exchange for outstanding notes that you acquired
as a result of market-making activities or other trading
activities, you must acknowledge that you will deliver this
prospectus in connection with any resale of the exchange notes.
See “Plan of Distribution.”
Any holder of outstanding notes who:
• is our affiliate;
• does not acquire exchange notes in the ordinary
course of its business; or
• tenders its outstanding notes in the exchange offers
with the intention to participate, or for the purpose of
participating, in a distribution of exchange notes
cannot rely on the position of the staff of the SEC enunciated
in Morgan Stanley & Co. Incorporated (available
June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in
Shearman & Sterling (available July 2,1993), or similar no-action letters and, in the absence of an
exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any resale of the exchange notes.
Expiration Date
The exchange offers will expire at 11:59 p.m., New York
City time,
on ,
2010, unless extended by HCA Inc. HCA Inc. currently does not
intend to extend the expiration date.
Withdrawal
You may withdraw the tender of your outstanding notes at any
time prior to the expiration of the exchange offers. HCA Inc.
will return to you any of your outstanding notes that are not
accepted for any reason for exchange, without expense to you,
promptly after the expiration or termination of the exchange
offers.
Each exchange offer is subject to customary conditions, which
HCA Inc. may waive. See “The Exchange Offers —
Conditions to the Exchange Offers.”
Procedures for Tendering Outstanding Notes
If you wish to participate in any of the exchange offers, you
must complete, sign and date the applicable accompanying letter
of transmittal, or a facsimile of such letter of transmittal,
according to the instructions contained in this prospectus and
the letter of transmittal. You must then mail or otherwise
deliver the letter of transmittal, or a facsimile of such letter
of transmittal, together with your outstanding notes and any
other required documents, to the exchange agent at the address
set forth on the cover page of the letter of transmittal.
If you hold outstanding notes through The Depository
Trust Company (“DTC”) and wish to participate in
the exchange offers, you must comply with the Automated Tender
Offer Program procedures of DTC by which you will agree to be
bound by the letter of transmittal. By signing, or agreeing to
be bound by, the letter of transmittal, you will represent to us
that, among other things:
• you are not our “affiliate” within the
meaning of Rule 405 under the Securities Act;
• you do not have an arrangement or understanding with
any person or entity to participate in the distribution of the
exchange notes;
• you are acquiring the exchange notes in the ordinary
course of your business; and
• if you are a broker-dealer that will receive
exchange notes for your own account in exchange for outstanding
notes that were acquired as a result of market-making
activities, you will deliver a prospectus, as required by law,
in connection with any resale of such exchange notes.
Special Procedures for Beneficial Owners
If you are a beneficial owner of outstanding notes that are
registered in the name of a broker, dealer, commercial bank,
trust company or other nominee, and you wish to tender those
outstanding notes in the exchange offer, you should contact the
registered holder promptly and instruct the registered holder to
tender those outstanding notes on your behalf. If you wish to
tender on your own behalf, you must, prior to completing and
executing the letter of transmittal and delivering your
outstanding notes, either make appropriate arrangements to
register ownership of the outstanding notes in your name or
obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to
the expiration date.
Guaranteed Delivery Procedures
If you wish to tender your outstanding notes and your
outstanding notes are not immediately available, or you cannot
deliver your outstanding notes, the letter of transmittal or any
other required documents, or you cannot comply with the
procedures under DTC’s
Automated Tender Offer Program for transfer of book-entry
interests prior to the expiration date, you must tender your
outstanding notes according to the guaranteed delivery
procedures set forth in this prospectus under “The Exchange
Offers — Guaranteed Delivery Procedures.”
Effect on Holders of Outstanding Notes
As a result of the making of, and upon acceptance for exchange
of all validly tendered outstanding notes pursuant to the terms
of the exchange offers, HCA Inc. and the guarantors of the notes
will have fulfilled a covenant under the registration rights
agreement. Accordingly, there will be no increase in the
applicable interest rate on the outstanding notes under the
circumstances described in the registration rights agreement. If
you do not tender your outstanding notes in the exchange offer,
you will continue to be entitled to all the rights and
limitations applicable to the outstanding notes as set forth in
the indenture, except HCA Inc. and the guarantors of the notes
will not have any further obligation to you to provide for the
exchange and registration of untendered outstanding notes under
the registration rights agreement. To the extent that
outstanding notes are tendered and accepted in the exchange
offers, the trading market for outstanding notes that are not so
tendered and accepted could be adversely affected.
Consequences of Failure to Exchange
All untendered outstanding notes will continue to be subject to
the restrictions on transfer set forth in the outstanding notes
and in the indenture. In general, the outstanding notes may not
be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities
laws. Other than in connection with the exchange offers, HCA
Inc. and the guarantors of the notes do not currently anticipate
that they will register the outstanding notes under the
Securities Act.
Certain United States Federal Income Tax Consequences
The exchange of outstanding notes in the exchange offers will
not be a taxable event for United States federal income tax
purposes. See “Certain United States Federal Tax
Consequences.”
Regulatory Approvals
Other than compliance with the Securities Act and qualification
of the indentures governing the notes under the
Trust Indenture Act, there are no federal or state
regulatory requirements that must be complied with or approvals
that must be obtained in connection with the exchange offers.
Use of Proceeds
We will not receive any cash proceeds from the issuance of the
exchange notes in the exchange offers. See “Use of
Proceeds.”
Exchange Agent
The Bank of New York Mellon is the exchange agent for the
exchange offers. The addresses and telephone numbers of the
exchange agent are set forth in the section captioned “The
Exchange Offers — Exchange Agent.”
The summary below describes the principal terms of the
exchange notes. Certain of the terms and conditions described
below are subject to important limitations and exceptions. The
“Description of the February 2009 Notes,”“Description of the April 2009 Notes,”“Description of the August 2009 Notes” and
“Description of the March 2010 Notes” sections of this
prospectus contain more detailed descriptions of the terms and
conditions of the outstanding notes and exchange notes. The
exchange notes will have terms identical in all material
respects to the outstanding notes, except that the exchange
notes will not contain terms with respect to transfer
restrictions, registration rights and additional interest for
failure to observe certain obligations in the registration
rights agreement.
Issuer
HCA Inc.
Securities Offered
$310,000,000 aggregate principal amount of
97/8% senior
secured notes due 2017.
$1,500,000,000 aggregate principal amount of
81/2% senior
secured notes due 2019.
$1,250,000,000 aggregate principal amount of
77/8% senior
secured notes due 2020.
$1,400,000,000 aggregate principal amount of
71/4% senior
secured notes due 2020.
Interest on the exchange 2017 notes will be payable in cash and
will accrue at a rate of
97/8%
per annum.
Interest on the exchange 2019 notes will be payable in cash and
will accrue at a rate of
81/2%
per annum.
Interest on the exchange February 2020 notes will be payable in
cash and will accrue at a rate of
77/8%
per annum.
Interest on the exchange September 2020 notes will be payable in
cash and will accrue at a rate of
71/4%
per annum.
Interest Payment Dates
We will pay interest on the exchange 2017 notes and the exchange
February 2020 notes on February 15 and August 15. Interest
began to accrue from the issue dates of the notes.
We will pay interest on the exchange 2019 notes on April 15 and
October 15. Interest began to accrue from the issue date of
the notes.
We will pay interest on the exchange September 2020 notes on
March 15 and September 15. Interest began to accrue from
the issue date of the notes.
Ranking of the Exchange First Lien Notes
Each series of exchange first lien notes will be our senior
secured obligations and will:
• rank senior in right of payment to any future
subordinated indebtedness;
• rank equally in right of payment with all of our
existing and future senior indebtedness;
• be effectively senior in right of payment to
indebtedness under our existing second lien notes (including the
exchange 2017 notes) to the extent of the collateral securing
such indebtedness;
• be effectively equal in right of payment with
indebtedness under our cash flow credit facility and the other
exchange first lien notes to the extent of the collateral (other
than certain European collateral securing our senior secured
European term loan facility) securing such indebtedness;
• be effectively subordinated in right of payment to
all indebtedness under our asset-based revolving credit facility
to the extent of the shared collateral securing such
indebtedness; and
• be effectively subordinated in right of payment to
all existing and future indebtedness and other liabilities of
our non-guarantor subsidiaries (other than indebtedness and
liabilities owed to us or one of our guarantor subsidiaries).
As of December 31, 2009, on an adjusted basis after giving
effect to the February 2010 distribution, the offering of the
outstanding September 2020 notes and the use of proceeds
therefrom:
• the outstanding first lien notes and related
guarantees would have been effectively senior in right of
payment to $6.088 billion of second lien notes (including
the outstanding 2017 notes), effectively equal in right of
payment to approximately $7.746 billion of senior secured
indebtedness under our cash flow credit facility (other than our
senior secured European term loan facility), the other
outstanding first lien notes and approximately $170 million
of other secured debt, and effectively junior in right in
payment to $1.765 billion of indebtedness under our
asset-based revolving credit facility, in each case to the
extent of the collateral securing such indebtedness;
• the outstanding first lien notes and related
guarantees would have been effectively subordinated in right of
payment to approximately $479 million equivalent
outstanding under the senior secured European term loan facility
and $192 million of other secured debt of our nonguarantor
subsidiaries, which primarily represents capital leases; and
• we would have had an additional $1.301 billion
of unutilized capacity under our senior secured revolving credit
facility and $230 million of unutilized capacity under our
asset-based revolving credit facility, subject to borrowing base
limitations.
Ranking of the Exchange 2017 Notes
The exchange 2017 notes will be our senior secured obligations
and will:
• rank senior in right of payment to any future
subordinated indebtedness;
• rank equally in right of payment with all of our
existing and future senior indebtedness;
• be effectively subordinated in right of payment to
indebtedness under our asset-based revolving credit facility to
the extent of the collateral securing such indebtedness on a
first-priority basis, and to indebtedness under our other senior
secured credit facilities and to the exchange first lien notes
to the extent of the collateral securing such indebtedness on a
first- and second-priority basis; and
• be effectively subordinated in right of payment to
all existing and future indebtedness and other liabilities of
our non-guarantor subsidiaries (other than indebtedness and
liabilities owed to us or one of our guarantor subsidiaries).
As of December 31, 2009, on an adjusted basis after giving
effect to the February 2010 distribution, the outstanding
September 2020 notes offering and the use of proceeds therefrom:
• the outstanding 2017 notes and related guarantees
would have been effectively subordinated in right of payment to
approximately $1.765 billion of indebtedness under our
asset-based revolving credit facility, approximately
$7.746 billion of senior secured indebtedness under our
cash flow credit facility (other than our senior secured
European term loan facility), approximately $4.150 billion
aggregate principal amount of outstanding first lien notes and
approximately $170 million of other secured debt, in each
case to the extent of the collateral securing such indebtedness;
• the outstanding 2017 notes and related guarantees
would also have been effectively subordinated in right of
payment to approximately $479 million equivalent
outstanding under the senior secured European term loan facility
and $192 million of other secured debt of our nonguarantor
subsidiaries, which primarily represents capital leases;
• the outstanding 2017 notes and related guarantees
would have ranked equal in right of payment to
$5.778 billion of second lien notes issued in 2006 at the
time of the Merger; and
• we would have had an additional $1.301 billion
of unutilized capacity under our senior secured revolving credit
facility and $230 million of unutilized capacity under our
asset-based revolving credit facility, subject to borrowing base
limitations.
Guarantees of the Exchange First Lien Notes
The exchange notes will be fully and unconditionally guaranteed
on a senior secured basis by each of our existing and future
direct or indirect wholly-owned domestic subsidiaries that
guarantees our obligations under our senior secured credit
facilities (except for certain special purpose subsidiaries that
have only guaranteed and pledged their assets under our
asset-based revolving credit facility). The subsidiary guarantee
of each series of exchange first lien notes will:
• rank senior in right of payment to all existing and
future subordinated indebtedness of the guarantor subsidiary;
• rank equally in right of payment with all existing
and future senior indebtedness of the guarantor subsidiary;
• be effectively senior in right of payment to the
guarantees of our second lien notes (including the exchange 2017
notes) to the extent of the guarantor subsidiary’s
collateral securing such indebtedness;
• be effectively equal in right of payment with the
guarantees of our cash flow credit facility and the other
exchange first lien notes to the extent of the guarantor
subsidiary’s collateral (other than certain European
collateral securing our senior secured European term loan
facility) securing such indebtedness;
• be effectively subordinated in right of payment to
the guarantees of our asset-based revolving credit facility to
the extent of the guarantor subsidiary’s collateral
securing such indebtedness; and
• be effectively subordinated in right of payment to
all existing and future indebtedness and other liabilities of
any subsidiary of a guarantor that is not also a guarantor of
the notes.
For the year ended December 31, 2009, our non-guarantor
subsidiaries accounted for approximately $12.468 billion,
or 41.5%, of our total revenues. As of December 31, 2009,
our non-guarantor subsidiaries accounted for approximately
$9.672 billion, or 40.1%, of our total assets and
approximately $6.750 billion, or 21.1%, of our total
liabilities. See Note 16 to our consolidated financial
statements included in this prospectus.
Guarantees of the Exchange 2017 Notes
The exchange 2017 notes will be fully and unconditionally
guaranteed on a senior secured basis by each of our existing and
future direct or indirect wholly-owned domestic subsidiaries
that guarantees our obligations under our senior secured credit
facilities (except for certain special purpose subsidiaries that
have only guaranteed and pledged their assets under our
asset-based revolving credit facility). Each subsidiary
guarantee will:
• rank senior in right of payment to all existing and
future subordinated indebtedness of the guarantor subsidiary;
• rank equally in right of payment with all existing
and future senior indebtedness of the guarantor subsidiary;
• be effectively subordinated in right of payment to
indebtedness under our asset-based revolving credit facility to
the extent of the collateral securing such indebtedness on a
first-priority basis, and to indebtedness under our other senior
secured credit facilities and to the exchange first lien notes
to the extent of the collateral securing such indebtedness on a
first- and second-priority basis; and
• be effectively subordinated in right of payment to
all existing and future indebtedness and other liabilities of
any subsidiary of a guarantor that is not also a guarantor of
the notes.
Security for the Exchange First Lien Notes
Each series of exchange first lien notes and guarantees will be
secured by first-priority liens, subject to permitted liens, on
certain of the assets of HCA Inc. and the subsidiary guarantors
that secure our cash flow credit facility and the other exchange
first lien notes on a pari passu basis, including:
• substantially all the capital stock of any wholly
owned first-tier subsidiary of HCA Inc. or of any subsidiary
guarantor of the notes (but limited to 65% of the voting stock
of any such wholly owned first-tier subsidiary that is a foreign
subsidiary); and
• substantially all tangible and intangible assets of
our company and each subsidiary guarantor, other than
(1) other properties that do not secure our senior secured
credit facilities, (2) deposit accounts, other bank or
securities accounts and cash, (3) leaseholds and motor
vehicles, (4) certain European collateral and
(5) certain receivables collateral that only secures our
asset-based revolving credit facility, in each case subject to
exceptions, and except that the lien on properties defined as
“principal properties” under our existing indenture
dated as of December 16, 1993, so long as such indenture
remains in effect, will be limited to securing a portion of the
indebtedness under the notes, our cash flow credit facility and
the first lien notes that, in the aggregate, does not exceed 10%
of our consolidated net tangible assets; provided that, with
respect to the portion of the collateral comprised of real
property for the exchange September 2020 notes, we will have up
to 60 days from the issue date of the outstanding September
2020 notes to complete those actions required to perfect the
first-priority lien on such collateral.
See “Risk Factors — Risks Related to the
Notes — There are circumstances other than repayment
or discharge of the notes under which the collateral securing
the notes and guarantees will be released automatically, without
your consent or the consent of the trustee” for an
explanation of one of the important exceptions to the obligation
to pledge the capital stock of first-tier subsidiaries of any
subsidiary guarantors.
The exchange first lien notes and guarantees of the exchange
notes also will be secured by second-priority liens, subject to
permitted liens, on certain receivables of HCA Inc. and the
subsidiary guarantors that secure our asset-based revolving
credit facility on a first-priority basis.
See “Description of the April 2009 Notes —
Security,”“Description of the August 2009
Notes — Security” and “Description of the
March 2010 Notes — Security.”
Security for the Exchange 2017 Notes
The exchange 2017 notes and guarantees of the exchange 2017
notes will be secured by second-priority liens, subject to
permitted liens, on certain of the assets of HCA Inc. and the
subsidiary guarantors that secure our senior secured credit
facilities and our first
lien notes on a first-priority basis. The assets that will
secure the exchange 2017 notes will include:
• substantially all the capital stock of any wholly
owned first-tier subsidiary of HCA Inc. or of any subsidiary
guarantor of the notes (but limited to 65% of the voting stock
of any such wholly owned first-tier subsidiary that is a foreign
subsidiary), subject to certain exceptions; and
• substantially all tangible and intangible assets of
our company and each subsidiary guarantor, other than
(1) properties defined as “principal properties”
under our indenture dated as of December 16, 1993, so long
as any indebtedness secured by those properties on a
first-priority basis remains outstanding, (2) other
properties that will not secure our senior secured facilities,
(3) deposit accounts, other bank or securities accounts and
cash, (4) leaseholds and motor vehicles, (5) certain
European collateral and (6) certain receivables collateral
that only secures our asset-based revolving credit facility, in
each case subject to certain exceptions.
See “Risk Factors — Risks Related to the
Notes — There are circumstances other than repayment
or discharge of the notes under which the collateral securing
the notes and guarantees will be released automatically, without
your consent or the consent of the trustee” for an
explanation of one of the important exceptions to the obligation
to pledge the capital stock of first-tier subsidiaries of any
subsidiary guarantors.
The exchange 2017 notes and guarantees of the exchange 2017
notes also will be secured by third-priority liens, subject to
permitted liens, on the accounts receivable and certain related
assets of HCA Inc. and certain of the subsidiary guarantors, and
the proceeds thereof, to the extent permitted by law and
contract, which assets will secure our asset-based revolving
credit facility on a first-priority basis and our other senior
secured credit facilities and our first lien notes on a
second-priority basis.
See “Description of the February 2009 Notes —
Security.”
Optional Redemption
We may redeem the exchange notes, in whole or in part, at any
time prior to February 15, 2013 with respect to the
exchange 2017 notes, April 15, 2014 with respect to the
exchange 2019 notes, August 15, 2014 with respect to the
exchange February 2020 notes and March 15, 2015 with
respect to the exchange September 2020 notes, plus accrued and
unpaid interest to the redemption date and a “make-whole
premium,” as described under “Description of the
February 2009 Notes — Optional Redemption,”“Description of the April 2009 Notes — Optional
Redemption,”“Description of the August 2009
Notes — Optional Redemption” and
“Description of the March 2010 Notes — Optional
Redemption.”
We may redeem the exchange notes, in whole or in part, on or
after February 15, 2013 with respect to the exchange 2017
notes, April 15, 2014 with respect to the exchange 2019
notes, August 15, 2014 with respect to the exchange
February 2020 notes and March 15, 2015 with respect to the
exchange September 2020 notes, at the prices set forth under
“Description of the February
2009 Notes — Optional Redemption,”
“Description of the April 2009 Notes — Optional
Redemption,”“Description of the August 2009
Notes — Optional Redemption” and
“Description of the March 2010 Notes — Optional
Redemption.”
Additionally, from time to time before February 15, 2012
with respect to the exchange 2017 notes, April 15, 2012
with respect to the exchange 2019 notes, August 15, 2012
with respect to the exchange February 2020 notes and
March 15, 2013 with respect to the exchange September 2020
notes, we may choose to redeem up to 35% of the principal amount
of each of the exchange notes at a redemption price equal to
109.875% of the face amount thereof, with respect to the
exchange 2017 notes, 108.500% of the face amount thereof, with
respect to the exchange 2019 notes, 107.875% of the face amount
thereof, with respect to the exchange February 2020 notes and
107.250% of the face amount thereof, with respect to the
exchange September 2020 notes, in each case with the net cash
proceeds that we raise in one or more equity offerings, so long
as at least 50% of the aggregate principal amount of each of the
exchange notes remains outstanding afterwards.
Change of Control Offer
Upon the occurrence of a change of control, you will have the
right, as holders of the exchange notes, to require us to
repurchase some or all of your exchange notes at 101% of their
face amount, plus accrued and unpaid interest to the repurchase
date.
We may not be able to pay you the required price for exchange
notes you present to us at the time of a change of control,
because:
• we may not have enough funds at that time; or
• the terms of our indebtedness under our senior
secured credit facilities may prevent us from making such
payment.
Your right to require us to repurchase the exchange notes upon
the occurrence of a change of control will cease to apply to a
series of exchange notes at all times after such exchange notes
have investment grade ratings from both Moody’s Investors
Service, Inc. and Standard & Poor’s.
Certain Covenants
The indenture governing the exchange notes contains covenants
limiting our ability and the ability of our restricted
subsidiaries to:
• incur additional debt or issue certain preferred
shares;
• pay dividends on or make other distributions in
respect of our capital stock or make other restricted payments;
• make certain investments;
• sell certain assets;
• create liens on certain assets to secure debt;
• consolidate, merge, sell or otherwise dispose of all
or substantially all of our assets;
• enter into certain transactions with our affiliates;
and
• designate our subsidiaries as unrestricted
subsidiaries.
These covenants are subject to a number of important limitations
and exceptions. See “Description of the February 2009
Notes,”“Description of the April 2009 Notes,”“Description of the August 2009 Notes” and
“Description of the March 2010 Notes.” Many of these
covenants will cease to apply to a series of exchange notes at
all times after such exchange notes have investment grade
ratings from both Moody’s Investors Service, Inc. and
Standard & Poor’s.
No Prior Market
The exchange notes will be freely transferable but will be new
securities for which there will not initially be a market.
Accordingly, we cannot assure you whether a market for the
exchange notes will develop or as to the liquidity of any such
market that may develop. The initial purchasers in the private
offering of the outstanding notes have informed us that they
currently intend to make a market in the exchange notes;
however, they are not obligated to do so, and they may
discontinue any such market-making activities at any time
without notice.
Ratio of
Earnings to Fixed Charges
The following table sets forth the ratio of earnings to fixed
charges of HCA Inc. for the periods indicated. The ratio of
earnings to fixed charges for the years ended December 31,2009, 2008 and 2007 have been derived from our audited
consolidated financial statements appearing elsewhere in this
prospectus. The ratio of earnings to fixed charges for the years
ended December 31, 2006 and 2005 have been derived from our
audited consolidated financial statements that are not included
in this prospectus.
For purposes of calculating the ratio of earnings to fixed
charges, earnings consist of net income attributable to
noncontrolling interests and income taxes plus fixed charges,
exclusive of capitalized interest. Fixed charges include cash
and noncash interest expense, whether expensed or capitalized,
amortization of debt issuance cost, and the portion of rent
expense representative of the interest factor.
Risk
Factors
You should consider carefully all of the information set forth
in this prospectus prior to exchanging your outstanding notes.
In particular, we urge you to consider carefully the factors set
forth under the heading “Risk Factors.”
You should carefully consider the risk factors set forth
below as well as the other information contained in this
prospectus before deciding to tender your outstanding notes in
the exchange offers. Any of the following risks could materially
and adversely affect our business, financial condition or
results of operations; however, the following risks are not the
only risks facing us. Additional risks and uncertainties not
currently known to us or those we currently view to be
immaterial also may materially and adversely affect our
business, financial condition or results of operations. In such
a case, the trading price of the exchange notes could decline or
we may not be able to make payments of interest and principal on
the exchange notes, and you may lose all or part of your
original investment.
Risks
Related to the Exchange Offers
There
may be adverse consequences if you do not exchange your
outstanding notes.
If you do not exchange your outstanding notes for exchange notes
in the exchange offer, you will continue to be subject to
restrictions on transfer of your outstanding notes as set forth
in the offering memorandum distributed in connection with the
private offering of the outstanding notes. In general, the
outstanding notes may not be offered or sold unless they are
registered or exempt from registration under the Securities Act
and applicable state securities laws. Except as required by the
registration rights agreement, we do not intend to register
resales of the outstanding notes under the Securities Act. You
should refer to “Summary — The Exchange
Offers” and “The Exchange Offers” for information
about how to tender your outstanding notes.
The tender of outstanding notes under the exchange offers will
reduce the outstanding amount of each series of the outstanding
notes, which may have an adverse effect upon, and increase the
volatility of, the market prices of the outstanding notes due to
a reduction in liquidity.
Your
ability to transfer the exchange notes may be limited by the
absence of an active trading market, and there is no assurance
that any active trading market will develop for the exchange
notes.
We are offering the exchange notes to the holders of the
outstanding notes. The outstanding notes were offered and sold
in 2009 and 2010 to institutional investors.
We do not intend to apply for a listing of the exchange notes on
a securities exchange or on any automated dealer quotation
system. There is currently no established market for the
exchange notes, and we cannot assure you as to the liquidity of
markets that may develop for the exchange notes, your ability to
sell the exchange notes or the price at which you would be able
to sell the exchange notes. If such markets were to exist, the
exchange notes could trade at prices that may be lower than
their principal amount or purchase price depending on many
factors, including prevailing interest rates, the market for
similar notes, our financial and operating performance and other
factors. The initial purchasers in the private offering of the
outstanding notes have advised us that they currently intend to
make a market with respect to the exchange notes. However, these
initial purchasers are not obligated to do so, and any market
making with respect to the exchange notes may be discontinued at
any time without notice. In addition, such market making
activity may be limited during the pendency of the exchange
offers or the effectiveness of a shelf registration statement in
lieu thereof. Therefore, we cannot assure you that an active
market for the exchange notes will develop or, if developed,
that it will continue. Historically, the market for
non-investment grade debt has been subject to disruptions that
have caused substantial volatility in the prices of securities
similar to the notes. The market, if any, for the exchange notes
may experience similar disruptions and any such disruptions may
adversely affect the prices at which you may sell your exchange
notes.
Certain
persons who participate in the exchange offers must deliver a
prospectus in connection with resales of the exchange
notes.
Based on interpretations of the staff of the SEC contained in
Exxon Capital Holdings Corp., SEC
no-action
letter (April 13, 1988), Morgan Stanley & Co.
Inc., SEC no-action letter (June 5, 1991) and
Shearman & Sterling, SEC no-action letter
(July 2, 1983), we believe that you may offer for resale,
resell or otherwise transfer the exchange notes without
compliance with the registration and prospectus delivery
requirements of the Securities Act. However, in some instances
described in this prospectus under “Plan of
Distribution,” certain holders of exchange notes will
remain obligated to comply with the registration and prospectus
delivery requirements of the Securities Act to transfer the
exchange notes. If such a holder transfers any exchange notes
without delivering a prospectus meeting the requirements of the
Securities Act or without an applicable exemption from
registration under the Securities Act, such a holder may incur
liability under the Securities Act. We do not and will not
assume, or indemnify such a holder against, this liability.
Risks
Related to Our Indebtedness
Our
substantial leverage could adversely affect our ability to raise
additional capital to fund our operations, limit our ability to
react to changes in the economy or our industry, expose us to
interest rate risk to the extent of our variable rate debt and
prevent us from meeting our obligations.
We are highly leveraged. As of December 31, 2009, on an as
adjusted basis after giving effect to the February 2010
distribution, the offering of the outstanding September 2020
notes and the use of proceeds therefrom, our total indebtedness
would have been approximately $27.345 billion. Our high
degree of leverage could have important consequences, including:
•
increasing our vulnerability to downturns or adverse changes in
general economic, industry or competitive conditions and adverse
changes in government regulations;
•
requiring a substantial portion of cash flow from operations to
be dedicated to the payment of principal and interest on our
indebtedness, therefore reducing our ability to use our cash
flow to fund our operations, capital expenditures and future
business opportunities;
•
exposing us to the risk of increased interest rates as certain
of our unhedged borrowings are at variable rates of interest;
•
limiting our ability to make strategic acquisitions or causing
us to make nonstrategic divestitures;
•
limiting our ability to obtain additional financing for working
capital, capital expenditures, product or service line
development, debt service requirements, acquisitions and general
corporate or other purposes; and
•
limiting our ability to adjust to changing market conditions and
placing us at a competitive disadvantage compared to our
competitors who are less highly leveraged.
We and our subsidiaries have the ability to incur additional
indebtedness in the future, subject to the restrictions
contained in our senior secured credit facilities and the
indentures governing our outstanding notes. If new indebtedness
is added to our current debt levels, the related risks that we
now face could intensify.
We may
not be able to generate sufficient cash to service all of our
indebtedness and may not be able to refinance our indebtedness
on favorable terms. If we are unable to do so, we may be forced
to take other actions to satisfy our obligations under our
indebtedness, which may not be successful.
Our ability to make scheduled payments on or to refinance our
debt obligations depends on our financial condition and
operating performance, which are subject to prevailing economic
and competitive conditions and to certain financial, business
and other factors beyond our control. We cannot assure you we
will maintain a level of cash flows from operating activities
sufficient to permit us to pay the principal, premium, if any,
and interest on our indebtedness.
As of December 31, 2009, on an as adjusted basis after
giving effect to the February 2010 distribution, the offering of
the outstanding September 2020 notes and the use of proceeds
therefrom, our substantial indebtedness would have included
$9.990 billion of indebtedness under our senior secured
credit facilities maturing in 2012 and 2013, $4.150 billion
aggregate principal amount of first lien notes maturing in 2019
and 2020, $6.088 billion of second lien notes maturing in
2014, 2016 and 2017 and $6.856 billion aggregate principal
amount of unsecured senior notes and debentures that mature on
various dates from 2010 to 2095 (including $5.454 billion
maturing through 2016). Because a significant portion of our
indebtedness matures in the next few years, we may find it
necessary or prudent to refinance that indebtedness with
longer-maturity debt at a higher interest rate. In February,
April and August of 2009 and in March of 2010, for example, we
issued $310 million in aggregate principal amount of
97/8%
second lien notes due 2017, $1.500 billion in aggregate
principal amount of
81/2%
first lien notes due 2019, $1.250 billion in aggregate
principal amount of
77/8%
first lien notes due 2020 and $1.400 billion in aggregate
principal amount of
71/4%
first lien notes due 2020, respectively. We used the net
proceeds of those offerings to prepay term loans under our cash
flow credit facility, which currently bears interest at a lower
floating rate. Our ability to refinance our indebtedness on
favorable terms, or at all, is directly affected by the current
global economic and financial conditions. In addition, our
ability to incur secured indebtedness (which would generally
enable us to achieve better pricing than the incurrence of
unsecured indebtedness) depends in part on the value of our
assets, which depends, in turn, on the strength of our cash
flows and results of operations, and on economic and market
conditions and other factors.
If our cash flows and capital resources are insufficient to fund
our debt service obligations or we are unable to refinance our
indebtedness, we may be forced to reduce or delay investments
and capital expenditures, or to sell assets, seek additional
capital or restructure our indebtedness. These alternative
measures may not be successful and may not permit us to meet our
scheduled debt service obligations. If our operating results and
available cash are insufficient to meet our debt service
obligations, we could face substantial liquidity problems and
might be required to dispose of material assets or operations to
meet our debt service and other obligations. We may not be able
to consummate those dispositions, or the proceeds from the
dispositions may not be adequate to meet any debt service
obligations then due.
Our
debt agreements contain restrictions that limit our flexibility
in operating our business.
Our senior secured credit facilities and the indentures
governing our outstanding notes contain various covenants that
limit our ability to engage in specified types of transactions.
These covenants limit our and certain of our subsidiaries’
ability to, among other things:
•
incur additional indebtedness or issue certain preferred shares;
•
pay dividends on, repurchase or make distributions in respect of
our capital stock or make other restricted payments;
•
make certain investments;
•
sell or transfer assets;
•
create liens;
•
consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets; and
•
enter into certain transactions with our affiliates.
Under our asset-based revolving credit facility, when (and for
as long as) the combined availability under our asset-based
revolving credit facility and our senior secured revolving
credit facility is less than a specified amount for a certain
period of time or, if a payment or bankruptcy event of default
has occurred and is continuing, funds deposited into any of our
depository accounts will be transferred on a daily basis into a
blocked account with the administrative agent and applied to
prepay loans under the asset-based revolving credit facility and
to cash collateralize letters of credit issued thereunder.
Under our senior secured credit facilities, we are required to
satisfy and maintain specified financial ratios. Our ability to
meet those financial ratios can be affected by events beyond our
control, and there can be no assurance we will continue to meet
those ratios. A breach of any of these covenants could result in
a default under both our cash flow credit facility and our
asset-based revolving credit facility. Upon the occurrence of an
event of default under our senior secured credit facilities, our
lenders could elect to declare all amounts outstanding under our
senior secured credit facilities to be immediately due and
payable and terminate all commitments to extend further credit.
If we were unable to repay those amounts, the lenders under our
senior secured credit facilities could proceed against the
collateral granted to them to secure such indebtedness. We have
pledged a significant portion of our assets as collateral under
our senior secured credit facilities, and that collateral (other
than certain European collateral securing our senior secured
European term loan facility) is also pledged as collateral under
our first lien notes. If any of the lenders under our senior
secured credit facilities accelerate the repayment of
borrowings, there can be no assurance we will have sufficient
assets to repay our senior secured credit facilities and the
first lien notes.
Risks
Related to Our Business
Our
hospitals face competition for patients from other hospitals and
health care providers.
The health care business is highly competitive, and competition
among hospitals and other health care providers for patients has
intensified in recent years. Generally, other hospitals in the
local communities we serve provide services similar to those
offered by our hospitals. In addition, CMS publicizes on a
website performance data related to quality measures and data on
patient satisfaction surveys hospitals submit in connection with
their Medicare reimbursement. Federal law provides for the
future expansion of the number of quality measures that must be
reported. Additional quality measures and future trends toward
clinical transparency may have an unanticipated impact on our
competitive position and patient volumes. In addition, the
Patient Protection and Affordable Care Act as amended by the
Health Care and Education Reconciliation Act of 2010
(“Health Reform Legislation”) requires all hospitals
to annually establish, update and make public a list of the
hospital’s standard charges for items and services. If any
of our hospitals achieve poor results (or results that are lower
than our competitors) on these quality measures or on patient
satisfaction surveys or if our standard charges are higher than
our competitors, our patient volumes could decline.
In addition, the number of freestanding specialty hospitals,
surgery centers and diagnostic and imaging centers in the
geographic areas in which we operate has increased
significantly. As a result, most of our hospitals operate in a
highly competitive environment. Some of the facilities that
compete with our hospitals are owned by governmental agencies or
not-for-profit
corporations supported by endowments, charitable contributions
and/or tax
revenues and can finance capital expenditures and operations on
a tax-exempt basis. Our hospitals are facing increasing
competition from specialty hospitals, some of which are
physician-owned, and from both our own and unaffiliated
freestanding surgery centers for market share in high margin
services and for quality physicians and personnel. If ambulatory
surgery centers are better able to compete in this environment
than our hospitals, our hospitals may experience a decline in
patient volume, and we may experience a decrease in margin, even
if those patients use our ambulatory surgery centers. In states
that do not require a Certificate of Need (“CON”) for
the purchase, construction or expansion of health care
facilities or services, competition in the form of new services,
facilities and capital spending is more prevalent. Further, if
our competitors are better able to attract patients, recruit
physicians, expand services or obtain favorable managed care
contracts at their facilities than our hospitals and ambulatory
surgery centers, we may experience an overall decline in patient
volume. See “Business — Competition.”
The
growth of uninsured and patient due accounts and a deterioration
in the collectibility of these accounts could adversely affect
our results of operations.
The primary collection risks of our accounts receivable relate
to the uninsured patient accounts and patient accounts for which
the primary insurance carrier has paid the amounts covered by
the applicable agreement, but patient responsibility amounts
(deductibles and copayments) remain outstanding. The provision
for doubtful accounts relates primarily to amounts due directly
from patients.
The amount of the provision for doubtful accounts is based upon
management’s assessment of historical writeoffs and
expected net collections, business and economic conditions,
trends in federal and state governmental and private employer
health care coverage, the rate of growth in uninsured patient
admissions and other collection indicators. Due to a number of
factors, including the recent economic downturn and increase in
unemployment, we believe our facilities may experience growth in
bad debts, uninsured discounts and charity care. At
December 31, 2009, our allowance for doubtful accounts
represented approximately 94% of the $5.176 billion patient
due accounts receivable balance. The sum of the provision for
doubtful accounts, uninsured discounts and charity care
increased from $6.134 billion for 2007, to
$7.009 billion for 2008 and to $8.362 billion for 2009.
A continuation of the trends that have resulted in an increasing
proportion of accounts receivable being comprised of uninsured
accounts and a deterioration in the collectibility of these
accounts will adversely affect our collection of accounts
receivable, cash flows and results of operations. The Health
Reform Legislation
seeks to decrease over time the number of uninsured individuals,
by among other things, requiring employers to offer, and
individuals to carry, health insurance or be subject to
penalties. However, it is difficult to predict the full impact
of the Health Reform Legislation due to the law’s
complexity, lack of implementing regulations or interpretive
guidance, gradual implementation and possible amendment, as well
as our inability to foresee how individuals and businesses will
respond to the choices afforded them by the law.
Health
care reform and changes in governmental programs may reduce our
revenues.
In March 2010, President Obama signed the Health Reform
Legislation into law. The Health Reform Legislation represents
significant change across the health care industry. As a result
of the law’s complexity, lack of implementing regulations
or interpretive guidance, gradual implementation and possible
amendment, the impact of the Health Reform Legislation is not
yet fully known. The primary goal of the Health Reform
Legislation is to decrease the number of uninsured individuals
by expanding coverage to approximately 32 million
additional individuals through a combination of public program
expansion and private sector health insurance reforms. The
Health Reform Legislation expands eligibility under existing
Medicaid programs, imposes financial penalties on individuals
who fail to carry insurance coverage and creates affordability
credits for those not enrolled in an employer-sponsored health
plan. Further, the Health Reform Legislation requires states to
establish a health insurance exchange and permits states to
create federally funded, non-Medicaid plans for low-income
residents not eligible for Medicaid. The Health Reform
Legislation establishes a number of health insurance market
reforms, including a ban on lifetime limits and pre-existing
condition exclusions, new benefit mandates, and increased
dependent coverage. Health insurance market reforms that expand
insurance coverage should increase revenues from providing care
to previously uninsured individuals; however, many of these
provisions of the Health Reform Legislation will not become
effective until 2014 or later. It is also possible that
implementation of these provisions could be delayed or even
blocked due to court challenges. In addition, there may be
efforts to repeal or amend the Health Reform Legislation.
Further, the Health Reform Legislation contains a number of
provisions designed to significantly reduce Medicare and
Medicaid program spending, including reductions in Medicare
market basket updates and Medicare and Medicaid disproportionate
share funding. A significant portion of our patient volume is
derived from government health care programs, principally
Medicare and Medicaid. Specifically, we derived approximately
40% of our revenues from the Medicare and Medicaid programs in
2009. Reductions to our reimbursement under the Medicare and
Medicaid programs by the Health Reform Legislation could
adversely affect our business and results of operations, to the
extent such reductions are not offset by the expected increases
in revenues from providing care to previously uninsured
individuals.
Because of the many variables involved, we are unable to
predict the net effect on the Company of the reductions in
Medicare and Medicaid spending, the expected increases in
revenues from providing care to previously uninsured
individuals, and numerous other provisions in the law that may
affect the Company. We are further unable to foresee how
individuals and businesses will respond to the choices afforded
them by the Health Reform Legislation. Thus, we cannot predict
the full impact of the Health Reform Legislation on the Company
at this time.
In addition to the Health Reform Legislation, in recent years,
legislative and regulatory changes have resulted in limitations
on and, in some cases, reductions in levels of payments to
health care providers for certain services under the Medicare
and Medicaid programs. For example, effective January 1,2008, CMS significantly revised the payment system used to
reimburse ambulatory surgery centers (“ASCs”) and
expanded the number of procedures that Medicare reimburses if
performed in an ASC. More Medicare procedures now performed in
hospitals, such as ours, may be moved to ASCs, reducing surgical
volume in our hospitals. Also, more Medicare procedures now
performed in ASCs, such as ours, may be moved to
physicians’ offices. Commercial third-party payers may
adopt similar policies.
Further, CMS has recently completed a two-year transition to
full implementation of the Medicare severity diagnosis-related
group (“MS-DRG”) system, which represents a refinement
to the existing diagnosis-related group system. Realignments in
the MS-DRG system could impact the margins we receive for
certain services. For federal fiscal year 2010, CMS has provided
a 2.1% market basket update for hospitals that submit certain
quality patient care indicators and a 0.1% update for hospitals
that do not submit this data.
Medicare payments to hospitals in federal fiscal years 2008 and
2009 were reduced to eliminate what CMS estimated to be the
effect of coding or classifications changes as a result of
hospitals implementing the
MS-DRG
system. If CMS retrospectively determines the adjustment levels
for federal fiscal years 2008 and 2009 were inadequate, CMS may
impose additional adjustments in future years. Although CMS has
not imposed an adjustment for federal fiscal year 2010, CMS has
announced its intent to impose payment adjustments in federal
fiscal years 2011 and 2012 because of what CMS has determined to
be an inadequate adjustment in federal fiscal year 2008. It is
not clear what impact, if any, the market basket reductions
required by the Health Reform Legislation will have on
CMS’s proposal. Additionally, Medicare payments to
hospitals are subject to a number of other adjustments, and the
actual impact on payments to specific hospitals may vary. In
some cases, commercial third-party payers and other payers such
as some state Medicaid programs rely on all or portions of the
Medicare MS-DRG system to determine payment rates, and
adjustments that negatively impact Medicare payments may also
negatively impact payments from those payers.
Since most states must operate with balanced budgets and since
the Medicaid program is often the state’s largest program,
states can be expected to adopt or consider adopting legislation
designed to reduce their Medicaid expenditures. The current
economic downturn has increased the budgetary pressures on most
states, and these budgetary pressures have resulted, and likely
will continue to result, in decreased spending for Medicaid
programs in many states. Further, many states have also adopted,
or are considering, legislation designed to reduce coverage,
enroll Medicaid recipients in managed care programs
and/or
impose additional taxes on hospitals to help finance or expand
the states’ Medicaid systems. The Health Reform Legislation
provides for significant expansions to the Medicaid program, but
these changes are not required until 2014. In addition, the
Health Reform Legislation will result in increased state
legislative and regulatory changes in order for states to comply
with new federal mandates, such as the requirement to establish
health insurance exchanges, and to participate in grants and
other incentive opportunities.
On May 1, 2009, the Department of Defense implemented a
prospective payment system for hospital outpatient services
furnished to beneficiaries of TRICARE, the Department of
Defense’s health care program for members of the armed
forces, similar to that utilized for services furnished to
Medicare beneficiaries. Because the Medicare outpatient
prospective payment system rates have historically been below
TRICARE rates, the adoption of this payment methodology for
TRICARE beneficiaries reduces our reimbursement; however,
TRICARE outpatient services do not represent a significant
portion of our patient volumes.
Current or future health care reform efforts, changes in laws or
regulations regarding government health programs, other changes
in the administration of government health programs and changes
to commercial third-party payers in response to health care
reform and changes to government health programs could have a
material, adverse effect on our financial position and results
of operations.
If we
are unable to retain and negotiate favorable contracts with
nongovernment payers, including managed care plans, our revenues
may be reduced.
Our ability to obtain favorable contracts with nongovernment
payers, including health maintenance organizations, preferred
provider organizations and other managed care plans
significantly affects the revenues and operating results of our
facilities. Revenues derived from these entities and other
insurers accounted for 52% and 53% of our patient revenues for
the years ended December 31, 2009 and December 31,2008, respectively. Nongovernment payers, including managed care
payers, continue to demand discounted fee structures, and the
trend toward consolidation among nongovernment payers tends to
increase their bargaining power over fee structures. Our future
success will depend, in part, on our ability to retain and renew
our managed care contracts and enter into new managed care
contracts on terms favorable to us. Other health care providers
may impact our ability to enter into managed care contracts or
negotiate increases in our reimbursement and other favorable
terms and conditions. For example, some of our competitors may
negotiate
exclusivity provisions with managed care plans or otherwise
restrict the ability of managed care companies to contract with
us. It is not clear what impact, if any, the increased
obligations on managed care payers and other payers imposed by
the Health Reform Legislation will have on our ability to
negotiate reimbursement increases. If we are unable to retain
and negotiate favorable contracts with managed care plans or
experience reductions in payment increases or amounts received
from nongovernment payers, our revenues may be reduced.
Our
performance depends on our ability to recruit and retain quality
physicians.
The success of our hospitals depends in part on the number and
quality of the physicians on the medical staffs of our
hospitals, the admitting practices of those physicians and
maintaining good relations with those physicians. Although we
employ some physicians, physicians are often not employees of
the hospitals at which they practice and, in many of the markets
we serve, most physicians have admitting privileges at other
hospitals in addition to our hospitals. Such physicians may
terminate their affiliation with our hospitals at any time. If
we are unable to provide adequate support personnel or
technologically advanced equipment and hospital facilities that
meet the needs of those physicians, they may be discouraged from
referring patients to our facilities, admissions may decrease
and our operating performance may decline.
Our
hospitals face competition for staffing, which may increase
labor costs and reduce profitability.
Our operations are dependent on the efforts, abilities and
experience of our management and medical support personnel, such
as nurses, pharmacists and lab technicians, as well as our
physicians. We compete with other health care providers in
recruiting and retaining qualified management and support
personnel responsible for the daily operations of each of our
hospitals, including nurses and other nonphysician health care
professionals. In some markets, the availability of nurses and
other medical support personnel has been a significant operating
issue to health care providers. We may be required to continue
to enhance wages and benefits to recruit and retain nurses and
other medical support personnel or to hire more expensive
temporary or contract personnel. As a result, our labor costs
could increase. We also depend on the available labor pool of
semi-skilled and unskilled employees in each of the markets in
which we operate. Certain proposed changes in federal labor
laws, including the Employee Free Choice Act, could increase the
likelihood of employee unionization attempts. To the extent a
significant portion of our employee base unionizes, it is
possible our labor costs could increase materially. In addition,
the states in which we operate could adopt mandatory
nurse-staffing ratios or could reduce mandatory nurse staffing
ratios already in place. State-mandated nurse-staffing ratios
could significantly affect labor costs and have an adverse
impact on revenue if we are required to limit admissions in
order to meet the required ratios. If our labor costs increase,
we may not be able to raise rates to offset these increased
costs. Because a significant percentage of our revenues consists
of fixed, prospective payments, our ability to pass along
increased labor costs is constrained. Our failure to recruit and
retain qualified management, nurses and other medical support
personnel, or to control labor costs, could have a material,
adverse effect on our results of operations.
If we
fail to comply with extensive laws and government regulations,
we could suffer penalties or be required to make significant
changes to our operations.
The health care industry is required to comply with extensive
and complex laws and regulations at the federal, state and local
government levels relating to, among other things:
•
billing and coding for services;
•
relationships with physicians and other referral sources;
confidentiality, maintenance, data breach, identity theft and
security issues associated with health-related and personal
information and medical records;
•
the screening, stabilization and transfer of individuals who
have emergency medical conditions;
•
licensure and certification;
•
hospital rate or budget review;
•
preparing and filing of cost reports;
•
operating policies and procedures; and
•
addition of facilities and services.
Among these laws are the federal Anti-kickback Statute, the
federal physician self-referral law (commonly called the Stark
Law), the Federal False Claims Act (“FCA”) and similar
state laws. We have a variety of financial relationships with
physicians and others who either refer or influence the referral
of patients to our hospitals and other health care facilities,
and these laws govern those relationships. The Office of
Inspector General of the Department of Health and Human Services
(“OIG”) has enacted safe harbor regulations that
outline practices deemed protected from prosecution under the
Anti-kickback Statute. While we endeavor to comply with the
applicable safe harbors, certain of our current arrangements,
including joint ventures and financial relationships with
physicians and other referral sources and persons and entities
to which we refer patients, do not qualify for safe harbor
protection. Failure to qualify for a safe harbor does not mean
the arrangement necessarily violates the Anti-kickback Statute,
but may subject the arrangement to greater scrutiny. However, we
cannot offer assurance that practices outside of a safe harbor
will not be found to violate the Anti-kickback Statute.
Allegations of violations of the Anti-kickback Statute may be
brought under the federal Civil Monetary Penalty Law, which
requires a lower burden of proof than other fraud and abuse
laws, including the Anti-kickback Statute.
Our financial relationships with referring physicians and their
immediate family members must comply with the Stark Law by
meeting an exception. We attempt to structure our relationships
to meet an exception to the Stark Law, but the regulations
implementing the exceptions are detailed and complex, and we
cannot provide assurance every relationship complies fully with
the Stark Law. Unlike the Anti-kickback Statute, failure to meet
an exception under the Stark Law results in a violation of the
Stark Law, even if such violation is technical in nature.
Additionally, if we violate the Anti-kickback Statute or Stark
Law, or if we improperly bill for our services, we may be found
to violate the FCA, either under a suit brought by the
government or by a private person under a qui tam, or
“whistleblower,” suit.
If we fail to comply with the Anti-kickback Statute, the Stark
Law, the FCA or other applicable laws and regulations, we could
be subjected to liabilities, including civil penalties
(including the loss of our licenses to operate one or more
facilities), exclusion of one or more facilities from
participation in the Medicare, Medicaid and other federal and
state health care programs and, for violations of certain laws
and regulations, criminal penalties. See “Regulation and
Other Factors.”
CMS published a proposal to collect information from 400
hospitals regarding their ownership, investment and compensation
arrangements with physicians. Called the Disclosure of Financial
Relationships Report (or “DFRR”), CMS intends to
use this data to monitor compliance with the Stark Law, and CMS
may share this information with other government agencies. Many
of these agencies have not previously analyzed this information
and have the authority to bring enforcement actions against
hospitals filing such reports. The DFRR and its supporting
documentation are currently under review by the Office of
Management and Budget, and it is unclear when, or if, it will be
finalized.
Because many of these laws and their implementing regulations
are relatively new, we do not always have the benefit of
significant regulatory or judicial interpretation of these laws
and regulations. In the future, different interpretations or
enforcement of these laws and regulations could subject our
current or past practices to allegations of impropriety or
illegality or could require us to make changes in our
facilities,
equipment, personnel, services, capital expenditure programs and
operating expenses. A determination we have violated these laws,
or the public announcement that we are being investigated for
possible violations of these laws, could have a material,
adverse effect on our business, financial condition, results of
operations or prospects, and our business reputation could
suffer significantly. In addition, other legislation or
regulations at the federal or state level may be adopted that
adversely affect our business.
We
have been and could become the subject of governmental
investigations, claims and litigation.
Health care companies are subject to numerous investigations by
various governmental agencies. Further, under the FCA, private
parties have the right to bring qui tam, or
“whistleblower,” suits against companies that submit
false claims for payments to, or improperly retain overpayments
from, the government. Some states have adopted similar state
whistleblower and false claims provisions. Certain of our
individual facilities have received, and other facilities may
receive, government inquiries from federal and state agencies.
Depending on whether the underlying conduct in these or future
inquiries or investigations could be considered systemic, their
resolution could have a material, adverse effect on our
financial position, results of operations and liquidity.
Governmental agencies and their agents, such as the Medicare
Administrative Contractors, fiscal intermediaries and carriers,
as well as the OIG, CMS and state Medicaid programs, conduct
audits of our health care operations. Private payers may conduct
similar post-payment audits, and we also perform internal audits
and monitoring. Depending on the nature of the conduct found in
such audits and whether the underlying conduct could be
considered systemic, the resolution of these audits could have a
material, adverse effect on our financial position, results of
operations and liquidity.
As required by statute, CMS is in the process of implementing
the Recovery Audit Contractor (“RAC”) program on a
nationwide basis. Under the program, CMS contracts with RACs to
conduct post-payment reviews to detect and correct improper
payments in the
fee-for-service
Medicare program. The Health Reform Legislation expands the RAC
program’s scope to include Medicaid claims by requiring all
states to enter into contracts with RACs by December 31,2010. In addition, CMS employs Medicaid Integrity Contractors
(“MICs”) to perform post-payment audits of Medicaid
claims and identify overpayments. Throughout 2010, MIC audits
will continue to expand. The Health Reform Legislation increases
federal funding for the MIC program for federal fiscal year 2011
and later years. In addition to RACs and MICs, several other
contractors, including the state Medicaid agencies, have
increased their review activities.
Should we be found out of compliance with any of these laws,
regulations or programs, depending on the nature of the
findings, our business, our financial position and our results
of operations could be negatively impacted.
Controls
designed to reduce inpatient services may reduce our
revenues.
Controls imposed by Medicare, managed Medicare, Medicaid,
managed Medicaid and commercial third-party payers designed to
reduce admissions and lengths of stay, commonly referred to as
“utilization review,” have affected and are expected
to continue to affect our facilities. Utilization review entails
the review of the admission and course of treatment of a patient
by health plans. Inpatient utilization, average lengths of stay
and occupancy rates continue to be negatively affected by
payer-required preadmission authorization and utilization review
and by payer pressure to maximize outpatient and alternative
health care delivery services for less acutely ill patients.
Efforts to impose more stringent cost controls are expected to
continue. For example, the Health Reform Legislation eliminates
current statutory restrictions on the use of prepayment review
by Medicare contractors. Although we are unable to predict the
effect these changes will have on our operations, significant
limits on the scope of services reimbursed and on reimbursement
rates and fees could have a material, adverse effect on our
business, financial position and results of operations.
Our
overall business results may suffer from the recent economic
downturn.
The United States economy has weakened significantly. Depressed
consumer spending and higher unemployment rates continue to
pressure many industries. During economic downturns,
governmental entities
often experience budget deficits as a result of increased costs
and lower than expected tax collections. These budget deficits
may force federal, state and local government entities to
decrease spending for health and human service programs,
including Medicare, Medicaid and similar programs, which
represent significant payer sources for our hospitals. Other
risks we face from general economic weakness include potential
declines in the population covered under managed care
agreements, patient decisions to postpone or cancel elective and
non-emergency health care procedures, potential increases in the
uninsured and underinsured populations and further difficulties
in our collecting patient co-payment and deductible receivables.
The Health Reform Legislation seeks to decrease over time the
number of uninsured individuals, provides for the expansion of
the Medicaid program and contains a number of insurance market
reforms designed to broaden insurance coverage, such as
eliminating the use of pre-existing condition exclusions.
However, it is difficult to predict the full impact of the
Health Reform Legislation due to the law’s complexity, lack
of implementing regulations or interpretive guidance, gradual
implementation and possible amendment.
The
industry trend towards value-based purchasing may negatively
impact our revenues.
There is a trend in the health care industry toward value-based
purchasing of health care services. These value-based purchasing
programs include both public reporting of quality data and
preventable adverse events tied to the quality and efficiency of
care provided by facilities. Governmental programs including
Medicare and Medicaid currently require hospitals to report
certain quality data to receive full reimbursement updates. In
addition, Medicare does not reimburse for care related to
certain preventable adverse events (also called “never
events”). Many large commercial payers currently require
hospitals to report quality data, and several commercial payers
do not reimburse hospitals for certain preventable adverse
events. Further, we have implemented a policy pursuant to which
we do not bill patients or third-party payers for fees or
expenses incurred due to certain preventable adverse events.
The Health Reform Legislation contains a number of provisions
intended to promote value-based purchasing. Beginning in federal
fiscal year 2013, hospitals that satisfy certain performance
standards will receive increased payments for discharges during
the following fiscal year. These payments will be funded by
decreases in payments to all hospitals for inpatient services.
For discharges occurring during federal fiscal year 2014 and
after, the performance standards must assess hospital
efficiency, including Medicare spending per beneficiary. In
addition, the Health Reform Legislation provides for reduced
payments based on a hospital’s HAC rates and readmission
rates and requires HAC rates and readmission rates to be made
public. Currently, Medicare no longer assigns an inpatient
hospital discharge to a higher paying
MS-DRG if a
selected HAC was not present on admission. Effective
July 1, 2011, the Health Reform Legislation will likewise
prohibit the use of federal funds under the Medicaid program to
reimburse providers for medical assistance provided to treat
HACs. Beginning in federal fiscal year 2015, hospitals that fall
into the top 25% of national risk-adjusted HAC rates for all
hospitals in the previous year will also receive a 1% reduction
in Medicare payment rates. For discharges occurring during a
fiscal year beginning on or after October 1, 2012,
hospitals with excessive readmissions for certain conditions
will receive reduced Medicare payments for all inpatient
admissions.
We expect value-based purchasing programs, including programs
that condition reimbursement on patient outcome measures, to
become more common and to involve a higher percentage of
reimbursement amounts. We are unable at this time to predict how
this trend will affect our results of operations, but it could
negatively impact our revenues.
Our
operations could be impaired by a failure of our information
systems.
Any system failure that causes an interruption in service or
availability of our systems could adversely affect operations or
delay the collection of revenues. Even though we have
implemented network security measures, our servers are
vulnerable to computer viruses, break-ins and similar
disruptions from unauthorized tampering. The occurrence of any
of these events could result in interruptions, delays, the loss
or corruption of data, or cessations in the availability of
systems, all of which could have a material adverse effect on
our financial position and results of operations and harm our
business reputation.
The performance of our information technology and systems is
critical to our business operations. In addition to our shared
services initiatives, our information systems are essential to a
number of critical areas of our operations, including:
•
accounting and financial reporting;
•
billing and collecting accounts;
•
coding and compliance;
•
clinical systems;
•
medical records and document storage;
•
inventory management;
•
negotiating, pricing and administering managed care contracts
and supply contracts; and
•
monitoring quality of care and collecting data on quality
measures necessary for full Medicare payment updates.
If we
fail to effectively and timely implement electronic health
record systems, our operations could be adversely
affected.
As required by the American Recovery and Reinvestment Act of
2009, HHS is in the process of developing and implementing an
incentive payment program for eligible hospitals and health care
professionals that adopt and meaningfully use certified
electronic health record (“EHR”) technology. If our
hospitals and employed professionals are unable to meet the
requirements for participation in the incentive payment program,
we will not be eligible to receive incentive payments that could
offset some of the costs of implementing EHR systems. Further,
beginning in 2015, eligible hospitals and professionals that
fail to demonstrate meaningful use of certified EHR technology
will be subject to reduced payments from Medicare. Failure to
implement EHR systems effectively and in a timely manner could
have a material, adverse effect on our financial position and
results of operations.
State
efforts to regulate the construction or expansion of health care
facilities could impair our ability to operate and expand our
operations.
Some states, particularly in the eastern part of the country,
require health care providers to obtain prior approval, known as
a CON, for the purchase, construction or expansion of health
care facilities, to make certain capital expenditures or to make
changes in services or bed capacity. In giving approval, these
states consider the need for additional or expanded health care
facilities or services. We currently operate health care
facilities in a number of states with CON laws. The failure to
obtain any requested CON could impair our ability to operate or
expand operations. Any such failure could, in turn, adversely
affect our ability to attract patients to our facilities and
grow our revenues, which would have an adverse effect on our
results of operations.
Our
facilities are heavily concentrated in Florida and Texas, which
makes us sensitive to regulatory, economic, environmental and
competitive conditions and changes in those
states.
We operated 163 hospitals at December 31, 2009, and 73 of
those hospitals are located in Florida and Texas. Our Florida
and Texas facilities’ combined revenues represented
approximately 51% of our consolidated revenues for the year
ended December 31, 2009. This concentration makes us
particularly sensitive to regulatory, economic, environmental
and competitive conditions and changes in those states. Any
material change in the current payment programs or regulatory,
economic, environmental or competitive conditions in those
states could have a disproportionate effect on our overall
business results.
In addition, our hospitals in Florida and Texas and other areas
across the Gulf Coast are located in hurricane-prone areas. In
the recent past, hurricanes have had a disruptive effect on the
operations of our hospitals in Florida, Texas and other coastal
states, and the patient populations in those states. Our
business
activities could be harmed by a particularly active hurricane
season or even a single storm, and the property insurance we
obtain may not be adequate to cover losses from future
hurricanes or other natural disasters.
We may
be subject to liabilities from claims by the Internal Revenue
Service.
At December 31, 2009, we were contesting before the Appeals
Division of the Internal Revenue Service (“IRS”)
certain claimed deficiencies and adjustments proposed by the IRS
in connection with its examination of the 2003 and 2004 federal
income tax returns for HCA and eight affiliates that are treated
as partnerships for federal income tax purposes
(“affiliated partnerships”). The disputed items
include the timing of recognition of certain patient service
revenues and our method for calculating the tax allowance for
doubtful accounts.
Six taxable periods of HCA and its predecessors ended in 1997
through 2002 and the 2002 taxable year of four affiliated
partnerships, for which the primary remaining issue is the
computation of the tax allowance for doubtful accounts, are
pending before the IRS Examination Division as of
December 31, 2009.
The IRS began an audit of the 2005 and 2006 federal income tax
returns for HCA and seven affiliated partnerships during 2008.
We anticipate the IRS Examination Division will conclude its
audit in 2010. During 2009, the seven affiliated partnership
audits were resolved with no material impact on our operations
or financial position. We anticipate the IRS will begin an audit
of the 2007 and 2008 federal income tax returns for HCA during
2010.
Management believes HCA, its predecessors and affiliates
properly reported taxable income and paid taxes in accordance
with applicable laws and agreements established with the IRS and
final resolution of these disputes will not have a material,
adverse effect on our results of operations or financial
position. However, if payments due upon final resolution of
these issues exceed our recorded estimates, such resolutions
could have a material, adverse effect on our results of
operations or financial position.
We may
be subject to liabilities from claims brought against our
facilities.
We are subject to litigation relating to our business practices,
including claims and legal actions by patients and others in the
ordinary course of business alleging malpractice, product
liability or other legal theories. See
“Business — Legal Proceedings.” Many of
these actions involve large claims and significant defense
costs. We insure a portion of our professional liability risks
through a wholly-owned subsidiary. Management believes our
reserves for self-insured retentions and insurance coverage are
sufficient to cover insured claims arising out of the operation
of our facilities. Our wholly-owned insurance subsidiary has
entered into certain reinsurance contracts, and the obligations
covered by the reinsurance contracts are included in its
reserves for professional liability risks, as the subsidiary
remains liable to the extent that the reinsurers do not meet
their obligations under the reinsurance contracts. If payments
for claims exceed actuarially determined estimates, are not
covered by insurance, or reinsurers, if any, fail to meet their
obligations, our results of operations and financial position
could be adversely affected.
We are
exposed to market risks related to changes in the market values
of securities and interest rate changes.
We are exposed to market risk related to changes in market
values of securities. The investments in debt and equity
securities of our wholly-owned insurance subsidiary were
$1.309 billion and $7 million, respectively, at
December 31, 2009. These investments are carried at fair
value, with changes in unrealized gains and losses being
recorded as adjustments to other comprehensive income. At
December 31, 2009, we had a net unrealized gain of
$20 million on the insurance subsidiary’s investment
securities.
We are exposed to market risk related to market illiquidity.
Liquidity of the investments in debt and equity securities of
our wholly-owned insurance subsidiary could be impaired by the
inability to access the capital markets. Should the wholly-owned
insurance subsidiary require significant amounts of cash in
excess of normal cash requirements to pay claims and other
expenses on short notice, we may have difficulty selling these
investments in a timely manner or be forced to sell them at a
price less than what we might otherwise
have been able to in a normal market environment. At
December 31, 2009, our wholly-owned insurance subsidiary
had invested $396 million ($401 million par value) in
municipal, tax-exempt student loan auction rate securities
(“ARS”) that continued to experience market
illiquidity since February 2008 when multiple failed auctions
occurred due to a severe credit and liquidity crisis in the
capital markets. It is uncertain if auction-related market
liquidity will resume for these securities. We may be required
to recognize
other-than-temporary
impairments on these investments in future periods should
issuers default on interest payments or should the fair market
valuations of the securities deteriorate due to ratings
downgrades or other issue specific factors.
We are also exposed to market risk related to changes in
interest rates, and we periodically enter into interest rate
swap agreements to manage our exposure to these fluctuations.
Our interest rate swap agreements involve the exchange of fixed
and variable rate interest payments between two parties, based
on common notional principal amounts and maturity dates. The net
notional amounts of the swap agreements represent balances used
to calculate the exchange of cash flows and are not our assets
or liabilities. See “Management’s Discussion and
Analysis of Financial Condition and Results of
Operations — Market Risk.”
Since
the Recapitalization, the Investors control us and may have
conflicts of interest with us in the future.
As of December 31, 2009, the Investors indirectly owned
approximately 97.1% of our capital stock due to the
Recapitalization. As a result, the Investors have control over
our decisions to enter into any significant corporate
transaction and have the ability to prevent any transaction that
requires the approval of shareholders. For example, the
Investors could cause us to make acquisitions that increase the
amount of our indebtedness or sell assets.
Additionally, the Sponsors are in the business of making
investments in companies and may acquire and hold interests in
businesses that compete directly or indirectly with us. One or
more of the Sponsors may also pursue acquisition opportunities
that may be complementary to our business and, as a result,
those acquisition opportunities may not be available to us. So
long as investment funds associated with or designated by the
Sponsors continue to indirectly own a significant amount of the
outstanding shares of our common stock, even if such amount is
less than 50%, the Sponsors will continue to be able to strongly
influence or effectively control our decisions.
Risks
Related to the Notes
The following risks apply to the outstanding notes and will
apply equally to the exchange notes.
The
secured indebtedness under our senior secured asset-based
revolving credit facility are effectively senior to the first
lien notes to the extent of the value of the receivables
collateral securing such facility on a first-priority
basis.
Our asset-based revolving credit facility has a first-priority
lien in the accounts receivable of our company and our domestic
subsidiaries, with certain exceptions. Our other senior secured
credit facilities and the first lien notes have a
second-priority lien in those receivables (except for those of
certain special purpose subsidiaries that only guarantee and
pledge their assets under our asset-based revolving credit
facility). The indentures governing the first lien notes and the
second lien notes permit us to incur additional indebtedness
secured on a first-priority basis by such assets in the future.
The first-priority liens in the collateral securing indebtedness
under our asset-based revolving credit facility and any such
future indebtedness are higher in priority as to such collateral
than the security interests securing the first lien notes and
the guarantees. Holders of the indebtedness under our
asset-based revolving credit facility and any other indebtedness
secured by higher priority liens on such collateral will be
entitled to receive proceeds from the realization of value of
such collateral to repay such indebtedness in full before the
holders of the first lien notes will be entitled to any recovery
from such collateral. As a result, holders of the first lien
notes will only be entitled to receive proceeds from the
realization of value of assets securing our asset-based
revolving credit facility on a higher priority basis after all
indebtedness and other obligations under our asset-based
revolving credit facility and
any other obligations secured by higher priority liens on such
assets are repaid in full. The first lien notes are effectively
junior in right of payment to indebtedness under our asset-based
revolving credit facility and any other indebtedness secured by
higher priority liens on such collateral to the extent of the
realizable value of such collateral. Even if there were
receivables collateral or proceeds left over to pay the exchange
first lien notes and the cash flow credit facility after a
foreclosure on that collateral and payment of the outstanding
amounts under the asset-based revolving credit facility, that
collateral would be subject to the first lien intercreditor
agreement, and the representative of the lenders under the cash
flow credit facility would initially control actions with
respect to that collateral. See “— Even though
the holders of the first lien notes benefit from a
first-priority lien on the collateral that secures our cash flow
credit facility, the representative of the lenders under the
cash flow credit facility will initially control actions with
respect to that collateral.”
As of December 31, 2009, the first lien notes would have
been effectively junior to $715 million of indebtedness
outstanding under our asset-based revolving credit facility to
the extent of the value of collateral securing such
indebtedness, and we borrowed an additional approximately
$1.050 billion under our asset-based revolving credit
facility in connection with the February 2010 distribution, with
which the first lien notes are also effectively junior.
Other
secured indebtedness, including our senior secured credit
facilities, is effectively senior to the 2009 second lien notes
to the extent of the value of the collateral securing such
facility on a first- and second-priority basis.
Certain of our senior secured credit facilities are
collateralized by a first-priority lien, subject to permitted
liens, in, among other things, the capital stock of our company,
the capital stock of any material wholly owned first-tier
subsidiary of our company or of any U.S. subsidiary
guarantor and substantially all of our and the
U.S. subsidiary guarantors’ other tangible and
intangible assets, subject to exceptions. In addition, our
asset-based revolving credit facility has a first-priority lien
in the accounts receivable of our company and certain of our
subsidiaries, and our other senior secured credit facilities,
other than the European term loan facility, and our first lien
notes have a second-priority lien in those receivables. The
indentures governing the first lien notes and the second lien
notes permit us to incur additional indebtedness secured on a
first-priority basis by such assets in the future. The first-
and second-priority liens in the collateral securing
indebtedness under our senior secured credit facilities and our
first lien notes and any such future indebtedness are higher in
priority as to such collateral than the security interests
securing the 2009 second lien notes and the other second lien
notes and the related guarantees.
The 2009 second lien notes and the other second lien notes and
the related guarantees are secured, subject to permitted liens,
by a second-priority lien or a third-priority lien, as the case
may be, in the assets that secure our senior secured credit
facilities and first lien notes on a first-priority or
second-priority basis, as the case may be. Holders of the
indebtedness under our senior secured credit facilities, our
first lien notes and any other indebtedness collateralized by a
higher-priority lien in such collateral will be entitled to
receive proceeds from the realization of value of such
collateral to repay such indebtedness in full before the holders
of the 2009 second lien notes and the other second lien notes
will be entitled to any recovery from such collateral. As a
result, holders of the 2009 second lien notes and the other
second lien notes will only be entitled to receive proceeds from
the realization of value of assets securing our senior secured
credit facilities and our first lien notes on a higher-priority
basis after all indebtedness and other obligations under our
senior secured credit facilities, our first lien notes and any
other obligations secured by higher-priority liens on such
assets are repaid in full. The 2009 second lien notes and the
other second lien notes are effectively junior in right of
payment to indebtedness under our senior secured credit
facilities, our first lien notes and any other indebtedness
collateralized by a higher-priority lien in our assets, to the
extent of the realizable value of such collateral. In addition,
the indenture governing the 2009 second lien notes permits us to
incur additional indebtedness secured by a lien that ranks
equally with the 2009 second lien notes and the other second
lien notes. Any such indebtedness may further limit the recovery
from the realization of the value of such collateral available
to satisfy holders of the 2009 second lien notes.
The
value of the collateral securing the notes may not be sufficient
to satisfy our obligations under the notes.
The fair market value of the collateral is subject to
fluctuations based on factors that include, among others,
general economic conditions and similar factors. The amount to
be received upon a sale of the collateral would be dependent on
numerous factors, including, but not limited to, the actual fair
market value of the collateral at such time, the timing and the
manner of the sale and the availability of buyers. By its
nature, portions of the collateral may be illiquid and may have
no readily ascertainable market value. In the event of a
foreclosure, liquidation, bankruptcy or similar proceeding, the
collateral may not be sold in a timely or orderly manner, and
the proceeds from any sale or liquidation of this collateral may
not be sufficient to pay our obligations under the notes.
To the extent that liens securing obligations under the senior
secured credit facilities and the first lien notes, pre-existing
liens, liens permitted under the indenture and other rights,
including liens on excluded assets, such as those securing
purchase money obligations and capital lease obligations granted
to other parties (in addition to the holders of any other
obligations secured by higher priority liens), encumber any of
the collateral securing the notes and the guarantees, those
parties have or may exercise rights and remedies with respect to
the collateral that could adversely affect the value of the
collateral for the applicable series of notes and the ability of
the applicable collateral agent, the trustee under the
applicable indenture or the holders of the applicable series of
notes to realize or foreclose on the collateral.
The first lien notes and the related guarantees are secured,
subject to permitted liens, by a first-priority lien in the
collateral that secures our cash flow credit facility on a
first-priority basis (other than any European collateral
securing our senior secured European term loan facility) and
share equally in right of payment to the extent of the value of
such collateral securing such cash flow credit facility on a
first-priority basis. The first lien notes and the related
guarantees are not secured by any of the European collateral
described in “Description of Other Indebtedness —
Senior Secured Credit Facilities — Guarantee and
Security.” The indentures governing the first lien notes
permit us to incur additional indebtedness secured by a lien
that ranks equally with the first lien notes. Any such
indebtedness may further limit the recovery from the realization
of the value of such collateral available to satisfy holders of
the first lien notes.
The 2009 second lien notes and the related guarantees are
secured, subject to permitted liens, by a second-priority lien
in the collateral that secures our cash flow credit facility and
our first lien notes on a first-priority basis (other than any
European collateral securing our senior secured European term
loan facility) and share equally in right of payment with the
other second lien to the extent of the value of such collateral.
The 2009 second lien notes and the related guarantees are not
secured by any of the European collateral described in
“Description of Other Indebtedness — Senior
Secured Credit Facilities — Guarantee and
Security.” The indenture governing the 2009 second lien
notes permits us to incur additional indebtedness secured by a
lien that ranks either senior to the 2009 second lien note or
equally with the 2009 second lien notes. Any such indebtedness
may further limit the recovery from the realization of the value
of such collateral available to satisfy holders of the 2009
second lien notes.
There may not be sufficient collateral to pay off all amounts we
may borrow under our senior secured credit facilities, the notes
and additional notes that we may offer that would be secured on
the same basis as the first lien notes or the second lien notes.
Liquidating the collateral securing the notes may not result in
proceeds in an amount sufficient to pay any amounts due under
the notes after also satisfying the obligations to pay any
creditors with prior liens. If the proceeds of any sale of
collateral are not sufficient to repay all amounts due on the
notes, the holders of the notes (to the extent not repaid from
the proceeds of the sale of the collateral) would have only a
senior unsecured, unsubordinated claim against our and the
subsidiary guarantors’ remaining assets.
Claims
of noteholders are structurally subordinate to claims of
creditors of all of our
non-U.S. subsidiaries
and some of our U.S. subsidiaries because they do not
guarantee the notes.
The notes are not guaranteed by any of our
non-U.S. subsidiaries,
our less than wholly-owned U.S. subsidiaries or certain
other U.S. subsidiaries. Accordingly, claims of holders of
the notes are structurally
subordinate to the claims of creditors of these non-guarantor
subsidiaries, including trade creditors. All obligations of our
non-guarantor subsidiaries will have to be satisfied before any
of the assets of such subsidiaries would be available for
distribution, upon a liquidation or otherwise, to us or a
guarantor of the notes.
For the year ended December 31, 2009, our non-guarantor
subsidiaries accounted for approximately $12.468 billion,
or 41.5%, of our total revenues. As of December 31, 2009,
our non-guarantor subsidiaries accounted for approximately
$9.672 billion, or 40.1%, of our total assets and
approximately $6.750 billion, or 21.1%, of our total
liabilities. See Note 16 to our consolidated financial
statements.
If we
default on our obligations to pay our indebtedness, we may not
be able to make payments on the notes.
Any default under the agreements governing our indebtedness,
including a default under our senior secured credit facilities
that is not waived by the required lenders or a default under
the indentures governing our notes, and the remedies sought by
the holders of such indebtedness, could prevent us from paying
principal, premium, if any, and interest on the notes and
substantially decrease the market value of the notes. If we are
unable to generate sufficient cash flow and are otherwise unable
to obtain funds necessary to meet required payments of
principal, premium, if any, and interest on our indebtedness, or
if we otherwise fail to comply with the various covenants,
including financial and operating covenants, in the instruments
governing our indebtedness (including covenants in our senior
secured credit facilities, the indentures governing the first
lien notes and the indentures governing the second lien notes),
we could be in default under the terms of the agreements
governing such indebtedness. In the event of such default, the
holders of such indebtedness could elect to declare all the
funds borrowed thereunder to be due and payable, together with
accrued and unpaid interest, the lenders under our senior
secured credit facilities could elect to terminate their
commitments thereunder, cease making further loans and institute
foreclosure proceedings against our assets, and we could be
forced into bankruptcy or liquidation. If our operating
performance declines, we may in the future need to obtain
waivers from the required lenders under our senior secured
credit facilities to avoid being in default. If we breach our
covenants under our senior secured credit facilities and seek a
waiver, we may not be able to obtain a waiver from the required
lenders. If this occurs, we would be in default under the
instrument governing that indebtedness, the lenders could
exercise their rights, as described above, and we could be
forced into bankruptcy or liquidation.
The
lien ranking provisions of the indentures and other agreements
relating to the collateral securing the first lien notes on a
second priority basis will limit the rights of holders of the
first lien notes with respect to that collateral, even during an
event of default.
The rights of the holders of the first lien notes with respect
to the receivables collateral that secures the asset-based
revolving credit facility on a first-priority basis and that
secures our cash flow credit facility and our first lien notes
on a second-priority basis are substantially limited by the
terms of the lien ranking agreements set forth in the indentures
and the applicable receivables intercreditor agreements, even
during an event of default. Under the indentures and the
applicable receivables intercreditor agreements, at any time
that obligations that have the benefit of the higher priority
liens are outstanding, any actions that may be taken with
respect to such collateral, including the ability to cause the
commencement of enforcement proceedings against such collateral,
to control the conduct of such proceedings and to approve
amendments to releases of such collateral from the lien of, and
waive past defaults under, such documents relating to such
collateral, will be at the direction of the holders of the
obligations secured by the first-priority liens, and the holders
of the first lien notes secured by lower-priority liens may be
adversely affected.
In addition, the indentures and the applicable receivables
intercreditor agreements contain certain provisions benefiting
holders of indebtedness under our asset-based revolving credit
facility, including provisions requiring the trustee and the
collateral agent for the first lien notes not to object
following the filing of a bankruptcy petition to certain
important matters regarding the receivables collateral. After
such filing, the value of this collateral could materially
deteriorate, and holders of the first lien notes would be unable
to raise an objection.
The receivables collateral that secures the first lien notes and
guarantees on a lower-priority basis is also subject to any and
all exceptions, defects, encumbrances, liens and other
imperfections as may be accepted by the lenders under our
asset-based revolving credit facility, whether on or after the
date the first lien notes and guarantees are issued. The
existence of any such exceptions, defects, encumbrances, liens
and other imperfections could adversely affect the value of the
collateral securing the first lien notes, as well as the ability
of the collateral agent to realize or foreclose on such
collateral.
The
lien ranking provisions of the indenture and other agreements
relating to the collateral securing the 2009 second lien notes
limit the rights of holders of the 2009 second lien notes with
respect to that collateral, even during an event of
default.
The rights of the holders of the 2009 second lien notes with
respect to the collateral that secures the 2009 second lien
notes and the other second lien on a second-priority or
third-priority basis, as the case may be, are substantially
limited by the terms of the lien ranking agreements set forth in
the indenture and the intercreditor agreement relating to the
2009 second lien notes, even during an event of default. Under
the indenture and the intercreditor agreement, at any time that
obligations that have the benefit of the higher-priority liens
are outstanding, any actions that may be taken with respect to
such collateral, including the ability to cause the commencement
of enforcement proceedings against such collateral and to
control the conduct of such proceedings, and the approval of
amendments to, releases of such collateral from the lien of, and
waivers of past defaults under, such documents relating to such
collateral, will be at the direction of the holders of the
obligations secured by the first-priority and second-priority
liens, as applicable, and the holders of the notes secured by
lower-priority liens may be adversely affected.
In addition, the indenture and the intercreditor agreement
relating to the 2009 second lien notes contain certain
provisions benefiting holders of indebtedness under our senior
secured credit facilities and the first lien notes, including
provisions requiring the trustee and the collateral agent not to
object following the filing of a bankruptcy petition to a number
of important matters regarding the collateral. After such
filing, the value of this collateral could materially
deteriorate, and holders of the 2009 second lien notes and the
other second lien notes would be unable to raise an objection.
In addition, the right of holders of obligations secured by
first-priority and second-priority liens, as applicable, to
foreclose upon and sell such collateral upon the occurrence of
an event of default also would be subject to limitations under
applicable bankruptcy laws if we or any of our subsidiaries
become subject to a bankruptcy proceeding.
The collateral that secures the 2009 second lien notes and the
other second lien notes and the related guarantees on a
lower-priority basis is also subject to any and all exceptions,
defects, encumbrances, liens and other imperfections as may be
accepted by the lenders under our senior secured credit
facilities, the collateral agent for our first lien notes and
other creditors that have the benefit of higher-priority liens
on such collateral from time to time, whether on or after the
date the 2009 second lien notes and guarantees were issued. The
existence of any such exceptions, defects, encumbrances, liens
and other imperfections could adversely affect the value of the
collateral securing the 2009 second lien notes and the other
second lien notes as well as the ability of the collateral agent
for the second lien notes to realize or foreclose on such
collateral.
Even
though the holders of the first lien notes benefit from a
first-priority lien on the collateral that secures our cash flow
credit facility, the representative of the lenders under the
cash flow credit facility will initially control actions with
respect to that collateral.
The rights of the holders of the first lien notes with respect
to the collateral that secures the first lien notes on a
first-priority basis is subject to a first lien intercreditor
agreement among all holders of obligations secured by that
collateral on a first-priority basis, including the obligations
under our cash flow credit facility. Under that intercreditor
agreement, any actions that may be taken with respect to such
collateral, including the ability to cause the commencement of
enforcement proceedings against such collateral, to control such
proceedings and to approve amendments to releases of such
collateral from the lien of, and waive past defaults under, such
documents relating to such collateral, will be at the direction
of the authorized representative of the lenders under the cash
flow credit facility until (1) our obligations under the
cash flow credit facility are discharged (which discharge does
not include certain refinancings of the cash flow credit
facility) or (2) 90 days
after the occurrence of an event of default under the indentures
governing the first lien notes. Under the circumstances
described in clause (2) of the preceding sentence, the
authorized representative of the holders of the indebtedness
that represents the largest outstanding principal amount of
indebtedness secured by a first-priority lien on the collateral
(other than the cash flow credit facility) and has complied with
the applicable notice provisions gains the right to take actions
with respect to the collateral.
Even if the authorized representative of a series of first lien
notes gains the right to direct the collateral agent in the
circumstances described in clause (2) above, the authorized
representative must stop doing so (and those powers with respect
to the collateral would revert to the authorized representative
of the lenders under the cash flow credit facility) if the
lenders’ authorized representative has commenced and is
diligently pursuing enforcement action with respect to the
collateral or the grantor of the security interest in that
collateral (whether our company or the applicable subsidiary
guarantor) is then a debtor under or with respect to (or
otherwise subject to) an insolvency or liquidation proceeding.
In addition, the senior secured credit facilities and the
indentures governing the first lien notes permit us to issue
additional series of notes that also have a first-priority lien
on the same collateral. As explained above, any time that the
representative of the lenders under the cash flow credit
facility does not have the right to take actions with respect to
the collateral pursuant to the first lien intercreditor
agreement, that right passes to the authorized representative of
the holders of the next largest outstanding principal amount of
indebtedness secured by a first-priority lien on the collateral.
Even though the outstanding 2019 notes are the largest series of
outstanding first lien notes, if we issue additional first lien
notes in the future in a greater principal amount than the
outstanding 2019 notes, then the authorized representative for
those additional notes would be earlier in line to exercise
rights under the first lien intercreditor agreement than the
authorized representative for the outstanding 2019 notes.
Under the first lien intercreditor agreement, the authorized
representative of the holders of the first lien notes may not
object following the filing of a bankruptcy petition to any
debtor-in-possession
financing or to the use of the shared collateral to secure that
financing, subject to conditions and limited exceptions. After
such a filing, the value of this collateral could materially
deteriorate, and holders of the first lien notes would be unable
to raise an objection.
The collateral that secures the first lien notes and guarantees
on a first-priority basis will also be subject to any and all
exceptions, defects, encumbrances, liens and other imperfections
as may be accepted by the authorized representative of the
lenders under our cash flow credit facility or of a series of
first lien notes during any period that such authorized
representative controls actions with respect to the collateral
pursuant to the first lien intercreditor agreement. The
existence of any such exceptions, defects, encumbrances, liens
and other imperfections could adversely affect the value of the
collateral securing the first lien notes as well as the ability
of the collateral agent for the first lien notes to realize or
foreclose on such collateral for the benefit of the holders of
the first lien notes.
We
will in most cases have control over the collateral, and the
sale of particular assets by us could reduce the pool of assets
securing the notes and the guarantees.
The collateral documents allow us to remain in possession of,
retain exclusive control over, freely operate, and collect,
invest and dispose of any income from, the collateral securing
the notes and the guarantees, except, under certain
circumstances, cash transferred to accounts controlled by the
administrative agent under our asset-based revolving credit
facility.
In addition, we will not be required to comply with all or any
portion of Section 314(d) of the Trust Indenture Act
of 1939 (the “Trust Indenture Act”) if we
determine, in good faith based on advice of counsel, that, under
the terms of that Section
and/or any
interpretation or guidance as to the meaning thereof of the SEC
and its staff, including “no action” letters or
exemptive orders, all or such portion of Section 314(d) of
the Trust Indenture Act is inapplicable to the released
collateral. For example, so long as no default or event of
default under the indenture would result therefrom and such
transaction would not violate the Trust Indenture Act, we
may, among other things, without any release or consent by the
indenture trustee, conduct ordinary course activities with
respect to collateral, such as selling, factoring, abandoning or
otherwise
disposing of collateral and making ordinary course cash payments
(including repayments of indebtedness). See “Description of
the February 2009 Notes,”“Description of the April
2009 Notes,”“Description of the August 2009
Notes” and “Description of the March 2010 Notes.”
There
are circumstances other than repayment or discharge of the notes
under which the collateral securing the notes and guarantees
will be released automatically, without your consent or the
consent of the trustee.
Under various circumstances, collateral securing the notes will
be released automatically, including:
•
a sale, transfer or other disposal of such collateral in a
transaction not prohibited under the indenture;
•
with respect to collateral held by a guarantor, upon the release
of such guarantor from its guarantee;
•
with respect to collateral that is capital stock, upon the
dissolution of the issuer of such capital stock in accordance
with the indenture;
•
as to the first lien notes, with respect to any receivables
collateral in which the first lien notes have a second-priority
lien upon any release by the lenders under our asset-based
revolving credit facility of their first-priority security
interest in such collateral; provided that, if the
release occurs in connection with a foreclosure or exercise of
remedies by the collateral agent for the lenders under our
asset-based revolving credit facility, the lien on that
collateral will be automatically released but any proceeds
thereof not used to repay the obligations under our asset-based
revolving credit facility will be subject to lien in favor of
the collateral agent for the holders of the first lien notes and
our cash flow credit facility;
•
as to the first lien notes, with respect to the collateral upon
which the first lien notes have a first-priority lien, upon any
release in connection with a foreclosure or exercise of remedies
with respect to that collateral directed by the authorized
representative of the lenders under our cash flow credit
facility during any period that such authorized representative
controls actions with respect to the collateral pursuant to the
first lien intercreditor agreement. Even though the holders of
the first lien notes share ratably with the lenders under our
cash flow credit facility, the authorized representative of the
lenders under our cash flow credit facility will initially
control actions with respect to the collateral, whether or not
the holders of the notes agree or disagree with those actions.
See “— Even though the holders of the first lien
notes benefit from a first-priority lien on the collateral that
secures our cash flow credit facility, the representative of the
lenders under the cash flow credit facility will initially
control actions with respect to that collateral”; and
•
as to the 2009 second lien notes, with respect to any collateral
in which the 2009 second lien notes have a second-priority or
third-priority lien, upon any release by the lenders under our
senior secured credit facilities and the collateral agent for
our first lien notes of their first-priority or second-priority
security interests in such collateral unless such release occurs
in connection with a discharge in full in cash of first lien
obligations, which discharge is not in connection with a
foreclosure of, or other exercise of remedies with respect to,
non-receivables collateral by the first lien secured parties
(such discharge not in connection with any such foreclosure or
exercise of remedies, a “Payment Discharge”);
provided that, in the case of a Payment Discharge, the
lien on any non-receivables collateral disposed of in
satisfaction in whole or in part of first lien obligations shall
be automatically released, but any proceeds thereof not used for
purposes of the discharge of first lien obligations in full in
cash or otherwise in accordance with the indentures governing
the second lien notes shall be subject to lien in favor of the
collateral agent for the 2009 second lien notes and the other
second lien notes.
In addition, the guarantee of a subsidiary guarantor will be
automatically released to the extent it is released under the
senior secured credit facilities or in connection with a sale of
such subsidiary guarantor in a transaction not prohibited by the
indenture.
The indentures governing the notes also permit us to designate
one or more of our restricted subsidiaries that is a guarantor
of the notes as an unrestricted subsidiary. If we designate a
subsidiary guarantor as an
unrestricted subsidiary for purposes of the indentures governing
the notes, all of the liens on any collateral owned by such
subsidiary or any of its subsidiaries and any guarantees of the
notes by such subsidiary or any of its subsidiaries will be
released under the indentures but not necessarily under our
senior secured credit facilities. Designation of an unrestricted
subsidiary will reduce the aggregate value of the collateral
securing the notes to the extent that liens on the assets of the
unrestricted subsidiary and its subsidiaries are released. In
addition, the creditors of the unrestricted subsidiary and its
subsidiaries will have a senior claim on the assets of such
unrestricted subsidiary and its subsidiaries. See
“Description of the February 2009 Notes,”“Description of the April 2009 Notes,”“Description of the August 2009 Notes” and
“Description of the March 2010 Notes.”
The
imposition of certain permitted liens will cause the assets on
which such liens are imposed to be excluded from the collateral
securing the notes and the guarantees. There are also certain
other categories of property that are excluded from the
collateral.
The indentures governing the notes permit liens in favor of
third parties to secure additional debt, including purchase
money indebtedness and capital lease obligations, and any assets
subject to such liens are automatically excluded from the
collateral securing the notes and the guarantees. Our ability to
incur purchase money indebtedness and capital lease obligations
is subject to the limitations as described in “Description
of the February 2009 Notes,”“Description of the April
2009 Notes,”“Description of the August 2009
Notes” and “Description of the March 2010 Notes.”
In addition, certain categories of assets are excluded from the
collateral securing the notes and the guarantees. Excluded
assets include the assets of our non-guarantor subsidiaries and
equity investees, certain capital stock and other securities of
our subsidiaries and equity investees, certain properties that
do not secure our senior secured credit facilities, certain
European collateral that secures our senior secured European
term loan facility, deposit accounts, other bank or securities
accounts, cash, leaseholds and motor vehicles, and the proceeds
from any of the foregoing. Also, the lien on properties defined
as “principal properties” under our existing indenture
dated as of December 16, 1993, so long as that indenture
remains in effect, will be limited to securing a portion of the
indebtedness under our cash flow credit facility and the first
lien notes that, in the aggregate, does not exceed 10% of our
consolidated net tangible assets. These “principal
properties” do not secure the 2009 second lien notes or the
other second lien notes. See “Description of the February
2009 Notes,”“Description of the April 2009
Notes,”“Description of the August 2009 Notes”
and “Description of the March 2010 Notes.” If an event
of default occurs under any series of notes and those notes are
accelerated, the notes and the guarantees will rank equally with
the holders of other unsubordinated and unsecured indebtedness
of the relevant entity with respect to any excluded property.
As of December 31, 2009, our non-guarantor subsidiaries
accounted for approximately $9.672 billion, or 40.1%, of
our total assets and approximately $6.750 billion, or
21.1%, of our total liabilities.
The
pledge of the capital stock, other securities and similar items
of our subsidiaries that secure the notes will automatically be
released from the lien on them and no longer constitute
collateral for so long as the pledge of such capital stock or
such other securities would require the filing of separate
financial statements with the SEC for that
subsidiary.
The notes and the guarantees are secured by a pledge of the
stock of some of our subsidiaries. Under the SEC regulations in
effect as of the issue date of the notes, if the par value, book
value as carried by us or market value (whichever is greatest)
of the capital stock, other securities or similar items of a
subsidiary pledged as part of the collateral is greater than or
equal to 20% of the aggregate principal amount of any class of
notes then outstanding, such subsidiary would be required to
provide separate financial statements to the SEC. Therefore, the
indentures and the collateral documents relating to each series
of notes provide that any capital stock and other securities of
any of our subsidiaries will be excluded from the collateral for
so long as the pledge of such capital stock or other securities
to secure that series of notes would cause such subsidiary to be
required to file separate financial statements with the SEC
pursuant to
Rule 3-16
of
Regulation S-X
(as in effect from time to time).
As a result, holders of the notes could lose a portion or all of
their security interest in the capital stock or other securities
of those subsidiaries during such period. It may be more
difficult, costly and time-consuming
for holders of the notes to foreclose on the assets of a
subsidiary than to foreclose on its capital stock or other
securities, so the proceeds realized upon any such foreclosure
could be significantly less than those that would have been
received upon any sale of the capital stock or other securities
of such subsidiary. See “Description of the February 2009
Notes — Security,”“Description of the April
2009 Notes — Security,”“Description of the
August 2009 Notes — Security” and
“Description of the March 2010 Notes —
Security.”
Your
rights in the collateral may be adversely affected by the
failure to perfect security interests in certain collateral in
the future.
Applicable law requires that certain property and rights
acquired after the grant of a general security interest, such as
real property, equipment subject to a certificate and certain
proceeds, can only be perfected at the time such property and
rights are acquired and identified. The trustees or the
collateral agents for the notes may not monitor, or we may not
inform the trustees or the collateral agents of, the future
acquisition of property and rights that constitute collateral,
and necessary action may not be taken to properly perfect the
security interest in such after-acquired collateral. The
collateral agents for the notes have no obligation to monitor
the acquisition of additional property or rights that constitute
collateral or the perfection of any security interest in favor
of the notes against third parties. Such failure may result in
the loss of the security interest therein or the priority of the
security interest in favor of the notes against third parties.
The
collateral is subject to casualty risks.
We intend to maintain insurance or otherwise insure against
hazards in a manner appropriate and customary for our business.
There are, however, certain losses that may be either
uninsurable or not economically insurable, in whole or in part.
Insurance proceeds may not compensate us fully for our losses.
If there is a complete or partial loss of any of the pledged
collateral, the insurance proceeds may not be sufficient to
satisfy all of the secured obligations, including the notes and
the guarantees.
We may
not be able to repurchase the notes upon a change of
control.
Upon the occurrence of specific kinds of change of control
events, we will be required to offer to repurchase all
outstanding notes at 101% of their principal amount plus accrued
and unpaid interest. The source of funds for any such purchase
of the notes will be our available cash or cash generated from
our subsidiaries’ operations or other sources, including
borrowings, sales of assets or sales of equity. We may not be
able to repurchase the notes upon a change of control because we
may not have sufficient financial resources to purchase all of
the notes that are tendered upon a change of control. Further,
we are contractually restricted under the terms of our senior
secured credit facilities from repurchasing all of the notes
tendered by holders upon a change of control. Accordingly, we
may not be able to satisfy our obligations to purchase the notes
unless we are able to refinance or obtain waivers under the
instruments governing that indebtedness. Our failure to
repurchase any series of notes upon a change of control would
cause a default under the indenture governing that series of
notes and a cross-default under the instruments governing our
senior secured credit facilities and the indentures governing
our other first lien notes and second lien notes. The
instruments governing our senior secured credit facilities also
provide that a change of control will be a default that permits
lenders to accelerate the maturity of borrowings thereunder. Any
of our future debt agreements may contain similar provisions.
In the
event of our bankruptcy, the ability of the holders of the notes
to realize upon the collateral will be subject to certain
bankruptcy law limitations.
The ability of holders of the notes to realize upon the
collateral will be subject to certain bankruptcy law limitations
in the event of our bankruptcy. Under applicable
U.S. federal bankruptcy laws, secured creditors are
prohibited from repossessing their security from a debtor in a
bankruptcy case without bankruptcy court approval and may be
prohibited from disposing of security repossessed from such a
debtor without bankruptcy court approval. Moreover, applicable
federal bankruptcy laws generally permit the debtor to continue
to retain collateral, including cash collateral, even though the
debtor is in default under the applicable debt instruments,
provided that the secured creditor is given “adequate
protection.”
The meaning of the term “adequate protection” may vary
according to the circumstances, but is intended generally to
protect the value of the secured creditor’s interest in the
collateral at the commencement of the bankruptcy case and may
include cash payments or the granting of additional security if
and at such times as the court, in its discretion, determines
that a diminution in the value of the collateral occurs as a
result of the stay of repossession or the disposition of the
collateral during the pendency of the bankruptcy case. In view
of the lack of a precise definition of the term “adequate
protection” and the broad discretionary powers of a
U.S. bankruptcy court, we cannot predict whether or when
the collateral agent for the notes could foreclose upon or sell
the collateral or whether or to what extent holders of notes
would be compensated for any delay in payment or loss of value
of the collateral through the requirement of “adequate
protection.”
Moreover, the collateral agents may need to evaluate the impact
of the potential liabilities before determining to foreclose on
collateral consisting of real property, if any, because secured
creditors that hold a security interest in real property may be
held liable under environmental laws for the costs of
remediating or preventing the release or threatened release of
hazardous substances at such real property. Consequently, the
collateral agents may decline to foreclose on such collateral or
exercise remedies available in respect thereof if they does not
receive indemnification to their satisfaction from the holders
of the notes.
Federal
and state fraudulent transfer laws may permit a court to void
the guarantees, and, if that occurs, you may not receive any
payments on the notes.
Federal and state fraudulent transfer and conveyance statutes
may apply to the issuance of the notes and the incurrence of the
guarantees. Under federal bankruptcy law and comparable
provisions of state fraudulent transfer or conveyance laws,
which may vary from state to state, the notes or guarantees
could be voided as a fraudulent transfer or conveyance if
(1) we or any of the guarantors, as applicable, issued the
notes or incurred the guarantees with the intent of hindering,
delaying or defrauding creditors or (2) we or any of the
guarantors, as applicable, received less than reasonably
equivalent value or fair consideration in return for either
issuing the notes or incurring the guarantees and, in the case
of (2) only, one of the following is also true at the time
thereof:
•
we or any of the guarantors, as applicable, were insolvent or
rendered insolvent by reason of the issuance of the notes or the
incurrence of the guarantees;
•
the issuance of the notes or the incurrence of the guarantees
left us or any of the guarantors, as applicable, with an
unreasonably small amount of capital to carry on the business;
•
we or any of the guarantors intended to, or believed that we or
such guarantor would, incur debts beyond our or such
guarantor’s ability to pay as they mature; or
•
we were or any of the guarantors was a defendant in an action
for money damages, or had a judgment for money damages docketed
against us or such guarantor if, in either case, after final
judgment, the judgment was unsatisfied.
If a court were to find that the issuance of the notes or the
incurrence of the guarantee was a fraudulent transfer or
conveyance, the court could void the payment obligations under
the notes or such guarantee or further subordinate the notes or
such guarantee to presently existing and future indebtedness of
ours or of the related guarantor, or require the holders of the
notes to repay any amounts received with respect to such
guarantee. In the event of a finding that a fraudulent transfer
or conveyance occurred, you may not receive any repayment on the
notes. Further, the voidance of the notes could result in an
event of default with respect to our and our subsidiaries’
other debt that could result in acceleration of such debt.
As a general matter, value is given for a transfer or an
obligation if, in exchange for the transfer or obligation,
property is transferred or an antecedent debt is secured or
satisfied. A debtor will generally not be considered to have
received value in connection with a debt offering if the debtor
uses the proceeds of that offering to make a dividend payment or
otherwise retire or redeem equity securities issued by the
debtor.
We cannot be certain as to the standards a court would use to
determine whether or not we or the guarantors were solvent at
the relevant time or, regardless of the standard that a court
uses, that the issuance
of the guarantees would not be further subordinated to our or
any of our guarantors’ other debt. Generally, however, an
entity would be considered insolvent if, at the time it incurred
indebtedness:
•
the sum of its debts, including contingent liabilities, was
greater than the fair saleable value of all its assets;
•
the present fair saleable value of its assets was less than the
amount that would be required to pay its probable liability on
its existing debts, including contingent liabilities, as they
become absolute and mature; or
•
it could not pay its debts as they become due.
Your
ability to transfer the notes may be limited by the absence of
an active trading market, and there is no assurance that any
active trading market will develop for the notes.
We cannot assure you that an active market for the exchange
notes will develop or, if developed, that it will continue.
Historically, the market for non investment-grade debt has been
subject to disruptions that have caused substantial volatility
in the prices of securities similar to the notes. We cannot
assure you that the market, if any, for the exchange notes will
be free from similar disruptions or that any such disruptions
may not adversely affect the prices at which you may sell your
notes. In addition, the exchange notes may trade at a discount
from the price at which the outstanding notes of the applicable
series were initially offered, depending upon prevailing
interest rates, the market for similar notes, our performance
and other factors.
ML Global Private Equity Fund, L.P., ML HCA Co. Invest, L.P. and
Merrill Lynch Ventures L.P. 2001 are affiliates of Banc of
America Securities LLC, which was one of the initial purchasers
of the outstanding notes. As a result of this affiliate
relationship, if Banc of America Securities LLC conducts any
market making activities with respect to the exchange notes,
Banc of America Securities LLC will be required to deliver a
market making prospectus when effecting offers and sales of the
exchange notes. For as long as a market making prospectus is
required to be delivered, the ability of Banc of America
Securities LLC to make a market in the exchange notes may, in
part, be dependent on our ability to maintain a current market
making prospectus for its use. If we are unable to maintain a
current market making prospectus, Banc of America Securities LLC
may be required to discontinue its market making activities
without notice.
The
outstanding 2017 notes and the outstanding 2019 notes were
issued with original issue discount for U.S. federal income
tax purposes.
The outstanding 2017 notes and the outstanding 2019 notes were
issued with original issue discount (“OID”) for
U.S. federal income tax purposes in an amount equal to the
difference between their stated principal amount and their issue
price. U.S. holders of the outstanding 2017 notes and the
outstanding 2019 notes will be required to include such
difference in gross income on a constant yield to maturity basis
in advance of the receipt of cash payment thereof regardless of
such holder’s method of accounting for U.S. federal
income tax purposes. See “Certain United States Federal Tax
Consequences.”
This prospectus contains “forward-looking statements”
within the meaning of the federal securities laws, which involve
risks and uncertainties. Forward-looking statements include all
statements that do not relate solely to historical or current
facts, and you can identify forward-looking statements because
they contain words such as “believes,”“expects,”“may,”“will,”“should,”“seeks,”“approximately,”“intends,”“plans,”“estimates,”“projects,”“continue,”“initiative” or
“anticipates” or similar expressions that concern our
prospects, objectives, strategies, plans or intentions. All
statements made relating to our estimated and projected
earnings, margins, costs, expenditures, cash flows, growth rates
and financial results or to the impact of existing or proposed
laws or regulations described or incorporated by reference in
this prospectus are forward-looking statements. These
forward-looking statements are subject to risks and
uncertainties that may change at any time, and, therefore, our
actual results may differ materially from those expected. We
derive many of our forward-looking statements from our operating
budgets and forecasts, which are based upon many detailed
assumptions. While we believe our assumptions are reasonable, it
is very difficult to predict the impact of known factors, and,
of course, it is impossible to anticipate all factors that could
affect our actual results.
Some of the important factors that could cause actual results to
differ materially from our expectations are disclosed under
“Risk Factors” and elsewhere in this prospectus,
including, without limitation, in conjunction with the
forward-looking statements included in this prospectus. All
subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are
expressly qualified in their entirety by these cautionary
statements.
We caution you that the important factors discussed above may
not contain all of the material factors that are important to
you. The forward-looking statements included in this prospectus
are made only as of the date hereof. We undertake no obligation
to publicly update or revise any forward-looking statement as a
result of new information, future events or otherwise, except as
otherwise required by law.
We will not receive any cash proceeds from the issuance of the
exchange notes pursuant to the exchange offers. In consideration
for issuing the exchange notes as contemplated in this
prospectus, we will receive in exchange a like principal amount
of outstanding notes, the terms of which are identical in all
material respects to the exchange notes. The outstanding notes
surrendered in exchange for the exchange notes will be retired
and cancelled and cannot be reissued. Accordingly, the issuance
of the exchange notes will not result in any change in our
capitalization.
The following table sets forth our capitalization as of
December 31, 2009:
•
on a historical basis;
•
on an as adjusted basis after giving effect to the February 2010
distribution of $1.750 billion to our stockholders on
February 5, 2010; and
•
on a further adjusted basis after giving effect to the offering
of the outstanding September 2020 notes and the use of proceeds
therefrom.
The information in this table should be read in conjunction with
“Summary — Recent Developments,”“Selected Financial Data” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and our consolidated financial statements and
related notes included in this prospectus.
On January 27, 2010, our Board of Directors declared a
distribution to the Company’s stockholders and holders of
vested stock options, which was paid on February 5, 2010.
The distribution was $17.50 per share and vested stock option,
or approximately $1.750 billion in the aggregate. The
distribution was funded using borrowings of approximately
$1.650 billion under our existing senior secured credit
facilities and approximately $100 million of cash on hand.
(2)
In connection with the Recapitalization, we entered into
(i) a $2.000 billion asset-based revolving credit
facility with an original six-year maturity (the
“asset-based revolving credit facility”)
($715 million outstanding at December 31, 2009 and an
additional approximately $1.050 billion was drawn in
connection with the February 2010 distribution); (ii) a
$2.000 billion senior secured revolving credit facility
with an original six-year maturity (the “senior secured
revolving credit facility”) (none outstanding at
December 31, 2009, without giving effect to outstanding
letters of credit, but approximately $600 million of which
was drawn in connection with the February 2010 distribution);
(iii) a $2.750 billion senior secured term loan A
facility with an original six-year maturity ($1.908 billion
outstanding at December 31, 2009, and approximately
$1.618 billion outstanding after giving effect to the use
of the estimated net proceeds of the outstanding September 2020
notes); (iv) an $8.800 billion senior secured term
loan B facility with an original seven-year maturity
($6.515 billion outstanding at December 31, 2009, and
approximately $5.528 billion
outstanding after giving effect to the use of the estimated net
proceeds of the offering of the outstanding September 2020
notes); and (v) a €1.000 billion
(€394 million, or $564 million-equivalent,
outstanding at December 31, 2009, and approximately
€335 million, or $479 million-equivalent,
outstanding after giving effect to the use of the estimated net
proceeds of the offering of the outstanding September 2020
notes), senior secured European term loan facility with an
original seven-year maturity. We refer to the facilities
described under (ii) through (v) above, collectively,
as the “cash flow credit facility” and, together with
the asset-based revolving credit facility, the “senior
secured credit facilities.”
(3)
In April 2009, we issued $1.500 billion aggregate principal
amount of first lien notes at a price of 96.755% of their face
value, resulting in $1.451 billion of gross proceeds, which
were used to repay obligations under our cash flow credit
facility after the payment of related fees and expenses. In
August 2009, we issued $1.250 billion aggregate principal
amount of first lien notes at a price of 98.254% of their face
value, resulting in $1.228 billion of gross proceeds, which
were used to repay obligations under our cash flow credit
facility after the payment of related fees and expenses. In
March 2010, we issued $1.400 billion aggregate principal
amount of first lien notes at a price of 99.095% of their face
value, resulting in approximately $1.387 billion of gross
proceeds, which were used to repay obligations under our cash
flow credit facility after the payment of related fees and
expenses. In each case, the discount will accrete and be
included in interest expense until the applicable first lien
notes mature.
(4)
Consists of capital leases and other secured debt with a
weighted average interest rate of 6.84%.
(5)
Consists of $4.200 billion of second lien notes (comprised
of $1.000 billion of
91/8% notes
due 2014 and $3.200 billion of
91/4% notes
due 2016) and $1.578 billion of
95/8%/103/8%
second lien toggle notes (which allow us, at our option, to pay
interest in kind during the first five years at the higher
interest rate of
103/8%)
due 2016. In addition, in February 2009 we issued
$310 million aggregate principal amount of
97/8%
second lien notes due 2017 at a price of 96.673% of their face
value, resulting in $300 million of gross proceeds, which
were used to repay obligations under our cash flow credit
facility after payment of related fees and expenses. The
discount on the 2009 second lien notes will accrete and be
included in interest expense until those 2009 second lien notes
mature.
(6)
Consists of (i) an aggregate principal amount of
$367 million medium-term notes with maturities ranging from
2010 to 2025 and a weighted average interest rate of 8.42%;
(ii) an aggregate principal amount of $886 million
debentures with maturities ranging from 2015 to 2095 and a
weighted average interest rate of 7.55%; (iii) an aggregate
principal amount of $5.407 billion senior notes with
maturities ranging from 2010 to 2033 and a weighted average
interest rate of 6.79%; (iv) £121 million
($196 million-equivalent at December 31,2009) aggregate principal amount of 8.75% senior notes
due 2010; and (v) $10 million of unamortized debt
discounts that reduce the existing indebtedness. For more
information regarding our unsecured and other indebtedness, see
“Description of Other Indebtedness.”
The following table sets forth selected financial data of HCA
Inc. as of the dates and for the periods indicated. The selected
financial data as of December 31, 2009 and 2008 and for
each of the three years in the period ended December 31,2009 have been derived from our audited consolidated financial
statements and related notes appearing elsewhere in this
prospectus. The selected financial data as of December 31,2007, 2006 and 2005 and for the two years in the period ended
December 31, 2006 presented in this table have been derived
from our audited consolidated financial statements that are not
included in this prospectus.
The selected financial data set forth below should be read in
conjunction with, and are qualified by reference to,
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and the consolidated
financial statements and related notes thereto appearing
elsewhere in this prospectus.
Number of freestanding outpatient surgical centers at end of
period(c)
97
97
99
98
87
Number of licensed beds at end of period(d)
38,839
38,504
38,405
39,354
41,265
Weighted average licensed beds(e)
38,825
38,422
39,065
40,653
41,902
Admissions(f)
1,556,500
1,541,800
1,552,700
1,610,100
1,647,800
Equivalent admissions(g)
2,439,000
2,363,600
2,352,400
2,416,700
2,476,600
Average length of stay (days)(h)
4.8
4.9
4.9
4.9
4.9
Average daily census(i)
20,650
20,795
21,049
21,688
22,225
Occupancy(j)
53
%
54
%
54
%
53
%
53
%
Emergency room visits(k)
5,593,500
5,246,400
5,116,100
5,213,500
5,415,200
Outpatient surgeries(l)
794,600
797,400
804,900
820,900
836,600
Inpatient surgeries(m)
494,500
493,100
516,500
533,100
541,400
Days revenues in accounts receivable(n)
45
49
53
53
50
Gross patient revenues(o)
$
115,682
$
102,843
$
92,429
$
84,913
$
78,662
Outpatient revenues as a % of patient revenues(p)
38
%
37
%
37
%
36
%
36
%
(a)
For purposes of calculating the ratio of earnings to fixed
charges, earnings consist of net income attributable to
noncontrolling interests and income taxes plus fixed charges,
exclusive of capitalized interest. Fixed charges include cash
and noncash interest expense, whether expensed or capitalized,
amortization of debt issuance cost, and the portion of rent
expense representative of the interest factor.
(b)
Excludes eight facilities in 2009, 2008 and 2007 and seven
facilities in 2006 and 2005 that are not consolidated (accounted
for using the equity method) for financial reporting purposes.
(c)
Excludes eight facilities in 2009 and 2008, nine facilities in
2007 and 2006 and seven facilities in 2005 that are not
consolidated (accounted for using the equity method) for
financial reporting purposes.
(d)
Licensed beds are those beds for which a facility has been
granted approval to operate from the applicable state licensing
agency.
(e)
Weighted average licensed beds represents the average number of
licensed beds, weighted based on periods owned.
(f)
Represents the total number of patients admitted to our
hospitals and is used by management and certain investors as a
general measure of inpatient volume.
Equivalent admissions are used by management and certain
investors as a general measure of combined inpatient and
outpatient volume. Equivalent admissions are computed by
multiplying admissions (inpatient volume) by the sum of gross
inpatient revenue and gross outpatient revenue and then dividing
the resulting amount by gross inpatient revenue. The equivalent
admissions computation “equates” outpatient revenue to
the volume measure (admissions) used to measure inpatient
volume, resulting in a general measure of combined inpatient and
outpatient volume.
(h)
Represents the average number of days admitted patients stay in
our hospitals.
(i)
Represents the average number of patients in our hospital beds
each day.
(j)
Represents the percentage of hospital licensed beds occupied by
patients. Both average daily census and occupancy rate provide
measures of the utilization of inpatient rooms.
(k)
Represents the number of patients treated in our emergency rooms.
(l)
Represents the number of surgeries performed on patients who
were not admitted to our hospitals. Pain management and
endoscopy procedures are not included in outpatient surgeries.
(m)
Represents the number of surgeries performed on patients who
have been admitted to our hospitals. Pain management and
endoscopy procedures are not included in inpatient surgeries.
(n)
Revenues per day is calculated by dividing the revenues for the
period by the days in the period. Days revenues in accounts
receivable is then calculated as accounts receivable, net of the
allowance for doubtful accounts, at the end of the period
divided by revenues per day.
(o)
Gross patient revenues are based upon our standard charge
listing. Gross charges/revenues typically do not reflect what
our hospital facilities are paid. Gross charges/revenues are
reduced by contractual adjustments, discounts and charity care
to determine reported revenues.
(p)
Represents the percentage of patient revenues related to
patients who are not admitted to our hospitals.
You should read the following discussion of our results of
operations and financial condition with “Selected Financial
Data” and the audited consolidated financial statements and
related notes included elsewhere in this prospectus. This
discussion contains forward-looking statements and involves
numerous risks and uncertainties, including, but not limited to,
those described in the “Risk Factors” section of this
prospectus. Actual results may differ materially from those
contained in any forward-looking statements.
You also should read the following discussion of our results
of operations and financial condition with
“Business — Business Drivers and Measures”
for a discussion of certain of our important financial policies
and objectives; performance measures and operational factors we
use to evaluate our financial condition and operating
performance; and our business segments.
Overview
We are one of the leading health care services companies in the
United States. At December 31, 2009, we operated 163
hospitals, comprised of 157 general, acute care hospitals; five
psychiatric hospitals; and one rehabilitation hospital. The 163
hospital total includes eight hospitals (seven general, acute
care hospitals and one rehabilitation hospital) owned by joint
ventures in which an affiliate of HCA is a partner, and these
joint ventures are accounted for using the equity method. In
addition, we operated 105 freestanding surgery centers, eight of
which are owned by joint ventures in which an affiliate of HCA
is a partner, and these joint ventures are accounted for using
the equity method. Our facilities are located in 20 states
and England. For the year ended December 31, 2009, we
generated revenues of $30.052 billion and net income
attributable to HCA Inc. of $1.054 billion.
2009
Operations Summary
Net income attributable to HCA Inc. totaled $1.054 billion
for 2009, compared to $673 million for 2008. The 2009
results include losses on sales of facilities of
$15 million and impairments of long-lived assets of
$43 million. The 2008 results include gains on sales of
facilities of $97 million and impairments of long-lived
assets of $64 million.
Revenues increased to $30.052 billion for 2009 from
$28.374 billion for 2008. Revenues increased 5.9% on a
consolidated basis and 6.1% on a same facility basis for 2009,
compared to 2008. The consolidated revenues increase can be
attributed to the combined impact of a 2.6% increase in revenue
per equivalent admission and a 3.2% increase in equivalent
admissions. The same facility revenues increase resulted from a
2.6% increase in same facility revenue per equivalent admission
and a 3.4% increase in same facility equivalent admissions.
During 2009, consolidated admissions increased 1.0% and same
facility admissions increased 1.2%, compared to 2008. Inpatient
surgical volumes increased 0.3% on a consolidated basis and
increased 0.5% on a same facility basis during 2009, compared to
2008. Outpatient surgical volumes declined 0.4% on a
consolidated basis and declined 0.1% on a same facility basis
during 2009, compared to 2008. Emergency department visits
increased 6.6% on a consolidated basis and increased 7.0% on a
same facility basis during 2009, compared to 2008.
For 2009, the provision for doubtful accounts declined to 10.9%
of revenues from 12.0% of revenues for 2008. The combined
self-pay revenue deductions for charity care and uninsured
discounts increased $1.486 billion for 2009, compared to
2008. The sum of the provision for doubtful accounts, uninsured
discounts and charity care, as a percentage of the sum of net
revenues, uninsured discounts and charity care, was 23.8% for
2009, compared to 21.9% for 2008. Same facility uninsured
admissions increased 4.7% and same facility uninsured emergency
room visits increased 6.5% for 2009, compared to 2008.
Interest expense totaled $1.987 billion for 2009, compared
to $2.021 billion for 2008. The $34 million decline in
interest expense for 2009 was due to a reduction in the average
debt balance offsetting an increase in the average interest rate.
The preparation of our consolidated financial statements
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the
disclosure of contingent liabilities and the reported amounts of
revenues and expenses. Our estimates are based on historical
experience and various other assumptions we believe are
reasonable under the circumstances. We evaluate our estimates on
an ongoing basis and make changes to the estimates and related
disclosures as experience develops or new information becomes
known. Actual results may differ from these estimates.
We believe the following critical accounting policies affect our
more significant judgments and estimates used in the preparation
of our consolidated financial statements.
Revenues
Revenues are recorded during the period the health care services
are provided, based upon the estimated amounts due from payers.
Estimates of contractual allowances under managed care health
plans are based upon the payment terms specified in the related
contractual agreements. Laws and regulations governing the
Medicare and Medicaid programs are complex and subject to
interpretation. The estimated reimbursement amounts are made on
a payer-specific basis and are recorded based on the best
information available regarding management’s interpretation
of the applicable laws, regulations and contract terms.
Management continually reviews the contractual estimation
process to consider and incorporate updates to laws and
regulations and the frequent changes in managed care contractual
terms resulting from contract renegotiations and renewals. We
have invested significant resources to refine and improve our
computerized billing systems and the information system data
used to make contractual allowance estimates. We have developed
standardized calculation processes and related training programs
to improve the utility of our patient accounting systems.
The Emergency Medical Treatment and Active Labor Act
(“EMTALA”) requires any hospital participating in the
Medicare program to conduct an appropriate medical screening
examination of every person who presents to the hospital’s
emergency room for treatment and, if the individual is suffering
from an emergency medical condition, to either stabilize the
condition or make an appropriate transfer of the individual to a
facility able to handle the condition. The obligation to screen
and stabilize emergency medical conditions exists regardless of
an individual’s ability to pay for treatment. Federal and
state laws and regulations, including but not limited to EMTALA,
require, and our commitment to providing quality patient care
encourages, the provision of services to patients who are
financially unable to pay for the health care services they
receive. The Health Reform Legislation requires health plans to
reimburse hospitals for emergency services provided to enrollees
without prior authorization and without regard to whether a
participating provider contract is in place. Further, the Health
Reform Legislation contains provisions that seek to decrease the
number of uninsured individuals, including requirements, which
do not become effective until 2014, for individuals to obtain,
and employers to provide, insurance coverage. These mandates may
reduce the financial impact of screening for and stabilizing
emergency medical conditions. However, it is difficult to
predict the full impact of the Health Reform Legislation due to
the law’s complexity, lack of implementing regulations or
interpretive guidance, gradual implementation and possible
amendment.
We do not pursue collection of amounts related to patients who
meet our guidelines to qualify as charity care; therefore, they
are not reported in revenues. Patients treated at our hospitals
for nonelective care, who have income at or below 200% of the
federal poverty level, are eligible for charity care. The
federal poverty level is established by the federal government
and is based on income and family size. We provide discounts
from our gross charges to uninsured patients who do not qualify
for Medicaid or charity care. These discounts are similar to
those provided to many local managed care plans.
Due to the complexities involved in the classification and
documentation of health care services authorized and provided,
the estimation of revenues earned and the related reimbursement
are often subject to interpretations that could result in
payments that are different from our estimates. Adjustments to
estimated Medicare and Medicaid reimbursement amounts and
disproportionate-share funds, which resulted in net increases to
revenues, related primarily to cost reports filed during the
respective year were $40 million, $32 million and
$47 million in 2009, 2008 and 2007, respectively. The
adjustments to estimated
reimbursement amounts, which resulted in net increases to
revenues, related primarily to cost reports filed during
previous years were $60 million, $35 million and
$83 million in 2009, 2008 and 2007, respectively. We expect
adjustments during the next 12 months related to Medicare and
Medicaid cost report filings and settlements and
disproportionate-share funds will result in increases to
revenues within generally similar ranges.
Provision
for Doubtful Accounts and the Allowance for Doubtful
Accounts
The collection of outstanding receivables from Medicare, managed
care payers, other third-party payers and patients is our
primary source of cash and is critical to our operating
performance. The primary collection risks relate to uninsured
patient accounts, including patient accounts for which the
primary insurance carrier has paid the amounts covered by the
applicable agreement, but patient responsibility amounts
(deductibles and copayments) remain outstanding. The provision
for doubtful accounts and the allowance for doubtful accounts
relate primarily to amounts due directly from patients. An
estimated allowance for doubtful accounts is recorded for all
uninsured accounts, regardless of the aging of those accounts.
Accounts are written off when all reasonable internal and
external collection efforts have been performed. Our collection
policies include a review of all accounts against certain
standard collection criteria, upon completion of our internal
collection efforts. Accounts determined to possess positive
collectibility attributes are forwarded to a secondary external
collection agency and the other accounts are written off. The
accounts that are not collected by the secondary external
collection agency are written off when they are returned to us
by the collection agency (usually within 12 months).
Writeoffs are based upon specific identification and the
writeoff process requires a writeoff adjustment entry to the
patient accounting system. We do not pursue collection of
amounts related to patients that meet our guidelines to qualify
as charity care.
The amount of the provision for doubtful accounts is based upon
management’s assessment of historical writeoffs and
expected net collections, business and economic conditions,
trends in federal, state, and private employer health care
coverage and other collection indicators. Management relies on
the results of detailed reviews of historical writeoffs and
recoveries at facilities that represent a majority of our
revenues and accounts receivable (the “hindsight
analysis”) as a primary source of information in estimating
the collectibility of our accounts receivable. We perform the
hindsight analysis quarterly, utilizing rolling twelve-months
accounts receivable collection and writeoff data. We believe our
quarterly updates to the estimated allowance for doubtful
accounts at each of our hospital facilities provide reasonable
valuations of our accounts receivable. These routine, quarterly
changes in estimates have not resulted in material adjustments
to our allowance for doubtful accounts, provision for doubtful
accounts or
period-to-period
comparisons of our results of operations. At December 31,2009 and 2008, the allowance for doubtful accounts represented
approximately 94% and 92%, respectively, of the
$5.176 billion and $5.148 billion, respectively,
patient due accounts receivable balance. The patient due
accounts receivable balance represents the estimated uninsured
portion of our accounts receivable. The estimated uninsured
portion of Medicaid pending and uninsured discount pending
accounts is included in our patient due accounts receivable
balance.
The revenue deductions related to uninsured accounts (charity
care and uninsured discounts) generally have the inverse effect
on the provision for doubtful accounts. To quantify the total
impact of and trends related to uninsured accounts, we believe
it is beneficial to view these revenue deductions and provision
for doubtful accounts in combination, rather than each
separately. A summary of these amounts for the years ended
December 31, follows (dollars in millions):
2009
2008
2007
Provision for doubtful accounts
$
3,276
$
3,409
$
3,130
Uninsured discounts
2,935
1,853
1,474
Charity care
2,151
1,747
1,530
Totals
$
8,362
$
7,009
$
6,134
The provision for doubtful accounts, as a percentage of
revenues, increased from 11.7% for 2007 to 12.0% for 2008 and
declined to 10.9% for 2009. However, the sum of the provision
for doubtful accounts,
uninsured discounts and charity care, as a percentage of the sum
of net revenues, uninsured discounts and charity care increased
from 20.5% for 2007 to 21.9% for 2008 and to 23.8% for 2009.
Days revenues in accounts receivable were 45 days,
49 days and 53 days at December 31, 2009, 2008
and 2007, respectively. Management expects a continuation of the
challenges related to the collection of the patient due
accounts. Adverse changes in the percentage of our patients
having adequate health care coverage, general economic
conditions, patient accounting service center operations, payer
mix, or trends in federal, state, and private employer health
care coverage could affect the collection of accounts
receivable, cash flows and results of operations.
The approximate breakdown of accounts receivable by payer
classification as of December 31, 2009 and 2008 is set
forth in the following table:
We, along with virtually all health care providers, operate in
an environment with professional liability risks. Our facilities
are insured by our wholly-owned insurance subsidiary for losses
up to $50 million per occurrence, subject to a
$5 million per occurrence self-insured retention. We
purchase excess insurance on a claims-made basis for losses in
excess of $50 million per occurrence. Our professional
liability reserves, net of receivables under reinsurance
contracts, do not include amounts for any estimated losses
covered by our excess insurance coverage. Provisions for losses
related to professional liability risks were $211 million,
$175 million and $163 million for the years ended
December 31, 2009, 2008 and 2007, respectively.
Reserves for professional liability risks represent the
estimated ultimate cost of all reported and unreported losses
incurred through the respective consolidated balance sheet
dates. The estimated ultimate cost includes estimates of direct
expenses and fees paid to outside counsel and experts, but does
not include the general overhead costs of our insurance
subsidiary or corporate office. Individual case reserves are
established based upon the particular circumstances of each
reported claim and represent our estimates of the future costs
that will be paid on reported claims. Case reserves are reduced
as claim payments are made and are adjusted upward or downward
as our estimates regarding the amounts of future losses are
revised. Once the case reserves for known claims are determined,
information is stratified by loss layers and retentions,
accident years, reported years, and geographic location of our
hospitals. Several actuarial methods are employed to utilize
this data to produce estimates of ultimate losses and reserves
for incurred but not reported claims, including: paid and
incurred extrapolation methods utilizing paid and incurred loss
development to estimate ultimate losses; frequency and severity
methods utilizing paid and incurred claims development to
estimate ultimate average frequency (number of claims) and
ultimate average severity (cost per claim); and
Bornhuetter-Ferguson methods which add expected development to
actual paid or incurred experience to estimate ultimate losses.
These methods use our company-specific historical claims data
and other information. Company-specific claim reporting and
settlement data collected over an approximate
20-year
period is used in our reserve estimation process. This
company-specific data includes information regarding our
business,
including historical paid losses and loss adjustment expenses,
historical and current case loss reserves, actual and projected
hospital statistical data, professional liability retentions for
each policy year, geographic information and other data.
Reserves and provisions for professional liability risks are
based upon actuarially determined estimates. The estimated
reserve ranges, net of amounts receivable under reinsurance
contracts, were $1.024 billion to $1.270 billion at
December 31, 2009 and $1.102 billion to
$1.332 billion at December 31, 2008. Our estimated
reserves for professional liability claims may change
significantly if future claims differ from expected trends. We
perform sensitivity analyses which model the volatility of key
actuarial assumptions and monitor our reserves for adequacy
relative to all our assumptions in the aggregate. Based on our
analysis, we believe the estimated professional liability
reserve ranges represent the reasonably likely outcomes for
ultimate losses. We consider the number and severity of claims
to be the most significant assumptions in estimating reserves
for professional liabilities. A 2% change in the expected
frequency trend could be reasonable likely and would increase
the reserve estimate by $16 million or reduce the reserve
estimate by $15 million. A 2% change in the expected claim
severity trend could be reasonably likely and would increase the
reserve estimate by $69 million or reduce the reserve
estimate by $63 million. We believe adequate reserves have
been recorded for our professional liability claims; however,
due to the complexity of the claims, the extended period of time
to settle the claims and the wide range of potential outcomes,
our ultimate liability for professional liability claims could
change by more than the estimated sensitivity amounts and could
change materially from our current estimates.
The reserves for professional liability risks cover
approximately 2,600 and 2,800 individual claims at
December 31, 2009 and 2008, respectively, and estimates for
unreported potential claims. The time period required to resolve
these claims can vary depending upon the jurisdiction and
whether the claim is settled or litigated. The average time
period between the occurrence and payment of final settlement
for our professional liability claims is approximately five
years, although the facts and circumstances of each individual
claim can result in an
occurrence-to-settlement
timeframe that varies from this average. The estimation of the
timing of payments beyond a year can vary significantly.
Reserves for professional liability risks were
$1.322 billion and $1.387 billion at December 31,2009 and 2008, respectively. The current portion of these
reserves, $265 million and $279 million at
December 31, 2009 and 2008, respectively, is included in
“other accrued expenses.” Obligations covered by
reinsurance contracts are included in the reserves for
professional liability risks, as the insurance subsidiary
remains liable to the extent reinsurers do not meet their
obligations. Reserves for professional liability risks (net of
$53 million and $57 million receivable under
reinsurance contracts at December 31, 2009 and 2008,
respectively) were $1.269 billion and $1.330 billion
at December 31, 2009 and 2008, respectively. The estimated
total net reserves for professional liability risks at
December 31, 2009 and 2008 are comprised of
$680 million and $724 million, respectively, of case
reserves for known claims and $589 million and
$606 million, respectively, of reserves for incurred but
not reported claims.
Changes in our professional liability reserves, net of
reinsurance recoverable, for the years ended December 31,
are summarized in the following table (dollars in millions):
2009
2008
2007
Net reserves for professional liability claims, January 1
$
1,330
$
1,469
$
1,542
Provision for current year claims
258
239
214
Favorable development related to prior years’ claims
(47
)
(64
)
(51
)
Total provision
211
175
163
Payments for current year claims
4
7
4
Payments for prior years’ claims
268
307
232
Total claim payments
272
314
236
Net reserves for professional liability claims, December 31
The favorable development related to prior years’ claims
resulted from declining claim frequency and moderating claim
severity trends. We believe these favorable trends are primarily
attributable to tort reforms enacted in key states, particularly
Texas, and our risk management and patient safety initiatives,
particularly in the area of obstetrics.
Income
Taxes
We calculate our provision for income taxes using the asset and
liability method, under which deferred tax assets and
liabilities are recognized by identifying the temporary
differences that arise from the recognition of items in
different periods for tax and accounting purposes. Deferred tax
assets generally represent the tax effects of amounts expensed
in our income statement for which tax deductions will be claimed
in future periods.
Although we believe we have properly reported taxable income and
paid taxes in accordance with applicable laws, federal, state or
international taxing authorities may challenge our tax positions
upon audit. Significant judgment is required in determining and
assessing the impact of uncertain tax positions. We report a
liability for unrecognized tax benefits from uncertain tax
positions taken or expected to be taken in our income tax
return. During each reporting period, we assess the facts and
circumstances related to uncertain tax positions. If the
realization of unrecognized tax benefits is deemed probable
based upon new facts and circumstances, the estimated liability
and the provision for income taxes are reduced in the current
period. Final audit results may vary from our estimates.
Results
of Operations
Revenue/Volume
Trends
Our revenues depend upon inpatient occupancy levels, the
ancillary services and therapy programs ordered by physicians
and provided to patients, the volume of outpatient procedures
and the charge and negotiated payment rates for such services.
Gross charges typically do not reflect what our facilities are
actually paid. Our facilities have entered into agreements with
third-party payers, including government programs and managed
care health plans, under which the facilities are paid based
upon the cost of providing services, predetermined rates per
diagnosis, fixed per diem rates or discounts from gross charges.
We do not pursue collection of amounts related to patients who
meet our guidelines to qualify for charity care; therefore, they
are not reported in revenues. We provide discounts to uninsured
patients who do not qualify for Medicaid or charity care that
are similar to the discounts provided to many local managed care
plans.
Revenues increased 5.9% to $30.052 billion for 2009 from
$28.374 billion for 2008 and increased 5.6% for 2008 from
$26.858 billion for 2007. The increase in revenues in 2009
can be primarily attributed to the combined impact of a 2.6%
increase in revenue per equivalent admission and a 3.2% increase
in equivalent admissions compared to the prior year. The
increase in revenues in 2008 can be primarily attributed to the
combined impact of a 5.2% increase in revenue per equivalent
admission and a 0.5% increase in equivalent admissions compared
to 2007.
Consolidated admissions increased 1.0% in 2009 compared to 2008
and declined 0.7% in 2008 compared to 2007. Consolidated
inpatient surgeries increased 0.3% and consolidated outpatient
surgeries declined 0.4% during 2009 compared to 2008.
Consolidated inpatient surgeries declined 4.5% and consolidated
outpatient surgeries declined 0.9% during 2008 compared to 2007.
Consolidated emergency department visits increased 6.6% during
2009 compared to 2008 and increased 2.5% during 2008 compared to
2007.
Same facility revenues increased 6.1% for the year ended
December 31, 2009 compared to the year ended
December 31, 2008 and increased 7.0% for the year ended
December 31, 2008 compared to the year ended
December 31, 2007. The 6.1% increase for 2009 can be
primarily attributed to the combined impact of a 2.6% increase
in same facility revenue per equivalent admission and a 3.4%
increase in same facility equivalent admissions. The 7.0%
increase for 2008 can be primarily attributed to the combined
impact of a 5.1% increase in same facility revenue per
equivalent admission and a 1.9% increase in same facility
equivalent admissions.
Same facility admissions increased 1.2% in 2009 compared to 2008
and increased 0.9% in 2008 compared to 2007. Same facility
inpatient surgeries increased 0.5% and same facility outpatient
surgeries declined 0.1% during 2009 compared to 2008. Same
facility inpatient surgeries declined 0.5% and same facility
outpatient surgeries declined 0.2% during 2008 compared to 2007.
Same facility emergency department visits increased 7.0% during
2009 compared to 2008 and increased 3.6% during 2008 compared to
2007.
Same facility uninsured emergency room visits increased 6.5% and
same facility uninsured admissions increased 4.7% during 2009
compared to 2008. Same facility uninsured emergency room visits
increased 4.5% and same facility uninsured admissions increased
1.7% during 2008 compared to 2007. Management believes same
facility uninsured emergency department visits and same facility
uninsured admissions could continue to increase during 2010 if
the adverse general economic and unemployment trends continue.
Admissions related to Medicare, managed Medicare, Medicaid,
managed Medicaid, managed care and other insurers and the
uninsured for the years ended December 31, 2009, 2008 and
2007 are set forth below.
The approximate percentages of our inpatient revenues related to
Medicare, managed Medicare, Medicaid, managed Medicaid, managed
care plans and other insurers and the uninsured for the years
ended December 31, 2009, 2008 and 2007 are set forth below.
At December 31, 2009, we owned and operated 38 hospitals
and 33 surgery centers in the state of Florida. Our Florida
facilities’ revenues totaled $7.343 billion and
$7.099 billion for the years ended December 31, 2009
and 2008, respectively. At December 31, 2009, we owned and
operated 35 hospitals and 23 surgery centers in the state of
Texas. Our Texas facilities’ revenues totaled
$8.042 billion and $7.351 billion for the years ended
December 31, 2009 and 2008, respectively. During 2009 and
2008, 57% and 55%, respectively, of our admissions and 51% of
our revenues were generated by our Florida and Texas facilities.
Uninsured admissions in Florida and Texas represented 64% and
63% of our uninsured admissions during 2009 and 2008,
respectively.
We provided $2.151 billion, $1.747 billion and
$1.530 billion of charity care (amounts are based upon our
gross charges) during the years ended December 31, 2009,
2008 and 2007, respectively. We provide discounts to uninsured
patients who do not qualify for Medicaid or charity care. These
discounts are similar to those provided to many local managed
care plans and totaled $2.935 billion, $1.853 billion
and $1.474 billion for the years ended December 31,2009, 2008 and 2007, respectively.
We receive a significant portion of our revenues from government
health programs, principally Medicare and Medicaid, which are
highly regulated and subject to frequent and substantial
changes. We have increased the indigent care services we provide
in several communities in the state of Texas, in affiliation
with other hospitals. The state of Texas has been involved in
the effort to increase the indigent care provided by private
hospitals. As a result of this additional indigent care provided
by private hospitals, public hospital districts or counties in
Texas have available funds that were previously devoted to
indigent care. The public hospital districts or counties are
under no contractual or legal obligation to provide such
indigent care. The public hospital districts or counties have
elected to transfer some portion of these available funds to the
state’s Medicaid program. Such action is at the sole
discretion of the public hospital districts or counties. It is
anticipated that these contributions to the state will be
matched with federal Medicaid funds. The state then may make
supplemental payments to hospitals in the state for Medicaid
services rendered. Hospitals receiving Medicaid supplemental
payments may include those that are providing additional
indigent care services. Such payments must be within the federal
UPL established by federal regulation. Our Texas Medicaid
revenues included $474 million, $262 million and
$232 million during 2009, 2008 and 2007, respectively, of
Medicaid supplemental payments pursuant to UPL programs.
The following are comparative summaries of operating results for
the years ended December 31, 2009, 2008 and 2007 (dollars
in millions):
2009
2008
2007
Amount
Ratio
Amount
Ratio
Amount
Ratio
Revenues
$
30,052
100.0
$
28,374
100.0
$
26,858
100.0
Salaries and benefits
11,958
39.8
11,440
40.3
10,714
39.9
Supplies
4,868
16.2
4,620
16.3
4,395
16.4
Other operating expenses
4,724
15.7
4,554
16.1
4,233
15.7
Provision for doubtful accounts
3,276
10.9
3,409
12.0
3,130
11.7
Equity in earnings of affiliates
(246
)
(0.8
)
(223
)
(0.8
)
(206
)
(0.8
)
Depreciation and amortization
1,425
4.8
1,416
5.0
1,426
5.4
Interest expense
1,987
6.6
2,021
7.1
2,215
8.2
Losses (gains) on sales of facilities
15
—
(97
)
(0.3
)
(471
)
(1.8
)
Impairment of long-lived assets
43
0.1
64
0.2
24
0.1
28,050
93.3
27,204
95.9
25,460
94.8
Income before income taxes
2,002
6.7
1,170
4.1
1,398
5.2
Provision for income taxes
627
2.1
268
0.9
316
1.1
Net income
1,375
4.6
902
3.2
1,082
4.1
Net income attributable to noncontrolling interests
321
1.1
229
0.8
208
0.8
Net income attributable to HCA Inc.
$
1,054
3.5
$
673
2.4
$
874
3.3
% changes from prior year:
Revenues
5.9
%
5.6
%
5.4
%
Income before income taxes
71.1
(16.3
)
(25.0
)
Net income attributable to HCA Inc.
56.7
(23.0
)
(15.7
)
Admissions(a)
1.0
(0.7
)
(3.6
)
Equivalent admissions(b)
3.2
0.5
(2.7
)
Revenue per equivalent admission
2.6
5.2
8.3
Same facility % changes from prior year(c):
Revenues
6.1
7.0
7.4
Admissions(a)
1.2
0.9
(1.3
)
Equivalent admissions(b)
3.4
1.9
(0.7
)
Revenue per equivalent admission
2.6
5.1
8.1
(a)
Represents the total number of patients admitted to our
hospitals and is used by management and certain investors as a
general measure of inpatient volume.
(b)
Equivalent admissions are used by management and certain
investors as a general measure of combined inpatient and
outpatient volume. Equivalent admissions are computed by
multiplying admissions (inpatient volume) by the sum of gross
inpatient revenue and gross outpatient revenue and then dividing
the resulting amount by gross inpatient revenue. The equivalent
admissions computation “equates” outpatient revenue to
the volume measure (admissions) used to measure inpatient
volume, resulting in a general measure of combined inpatient and
outpatient volume.
(c)
Same facility information excludes the operations of hospitals
and their related facilities that were either acquired, divested
or removed from service during the current and prior year.
Net income attributable to HCA Inc. totaled $1.054 billion
for the year ended December 31, 2009 compared to
$673 million for the year ended December 31, 2008.
Financial results for 2009 include losses on sales of facilities
of $15 million and asset impairment charges of
$43 million. Financial results for 2008 include gains on
sales of facilities of $97 million and asset impairment
charges of $64 million.
Revenues increased 5.9% to $30.052 billion for 2009 from
$28.374 billion for 2008. The increase in revenues was due
primarily to the combined impact of a 2.6% increase in revenue
per equivalent admission and a 3.2% increase in equivalent
admissions compared to 2008. Same facility revenues increased
6.1% due primarily to the combined impact of a 2.6% increase in
same facility revenue per equivalent admission and a 3.4%
increase in same facility equivalent admissions compared to 2008.
During 2009, consolidated admissions increased 1.0% and same
facility admissions increased 1.2% for 2009, compared to 2008.
Consolidated inpatient surgical volumes increased 0.3%, and same
facility inpatient surgeries increased 0.5% during 2009 compared
to 2008. Consolidated outpatient surgical volumes declined 0.4%,
and same facility outpatient surgeries declined 0.1% during 2009
compared to 2008. Emergency department visits increased 6.6% on
a consolidated basis and increased 7.0% on a same facility basis
during 2009 compared to 2008.
Salaries and benefits, as a percentage of revenues, were 39.8%
in 2009 and 40.3% in 2008. Salaries and benefits per equivalent
admission increased 1.3% in 2009 compared to 2008. Same facility
labor rate increases averaged 3.7% for 2009 compared to 2008.
Supplies, as a percentage of revenues, were 16.2% in 2009 and
16.3% in 2008. Supply costs per equivalent admission increased
2.1% in 2009 compared to 2008. Same facility supply costs
increased 5.9% for medical devices, 4.0% for pharmacy supplies,
7.1% for blood products and 7.0% for general medical and
surgical items in 2009 compared to 2008.
Other operating expenses, as a percentage of revenues, declined
to 15.7% in 2009 from 16.1% in 2008. Other operating expenses
are primarily comprised of contract services, professional fees,
repairs and maintenance, rents and leases, utilities, insurance
(including professional liability insurance) and nonincome
taxes. The overall decline in other operating expenses, as a
percentage of revenues, is comprised of relatively small
reductions in several areas, including utilities, employee
recruitment and travel and entertainment. Other operating
expenses include $248 million and $144 million of
indigent care costs in certain Texas markets during 2009 and
2008, respectively. Provisions for losses related to
professional liability risks were $211 million and
$175 million for 2009 and 2008, respectively.
Provision for doubtful accounts declined $133 million, from
$3.409 billion in 2008 to $3.276 billion in 2009, and
as a percentage of revenues, declined to 10.9% for 2009 from
12.0% in 2008. The provision for doubtful accounts and the
allowance for doubtful accounts relate primarily to uninsured
amounts due directly from patients. The decline in the provision
for doubtful accounts can be attributed to the
$1.486 billion increase in the combined self-pay revenue
deductions for charity care and uninsured discounts during 2009,
compared to 2008. The sum of the provision for doubtful
accounts, uninsured discounts and charity care, as a percentage
of the sum of net revenues, uninsured discounts and charity
care, was 23.8% for 2009, compared to 21.9% for 2008. At
December 31, 2009, our allowance for doubtful accounts
represented approximately 94% of the $5.176 billion total
patient due accounts receivable balance, including accounts, net
of estimated contractual discounts, related to patients for
which eligibility for Medicaid coverage or uninsured discounts
was being evaluated.
Equity in earnings of affiliates increased from
$223 million for 2008 to $246 million for 2009. Equity
in earnings of affiliates relates primarily to our Denver,
Colorado market joint venture.
Depreciation and amortization decreased, as a percentage of
revenues, to 4.8% in 2009 from 5.0% in 2008. Depreciation
expense was $1.419 billion for 2009 and $1.412 billion
for 2008.
Interest expense decreased to $1.987 billion for 2009 from
$2.021 billion for 2008. The decrease in interest expense
was due to reductions in the average debt balance. Our average
debt balance was
$26.267 billion for 2009 compared to $27.211 billion
for 2008. The average interest rate for our long-term debt
increased from 7.4% for 2008 to 7.6% for 2009.
Net losses on sales of facilities were $15 million for 2009
and included $8 million of net losses on the sales of three
hospital facilities and $7 million of net losses on sales
of real estate and other health care entity investments. Gains
on sales of facilities were $97 million for 2008 and
included $81 million of gains on the sales of two hospital
facilities and $16 million of net gains on sales of real
estate and other health care entity investments.
Impairments of long-lived assets were $43 million for 2009
and included $19 million related to goodwill and
$24 million related to property and equipment. Impairments
of long-lived assets were $64 million for 2008 and included
$48 million related to goodwill and $16 million
related to property and equipment.
The effective tax rate was 37.3% and 28.5% for 2009 and 2008,
respectively. The effective tax rate computations exclude net
income attributable to noncontrolling interests as it relates to
consolidated partnerships. Primarily as a result of reaching a
settlement with the IRS Appeals Division and the revision of the
amount of a proposed IRS adjustment related to prior taxable
periods, we reduced our provision for income taxes by
$69 million in 2008. Excluding the effect of these
adjustments, the effective tax rate for 2008 would have been
35.8%.
Net income attributable to noncontrolling interests increased
from $229 million for 2008 to $321 million for 2009.
The increase in net income attributable to noncontrolling
interests related primarily to growth in operating results of
hospital joint ventures in two Texas markets.
Net income attributable to HCA Inc. totaled $673 million
for the year ended December 31, 2008 compared to
$874 million for the year ended December 31, 2007.
Financial results for 2008 include gains on sales of facilities
of $97 million and asset impairment charges of
$64 million. Financial results for 2007 include gains on
sales of facilities of $471 million and an asset impairment
charge of $24 million.
Revenues increased 5.6% to $28.374 billion for 2008 from
$26.858 billion for 2007. The increase in revenues was due
primarily to the combined impact of a 5.2% increase in revenue
per equivalent admission and a 0.5% increase in equivalent
admissions compared to 2007. Same facility revenues increased
7.0% due primarily to the combined impact of a 5.1% increase in
same facility revenue per equivalent admission and a 1.9%
increase in same facility equivalent admissions compared to 2007.
During 2008, consolidated admissions declined 0.7% and same
facility admissions increased 0.9%, compared to 2007. Inpatient
surgical volumes declined 4.5% on a consolidated basis and same
facility inpatient surgeries declined 0.5% during 2008 compared
to 2007. Outpatient surgical volumes declined 0.9% on a
consolidated basis and same facility outpatient surgeries
declined 0.2% during 2008 compared to 2007. Emergency department
visits increased 2.5% on a consolidated basis and increased 3.6%
on a same facility basis during 2008 compared to 2007.
Salaries and benefits, as a percentage of revenues, were 40.3%
in 2008 and 39.9% in 2007. Salaries and benefits per equivalent
admission increased 6.3% in 2008 compared to 2007. Same facility
labor rate increases averaged 5.1% for 2008 compared to 2007.
Supplies, as a percentage of revenues, were 16.3% in 2008 and
16.4% in 2007. Supply costs per equivalent admission increased
4.5% in 2008 compared to 2007. Same facility supply costs
increased 8.0% for medical devices, 2.8% for pharmacy supplies,
18.7% for blood products and 6.6% for general medical and
surgical items in 2008 compared to 2007.
Other operating expenses, as a percentage of revenues, increased
to 16.1% in 2008 from 15.7% in 2007. Other operating expenses
are primarily comprised of contract services, professional fees,
repairs and maintenance, rents and leases, utilities, insurance
(including professional liability insurance) and nonincome
taxes. Increases in professional fees paid to hospitalists,
emergency room physicians and anesthesiologists represented
20 basis points of the 2008 increase in other operating
expenses. Other operating expenses include
$144 million and $187 million of indigent care costs
in certain Texas markets during 2008 and 2007, respectively.
Provisions for losses related to professional liability risks
were $175 million and $163 million for 2008 and 2007,
respectively.
Provision for doubtful accounts, as a percentage of revenues,
increased to 12.0% for 2008 from 11.7% in 2007. The provision
for doubtful accounts and the allowance for doubtful accounts
relate primarily to uninsured amounts due directly from
patients. The increase in the provision for doubtful accounts,
as a percentage of revenues, can be attributed to an increasing
amount of patient financial responsibility under certain managed
care plans and same facility increases in uninsured emergency
room visits of 4.5% and uninsured admissions of 1.7% in 2008
compared to 2007. At December 31, 2008, our allowance for
doubtful accounts represented approximately 92% of the
$5.148 billion total patient due accounts receivable
balance, including accounts, net of estimated contractual
discounts, related to patients for which eligibility for
Medicaid coverage or uninsured discounts was being evaluated.
Equity in earnings of affiliates increased from
$206 million for 2007 to $223 million for 2008. Equity
in earnings of affiliates relates primarily to our Denver,
Colorado market joint venture.
Depreciation and amortization declined, as a percentage of
revenues, to 5.0% in 2008 from 5.4% in 2007. Depreciation
expense was $1.412 billion for 2008 and $1.421 billion
for 2007.
Interest expense declined to $2.021 billion for 2008 from
$2.215 billion for 2007. The decline in interest expense
was due to reductions in both the average debt balance and the
average interest rate on long-term debt. Our average debt
balance was $27.211 billion for 2008 compared to
$27.732 billion for 2007. The average interest rate for our
long-term debt declined from 8.0% for 2007 to 7.4% for 2008.
Gains on sales of facilities were $97 million for 2008 and
included $81 million of net gains on the sales of two
hospital facilities and $16 million of net gains on sales
of real estate and other health care entity investments. Gains
on sales of facilities were $471 million for 2007 and
included a $312 million gain on the sale of our two
Switzerland hospitals, a $131 million gain on the sale of a
facility in Florida and $28 million of net gains on sales
of real estate and other health care entity investments.
Impairments of long-lived assets were $64 million for 2008
and included $48 million related to goodwill and
$16 million related to property and equipment. The
$24 million asset impairment for 2007 related to property
and equipment.
The effective tax rate was 28.5% for 2008 and 26.6% for 2007,
respectively. The effective tax rate computations exclude net
income attributable to noncontrolling interests as it relates to
consolidated partnerships. Primarily as a result of reaching a
settlement with the IRS Appeals Division and the revision of the
amount of a proposed IRS adjustment related to prior taxable
periods, we reduced our provision for income taxes by
$69 million in 2008. Our 2007 provision for income taxes
was reduced by $85 million, principally based on receiving
new information related to tax positions taken in a prior
taxable year, and by an additional $39 million to adjust
2006 state tax accruals to the amounts reported on
completed tax returns and based upon an analysis of the
Recapitalization costs. Excluding the effect of these
adjustments, the effective tax rates for 2008 and 2007 would
have been 35.8% and 37.0%, respectively.
Net income attributable to noncontrolling interests increased
from $208 million for 2007 to $229 million for 2008.
The increase relates primarily to our Austin, Texas market
partnership and our group purchasing organization.
Liquidity
and Capital Resources
Our primary cash requirements are paying our operating expenses,
servicing our debt, capital expenditures on our existing
properties, acquisitions of hospitals and other health care
entities and distributions to noncontrolling interests. Our
primary cash sources are cash flow from operating activities,
issuances of debt and equity securities and dispositions of
hospitals and other health care entities.
Cash provided by operating activities totaled
$2.747 billion in 2009 compared to $1.990 billion in
2008 and $1.564 billion in 2007. Working capital totaled
$2.264 billion at December 31, 2009 and
$2.391 billion at
December 31, 2008. The $757 million increase in cash
provided by operating activities for 2009, compared to 2008,
related primarily to the $473 million increase in net
income and $143 million improvement from changes in
operating assets and liabilities and the provision for doubtful
accounts. The $426 million increase in cash provided by
operating activities for 2008, compared to 2007, relates
primarily to changes in working capital items. The changes in
accounts receivable (net of the provision for doubtful
accounts), inventories and other assets, and accounts payable
and accrued expenses contributed $42 million to cash
provided by operating activities for 2008 while changes in these
items decreased cash provided by operating activities by
$485 million for 2007. The net impact of the cash payments
for interest and income taxes was an increase in cash payments
of $203 million for 2009 compared to 2008 and an increase
of $111 million for 2008 compared to 2007.
Cash used in investing activities was $1.035 billion,
$1.467 billion and $479 million in 2009, 2008 and
2007, respectively. Excluding acquisitions, capital expenditures
were $1.317 billion in 2009, $1.600 billion in 2008
and $1.444 billion in 2007. We expended $61 million,
$85 million and $32 million for acquisitions of
hospitals and health care entities during 2009, 2008 and 2007,
respectively. Expenditures for acquisitions in all three years
were generally comprised of outpatient and ancillary services
entities and were funded by a combination of cash flows from
operations and the issuance or incurrence of debt. Planned
capital expenditures are expected to approximate
$1.5 billion in 2010. At December 31, 2009, there were
projects under construction which had an estimated additional
cost to complete and equip over the next five years of
$1.2 billion. We expect to finance capital expenditures
with internally generated and borrowed funds.
During 2009, we received cash proceeds of $41 million from
dispositions of three hospitals and sales of other health care
entities and real estate investments. We also received net cash
proceeds of $303 million related to net changes in our
investments. During 2008, we received cash proceeds of
$143 million from dispositions of two hospitals and
$50 million from sales of other health care entities and
real estate investments. During 2007, we sold three hospitals
for cash proceeds of $661 million, and we also received
cash proceeds of $106 million related primarily to the
sales of real estate investments and $207 million related
to net changes in our investments.
Cash used in financing activities totaled $1.865 billion in
2009, $451 million in 2008 and $1.326 billion in 2007.
During 2009, 2008 and 2007, we used cash proceeds from sales of
facilities and available cash provided by operations to make net
debt repayments of $1.459 billion, $260 million and
$1.270 billion, respectively. During 2009, 2008 and 2007,
we made distributions to noncontrolling interests of
$330 million, $178 million and $152 million,
respectively. We also paid debt issuance costs of
$70 million for 2009. We or our affiliates, including
affiliates of the Sponsors, may in the future repurchase
portions of our debt securities, subject to certain limitations,
from time to time in either the open market or through privately
negotiated transactions, in accordance with applicable SEC and
other legal requirements. The timing, prices, and sizes of
purchases depend upon prevailing trading prices, general
economic and market conditions, and other factors, including
applicable securities laws. Funds for the repurchase of debt
securities have, and are expected to, come primarily from cash
generated from operations and borrowed funds.
In addition to cash flows from operations, available sources of
capital include amounts available under our senior secured
credit facilities ($3.181 billion as of December 31,2009 and $3.142 billion as of January 31,2010) and anticipated access to public and private debt
markets.
On January 27, 2010, our Board of Directors declared a
distribution to the Company’s stockholders and holders of
vested stock options. The distribution was $17.50 per share and
vested stock option, or approximately $1.750 billion in the
aggregate. The distribution was paid on February 5, 2010 to
holders of record on February 1, 2010. The distribution was
funded using funds available under our existing senior secured
credit facilities and approximately $100 million of cash on
hand.
Investments of our professional liability insurance subsidiary,
to maintain statutory equity and pay claims, totaled
$1.316 billion and $1.622 billion at December 31,2009 and 2008, respectively. The insurance subsidiary maintained
net reserves for professional liability risks of
$590 million and $782 million at December 31,2009 and 2008, respectively. Our facilities are insured by our
wholly- owned insurance subsidiary for losses up to
$50 million per occurrence; however, since January 2007,
this coverage is subject to a $5 million per occurrence
self-insured retention. Net reserves for the self-insured
professional liability
risks retained were $679 million and $548 million at
December 31, 2009 and 2008, respectively. Claims payments,
net of reinsurance recoveries, during the next 12 months
are expected to approximate $240 million. We estimate that
approximately $90 million of the expected net claim
payments during the next 12 months will relate to claims
subject to the self-insured retention.
Financing
Activities
Due to the Recapitalization, we are a highly leveraged company
with significant debt service requirements. Our debt totaled
$25.670 billion and $26.989 billion at
December 31, 2009 and 2008, respectively. Our interest
expense was $1.987 billion for 2009 and $2.021 billion
for 2008.
During February 2009, we issued $310 million aggregate
principal amount of
97/8% senior
secured second lien notes due 2017 at a price of 96.673% of
their face value, resulting in $300 million of gross
proceeds. During April 2009, we issued $1.500 billion
aggregate principal amount of
81/2% senior
secured first lien notes due 2019 at a price of 96.755% of their
face value, resulting in $1.451 billion of gross proceeds.
During August 2009, we issued $1.250 billion aggregate
principal amount of
77/8% senior
secured first lien notes due 2020 at a price of 98.254% of their
face value, resulting in $1.228 billion of gross proceeds.
After the payment of related fees and expenses, we used the
proceeds from these debt offerings to repay outstanding
indebtedness under our senior secured term loan facilities.
Management believes that cash flows from operations, amounts
available under our senior secured credit facilities and our
anticipated access to public and private debt markets will be
sufficient to meet expected liquidity needs during the next
twelve months.
Contractual
Obligations and Off-Balance Sheet Arrangements
As of December 31, 2009, maturities of contractual
obligations and other commercial commitments are presented in
the table below (dollars in millions):
Payments Due by Period
Contractual Obligations(a)
Total
Current
2-3 Years
4-5 Years
After 5 Years
Long-term debt including interest, excluding the senior secured
credit facilities(b)
$
26,739
$
2,175
$
3,780
$
4,915
$
15,869
Loans outstanding under the senior secured credit facilities,
including interest(b)
11,786
649
3,565
7,410
162
Operating leases(c)
1,190
226
355
223
386
Purchase and other obligations(c)
196
43
33
30
90
Total contractual obligations
$
39,911
$
3,093
$
7,733
$
12,578
$
16,507
Other Commercial Commitments Not Recorded on the
Commitment Expiration by Period
Consolidated Balance Sheet
Total
Current
2-3 Years
4-5 Years
After 5 Years
Surety bonds(d)
$
106
$
105
$
1
$
—
$
—
Letters of credit(e)
100
23
44
33
—
Physician commitments(f)
40
30
10
—
—
Guarantees(g)
2
—
—
—
2
Total commercial commitments
$
248
$
158
$
55
$
33
$
2
(a)
We have not included obligations to pay estimated professional
liability claims ($1.322 billion at December 31,2009) in this table. The estimated professional liability
claims, which occurred prior to 2007, are expected to be funded
by the designated investment securities that are restricted for
this purpose ($1.316 billion at December 31, 2009). We
also have not included obligations related to unrecognized tax
benefits of $628 million at December 31, 2009, as we
cannot reasonably estimate the timing or amounts of additional
cash payments, if any, at this time.
(b)
Estimates of interest payments assumes that interest rates,
borrowing spreads and foreign currency exchange rates at
December 31, 2009, remain constant during the period
presented.
(c)
Amounts relate to future operating lease obligations, purchase
obligations and other obligations and are not recorded in our
consolidated balance sheet. Amounts also include physician
commitments that are recorded in our consolidated balance sheet.
(d)
Amounts relate primarily to instances in which we have agreed to
indemnify various commercial insurers who have provided surety
bonds to cover damages for malpractice cases which were awarded
to plaintiffs by the courts. These cases are currently under
appeal and the bonds will not be released by the courts until
the cases are closed.
(e)
Amounts relate primarily to various employee benefit plan
obligations in which we have letters of credit outstanding.
(f)
In consideration for physicians relocating to the communities in
which our hospitals are located and agreeing to engage in
private practice for the benefit of the respective communities,
we make advances to physicians, normally over a period of one
year, to assist in establishing the physicians’ practices.
The actual amount of these commitments to be advanced often
depends upon the financial results of the physicians’
private practices during the recruitment agreement payment
period. The physician commitments reflected were based on our
maximum exposure on effective agreements at December 31,2009.
(g)
We have entered into guarantee agreements related to certain
leases.
Market
Risk
We are exposed to market risk related to changes in market
values of securities. The investments in debt and equity
securities of our wholly-owned insurance subsidiary were
$1.309 billion and $7 million, respectively, at
December 31, 2009. These investments are carried at fair
value, with changes in unrealized gains and losses being
recorded as adjustments to other comprehensive income. At
December 31, 2009, we had a net unrealized gain of
$20 million on the insurance subsidiary’s investment
securities.
We are exposed to market risk related to market illiquidity.
Liquidity of the investments in debt and equity securities of
our wholly-owned insurance subsidiary could be impaired by the
inability to access the capital markets. Should the wholly-owned
insurance subsidiary require significant amounts of cash in
excess of normal cash requirements to pay claims and other
expenses on short notice, we may have difficulty selling these
investments in a timely manner or be forced to sell them at a
price less than what we might otherwise have been able to in a
normal market environment. At December 31, 2009, our
wholly-owned insurance subsidiary had invested $396 million
($401 million par value) in municipal, tax-exempt student
loan auction rate securities (“ARS”) that continue to
experience market illiquidity since February 2008 when multiple
failed auctions occurred due to a severe credit and liquidity
crisis in the capital markets. It is uncertain if
auction-related market liquidity will resume for these
securities. We may be required to recognize
other-than-temporary
impairments on these investments in future periods should
issuers default on interest payments or should the fair market
valuations of the securities deteriorate due to ratings
downgrades or other issue specific factors.
We are also exposed to market risk related to changes in
interest rates, and we periodically enter into interest rate
swap agreements to manage our exposure to these fluctuations.
Our interest rate swap agreements involve the exchange of fixed
and variable rate interest payments between two parties, based
on common notional principal amounts and maturity dates. The
notional amounts of the swap agreements represent balances used
to calculate the exchange of cash flows and are not our assets
or liabilities. Our credit risk related to these agreements is
considered low because the swap agreements are with creditworthy
financial institutions. The interest payments under these
agreements are settled on a net basis. These derivatives have
been recognized in the financial statements at their respective
fair values. Changes in the fair value of these derivatives are
included in other comprehensive income.
With respect to our interest-bearing liabilities, approximately
$1.205 billion of long-term debt at December 31, 2009
is subject to variable rates of interest, while the remaining
balance in long-term debt of $24.465 billion at
December 31, 2009 is subject to fixed rates of interest.
Both the general level of interest rates and, for the senior
secured credit facilities, our leverage affect our variable
interest rates. Our variable rate debt is comprised primarily of
amounts outstanding under the senior secured credit facilities.
Borrowings under the senior secured credit facilities bear
interest at a rate equal to an applicable margin plus, at our
option, either (a) a base rate determined by reference to
the higher of (1) the federal funds rate plus 0.50% and
(2) the prime rate of Bank of America or (b) a LIBOR
rate for the currency of such borrowing for the relevant
interest period. The applicable margin for borrowings under the
senior secured credit facilities, with the exception of term
loan B where the margin is static, may be reduced subject to
attaining certain leverage ratios. The average rate for our
long-term debt increased from 6.9% at December 31, 2008 to
7.6% at December 31, 2009.
On March 2, 2009, we amended our $13.550 billion and
€1.000 billion senior secured cash flow credit
facility, dated as of November 17, 2006, as amended
February 16, 2007 (the “cash flow credit
facility”), to allow for one or more future issuances of
additional secured notes, which may include notes that are
secured on a pari passu basis or on a junior basis with
the obligations under the cash flow credit facility, so long as
(1) such notes do not require any scheduled payment or
redemption prior to the scheduled term loan B final maturity
date as currently in effect and (2) the proceeds from any
such issuance are used within three business days of receipt to
prepay term loans under the cash flow credit facility in
accordance with the terms of the cash flow credit facility. The
U.S. security documents related to the cash flow credit
facility were also amended and restated in connection with the
amendment in order to give effect to the security interests
granted to holders of such additional secured notes.
On March 2, 2009, we amended our $2.000 billion senior
secured asset-based revolving credit facility, dated as of
November 17, 2006, as amended and restated as of
June 20, 2007 (the “ABL credit facility”), to
allow for one or more future issuances of additional secured
notes or loans, which may include notes or loans that are
secured on a pari passu basis or on a junior basis with
the obligations under the cash flow credit facility, so long as
the proceeds from any such issuance are used to prepay term
loans under the cash flow credit facility within three business
days of the receipt thereof. The amendment to the ABL credit
facility also altered the excess facility availability
requirement to include a separate minimum facility availability
requirement applicable to the ABL credit facility, and increased
the applicable LIBOR and ABR margins for all borrowings under
the ABL credit facility by 0.25% each.
The estimated fair value of our total long-term debt was
$25.659 billion at December 31, 2009. The estimates of
fair value are based upon the quoted market prices for the same
or similar issues of long-term debt with the same maturities.
Based on a hypothetical 1% increase in interest rates, the
potential annualized reduction to future pretax earnings would
be approximately $12 million. To mitigate the impact of
fluctuations in interest rates, we generally target a portion of
our debt portfolio to be maintained at fixed rates.
Our international operations and the European term loan expose
us to market risks associated with foreign currencies. In order
to mitigate the currency exposure related to debt service
obligations through December 31, 2011 under the European
term loan, we have entered into cross currency swap agreements.
A cross currency swap is an agreement between two parties to
exchange a stream of principal and interest payments in one
currency for a stream of principal and interest payments in
another currency over a specified period.
Financial
Instruments
Derivative financial instruments are employed to manage risks,
including foreign currency and interest rate exposures, and are
not used for trading or speculative purposes. We recognize
derivative instruments, such as interest rate swap agreements
and foreign exchange contracts, in the consolidated balance
sheets at fair value. Changes in the fair value of derivatives
are recognized periodically either in earnings or in
stockholders’ equity, as a component of other comprehensive
income, depending on whether the derivative financial instrument
qualifies for hedge accounting, and if so, whether it qualifies
as a fair value hedge or a cash flow hedge. Gains and losses on
derivatives designated as cash flow hedges, to the extent they
are effective, are
recorded in other comprehensive income, and subsequently
reclassified to earnings to offset the impact of the hedged
items when they occur. Changes in the fair value of derivatives
not qualifying as hedges, and for any portion of a hedge that is
ineffective, are reported in earnings.
The net interest paid or received on interest rate swaps is
recognized as interest expense. Gains and losses resulting from
the early termination of interest rate swap agreements are
deferred and amortized as adjustments to expense over the
remaining period of the debt originally covered by the
terminated swap.
Effects
of Inflation and Changing Prices
Various federal, state and local laws have been enacted that, in
certain cases, limit our ability to increase prices. Revenues
for general, acute care hospital services rendered to Medicare
patients are established under the federal government’s
prospective payment system. Total
fee-for-service
Medicare revenues approximated 23% in 2009, 23% in 2008 and 24%
in 2007 of our total patient revenues.
Management believes hospital industry operating margins have
been, and may continue to be, under significant pressure because
of changes in payer mix and growth in operating expenses in
excess of the increase in prospective payments under the
Medicare program. In addition, as a result of increasing
regulatory and competitive pressures, our ability to maintain
operating margins through price increases to non-Medicare
patients is limited.
IRS
Disputes
At December 31, 2009, we were contesting before the Appeals
Division of the Internal Revenue Service (the “IRS”)
certain claimed deficiencies and adjustments proposed by the IRS
in connection with its examinations of the 2003 and 2004 federal
income returns for HCA and eight affiliates that are treated as
partnerships for federal income tax purposes (“affiliated
partnerships”). The disputed items include the timing of
recognition of certain patient service revenues and our method
for calculating the tax allowance for doubtful accounts.
Six taxable periods of HCA and its predecessors ended in 1997
through 2002 and the 2002 taxable year of four affiliated
partnerships, for which the primary remaining issue is the
computation of the tax allowance for doubtful accounts, are
pending before the IRS Examination Division as of
December 31, 2009. The IRS began an audit of the 2005 and
2006 federal income tax returns for HCA and seven affiliated
partnerships during 2008. We anticipate the IRS Examination
Division will conclude its audit in 2010. During 2009, the seven
affiliated partnership audits were resolved with no material
impact on our operations or financial position. We anticipate
the IRS will begin an audit of the 2007 and 2008 federal income
tax returns for HCA during 2010.
Management believes HCA, its predecessors and affiliates
properly reported taxable income and paid taxes in accordance
with applicable laws and agreements established with the IRS and
final resolution of these disputes will not have a material,
adverse effect on our results of operations or financial
position. However, if payments due upon final resolution of
these issues exceed our recorded estimates, such resolutions
could have a material, adverse effect on our results of
operations or financial position.
We are one of the leading health care services companies in the
United States. At December 31, 2009, we operated 163
hospitals, comprised of 157 general, acute care hospitals; five
psychiatric hospitals; and one rehabilitation hospital. The 163
hospital total includes eight hospitals (seven general, acute
care hospitals and one rehabilitation hospital) owned by joint
ventures in which an affiliate of HCA is a partner, and these
joint ventures are accounted for using the equity method. In
addition, we operated 105 freestanding surgery centers, eight of
which are owned by joint ventures in which an affiliate of HCA
is a partner, and these joint ventures are accounted for using
the equity method. Our facilities are located in 20 states
and England. For the year ended December 31, 2009, we
generated revenues of $30.052 billion and net income
attributable to HCA Inc. of $1.054 billion.
Our primary objective is to provide a comprehensive array of
quality health care services in the most cost-effective manner
possible. Our general, acute care hospitals typically provide a
full range of services to accommodate such medical specialties
as internal medicine, general surgery, cardiology, oncology,
neurosurgery, orthopedics and obstetrics, as well as diagnostic
and emergency services. Outpatient and ancillary health care
services are provided by our general, acute care hospitals,
freestanding surgery centers, diagnostic centers and
rehabilitation facilities. Our psychiatric hospitals provide a
full range of mental health care services through inpatient,
partial hospitalization and outpatient settings.
Certain of our affiliates provide a variety of management
services to our health care facilities, including patient safety
programs; ethics and compliance programs; national supply
contracts; equipment purchasing and leasing contracts;
accounting, financial and clinical systems; governmental
reimbursement assistance; construction planning and
coordination; information technology systems and solutions;
legal counsel; human resources services; and internal audit
services.
Our
Strengths
Largest Provider with a Diversified Revenue
Base. We are the largest investor-owned health
care services provider in the United States. We maintain a
diverse portfolio of assets with no single facility contributing
more than 2.4% of revenues and no single metropolitan
statistical area contributing more than 7.8% of revenues for the
year ended December 31, 2009. In addition, we maintain a
diversified payer base, including approximately 3,000 managed
care contracts, with no one commercial payer representing more
than approximately 8% of revenues for the year ended
December 31, 2009. We believe our broad geographic
footprint and diverse revenue base limit exposure to any single
local market. We also provide a diverse array of medical and
surgical services across different settings ranging from large
hospitals to ambulatory surgery centers (“ASCs”),
which, we believe, limits our exposure to changes in
reimbursement policies targeting specific services or care
settings.
Leading Market Positions. We maintain the
number one or two inpatient position in nearly all of our
markets, with our share of local inpatient admissions typically
ranging from 20% to 40%. Additionally, we believe we have the
leading position in one or more clinical areas, such as
cardiology or orthopedics, in many of our markets. As a result,
our hospitals are in demand by patients and large employers,
which enables us to negotiate for favorable rates and terms from
a wide range of commercial payers.
Strong Presence in Growth Markets. We have a
strong market presence in a number of the fastest growing
markets in the United States. We believe the majority of the
large markets in which we have a presence will experience more
rapid growth among the population aged 65 or older than the
national average, based on the most recently available census
data. We believe we will benefit from our presence in these key
markets due to an expected increase in hospital spending.
Well-Capitalized Portfolio of High-Quality
Assets. We have invested over $7.8 billion
in our facilities over the five-year period ended
December 31, 2009 to expand the range, and improve the
quality, of services provided at our facilities. As a result of
our disciplined and strategic deployment of capital, we believe
our
hospitals are competitive and will continue to attract
high-quality physicians, maximize cost efficiencies and address
the health care needs of our local communities.
Leading Provider of Outpatient Services. We
are one of the largest providers of outpatient services in the
United States, and these outpatient services accounted for
approximately 38% of our revenues in 2009. The scope of our
outpatient services reflects a recent trend toward the provision
of an increasing number of services on an outpatient basis. An
important component of our strategy is to achieve a fully
integrated delivery model through the development of
market-leading outpatient services, both to address outpatient
migration and to provide higher growth, higher margin services.
Reputation for Quality. Since our founding, we
have maintained an unwavering focus on patients and clinical
outcomes. We have invested extensively in quality over the past
10 years, with an emphasis on implementing information
technology and adopting industry-wide best practices and
clinical protocols. As a result of these efforts, settled
professional liability claims, based on actuarial projections
per 1,000 beds, have dropped from 18.3 in 1999 to 12.6 in 2008.
We also previously participated in the Centers for
Medicare & Medicaid Services (“CMS”)
National Voluntary Hospital Reporting Initiative and now
participate in its successor, the Reporting Hospital Quality
Data for Annual Payment Update program, which currently requires
hospitals to report on their compliance with 46 quality measures
in order to receive a full Medicare market basket payment
increase. The Patient Protection and Affordable Care Act as
amended by the Health Care and Education Reconciliation Act of
2010 (“Health Reform Legislation”) further ties
payment to quality measures by establishing a value based
purchasing system and adjusting hospital payment rates based on
hospital-acquired conditions (“HACs”) and hospital
readmissions. We believe quality of care increasingly will
influence physician and patient choices about health care
delivery and impact our reimbursement as payers put more
emphasis on performance. Our reputation and focus on providing
high-quality patient care continue to make us the provider of
choice for thousands of individual health care consumers,
physicians and payers.
Proven Ability to Innovate. We strive to be at
the forefront of industry best practices and expect to continue
to increase our operational efficiency through a variety of
strategic initiatives. Our previous operating improvement
initiatives include:
•
Leveraging Our Purchasing Power. We have
established a captive group purchasing organization
(“GPO”) to partner with other health care services
providers to take advantage of our combined purchasing power.
Our GPO generated $107 million, $93 million and
$89 million of administrative fees from suppliers in 2009,
2008 and 2007, respectively, for performing GPO services and
significantly lowered our supply costs. Because of our scale,
our GPO has a
per-unit
cost advantage over competitors that we believe ranges from 5%
to 21%.
•
Centralizing Our Billing and Accounts Receivable Collection
Efforts. We have built regional service centers
to create efficiencies in billing and collection processes,
particularly with respect to payment disputes with managed care
companies. This effort has resulted in increased, incremental
cash collections.
Demonstrated Strong Cash Flows. Our leading
market positions, diversified revenues, focus on operational
efficiency and high-quality portfolio of assets have enabled us
to generate strong operating cash flows over the past several
years. We generated cash flows from operating activities of
$2.747 billion in 2009, $1.990 billion in 2008 and
$1.564 billion in 2007. We believe expected demand for
hospital and outpatient services, together with our diversified
payer base, geographic locations and service offerings, will
allow us to continue to generate strong cash flows.
Experienced Management Team. Members of our
management team are widely considered leaders in the hospital
industry and have made significant equity investments in our
company. Richard M. Bracken was appointed our CEO and President,
effective January 1, 2009, and Chairman of the Board of
Directors, effective December 15, 2009. Mr. Bracken
began his career with us approximately 30 years ago and has
held various executive positions with the Company, including,
most recently, as our President and Chief Operating Officer
since January 2002. Our Executive Vice President and Chief
Financial Officer, R. Milton Johnson, joined us over
27 years ago, has held various positions in financial
operations at the Company and has served as a
director since December 15, 2009. In addition, we benefit
from our team of world-class operators who have the experience
and talent necessary to run a complex health care business.
Our
Strategy
We are committed to providing the communities we serve high
quality, cost-effective health care while complying fully with
our ethics policy, governmental regulations and guidelines and
industry standards. As a part of this strategy, management
focuses on the following principal elements:
Maintain Our Dedication to the Care and Improvement of Human
Life. Our business is built on putting patients
first and providing high quality health care services in the
communities we serve. Our dedicated professionals oversee our
Quality Review System, which measures clinical outcomes,
satisfaction and regulatory compliance to improve hospital
quality and performance. We are implementing hospitalist
programs in some facilities, evidence-based medicine programs
and infection reduction initiatives. In addition, we continue to
implement health information technology to improve the quality
and convenience of services to our communities. We are using our
electronic medication administration record, which uses bar
coding technology to ensure that each patient receives the right
medication, to build toward a fully electronic health record
that will provide convenient access, electronic order entry and
decision support for physicians. These technologies improve
patient safety, quality and efficiency.
Maintain Our Commitment to Ethics and
Compliance. We are committed to a corporate
culture highlighted by the following values —
compassion, honesty, integrity, fairness, loyalty, respect and
kindness. Our comprehensive ethics and compliance program
reinforces our dedication to these values.
Leverage Our Leading Local Market
Positions. We strive to maintain and enhance the
leading positions we enjoy in the majority of our markets. We
believe the broad geographic presence of our facilities across a
range of markets, in combination with the breadth and quality of
services provided by our facilities, increases our
attractiveness to patients and large employers and positions us
to negotiate more favorable terms from commercial payers and
increase the number of payers with whom we contract. We also
intend to strategically enhance our outpatient presence in our
communities to attract more patients to our facilities.
Expand Our Presence in Key Markets. We seek to
grow our business in key markets, focusing on large, high growth
urban and suburban communities, primarily in the southern and
western regions of the United States. We seek to strategically
invest in new and expanded services at our existing hospitals
and surgery centers to increase our revenues at those facilities
and provide the benefits of medical technology advances to our
communities. We intend to continue to expand high volume and
high margin specialty services, such as cardiology and
orthopedic services, and increase the capacity, scope and
convenience of our outpatient facilities. To complement this
intrinsic growth, we intend to continue to opportunistically
develop and acquire new hospitals and outpatient facilities.
Continue to Leverage Our Scale. We will
continue to obtain price efficiencies through our group
purchasing organization and build on the cost savings and
efficiencies in billing, collection and other processes we have
achieved through our regional service centers. We are
increasingly taking advantage of our national scale by
contracting for services on a multistate basis. We are expanding
our successful shared services model for additional clinical and
support functions, such as physician credentialing, medical
transcription, electronic medical recordkeeping and health
information management, across multiple markets.
Continue to Develop Physician
Relationships. We depend on the quality and
dedication of the physicians who practice at our facilities, and
we encourage, consistent with applicable laws, both primary care
physicians and specialists to join our medical staffs. We
sometimes assist physicians who are recruited under applicable
regulatory provisions with establishing and building a practice
or joining an
existing practice. As part of our comprehensive approach to
physician integration in our markets, we will continue to:
•
expand the number of high quality specialty services, such as
cardiology, orthopedics, oncology and neonatology;
•
use joint ventures with physicians to further develop our
outpatient business, particularly through ASCs;
•
develop medical office buildings to provide convenient
facilities for physicians to locate their practices and serve
their patients;
•
focus on improving the quality, advanced technology,
infrastructure and performance of our facilities; and
•
employ physicians as appropriate.
Become the Health Care Employer of Choice. We
will continue to use a number of industry-leading practices to
help ensure our hospitals are a health care employer of choice
in their respective communities. Our staffing initiatives for
both care providers and hospital management provide strategies
for recruitment, compensation and productivity to increase
employee retention and operating efficiency at our hospitals.
For example, we maintain an internal contract nursing agency to
supply our hospitals with high quality staffing at a lower cost
than external agencies. In addition, we have developed several
proprietary training and career development programs for our
physicians and hospital administrators, including an executive
development program designed to train the next generation of
hospital leadership. We believe our continued investment in the
training and retention of employees improves the quality of
care, enhances operational efficiency and fosters our reputation
as an employer of choice.
Business
Drivers and Measures
Our
Financial Policies and Objectives
We seek to optimize our financial and operating performance by
implementing the business strategy set forth under
“— Our Strategy.” Our success in
implementing this strategy depends, in turn, on our ability to
fulfill our financial policies and objectives, which include the
following:
•
Operations: We plan to focus on our core
operations — the provision of high quality,
cost-effective health care in large, high growth urban and
suburban communities, primarily in the southern and western
regions of the United States. Our specific policies designed to
maintain this focus include:
•
use investments in new and expanded services to drive use of our
facilities;
•
seek rate increases from managed care payers commensurate with
increases in our underlying costs to provide high quality
services;
•
manage operating expenses by, among other methods, leveraging
our scale;
•
seek cost savings by reducing variations in our patient care and
support processes and reducing our discretionary operating
expenses; and
•
consider divesting non-core assets, where appropriate.
•
Leverage: We expect to have significant
indebtedness for the foreseeable future. However, we expect to:
•
manage our floating interest rate exposure through our
$8.5 billion aggregate notional amount of pay-fixed rate
swap agreements related to our senior secured credit facilities
debt at December 31, 2009; and
Capital Expenditures: We plan to maintain a
disciplined capital expenditure approach by:
•
targeting new investments with potentially high returns;
•
deploying capital strategically to improve our competitive
position and market share and to enhance our operations; and
•
manage discretionary capital expenditures based on the strength
of our cash flows.
Operational
Factors
In pursuing our business and our financial policies and
objectives, we pay close attention to a number of performance
measures and operational factors.
Our revenues depend upon inpatient occupancy levels, the
ancillary services and therapy programs ordered by physicians
and provided to patients, the volume of outpatient procedures
and the charges and negotiated payment rates for such services.
Our expenses depend upon the levels of salaries and benefits
paid to our employees, the cost of supplies and the costs of
other operating expenses. To monitor these variables, we use a
variety of metrics, including those described below.
•
Volume Measures:
•
admissions, which is the total number of patients admitted to
our hospitals and which we use as a measure of inpatient volume;
•
equivalent admissions, which is a measure of patient volume that
takes into account both inpatient and outpatient volume;
•
the payer mix of our admissions, i.e., the percentage of our
admissions related to Medicare, Medicaid, managed Medicare,
managed Medicaid, managed care and other insurers, and uninsured
patients;
•
emergency room visits;
•
inpatient and outpatient surgeries; and
•
the average daily census of patients in our hospital beds.
•
Pricing Measures:
•
revenue per equivalent admission; and
•
revenue, minus our provision for doubtful accounts, per
equivalent admission.
•
Expense Measures:
•
salaries and benefits per equivalent admission;
•
supply costs per equivalent admission;
•
other operating expenses (including contract services,
professional fees, repairs and maintenance, rents and leases,
utilities, insurance and nonincome taxes) per equivalent
admission; and
•
operating expenses, minus our provision for doubtful accounts,
per equivalent admission.
We set forth the volume measures described above, except for
payer mix, for the years ended December 31, 2009, 2008,
2007, 2006 and 2005 under the heading “Operating Data”
in “Selected Financial Data.” We give details about
the payer mix for the years ended December 31, 2009, 2008
and 2007 in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Results of
Operations — Revenue/Volume Trends.”
The pricing and expense measures described above can be derived
by dividing (1) the amounts from the applicable line items
in our income statement (minus our provision for doubtful
accounts, where indicated) by
(2) equivalent admissions, which are set forth under the
heading “Operating Data” in “Selected Financial
Data.”
Business
Segments
Our company operations are structured in three geographically
organized groups:
•
Western Group. The Western Group is comprised
of the markets in Alaska, California, Colorado, Idaho, Kansas,
Nevada, Oklahoma, Texas and Utah. Samuel Hazen, who has held
various positions with HCA for 24 years, is the Western
Group’s President. As of December 31, 2009, there were
55 consolidating hospitals within the Western Group. The Western
Group includes seven of our non-consolidated hospitals, with
respect to which major strategic and operating decisions are
shared equally with non-HCA partners. For the year ended
December 31, 2009, the Western Group generated revenues of
$13.140 billion.
•
Central Group. The Central Group is comprised
of the markets in Indiana, Georgia (northern portion), Kansas,
Kentucky, Louisiana, Mississippi, Missouri, New Hampshire,
Tennessee and Virginia. Paul Rutledge, who has held various
positions with HCA for 20 years, is the Central
Group’s President. As of December 31, 2009, there were
46 consolidating hospitals within the Central Group. The Central
Group includes one of our non-consolidating hospitals, with
respect to which major strategic and operating decisions are
shared equally with non-HCA partners. For the year ended
December 31, 2009, the Central Group generated revenues of
$7.225 billion.
•
Eastern Group. The Eastern Group is comprised
of the markets in Florida, Georgia (southern portion) and South
Carolina. Charles Hall, who has held various positions with HCA
for 20 years, is the Eastern Group’s President. As of
December 31, 2009, there were 48 consolidating hospitals
within the Eastern Group. For the year ended December 31,2009, the Eastern Group generated revenues of
$8.807 billion.
We also owned and operated six hospitals in England as of
December 31, 2009, which are included in our Corporate and
Other Segment. These international facilities generated revenues
of $709 million for the year ended December 31, 2009.
Our divisions and market structures are designed to augment our
market-based strategy to provide integrated services to their
respective community. This structure allows our management to
focus on manageable groupings of hospitals and provide them with
direct support.
Note 13 to our audited consolidated financial statements
contains information by segment on our revenues, equity in
earnings of affiliates, adjusted segment EBITDA and depreciation
and amortization for the years ended December 31, 2009,
2008 and 2007.
Health
Care Facilities
We currently own, manage or operate hospitals; freestanding
surgery centers; diagnostic and imaging centers; radiation and
oncology therapy centers; comprehensive rehabilitation and
physical therapy centers; and various other facilities.
At December 31, 2009, we owned and operated 150 general,
acute care hospitals with 38,349 licensed beds, and an
additional seven general, acute care hospitals with 2,269
licensed beds, which are operated through joint ventures, which
are accounted for using the equity method. Most of our general,
acute care hospitals provide medical and surgical services,
including inpatient care, intensive care, cardiac care,
diagnostic services and emergency services. The general, acute
care hospitals also provide outpatient services such as
outpatient surgery, laboratory, radiology, respiratory therapy,
cardiology and physical therapy. Each hospital has an organized
medical staff and a local board of trustees or governing board,
made up of members of the local community.
Our hospitals do not typically engage in extensive medical
research and education programs. However, some of our hospitals
are affiliated with medical schools and may participate in the
clinical rotation of medical interns and residents and other
education programs.
At December 31, 2009, we operated five psychiatric
hospitals with 490 licensed beds. Our psychiatric hospitals
provide therapeutic programs including child, adolescent and
adult psychiatric care, adult and adolescent alcohol and drug
abuse treatment and counseling.
We also operate outpatient health care facilities which include
freestanding ASCs, diagnostic and imaging centers, comprehensive
outpatient rehabilitation and physical therapy centers,
outpatient radiation and oncology therapy centers and various
other facilities. These outpatient services are an integral
component of our strategy to develop comprehensive health care
networks in select communities. A majority of our ASCs are
operated through partnerships or limited liability companies,
with majority ownership of each partnership or limited liability
company typically held by a general partner or subsidiary that
is an affiliate of HCA.
Certain of our affiliates provide a variety of management
services to our health care facilities, including patient safety
programs; ethics and compliance programs; national supply
contracts; equipment purchasing and leasing contracts;
accounting, financial and clinical systems; governmental
reimbursement assistance; construction planning and
coordination; information technology systems and solutions;
legal counsel; human resources services; and internal audit
services.
Sources
of Revenue
Hospital revenues depend upon inpatient occupancy levels, the
medical and ancillary services ordered by physicians and
provided to patients, the volume of outpatient procedures and
the charges or payment rates for such services. Charges and
reimbursement rates for inpatient services vary significantly
depending on the type of payer, the type of service (e.g.,
medical/surgical, intensive care or psychiatric) and the
geographic location of the hospital. Inpatient occupancy levels
fluctuate for various reasons, many of which are beyond our
control.
We receive payment for patient services from the federal
government under the Medicare program, state governments under
their respective Medicaid or similar programs, managed care
plans, private insurers and directly from patients. The
approximate percentages of our revenues from such sources were
as follows:
Medicare is a federal program that provides certain hospital and
medical insurance benefits to persons age 65 and over, some
disabled persons, persons with end-stage renal disease and
persons with Lou Gehrig’s Disease. Medicaid is a
federal-state program, administered by the states, which
provides hospital and medical benefits to qualifying individuals
who are unable to afford health care. All of our general, acute
care hospitals located in the United States are certified as
health care services providers for persons covered under
Medicare and Medicaid programs. Amounts received under Medicare
and Medicaid programs are generally significantly less than
established hospital gross charges for the services provided.
Our hospitals generally offer discounts from established charges
to certain group purchasers of health care services, including
private insurance companies, employers, HMOs, PPOs and other
managed care plans. These discount programs generally limit our
ability to increase revenues in response to increasing costs.
See “Business — Competition.” Patients are
generally not responsible for the total difference between
established hospital gross charges and amounts reimbursed for
such services under Medicare, Medicaid, HMOs or PPOs and other
managed care plans, but are responsible to the extent of any
exclusions, deductibles or coinsurance
features of their coverage. The amount of such exclusions,
deductibles and coinsurance continues to increase. Collection of
amounts due from individuals is typically more difficult than
from governmental or third-party payers. We provide discounts to
uninsured patients who do not qualify for Medicaid or charity
care under our charity care policy. These discounts are similar
to those provided to many local managed care plans. In
implementing the discount policy, we attempt to qualify
uninsured patients for Medicaid, other federal or state
assistance or charity care under our charity care policy. If an
uninsured patient does not qualify for these programs, the
uninsured discount is applied.
Medicare
Inpatient
Acute Care
Under the Medicare program, we receive reimbursement under a
prospective payment system (“PPS”) for general, acute
care hospital inpatient services. Under the hospital inpatient
PPS, fixed payment amounts per inpatient discharge are
established based on the patient’s assigned Medicare
severity diagnosis-related group (“MS-DRG”). The
Centers for Medicare & Medicaid Services
(“CMS”) recently completed a two-year transition to
full implementation of MS-DRGs to replace the previously used
Medicare diagnosis related groups in an effort to better
recognize severity of illness in Medicare payment rates. MS-DRGs
classify treatments for illnesses according to the estimated
intensity of hospital resources necessary to furnish care for
each principal diagnosis. MS-DRG weights represent the average
resources for a given MS-DRG relative to the average resources
for all MS-DRGs. MS-DRG payments are adjusted for area wage
differentials. Hospitals, other than those defined as
“new,” receive PPS reimbursement for inpatient capital
costs based on MS-DRG weights multiplied by a geographically
adjusted federal rate. When the cost to treat certain patients
falls well outside the normal distribution, providers typically
receive additional “outlier” payments.
MS-DRG rates are updated and MS-DRG weights are recalibrated
using cost relative weights each federal fiscal year (which
begins October 1). The index used to update the MS-DRG rates
(the “market basket”) gives consideration to the
inflation experienced by hospitals and entities outside the
health care industry in purchasing goods and services. In
federal fiscal year 2009, the MS-DRG rate was increased by the
full market basket of 3.6%. For the federal fiscal year 2010,
CMS has set the MS-DRG rate increase at the full market basket
of 2.1%. However, the Health Reform Legislation includes a 0.25%
reduction to the market basket for 2010 for discharges occurring
on or after April 1, 2010. The Health Reform Legislation
also provides for the following reductions to the market basket
update for each of the following federal fiscal years: 0.25% in
2011, 0.1% in 2012 and 2013, 0.3% in 2014, 0.2% in 2015 and 2016
and 0.75% in 2017, 2018 and 2019. For federal fiscal year 2012
and each subsequent federal fiscal year, the Health Reform
Legislation provides for the annual market basket update to be
further reduced by a productivity adjustment tied to an
economy-wide productivity average as determined by the
Department of Health and Human Services (“HHS”). In
addition, the Health Reform Legislation mandates several pilot
programs intended to evaluate alternative payment methodologies,
including a national bundled payment program for inpatient
hospital services provided to treat eligible medical conditions
or episodes of care. A decrease in payments rates or an increase
in rates that is below the increase in our costs may adversely
affect the results of our operations.
In federal fiscal years 2008 and 2009, CMS reduced payments to
hospitals through a documentation and coding adjustment intended
to account for changes in payments under the MS-DRG system that
are not related to changes in patient case mix. In addition, CMS
has the authority to determine retrospectively whether the
documentation and coding adjustment levels for federal fiscal
years 2008 and 2009 were adequate to account for changes in
payments not related to changes in case mix. CMS has not imposed
an adjustment for federal fiscal year 2010, but has announced
its intent to impose reductions to payments in federal fiscal
years 2011 and 2012 because of what CMS has determined to be an
inadequate adjustment in federal fiscal year 2008. Such payment
adjustments may adversely affect the results of our operations.
It is not clear what impact, if any, the market basket
reductions required by the Health Reform Legislation will have
on CMS’s proposal.
Further realignments in the MS-DRG system could also reduce the
payments we receive for certain specialties, including
cardiology and orthopedics. CMS has focused on payment levels
for such specialties in
recent years in part because of the proliferation of specialty
hospitals. Changes in the payments received for specialty
services could have an adverse effect on our results of
operations.
The Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (“MMA”) provides for rate increases at the
full market basket if data for patient care quality indicators
are submitted to the Secretary of HHS. As required by the
Deficit Reduction Act of 2005 (“DRA 2005”), CMS has
expanded, through a series of rulemakings, the number of quality
measures that must be reported to receive a full market basket
update. CMS currently requires hospitals to report 46 quality
measures in order to qualify for the full market basket update
to the inpatient PPS in federal fiscal year 2011. Failure to
submit the required quality indicators will result in a two
percentage point reduction to the market basket update. All of
our hospitals paid under Medicare inpatient MS-DRG PPS are
participating in the quality initiative by submitting the
requested quality data. While we will endeavor to comply with
all data submission requirements as additional requirements
continue to be added, our submissions may not be deemed timely
or sufficient to entitle us to the full market basket adjustment
for all of our hospitals.
As part of CMS’s goal of transforming Medicare from a
passive payer to an active purchaser of quality goods and
services, for discharges occurring after October 1, 2008,
Medicare no longer assigns an inpatient hospital discharge to a
higher paying MS-DRG if a selected HAC was not present on
admission. In this situation, the case is paid as though the
secondary diagnosis was not present. Currently, there are ten
categories of conditions on the list of HACs. In addition, CMS
has established three National Coverage Determinations
(“NCDs”) that prohibit Medicare reimbursement for
erroneous surgical procedures performed on an inpatient or
outpatient basis. The Health Reform Legislation provides for
reduced payments based on a hospital’s HAC rates and
readmission rates and requires HAC rates and readmission rates
to be made public. Beginning in federal fiscal year 2015,
hospitals that fall into the top 25% of risk-adjusted HAC rates
for all hospitals in the previous year will receive a 1%
reduction in payment rates. For discharges occurring during a
fiscal year beginning on or after October 1, 2012,
hospitals with excessive readmissions for certain conditions
will receive reduced payments for all inpatient admissions.
Historically, the Medicare program has set aside 5.10% of
Medicare inpatient payments to pay for outlier cases. CMS
estimates that outlier payments accounted for 4.8% of total
operating DRG payments for federal fiscal year 2008. For federal
fiscal year 2009, CMS established an outlier threshold of
$20,045, and for federal fiscal year 2010, CMS has increased the
outlier threshold to $23,140. We do not anticipate the increase
to the outlier threshold for federal fiscal year 2010 will have
a material impact on our results of operations.
Outpatient
CMS reimburses hospital outpatient services (and certain
Medicare Part B services furnished to hospital inpatients
who have no Part A coverage) on a PPS basis. CMS continues
to use fee schedules to pay for physical, occupational and
speech therapies, durable medical equipment, clinical diagnostic
laboratory services and nonimplantable orthotics and
prosthetics, freestanding surgery centers services and services
provided by independent diagnostic testing facilities.
Hospital outpatient services paid under PPS are classified into
groups called ambulatory payment classifications
(“APCs”). Services for each APC are similar clinically
and in terms of the resources they require. A payment rate is
established for each APC. Depending on the services provided, a
hospital may be paid for more than one APC for a patient visit.
The APC payment rates were updated for calendar years 2008 and
2009 by market baskets of 3.30% and 3.60%, respectively. On
November 20, 2009, CMS published a final rule that updated
payment rates for calendar year 2010 by the full market basket
of 2.1%. However, the Health Reform Legislation includes a 0.25%
reduction to the market basket for 2010. The Health Reform
Legislation also provides for the following reductions to the
market basket update for each of the following calendar years:
0.25% in 2011, 0.1% in 2012 and 2013, 0.3% in 2014, 0.2% in 2015
and 2016 and 0.75% in 2017, 2018 and 2019. For calendar year
2012 and each subsequent calendar year, the Health Reform
Legislation provides for an annual market basket update to be
further reduced by a productivity adjustment tied to an
economy-wide productivity average as determined by HHS. CMS
continues to require hospitals to submit quality data relating
to outpatient care to receive the full market basket increase
under the outpatient PPS in
calendar year 2010. CMS required hospitals to report data on
eleven quality measures in calendar year 2009 for the payment
determination in calendar year 2010 and will continue to require
hospitals to report the existing eleven quality measures in
calendar year 2010 for the 2011 payment determination. Hospitals
that fail to submit such data will receive the market basket
update minus two percentage points for the outpatient PPS.
Rehabilitation
CMS reimburses inpatient rehabilitation facilities
(“IRFs”) on a PPS basis. Under IRF PPS, patients are
classified into case mix groups based upon impairment, age,
comorbidities (additional diseases or disorders from which the
patient suffers) and functional capability. IRFs are paid a
predetermined amount per discharge that reflects the
patient’s case mix group and is adjusted for area wage
levels, low-income patients, rural areas and high-cost outliers.
CMS provided for a market basket update of 2.5% for federal
fiscal year 2010. However, the Health Reform Legislation
requires a 0.25% reduction to the market basket for 2010 for
discharges occurring on or after April 1, 2010. The Health
Reform Legislation also provides for the following reductions to
the market basket update for each of the following federal
fiscal years: 0.25% in 2011, 0.1% in 2012 and 2013, 0.3% in
2014, 0.2% in 2015 and 2016 and 0.75% in 2017, 2018 and 2019.
For federal fiscal year 2012 and each subsequent federal fiscal
year, the Health Reform Legislation provides for the annual
market basket update to be further reduced by a productivity
adjustment tied to an economy-wide productivity average as
determined by HHS. Beginning in federal fiscal year 2014, IRFs
will be required to report quality measures to HHS or will
receive a two percentage point reduction to the market basket
update. As of December 31, 2009, we had one rehabilitation
hospital, which is operated through a joint venture, and 46
hospital rehabilitation units.
On May 7, 2004, CMS published a final rule to change the
criteria for being classified as an IRF. Pursuant to that final
rule, 75% of a facility’s inpatients over a given year had
to have been treated for at least one of 10 specified
conditions, and a subsequent regulation expanded the number of
specified conditions to 13. Since then, several statutory and
regulatory adjustments have been made to the rule, including
adjustments to the percentage of a facility’s patients that
must be treated for one of the 13 specified conditions.
Currently, the compliance threshold is set by statute at 60%.
Implementation of this 60% threshold has reduced our IRF
admissions and can be expected to continue to restrict the
treatment of patients whose medical conditions do not meet any
of the 13 approved conditions. In addition, effective
January 1, 2010, IRFs must meet additional coverage
criteria, including patient selection and care requirements
relating to pre-admission screenings, post-admission
evaluations, ongoing coordination of care and involvement of
rehabilitation physicians. A facility that fails to meet the 60%
threshold or other criteria to be classified as an IRF will be
paid under the acute care hospital inpatient or outpatient PPS,
which generally provide for lower payment amounts.
Psychiatric
Inpatient hospital services furnished in psychiatric hospitals
and psychiatric units of general, acute care hospitals and
critical access hospitals are reimbursed under a prospective
payment system (“IPF PPS”), a per diem payment, with
adjustments to account for certain patient and facility
characteristics. IPF PPS contains an “outlier” policy
for extraordinarily costly cases and an adjustment to a
facility’s base payment if it maintains a full-service
emergency department. CMS has established the IPF PPS payment
rate in a manner intended to be budget neutral and has adopted a
July 1 update cycle, with each twelve month period referred to
as a “rate year.” The rehabilitation, psychiatric and
long-term care (“RPL”) market basket update is used to
update the IPF PPS. The annual RPL market basket update for rate
year 2010 is 2.1%. However, the Health Reform Legislation
includes a 0.25% reduction to the market basket for rate year
2010. The Health Reform Legislation also provides for the
following reductions to the market basket update for each of the
following rate years: 0.25% in 2011, 0.1% in 2012 and 2013, 0.3%
in 2014, 0.2% in 2015 and 2016 and 0.75% in 2017, 2018 and 2019.
For rate year 2012 and each subsequent rate year, the Health
Reform Legislation provides for the annual market basket update
to be further reduced by a productivity adjustment tied to an
economy-wide productivity average as determined by HHS. As of
December 31, 2009, we had five psychiatric hospitals and 32
hospital psychiatric units.
CMS reimburses ambulatory surgery centers (“ASCs”)
using a predetermined fee schedule. Reimbursements for ASC
overhead costs are limited to no more than the overhead costs
paid to hospital outpatient departments under the Medicare
hospital outpatient PPS for the same procedure. Effective
January 1, 2008, ASC payment groups increased from nine
clinically disparate payment groups to an extensive list of
covered surgical procedures among the APCs used under the
outpatient PPS for these surgical services. Because the new
payment system has a significant impact on payments for certain
procedures, CMS has established a four-year transition period
for implementing the required payment rates. Moreover, if CMS
determines that a procedure is commonly performed in a
physician’s office, the ASC reimbursement for that
procedure is limited to the reimbursement allowable under the
Medicare Part B Physician Fee Schedule, with limited
exceptions. In addition, all surgical procedures, other than
those that pose a significant safety risk or generally require
an overnight stay, are payable as ASC procedures. As a result,
more Medicare procedures now performed in hospitals may be moved
to ASCs, reducing surgical volume in our hospitals. Also, more
Medicare procedures now performed in ASCs may be moved to
physicians’ offices. Commercial third-party payers may
adopt similar policies. The Health Reform Legislation requires
HHS to issue a plan by January 1, 2011 for developing a
value-based purchasing program for ASCs. Such a program may
further impact Medicare reimbursement of ASCs or increase our
operating costs in order to satisfy the value-based standards.
For federal fiscal year 2011 and each subsequent federal fiscal
year, the Health Reform Legislation provides for the annual
market basket update to be reduced by a productivity adjustment
tied to an economy-wide productivity average as determined by
HHS.
Other
Under PPS, the payment rates are adjusted for the area
differences in wage levels by a factor (“wage index”)
reflecting the relative wage level in the geographic area
compared to the national average wage level. Beginning in
federal fiscal year 2007, CMS adjusted 100% of the wage index
factor for occupational mix. The redistributive impact of wage
index changes, while slightly negative in the aggregate, is not
anticipated to have a material financial impact for 2010.
However, the Health Reform Legislation requires HHS to report to
Congress by December 31, 2011 with recommendations on how
to comprehensively reform the Medicare wage index system.
As required by the MMA, CMS is implementing contractor reform
whereby CMS has competitively bid the Medicare fiscal
intermediary and Medicare carrier functions to 15 Medicare
Administrative Contractors (“MACs”), which are
geographically assigned. CMS has awarded contracts to all 15 MAC
jurisdictions; as a result of filed protests, CMS is taking
corrective action regarding the contracts in several
jurisdictions. While chain providers had the option of having
all hospitals use one home office MAC, HCA chose to use the MACs
assigned to the geographic areas in which our hospitals are
located. The individual MAC jurisdictions are in varying phases
of transition. For the transition periods and for a potentially
unforeseen period thereafter, all of these changes could impact
claims processing functions and the resulting cash flow;
however, we are unable to predict the impact at this time.
Under the Recovery Audit Contractor (“RAC”) program,
CMS contracts with RACs to conduct post-payment reviews to
detect and correct improper payments in the
fee-for-service
Medicare program. CMS has awarded contracts to four RACs that
are implementing the RAC program on a nationwide basis as
required by statute. The Health Reform Legislation expands the
RAC program’s scope to include Medicaid claims by requiring
all states to enter contracts with RACs by December 31,2010.
Managed
Medicare
Managed Medicare plans relate to situations where a private
company contracts with CMS to provide members with Medicare
Part A, Part B and Part D benefits. Managed
Medicare plans can be structured as HMOs, PPOs or private
fee-for-service
plans. The Medicare program allows beneficiaries to choose
enrollment in certain managed Medicare plans. In 2003, MMA
increased reimbursement to managed Medicare plans and expanded
Medicare beneficiaries’ healthcare options. Since 2003, the
number of beneficiaries choosing to receive their Medicare
benefits through such plans has increased. However, the Medicare
Improvements for Patients and Providers Act of 2008 imposed new
restrictions and implemented focused cuts to certain managed
Medicare plans. In addition, the Health Reform Legislation
reduces payments to managed Medicare plans. In light of the
current economic downturn and the recently enacted legislation,
managed Medicare plans may experience reduced premium payments,
which may lead to decreased enrollment in such plans.
Medicaid
Medicaid programs are funded jointly by the federal government
and the states and are administered by states under approved
plans. Most state Medicaid program payments are made under a PPS
or are based on negotiated payment levels with individual
hospitals. Medicaid reimbursement is often less than a
hospital’s cost of services. Effective July 1, 2011,
the Health Reform Legislation will prohibit the use of federal
funds under the Medicaid program to reimburse providers for
medical assistance provided to treat HACs. The Health Reform
Legislation also requires states to expand Medicaid coverage to
all individuals under age 65 with incomes up to 133% of the
federal poverty level by 2014. Expansion of the Medicaid program
could adversely affect future levels of reimbursement received
by our hospitals.
Since most states must operate with balanced budgets and since
the Medicaid program is often the state’s largest program,
states can be expected to adopt or consider adopting legislation
designed to reduce their Medicaid expenditures. The current
economic downturn has increased the budgetary pressures on most
states, and these budgetary pressures have resulted and likely
will continue to result in decreased spending for Medicaid
programs in many states. Further, many states have also adopted,
or are considering, legislation designed to reduce coverage,
enroll Medicaid recipients in managed care programs
and/or
impose additional taxes on hospitals to help finance or expand
the states’ Medicaid systems. As permitted by law, certain
states in which we operate have adopted broad-based provider
taxes to fund the
non-federal
share of Medicaid programs.
Through DRA 2005, Congress has expanded the federal
government’s involvement in fighting fraud, waste and abuse
in the Medicaid program by creating the Medicaid Integrity
Program. Among other things, the DRA 2005 requires CMS to employ
private contractors, referred to as Medicaid Integrity
Contractors (“MICs”), to perform post-payment audits
of Medicaid claims and identify overpayments. MICs are assigned
to five geographic regions and have commenced audits in several
of the states assigned to those regions. Throughout 2010, MIC
audits will continue to expand to other states. The Health
Reform Legislation increases federal funding for the MIC program
for federal fiscal year 2011 and later years. In addition to
MICs, several other contractors, including the state Medicaid
agencies, have increased their review activities. The Health
Reform Legislation expands the RAC program’s scope to
include Medicaid claims by requiring all states to enter
contracts with RACs by December 31, 2010. Future
legislation or other changes in the administration or
interpretation of government health programs could have a
material, adverse effect on our financial position and results
of operations.
Managed
Medicaid
Managed Medicaid programs enable states to contract with one or
more entities for patient enrollment, care management and claims
adjudication. The states usually do not relinquish program
responsibilities for financing, eligibility criteria and core
benefit plan design. We generally contract directly with one of
the designated entities, usually a managed care organization.
The provisions of these programs are state-specific.
Enrollment in managed Medicaid plans has increased in recent
years, as state governments seek to control the cost of Medicaid
programs. However, general economic conditions in the states in
which we operate may require reductions in premium payments to
these plans and may reduce reimbursement received from these
plans.
TRICARE
TRICARE is the Department of Defense’s health care program
for members of the armed forces. On May 1, 2009, the
Department of Defense implemented a prospective payment system
for hospital outpatient services furnished to TRICARE
beneficiaries similar to that utilized for services furnished to
Medicare beneficiaries. Because the Medicare outpatient
prospective payment system APC rates have historically been
below TRICARE rates, the adoption of this payment methodology
for TRICARE beneficiaries reduces our reimbursement; however,
TRICARE outpatient services do not represent a significant
portion of our patient volumes.
Annual
Cost Reports
All hospitals participating in the Medicare, Medicaid and
TRICARE programs, whether paid on a reasonable cost basis or
under a PPS, are required to meet certain financial reporting
requirements. Federal and, where applicable, state regulations
require the submission of annual cost reports covering the
revenues, costs and expenses associated with the services
provided by each hospital to Medicare beneficiaries and Medicaid
recipients.
Annual cost reports required under the Medicare and Medicaid
programs are subject to routine audits, which may result in
adjustments to the amounts ultimately determined to be due to us
under these reimbursement programs. These audits often require
several years to reach the final determination of amounts due to
or from us under these programs. Providers also have rights of
appeal, and it is common to contest issues raised in audits of
cost reports.
Managed
Care and Other Discounted Plans
Most of our hospitals offer discounts from established charges
to certain large group purchasers of health care services,
including managed care plans and private insurance companies.
Admissions reimbursed by commercial managed care and other
insurers were 34%, 35% and 37% of our total admissions for the
years ended December 31, 2009, 2008 and 2007, respectively.
Managed care contracts are typically negotiated for terms
between one and three years. While we generally received annual
average yield increases of 6% to 7% from managed care payers
during 2009, there can be no assurance that we will continue to
receive increases in the future. It is not clear what impact, if
any, the increased obligations on managed care payers and other
health plans imposed by the Health Reform Legislation will have
on our ability to negotiate reimbursement increases.
Uninsured
and Self-Pay Patients
A high percentage of our uninsured patients are initially
admitted through our emergency rooms. For the year ended
December 31, 2009, approximately 81% of our admissions of
uninsured patients occurred through our emergency rooms. The
Emergency Medical Treatment and Active Labor Act
(“EMTALA”) requires any hospital that participates in
the Medicare program to conduct an appropriate medical screening
examination of every person who presents to the hospital’s
emergency room for treatment and, if the individual is suffering
from an emergency medical condition, to either stabilize that
condition or make an appropriate transfer of the individual to a
facility that can handle the condition. The obligation to screen
and stabilize emergency medical conditions exists regardless of
an individual’s ability to pay for treatment. The Health
Reform Legislation requires health plans to reimburse hospitals
for emergency services provided to enrollees without prior
authorization and without regard to whether a participating
provider contract is in place. Further, the Health Reform
Legislation contains provisions that seek to decrease the number
of uninsured individuals, including requirements, which do not
become effective until 2014, for individuals to obtain, and
employers to provide, insurance coverage. These mandates may
reduce the financial impact of screening for and stabilizing
emergency medical conditions. However, it is difficult to
predict the full impact of the Health Reform Legislation due to
the law’s complexity, lack of implementing regulations or
interpretive guidance, gradual implementation and possible
amendment.
We are taking proactive measures to reduce our provision for
doubtful accounts by, among other things: screening all
patients, including the uninsured, through our emergency
screening protocol, to determine the appropriate care setting in
light of their condition, while reducing the potential for bad
debt; and increasing up-front collections from patients subject
to co-pay and deductible requirements and uninsured patients.
We believe that the most important factors relating to the
overall utilization of a hospital are the quality and market
position of the hospital and the number and quality of
physicians and other health care professionals providing patient
care within the facility. Generally, we believe the ability of a
hospital to be a market leader is determined by its breadth of
services, level of technology, emphasis on quality of care and
convenience for patients and physicians. Other factors that
impact utilization include the growth in local population, local
economic conditions and market penetration of managed care
programs.
The following table sets forth certain operating statistics for
our health care facilities. Health care facility operations are
subject to certain seasonal fluctuations, including decreases in
patient utilization during holiday periods and increases in the
cold weather months. The data set forth in this table includes
only those facilities that are consolidated for financial
reporting purposes.
Number of freestanding outpatient surgery centers at end of
period(b)
97
97
99
98
87
Number of licensed beds at end of period(c)
38,839
38,504
38,405
39,354
41,265
Weighted average licensed beds(d)
38,825
38,422
39,065
40,653
41,902
Admissions(e)
1,556,500
1,541,800
1,552,700
1,610,100
1,647,800
Equivalent admissions(f)
2,439,000
2,363,600
2,352,400
2,416,700
2,476,600
Average length of stay (days)(g)
4.8
4.9
4.9
4.9
4.9
Average daily census(h)
20,650
20,795
21,049
21,688
22,225
Occupancy rate(i)
53
%
54
%
54
%
53
%
53
%
Emergency room visits(j)
5,593,500
5,246,400
5,116,100
5,213,500
5,415,200
Outpatient surgeries(k)
794,600
797,400
804,900
820,900
836,600
Inpatient surgeries(l)
494,500
493,100
516,500
533,100
541,400
(a)
Excludes eight facilities in 2009, 2008 and 2007 and seven
facilities in 2006 and 2005 that are not consolidated (accounted
for using the equity method) for financial reporting purposes.
(b)
Excludes eight facilities in 2009 and 2008, nine facilities in
2007 and 2006 and seven facilities in 2005 that are not
consolidated (accounted for using the equity method) for
financial reporting purposes.
(c)
Licensed beds are those beds for which a facility has been
granted approval to operate from the applicable state licensing
agency.
(d)
Weighted average licensed beds represents the average number of
licensed beds, weighted based on periods owned.
(e)
Represents the total number of patients admitted to our
hospitals and is used by management and certain investors as a
general measure of inpatient volume.
(f)
Equivalent admissions are used by management and certain
investors as a general measure of combined inpatient and
outpatient volume. Equivalent admissions are computed by
multiplying admissions (inpatient volume) by the sum of gross
inpatient revenue and gross outpatient revenue and then dividing
the resulting amount by gross inpatient revenue. The equivalent
admissions computation “equates” outpatient revenue to
the volume measure (admissions) used to measure inpatient
volume, resulting in a general measure of combined inpatient and
outpatient volume.
(g)
Represents the average number of days admitted patients stay in
our hospitals.
(h)
Represents the average number of patients in our hospital beds
each day.
(i)
Represents the percentage of hospital licensed beds occupied by
patients. Both average daily census and occupancy rate provide
measures of the utilization of inpatient rooms.
Represents the number of patients treated in our emergency rooms.
(k)
Represents the number of surgeries performed on patients who
were not admitted to our hospitals. Pain management and
endoscopy procedures are not included in outpatient surgeries.
(l)
Represents the number of surgeries performed on patients who
have been admitted to our hospitals. Pain management and
endoscopy procedures are not included in inpatient surgeries.
Competition
Generally, other hospitals in the local communities served by
most of our hospitals provide services similar to those offered
by our hospitals. Additionally, in recent years the number of
freestanding ASCs and diagnostic centers (including facilities
owned by physicians) in the geographic areas in which we operate
has increased significantly. As a result, most of our hospitals
operate in a highly competitive environment. In some cases,
competing hospitals are more established than our hospitals.
Some competing hospitals are owned by tax-supported government
agencies and many others are owned by
not-for-profit
entities that may be supported by endowments, charitable
contributions
and/or tax
revenues and are exempt from sales, property and income taxes.
Such exemptions and support are not available to our hospitals.
In certain localities there are large teaching hospitals that
provide highly specialized facilities, equipment and services
which may not be available at most of our hospitals. We are
facing increasing competition from specialty hospitals, some of
which are physician-owned, and both our own and unaffiliated
freestanding ASCs for market share in high margin services.
Psychiatric hospitals frequently attract patients from areas
outside their immediate locale and, therefore, our psychiatric
hospitals compete with both local and regional hospitals,
including the psychiatric units of general, acute care hospitals.
Our strategies are designed to ensure our hospitals are
competitive. We believe our hospitals compete within local
communities on the basis of many factors, including the quality
of care, ability to attract and retain quality physicians,
skilled clinical personnel and other health care professionals,
location, breadth of services, technology offered and prices
charged. Pursuant to the Health Reform Legislation, hospitals
will be required to publish annually a list of their standard
charges for items and services. We have increased our focus on
operating outpatient services with improved accessibility and
more convenient service for patients, and increased
predictability and efficiency for physicians.
Two of the most significant factors to the competitive position
of a hospital are the number and quality of physicians
affiliated with the hospital. Although physicians may at any
time terminate their affiliation with a hospital we operate, our
hospitals seek to retain physicians with varied specialties on
the hospitals’ medical staffs and to attract other
qualified physicians. We believe physicians refer patients to a
hospital on the basis of the quality and scope of services it
renders to patients and physicians, the quality of physicians on
the medical staff, the location of the hospital and the quality
of the hospital’s facilities, equipment and employees.
Accordingly, we strive to maintain and provide quality
facilities, equipment, employees and services for physicians and
patients.
Another major factor in the competitive position of a hospital
is our ability to negotiate service contracts with purchasers of
group health care services. Managed care plans attempt to direct
and control the use of hospital services and obtain discounts
from hospitals’ established gross charges. In addition,
employers and traditional health insurers continue to attempt to
contain costs through negotiations with hospitals for managed
care programs and discounts from established gross charges.
Generally, hospitals compete for service contracts with group
health care services purchasers on the basis of price, market
reputation, geographic location, quality and range of services,
quality of the medical staff and convenience. Our future success
will depend, in part, on our ability to retain and renew our
managed care contracts and enter into new managed care contracts
on favorable terms. Other health care providers may impact our
ability to enter into managed care contracts or negotiate
increases in our reimbursement and other favorable terms and
conditions. For example, some of our competitors may negotiate
exclusivity provisions with managed care plans or otherwise
restrict the ability of managed care companies to contract with
us. The trend toward consolidation among non-government payers
tends to increase their bargaining power over fee structures.
The importance of obtaining contracts with
managed care organizations varies from community to community,
depending on the market strength of such organizations.
State certificate of need (“CON”) laws, which place
limitations on a hospital’s ability to expand hospital
services and facilities, make capital expenditures and otherwise
make changes in operations, may also have the effect of
restricting competition. We currently operate health care
facilities in a number of states with CON laws. Before issuing a
CON, these states consider the need for additional or expanded
health care facilities or services. In those states which have
no CON laws or which set relatively high levels of expenditures
before they become reviewable by state authorities, competition
in the form of new services, facilities and capital spending is
more prevalent. See “Regulation and Other Factors.”
We and the health care industry as a whole face the challenge of
continuing to provide quality patient care while dealing with
rising costs and strong competition for patients. Changes in
medical technology, existing and future legislation, regulations
and interpretations and managed care contracting for provider
services by private and government payers remain ongoing
challenges.
Admissions, average lengths of stay and reimbursement amounts
continue to be negatively affected by payer-required
pre-admission authorization, utilization review and payer
pressure to maximize outpatient and alternative health care
delivery services for less acutely ill patients. The Health
Reform Legislation eliminates statutory restrictions on the use
of prepayment review by Medicare contractors. Increased
competition, admission constraints and payer pressures are
expected to continue. To meet these challenges, we intend to
expand our facilities or acquire or construct new facilities
where appropriate, to better enable the provision of a
comprehensive array of outpatient services, offer market
competitive pricing to private payer groups, upgrade facilities
and equipment, and offer new or expanded programs and services.
Health care facility construction and operation are subject to
numerous federal, state and local regulations relating to the
adequacy of medical care, equipment, personnel, operating
policies and procedures, maintenance of adequate records, fire
prevention, rate-setting and compliance with building codes and
environmental protection laws. Facilities are subject to
periodic inspection by governmental and other authorities to
assure continued compliance with the various standards necessary
for licensing and accreditation. We believe our health care
facilities are properly licensed under applicable state laws.
Each of our acute care hospitals are certified for participation
in the Medicare and Medicaid programs and are accredited by The
Joint Commission. If any facility were to lose its Medicare or
Medicaid certification, the facility would be unable to receive
reimbursement from federal health care programs. If any facility
were to lose accreditation by The Joint Commission, the facility
would be subject to state surveys, potentially be subject to
increased scrutiny by CMS and likely lose payment from
non-government payers. Management believes our facilities are in
substantial compliance with current applicable federal, state,
local and independent review body regulations and standards. The
requirements for licensure, certification and accreditation are
subject to change and, in order to remain qualified, it may
become necessary for us to make changes in our facilities,
equipment, personnel and services. The requirements for
licensure also may include notification or approval in the event
of the transfer or change of ownership. Failure to obtain the
necessary state approval in these circumstances can result in
the inability to complete an acquisition or change of ownership.
Certificates
of Need
In some states where we operate hospitals and other health care
facilities, the construction or expansion of health care
facilities, the acquisition of existing facilities, the transfer
or change of ownership and the addition of new beds or services
may be subject to review by and prior approval of state
regulatory agencies under a CON program. Such laws generally
require the reviewing state agency to determine the public need
for additional or expanded health care facilities and services.
Failure to obtain necessary state approval can result in the
inability to expand facilities, complete an acquisition or
change ownership.
State
Rate Review
Some states have adopted legislation mandating rate or budget
review for hospitals or have adopted taxes on hospital revenues,
assessments or licensure fees to fund indigent health care
within the state. In the aggregate, indigent tax provisions have
not materially, adversely affected our results of operations.
Although we do not currently operate facilities in states that
mandate rate or budget reviews, we cannot predict whether we
will operate in such states in the future, or whether the states
in which we currently operate may adopt legislation mandating
such reviews.
Federal
Health Care Program Regulations
Participation in any federal health care program, including the
Medicare and Medicaid programs, is heavily regulated by statute
and regulation. If a hospital fails to substantially comply with
the numerous conditions of participation in the Medicare and
Medicaid programs or performs certain prohibited acts, the
hospital’s participation in the federal health care
programs may be terminated, or civil or criminal penalties may
be imposed under certain provisions of the Social Security Act,
or both.
Anti-kickback
Statute
A section of the Social Security Act known as the
“Anti-kickback Statute” prohibits providers and others
from directly or indirectly soliciting, receiving, offering or
paying any remuneration with the intent of generating referrals
or orders for services or items covered by a federal health care
program. Courts have interpreted this statute broadly and held
that there is a violation of the Anti-kickback Statute if just
one purpose of the remuneration is to generate referrals, even
if there are other lawful purposes. Furthermore, the Health
Reform Legislation provides that knowledge of the law or the
intent to violate the law is not required.
Violations of the Anti-kickback Statute may be punished by a
criminal fine of up to $25,000 for each violation or
imprisonment, civil money penalties of up to $50,000 per
violation and damages of up to three times the total amount of
the remuneration
and/or
exclusion from participation in federal health care programs,
including Medicare and Medicaid. The Health Reform Legislation
provides that submission of a claim for services or items
generated in violation of the Anti-kickback Statute constitutes
a false or fraudulent claim and may be subject to additional
penalties under the federal False Claims Act (“FCA”).
The Office of Inspector General at HHS (“OIG”), among
other regulatory agencies, is responsible for identifying and
eliminating fraud, abuse and waste. The OIG carries out this
mission through a nationwide program of audits, investigations
and inspections. As one means of providing guidance to health
care providers, the OIG issues “Special Fraud Alerts.”
These alerts do not have the force of law, but identify features
of arrangements or transactions that the government believes may
cause the arrangements or transactions to violate the
Anti-kickback Statute or other federal health care laws. The OIG
has identified several incentive arrangements that constitute
suspect practices, including: (a) payment of any incentive
by a hospital each time a physician refers a patient to the
hospital, (b) the use of free or significantly discounted
office space or equipment in facilities usually located close to
the hospital, (c) provision of free or significantly
discounted billing, nursing or other staff services,
(d) free training for a physician’s office staff in
areas such as management techniques and laboratory techniques,
(e) guarantees which provide, if the physician’s
income fails to reach a predetermined level, the hospital will
pay any portion of the remainder, (f) low-interest or
interest-free loans, or loans which may be forgiven if a
physician refers patients to the hospital, (g) payment of
the costs of a physician’s travel and expenses for
conferences, (h) coverage on the hospital’s group
health insurance plans at an inappropriately low cost to the
physician, (i) payment for services (which may include
consultations at the hospital) which require few, if any,
substantive duties by the physician, (j) purchasing goods
or services from physicians at prices in excess of their fair
market value, and (k) rental of space in physician offices,
at other than fair market value terms, by persons or entities to
which physicians refer. The OIG has encouraged persons having
information about hospitals who offer the above types of
incentives to physicians to report such information to the OIG.
The OIG also issues Special Advisory Bulletins as a means of
providing guidance to health care providers. These bulletins,
along with the Special Fraud Alerts, have focused on certain
arrangements that could be subject to heightened scrutiny by
government enforcement authorities, including:
(a) contractual joint venture arrangements and other joint
venture arrangements between those in a position to refer
business, such as physicians, and those providing items or
services for which Medicare or Medicaid pays, and
(b) certain “gainsharing” arrangements, i.e., the
practice of giving physicians a share of any reduction in a
hospital’s costs for patient care attributable in part to
the physician’s efforts.
In addition to issuing Special Fraud Alerts and Special Advisory
Bulletins, the OIG issues compliance program guidance for
certain types of health care providers. The OIG guidance
identifies a number of risk areas under federal fraud and abuse
statutes and regulations. These areas of risk include
compensation arrangements with physicians, recruitment
arrangements with physicians and joint venture relationships
with physicians.
As authorized by Congress, the OIG has published safe harbor
regulations that outline categories of activities deemed
protected from prosecution under the Anti-kickback Statute.
Currently, there are statutory exceptions and safe harbors for
various activities, including the following: certain investment
interests, space rental, equipment rental, practitioner
recruitment, personnel services and management contracts, sale
of practice, referral services, warranties, discounts,
employees, group purchasing organizations, waiver of beneficiary
coinsurance and deductible amounts, managed care arrangements,
obstetrical malpractice insurance subsidies, investments in
group practices, freestanding surgery centers, ambulance
replenishing, and referral agreements for specialty services.
The fact that conduct or a business arrangement does not fall
within a safe harbor, or it is identified in a Special Fraud
Alert or Advisory Bulletin or as a risk area in the Supplemental
Compliance Guidelines for Hospitals, does not necessarily render
the conduct or business arrangement illegal under the
Anti-kickback Statute. However, such conduct and business
arrangements may lead to increased scrutiny by government
enforcement authorities.
We have a variety of financial relationships with physicians and
others who either refer or influence the referral of patients to
our hospitals and other health care facilities, including
employment contracts, leases, medical director agreements and
professional service agreements. We also have similar
relationships with physicians and facilities to which patients
are referred from our facilities. In addition, we provide
financial incentives, including minimum revenue guarantees, to
recruit physicians into the communities served by our hospitals.
While we endeavor to comply with the applicable safe harbors,
certain of our current arrangements, including joint ventures
and financial relationships with physicians and other referral
sources and persons and entities to which we refer patients, do
not qualify for safe harbor protection.
Although we believe our arrangements with physicians and other
referral sources have been structured to comply with current law
and available interpretations, there can be no assurance
regulatory authorities enforcing these laws will determine these
financial arrangements comply with the Anti-kickback Statute or
other applicable laws. An adverse determination could subject us
to liabilities under the Social Security Act, including criminal
penalties, civil monetary penalties and exclusion from
participation in Medicare, Medicaid or other federal health care
programs.
Stark
Law
The Social Security Act also includes a provision commonly known
as the “Stark Law.” The Stark Law prevents the entity
from billing Medicare and Medicaid programs for any items or
services that result from a prohibited referral and requires the
entity to refund amounts received for items or services provided
pursuant to the prohibited referral. The law, thus, effectively
prohibits physicians from referring Medicare and Medicaid
patients to entities with which they or any of their immediate
family members have a financial relationship, if these entities
provide certain “designated health services”
reimbursable by Medicare, including inpatient and outpatient
hospital services, clinical laboratory services and radiology
services. Sanctions for violating the Stark Law include denial
of payment, civil monetary penalties of up to $15,000 per claim
submitted and exclusion from the federal health care programs.
The statute also provides for a penalty of up to $100,000 for a
circumvention scheme. There are exceptions to the self-referral
prohibition for many of the customary financial arrangements
between physicians and providers, including employment
contracts, leases and recruitment agreements. Unlike safe
harbors under the Anti-kickback Statute with which compliance is
voluntary, an arrangement must comply with every requirement of
a Stark Law exception or the arrangement is in violation of the
Stark Law. Although there is an exception for a physician’s
ownership interest in an entire hospital, the Health Reform
Legislation prohibits newly created physician-owned hospitals
from billing for Medicare patients referred by their physician
owners. As a result, the new law will effectively prevent the
formation of physician-owned hospitals after December 31,2010. While the new law grandfathers existing physician-owned
hospitals, it does not allow these hospitals to increase the
percentage of physician ownership and significantly restricts
their ability to expand services.
Through a series of rulemakings, CMS has issued final
regulations implementing the Stark Law. Additional changes to
these regulations, which became effective October 1, 2009,
further restrict the types of arrangements facilities and
physicians may enter, including additional restrictions on
certain leases, percentage compensation arrangements, and
agreements under which a hospital purchases services “under
arrangements.” While these regulations were intended to
clarify the requirements of the exceptions to the Stark Law, it
is unclear how the government will interpret many of these
exceptions for enforcement purposes. CMS has indicated it is
considering additional changes to the Stark Law regulations.
Because many of these laws and their implementing regulations
are relatively new, we do not always have the benefit of
significant regulatory or judicial interpretation of these laws
and regulations. We attempt to structure our relationships to
meet an exception to the Stark Law, but the regulations
implementing the exceptions are detailed and complex, and we
cannot assure that every relationship complies fully with the
Stark Law.
On September 14, 2007, CMS published an information
collection request called the Disclosure of Financial Relations
Report (“DFRR”). The DFRR and its supporting
documentation are currently under review by the Office of
Management and Budget, and it is unclear when, or if, it will be
finalized. CMS has indicated that responding hospitals will have
a limited amount of time to compile a significant amount of
information relating to their financial relationships with
physicians. A hospital may be subject to substantial penalties
if it is unable to assemble and report this information within
the required time frame or if any applicable
government agency determines that the submission is inaccurate
or incomplete. Depending on the final format of the DFRR,
responding hospitals may be subject to substantial penalties as
a result of enforcement actions brought by government agencies
and whistleblowers acting pursuant to the FCA and similar state
laws, based on such allegations as failure to respond within
required deadlines, that the response is inaccurate or contains
incomplete information, or that the response indicates a
potential violation of the Stark Law or other requirements.
Similar
State Laws
Many states in which we operate also have laws similar to the
Anti-kickback Statute that prohibit payments to physicians for
patient referrals and laws similar to the Stark Law that
prohibit certain self-referrals. The scope of these state laws
is broad, since they can often apply regardless of the source of
payment for care, and little precedent exists for their
interpretation or enforcement. These statutes typically provide
for criminal and civil penalties, as well as loss of facility
licensure.
Other
Fraud and Abuse Provisions
The Health Insurance Portability and Accountability Act of 1996
(“HIPAA”) broadened the scope of certain fraud and
abuse laws by adding several criminal provisions for health care
fraud offenses that apply to all health benefit programs. The
Social Security Act also imposes criminal and civil penalties
for making false claims and statements to Medicare and Medicaid.
False claims include, but are not limited to, billing for
services not rendered or for misrepresenting actual services
rendered in order to obtain higher reimbursement, billing for
unnecessary goods and services, and cost report fraud. Federal
enforcement officials have the ability to exclude from Medicare
and Medicaid any investors, officers and managing employees
associated with business entities that have committed health
care fraud, even if the officer or managing employee had no
knowledge of the fraud. Criminal and civil penalties may be
imposed for a number of other prohibited activities, including
failure to return known overpayments, certain gainsharing
arrangements, billing Medicare amounts that are substantially in
excess of a provider’s usual charges, offering remuneration
to influence a Medicare or Medicaid beneficiary’s selection
of a health care provider, contracting with an individual or
entity known to be excluded from a federal health care program,
making or accepting a payment to induce a physician to reduce or
limit services, and soliciting or receiving any remuneration in
return for referring an individual for an item or service
payable by a federal health care program. Like the Anti-kickback
Statute, these provisions are very broad. Under the Health
Reform Legislation, civil penalties may be imposed for the
failure to report and return an overpayment within 60 days
of identifying the overpayment or by the date a corresponding
cost report is due, whichever is later. To avoid liability,
providers must, among other things, carefully and accurately
code claims for reimbursement, promptly return overpayments and
accurately prepare cost reports.
Some of these provisions, including the federal Civil Monetary
Penalty Law, require a lower burden of proof than other fraud
and abuse laws, including the Anti-kickback Statute. Civil
monetary penalties that may be imposed under the federal Civil
Monetary Penalty Law range from $10,000 to $50,000 per act, and
in some cases may result in penalties of up to three times the
remuneration offered, paid, solicited or received. In addition,
a violator may be subject to exclusion from federal and state
health care programs. Federal and state governments increasingly
use the federal Civil Monetary Penalty Law, especially where
they believe they cannot meet the higher burden of proof
requirements under the Anti-kickback Statute. Further,
individuals can receive up to $1,000 for providing information
on Medicare fraud and abuse that leads to the recovery of at
least $100 of Medicare funds under the Medicare Integrity
Program.
The
Federal False Claims Act and Similar State Laws
The qui tam, or whistleblower, provisions of the FCA
allow private individuals to bring actions on behalf of the
government alleging that the defendant has defrauded the federal
government. Further, the government may use the FCA to prosecute
Medicare and other government program fraud in areas such as
coding errors, billing for services not provided and submitting
false cost reports. When a private party brings a qui tam
action under the FCA, the defendant is not made aware of the
lawsuit until the government commences its own investigation or
makes a determination whether it will intervene. When a
defendant is determined by a court of law to be liable under the
FCA, the defendant may be required to pay three times the actual
damages
sustained by the government, plus mandatory civil penalties of
between $5,500 and $11,000 for each separate false claim. There
are many potential bases for liability under the FCA. Liability
often arises when an entity knowingly submits a false claim for
reimbursement to the federal government. The FCA defines the
term “knowingly” broadly. Though simple negligence
will not give rise to liability under the FCA, submitting a
claim with reckless disregard to its truth or falsity
constitutes a “knowing” submission under the FCA and,
therefore, will qualify for liability. The Fraud Enforcement and
Recovery Act of 2009 expanded the scope of the FCA by, among
other things, creating liability for knowingly and improperly
avoiding repayment of an overpayment received from the
government and broadening protections for whistleblowers. Under
the Health Reform Legislation, the FCA is implicated by the
knowing failure to report and return an overpayment within
60 days of identifying the overpayment or by the date a
corresponding cost report is due, whichever is later. Further,
the Health Reform Legislation expands the scope of the FCA to
cover payments in connection with the new health insurance
exchanges to be created by the Health Reform Legislation, if
those payments include any federal funds.
In some cases, whistleblowers and the federal government have
taken the position, and some courts have held, that providers
who allegedly have violated other statutes, such as the
Anti-kickback Statute and the Stark Law, have thereby submitted
false claims under the FCA. The Health Reform Legislation
clarifies this issue with respect to the Anti-kickback Statute
by providing that submission of claims for services or items
generated in violation of the Anti-kickback Statute constitutes
a false or fraudulent claim under the FCA. Every entity that
receives at least $5 million annually in Medicaid payments
must have written policies for all employees, contractors or
agents, providing detailed information about false claims, false
statements and whistleblower protections under certain federal
laws, including the FCA, and similar state laws. In addition,
federal law provides an incentive to states to enact false
claims laws comparable to the FCA. A number of states in which
we operate have adopted their own false claims provisions as
well as their own whistleblower provisions under which a private
party may file a civil lawsuit in state court. We have adopted
and distributed policies pertaining to the FCA and relevant
state laws.
HIPAA
Administrative Simplification and Privacy and Security
Requirements
The Administrative Simplification Provisions of HIPAA require
the use of uniform electronic data transmission standards for
certain health care claims and payment transactions submitted or
received electronically. These provisions are intended to
encourage electronic commerce in the health care industry. HHS
has issued regulations implementing the HIPAA Administrative
Simplification Provisions and compliance with these regulations
is mandatory for our facilities. In addition, HIPAA requires
that each provider use a National Provider Identifier. In
January 2009, CMS published a final rule making changes to the
formats used for certain electronic transactions and requiring
the use of updated standard code sets for certain diagnoses and
procedures known as ICD-10 code sets. While use of the ICD-10
code sets is not mandatory until October 1, 2013, we will
be modifying our payment systems and processes to prepare for
the implementation. Implementing the ICD-10 code sets will
require significant administrative changes, but we believe that
the cost of compliance with these regulations has not had and is
not expected to have a material, adverse effect on our business,
financial position or results of operations. The Health Reform
Legislation requires HHS to adopt standards for additional
electronic transactions and to establish operating rules to
promote uniformity in the implementation of each standardized
electronic transaction.
The privacy and security regulations promulgated pursuant to
HIPAA extensively regulate the use and disclosure of
individually identifiable health information and require covered
entities, including health plans and most health care providers,
to implement administrative, physical and technical safeguards
to protect the security of such information. The American
Recovery and Reinvestment Act of 2009 (“ARRA”), which
was signed into law on February 17, 2009, broadened the
scope of the HIPAA privacy and security regulations. In
addition, ARRA extends the application of certain provisions of
the security and privacy regulations to business associates
(entities that handle identifiable health information on behalf
of covered entities) and subjects business associates to civil
and criminal penalties for violation of the regulations. We
enforce a HIPAA compliance plan, which we believe complies with
HIPAA privacy and security requirements and under which a HIPAA
compliance group monitors our compliance. The privacy
regulations and security regulations have and will continue to
impose significant costs on our facilities in order to comply
with these standards.
As required by ARRA, HHS published an interim final rule on
August 24, 2009, that requires covered entities to report
breaches of unsecured protected health information to affected
individuals without unreasonable delay but not to exceed
60 days of discovery of the breach by a covered entity or
its agents. Notification must also be made to HHS and, in
certain situations involving large breaches, to the media.
Various state laws and regulations may also require us to notify
affected individuals in the event of a data breach involving
individually identifiable information.
Violations of the HIPAA privacy and security regulations may
result in civil and criminal penalties, and ARRA has
strengthened the enforcement provisions of HIPAA, which may
result in increased enforcement activity. Under ARRA, HHS is
required to conduct periodic compliance audits of covered
entities and their business associates. ARRA broadens the
applicability of the criminal penalty provisions to employees of
covered entities and requires HHS to impose penalties for
violations resulting from willful neglect. ARRA also
significantly increases the amount of the civil penalties, with
penalties of up to $50,000 per violation for a maximum civil
penalty of $1,500,000 in a calendar year for violations of the
same requirement. In addition, ARRA authorizes state attorneys
general to bring civil actions seeking either injunction or
damages in response to violations of HIPAA privacy and security
regulations that threaten the privacy of state residents. Our
facilities also remain subject to any federal or state
privacy-related laws that are more restrictive than the privacy
regulations issued under HIPAA. These laws vary and could impose
additional penalties.
There are numerous other laws and legislative and regulatory
initiatives at the federal and state levels addressing privacy
and security concerns. For example, the Federal Trade Commission
issued a final rule in October 2007 requiring financial
institutions and creditors, which may include health providers
and health plans, to implement written identity theft prevention
programs to detect, prevent, and mitigate identity theft in
connection with certain accounts. The Federal Trade Commission
has delayed enforcement of this rule until June 1, 2010.
EMTALA
All of our hospitals in the United States are subject to EMTALA.
This federal law requires any hospital participating in the
Medicare program to conduct an appropriate medical screening
examination of every individual who presents to the
hospital’s emergency room for treatment and, if the
individual is suffering from an emergency medical condition, to
either stabilize the condition or make an appropriate transfer
of the individual to a facility able to handle the condition.
The obligation to screen and stabilize emergency medical
conditions exists regardless of an individual’s ability to
pay for treatment. There are severe penalties under EMTALA if a
hospital fails to screen or appropriately stabilize or transfer
an individual or if the hospital delays appropriate treatment in
order to first inquire about the individual’s ability to
pay. Penalties for violations of EMTALA include civil monetary
penalties and exclusion from participation in the Medicare
program. In addition, an injured individual, the
individual’s family or a medical facility that suffers a
financial loss as a direct result of a hospital’s violation
of the law can bring a civil suit against the hospital.
The government broadly interprets EMTALA to cover situations in
which individuals do not actually present to a hospital’s
emergency room, but present for emergency examination or
treatment to the hospital’s campus, generally, or to a
hospital-based clinic that treats emergency medical conditions
or are transported in a hospital-owned ambulance, subject to
certain exceptions. At least one court has interpreted the law
also to apply to a hospital that has been notified of a
patient’s pending arrival in a non-hospital owned
ambulance. EMTALA does not generally apply to individuals
admitted for inpatient services. The government has expressed
its intent to investigate and enforce EMTALA violations actively
in the future. We believe our hospitals operate in substantial
compliance with EMTALA.
Corporate
Practice of Medicine/Fee Splitting
Some of the states in which we operate have laws prohibiting
corporations and other entities from employing physicians,
practicing medicine for a profit and making certain direct and
indirect payments or fee-splitting arrangements between health
care providers designed to induce or encourage the referral of
patients to, or the recommendation of, particular providers for
medical products and services. Possible sanctions for violation
of these restrictions include loss of license and civil and
criminal penalties. In addition, agreements between the
corporation
and the physician may be considered void and unenforceable.
These statutes vary from state to state, are often vague and
have seldom been interpreted by the courts or regulatory
agencies.
Health
Care Industry Investigations
Significant media and public attention has focused in recent
years on the hospital industry. This media and public attention,
changes in government personnel or other factors may lead to
increased scrutiny of the health care industry. While we are
currently not aware of any material investigations of the
Company under federal or state health care laws or regulations,
it is possible that governmental entities could initiate
investigations or litigation in the future at facilities we
operate and that such matters could result in significant
penalties, as well as adverse publicity. It is also possible
that our executives and managers could be included in
governmental investigations or litigation or named as defendants
in private litigation.
Our substantial Medicare, Medicaid and other governmental
billings result in heightened scrutiny of our operations. We
continue to monitor all aspects of our business and have
developed a comprehensive ethics and compliance program that is
designed to meet or exceed applicable federal guidelines and
industry standards. Because the law in this area is complex and
constantly evolving, governmental investigations or litigation
may result in interpretations that are inconsistent with our or
industry practices.
In public statements surrounding current investigations,
governmental authorities have taken positions on a number of
issues, including some for which little official interpretation
previously has been available, that appear to be inconsistent
with practices that have been common within the industry and
that previously have not been challenged in this manner. In some
instances, government investigations that have in the past been
conducted under the civil provisions of federal law may now be
conducted as criminal investigations.
Both federal and state government agencies have increased their
focus on and coordination of civil and criminal enforcement
efforts in the health care area. The OIG and the Department of
Justice have, from time to time, established national
enforcement initiatives, targeting all hospital providers that
focus on specific billing practices or other suspected areas of
abuse. The Health Reform Legislation includes additional federal
funding to fight health care fraud, waste and abuse, including
$95 million for federal fiscal year 2011, $55 million
in federal fiscal year 2012 and additional increased funding
through 2016. In addition, governmental agencies and their
agents, such as the Medicare Administrative Contractors, fiscal
intermediaries and carriers, may conduct audits of our health
care operations. Private payers may conduct similar post-payment
audits, and we also perform internal audits and monitoring.
In addition to national enforcement initiatives, federal and
state investigations have addressed a wide variety of routine
health care operations such as: cost reporting and billing
practices, including for Medicare outliers; financial
arrangements with referral sources; physician recruitment
activities; physician joint ventures; and hospital charges and
collection practices for self-pay patients. We engage in many of
these routine health care operations and other activities that
could be the subject of governmental investigations or
inquiries. For example, we have significant Medicare and
Medicaid billings, numerous financial arrangements with
physicians who are referral sources to our hospitals, and joint
venture arrangements involving physician investors. Certain of
our individual facilities have received, and other facilities
may receive, government inquiries from federal and state
agencies. Any additional investigations of the Company, our
executives or managers could result in significant liabilities
or penalties to us, as well as adverse publicity.
Commencing in 1997, we became aware we were the subject of
governmental investigations and litigation relating to our
business practices. As part of the investigations, the United
States intervened in a number of qui tam actions brought
by private parties. The investigations related to, among other
things, DRG coding, outpatient laboratory billing, home health
issues, physician relations, cost report and wound care issues.
The investigations were concluded through a series of agreements
executed in 2000 and 2003 with the Criminal Division of the
Department of Justice, the Civil Division of the Department of
Justice, various U.S. Attorneys’ offices, CMS, a
negotiating team representing states with claims against us, and
others. In January 2001, we entered into an eight-year Corporate
Integrity Agreement (“CIA”) with the OIG, which
expired January 24, 2009. If the government were to
determine that we violated or breached the CIA or other federal
or state laws relating to Medicare, Medicaid or similar
programs, we could be subject to substantial monetary fines,
civil and criminal penalties
and/or
exclusion from participation in the Medicare and Medicaid
programs and other federal and state health care programs.
Alleged violations may be pursued by the government or through
private qui tam actions. Sanctions imposed against us as
a result of such actions could have a material, adverse effect
on our results of operations and financial position.
Health
Care Reform
In March 2010, President Obama signed the Health Reform
Legislation into law. The Health Reform Legislation represents
significant change across the health care industry. As a result
of the law’s complexity, lack of implementing regulations
or interpretive guidance, gradual implementation and possible
amendment, the impact of the Health Reform Legislation is not
yet fully known. The primary goal of the Health Reform
Legislation is to decrease the number of uninsured individuals
by expanding coverage to approximately 32 million
additional individuals through a combination of public program
expansion and private sector health insurance reforms. The
Health Reform Legislation expands eligibility under existing
Medicaid programs, imposes financial penalties on individuals
who fail to carry insurance coverage and creates affordability
credits for those not enrolled in an employer-sponsored health
plan. Further, the Health Reform Legislation requires states to
establish a health insurance exchange and permits states to
create federally funded, non-Medicaid plans for low-income
residents not eligible for Medicaid. The Health Reform
Legislation establishes a number of health insurance market
reforms, including a ban on lifetime limits and pre-existing
condition exclusions, new benefit mandates, and increased
dependent coverage. Health insurance market reforms that expand
insurance coverage should increase revenues from providing care
to previously uninsured individuals; however, many of these
provisions of the Health Reform Legislation will not become
effective until 2014 or later. It is also possible that
implementation of these provisions could be delayed or even
blocked due to court challenges. In addition, there may be
efforts to repeal or amend the Health Reform Legislation.
Further, the Health Reform Legislation contains a number of
provisions designed to significantly reduce Medicare and
Medicaid program spending, including reductions in Medicare
market basket updates and Medicare and Medicaid disproportionate
share funding. A significant portion of our patient volume is
derived from government health care programs, principally
Medicare and Medicaid. Specifically, we derived approximately
40% of our revenues from the Medicare and Medicaid programs in
2009. Reductions to our reimbursement under the Medicare and
Medicaid programs by the Health Reform Legislation could
adversely affect our business and results of operations, to the
extent such reductions are not offset by the expected increases
in revenues from providing care to previously uninsured
individuals.
The Health Reform Legislation prohibits newly created
physician-owned hospitals from billing for Medicare patients
referred by their physician owners. As a result, the new law
will effectively prevent the formation of physician-owned
hospitals after December 31, 2010. While the new law
grandfathers existing physician-owned hospitals, it does not
allow these hospitals to increase the percentage of physician
ownership and significantly restricts their ability to expand
services.
Because of the many variables involved, we are unable to predict
the net effect on the Company of the reductions in Medicare and
Medicaid spending, the expected increases in revenues from
providing care to previously uninsured individuals, and numerous
other provisions in the law that may affect the Company. We are
further unable to foresee how individuals and businesses will
respond to the choices afforded them by the Health Reform
Legislation. Thus, we cannot predict the full impact of the
Health Reform Legislation on the Company at this time.
Current and possible future changes in the Medicare, Medicaid,
and other state programs, including Medicaid supplemental
payments pursuant to upper payment limit programs, may impact
reimbursements to health care providers and insurers. Many
states have enacted, or are considering enacting, health reform
measures, including reforms designed to reduce their Medicaid
expenditures and change private health care insurance. States
have also adopted, or are considering, legislation designed to
reduce coverage, enroll Medicaid recipients in managed care
programs
and/or
impose additional taxes on hospitals to help finance or expand
states’ Medicaid systems. Some states, including states in
which we operate, have applied for and have been granted federal
waivers from current Medicaid regulations to allow them to serve
some or all of their Medicaid participants through managed care
providers. The Health Reform Legislation will result in
increased state legislative and regulatory changes in order
for states to comply with new federal mandates, such as the
requirement to establish health insurance exchanges and the
expansion of Medicaid enrollment, and to participate in grants
and other incentive opportunities.
Hospital operating margins have been, and may continue to be,
under significant pressure because of deterioration in pricing
flexibility and payer mix, reductions in Medicaid expenditures
and growth in operating expenses in excess of the increase in
PPS payments under the Medicare program. Changes to federal and
state government health care programs, to commercial plans and
to other aspects of the health care industry resulting from the
Health Reform Legislation may increase the pressure on hospital
operating margins.
General
Economic and Demographic Factors
The United States economy has weakened significantly. Depressed
consumer spending and higher unemployment rates continue to
pressure many industries. During economic downturns,
governmental entities often experience budget deficits as a
result of increased costs and lower than expected tax
collections. These budget deficits may force federal, state and
local government entities to decrease spending for health and
human service programs, including Medicare, Medicaid and similar
programs, which represent significant payer sources for our
hospitals. Other risks we face from general economic weakness
include potential declines in the population covered under
managed care agreements, patient decisions to postpone or cancel
elective and non-emergency health care procedures, potential
increases in the uninsured and underinsured populations and
further difficulties in our collecting patient co-payment and
deductible receivables. The Health Reform Legislation seeks to
decrease over time the number of uninsured individuals, by among
other things requiring employers to offer, and individuals to
carry, health insurance or be subject to penalties. However, it
is difficult to predict the full impact of the Health Reform
Legislation due to the law’s complexity, lack of
implementing regulations or interpretive guidance, gradual
implementation and possible amendment.
The health care industry is impacted by the overall United
States financial pressures. The federal deficit, the growing
magnitude of Medicare expenditures and the aging of the United
States population will continue to place pressure on federal
health care programs.
Compliance
Program and Corporate Integrity Agreement
We maintain a comprehensive ethics and compliance program that
is designed to meet or exceed applicable federal guidelines and
industry standards. The program is intended to monitor and raise
awareness of various regulatory issues among employees and to
emphasize the importance of complying with governmental laws and
regulations. As part of the ethics and compliance program, we
provide annual ethics and compliance training to our employees
and encourage all employees to report any violations to their
supervisor, an ethics and compliance officer or a toll-free
telephone ethics line. The Health Reform Legislation requires
providers to implement core elements of a compliance program
criteria to be established by HHS, on a timeline to be
established by HHS, as a condition of enrollment in the Medicare
or Medicaid programs, and we may have to modify our compliance
programs to comply with these new criteria.
Until January 24, 2009, we operated under a CIA, which was
structured to assure the federal government of our overall
federal health care program compliance and specifically covered
DRG coding, outpatient PPS billing and physician relations. We
underwent major training efforts to ensure that our employees
learned and applied the policies and procedures implemented
under the CIA and our ethics and compliance program. The CIA had
the effect of increasing the amount of information we provided
to the federal government regarding our health care practices
and our compliance with federal regulations. Under the CIA, we
had numerous affirmative obligations, including the requirement
to report potential violations of applicable federal health care
laws and regulations. Pursuant to this obligation, we reported a
number of potential violations of the Stark Law, the
Anti-kickback Statute, EMTALA, HIPAA and other laws, most of
which we consider to be nonviolations or technical violations.
We submitted our final report pursuant to the CIA on
April 30, 2009. These reports could result in greater
scrutiny by regulatory authorities. The government could
determine that our reporting
and/or our
resolution of reported issues was inadequate. A determination
that we breached the CIA
and/or a
finding of violations of applicable health care laws or
regulations could subject us to repayment requirements,
substantial monetary penalties, civil penalties, exclusion from
participation in the Medicare and Medicaid and other federal and
state health care programs and, for violations of certain laws
and regulations, criminal penalties. Although the CIA expired on
January 24, 2009, we maintain our
ethics and compliance program in substantially the same form.
However, the audit plans in the CIA have been modified and the
reportable events process has been converted to an internal
reporting process.
Antitrust
Laws
The federal government and most states have enacted antitrust
laws that prohibit certain types of conduct deemed to be
anti-competitive. These laws prohibit price fixing, concerted
refusal to deal, market monopolization, price discrimination,
tying arrangements, acquisitions of competitors and other
practices that have, or may have, an adverse effect on
competition. Violations of federal or state antitrust laws can
result in various sanctions, including criminal and civil
penalties. Antitrust enforcement in the health care industry is
currently a priority of the Federal Trade Commission. We believe
we are in compliance with such federal and state laws, but
future review of our practices by courts or regulatory
authorities could result in a determination that could adversely
affect our operations.
Environmental
Matters
We are subject to various federal, state and local statutes and
ordinances regulating the discharge of materials into the
environment. We do not believe that we will be required to
expend any material amounts in order to comply with these laws
and regulations.
Insurance
As is typical in the health care industry, we are subject to
claims and legal actions by patients in the ordinary course of
business. Subject to a $5 million per occurrence
self-insured retention, our facilities are insured by our
wholly-owned insurance subsidiary for losses up to
$50 million per occurrence. The insurance subsidiary has
obtained reinsurance for professional liability risks generally
above a retention level of $15 million per occurrence. We
also maintain professional liability insurance with unrelated
commercial carriers for losses in excess of amounts insured by
our insurance subsidiary.
We purchase, from unrelated insurance companies, coverage for
directors and officers liability and property loss in amounts we
believe are adequate. The directors and officers liability
coverage includes a $25 million corporate deductible for
the period prior to the Recapitalization and a $1 million
corporate deductible subsequent to the Recapitalization. In
addition, we will continue to purchase coverage for our
directors and officers on an ongoing basis. The property
coverage includes varying deductibles depending on the cause of
the property damage. These deductibles range from $500,000 per
claim up to 5% of the affected property values for certain flood
and wind and earthquake related incidents.
Employees
and Medical Staffs
At December 31, 2009, we had approximately
190,000 employees, including approximately
49,000 part-time employees. References herein to
“employees” refer to employees of our affiliates. We
are subject to various state and federal laws that regulate
wages, hours, benefits and other terms and conditions relating
to employment. At December 31, 2009, employees at 20 of our
hospitals are represented by various labor unions. It is
possible additional hospitals may unionize in the future. We
consider our employee relations to be good and have not
experienced work stoppages that have materially, adversely
affected our business or results of operations. Our hospitals,
like most hospitals, have experienced labor costs rising faster
than the general inflation rate. In some markets, nurse and
medical support personnel availability has become a significant
operating issue to health care providers. To address this
challenge, we have implemented several initiatives to improve
retention, recruiting, compensation programs and productivity.
Our hospitals are staffed by licensed physicians, who generally
are not employees of our hospitals. However, some physicians
provide services in our hospitals under contracts, which
generally describe a term of service, provide and establish the
duties and obligations of such physicians, require the
maintenance of certain performance criteria and fix compensation
for such services. Any licensed physician may apply to be
accepted to the medical staff of any of our hospitals, but the
hospital’s medical staff and the appropriate governing
board of the hospital, in accordance with established
credentialing criteria, must approve acceptance to the staff.
Members of the medical staffs of our hospitals often also serve
on the medical staffs of other hospitals and may terminate their
affiliation with one of our hospitals at any time.
We may be required to continue to enhance wages and benefits to
recruit and retain nurses and other medical support personnel or
to hire more expensive temporary or contract personnel. As a
result, our labor costs could increase. We also depend on the
available labor pool of semi-skilled and unskilled employees in
each of the markets in which we operate. Certain proposed
changes in federal labor laws, including the Employee Free
Choice Act, could increase the likelihood of employee
unionization attempts. To the extent a significant portion of
our employee base unionizes, our costs could increase
materially. In addition, the states in which we operate could
adopt mandatory nurse-staffing ratios or could reduce mandatory
nurse-staffing ratios already in place. State-mandated
nurse-staffing ratios could significantly affect labor costs,
and have an adverse impact on revenues if we are required to
limit patient admissions in order to meet the required ratios.
Properties
The following table lists, by state, the number of hospitals
(general, acute care, psychiatric and rehabilitation) directly
or indirectly owned and operated by us as of December 31,2009:
State
Hospitals
Beds
Alaska
1
250
California
5
1,587
Colorado
7
2,259
Florida
38
9,780
Georgia
11
1,946
Idaho
2
481
Indiana
1
278
Kansas
4
1,286
Kentucky
2
384
Louisiana
7
1,428
Mississippi
1
130
Missouri
6
1,055
Nevada
3
1,075
New Hampshire
2
295
Oklahoma
2
793
South Carolina
3
740
Tennessee
12
2,313
Texas
35
10,493
Utah
6
968
Virginia
9
2,963
International
England
6
704
163
41,208
In addition to the hospitals listed in the above table, we
directly or indirectly operate 105 freestanding surgery centers.
We also operate medical office buildings in conjunction with
some of our hospitals. These office buildings are primarily
occupied by physicians who practice at our hospitals. Fourteen
of our general, acute care hospitals and three of our other
properties have been mortgaged to support our obligations under
our senior secured cash flow credit facility and the first lien
secured notes we issued in 2009 and 2010. These three other
properties are also subject to second mortgages to support our
obligations under the second lien secured notes we issued in
2006 and 2009.
We maintain our headquarters in approximately
1,200,000 square feet of space in the Nashville, Tennessee
area. In addition to the headquarters in Nashville, we maintain
regional service centers related to our shared services
initiatives. These service centers are located in markets in
which we operate hospitals.
We believe our headquarters, hospitals and other facilities are
suitable for their respective uses and are, in general, adequate
for our present needs. Our properties are subject to various
federal, state and local statutes and ordinances regulating
their operation. Management does not believe that compliance
with such statutes and ordinances will materially affect our
financial position or results of operations.
Legal
Proceedings
We operate in a highly regulated and litigious industry. As a
result, various lawsuits, claims and legal and regulatory
proceedings have been and can be expected to be instituted or
asserted against us. The resolution of any such lawsuits, claims
or legal and regulatory proceedings could materially and
adversely affect our results of operations and financial
position in a given period.
Government
Investigations, Claims and Litigation
In January 2001, we entered into an eight-year CIA with the
Office of Inspector General at HHS, which expired on
January 24, 2009. Under the CIA, we had numerous
affirmative obligations, including the requirement to report
potential violations of applicable federal health care laws and
regulations. Pursuant to these obligations, we reported a number
of potential violations of the Stark Law, the Anti-kickback
Statute, EMTALA and other laws, most of which we consider to be
nonviolations or technical violations. We submitted our final
report pursuant to the CIA on April 30, 2009. The
government could determine that our reporting
and/or our
resolution of reported issues was inadequate. Violation or
breach of the CIA, or violation of federal or state laws
relating to Medicare, Medicaid or similar programs, could
subject us to substantial monetary fines, civil and criminal
penalties
and/or
exclusion from participation in the Medicare and Medicaid
programs. Alleged violations may be pursued by the government or
through private qui tam actions. Sanctions imposed
against us as a result of such actions could have a material,
adverse effect on our results of operations or financial
position.
Merger
Litigation in State Court
In 2006, the Foundation for Seacoast Health filed suit against
HCA in state court in New Hampshire. The Foundation alleged that
both the 2006 Recapitalization transaction and a prior 1999
intra-corporate transaction violated a 1983 agreement that
placed certain restrictions on transfers of the Portsmouth
Regional Hospital. In May 2007, the trial court ruled against
the Foundation on all its claims. On appeal, the New Hampshire
Supreme Court affirmed the ruling on the Recapitalization, but
remanded to the trial court the claims based on the 1999
intra-corporate transaction. The trial court ruled in December
2009 that the 1999 intra-corporate transaction breached the
transfer restriction provisions of the 1983 agreement. The trial
court will now conduct further proceedings to determine whether
any harm has flowed from the alleged breach, and if so, what the
appropriate remedy should be, including determining whether,
pursuant to the Foundation’s assertion, that it should have
the right to purchase the hospital.
General
Liability and Other Claims
We are a party to certain proceedings relating to claims for
income taxes and related interest before the IRS Appeals
Division. For a description of those proceedings, see
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Pending IRS
Disputes” and Note 5 to our consolidated financial
statements.
We are also subject to claims and suits arising in the ordinary
course of business, including claims for personal injuries or
for wrongful restriction of, or interference with,
physicians’ staff privileges. In certain of these actions
the claimants have asked for punitive damages against us, which
may not be covered by insurance. In the opinion of management,
the ultimate resolution of these pending claims and legal
proceedings will not have a material, adverse effect on our
results of operations or financial position.
The holder of 91,845,692 shares of our common stock,
representing approximately 97.1% of the shares of our common
stock entitled to vote on the record date, executed a written
consent in lieu of an annual meeting removing the Company’s
existing directors and re-electing thirteen directors to serve
as members of our Board of Directors. That consent and the
election of directors will become effective on or about
April 28, 2010. The directors will serve until their
successors are duly elected and qualified or until the earlier
of their death, resignation, or removal. The following is a
brief description of the background and business experience of
each member of our Board of Directors:
Director
Name
Age(1)
Since
Position(s)
Richard M. Bracken
57
2002
Chairman of the Board and Chief Executive Officer
R. Milton Johnson
53
2009
Executive Vice President, Chief Financial Officer and Director
Our Board of Directors consists of thirteen directors, who are
each managers of Hercules Holding. The Amended and Restated
Limited Liability Company Agreement of Hercules Holding requires
that the members of Hercules Holding take all necessary action
to ensure that the persons who serve as managers of Hercules
Holding also serve on the Board of Directors of HCA. See
“Certain Relationships and Related Party
Transactions.” In addition, Mr. Bracken’s
employment agreement provides that he will continue to serve as
a member of our Board of Directors so long as he remains an
officer of HCA. Because of these requirements, together with
Hercules Holding’s ownership of approximately 97.1% of our
outstanding common stock, we do not currently have a policy or
procedures with respect to stockholder recommendations for
nominees to the Board of Directors.
Richard M. Bracken has served as Chief Executive Officer
of the Company since January 2009 and was appointed as Chairman
of the Board in December 2009. Mr. Bracken served as
President and Chief Executive Officer from January 2009 to
December 2009. Mr. Bracken was appointed Chief Operating
Officer in July 2001 and served as President and Chief Operating
Officer from January 2002 to January 2009. Mr. Bracken
served as President — Western Group of the Company
from August 1997 until July 2001. From January 1995 to August
1997, Mr. Bracken served as President of the Pacific
Division of the Company. Prior to 1995, Mr. Bracken served
in various hospital Chief Executive Officer and Administrator
positions with
HCA-Hospital
Corporation of America.
R. Milton Johnson has served as Executive Vice President
and Chief Financial Officer of the Company since July 2004 and
was appointed as a director in December 2009. Mr. Johnson
served as Senior Vice President and Controller of the
Company from July 1999 until July 2004. Mr. Johnson served
as Vice
President and Controller of the Company from November 1998 to
July 1999. Prior to that time, Mr. Johnson served as Vice
President — Tax of the Company from April 1995 to
October 1998. Prior to that time, Mr. Johnson served as
Director of Tax for Healthtrust from September 1987 to April
1995.
Christopher J. Birosak is a Managing Director of BAML
Capital Partners, the private equity division of Bank of America
Corporation. BAML is the successor organization to Merrill Lynch
Global Private Equity. Prior to joining the Global Private
Equity Division of Merrill Lynch in 2004, Mr. Birosak
worked in various capacities in the Merrill Lynch Leveraged
Finance Group with particular emphasis on leveraged buyouts and
mergers and acquisitions related financings. Mr. Birosak
served as a director of Atrium Companies, Inc. from 2004 to 2009
and currently serves on the board of directors of NPC
International. Mr. Birosak joined Merrill Lynch in 1994.
John P. Connaughton has been a Managing Director of Bain
Capital Partners, LLC since 1997 and a member of the firm since
1989. Prior to joining Bain Capital, Mr. Connaughton was a
consultant at Bain & Company, Inc., where he worked in
the health care, consumer products and business services
industries. Mr. Connaughton served as a director of
Stericycle, Inc. from 1999 to 2005, M/C Communications (PriMed)
from 2004 to 2009 and AMC Theatres from 2007 to 2009 and
currently serves as a director of Clear Channel Communications,
Inc., CRC Health Corporation, Warner Chilcott, Ltd., Sungard
Data Systems, Warner Music Group, Quintiles Transnational Corp.
and The Boston Celtics.
James D. Forbes has been Head of Bank of America’s
Global Principal Investments Division since March 2009. From
November 2008 to March 2009, Mr. Forbes served as Head of
Asia Pacific Corporate and Investment Banking based in Hong
Kong. From August 2002 to November 2008, he served as Global
Head of Healthcare Investment Banking at Merrill Lynch. Before
joining Merrill Lynch in 1995, Mr. Forbes worked at CS
First Boston where he was part of Debt Capital Markets.
Kenneth W. Freeman has been a member of member of KKR
Management LLC, the general partner of KKR & Co. L.P.,
since October 1, 2009. Before that, he was a member of the
limited liability company which served as the general partner of
Kohlberg Kravis Roberts & Co. L.P. since 2007 and
joined the firm as Managing Director in May 2005. From May 2004
to December 2004, Mr. Freeman was Chairman of Quest
Diagnostics Incorporated, and from January 1996 to May 2004, he
served as Chairman and Chief Executive Officer of Quest
Diagnostics Incorporated. From May 1995 to December 1996,
Mr. Freeman was President and Chief Executive Officer of
Corning Clinical Laboratories, the predecessor company to Quest
Diagnostics. Prior to that, he served in various general
management and financial roles with Corning Incorporated.
Mr. Freeman currently serves as a director of Accellent,
Inc. and Masonite, Inc. and is chairman of the board of trustees
of Bucknell University.
Thomas F. Frist III is a principal of Frist Capital
LLC, a private investment vehicle for Mr. Frist and certain
related persons and has held such position since 1998.
Mr. Frist is also a general partner at Frisco Partners,
another Frist family investment vehicle. Mr. Frist served
as a director of Triad Hospitals, Inc. from 1998 to October 2006
and currently serves as a director of SAIC, Inc. Mr. Frist
is the brother of William R. Frist, who also serves as a
director of the Company.
William R. Frist is a principal of Frist Capital LLC, a
private investment vehicle for Mr. Frist and certain
related persons and has held such position since 2003.
Mr. Frist is also a general partner at Frisco Partners,
another Frist family investment vehicle. Mr. Frist is the
brother of Thomas F. Frist III, who also serves as a director of
the Company.
Christopher R. Gordon is a Managing Director of Bain
Capital Partners, LLC and joined the firm in 1997. Prior to
joining Bain Capital, Mr. Gordon was a consultant at
Bain & Company. Mr. Gordon currently serves as a
director of Accellent, Inc., CRC Health Corporation and
Quintiles Transnational Corp.
Michael W. Michelson has been a member of KKR Management,
LLC, the general partner of KKR & Co. L.P., since
October 1, 2009. Before that, he was a member of the
limited liability company which served as the general partner of
Kohlberg Kravis Roberts & Co. L.P. since 1996. Prior
to that, he was a general partner of Kohlberg Kravis
Roberts & Co. L.P. Mr. Michelson served as a director
of Accellent Inc. from 2005 to
2009 and Alliance Imaging from 1999 to 2007. Mr. Michelson
is currently a director of Biomet, Inc. and Jazz
Pharmaceuticals, Inc.
James C. Momtazee has been a member of KKR Management
LLC, the general partner of KKR & Co. L.P. since
October 1, 2009. Before that, he was a member of the
limited liability company which served as the general partner of
Kohlberg Kravis Roberts & Co. L.P. since 2009. From
1996 to 2009, he was an executive of Kohlberg Kravis
Roberts & Co. L.P. From 1994 to 1996,
Mr. Momtazee was with Donaldson, Lufkin &
Jenrette in its investment banking department. Mr. Momtazee
served as a director of Alliance Imaging from 2002 to 2007 and
Accuride from March 2005 to December 2005 and currently serves
as a director of Accellent, Inc. and Jazz Pharmaceuticals, Inc.
Stephen G. Pagliuca is a Managing Director of Bain
Capital Partners, LLC. Mr. Pagliuca is also a Managing
Partner and an owner of the Boston Celtics basketball franchise.
Mr. Pagliuca joined Bain & Company in 1982 and
founded the Information Partners private equity fund for Bain
Capital in 1989. He also worked as a senior accountant and
international tax specialist for Peat Marwick
Mitchell & Company in the Netherlands.
Mr. Pagliuca served as a director of Warner Chilcott, Ltd.
from 2005 to 2009, HCA Inc. from November 2006 to September
2009, Quintiles Transnational Corp. from 2008 to 2009, M/C
Communications from 2004 to 2009 and FCI, S.A. from 2005 to 2009
and currently serves as a director of Burger King Holdings Inc.
and Gartner, Inc.
Nathan C. Thorne was a Senior Vice President of Merrill
Lynch & Co., Inc., a subsidiary of Bank of America
Corporation, from February 2006 to July 2009, and President of
Merrill Lynch Global Private Equity from 2002 to 2009.
Mr. Thorne joined Merrill Lynch in 1984. Mr. Thorne
currently serves as a director of Nuveen Investments, Inc.
Executive
Officers
As of April 1, 2010, our executive officers (other than
Messrs. Bracken and Johnson who are listed above) were as
follows:
Name
Age
Position(s)
David G. Anderson
62
Senior Vice President — Finance and Treasurer
Victor L. Campbell
63
Senior Vice President
Charles J. Hall
57
President — Eastern Group
Samuel N. Hazen
49
President — Western Group
A. Bruce Moore, Jr.
50
President — Outpatient Services Group
Jonathan B. Perlin, M.D.
49
President — Clinical Services Group and Chief Medical
Officer
W. Paul Rutledge
55
President — Central Group
Joseph A. Sowell, III
53
Senior Vice President and Chief Development Officer
Joseph N. Steakley
55
Senior Vice President — Internal Audit Services
John M. Steele
54
Senior Vice President — Human Resources
Donald W. Stinnett
54
Senior Vice President and Controller
Beverly B. Wallace
59
President — Shared Services Group
Robert A. Waterman
56
Senior Vice President, General Counsel and Chief Labor Relations
Officer
Noel Brown Williams
55
Senior Vice President and Chief Information Officer
Alan R. Yuspeh
60
Senior Vice President and Chief Ethics and Compliance Officer
David G. Anderson has served as Senior Vice
President — Finance and Treasurer of the Company since
July 1999. Mr. Anderson served as Vice
President — Finance of the Company from September 1993
to July 1999 and was elected to the additional position of
Treasurer in November 1996. From March 1993 until September
1993, Mr. Anderson served as Vice President —
Finance and Treasurer of Galen Health Care, Inc.
From July 1988 to March 1993, Mr. Anderson served as Vice
President — Finance and Treasurer of Humana Inc.
Victor L. Campbell has served as Senior Vice President of
the Company since February 1994. Prior to that time,
Mr. Campbell served as HCA-Hospital Corporation of
America’s Vice President for Investor, Corporate and
Government Relations. Mr. Campbell joined HCA-Hospital
Corporation of America in 1972. Mr. Campbell serves on the
Board of the Nashville Health Care Council, as a member of the
American Hospital Association’s President’s Forum, and
on the Board and Executive Committee of the Federation of
American Hospitals.
Charles J. Hall was appointed President —
Eastern Group of the Company in October 2006. Prior to that
time, Mr. Hall had served as President — North
Florida Division since April 2003. Mr. Hall had previously
served the Company as President of the East Florida Division
from January 1999 until April 2003, as a Market President in the
East Florida Division from January 1998 until December 1998, as
President of the South Florida Division from February 1996 until
December 1997, and as President of the Southwest Florida
Division from October 1994 until February 1996, and in various
other capacities since 1987.
Samuel N. Hazen was appointed President —
Western Group of the Company in July 2001. Mr. Hazen served
as Chief Financial Officer — Western Group of the
Company from August 1995 to July 2001. Mr. Hazen served as
Chief Financial Officer — North Texas Division of the
Company from February 1994 to July 1995. Prior to that time,
Mr. Hazen served in various hospital and regional Chief
Financial Officer positions with Humana Inc. and Galen Health
Care, Inc.
Bruce Moore, Jr. was appointed President —
Outpatient Services Group in January 2006. Mr. Moore had
served as Senior Vice President and as Chief Operating
Officer — Outpatient Services Group since July 2004
and as Senior Vice President — Operations
Administration from July 1999 until July 2004. Mr. Moore
served as Vice President — Operations Administration
of the Company from September 1997 to July 1999, as Vice
President — Benefits from October 1996 to September
1997, and as Vice President — Compensation from March
1995 until October 1996.
Dr. Jonathan B. Perlin was appointed
President — Clinical Services Group and Chief Medical
Officer in November 2007. Dr. Perlin had served as Chief
Medical Officer and Senior Vice President — Quality of
the Company from August 2006 to November 2007. Prior to joining
the Company, Dr. Perlin served as Under Secretary for
Health in the U.S. Department of Veterans Affairs since
April 2004. Dr. Perlin joined the Veterans Health
Administration in November 1999 where he served in various
capacities, including as Deputy Under Secretary for Health from
July 2002 to April 2004, and as Chief Quality and Performance
Officer from November 1999 to September 2002.
W. Paul Rutledge was appointed as
President — Central Group in October 2005.
Mr. Rutledge had served as President of the MidAmerica
Division since January 2001. He served as President of TriStar
Health System from June 1996 to January 2001 and served as
President of Centennial Medical Center from May 1993 to June
1996. He has served in leadership capacities with HCA for more
than 27 years, working with hospitals in the United States
and London, England.
Joseph A. Sowell, III was appointed as Senior Vice
President and Chief Development Officer of the Company in
December 2009. From 1987 to 1996 and again from 1999 to 2009,
Mr. Sowell was a partner at the law firm of Waller Lansden
Dortch & Davis where he specialized in the areas of
healthcare law, mergers and acquisitions, joint ventures,
private equity financing, tax law and general corporate law. He
also co-managed the firm’s corporate and commercial
transactions practice. From 1996 to 1999, Mr. Sowell served
as the head of development, and later as the Chief Operating
Officer of Arcon Healthcare.
Joseph N. Steakley has served as Senior Vice
President — Internal Audit Services of the Company
since July 1999. Mr. Steakley served as Vice
President — Internal Audit Services from November 1997
to July 1999. From October 1989 until October 1997,
Mr. Steakley was a partner with Ernst & Young
LLP. Mr. Steakley is a member of the board of directors of
J. Alexander’s Corporation, where he serves on the
compensation committee and as chairman of the audit committee.
John M. Steele has served as Senior Vice
President — Human Resources of the Company since
November 2003. Mr. Steele served as Vice
President — Compensation and Recruitment of the
Company from November 1997 to October 2003. From March 1995
to November 1997, Mr. Steele served as Assistant Vice
President — Recruitment.
Donald W. Stinnett has served as Senior Vice President
and Controller since December 2008. Mr. Stinnett served as
Chief Financial Officer — Eastern Group from October
2005 to December 2008 and Chief Financial Officer of the Far
West Division from July 1999 to October 2005. Mr. Stinnett
served as Chief Financial Officer and Vice President of Finance
of Franciscan Health System of the Ohio Valley from 1995 until
1999, and served in various capacities with Franciscan Health
System of Cincinnati and Providence Hospital in Cincinnati prior
to that time.
Beverly B. Wallace was appointed President —
Shared Services Group in March 2006. From January 2003 until
March 2006, Ms. Wallace served as President —
Financial Services Group. Ms. Wallace served as Senior Vice
President — Revenue Cycle Operations Management of the
Company from July 1999 to January 2003. Ms. Wallace served
as Vice President — Managed Care of the Company from
July 1998 to July 1999. From 1997 to 1998, Ms. Wallace
served as President — Homecare Division of the
Company. From 1996 to 1997, Ms. Wallace served as Chief
Financial Officer — Nashville Division of the Company.
From 1994 to 1996, Ms. Wallace served as Chief Financial
Officer —
Mid-America
Division of the Company.
Robert A. Waterman has served as Senior Vice President
and General Counsel of the Company since November 1997 and Chief
Labor Relations Officer since March 2009. Mr. Waterman
served as a partner in the law firm of Latham &
Watkins from September 1993 to October 1997; he was Chair of the
firm’s healthcare group during 1997.
Noel Brown Williams has served as Senior Vice President
and Chief Information Officer of the Company since October 1997.
From October 1996 to September 1997, Ms. Williams served as
Chief Information Officer for American Service Group/Prison
Health Services, Inc. From September 1995 to September 1996,
Ms. Williams worked as an independent consultant. From June
1993 to June 1995, Ms. Williams served as Vice President,
Information Services for HCA Information Services. From February
1979 to June 1993, she held various positions with HCA-Hospital
Corporation of America Information Services.
Alan R. Yuspeh has served as Senior Vice President and
Chief Ethics and Compliance Officer of the Company since May
2007. From October 1997 to May 2007, Mr. Yuspeh served as
Senior Vice President — Ethics, Compliance and
Corporate Responsibility of the Company. From September 1991
until October 1997, Mr. Yuspeh was a partner with the law
firm of Howrey & Simon. As a part of his law practice,
Mr. Yuspeh served from 1987 to 1997 as Coordinator of the
Defense Industry Initiative on Business Ethics and Conduct.
Board of
Directors and Board Committees
Director
Independence
Our Board of Directors consists of thirteen directors, who are
each managers of Hercules Holding. The Amended and Restated
Limited Liability Company Agreement of Hercules Holding requires
that the members of Hercules Holding take all necessary action
to ensure that the persons who serve as managers of Hercules
Holding also serve on the Board of Directors of HCA. See
“Certain Relationships and Related Party
Transactions.” In addition, Mr. Bracken’s
employment agreement provides that he will continue to serve as
a member of our Board of Directors so long as he remains an
officer of HCA. Because of these requirements, together with
Hercules Holding’s ownership of approximately 97.1% of our
outstanding common stock, we do not currently have a policy or
procedures with respect to stockholder recommendations for
nominees to the Board of Directors, nor do we have a
nominating/corporate governance committee, or a committee that
serves a similar purpose. Effective December 31, 2008, Jack
O. Bovender, Jr. retired as Chief Executive Officer but
retained the role of executive Chairman of the Board until
December 15, 2009, and effective January 1, 2009,
Mr. Bracken was appointed to serve as Chief Executive
Officer of the Company. Effective December 15, 2009,
Mr. Bracken was appointed Chairman of the Board, and
Mr. Johnson was appointed as a member of the Board of
Directors. Our Board of Directors currently has four standing
committees: the Audit and Compliance
Committee, the Compensation Committee, the Executive Committee
and the Patient Safety and Quality of Care Committee. Each of
the Investors (other than the Sponsor Assignees) has the right
to have at least one director serve on all standing committees.
Patient
Safety and
Audit and
Quality of
Name of Director
Compliance
Compensation
Executive
Care
Christopher J. Birosak
X
Richard M. Bracken*
Chair
John P. Connaughton
Chair
X
James D. Forbes
X
Kenneth W. Freeman
X
Thomas F. Frist III
X
X
William R. Frist
X
Christopher R. Gordon
X
R. Milton Johnson*
Michael W. Michelson
X
X
James C. Momtazee
Chair
Stephen G. Pagliuca
X
Nathan C. Thorne
X
Chair
*
Indicates management director.
Though not formally considered by our Board because our common
stock is not listed on any national securities exchange, based
upon the listing standards of the New York Stock Exchange
(“NYSE”), the national securities exchange upon which
our common stock was listed prior to the Merger, we do not
believe any of our directors would be considered
“independent” because of their relationships with
certain affiliates of the funds and other entities which hold
significant interests in Hercules Holding, which owns
approximately 97.1% of our outstanding common stock, and other
relationships with us. See “Certain Relationships and
Related Party Transactions.” Accordingly, we do not believe
that any of Messrs. Birosak, Frist, Gordon or Momtazee, the
members of our Audit and Compliance Committee, would meet the
independence requirements or
Rule 10A-1
of the Exchange Act or the NYSE’s audit committee
independence requirements, or that Messrs. Connaughton,
Forbes or Michelson, the members of our Compensation Committee,
would meet the NYSE’s independence requirements.
Director
Qualifications
The Board of Directors seeks to ensure the Board is composed of
members whose particular experience, qualifications, attributes
and skills, when taken together, will allow the Board to satisfy
its oversight responsibilities effectively. In identifying
candidates for membership on the Board, the Board takes into
account (1) minimum individual qualifications, such as high
ethical standards, integrity, mature and careful judgment,
industry knowledge or experience and an ability to work
collegially with the other members of the Board and (2) all
other factors it considers appropriate, including alignment with
our stockholders, especially investment funds affiliated with
the Sponsors. While we do not have any specific diversity
policies for considering Board candidates, we believe each
director contributes to the Board of Directors’ overall
diversity — diversity being broadly construed to mean
a variety of opinions, perspectives, personal and professional
experiences and backgrounds.
In 2009, Messrs. Birosak, Bracken, Connaughton, Forbes,
Freeman, Frist III, Frist, Gordon, Johnson, Michelson, Momtazee,
Pagliuca and Thorne were elected to the Company’s Board.
Messrs. Birosak, Connaughton, Forbes, Freeman, Frist III,
Frist, Gordon, Michelson, Momtazee, Pagliuca and Thorne were
appointed to the Board as a consequence of their respective
relationships with investment funds affiliated with
the Sponsors and the Frist Entities. They are collectively
referred to as the “Sponsor Directors.”
Messrs. Bracken and Johnson are collectively referred to as
the “Non-Sponsor Directors.”
When considering whether the Board’s directors and nominees
have the experience, qualifications, attributes and skills,
taken as a whole, to enable the Board to satisfy its oversight
responsibilities effectively in light of the Company’s
business and structure, the Board focused primarily on the
information discussed in each of the Board members’
biographical information set forth above.
Each of the Company’s directors possesses high ethical
standards, acts with integrity, and exercises careful, mature
judgment. Each is committed to employing their skills and
abilities to aid the long-term interests of the stakeholders of
the Company. In addition, our directors are knowledgeable and
experienced in one or more business, governmental, or civic
endeavors, which further qualifies them for service as members
of the Board. Alignment with our stockholders is important in
building value at the Company over time.
Each of the Sponsor Directors was elected to the Board pursuant
to the Amended and Restated Limited Liability Company Agreement
of Hercules Holding. Pursuant to such agreement,
Messrs. Freeman, Michelson and Momtazee were appointed to
the Board as a consequence of their respective relationships
with KKR, Messrs. Birosak, Forbes and Thorne were appointed
to the Board as a consequence of their respective relationships
with Bank of America Corporation, Messrs. Connaughton,
Gordon and Pagliuca were appointed to the Board as a consequence
of their respective relationships with Bain Capital and
Messrs. Frist III and Frist were appointed to the
Board as a consequence of their respective relationships with
the Frist Entities.
As a group, the Sponsor Directors possess experience in owning
and managing enterprises like the Company and are familiar with
corporate finance, strategic business planning activities and
issues involving stakeholders more generally.
The Non-Sponsor Directors bring leadership, extensive business,
operating, legal and policy experience, and tremendous knowledge
of our Company and the Company’s industry, to the Board. In
addition, the Non-Sponsor Directors bring their broad strategic
vision for our Company to the Board. Mr. Bracken’s
service as the Chairman and Chief Executive Officer of the
Company and Mr. Johnson’s service as Executive Vice
President, Chief Financial Officer and Director creates a
critical link between management and the Board, enabling the
Board to perform its oversight function with the benefits of
management’s perspectives on the business. In addition,
having the Chief Executive Officer and Executive Vice President
and Chief Financial Officer, and Messrs. Bracken and
Johnson in particular, on our Board provides our Company with
ethical, decisive and effective leadership.
The Amended and Restated Limited Liability Company Agreement of
Hercules Holding provides that each Sponsor has the right to
designate three directors, that the Frist Entities have the
right to designate two directors and that the Board will include
two representatives of management of our Company. Any directors
nominated to fill the directorships selected by the Sponsors and
the Frist Entities are chosen by the applicable Sponsor or the
Frist Entities, as the case may be. The Sponsors, the Frist
Entities and the other members of the Board participate in the
consideration of nominees to the Board as representatives of the
Company’s management.
Board
Leadership Structure
The Board appointed the Company’s Chief Executive Officer
as Chairman because he is the director most familiar with the
Company’s business and industry, and as a result is best
suited to effectively identify strategic priorities and lead the
discussion and execution of strategy. The Board believes the
combined position of Chairman and CEO promotes a unified
direction and leadership for the Board and gives a single, clear
focus for the chain of command for our organization, strategy
and business plans. Because the Company is a controlled
corporation and the Board is primarily composed of Sponsor
Directors, the Company does not have a lead or any other
independent directors.
Risk is inherent with every business. Management is responsible
for the
day-to-day
management of risks the Company faces, while the Board of
Directors, as a whole and through its committees, has
responsibility for the oversight of risk management. In its risk
oversight role, the Board of Directors has the responsibility to
satisfy itself that the risk management processes designed and
implemented by management are adequate and functioning as
designed. Our Board of Directors oversees an enterprise-wide
approach to risk management, designed to support the achievement
of organizational objectives, including strategic objectives, to
improve long-term organizational performance and enhance
stockholder value. A fundamental aspect of risk management is
not only understanding the risks a company faces and what steps
management is taking to manage those risks, but also
understanding what level of risk is appropriate for the company.
The involvement of the full Board of Directors in setting the
Company’s business strategy is a key part of its assessment
of management’s appetite for risk and also a determination
of what constitutes an appropriate level of risk for the Company.
We conduct an annual enterprise risk management assessment,
which is facilitated by the Company’s enterprise risk
management team in collaboration with the Company’s
internal auditors. The senior internal audit executive officer
reports to the Chief Executive Officer and Chairman and to the
Audit and Compliance Committee in this capacity. In this
process, we assess risk throughout the Company by conducting
surveys and interviews of Company employees and directors
soliciting information regarding business risks that could
significantly adversely affect the Company, including the
achievement of its strategic plan. We then identify any controls
or initiatives in place to mitigate any material risk and the
effectiveness of any such controls or initiatives. The
enterprise risk management team annually prepares a report for
senior management and, ultimately, the Board of Directors
regarding the key identified risks and how the Company manages
these risks to review and analyze both on an annual and ongoing
basis. Senior management attends the quarterly Board meetings
and is available to address any questions or concerns raised by
the Board regarding risk management and any other matters.
Additionally, each quarter, the Board of Directors receives
presentations from senior management on strategic matters
involving our operations.
While the Board of Directors has the ultimate oversight
responsibility for the risk management process, various
committees of the Board assist the Board in fulfilling its
oversight responsibilities in certain areas of risk. In
particular, the Audit and Compliance Committee focuses on
financial and enterprise risk exposures, including internal
controls, and discusses with management, the senior internal
audit executive officer, the senior chief ethics and compliance
officer and the independent auditor the Company’s policies
with respect to risk assessment and risk management. The Audit
and Compliance Committee also assists the Board in fulfilling
its duties and oversight responsibilities relating to the
Company’s compliance with applicable laws and regulations,
the Company Code of Conduct, and related Company policies and
procedures, including the Corporate Ethics and Compliance
Program. The Compensation Committee assists the Board in
fulfilling its oversight responsibilities with respect to the
management of risks arising from our compensation policies and
programs. The Patient Safety and Quality of Care Committee
assists the Board in fulfilling its risk oversight
responsibility with respect to the Company’s policies and
procedures relating to patient safety and the delivery of
quality medical care to patients.
Board
Meetings and Committees
During 2009, our Board of Directors held nine meetings. All
directors attended at least 75% of the Board meetings and
meetings of the committees of the Board on which the director
served. Given that we do not presently intend on holding annual
stockholder meetings because we are not currently publicly
traded, HCA has not adopted a policy regarding director
attendance at annual meetings of stockholders. The Company did
not have an annual meeting of stockholders in 2009 and our
directors were re-elected through stockholder action taken on
written consent effective September 21, 2009.
Our Audit and Compliance Committee is composed of James C.
Momtazee, Chairman, Christopher J. Birosak, Thomas F. Frist III,
and Christopher R. Gordon. In light of our status as a closely
held company and the absence of a public trading market for our
common stock, our Board has not designated any member of the
Audit and Compliance Committee as an “audit committee
financial expert.” None of the members of the
Audit and Compliance Committee would meet the independence
requirements of
Rule 10A-1
of the Exchange Act or the NYSE’s audit committee
independence requirements, because of their relationships with
certain affiliates of the funds and other entities which hold
significant interests in Hercules Holding, which, as of
April 1, 2010, owned approximately 97.1% of our outstanding
common stock, and other relationships with us. See “Certain
Relationships and Related Party Transactions.” This
committee reviews the programs of our internal auditors, the
results of their audits, and the adequacy of our system of
internal controls and accounting practices. This committee also
reviews the scope of the annual audit by our independent
registered public accounting firm before its commencement,
reviews the results of the audit and reviews the types of
services for which we retain our independent registered public
accounting firm. The Audit and Compliance Committee has adopted
a charter which can be obtained on the Corporate Governance page
of the Company’s website at www.hcahealthcare.com. In 2009,
the Audit and Compliance Committee met five times.
Compensation
Committee
Our Compensation Committee is currently composed of John P.
Connaughton, Chairman, James. D. Forbes and Michael W.
Michelson. None of the members of our Compensation Committee
would meet the NYSE’s independence requirements. The
Compensation Committee is generally charged with the oversight
of our executive compensation and rewards programs.
Responsibilities of the Compensation Committee include the
review and approval of the following items:
•
Executive compensation strategy and philosophy;
•
Compensation arrangements for executive management;
•
Design and administration of the annual cash-based Senior
Officer Performance Excellence Program;
•
Design and administration of our equity incentive plans;
•
Executive benefits and perquisites (including the HCA
Restoration Plan and the Supplemental Executive Retirement
Plan); and
•
Any other executive compensation or benefits related items
deemed noteworthy by the Compensation Committee.
In addition, the Compensation Committee considers the proper
alignment of executive pay policies with Company values and
strategy by overseeing employee compensation policies, corporate
performance measurement and assessment, and Chief Executive
Officer performance assessment. The Compensation Committee may
retain the services of independent outside consultants, as it
deems appropriate, to assist in the strategic review of programs
and arrangements relating to executive compensation and
performance. In 2009 the Compensation Committee hired Semler
Brossy Consulting Group, LLC to assist in conducting an
assessment of competitive executive compensation. The
Compensation Committee may consider recommendations from our
Chief Executive Officer and compensation consultants, among
other factors, in making its compensation determinations. The
Compensation Committee has the authority to delegate any of its
responsibilities to one or more subcommittees as the committee
may deem appropriate. For a discussion of the processes and
procedures for determining executive and director compensation
and the role of executive officers and compensation consultants
in determining or recommending the amount or form of
compensation, see “Executive Compensation —
Compensation Discussion and Analysis.” The Compensation
Committee has adopted a charter which can be obtained on the
Corporate Governance page of our website at
www.hcahealthcare.com. In 2009, the Compensation Committee met
eight times.
Policy
Regarding Communications with the Board of
Directors
Stockholders, employees and other interested parties may
communicate with any of our directors by writing to such
director(s)
c/o Board
of Directors, HCA Inc., One Park Plaza, Nashville, TN37203,
Attention: Corporate Secretary. All communications from
stockholders, employees and other interested parties addressed
in that manner will be forwarded to the appropriate director. If
the volume of communication becomes such that the Board adopts a
process for determining which communications will be relayed to
Board members, that process will appear on the Corporate
Governance page of our website at www.hcahealthcare.com.
Code of
Ethics
We have a Code of Conduct, which is applicable to all our
directors, officers and employees (the “Code of
Conduct”). The Code of Conduct is available on the Ethics
and Compliance and Corporate Governance pages of our website at
www.hcahealthcare.com. To the extent required pursuant to
applicable SEC regulations, we intend to post amendments to or
waivers from our Code of Conduct (to the extent applicable to
our chief executive officer, principal financial officer or
principal accounting officer) at this location on our website or
report the same on a Current Report on Form
8-K. Our
Code of Conduct is available free of charge upon request to our
Corporate Secretary, HCA Inc., One Park Plaza, Nashville, TN37203.
In consultation with the Compensation Committee, members of
Human Resources, Legal, Enterprise Risk Management and Internal
Audit management conducted an assessment of whether the
Company’s compensation policies and practices encourage
excessive or inappropriate risk taking by our employees,
including employees other than our named executive officers.
This assessment included a review of the risk characteristics of
our business and the design of our incentive plans and policies.
Although a significant portion of our executive compensation
program is performance-based, the Compensation Committee has
focused on aligning the Company’s compensation policies
with the long-term interests of the Company and avoiding rewards
or incentive structures that could create unnecessary risks to
the Company.
Management reported its findings to the Compensation Committee,
which agreed with management’s assessment that our plans
and policies do not encourage excessive or inappropriate risk
taking and determined such policies or practices are not
reasonably likely to have a material, adverse effect on the
Company.
Compensation
Discussion and Analysis
The Compensation Committee (the “Committee”) of the
Board of Directors is generally charged with the oversight of
our executive compensation and rewards programs. The Committee
is currently composed of John P. Connaughton, James D. Forbes
and Michael W. Michelson. In early 2009, the Committee also
included George A. Bitar, and determinations with respect to
2009 compensation were made by such Committee. Responsibilities
of the Committee include the review and approval of the
following items:
•
Executive compensation strategy and philosophy;
•
Compensation arrangements for executive management;
•
Design and administration of the annual cash-based Senior
Officer Performance Excellence Program (“PEP”);
•
Design and administration of our equity incentive plans;
•
Executive benefits and perquisites (including the HCA
Restoration Plan and the Supplemental Executive Retirement
Plan); and
•
Any other executive compensation or benefits related items
deemed appropriate by the Committee.
In addition, the Committee considers the proper alignment of
executive pay policies with Company values and strategy by
overseeing executive compensation policies, corporate
performance measurement and assessment, and Chief Executive
Officer performance assessment. The Committee may retain the
services of independent outside consultants, as it deems
appropriate, to assist in the strategic review of programs and
arrangements relating to executive compensation and performance.
The following executive compensation discussion and analysis
describes the principles underlying our executive compensation
policies and decisions as well as the material elements of
compensation for our named executive officers. Our named
executive officers for 2009 were:
•
Richard M. Bracken, Chairman and Chief Executive Officer;
•
R. Milton Johnson, Executive Vice President and Chief Financial
Officer;
•
Beverly B. Wallace, President — Shared Services Group;
•
Samuel N. Hazen, President — Western Group;
•
W. Paul Rutledge, President — Central Group; and
•
Jack O. Bovender, Jr., Executive Chairman of the Board
(Retired).
Effective December 31, 2008, Mr. Bovender retired as
Chief Executive Officer but retained the role of executive
Chairman of the Board, and effective January 1, 2009,
Mr. Bracken was appointed to serve as Chief Executive
Officer and President of the Company. Mr. Bovender retired
as executive Chairman of the Board on December 15, 2009,
and Mr. Bracken assumed the additional responsibilities as
Chairman of the Board at such time.
As discussed in more detail below, the material elements and
structure of the named executive officers’ compensation
program were negotiated and determined in connection with the
Merger, subject to annual adjustments in the Committee’s
discretion.
Compensation
Philosophy and Objectives
The core philosophy of our executive compensation program is to
support the Company’s primary objective of providing the
highest quality health care to our patients while enhancing the
long term value of the Company to our stockholders.
Specifically, the Committee believes the most effective
executive compensation program (for all executives, including
named executive officers):
•
Reinforces HCA’s strategic initiatives;
•
Aligns the economic interests of our executives with those of
our stockholders; and
•
Encourages attraction and long term retention of key
contributors.
The Committee is committed to a strong, positive link between
our objectives and our compensation and benefits practices.
Our compensation philosophy also allows for flexibility in
establishing executive compensation based on an evaluation of
information prepared by management or other advisors and other
subjective and objective considerations deemed appropriate by
the Committee, subject to any contractual agreements with our
executives. The Committee will also consider the recommendations
of our Chief Executive Officer. This flexibility is important to
ensure our compensation programs are competitive and that our
compensation decisions appropriately reflect the unique
contributions and characteristics of our executives.
Compensation
Structure and Benchmarking
Our compensation program is heavily weighted towards
performance-based compensation, reflecting our philosophy of
increasing the long-term value of the Company and supporting
strategic imperatives. Total direct compensation and other
benefits consist of the following elements:
Total Direct Compensation
• Base Salary
• Annual Cash-Based Incentives (offered
through our PEP)
• Long-Term Equity Incentives (in the form
of Stock Options)
Other Benefits
• Retirement Plans
• Limited Perquisites and Other Personal
Benefits
• Severance Benefits
The Committee does not support rigid adherence to benchmarks or
compensatory formulas and strives to make compensation decisions
which effectively support our compensation objectives and
reflect the unique attributes of the Company and each executive.
Our general practice, however, with respect to pay positioning,
is that executive base salaries and annual incentive (PEP)
target values should generally position total annual cash
compensation between the median and 75th percentile of
similarly-sized general industry companies. We utilize the
general industry as our primary source for competitive pay
levels because HCA is significantly larger than its industry
peers. See the discussion of benchmarking below for further
information. The named executive officers’ pay fell within
the range noted above for jobs with equivalent market
comparisons.
The cash compensation mix between salary and PEP has
historically been more weighted towards salary than competitive
practice among our general industry peers would suggest. Over
time, we have made steps towards a mix of cash compensation that
will place a greater emphasis on annual performance-based
compensation.
Although we look at competitive long-term equity incentive award
values in similarly-sized general industry companies when
assessing the competitiveness of our compensation programs, we
do not make annual executive option grants (and we did not base
our initial post-Merger 2007 stock option grants on these
levels) since equity is structured differently in closely held
companies than in publicly-traded companies. As is typical in
similar situations, the Investors wanted to share a certain
percentage of the equity with executives shortly after the
consummation of the Merger and establish performance objectives
and incentives up front in lieu of annual grants to ensure our
executives’ long-term economic interests would be aligned
with those of the Investors. This pool of equity was then
further allocated based on the executives’ responsibilities
and anticipated impact on, and potential for, driving Company
strategy and performance. The resulting total direct pay mix on
a cumulative basis, is heavily weighted towards
performance-based pay (PEP plus stock options) rather than fixed
pay, which the Committee believes reflects the compensation
philosophy and objectives discussed above.
In accordance with agreements entered into at the time of the
Merger, our named executive officers received the 2x Time
Options (as defined below) in 2009 with an exercise price equal
to two times the share price at the Merger (or $102.00). The
Committee allocated those options in consultation with our Chief
Executive Officer based on past executive contributions and
future anticipated impact on Company objectives. For additional
information regarding the 2x Time Options, see
“— Elements of Compensation — Long-Term
Equity Incentive Awards: Options” below.
Compensation
Process
The Committee ensures executives’ pay levels are materially
consistent with the compensation strategy described above, in
part, by conducting annual assessments of competitive executive
compensation. Management (but no named executive officer), in
collaboration with the Committee’s independent consultant,
Semler Brossy Consulting Group, LLC, collects and presents
compensation data from similarly-sized general industry
companies, based to the extent possible on comparable position
matches and compensation components. The following nationally
recognized survey sources were utilized in anticipation of
establishing 2009 executive compensation:
Survey
Revenue Scope
Towers Perrin Executive Compensation Database
Greater than $20B
Hewitt Total Compensation Measurement
$10B - $25B
Hewitt Total Compensation Measurement
Greater than $25B
These particular revenue scopes were selected because they were
the closest approximations to HCA’s revenue size. Each
survey that provided an appropriate position match and
sufficient sample size to be used in the compensation review was
weighted equally. For this purpose, the two Hewitt survey cuts
were considered as one survey, and we used a weighted average of
the two surveys (65% for the $10B — $25B cut and 35%
for the Greater than $25B).
Data was also collected from health care providers within our
industry including Community Health Systems, Inc., Health
Management Associates, Inc., Kindred Healthcare, Inc., LifePoint
Hospitals, Inc., Tenet Healthcare Corporation and Universal
Health Services, Inc. These health care providers are used only
to obtain a general understanding of current industry
compensation practices since we are significantly larger than
these companies. CEO and CFO compensation data was also
collected and reviewed for large public health care companies
which included, in addition to health care providers, companies
in the health insurance, pharmaceutical, medical supplies and
related industries. This peer group’s 2008 revenues ranged
from $7.2 billion to $81.2 billion with median
revenues of $21.3 billion. The companies in this analysis
included Abbott Laboratories, Aetna Inc., Amgen Inc., Baxter
International Inc., Boston Scientific Corp., Bristol-Myers
Squibb Company, CIGNA Corp., Coventry Health Care, Inc., Express
Scripts, Inc., Humana Inc., Johnson & Johnson,
Eli Lilly and Company, Medco Health Solutions Inc.,
Merck & Co., Inc., Pfizer Inc., Quest Diagnostics
Incorporated, Schering-Plough Corporation, Tenet Healthcare
Corporation, Thermo Fisher Scientific Inc., UnitedHealth Group
Incorporated, Wellpoint, Inc. and Wyeth.
Consistent with our flexible compensation philosophy, the
Committee is not required to approve compensation precisely
reflecting the results of these surveys, and may also consider,
among other factors (typically not reflected in these surveys):
the requirements of the applicable employment agreements, the
executive’s individual performance during the year, his or
her projected role and responsibilities for the coming year, his
or her actual and potential impact on the successful execution
of Company strategy, recommendations from our Chief Executive
Officer and compensation consultants, an officer’s prior
compensation, experience, and professional status, internal pay
equity considerations, and employment market conditions and
compensation practices within our peer group. The weighting of
these and other relevant factors is determined on a
case-by-case
basis for each executive upon consideration of the relevant
facts and circumstances.
Employment
Agreements
In connection with the Merger, we entered into employment
agreements with each of our named executive officers and certain
other members of senior management to help ensure the retention
of those executives critical to the future success of the
Company. Among other things, these agreements set the
executives’ compensation terms, their rights upon a
termination of employment, and restrictive covenants around
non-competition, non-solicitation, and confidentiality. These
terms and conditions are further explained in the remaining
portion of this Compensation Discussion and Analysis and under
“— Narrative Disclosure to Summary Compensation
Table and 2009 Grants of Plan-Based Awards Table —
Employment Agreements.”
In light of Mr. Bovender’s retirement from the
position of Chief Executive Officer, effective December 31,2008, and continuing service to the Company as executive
Chairman until December 15, 2009, the Company entered into
an Amended and Restated Employment Agreement with
Mr. Bovender, effective December 31, 2008. The
material amendments to Mr. Bovender’s prior employment
agreement as set forth in the Amended and Restated Employment
Agreement are described below under
“Mr. Bovender’s Continuing Severance
Benefits” and under “— Narrative Disclosure
to Summary Compensation Table and 2009 Grants of Plan-Based
Awards Table — Employment Agreements.”
The Company also amended Mr. Bracken’s employment
agreement, effective January 1, 2009, to reflect his
appointment to the position of Chief Executive Officer.
Elements
of Compensation
Base
Salary
Base salaries are intended to provide reasonable and competitive
fixed compensation for regular job duties. The threshold base
salaries for our executives are set forth in their employment
agreements. We did not increase named executive officer base
salaries in 2009, other than an increase in
Mr. Johnson’s base salary, as detailed below, in order
to better align his salary with market for his position as Chief
Financial Officer based on general industry surveys. In light of
Mr. Bovender’s retirement from the position of Chief
Executive Officer and continuing role as executive Chairman and
Mr. Bracken’s assumption of the responsibilities of
Chief Executive Officer, Mr. Bovender’s base salary
for 2009 was reduced to $1.144 million (as described
further in “— Narrative Disclosure to Summary
Compensation Table and 2009 Grants of Plan-Based Awards
Table — Employment Agreements —
Mr. Bovender’s Employment Agreements”), and
Mr. Bracken’s 2009 base salary was increased to
$1.325 million. Similarly, taking into consideration the
additional responsibilities being assumed by the position of
Executive Vice President and Chief Financial Officer and
relevant market comparables from the survey data,
Mr. Johnson’s 2009 salary was set at $850,000,
reflecting an increase of approximately 7.6% from his 2008
salary. In light of actual total cash compensation realized for
2009 and current target cash compensation opportunities levels,
no merit base salary increases are planned for 2010 at this
time. Mr. Rutledge’s salary will be increased by 3.7%
effective April 1, 2010 as an internal equity adjustment to
internal peer roles.
The PEP is intended to reward named executive officers for
annual financial performance, with the goals of providing high
quality health care for our patients and increasing stockholder
value. Accordingly, in 2008, the Company’s
2008-2009
Senior Officer Performance Excellence Program, as amended (the
“2008-2009
PEP”), was approved by the Committee to cover annual cash
incentive awards for both 2008 and 2009. Each named executive
officer in the
2008-2009
PEP was initially assigned a maximum 2009 annual award target
expressed as a percentage of salary ranging from 72% to 132%,
which under the terms of the
2008-2009
PEP applies to the lesser of (a) the named executive
officer’s 2009 base salary, or (b) 125% of the named
executive officer’s 2008 base salary. The Committee had the
discretion to reduce, but not increase, the 2009 Threshold,
Target and Maximum percentages as set forth in the
2008-2009
PEP. Mr. Bovender’s 2009 PEP target and an additional
one-time $250,000 bonus opportunity based on his contributions
to certain legislative initiatives as determined by the
Committee were set forth in his Amended Employment Agreement, as
described in “— Narrative Disclosure to Summary
Compensation Table and 2009 Grants of Plan-Based Awards
Table — Employment Agreements —
Mr. Bovender’s Employment Agreement.” The
Committee set Mr. Bracken’s 2009 target percentage at
130% of his 2009 base salary in connection with his appointment
as Chief Executive Officer and amended the
2008-2009
PEP to set Mr. Johnson’s 2009 target percentage at 80%
of his 2009 base salary in light of the additional
responsibilities assumed by the position of Executive Vice
President and Chief Financial Officer. The 2009 target
percentage for each of Ms. Wallace and Messrs. Hazen
and Rutledge was set at 66% of their respective 2009 base
salaries (see individual targets in the table below). These
targets were intended to provide a meaningful incentive for
executives to achieve or exceed performance goals.
The
2008-2009
PEP was designed to provide 100% of the target award for target
performance, 50% of the target award for a minimum acceptable
(threshold) level of performance, and a maximum of 200% of the
target award for maximum performance, while no payments were to
be made for performance below threshold levels. The Committee
believes this payout curve is consistent with competitive
practice. More importantly, it promotes and rewards continuous
growth as performance goals have consistently been set at
increasingly higher levels each year. Actual awards under the
PEP are generally determined using the following two steps:
1. The executive’s conduct must reflect our mission
and values by upholding our Code of Conduct and following our
compliance policies and procedures. This step is critical to
reinforcing our commitment to integrity and the delivery of high
quality health care. In the event the Committee determines the
participant’s conduct during the fiscal year is not in
compliance with the first step, he or she will not be eligible
for an incentive award.
2. The actual award amount is determined based upon Company
performance. In 2009, the PEP for all named executive officers,
other than Mr. Hazen and Mr. Rutledge, incorporated
one Company financial performance measure, EBITDA, defined in
the
2008-2009
PEP as earnings before interest, taxes, depreciation,
amortization, minority interest expense (now, net income
attributable to noncontrolling interests), gains or losses on
sales of facilities, gains or losses on extinguishment of debt,
asset or investment impairment charges, restructuring charges,
and any other significant nonrecurring non-cash gains or charges
(but excluding any expenses for share-based compensation under
ASC 718, Compensation-Stock Compensation (“ASC
718”)) (“EBITDA”). The Company EBITDA target for
2009, as adjusted, was $4.768 billion for the named
executive officers. Mr. Hazen’s 2009 PEP, as the
Western Group President, was based 50% on Company EBITDA and 50%
on Western Group EBITDA (with a Western Group EBITDA target for
2009 of $2.352 billion, as adjusted) to ensure his
accountability for his group’s results. Similarly,
Mr. Rutledge’s 2009 PEP, as the Central Group
President, was based 50% on Company EBITDA and 50% on Central
Group EBITDA (with a Central Group EBITDA target for 2009 of
$1.137 billion, as adjusted). The Committee chose to base
annual incentives on EBITDA for a number of reasons:
•
It effectively measures overall Company performance;
•
It can be considered an important surrogate for cash flow, a
critical metric related to paying down the Company’s
significant debt obligation;
It is the key metric driving the valuation in the internal
Company model, consistent with the valuation approach used by
industry analysts; and
•
It is consistent with the metric used for the vesting of the
financial performance portion of our option grants.
These EBITDA targets should not be understood as
management’s predictions of future performance or other
guidance and investors should not apply these in any other
context. Our 2009 threshold and maximum goals were set at
approximately +/- 3.6% of the target goal to reflect likely
performance volatility. EBITDA targets were linked to the
Company’s short-term and long-term business objectives to
ensure incentives are provided for appropriate annual growth.
Upon review of the Company’s 2009 financial performance,
the Committee determined that Company EBITDA performance for the
fiscal year ended December 31, 2009 was above the maximum
performance levels as set by the Compensation Committee, as
adjusted; likewise, the EBITDA performance of the Western Group
and Central Group also exceeded the maximum performance targets,
as adjusted.
2009 Adjusted
2009 Actual
EBITDA Target
Adjusted EBITDA
Company
$
4.768 billion
$
5.512 billion
Western Group
$
2.352 billion
$
2.841 billion
Central Group
$
1.137 billion
$
1.325 billion
Accordingly, the 2009 PEP was paid out as follows to the named
executive officers (the actual 2009 PEP payout amounts are
included in the “Non-Equity Incentive Plan
Compensation” column of the Summary Compensation Table):
2009 Actual PEP
2009 Target PEP
Award
Named Executive Officer
(% of Salary)
(% of Salary)
Richard M. Bracken (Chairman and CEO)
130
%
260
%
R. Milton Johnson (Executive Vice President and CFO)
80
%
160
%
Beverly B. Wallace (President, Shared Services Group)
66
%
132
%
Samuel N. Hazen (President, Western Group)
66
%
132
%
W. Paul Rutledge (President, Central Group)
66
%
132
%
Jack O. Bovender, Jr. (Retired Chairman)
50
%
100
%
Mr. Bovender also received the additional bonus of $250,000
based upon his contributions to certain of the Company’s
legislative initiatives as described above.
On March 31, 2010, the Committee adopted the 2010 Senior
Officer Performance Excellence Program (the “2010
PEP”). Under the 2010 PEP, the named executive officers of
the Company shall be eligible to earn performance awards based
upon the achievement of certain specified performance targets.
The specified performance criteria for the Company’s named
executive officers and other participants is EBITDA (as defined
in the 2010 PEP), and with respect to the Western and Central
Group Presidents, 50% of their respective award opportunities
are based on EBITDA for the Company’s Western and Central
Groups, respectively. Target awards for the named executive
officers are the same as for 2009 and are as follows:
•
130% of base salary for Richard M. Bracken, our Chairman and CEO;
•
80% of base salary for R. Milton Johnson, our Executive Vice
President and CFO;
•
66% of base salary for Beverly B. Wallace, our
President — Shared Services Group;
•
66% of base salary for Samuel N. Hazen, our
President — Western Group; and
•
66% of base salary for W. Paul Rutledge, our
President — Central Group.
Participants will receive 100% of the target award for target
performance, 25% of the target award for a minimum acceptable
(threshold) level of performance, and a maximum of 200% of the
target award for
maximum performance. No payments will be made for performance
below specified threshold amounts. Payouts between threshold and
maximum will be calculated by the Committee in its sole
discretion using straight-line interpolation. The Committee may
make adjustments to the terms and conditions of, and the
criteria included in, awards under the 2010 PEP in recognition
of unusual or nonrecurring events affecting a participant or the
Company, or the financial statements of the Company, or in
certain other instances specified in the 2010 PEP.
The Committee set the named executive officers’ 2010 target
performance goals under the PEP based on realistic expectations
of Company performance, ensuring successful execution of our
plans in order to realize the most value from these awards.
While we do not intend to disclose our 2010 PEP EBITDA target,
as an understanding of that target is not necessary for a fair
understanding of the named executive officers’ compensation
for 2009 and could result in competitive harm and market
confusion, we consistently set targets that require an increase
in EBITDA year over year to promote continuous growth consistent
with our business plan. For 2010, the Committee has the ability
to apply negative discretion based on performance of
company-wide quality metrics against industry benchmarks, and
for Ms. Wallace, negative discretion can be applied based
on performance of individual goals related to the operations of
the Shared Services Group.
Awards pursuant to the 2010 PEP that are attributable to the
performance goals being met at “target” level or below
will be paid solely in cash, and, in the event performance goals
are achieved above the “target” level, the amount of
an award attributable to performance results in excess of
“target” levels shall be payable 50% in cash and 50%
in restricted stock units.
The Company can recover (or “clawback”) incentive
compensation pursuant to our 2010 PEP that was based on
(i) achievement of financial results that are subsequently
the subject of a restatement due to material noncompliance with
any financial reporting requirement under either GAAP or federal
securities laws, other than as a result of changes to accounting
rules and regulations, or (ii) a subsequent finding that
the financial information or performance metrics used by the
Committee to determine the amount of the incentive compensations
are materially inaccurate, in each case regardless of individual
fault. In addition, the Company may recover any incentive
compensation awarded or paid pursuant to this policy based on
the participant’s conduct which is not in good faith and
which materially disrupts, damages, impairs or interferes with
the business of the Company and its affiliates. The Committee
may also provide for incremental additional payments to
then-current executives in the event any restatement or error
indicates that such executives should have received higher
performance-based payments. This policy is administered by the
Committee in the exercise of its discretion and business
judgment based on the relevant facts and circumstances.
Long-Term
Equity Incentive Awards: Options
In connection with the Merger, the Board of Directors approved
and adopted the 2006 Stock Incentive Plan for Key Employees of
HCA Inc. and its Affiliates (the “2006 Plan”). The
purpose of the 2006 Plan is to:
•
Promote our long term financial interests and growth by
attracting and retaining management and other personnel and key
service providers with the training, experience and abilities to
enable them to make substantial contributions to the success of
our business;
•
Motivate management personnel by means of growth-related
incentives to achieve long range goals; and
•
Further the alignment of interests of participants with those of
our stockholders through opportunities for increased stock or
stock-based ownership in the Company.
In January 2007, pursuant to the terms of the named executive
officers’ respective employment agreements, the Committee
approved long-term stock option grants to our named executive
officers under the 2006 Plan consisting solely of a one-time,
multi-year stock option grant in lieu of annual long-term equity
incentive award grants (“New Options”). In addition to
the New Options granted in 2007, the Company committed to grant
the named executive officers 2x Time Options (as defined below)
in their respective employment agreements, as described in more
detail below under “— Narrative Disclosure to
Summary Compensation Table and 2009 Grants of Plan-Based Awards
Table — Employment Agreements.” The Committee
believes stock options are the most effective long-term vehicle
to directly align the interests of
executives with those of our stockholders by motivating
performance that results in the long-term appreciation of the
Company’s value, since they only provide value to the
executive if the value of the Company increases. As is typical
in leveraged buyout situations, the Committee determined that
granting all of the stock options (except the 2x Time Options)
up front rather than annually was appropriate to aid in
retaining key leaders critical to the Company’s success
over the next several years and, coupled with the
executives’ significant personal investments in connection
with the Merger, provide an equity incentive and stake in the
Company that directly aligns the long-term economic interests of
the executives with those of the Investors.
The New Options have a ten year term and are divided so that
1/3
are time vested options,
1/3
are EBITDA-based performance vested options and
1/3
are performance options that vest based on investment return to
the Sponsors, each as described below. The combination of time,
performance and investor return based vesting of these awards is
designed to compensate executives for long term commitment to
the Company, while motivating sustained increases in our
financial performance and helping ensure the Sponsors have
received an appropriate return on their invested capital before
executives receive significant value from these grants.
The time vested options are granted to aid in retention.
Consistent with this goal, the time vested options granted in
2007 vest and become exercisable in equal increments of 20% on
each of the first five anniversaries of the grant date. The time
vested options have an exercise price equivalent to fair market
value on the date of grant. Since our common stock is not
currently traded on a national securities exchange, fair market
value was determined reasonably and in good faith by the Board
of Directors after consultation with the Chief Executive Officer
and other advisors.
The EBITDA-based performance vested options are intended to
motivate sustained improvement in long-term performance.
Consistent with this goal, the EBITDA-based performance vested
options granted in 2007 are eligible to vest and become
exercisable in equal increments of 20% at the end of fiscal
years 2007, 2008, 2009, 2010 and 2011 if certain annual EBITDA
performance targets are achieved. These EBITDA performance
targets were established at the time of the Merger and can be
adjusted by the Board of Directors in consultation with the
Chief Executive Officer as described below. We chose EBITDA
(defined in the award agreements as earnings before interest,
taxes, depreciation, amortization, minority interest expense
(now, net income attributable to noncontrolling interests),
gains or losses on sales of facilities, gains or losses on
extinguishment of debt, asset or investment impairment charges,
restructuring charges, and any other significant nonrecurring
non-cash gains or charges (but excluding any expenses for
share-based compensation under ASC 718 with respect to any
awards granted under the 2006 Plan)) as the performance metric
since it is a key driver of our valuation and for other reasons
as described above in the “— Elements of
Compensation — Annual Incentive Compensation:
PEP” section of this Compensation Discussion and Analysis.
Due to the number of events that can occur within our industry
in any given year that are beyond the control of management but
may significantly impact our financial performance (e.g., health
care regulations, industry-wide significant fluctuations in
volume, etc.), we have incorporated vesting provisions. The
EBITDA-based performance vested options may vest and become
exercisable on a “catch up” basis, such that options
that were eligible to vest but failed to vest due to our failure
to achieve prior EBITDA targets will vest if at the end of any
subsequent year or at the end of fiscal year 2012, the
cumulative total EBITDA earned in all prior years exceeds the
cumulative EBITDA target at the end of such fiscal year.
As discussed above, we do not intend to disclose the
2010-2011
EBITDA performance targets as they reflect competitive,
sensitive information regarding our budget. However, we
deliberately set our targets at increasingly higher levels.
Thus, while designed to be attainable, target performance levels
for these years require strong, improving performance and
execution, which in our view, provides an incentive firmly
aligned with stockholder interests.
As with the EBITDA targets under our PEP, pursuant to the terms
of the 2006 Plan and the Stock Option Agreements governing the
2007 grants, the Board of Directors, in consultation with our
Chief Executive Officer, has the ability to adjust the
established EBITDA targets for significant events, changes in
accounting rules and other customary adjustment events. We
believe these adjustments may be necessary in order to
effectuate the intents and purposes of our compensation plans
and to avoid unintended consequences that are inconsistent with
these intents and purposes. For example, the Board of Directors
exercised its ability to make
adjustments to the Company’s
2009-2011
EBITDA performance targets (including cumulative EBITDA targets)
for facility dispositions and accounting changes occurring
during the 2009 fiscal year.
The options that vest based on investment return to the Sponsors
are intended to align the interests of executives with those of
our principal stockholders to ensure stockholders receive their
expected return on their investment before the executives can
receive their gains on this portion of the option grant. These
options vest and become exercisable with respect to 10% of the
common stock subject to such options at the end of fiscal years
2007, 2008, 2009, 2010 and 2011 if the Investor Return (as
defined below) is at least equal to two times the price paid to
stockholders in the Merger (or $102.00), and with respect to an
additional 10% at the end of fiscal years 2007, 2008, 2009, 2010
and 2011 if the Investor Return is at least equal to
two-and-a-half
times the price paid to stockholders in the Merger (or $127.50).
“Investor Return” means, on any of the first five
anniversaries of the closing date of the Merger, or any date
thereafter, all cash proceeds actually received by affiliates of
the Sponsors after the closing date in respect of their common
stock, including the receipt of any cash dividends or other cash
distributions (including the fair market value of any
distribution of common stock by the Sponsors to their limited
partners), determined on a fully diluted, per share basis. The
Sponsor investment return options also may become vested and
exercisable on a “catch up” basis if the relevant
Investor Return is achieved at any time occurring prior to the
expiration of such options.
Upon review of the Company’s 2009 financial performance,
the Committee determined the Company achieved the 2009 EBITDA
performance target of $4.821 billion, as adjusted, under
the New Option awards; therefore, pursuant to the terms of the
2007 Stock Option Agreements, 20% of each named executive
officer’s EBITDA-based performance vested options vested as
of December 31, 2009. Further, 20% of each named executive
officer’s time vested options vested on the second
anniversary of their grant date, January 30, 2009. As of
the end of the 2009 fiscal year, no portion of the options that
vest based on Investor Return have vested; however, such options
remain subject to the “catch up” vesting provisions
described above.
In each of the employment agreements with the named executive
officers, we also committed to grant, among the named executive
officers and certain other executives, 10% of the options
initially authorized for grant under the 2006 Plan at some time
before November 17, 2011 (but with a good faith commitment
to do so before a “change in control” (as defined in
the 2006 Plan) or a “public offering” (as defined in
the 2006 Plan) and before the time when our Board of Directors
reasonably believes that the fair market value of our common
stock is likely to exceed the equivalent of $102.00 per share)
at an exercise price per share that is the equivalent of $102.00
per share (“2x Time Options”). On October 6,2009, the 2x Time Options were granted. The Committee allocated
those options in consultation with our Chief Executive Officer
based on past executive contributions and future anticipated
impact on Company objectives. Forty percent of the 2x Time
Options were vested upon grant to reflect employment served
since the Merger, an additional twenty percent of the options
vested on November 17, 2009, and twenty percent of the
options granted to each recipient will vest on November 17,2010 and November 17, 2011, respectively. The terms of the
2x Time Options are otherwise consistent with other time vesting
options granted under the 2006 Plan.
For additional information concerning the options awarded in
2007 and 2009, see the 2009 Grants of Plan-Based Awards and
Outstanding Equity Awards at 2009 Fiscal Year-End Tables.
Ownership
Guidelines
While we have maintained stock ownership guidelines in the past,
as a non-listed company, we no longer have a policy regarding
stock ownership guidelines. However, we do believe equity
ownership aligns our executive officers’ interests with
those of the Investors. Accordingly, all of our named executive
officers were required to rollover at least half their
pre-Merger equity and, therefore, maintain significant stock
ownership in the Company. See “Security Ownership of
Certain Beneficial Owners.”
Retirement
Plans
We currently maintain one qualified retirement plan for which
the named executive officers are eligible, the HCA 401(k) Plan,
to aid in retention and to assist employees in providing for
their retirement. We also used to maintain the HCA Retirement
Plan, which as of April 1, 2008, merged into the HCA 401(k)
Plan
resulting in one qualified retirement plan. Generally all
employees who have completed the required service are eligible
to participate in the HCA 401(k) Plan. Each of our named
executive officers participates in the plan. For additional
information on these plans, including amounts contributed by HCA
in 2009 to the named executive officers, see the Summary
Compensation Table and related footnotes and narratives and
“— 2009 Pension Benefits.”
Our key executives, including the named executive officers, also
participate in two supplemental retirement programs. The
Committee and the Board initially approved these supplemental
programs to:
•
Recognize significant long-term contributions and commitments by
executives to the Company and to performance over an extended
period of time;
•
Induce our executives to continue in our employ through a
specified normal retirement age (initially 62 through 65, but
reduced to 60 upon the change in control at the time of the
Merger in 2006); and
•
Provide a competitive benefit to aid in attracting and retaining
key executive talent.
The Restoration Plan provides a benefit to replace a portion of
the contributions lost in the HCA 401(k) Plan due to certain IRS
limitations. Effective January 1, 2008, participants in the
SERP (described below) are no longer eligible for Restoration
Plan contributions; however, the hypothetical accounts
maintained for each named executive officer as of
January 1, 2008 will continue to be maintained and will be
increased or decreased with hypothetical investment returns
based on the actual investment return of the Mix B fund within
the HCA 401(k) Plan. For additional information concerning the
Restoration Plan, see “— 2009 Nonqualified Deferred
Compensation.”
Key executives also participate in the Supplemental Executive
Retirement Plan (the “SERP”), adopted in 2001. The
SERP benefit brings the total value of annual retirement income
to a specific income replacement level. For named executive
officers with 25 years or more of service, this income
replacement level is 60% of final average pay (base salary and
PEP payouts) at normal retirement, a competitive level of
benefit at the time the plan was implemented. Due to the Merger,
all participants are fully vested in their SERP benefits and the
plan is now frozen to new entrants. For additional information
concerning the SERP, see “— 2009 Pension
Benefits.”
In the event a participant renders service to another health
care organization within five years following retirement or
termination of employment, he or she forfeits the rights to any
further payment, and must repay any payments already made. This
non-competition provision is subject to waiver by the Committee
with respect to the named executive officers.
Personal
Benefits
Our executive officers receive limited, if any, benefits outside
of those offered to our other employees. Generally, we provide
these benefits to increase travel and work efficiencies and
allow for more productive use of the executive’s time.
Mr. Bracken is permitted to use the Company aircraft for
personal trips, subject to the aircraft’s availability.
Prior to his retirement, Mr. Bovender was also permitted to
use the Company aircraft for personal trips, subject to the
aircraft’s availability. The named executive officers may
have their spouses accompany them on business trips taken on the
Company aircraft, subject to seat availability. In addition,
there are times when it is appropriate for an executive’s
spouse to attend events related to our business. On those
occasions, we will pay for the travel expenses of the
executive’s spouse. We will, on an as needed basis, provide
mobile telephones and personal digital assistants to our
employees and certain of our executive officers have obtained
such devices through us. The value of these personal benefits,
if any, is included in the executive officer’s income for
tax purposes and, in certain limited circumstances, the
additional income attributed to an executive officer as a result
of one or more of these benefits will be grossed up to cover the
taxes due on that income. Except as otherwise discussed herein,
other welfare and employee-benefit programs are the same for all
of our eligible employees, including our executive officers. For
additional information, see footnote (4) to the Summary
Compensation Table.
As noted above, all of our named executive officers have entered
into employment agreements, which provide, among other things,
each executive’s rights upon a termination of employment in
exchange for non-competition, non-solicitation, and
confidentiality covenants. We believe that reasonable severance
benefits are appropriate in order to be competitive in our
executive retention efforts. These benefits should reflect the
fact that it may be difficult for such executives to find
comparable employment within a short period of time. We also
believe that these types of agreements are appropriate and
customary in situations such as the Merger wherein the
executives have made significant personal investments in the
Company and that investment is generally illiquid for a
significant period of time. Finally, we believe formalized
severance arrangements are common benefits offered by employers
competing for similar senior executive talent.
Severance
Benefits for Named Executive Officers (other than
Mr. Bovender)
If employment is terminated by the Company without
“cause” or by the executive for “good
reason” (whether or not the termination was in connection
with a
change-in-control),
the executive would be entitled to “accrued rights”
(cause, good reason and accrued rights are as defined in
“— Narrative Disclosure to Summary Compensation Table
and 2009 Grants of Plan-Based Awards Table —
Employment Agreements”) plus:
•
Subject to restrictive covenants and the signing of a general
release of claims, an amount equal to two times for
Ms. Wallace and Messrs. Hazen and Rutledge and three
times in the case of Messrs. Bracken and Johnson the sum of
base salary plus PEP paid or payable in respect of the fiscal
year immediately preceding the fiscal year in which termination
occurs, payable over a two year period;
•
Pro-rata bonus; and
•
Continued coverage under our group health plans during the
period over which the cash severance is paid.
Additionally, unvested options will be forfeited; however,
vested New Options (including 2x Time Options) will remain
exercisable until the first anniversary of the termination of
the executive’s employment.
Because we believe a termination by the executive for good
reason (a constructive termination) is conceptually the same as
an actual termination by the Company without cause, we believe
it is appropriate to provide severance benefits following such a
constructive termination of the named executive officer’s
employment. All of our severance provisions are believed to be
within the realm of competitive practice and are intended to
provide fair and reasonable compensation to the executive upon a
termination event.
Mr. Bovender’s
Continuing Severance Benefits
In light of his long-term service to the Company and his
retirement from the position of Chief Executive Officer, the
Company entered into an Amended and Restated Employment
Agreement with Mr. Bovender, effective December 31,2008 (the “Amended Employment Agreement”).
Mr. Bovender’s Amended Employment Agreement provides
that, effective as of the expiration of the Employment Term (as
defined in “— Narrative Disclosure to Summary
Compensation Table and 2009 Grants of Plan-Based Awards
Table — Employment Agreements”),
Mr. Bovender was entitled to receive the “accrued
rights” as described above for the other named executive
officers. Mr. Bovender was also entitled to receive a pro
rata portion of his bonus under the
2008-2009
PEP based on the Company’s actual results for 2009
(“Mr. Bovender’s Prorated Bonus”).
Mr. Bovender is also entitled to continued coverage under
the Company’s group health plans for Mr. Bovender and
his wife until age 65, reimbursement of any unreimbursed
business expenses properly incurred and such employee benefits,
if any, as to which Mr. Bovender would be entitled under
the Company’s employee benefit plans.
The Amended Employment Agreement also provides that, effective
as of the expiration of the Employment Term (December 15,2009), (i) neither Mr. Bovender nor the Company have
any put or call rights with respect to Mr. Bovender’s
New Options or stock acquired upon the exercise of any such
options;
(ii) Mr. Bovender’s “rollover” stock
options will remain exercisable as if Mr. Bovender’s
employment terminated by reason of “retirement” in
accordance with the terms of the applicable equity plans and
award agreements; (iii) the unvested New Options (including
the 2x Time Options) held by Mr. Bovender that vest solely
based on the passage of time will vest as if
Mr. Bovender’s employment had continued through the
next three anniversaries of their date of grant; (iv) the
unvested New Options held by Mr. Bovender that are EBITDA
performance options will remain outstanding and will vest, if at
all, on the next four dates that they would have otherwise
vested had Mr. Bovender’s employment continued, based
upon the extent to which performance goals are met; (v) the
unvested New Options held by Mr. Bovender that are
“Investor Return” performance options will remain
outstanding and will vest, if at all, on the dates that they
would have otherwise vested had Mr. Bovender’s
employment continued through the expiration of such options,
based upon the extent to which performance goals are met; and
(vi) Mr. Bovender’s New Options will remain
exercisable until the second anniversary of the last date on
which his EBITDA performance options are eligible to vest (which
is December 31, 2014), except that
(a) Mr. Bovender’s 2x Time Options will remain
exercisable until the fifth anniversary of the last date on
which his EBITDA performance options are eligible to vest (which
is December 31, 2017), and
(b) Mr. Bovender’s “Investor Return”
performance options will remain exercisable until the expiration
of such options.
Change in
Control Benefits
Pursuant to the Stock Option Agreements governing the New
Options granted in 2007 and the 2x Time Options granted in 2009,
both under the 2006 Plan, upon a Change in Control of the
Company (as defined below), all unvested time vesting New
Options and 2x Time Options (that have not otherwise terminated
or become exercisable) shall become immediately exercisable.
Performance options that vest subject to the achievement of
EBITDA targets will become exercisable upon a Change in Control
of the Company if: (i) prior to the date of the occurrence
of such event, all EBITDA targets have been achieved for years
ending prior to such date; (ii) on the date of the
occurrence of such event, the Company’s actual cumulative
total EBITDA earned in all years occurring after the performance
option grant date, and ending on the date of the Change in
Control, exceeds the cumulative total of all EBITDA targets in
effect for those same years; or (iii) the Investor Return
is at least
two-and-a-half
times the price paid to the stockholders in the Merger (or
$127.50). For purposes of the vesting provision set forth in
clause (ii) above, the EBITDA target for the year in which
the Change in Control occurs shall be equitably adjusted by the
Board of Directors in good faith in consultation with the chief
executive officer (which adjustment shall take into account the
time during such year at which the Change in Control occurs).
Performance vesting options that vest based on the investment
return to the Sponsors will only vest upon the occurrence of a
Change in Control if, as a result of such event, the applicable
Investor Return (i.e., at least two times the price paid to the
stockholders in the Merger for half of these options and at
least
two-and-one-half
times the price paid to the stockholders in the Merger for the
other half of these options) is also achieved in such
transaction (if not previously achieved). “Change in
Control” means in one or more of a series of transactions
(i) the transfer or sale of all or substantially all of the
assets of the Company (or any direct or indirect parent of the
Company) to an Unaffiliated Person (as defined below);
(ii) a merger, consolidation, recapitalization or
reorganization of the Company (or any direct or indirect parent
of the Company) with or into another Unaffiliated Person, or a
transfer or sale of the voting stock of the Company (or any
direct or indirect parent of the Company), an Investor, or any
affiliate of any of the Investors to an Unaffiliated Person, in
any such event that results in more than 50% of the common stock
of the Company (or any direct or indirect parent of the Company)
or the resulting company being held by an Unaffiliated Person;
or (iii) a merger, consolidation, recapitalization or
reorganization of the Company (or any direct or indirect parent
of the Company) with or into another Unaffiliated Person, or a
transfer or sale by the Company (or any direct or indirect
parent of the Company), an Investor or any affiliate of any of
the Investors, in any such event after which the Investors and
their affiliates (x) collectively own less than 15% of the
common stock of and (y) collectively have the ability to
appoint less than 50% of the directors to the Board (or any
resulting company after a merger). For purposes of this
definition, the term “Unaffiliated Person” means a
person or group who is not an Investor, an affiliate of any of
the Investors or an entity in which any Investor holds, directly
or indirectly, a majority of the economic interest in such
entity.
Additional information regarding applicable payments under such
agreements for the named executive officers is provided under
“— Narrative Disclosure to Summary Compensation
Table and 2009 Grants of Plan-Based Awards Table —
Employment Agreements” and “— Potential Payments
Upon Termination or Change in Control.”
Recoupment
of Compensation
Information regarding the Company’s policy with respect to
recovery of incentive compensation is provided under
“— Elements of Compensation — Annual
Incentive Compensation: PEP” above.
Tax
and Accounting Implications
On April 29, 2008, we registered our common stock pursuant
to Section 12(g) of the Securities Exchange Act of 1934, as
amended; and the Company became subject to Section 162(m)
of the Internal Revenue Code, as amended (the “Code”)
for fiscal year 2008 and beyond, so long as the Company’s
stock remains registered with the SEC. The Committee considers
the impact of Section 162(m) in the design of its
compensation strategies. Under Section 162(m), compensation
paid to executive officers in excess of $1,000,000 cannot be
taken by us as a tax deduction unless the compensation qualifies
as performance-based compensation. We have determined, however,
that we will not necessarily seek to limit executive
compensation to amounts deductible under Section 162(m) if
such limitation is not in the best interests of our
stockholders. While considering the tax implications of its
compensation decisions, the Committee believes its primary focus
should be to attract, retain and motivate executives and to
align the executives’ interests with those of our
stakeholders.
The Committee operates its compensation programs with the good
faith intention of complying with Section 409A of the
Internal Revenue Code. We account for stock based payments with
respect to our long term equity incentive award programs in
accordance with the requirements of ASC 718.
2009
Summary Compensation Table
The following table sets forth information regarding the
compensation earned by the Chief Executive Officer, the Chief
Financial Officer and our other three most highly compensated
executive officers during 2009 and Mr. Bovender, who would
have been one of our most highly compensated executive officers
had he not retired as an executive officer on December 15,2009.
Changes in
Pension
Non-Equity
Value and
Incentive
Nonqualified
Option
Plan
Deferred
All Other
Salary
Awards
Compensation
Compensation
Compensation
Name and Principal Positions
Year
($)
($)(1)
($)(2)
Earnings ($)(3)
($)(4)
Total ($)
Richard M. Bracken
2009
$
1,324,975
$
3,361,016
$
3,445,000
$
4,096,368
$
25,532
$
12,252,891
Chairman and Chief
2008
$
1,060,872
—
$
694,370
$
1,740,620
$
31,781
$
3,527,643
Executive Officer
2007
$
1,060,872
$
5,560,666
$
1,909,570
$
590,370
$
142,932
$
9,264,410
R. Milton Johnson
2009
$
849,984
$
2,520,714
$
1,360,000
$
2,032,089
$
17,674
$
6,780,461
Executive Vice President,
2008
$
786,698
—
$
355,491
$
1,871,790
$
38,769
$
3,052,748
Chief Financial Officer
and Director
2007
$
750,379
$
3,971,905
$
900,455
$
509,442
$
82,462
$
6,214,643
Beverly B. Wallace
2009
$
700,000
$
997,771
$
924,018
$
2,047,036
$
16,500
$
4,685,325
President — Shared
2008
$
700,000
—
$
314,992
$
2,080,836
$
15,651
$
3,111,479
Services Group
2007
$
700,000
$
2,224,258
$
840,000
$
676,111
$
75,013
$
4,515,382
Samuel N. Hazen
2009
$
788,672
$
997,771
$
1,041,067
$
1,725,405
$
16,499
$
4,569,414
President — Western Group
2008
$
788,672
—
$
350,807
$
810,462
$
15,651
$
1,965,592
2007
$
788,672
$
2,542,007
$
830,779
$
258,787
$
84,767
$
4,505,012
W. Paul Rutledge
2009
$
675,000
$
997,771
$
891,017
$
1,510,040
$
16,500
$
4,090,328
President — Central Group
Jack O. Bovender, Jr.
2009
$
1,288,676
$
1,470,443
$
1,250,000
$
4,127,725
$
76,399
$
8,213,243
Executive Chairman*
2008
$
1,620,228
—
$
1,391,886
$
3,926,217
$
45,321
$
6,983,652
2007
$
1,620,228
$
6,355,038
$
3,888,547
—
$
197,092
$
12,060,905
*
Mr. Bovender retired as executive Chairman of the Company
effective December 15, 2009.
Option Awards for 2007 and 2009 include the aggregate grant date
fair value of the stock option awards granted during fiscal
years 2007 and 2009, respectively, in accordance with ASC 718
with respect to New Options (including the 2x Time Options) to
purchase shares of our common stock awarded to the named
executive officers in fiscal years 2007 and 2009, respectively,
under the 2006 Plan. See Note 2 to our consolidated
financial statements included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009.
(2)
Non-Equity Incentive Plan Compensation for 2009 reflects amounts
earned for the year ended December 31, 2009 under the
2008-2009
PEP, which amounts were paid in the first quarter of 2010
pursuant to the terms of the
2008-2009
PEP. For 2009, the Company exceeded its maximum performance
level, as adjusted, with respect to the Company’s EBITDA
and the Central and Western Group EBITDA; therefore, pursuant to
the terms of the
2008-2009
PEP, awards under the
2008-2009
PEP were paid out to the named executive officers, at the
maximum level of 200% of their respective target amounts.
Mr. Bovender was also awarded, pursuant to his Amended
Employment Agreement, an additional one-time bonus of $250,000
based upon his contributions to certain legislative initiatives
as determined by the Committee.
Non-Equity Incentive Plan Compensation for 2008 reflects amounts
earned for the year ended December 31, 2008 under the
2008-2009
PEP, which amounts were paid in the first quarter of 2009
pursuant to the terms of the
2008-2009
PEP. For 2008, the Company did not achieve its target
performance level, but exceeded its threshold performance level,
as adjusted, with respect to the Company’s EBITDA;
therefore, pursuant to the terms of the
2008-2009
PEP, 2008 awards under the
2008-2009
PEP were paid out to the named executive officers at
approximately 68.2% of each such officer’s respective
target amount, with the exception of Mr. Hazen, whose award
was paid out at approximately 67.4% of his target amount, due to
the 50% of his PEP based on the Western Group EBITDA, which also
exceeded the threshold performance level but did not reach the
target performance level.
Non-Equity Incentive Plan Compensation for 2007 reflects amounts
earned for the year ended December 31, 2007 under the 2007
PEP, which amounts were paid in the first quarter of 2008
pursuant to the terms of the 2007 PEP. For 2007, the Company
exceeded its maximum performance level, as adjusted, with
respect to the Company’s EBITDA; therefore, pursuant to the
terms of the 2007 PEP, awards under the 2007 PEP were paid out
to the named executive officers, at the maximum level of 200% of
their respective target amounts, with the exception of
Mr. Hazen, whose award was paid out at 175.6% of the target
amount, due to the 50% of his PEP based on the Western Group
EBITDA, which exceeded the target but did not reach the maximum
performance level.
(3)
All amounts for 2009 are attributable to changes in value of the
SERP benefits. Assumptions used to calculate these figures are
provided under the table titled “2009 Pension
Benefits.” The changes in the SERP benefit value during
2009 were impacted mainly by: (i) the passage of time which
reflects another year of pay and service plus actual investment
return, (ii) the discount rate changing from 6.25% to
5.00%, which resulted in an increase in the value and
(iii) the use of the actual 2009 interest rate of 4.24% for
Mr. Bovender who retired in 2009. The impact of these
events on the SERP benefit values was:
Bracken
Johnson
Wallace
Hazen
Rutledge
Bovender
Passage of Time
$
1,655,097
$
618,320
$
788,376
$
343,653
$
420,979
$
2,053,402
Discount Rate Change
$
2,441,271
$
1,413,769
$
1,258,660
$
1,381,752
$
1,089,061
—
Actual Retirement
—
—
—
—
—
$
2,074,323
All amounts for 2008 are attributable to changes in value of the
SERP benefits. Assumptions used to calculate these figures are
provided under the table titled “2009 Pension
Benefits.” The changes in the SERP benefit value during
2008 were impacted mainly by: (i) the passage of time which
reflects another year of pay and service plus actual investment
return, (ii) the discount rate changing from 6.00% to
6.25%, which resulted in a decrease in the value and
(iii) the opportunity for participants to change their
benefit election before 2009 for terminations and retirements
occurring after 2008. Mr. Bovender elected
to change his benefit payment from an annuity to a lump sum. The
impact of these events on the SERP benefit values was:
Bracken
Johnson
Wallace
Hazen
Bovender
Passage of Time
$
2,142,217
$
2,100,290
$
2,301,107
$
1,037,631
$
1,432,831
Discount Rate Change
$
(401,597
)
$
(228,500
)
$
(220,271
)
$
(227,169
)
$
(467,374
)
Change in Election
—
—
—
—
$
2,960,760
All amounts for 2007 are attributable to changes in value of the
SERP benefits. Assumptions used to calculate these figures are
provided under the table titled “2009 Pension
Benefits.” The changes in the SERP benefit value during
2007 were impacted mainly by: (i) the passage of time which
reflects another year of pay and service, (ii) the discount
rate changing from 5.75% to 6.00%, which resulted in a decrease
in the value and (iii) the use of the named executive
officers’ actual elections compared to 2006 when benefits
were valued assuming a 50% probability of electing a lump sum
and a 50% probability of electing an annuity. All named
executive officers elected a lump sum payment at retirement,
with the exception of Mr. Bovender, who elected an annuity.
The impact of these events on the SERP benefit values was:
Bracken
Johnson
Wallace
Hazen
Bovender
Passage of Time
$
399,630
$
510,118
$
549,404
$
266,066
$
(966,974
)
Discount Rate Change
$
(351,603
)
$
(145,992
)
$
(165,945
)
$
(186,325
)
$
(542,195
)
Actual Election
$
542,343
$
145,315
$
292,652
$
179,046
$
(1,322,788
)
(4)
2009 amounts generally consist of:
•
Matching Company contributions to our 401(k) Plan as set forth
below.
Bracken
Johnson
Wallace
Hazen
Rutledge
Bovender
HCA 401(k) matching contribution
$
16,500
$
16,500
$
16,500
$
16,499
$
16,500
$
16,500
•
Personal use of corporate aircraft. In 2009,
Messrs. Bracken, Johnson and Bovender were allowed personal
use of Company aircraft with an estimated incremental cost of
$5,025, $1,129 and $13,141, respectively, to the Company.
Ms. Wallace and Messrs. Hazen and Rutledge did not
have any personal travel on Company aircraft in 2009. We
calculate the aggregate incremental cost of the personal use of
Company aircraft based on a methodology that includes the
average aggregate cost, on a per nautical mile basis, of
variable expenses incurred in connection with personal plane
usage, including trip-related maintenance, landing fees, fuel,
crew hotels and meals, on-board catering, trip-related hangar
and parking costs and other variable costs. Because our aircraft
are used primarily for business travel, our incremental cost
methodology does not include fixed costs of owning and operating
aircraft that do not change based on usage. We grossed up the
income attributed to Mr. Bracken with respect to certain
trips on Company aircraft. The additional income attributed to
him as a result of gross ups was $594. In addition, we will pay
the expenses of our executives’ spouses associated with
travel to
and/or
attendance at business related events at which spouse attendance
is appropriate. We paid approximately $2,477 and $13,327 for
travel
and/or other
expenses incurred by Messrs. Bracken’s and
Bovender’s wives, respectively, for such business related
events, and additional income of $891 and $4,793 was attributed
to Messrs. Bracken and Bovender, respectively, as a result
of the gross up on such amounts.
•
Additional income of $28,638 was attributed to Mr. Bovender
for gifts received from the Company in connection with his
retirement.
2008 amounts consist of:
•
Company contributions to our former Retirement Plan and matching
Company contributions to our 401(k) Plan as set forth below.
Effective January 1, 2008, participants in the SERP are no
longer eligible for Restoration Plan contributions.
•
Personal use of corporate aircraft. In 2008,
Messrs. Bovender, Bracken and Johnson were allowed personal
use of Company aircraft with an estimated incremental cost of
$28,913, $15,233 and $4,546, respectively, to the Company.
Ms. Wallace and Mr. Hazen did not have any personal
travel on Company aircraft in 2008. We calculate the aggregate
incremental cost of the personal use of Company aircraft based
on a methodology that includes the average aggregate cost, on a
per nautical mile basis, of variable expenses incurred in
connection with personal plane usage, including trip-related
maintenance, landing fees, fuel, crew hotels and meals, on-board
catering, trip-related hangar and parking costs and other
variable costs. Because our aircraft are used primarily for
business travel, our incremental cost methodology does not
include fixed costs of owning and operating aircraft that do not
change based on usage. We grossed up the income attributed to
Messrs. Bovender and Bracken with respect to certain trips
on Company aircraft. The additional income attributed to them as
a result of gross ups was $588 and $599, respectively. In
addition, we will pay the expenses of our executives’
spouses associated with travel to
and/or
attendance at business related events at which spouse attendance
is appropriate. We paid approximately $107, $189 and $13,660 for
travel
and/or other
expenses incurred by Messrs. Bovender’s,
Bracken’s and Johnson’s wives, respectively, for such
business related events, and additional income of $62, $109 and
$4,912 was attributed to Messrs. Bovender, Bracken and
Johnson, respectively, as a result of the gross up on such
amounts.
2007 amounts consist of:
•
Company contributions to our former Retirement Plan, matching
Company contributions to our 401(k) Plan and Company accruals
for our Restoration Plan as set forth below.
Bracken
Johnson
Wallace
Hazen
Bovender
HCA Retirement Plan
$
19,388
$
19,388
$
19,388
$
19,388
$
19,388
HCA 401(k) matching contribution
$
3,375
$
3,375
$
3,375
$
3,375
$
2,250
HCA Restoration Plan
$
91,946
$
57,792
$
52,250
$
62,004
$
153,475
•
Personal use of corporate aircraft. In 2007,
Messrs. Bovender and Bracken were allowed personal use of
Company aircraft with an estimated incremental cost of $21,350
and $26,895, respectively, to the Company, calculated as
described above. Ms. Wallace and Mr. Hazen did not
have any personal travel on Company’s aircraft in 2007. We
grossed up the income attributed to Messrs. Bovender and
Bracken with respect to certain trips on Company aircraft. The
additional income attributed to them as a result of gross ups
was $629 and $863, respectively. In addition, we will pay the
travel expenses of our executives’ spouses associated with
travel to business related events at which spouse attendance is
appropriate. We paid approximately $342 for travel by
Mr. Bracken’s wife on a commercial airline and related
expenses for such an event, and additional income of $123 was
attributed to Mr. Bracken as a result of the gross up on
such amount.
The following table provides information with respect to awards
made under our 2006 Plan and
2008-2009
PEP during the 2009 fiscal year.
All Other
Option
Estimated Possible Payouts
Estimated Possible Payouts
Awards:
Exercise or
Under Non-Equity Incentive
Under Equity Incentive
Number of
Base Price
Grant Date
Plan Awards ($)(1)
Plan Awards (#)
Securities
of Option
Fair Value
Grant
Threshold
Target
Maximum
Threshold
Target
Maximum
Underlying
Awards
of Option
Name
Date
($)
($)
($)
(#)
(#)
(#)
Options(2)
($/sh)
Awards
Richard M. Bracken
10/6/2009
—
—
—
—
—
—
315,742
$
102.00
$
3,361,016
Richard M. Bracken
N/A
$
861,250
$
1,722,500
$
3,445,000
—
—
—
—
—
—
R. Milton Johnson
10/6/2009
—
—
—
—
—
—
236,802
$
102.00
$
2,520,714
R. Milton Johnson
N/A
$
340,000
$
680,000
$
1,360,000
—
—
—
—
—
—
Beverly B. Wallace
10/6/2009
—
—
—
—
—
—
93,733
$
102.00
$
997,771
Beverly B. Wallace
N/A
$
231,004
$
462,009
$
924,018
—
—
—
—
—
—
Samuel N. Hazen
10/6/2009
—
—
—
—
—
—
93,733
$
102.00
$
997,771
Samuel N. Hazen
N/A
$
260,267
$
520,534
$
1,041,067
—
—
—
—
—
—
W. Paul Rutledge
10/6/2009
—
—
—
—
—
—
93,733
$
102.00
$
997,771
W. Paul Rutledge
N/A
$
222,754
$
445,509
$
891,017
—
—
—
—
—
—
Jack O. Bovender, Jr.
10/6/2009
—
—
—
—
—
—
138,137
$
102.00
$
1,470,443
Jack O. Bovender, Jr.
N/A
$
250,000
$
500,000
$
1,000,000
—
—
—
—
—
—
(1)
Non-equity incentive awards granted to each of the named
executive officers pursuant to our
2008-2009
PEP for the 2009 fiscal year, as described in more detail under
“— Compensation Discussion and Analysis —
Elements of Compensation — Annual Incentive
Compensation: PEP.” The amounts shown in the
“Threshold” column reflect the threshold payment,
which is 50% of the amount shown in the “Target”
column. The amount shown in the “Maximum” column is
200% of the target amount. Mr. Bovender’s Amended
Employment Agreement set forth his PEP target for the 2009
fiscal year. Pursuant to the terms of the
2008-2009
PEP, the Company exceeded its maximum performance level, as
adjusted, for 2009 with respect to the Company’s EBITDA and
the Central and Western Group EBITDA; therefore, pursuant to the
terms of the
2008-2009
PEP, awards were paid out to the named executive officers, at
the maximum level of 200% of their respective target amounts for
2009. Messrs. Bracken, Johnson, Hazen, Rutledge and
Bovender and Ms. Wallace received $3,445,000, $1,360,000,
$1,041,067, $891,017, $1,000,000 and $924,018, respectively,
under the
2008-2009
Senior Officer PEP for the 2009 fiscal year. Such amounts are
reflected in the “Non-Equity Incentive Plan
Compensation” column of the Summary Compensation Table.
(2)
Stock options awarded under the 2006 Plan, pursuant to the named
executive officers’ respective employment agreements, by
the Compensation Committee as a part of the named executive
officers’ long term equity incentive award. The 2x Time
Options granted in 2009 are structured, pursuant to the named
executive officer’s respective employment agreements, so
that 40% were vested on the grant date to reflect employment
served since the Merger, an additional 20% vested on
November 17, 2009 and an additional 20% will vest on each
of November 17, 2010 and November 17, 2011,
respectively. The terms of these option awards are described in
more detail under “— Compensation Discussion and
Analysis — Elements of Compensation — Long Term
Equity Incentive Awards: Options.” The aggregate grant date
fair value of these option grants in accordance with ASC 718 is
reflected in the “Option Awards” column of the Summary
Compensation Table.
Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table
Total
Compensation
In 2009, 2008 and 2007, total direct compensation, as described
in the Summary Compensation Table, consisted primarily of base
salary, annual PEP awards payable in cash, and, in 2007, long
term stock option grants designed to be one-time grants to cover
at least five years of service and, in 2009, 2x Time Option
grants as set forth in each named executive officer’s
employment agreement to be fully vested on the fifth anniversary
of the Merger. This mix was intended to reflect our philosophy
that a significant portion of an executive’s compensation
should be equity-linked
and/or tied
to our operating performance. In addition, we provided an
opportunity for executives to participate in two supplemental
retirement plans; however, effective January 1, 2008,
participants in the SERP are no longer eligible for Restoration
Plan contributions, although
Restoration Plan accounts will continue to be maintained for
such participants (for additional information concerning the
Restoration Plan, see “— 2009 Nonqualified Deferred
Compensation”).
Options
In January 2007, New Options to purchase common stock of the
Company were granted under the 2006 Plan to members of
management and key employees, including the named executive
officers. The New Options were designed to be long term equity
incentive awards, constituting a one-time stock option grant in
lieu of annual equity grants. The New Options granted in 2007
have a ten year term and are structured so that
1/3
are time vested options (vesting in five equal installments on
the first five anniversaries of the grant date),
1/3 are
EBITDA-based performance vested options and
1/3
are performance options that vest based on investment return to
the Sponsors. The terms of the New Options granted in 2007 are
described in greater detail under “— Compensation
Discussion and Analysis — Elements of Compensation —
Long Term Equity Incentive Awards: Options.” The aggregate
grant date fair value of the New Options granted in 2007 in
accordance with ASC 718 is included under the “Option
Awards” column of the Summary Compensation Table.
In accordance with their employment agreements entered into at
the time of the Merger, as each may have been or may be
subsequently amended, our named executive officers received the
2x Time Options in October 2009 with an exercise price equal to
two times the share price at the Merger (or $102.00). The
Committee allocated the 2x Time Options in consultation with our
Chief Executive Officer based on past executive contributions
and future anticipated impact on Company objectives. The 2x Time
Options have a ten year term and are structured so that forty
percent were vested upon grant, an additional twenty percent of
the options vested on November 17, 2009, and twenty percent
of the options granted to each recipient will vest on
November 17, 2010 and November 17, 2011, respectively.
Thereby, a portion of the grant was vested on the date of the
grant based on employment served since the Merger. The terms of
the 2x Time Options are otherwise consistent with other time
vesting options granted under the 2006 Plan. The terms of the 2x
Time Options granted in 2009 are described in greater detail
under “— Compensation Discussion and
Analysis — Elements of Compensation — Long
Term Equity Incentive Awards: Options.” The aggregate grant
date fair value of the 2x Time Options granted in 2009 in
accordance with ASC 718 is included under the “Option
Awards” column of the Summary Compensation Table.
As a result of the Merger, all unvested awards under the HCA
2005 Equity Incentive Plan (the “2005 Plan”) (and all
predecessor equity incentive plans) vested in November 2006.
Generally, all outstanding options under the 2005 Plan (and any
predecessor plans) were cancelled and converted into the right
to receive a cash payment equal to the number of shares of
common stock underlying the option multiplied by the amount by
which the Merger consideration of $51.00 per share exceeded the
exercise price for the options (without interest and less any
applicable withholding taxes). However, certain members of
management, including the named executive officers, were given
the opportunity to convert options held by them prior to
consummation of the Merger into options to purchase shares of
common stock of the surviving corporation (“Rollover
Options”). Immediately after the consummation of the
Merger, all Rollover Options (other than those with an exercise
price below $12.75) were adjusted so that they retained the same
“spread value” (as defined below) as immediately prior
to the Merger, but the new per share exercise price for all
Rollover Options would be $12.75. The term “spread
value” means the difference between (x) the aggregate
fair market value of the common stock (determined using the
Merger consideration of $51.00 per share) subject to the
outstanding options held by the participant immediately prior to
the Merger that became Rollover Options, and (y) the
aggregate exercise price of those options.
New Options, 2x Time Options and Rollover Options held by the
named executive officers are described in the Outstanding Equity
Awards at 2009 Fiscal Year-End Table.
Employment
Agreements
In connection with the Merger, on November 16, 2006,
Hercules Holding entered into substantially similar employment
agreements with each of the named executive officers and certain
other executives, which agreements were shortly thereafter
assumed by the Company and which agreements govern the terms of
each
executive’s employment. However, in light of
Mr. Bovender’s retirement from the positions of Chief
Executive Officer and Chairman, effective December 31, 2008
and December 15, 2009, respectively, the Company entered
into an Amended and Restated Employment Agreement with
Mr. Bovender, effective December 31, 2008, the terms
of which are described below. The Company also entered into an
amendment to Mr. Bracken’s employment agreement,
effective January 1, 2009, to reflect his appointment to
the position of Chief Executive Officer.
Executive
Employment Agreements (Other than
Mr. Bovender’s)
The term of employment under each of these agreements is
indefinite, and they are terminable by either party at any time;
provided that an executive must give no less than 90 days
notice prior to a resignation.
Each employment agreement sets forth the executive’s annual
base salary, which will be subject to discretionary annual
increases upon review by the Board of Directors, and states that
the executive will be eligible to earn an annual bonus as a
percentage of salary with respect to each fiscal year, based
upon the extent to which annual performance targets established
by the Board of Directors are achieved. The employment
agreements committed us to provide each executive with annual
bonus opportunities in 2008 that were consistent with those
applicable to the 2007 fiscal year, unless doing so would be
adverse to our interests or the interests of our stockholders,
and for later fiscal years, the agreements provide that the
Board of Directors will set bonus opportunities in consultation
with our Chief Executive Officer. With respect to the 2009 and
2008 fiscal years and the 2007 fiscal year, each executive was
eligible to earn under the
2008-2009
PEP and the
2007-2008
PEP, respectively, (i) a target bonus, if performance
targets were met; (ii) a specified percentage of the target
bonus, if “threshold” levels of performance were
achieved but performance targets were not met; or (iii) a
multiple of the target bonus if “maximum” performance
goals were achieved, with the annual bonus amount being
interpolated, in the sole discretion of the Board of Directors,
for performance results that exceeded “threshold”
levels but do not meet or exceed “maximum” levels. The
annual bonus opportunities for 2009 were set forth in the
2008-2009
PEP, as described in more detail under “Compensation
Discussion and Analysis — Annual Incentive
Compensation: PEP.” As described above, the Company
exceeded its maximum performance level, as adjusted, for 2009
with respect to the Company’s EBITDA and the Central and
Western Group EBITDA; therefore, pursuant to the terms of the
2008-2009
PEP, awards were paid out to the named executive officers, at
the maximum level of 200% of their respective target amounts for
2009. As described above, awards under the 2008 PEP were paid
out to the named executive officers at approximately 68.2% of
each such officer’s respective target amount, with the
exception of Mr. Hazen, whose award was paid out at
approximately 67.4% of the target amount. Awards under the 2007
PEP were paid out to the named executive officers, at the
maximum level of 200% of their respective target amounts, with
the exception of Mr. Hazen, whose award was paid out at
175.6% of his target amount. Each employment agreement also sets
forth the number of options that the executive received pursuant
to the 2006 Plan as a percentage of the total equity initially
made available for grants pursuant to the 2006 Plan. Such option
awards, the New Options, were made January 30, 2007 and are
described above under “— Options.”
In each of the employment agreements with the named executive
officers, we also committed to grant, among the named executive
officers and certain other executives, the 2x Time Options,
which were granted, as described above, on October 6, 2009.
Additionally, pursuant to the employment agreements, we agree to
indemnify each executive against any adverse tax consequences
(including, without limitation, under Section 409A and 4999
of the Internal Revenue Code), if any, that result from the
adjustment by us of stock options held by the executive in
connection with Merger or the future payment of any
extraordinary cash dividends.
Pursuant to each employment agreement, if an executive’s
employment terminates due to death or disability, the executive
would be entitled to receive (i) any base salary and any
bonus that is earned and unpaid through the date of termination;
(ii) reimbursement of any unreimbursed business expenses
properly incurred by the executive; (iii) such employee
benefits, if any, as to which the executive may be entitled
under our employee benefit plans (the payments and benefits
described in (i) through (iii) being “accrued
rights”); and (iv) a pro rata portion of any annual
bonus that the executive would have been entitled to receive
pursuant to the employment agreement based upon our actual
results for the year of termination (with such proration
based on the percentage of the fiscal year that shall have
elapsed through the date of termination of employment, payable
to the executive when the annual bonus would have been otherwise
payable (the “pro rata bonus”)).
If an executive’s employment is terminated by us without
“cause” (as defined below) or by the executive for
“good reason” (as defined below) (each a
“qualifying termination”), the executive would be
(i) entitled to the accrued rights; (ii) subject to
compliance with certain confidentiality, non-competition and
non-solicitation covenants contained in his or her employment
agreement and execution of a general release of claims on behalf
of the Company, an amount equal to the product of (x) two
(three in the case of Richard M. Bracken and R. Milton Johnson)
and (y) the sum of (A) the executive’s base
salary and (B) annual bonus paid or payable in respect of
the fiscal year immediately preceding the fiscal year in which
termination occurs, payable over a two-year period;
(iii) entitled to the pro rata bonus; and
(iv) entitled to continued coverage under our group health
plans during the period over which the cash severance described
in clause (ii) is paid. The executive’s vested New
Options and 2x Time Options would also remain exercisable until
the first anniversary of the termination of the executive’s
employment. However, in lieu of receiving the payments and
benefits described in (ii), (iii) and (iv) immediately
above, the executive may instead elect to have his or her
covenants not to compete waived by us. The same severance
applies regardless of whether the termination was in connection
with a change in control of the Company.
“Cause”is defined as an executive’s
(i) willful and continued failure to perform his material
duties to the Company which continues beyond 10 business days
after a written demand for substantial performance is delivered;
(ii) willful or intentional engagement in material
misconduct that causes material and demonstrable injury,
monetarily or otherwise, to the Company or the Sponsors;
(iii) conviction of, or a plea of nolo contendere
to, a crime constituting a felony, or a misdemeanor for
which a sentence of more than six months’ imprisonment is
imposed; or (iv) willful and material breach of his
covenants under the employment agreement which continues beyond
the designated cure period or of the agreements relating to the
new equity. “Good Reason” is defined as (i) a
reduction in the executive’s base salary (other than a
general reduction that affects all similarly situated employees
in substantially the same proportions which is implemented by
the Board in good faith after consultation with the chief
executive officer and chief operating officer), a reduction in
the executive’s annual incentive compensation opportunity,
or the reduction of benefits payable to the executive under the
SERP; (ii) a substantial diminution in the executive’s
title, duties and responsibilities; or (iii) a transfer of
the executive’s primary workplace to a location that is
more than 20 miles from his or her current workplace (other
than, in the case of (i) and (ii), any isolated,
insubstantial and inadvertent failure that is not in bad faith
and is cured within 10 business days after the executive’s
written notice to the Company).
In the event of an executive’s termination of employment
that is not a qualifying termination or a termination due to
death or disability, he or she will only be entitled to the
“accrued rights” (as defined above).
Additional information with respect to potential payments to the
named executive officers pursuant to their employment agreements
and the 2006 Plan is contained in “— Potential
Payments Upon Termination or Change in Control.”
Mr. Bovender’s
Employment Agreement
The Company entered into the Amended Employment Agreement with
Jack O. Bovender, Jr. on October 27, 2008, which
became effective on December 31, 2008. Pursuant to the
terms of the Amended Employment Agreement, Mr. Bovender was
employed by HCA Management Services, L.P., an affiliate of the
Company, and served as executive Chairman of the Company for a
period commencing December 31, 2008 and ending
December 15, 2009 (the “Employment Term”).
The Amended Employment Agreement provided that Mr. Bovender
receive a base salary (i) at the monthly rate of $135,000
for the first three months of the Employment Term and
(ii) at the monthly rate of $86,957 for the next eight and
one-half months of the Employment Term
(“Mr. Bovender’s Base Salary”).
Mr. Bovender was also entitled to the full amount of any
annual bonus earned, but unpaid, as of the effective date of the
Amended Employment Agreement for the year ended
December 31, 2008 under the Company’s
2008-2009
PEP. For calendar year 2009, Mr. Bovender was eligible to
earn a bonus under the
2008-2009
PEP with a “target bonus” of $500,000.
Mr. Bovender had an additional 2009 bonus opportunity of up
to $250,000 based upon his contributions to certain legislative
initiatives as determined by the Committee
(“Mr. Bovender’s Additional Bonus”).
Pursuant to the terms of the
2008-2009
PEP, the Company exceeded its maximum performance level, as
adjusted, for 2009 with respect to the Company’s EBITDA;
therefore, pursuant to the terms of the
2008-2009
PEP, Mr. Bovender’s award for the 2009 fiscal year was
paid out at the maximum level of 200% of his target amount.
Mr. Bovender was also awarded, pursuant to his Amended
Employment Agreement, an additional one-time bonus of $250,000
based upon his contributions to certain legislative initiatives
as determined by the Committee. The Amended Employment Agreement
generally provides for the provision of or reimbursement of
expenses associated with office space, shared clerical support
and office equipment until Mr. Bovender reaches age 70.
The terms of Mr. Bovender’s employment agreement with
respect to termination of his employment are described in detail
under “Compensation Discussion and Analysis —
Severance and Change in Control Agreements —
Mr. Bovender’s Continuing Severance Benefits.”
Additional information with respect to payments to
Mr. Bovender pursuant to his Amended Employment Agreement
and the 2006 Plan is contained in “— Potential
Payments Upon Termination or Change in Control.”
Outstanding
Equity Awards at 2009 Fiscal Year-End
The following table includes certain information with respect to
options held by the named executive officers as of
December 31, 2009.
Reflects Rollover Options, as further described under
“— Narrative Disclosure to Summary Compensation
Table and 2009 Grants of Plan-Based Awards Table —
Options,” the 40% of the named executive officer’s
time vested New Options, comprised of the 20% that vested as of
January 30, 2008 and January 30, 2009, respectively,
the 60% of the named executive officer’s EBITDA-based
performance vested New Options, comprised of the 20% that vested
as of December 31, 2007, December 31, 2008 and
December 31, 2009, respectively (upon the Committee’s
determination that the Company achieved the 2007, 2008 and 2009
EBITDA performance targets under the option awards, as adjusted,
as described in more detail under “— Compensation
Discussion and Analysis — Elements of
Compensation — Long Term Equity Incentive Awards:
Options”) and the 60% of the named executive officer’s
vested 2x Time Options, comprised of the 40% that were vested on
the grant date and the 20% that vested on November 17, 2009.
(2)
Reflects New Options awarded in January 2007 under the 2006 Plan
by the Compensation Committee as part of the named executive
officer’s long term equity incentive award. The New Options
granted in 2007 are structured so that
1/3
are time vested options (vesting in five equal installments on
the first five anniversaries of the January 30, 2007 grant
date),
1/3
are EBITDA-based performance vested options (vesting in equal
increments of 20% at the end of fiscal years 2007, 2008, 2009,
2010 and 2011 if certain annual EBITDA performance targets are
achieved, subject to “catch up” vesting, such that,
options that were eligible to vest but failed to vest due to our
failure to achieve prior EBITDA targets will vest if at the end
of any subsequent year or at the end of fiscal year 2012, the
cumulative total EBITDA earned in all prior years exceeds the
cumulative EBITDA target at the end of such fiscal year) and
1/3
are performance options that vest based on investment return to
the Sponsors (vesting with respect to 10% of the common stock
subject to such options at the end of fiscal years 2007, 2008,
2009, 2010 and 2011 if the Investor Return is at least $102.00
and with respect to an additional 10% at the end of fiscal years
2007, 2008, 2009, 2010 and 2011 if the Investor Return is at
least $127.50, subject to “catch up” vesting if the
relevant Investor Return is achieved at any time occurring prior
to January 30, 2017, so long as the named executive officer
remains employed by the Company). The time vested options are
reflected in the “Number of Securities Underlying
Unexercised Options Unexercisable” column (with the
exception of the 40% of the time vested options that were vested
as of December 31, 2009, which are reflected in the
“Number of Securities Underlying Unexercised Options
Exercisable” column), and the EBITDA-based performance
vested
options and investment return performance vested options are
both reflected in the “Equity Incentive Plan Awards: Number
of Securities Underlying Unexercised Unearned Options”
column (with the exception of the 60% of the EBITDA-based
performance vested options that were vested as of
December 31, 2009, which are reflected in the “Number
of Securities Underlying Unexercised Options Exercisable”
column). The terms of these option awards are described in more
detail under “— Narrative Disclosure to Summary
Compensation Table and 2009 Grants of Plan-Based Awards
Table — Options.”
(3)
Reflects 2x Time Options awarded in October 2009 under the 2006
Plan by the Compensation Committee, pursuant to the named
executive officer’s employment agreement, as part of the
named executive officer’s long term equity incentive award.
The 2x Time Options are structured, pursuant to the named
executive officer’s respective employment agreements, so
that 40% were vested on the grant date, an additional 20% vested
on November 17, 2009 and an additional 20% will vest on
November 17, 2010 and November 17, 2011, respectively.
The 60% of the 2x Time Options that were vested as of
December 31, 2009 are reflected in the “Number of
Securities Underlying Unexercised Options Exercisable”
column, and the 40% of the 2x Time Options that were not vested
as of December 31, 2009 are reflected in the “Number
of Securities Underlying Unexercised Options Unexercisable”
column. The terms of these option awards are described in more
detail under “— Narrative Disclosure to Summary
Compensation Table and 2009 Grants of Plan-Based Awards
Table — Options.”
(4)
Immediately after the consummation of the Merger, all Rollover
Options (other than those with an exercise price below $12.75)
were adjusted such that they retained the same “spread
value” (as defined below) as immediately prior to the
Merger, but the new per share exercise price for all Rollover
Options would be $12.75. The term “spread value” means
the difference between (x) the aggregate fair market value
of the common stock (determined using the Merger consideration
of $51.00 per share) subject to the outstanding options held by
the participant immediately prior to the Merger that became
Rollover Options, and (y) the aggregate exercise price of
those options.
(5)
The exercise price for the New Options granted under the 2006
Plan to the named executive officers on January 30, 2007
was equal to the fair value of our common stock on the date of
the grant, as determined by our Board of Directors in
consultation with our Chief Executive Officer and other
advisors, pursuant to the terms of the 2006 Plan.
(6)
The exercise price for the 2x Time Options granted under the
2006 Plan to the named executive officers on October 6,2009 was $102.00, pursuant to the named executive officers’
employment agreements.
Option
Exercises and Stock Vested in 2009
The following table includes certain information with respect to
options exercised by the named executive officers during the
fiscal year ended December 31, 2009.
Option Awards
Number of Shares
Acquired on
Value Realized on
Name
Exercise(1)
Exercise ($)(2)
Jack O. Bovender, Jr.
188,340
$
21,243,911
(1)
Mr. Bovender elected a cashless exercise of 360,494 stock
options resulting in net shares realized of 188,340.
(2)
Represents the difference between the exercise price of the
options and the fair market value of the common stock on the
date of exercise, as determined by our Board of Directors in
consultation with our Chief Executive Officer and other advisors.
Our SERP is intended to qualify as a “top-hat” plan
designed to benefit a select group of management or highly
compensated employees. There are no other defined benefit plans
that provide for payments or benefits to any of the named
executive officers. Information about benefits provided by the
SERP is as follows:
Number of Years
Present Value of
Payments During
Name
Plan Name
Credited Service
Accumulated Benefit
Last Fiscal Year
Richard M. Bracken
SERP
28
$
14,303,696
—
R. Milton Johnson
SERP
27
$
6,353,324
—
Beverly B. Wallace
SERP
26
$
8,696,543
—
Samuel N. Hazen
SERP
27
$
5,330,983
—
W. Paul Rutledge
SERP
28
$
5,504,026
—
Jack O. Bovender, Jr.
SERP
29
—
$
26,300,528
Mr. Bovender retired in 2009, and he received a SERP
payment in April 2009. Mr. Bracken and Ms. Wallace are
eligible for early retirement. The remaining named executive
officers have not satisfied the eligibility requirements for
normal or early retirement. All of the named executive officers
are 100% vested in their accrued SERP benefit.
Plan
Provisions
In the event the employee’s “accrued benefits under
the Company’s Plans” (computed using “actuarial
factors”) are insufficient to provide the “life
annuity amount,” the SERP will provide a benefit equal to
the amount of the shortfall. Benefits can be paid in the form of
an annuity or a lump sum. The lump sum is calculated by
converting the annuity benefit using the “actuarial
factors.” All benefits with a present value not exceeding
one million dollars are paid as a lump sum regardless of the
election made.
Normal retirement eligibility requires attainment of age 60
for employees who were participants at the time of the change in
control which occurred as a result of the Merger, including all
of the named executive officers. Early retirement eligibility
requires age 55 with 20 or more years of service. The
service requirement for early retirement is waived for employees
participating in the SERP at the time of its inception in 2001,
including all of the named executive officers. The “life
annuity amount” payable to a participant who takes early
retirement is reduced by three percent for each full year or
portion thereof that the participant retires prior to normal
retirement age.
The “life annuity amount” is the annual benefit
payable as a life annuity to a participant upon normal
retirement. It is equal to the participant’s “accrual
rate” multiplied by the product of the participant’s
“years of service” times the participant’s
“pay average.” The SERP benefit for each year equals
the life annuity amount less the annual life annuity amount
produced by the employee’s “accrued benefit under the
Company’s Plans.”
The “accrual rate” is a percentage assigned to each
participant, and is either 2.2% or 2.4%. All of the named
executive officers are assigned a percentage of 2.4%.
A participant is credited with a “year of service” for
each calendar year that the participant performs
1,000 hours of service for HCA or one of our subsidiaries,
or for each year the participant is otherwise credited by us,
subject to a maximum credit of 25 years of service.
A participant’s “pay average” is an amount equal
to one-fifth of the sum of the compensation during the period of
60 consecutive months for which total compensation is greatest
within the 120 consecutive month period immediately preceding
the participant’s retirement. For purposes of this
calculation, the participant’s compensation includes base
compensation, payments under the PEP, and bonuses paid prior to
the establishment of the PEP.
The “accrued benefits under the Company’s Plans”
for an employee equals the sum of the employer-funded benefits
accrued under the former HCA Retirement Plan, the HCA 401(k)
Plan and any other tax-qualified plan maintained by us or one of
our subsidiaries, the income/loss adjusted amount distributed to
the
participant under any of these plans, the account credit and the
income/loss adjusted amount distributed to the participant under
the Restoration Plan and any other nonqualified retirement plans
sponsored by us or one of our subsidiaries.
The “actuarial factors” include (a) interest at
the long term Applicable Federal Rate under Section 1274(d)
of the Code or any successor thereto as of the first day of
November preceding the plan year in or for which a benefit
amount is calculated, and (b) mortality being the
applicable Section 417(e)(3) of the Code mortality table,
as specified and changed by the U.S. Treasury Department.
Credited service does not include any amount other than service
with us or one of our subsidiaries.
Assumptions
The Present Value of Accumulated Benefit is based on a
measurement date of December 31, 2009.
The assumption is made that there is no probability of
pre-retirement death or termination. Retirement age is assumed
to be the Normal Retirement Age as defined in the SERP for all
named executive officers, as adjusted by the provisions relating
to change in control, or age 60. Age 60 also
represents the earliest date the named executive officers are
eligible to receive an unreduced benefit.
All other assumptions used in the calculations are the same as
those used for the valuation of the plan liabilities in this
prospectus.
Supplemental
Information
In the event a participant renders service to another health
care organization within five years following retirement or
termination of employment, he or she forfeits his rights to any
further payment, and must repay any benefits already paid. This
non-competition provision is subject to waiver by the Committee
with respect to the named executive officers.
2009
Nonqualified Deferred Compensation
Amounts shown in the table are attributable to the HCA
Restoration Plan, an unfunded, nonqualified defined contribution
plan designed to restore benefits under the HCA 401(k) Plan
based on compensation in excess of the Code
Section 401(a)(17) compensation limit ($245,000 in 2009).
Executive
Registrant
Aggregate
Aggregate
Contributions
Contributions
Earnings
Aggregate
Balance
in Last
in Last
in Last
Withdrawals/
at Last
Name
Fiscal Year
Fiscal Year
Fiscal Year
Distributions
Fiscal Year End
Richard M. Bracken
—
—
$
267,148
—
$
1,418,398
R. Milton Johnson
—
—
$
109,549
—
$
581,639
Beverly B. Wallace
—
—
$
90,252
—
$
479,186
Samuel N. Hazen
—
—
$
146,239
—
$
776,440
W. Paul Rutledge
—
—
$
80,356
—
$
426,642
Jack O. Bovender, Jr.
—
—
$
498,306
—
$
2,692,051
The following amounts from the column titled “Aggregate
Balance at Last Fiscal Year” have been reported in the
Summary Compensation Tables in prior years:
Until 2008, hypothetical accounts for each participant were
credited each year with a contribution designed to restore the
HCA Retirement Plan based on compensation in excess of the Code
Section 401(a)(17) compensation limit ($245,000 in 2009),
based on years of service. Effective January 1, 2008,
participants in the SERP are no longer eligible for Restoration
Plan contributions. However, the hypothetical accounts as of
January 1, 2008 will continue to be maintained and will be
increased or decreased with hypothetical investment returns
based on the actual investment return of the Mix B fund of the
HCA 401(k) Plan.
No employee deferrals are allowed under this or any other
nonqualified deferred compensation plan.
Prior to January 1, 2010, eligible employees make a one
time election prior to participation (or prior to
December 31, 2006, if earlier) regarding the form of
distribution of the benefit. Participants chose between a lump
sum and five or ten-year installments. Effective January 1,2010, all distributions are paid in the form of a lump-sum
distribution unless the participant had submitted an installment
payment election prior to April 30, 2009. Distributions are
paid (or begin) during the July following the year of
termination of employment or retirement. All balances not
exceeding $500,000 are automatically paid as a lump sum.
Supplemental
Information
In the event a participant renders service to another health
care organization within five years following retirement or
termination of employment, he or she forfeits the rights to any
further payment, and must repay any payments already made. This
non-competition provision is subject to waiver by the Committee
with respect to the named executive officers.
Potential
Payments Upon Termination or Change in Control
The following tables show the estimated amount of potential cash
severance payable to each of the named executive officers
(except for Mr. Bovender) (based upon his or her 2009 base
salary and PEP payment received in 2009 for 2008 performance),
as well as the estimated value of continuing benefits, based on
compensation and benefit levels in effect on December 31,2009, assuming the executive’s employment terminates or the
Company undergoes a Change in Control (as defined in the 2006
Plan and set forth above under “— Narrative Disclosure
to Summary Compensation Table and 2009 Grants of Plan-Based
Awards Table — Options”) effective
December 31, 2009. Due to the numerous factors involved in
estimating these amounts, the actual value of benefits and
amounts to be paid can only be determined upon an
executive’s termination of employment. Mr. Bovender
retired from the Company on December 15, 2009, and the
“Normal Retirement” column of the table relating to
Mr. Bovender shows the estimated value of continuing
benefits, as well as, where noted, actual amounts paid to
Mr. Bovender under his Amended Employment Agreement in
connection with his retirement. As noted above, in the event a
named executive officer breaches or violates those certain
confidentiality, non-competition
and/or
non-solicitation covenants contained in his or her employment
agreement, the SERP or the HCA Restoration Plan, certain of the
payments described below may be subject to forfeiture
and/or
repayment. See “— Narrative Disclosure to Summary
Compensation Table and 2009 Grants of Plan-Based Awards
Table — Executive Employment Agreements,”“— 2009 Pension Benefits — Supplemental
Information,” and “2009 Nonqualified Deferred
Compensation — Supplemental Information.”
Richard
M. Bracken
Involuntary
Voluntary
Termination
Termination
Voluntary
Early
Normal
Without
Termination
for Good
Change in
Termination
Retirement
Retirement
Cause
for Cause
Reason
Disability
Death
Control
Cash Severance(1)
—
—
—
$
6,058,110
—
$
6,058,110
—
—
—
Non-Equity Incentive Bonus(2)
$
3,445,000
$
3,445,000
$
3,445,000
$
3,445,000
—
$
3,445,000
$
3,445,000
$
3,445,000
$
3,445,000
Unvested Stock Options(3)
—
—
—
—
—
—
—
—
$
8,622,517
SERP(4)
$
15,493,294
$
15,493,294
—
$
15,493,294
$
15,493,294
$
15,493,294
$
15,493,294
$
13,722,318
—
Retirement Plans(5)
$
2,522,553
$
2,522,553
$
2,522,553
$
2,522,553
$
2,522,553
$
2,522,553
$
2,522,553
$
2,522,553
—
Health and Welfare Benefits
—
—
—
—
—
—
—
—
—
Disability Income(6)
—
—
—
—
—
—
$
1,819,299
—
—
Life Insurance Benefits(7)
—
—
—
—
—
—
—
$
1,401,000
—
Accrued Vacation Pay
$
183,462
$
183,462
$
183,462
$
183,462
$
183,462
$
183,462
$
183,462
$
183,462
—
Total
$
21,644,309
$
21,644,309
$
6,151,015
$
27,702,419
$
18,199,309
$
27,702,419
$
23,463,608
$
21,274,333
$
12,067,517
(1)
Represents amounts Mr. Bracken would be entitled to receive
pursuant to his employment agreement. See “— Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table — Executive Employment
Agreements.”
(2)
Represents the amount Mr. Bracken would be entitled to
receive for the 2009 fiscal year pursuant to the
2008-2009
PEP and his employment agreement, which amount is also included
in the “Non-Equity Incentive Plan Compensation” column
of the Summary Compensation Table. See “— Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table — Executive Employment
Agreements.”
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Mr. Bracken’s unvested New Options and the fair value
price of our common stock on December 31, 2009 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($87.99 per share). For the purposes of this calculation, it is
assumed that the Company achieved an Investor Return of at least
2.5 times the Base Price of $51.00 at the end of the 2009 fiscal
year. The $102.00 per share exercise price of 2x Time Options
was greater than the December 31, 2009 fair value price;
therefore, this value does not include Mr. Bracken’s
unvested 2x Time Options.
(4)
Reflects the actual lump sum value of the SERP based on the 2009
interest rate of 4.24%.
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Mr. Bracken would be
entitled. The value includes $1,104,155 from the HCA 401(k) Plan
(which represents the value of the Company’s contributions)
and $1,418,398 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Mr. Bracken would be entitled to receive
under our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
age 66, and monthly benefits of $10,000 per month from our
Supplemental Insurance Program payable after the six-month
elimination period to age 65.
(7)
No post-retirement or post-termination life insurance or death
benefits are provided to Mr. Bracken.
Mr. Bracken’s payment upon death while actively
employed includes $1,326,000 of Company-paid life insurance and
$75,000 from the Executive Death Benefit Plan.
R. Milton
Johnson
Involuntary
Voluntary
Termination
Termination
Voluntary
Early
Normal
Without
Termination
for Good
Change in
Termination
Retirement
Retirement
Cause
for Cause
Reason
Disability
Death
Control
Cash Severance(1)
—
—
—
$
3,616,473
—
$
3,616,473
—
—
—
Non-Equity Incentive Bonus(2)
$
1,360,000
$
1,360,000
$
1,360,000
$
1,360,000
—
$
1,360,000
$
1,360,000
$
1,360,000
$
1,360,000
Unvested Stock Options(3)
—
—
—
—
—
—
—
—
$
6,158,946
SERP(4)
$
7,685,014
—
—
$
7,685,014
$
7,685,014
$
7,685,014
$
7,685,014
$
7,162,791
—
Retirement Plans(5)
$
1,520,116
$
1,520,116
$
1,520,116
$
1,520,116
$
1,520,116
$
1,520,116
$
1,520,116
$
1,520,116
—
Health and Welfare Benefits
—
—
—
—
—
—
—
—
—
Disability Income(6)
—
—
—
—
—
—
$
2,077,246
—
—
Life Insurance Benefits(7)
—
—
—
—
—
—
—
$
851,000
—
Accrued Vacation Pay
$
117,692
$
117,692
$
117,692
$
117,692
$
117,692
$
117,692
$
117,692
$
117,692
—
Total
$
10,682,822
$
2,997,808
$
2,997,808
$
14,299,295
$
9,322,822
$
14,299,295
$
12,760,068
$
11,011,599
$
7,518,946
(1)
Represents amounts Mr. Johnson would be entitled to receive
pursuant to his employment agreement. See “— Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table — Executive Employment
Agreements.”
(2)
Represents the amount Mr. Johnson would be entitled to
receive for the 2009 fiscal year pursuant to the
2008-2009
PEP and his employment agreement, which amount is also included
in the “Non-Equity Incentive Plan Compensation” column
of the Summary Compensation Table. See “— Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table — Executive Employment
Agreements.”
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Mr. Johnson’s unvested New Options and the fair value
price of our common stock on December 31, 2009 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($87.99 per share). For the purposes of this calculation,
it is assumed that the Company achieved an Investor Return of at
least 2.5 times the Base Price of $51.00 at the end of the 2009
fiscal year. The $102.00 per share exercise price of 2x Time
Options was greater than the December 31, 2009 fair value
price; therefore, this value does not include
Mr. Johnson’s unvested 2x Time Options.
(4)
Reflects the actual lump sum value of the SERP based on the 2009
interest rate of 4.24%.
(5)
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Mr. Johnson would be
entitled. The value includes $938,477 from the HCA 401(k) Plan
(which represents the value of the Company’s contributions)
and $581,639 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Mr. Johnson would be entitled to receive
under our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
age 66 and 4 months, and monthly benefits of $10,000
per month from our Supplemental Insurance Program payable after
the six-month elimination period to age 65.
No post-retirement or post-termination life insurance or death
benefits are provided to Mr. Johnson.
Mr. Johnson’s payment upon death while actively
employed with the Company includes $851,000 of Company-paid life
insurance.
Beverly
B. Wallace
Involuntary
Voluntary
Termination
Termination
Voluntary
Early
Normal
Without
Termination
for Good
Change in
Termination
Retirement
Retirement
Cause
for Cause
Reason
Disability
Death
Control
Cash Severance(1)
—
—
—
$
2,030,010
—
$
2,030,010
—
—
—
Non-Equity Incentive Bonus(2)
$
924,018
$
924,018
$
924,018
$
924,018
—
$
924,018
$
924,018
$
924,018
$
924,018
Unvested Stock Options(3)
—
—
—
—
—
—
—
—
$
3,448,985
SERP(4)
$
8,658,884
$
8,658,884
—
$
8,658,884
$
8,658,884
$
8,658,884
$
8,658,884
$
7,794,032
—
Retirement Plans(5)
$
938,279
$
938,279
$
938,279
$
938,279
$
938,279
$
938,279
$
938,279
$
938,279
—
Health and Welfare Benefits
—
—
—
—
—
—
—
—
—
Disability Income(6)
—
—
—
—
—
—
$
1,354,785
—
—
Life Insurance Benefits(7)
—
—
—
—
—
—
—
$
701,000
—
Accrued Vacation Pay
$
96,925
$
96,925
$
96,925
$
96,925
$
96,925
$
96,925
$
96,925
$
96,925
—
Total
$
10,618,106
$
10,618,106
$
1,959,222
$
12,648,116
$
9,694,088
$
12,648,116
$
11,972,891
$
10,454,254
$
4,373,003
(1)
Represents amounts Ms. Wallace would be entitled to receive
pursuant to her employment agreement. See “Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table — Executive Employment
Agreements.”
(2)
Represents the amount Ms. Wallace would be entitled to
receive for the 2009 fiscal year pursuant to the
2008-2009
PEP and her employment agreement, which amount is also included
in the “Non-Equity Incentive Plan Compensation” column
of the Summary Compensation Table. See “— Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table — Executive Employment
Agreements.”
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Ms. Wallace’s unvested New Options and the fair value
price of our common stock on December 31, 2009 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($87.99 per share). For the purposes of this calculation, it is
assumed that the Company achieved an Investor Return of at least
2.5 times the Base Price of $51.00 at the end of the 2009 fiscal
year. The $102.00 per share exercise price of 2x Time Options
was greater than the December 31, 2009 fair value price;
therefore, this value does not include Ms. Wallace’s
unvested 2x Time Options.
(4)
Reflects the actual lump sum value of the SERP based on the 2009
interest rate of 4.24%.
(5)
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Ms. Wallace would be
entitled. The value includes $459,093 from the HCA 401(k) Plan
(which represents the value of the Company’s contributions)
and $479,186 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Ms. Wallace would be entitled to receive
under our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
age 66, and monthly benefits of $10,000 per month from our
Supplemental Insurance Program payable after the six-month
elimination period to age 65.
(7)
No post-retirement or post-termination life insurance or death
benefits are provided to Ms. Wallace.
Ms. Wallace’s payment upon death while actively
employed includes $701,000 of Company-paid life insurance.
Represents amounts Mr. Hazen would be entitled to receive
pursuant to his employment agreement. See “—Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table — Executive Employment
Agreements.”
(2)
Represents the amount Mr. Hazen would be entitled to
receive for the 2009 fiscal year pursuant to the
2008-2009
PEP and his employment agreement, which amount is also included
in the “Non-Equity Incentive Plan Compensation” column
of the Summary Compensation Table. See “—Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table — Executive Employment
Agreements.”
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Mr. Hazen’s unvested New Options and the fair value
price of our common stock on December 31, 2009 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($87.99 per share). For the purposes of this calculation, it is
assumed that the Company achieved an Investor Return of at least
2.5 times the Base Price of $51.00 at the end of the 2009 fiscal
year. The $102.00 per share exercise price of 2x Time Options
was greater than the December 31, 2009 fair value price;
therefore, this value does not include Mr. Hazen’s
unvested 2x Time Options.
(4)
Reflects the actual lump sum value of the SERP based on the 2009
interest rate of 4.24%.
(5)
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Mr. Hazen would be
entitled. The value includes $540,152 from the HCA 401(k) Plan
(which represents the value of the Company’s contributions)
and $776,440 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Mr. Hazen would be entitled to receive under
our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
age 67, and monthly benefits of $10,000 per month from our
Supplemental Insurance Program payable after the
six-month
elimination period to age 65.
(7)
No post-retirement or post-termination life insurance or death
benefits are provided to Mr. Hazen. Mr. Hazen’s
payment upon death while actively employed with the Company
includes $789,000 of
Company-paid
life insurance.
Represents amounts Mr. Rutledge would be entitled to
receive pursuant to his employment agreement. See “—
Narrative Disclosure to Summary Compensation Table and 2009
Grants of Plan-Based Awards Table — Executive
Employment Agreements.”
(2)
Represents the amount Mr. Rutledge would be entitled to
receive for the 2009 fiscal year pursuant to the
2008-2009
PEP and his employment agreement, which amount is also included
in the “Non-Equity Incentive Plan Compensation” column
of the Summary Compensation Table. See “— Narrative
Disclosure to Summary Compensation Table and 2009 Grants of
Plan-Based Awards Table — Executive Employment
Agreements.”
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Mr. Rutledge’s unvested New Options and the fair value
price of our common stock on December 31, 2009 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($87.99 per share). For the purposes of this calculation,
it is assumed that the Company achieved an Investor Return of at
least 2.5 times the Base Price of $51.00 at the end of the 2009
fiscal year. The $102.00 per share exercise price of 2x Time
Options was greater than the December 31, 2009 fair value
price; therefore, this value does not include
Mr. Rutledge’s unvested 2x Time Options.
(4)
Reflects the actual lump sum value of the SERP based on the 2009
interest rate of 4.24%.
(5)
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Mr. Rutledge would
be entitled. The value includes $676,161 from the HCA 401(k)
Plan (which represents the value of the Company’s
contributions) and $426,642 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Mr. Rutledge would be entitled to receive
under our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
age 66 and 2 months, and monthly benefits of $10,000
per month from our Supplemental Insurance Program payable after
the six-month elimination period to age 65.
(7)
No post-retirement or post-termination life insurance or death
benefits are provided to Mr. Rutledge.
Mr. Rutledge’s payment upon death while actively
employed includes $676,000 of Company-paid life insurance and
$75,000 from the Executive Death Benefit Plan.
Represents the amount Mr. Bovender received for the 2009
fiscal year pursuant to the
2008-2009
PEP and his Amended Employment Agreement, which amount is also
included in the “Non-Equity Incentive Plan
Compensation” column of the Summary Compensation Table. See
“— Narrative Disclosure to Summary Compensation Table
and 2009 Grants of Plan-Based Awards Table —
Mr. Bovender’s Employment Agreement.”
(2)
For the purposes of the “Normal Retirement” column,
represents the intrinsic value of all unvested stock options,
which, pursuant to Mr. Bovender’s Amended Employment
Agreement, will continue to vest after his retirement,
calculated as the difference between the exercise price of
Mr. Bovender’s unvested New Options and 2x Time
Options subject to such continued vesting provision and the fair
value price of our common stock on December 15, 2009 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($87.99 per share). For the purposes of this calculation, it is
assumed that the 2010 and 2011 EBITDA performance targets under
the option awards are achieved by the Company and that the
Company achieves an Investor Return of at least 2.5 times the
Base Price of $51.00 at the end of each of the 2010 and 2011
fiscal years, respectively. The $102.00 per share exercise price
of 2x Time Options was greater than the December 15, 2009
fair value price; therefore, this value does not include
Mr. Bovender’s unvested 2x Time Options. See
“— Compensation Discussion and Analysis —
Severance and Change in Control Agreements.”
For purposes of the “Change in Control” column,
represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Mr. Bovender’s unvested New Options and the fair value
price of our common stock on December 31, 2009 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($87.99 per share). For the purposes of this calculation, it is
assumed that the Company achieved an Investor Return of at least
2.5 times the Base Price of $51.00 at the end of the 2009 fiscal
year. The $102.00 per share exercise price of 2x Time Options
was greater than the December 31, 2009 fair value price;
therefore, this value does not include Mr. Bovender’s
unvested 2x Time Options.
(3)
Reflects the actual SERP lump sum paid in April 2009.
(4)
Reflects the estimated lump-sum present value of qualified and
nonqualified retirement plans to which Mr. Bovender is
entitled as of his retirement date of December 15, 2009.
The value includes $192,126 from the HCA 401(k) Plan (which
represents the value of the Company’s contributions) and
$2,692,051 from the HCA Restoration Plan.
(5)
Reflects the present value of the medical premiums for
Mr. Bovender from termination to age 65 as required
pursuant to Mr. Bovender’s Amended Employment
Agreement. See “— Narrative Disclosure to Summary
Compensation Table and 2009 Grants of Plan-Based Awards
Table — Mr. Bovender’s Employment
Agreement.”
Reflects the actual accrued vacation pay received by
Mr. Bovender in December 2009, which amount is also
included in the “Salary” column of the Summary
Compensation Table.
Director
Compensation
During the year ended December 31, 2009, none of our
directors received compensation for their service as a member of
our Board. Our directors are reimbursed for any expenses
incurred in connection with their service.
Compensation
Committee Interlocks and Insider Participation
During 2009, the Compensation Committee of the Board of
Directors was composed of John P. Connaughton, George A. Bitar
and Michael W. Michelson. Effective April 22, 2009,
Mr. Bitar retired from our Board of Directors, and James D.
Forbes joined our Board of Directors and was appointed as a
member of the Compensation Committee. None of the members of the
Compensation Committee have at any time been an officer or
employee of HCA or any of its subsidiaries. In addition, none of
our executive officers serves as a member of the Board of
Directors or Compensation Committee of any entity which has one
or more executive officers serving as a member of our Board of
Directors or Compensation Committee. Each member of the
Compensation Committee is also a manager of Hercules Holding,
and the Amended and Restated Limited Liability Company Agreement
of Hercules Holding requires that the members of Hercules
Holding take all necessary action to ensure that the persons who
serve as managers of Hercules Holding also serve on our Board of
Directors. Messrs. Michelson, Forbes, Connaughton and Bitar
are affiliated with KKR, MLGPE (an affiliate of Bank of America
Corporation), Bain Capital and MLGPE respectively, each of which
is a party to the sponsor management agreement with us. The
Amended and Restated Limited Liability Company Agreement of
Hercules Holding, the sponsor management agreement and certain
transactions with affiliates of MLGPE and KKR are described in
greater detail in “Certain Relationships and Related Party
Transactions.”
The following table sets forth information regarding the
beneficial ownership of our common stock as of April 1,2010 for:
•
each person who is known by us to own beneficially more than 5%
of the outstanding shares of our common stock;
•
each of our directors;
•
each of our executive officers named in the Summary Compensation
Table; and
•
all of our directors and executive officers as a group.
The percentages of shares outstanding provided in the tables are
based on 94,626,087 shares of our common stock, par value
$0.01 per share, outstanding as of April 1, 2010.
Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes voting or investment power
with respect to securities. Shares issuable upon the exercise of
options that are exercisable within 60 days of
April 1, 2010 are considered outstanding for the purpose of
calculating the percentage of outstanding shares of our common
stock held by the individual, but not for the purpose of
calculating the percentage of outstanding shares held by any
other individual. The address of each of our directors and
executive officers listed below is
c/o HCA
Inc., One Park Plaza, Nashville, Tennessee37203.
Name of Beneficial Owner
Number of Shares
Percent
Hercules Holding II, LLC
91,845,692
(1)
97.1
%
Christopher J. Birosak
(1)
—
Jack O. Bovender, Jr.
552,843
(2)
*
Richard M. Bracken
563,580
(3)
*
John P. Connaughton
(1)
—
James D. Forbes
(1)
—
Kenneth W. Freeman
(1)
—
Thomas F. Frist III
(1)
—
William R. Frist
(1)
—
Christopher R. Gordon
(1)
—
Samuel N. Hazen
243,143
(4)
*
R. Milton Johnson
354,442
(5)
*
Michael W. Michelson
(1)
—
James C. Momtazee
(1)
—
Stephen G. Pagliuca
(1)
—
W. Paul Rutledge
179,935
(6)
*
Nathan C. Thorne
(1)
—
Beverly B. Wallace
163,664
(7)
*
All directors and executive officers as a group (28 persons)
2,441,244
(8)
2.5
%
*
Less than one percent.
(1)
Hercules Holding holds 91,845,692 shares, or approximately
97.1%, of our outstanding common stock. Hercules Holding is held
by a private investor group, including affiliates of Bain
Capital, KKR and MLGPE (previously the private equity arm of
Merrill Lynch & Co., Inc., which is a wholly-owned
subsidiary of Bank of America Corporation), and affiliates of
HCA founder Dr. Thomas F. Frist, Jr., including
Mr. Thomas F. Frist III and Mr. William R. Frist,
who serve as directors. Messrs. Connaughton, Gordon and
Pagliuca are affiliated with Bain Capital, whose affiliated
funds may be deemed to have indirect beneficial ownership of
23,373,333 shares, or 24.7%, of our outstanding common
stock through their interests in Hercules Holding.
Messrs. Freeman, Michelson and Momtazee are affiliated with
KKR, which indirectly
holds 23,373,332 shares, or 24.7%, of our outstanding
common stock through the interests of certain of its affiliated
funds in Hercules Holding. Messrs. Birosak, Forbes and
Thorne are affiliated with Bank of America Corporation, which
indirectly holds 23,373,333 shares, or 24.7%, of our
outstanding common stock through the interests of certain of its
affiliated funds in Hercules Holding and 980,393, or 1.0%, of
our outstanding common stock through Banc of America Securities
LLC. Thomas F. Frist III and William R. Frist may each be
deemed to indirectly, beneficially hold 17,804,125 shares,
or 18.8%, of our outstanding common stock through their
interests in Hercules Holding. Each of such persons, other than
Hercules Holding, disclaims membership in any such group and
disclaims beneficial ownership of these securities, except to
the extent of its pecuniary interest therein. The principal
office addresses of Hercules Holding are
c/o Bain
Capital Partners, LLC, 111 Huntington Avenue, Boston, MA02199,
c/o Kohlberg
Kravis Roberts & Co. L.P., 2800 Sand Hill Road,
Suite 200, Menlo Park, CA94025,
c/o Merrill
Lynch Global Private Equity, Four World Financial Center, Floor
23, New York, NY10080 and
c/o Dr. Thomas
F. Frist, Jr., 3100 West End Ave., Suite 500,
Nashville, TN37203.
(2)
Includes 242,721 shares issuable upon exercise of options.
Effective December 15, 2009, Mr. Bovender retired as
executive Chairman of the Board.
(3)
Includes 482,097 shares issuable upon exercise of options.
(4)
Includes 209,171 shares issuable upon exercise of options.
(5)
Includes 311,669 shares issuable upon exercise of options.
(6)
Includes 147,185 shares issuable upon exercise of options.
(7)
Includes 161,264 shares issuable upon exercise of options.
(8)
Includes 2,013,633 shares issuable upon exercise of
options. Does not include shares beneficially owned by
Mr. Bovender, who retired as executive Chairman of the
Board effective December 15, 2009.
In accordance with its charter, our Audit and Compliance
Committee reviews and approves all material related party
transactions. Prior to its approval of any material related
party transaction, the Audit and Compliance Committee will
discuss the proposed transaction with management and our
independent auditor. In addition, our Code of Conduct requires
that all of our employees, including our executive officers,
remain free of conflicts of interest in the performance of their
responsibilities to the Company. An executive officer who wishes
to enter into a transaction in which their interests might
conflict with ours must first receive the approval of the Audit
and Compliance Committee. The Amended and Restated Limited
Liability Company Agreement of Hercules Holding generally
requires that an Investor must obtain the prior written consent
of each other Investor (other than the Sponsor Assignees) before
it or any of its affiliates (including our directors) enter into
any transaction with us.
Stockholder
Agreements
On January 30, 2007, our Board of Directors awarded to
members of management and certain key employees New Options to
purchase shares of our common stock (the New Options together
with the Rollover Options, “Options”) pursuant to the
2006 Plan. Our Compensation Committee approved additional option
awards periodically throughout the years ended December 31,2009, 2008 and 2007 to members of management and certain key
employees in cases of promotions, significant contributions to
the Company and new hires. In connection with their option
awards, the participants under the 2006 Plan were required to
enter into a Management Stockholder’s Agreement, a Sale
Participation Agreement, and an Option Agreement with respect to
the New Options. Below are brief summaries of the principal
terms of the Management Stockholder’s Agreement and the
Sale Participation Agreement, each of which are qualified in
their entirety by reference to the agreements themselves, forms
of which were filed as Exhibits 10.12 and 10.13,
respectively, to the registration statement of which this
prospectus is a part. The terms of the Option Agreement with
respect to New Options and the 2006 Plan are described in more
detail in “Executive Compensation — Compensation
Discussion and Analysis — Elements of
Compensation — Long-Term Equity Incentive Awards:
Options.”
Management
Stockholder’s Agreement
The Management Stockholder’s Agreement imposes significant
restrictions on transfers of shares of our common stock.
Generally, shares will be nontransferable by any means at any
time prior to the earlier of a “Change in Control” (as
defined in the Management Stockholder’s Agreement) or the
fifth anniversary of the closing date of the Merger, except
(i) sales pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the
“Securities Act”) filed by the Company in accordance
with the Management Stockholder’s Agreement, (ii) a
sale pursuant to the Sale Participation Agreement (described
below), (iii) a sale to certain “Permitted
Transferees” (as defined in the Management
Stockholder’s Agreement), or (iv) as otherwise
permitted by our Board of Directors or pursuant to a waiver of
the restrictions on transfers given by unanimous agreement of
the Sponsors. On and after such fifth anniversary through the
earlier of a Change in Control or the eighth anniversary of the
closing date of the Merger, a management stockholder will be
able to transfer shares of our common stock, but only to the
extent that, on a cumulative basis, the management stockholders
in the aggregate do not transfer a greater percentage of their
equity than the percentage of equity sold or otherwise disposed
of by the Sponsors.
In the event that a management stockholder wishes to sell his or
her stock at any time following the fifth anniversary of the
closing date of the Merger but prior to an initial public
offering of our common stock, the Management Stockholder’s
Agreement provides the Company with a right of first offer on
those shares upon the same terms and conditions pursuant to
which the management stockholder would sell them to a third
party. In the event that a registration statement is filed with
respect to our common stock in the future, the Management
Stockholder’s Agreement prohibits management stockholders
from selling shares not included in the registration statement
from the time of receipt of notice until 180 days (in the
case of an initial public offering) or 90 days (in the case
of any other public offering) of the date of the registration
statement. The Management Stockholder’s Agreement also
provides for the management stockholder’s ability to cause
us to repurchase their outstanding stock and options in the
event of the management stockholder’s death or
disability, and for our ability to cause the management
stockholder to sell their stock or options back to the Company
upon certain termination events.
The Management Stockholder’s Agreement provides that, in
the event we propose to sell shares to the Sponsors, certain
members of senior management, including the executive officers
(the “Senior Management Stockholders”) have a
preemptive right to purchase shares in the offering. The maximum
shares a Senior Management Stockholder may purchase is a
proportionate number of the shares offered to the percentage of
shares owned by the Senior Management Stockholder prior to the
offering. Additionally, following the initial public offering of
our common stock, the Senior Management Stockholders will have
limited “piggyback” registration rights with respect
to their shares of common stock. The maximum number of shares of
Common Stock which a Senior Management Stockholder may register
is generally proportionate with the percentage of common stock
being sold by the Sponsors (relative to their holdings thereof).
Sale
Participation Agreement
The Sale Participation Agreement grants the Senior Management
Stockholders the right to participate in any private direct or
indirect sale of shares of common stock by the Sponsors (such
right being referred to herein as the “Tag-Along
Right”), and requires all management stockholders to
participate in any such private sale if so elected by the
Sponsors in the event that the Sponsors are proposing to sell at
least 50% of the outstanding common stock held by the Sponsors,
whether directly or through their interests in Hercules Holding
(such right being referred to herein as the “Drag-Along
Right”). The number of shares of common stock which would
be required to be sold by a management stockholder pursuant to
the exercise of the Drag-Along Right will be the sum of the
number of shares of common stock then owned by the management
stockholder and his affiliates plus all shares of common stock
the management stockholder is entitled to acquire under any
unexercised Options (to the extent such Options are exercisable
or would become exercisable as a result of the consummation of
the proposed sale), multiplied by a fraction (x) the
numerator of which shall be the aggregate number of shares of
common stock proposed to be transferred by the Sponsors in the
proposed sale and (y) the denominator of which shall be the
total number of shares of common stock owned by the Sponsors
entitled to participate in the proposed sale. Management
stockholders will bear their pro rata share of any fees,
commissions, adjustments to purchase price, expenses or
indemnities in connection with any sale under the Sale
Participation Agreement.
Amended
and Restated Limited Liability Company Agreement of Hercules
Holding II, LLC
The Investors and certain other investment funds who agreed to
co-invest with them through a vehicle jointly controlled by the
Investors to provide equity financing for the Recapitalization
entered into a limited liability company operating agreement in
respect of Hercules Holding (the “LLC Agreement”). The
LLC Agreement contains agreements among the parties with respect
to the election of our directors, restrictions on the issuance
or transfer of interests in us, including a right of first
offer, tag-along rights and drag-along rights, and other
corporate governance provisions (including the right to approve
various corporate actions).
Pursuant to the LLC Agreement, Hercules Holding and its members
are required to take necessary action to ensure that each
manager on the board of Hercules Holding also serves on our
Board of Directors. Each of the Sponsors has the right to
appoint three managers to Hercules Holding’s board, the
Frist family has the right to appoint two managers to the board,
and the remaining two managers on the board are to come from our
management team (currently Messrs. Bracken and Johnson).
The rights of the Sponsors and the Frist family to designate
managers are subject to their ownership percentages in Hercules
Holding remaining above a specified percentage of the
outstanding ownership interests in Hercules Holding.
The LLC Agreement also requires that, in addition to a majority
of the total number of managers being present to constitute a
quorum for the transaction of business at any board or committee
meeting, at least one manager designated by each of the
Investors (other than the Sponsor Assignees) must be present,
unless waived by that Investor. The LLC Agreement further
provides that, for so long as at least two Sponsors are entitled
to designate managers to Hercules Holding’s board, at least
one manager from each of two Sponsors must consent to any board
or committee action in order for it to be valid. The LLC
Agreement requires that
our organizational and governing documents contain provisions
similar to those described in this paragraph. A copy of this
agreement has been filed as Exhibit 10.33 to the registration
statement of which this prospectus is a part.
Registration
Rights Agreement
Hercules Holding and the Investors entered into a registration
rights agreement with us upon completion of the
Recapitalization. Pursuant to this agreement, the Investors
(with certain exceptions as to the Sponsor Assignees) can cause
us to register shares of our common stock held by Hercules
Holding under the Securities Act and, if requested, to maintain
a shelf registration statement effective with respect to such
shares. The Investors are also entitled to participate on a pro
rata basis in any registration of our common stock under the
Securities Act that we may undertake. A copy of this agreement
has been filed as Exhibit 4.21 to the registration
statement of which this prospectus is a part.
Sponsor
Management Agreement
In connection with the Merger, we entered into a management
agreement with affiliates of each of the Sponsors and certain
members of the Frist family, including Thomas F.
Frist, Jr., M.D., Thomas F. Frist III and William
R. Frist, pursuant to which such entities or their affiliates
will provide management services to us. Pursuant to the
agreement, in 2009, we paid management fees of
$15.3 million and reimbursed
out-of-pocket
expenses incurred in connection with the provision of services
pursuant to the agreement. The agreement provides that the
aggregate annual management fee, initially set at
$15 million, increases annually beginning in 2008 at a rate
equal to the percentage increase of Adjusted EBITDA (as defined
in the Management Agreement) in the applicable year compared to
the preceding year. The agreement also provides that we will pay
a 1% fee in connection with certain subsequent financing,
acquisition, disposition and change of control transactions, as
well as a termination fee based on the net present value of
future payment obligations under the management agreement, in
the event of an initial public offering or under certain other
circumstances. No fees were paid under either of these
provisions in 2009. The agreement includes customary exculpation
and indemnification provisions in favor of the Sponsors and
their affiliates and the Frists. A copy of this agreement has
been filed as Exhibit 10.24 to the registration statement
of which this prospectus is a part.
Other
Relationships
In 2008 and 2007, we paid approximately $25.5 million and
$25.0 million, respectively, to HCP, Inc. (NYSE: HCP),
representing the aggregate annual lease payments for certain
medical office buildings leased by the Company. Charles A. Elcan
was an executive officer of HCP, Inc. until April 30, 2008
and is the
son-in-law
of Dr. Thomas F. Frist, Jr. (who was a member of our
Board of Directors in 2008) and
brother-in-law
of Thomas F. Frist III and William R. Frist, who are
members of our Board of Directors.
Christopher S. George serves as the chief executive officer of
an HCA-affiliated hospital, and in 2009, 2008 and 2007,
Mr. George earned total compensation in respect of base
salary and bonus of approximately $370,000, $440,000 and
$272,000, respectively, for his services. Mr. George also
received certain other benefits, including awards of equity,
customary to similar positions within the Company.
Mr. George’s father, V. Carl George, was an executive
officer of HCA until March 31, 2009.
Dustin A. Greene serves as the chief operating officer of an
HCA-affiliated hospital, and in 2009 and 2008, Mr. Greene
earned total compensation in respect of base salary and bonus of
approximately $160,000 and $143,000, respectively, for his
services. Mr. Greene also received certain other benefits,
including awards of equity, customary to similar positions
within the Company. Mr. Greene’s
father-in-law,
W. Paul Rutledge, is an executive officer of HCA.
Bank of America, N.A. (“Bank of America”) acts as
administrative agent and is a lender under each of our senior
secured cash flow credit facility and our asset-based revolving
credit facility. Affiliates of Bank of America indirectly own
approximately 25.7% of the shares of our company. We engaged
Banc of America Securities LLC, an affiliate of Bank of America,
as arranger and documentation agent in connection with certain
amendments to our cash flow credit facility and our asset-based
revolving credit facility in March
2009. Under that engagement, upon such amendments becoming
effective, we paid Banc of America Securities LLC aggregate fees
of $6 million relating to the amendments to our senior
secured credit facilities. Banc of America also received its pro
rata share of consent fees, amounting to $121,816, paid to the
lenders under our senior secured cash flow credit facility in
connection with certain amendments to those facilities in June
2009.
In addition, Banc of America Securities LLC acted as joint
book-running manager and a representative of the initial
purchasers of the
97/8% Senior
Secured Notes due 2017 (the “outstanding 2017 notes”)
that we issued on February 19, 2009, the
81/2% Senior
Secured Notes due 2019 that we issued on April 22, 2009
(the “outstanding 2019 notes”), the
77/8% Senior
Secured Notes due 2020 that we issued on August 11, 2009
(the “outstanding February 2020 notes”) and the
71/4% Senior
Secured Notes due 2020 that we issued on March 10, 2010
(the “outstanding September 2020 notes”). The proceeds
of the issuance of the outstanding 2017 notes, the outstanding
2019 notes, the outstanding February 2020 notes and the
outstanding September 2020 notes were used to repay indebtedness
under the senior secured credit facilities, and Bank of America
received its pro rata portion of such repayment. In addition,
Banc of America Securities LLC received placement fees of
$1.4 million in connection with the issuance of the
outstanding 2017 notes, placement fees of $8.0 million in
connection with the issuance of the outstanding 2019 notes and
the outstanding February 2020 notes, and placement fees of
$3.8 million in connection with the issuance of the
outstanding September 2020 notes.
We also engaged Banc of America Securities LLC in connection
with certain amendments to our cash flow credit facility in
April 2010. Under that engagement, we paid Banc of America
Securities LLC aggregate fees of approximately $2.0 million
relating to those amendments.
KKR Capital Markets LLC, one of the other initial purchasers of
the outstanding 2017 notes, is an affiliate of KKR, whose
affiliates own approximately 24.7% of the shares of our company,
and received placement fees of $191,050 in connection with the
issuance of the outstanding 2017 notes.
On November 17, 2006 in connection with the
Recapitalization, we entered into the senior secured credit
facilities with Banc of America Securities LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as joint
lead arrangers and bookrunners, Bank of America, N.A., as
administrative agent, JPMorgan Chase Bank, N.A. and Citicorp
North America, Inc., as co-syndication agents and Merrill Lynch
Capital Corporation, as documentation agent.
The senior secured credit facilities provide senior secured
financing of $16.800 billion, consisting of:
•
$12.800 billion-equivalent in term loan facilities,
comprised of a $2.750 billion senior secured term loan A
facility with a term of six years, a $8.800 billion senior
secured term loan B facility with a term of seven years and a
€1.000 billion senior secured European term loan
facility with a term of seven years; and
•
$4.000 billion in revolving credit facilities, comprised of
a $2.000 billion senior secured asset-based revolving
credit facility available in dollars with a term of six years
and a $2.000 billion senior secured revolving credit
facility available in dollars, euros and pounds sterling with a
term of six years. Availability under the asset-based revolving
credit facility is subject to a borrowing base of 85% of
eligible accounts receivable less customary reserves.
We refer to these senior secured credit facilities, excluding
the asset-based revolving credit facility, as the “cash
flow credit facility” and, collectively with the
asset-based revolving credit facility, the “senior secured
credit facilities.” The asset-based revolving credit
facility is documented in a separate loan agreement from the
other senior secured credit facilities.
HCA Inc. is the primary borrower under the senior secured credit
facilities, except that a U.K. subsidiary is the borrower under
the European term loan facility. The revolving credit facilities
include capacity available for the issuance of letters of credit
and for borrowings on
same-day
notice, referred to as the swingline loans. A portion of the
letter of credit availability under the cash-flow revolving
credit facility is available in euros, dollars and pounds
sterling. Lenders under the cash flow credit facility are
subject to a loss sharing agreement pursuant to which, upon the
occurrence of certain events, including a bankruptcy event of
default under the cash flow credit facility, each such lender
will automatically be deemed to have exchanged its interest in a
particular tranche of the cash flow credit facility for a pro
rata percentage in all of the tranches of the cash flow credit
facility.
On February 16, 2007, we amended our cash flow credit
facility to reduce the applicable margins with respect to the
term borrowings thereunder. On June 20, 2007, we amended
our asset-based revolving credit facility to reduce the
applicable margin with respect to borrowings thereunder.
On March 2, 2009, we amended our cash flow credit facility
to allow for one or more future issuances of additional secured
notes, which may include notes that are secured on a pari
passu basis or on a junior basis with the obligations under
the cash flow credit facility, so long as (1) such notes do
not require, subject to certain exceptions, scheduled
repayments, payment of principal or redemption prior to the
scheduled term loan B maturity date as currently in effect,
(2) the terms of such notes, taken as a whole, are not more
restrictive than those in the cash flow credit facility and
(3) the proceeds from any such issuance are used within
three business days of receipt to permanently prepay term loans
under the cash flow credit facility in accordance with the terms
of the cash flow credit facility. The U.S. security
documents related to the cash flow credit facility were also
amended and restated in connection with the amendment in order
to give effect to the security interests to be granted to
holders of such additional secured notes.
On March 2, 2009, we also amended our asset-based revolving
credit facility to allow for one or more future issuances of
additional secured notes or loans, which may include notes or
loans that are secured on a pari passu basis or on a
junior basis with the obligations under the cash flow credit
facility, so long as (1) such notes or loans do not
require, subject to certain exceptions, scheduled repayments,
payment of principal or
redemption prior to the scheduled term loan B final maturity
date as currently in effect, (2) the terms of such notes or
loans, as applicable, taken as a whole, are not more restrictive
than those in the cash flow credit facility and (3) the
proceeds from any such issuance are used within three business
days of receipt to permanently prepay term loans under the cash
flow credit facility in accordance with the terms of the cash
flow credit facility. The amendment to the asset-based revolving
credit facility also altered the excess facility availability
requirement to include a separate minimum facility availability
requirement applicable to the asset-based revolving credit
facility and increased the applicable LIBOR and asset-based
revolving margins for all borrowings under the asset-based
revolving credit facility by 0.25% each.
On June 18, 2009, we amended our cash flow credit facility
to permit unlimited refinancings of the term loans initially
incurred in November 2006 under the cash flow credit facility
(the “initial term loans”), as well as any previously
incurred refinancing term loans through the incurrence of new
term loans under the cash flow credit facility
(“refinancing term loans”), (collectively, with the
initial term loans, the “then-existing term loans”),
and to permit the establishment of one or more series of
commitments under replacement cash flow revolvers under the cash
flow credit facility (“replacement revolver”) to
replace all or a portion of the revolving commitments initially
established in November 2006 under the cash flow credit facility
(the “initial revolver”) as well as any previously
issued replacement revolvers (with no more than three series of
revolving commitments to be outstanding at any time) in each
case, subject to the terms described below. The amendment to the
cash flow credit facility further permits the maturity date of
any then-existing term loan to be extended (any such loans so
extended, the “extended term loans”). The amendment to
the cash flow credit facility provides that:
•
As to refinancing term loans, (1) the proceeds from such
refinancing term loans be used to repay in full the initial term
loans before being used to repay any previously issued
refinancing term loans; (2) the refinancing term loans
mature later than the latest maturity date of any of the initial
term loans; (3) the weighted average life to maturity for
the refinancing term loans be greater than the remaining
weighted average life to maturity of the tranche B term
loan under the cash flow credit facility measured at the time
such refinancing term loans are incurred; and
(4) refinancing terms loans will not share in mandatory
prepayments resulting from the creation or issuance of extended
term loans
and/or first
lien notes until the initial term loans are repaid in full but
will share in other mandatory prepayments such as those from
asset sales.
•
As to replacement revolvers, terms of such replacement revolver
be substantially identical to the commitments being replaced,
other than with respect to maturity and pricing.
•
As to extended term loans, (1) any offer to extend must be
made to all lenders under the term loan being extended, and, if
such offer is oversubscribed, the extension will be allocated
ratably to the lenders according to the respective amounts then
held by the accepting lenders; (2) each series of extended
term loans having the same interest margins, extension fees and
amortization schedule shall be a separate class of term loans;
and (3) extended term loans will not share in mandatory
prepayments resulting from the creation or issuance of
refinancing term loans
and/or first
lien notes until the initial term loans are repaid in full but
will share in other mandatory prepayments such as those from
asset sales.
•
Any refinancing term loans and any obligations under replacement
revolvers will have a pari passu claim on the collateral
securing the initial term loans and the initial revolver.
On April 6, 2010, we amended our cash flow credit facility to
(i) extend the maturity date of $2.0 billion of our
tranche B term loans to March 31, 2017 and
(ii) increase the ABR margin and LIBOR margin with respect
to such extended term loans to 2.25% and 3.25%, respectively.
The maturity date, interest margins and fees, as applicable,
with respect to all other loans, and all commitments and letters
of credit, outstanding under the cash flow credit facility
remain unchanged.
See also “Certain Relationships and Related Party
Transactions” for a description of certain relationships
between us and Bank of America, N.A., the administrative agent
under the cash flow credit facility and the asset-based
revolving credit facility.
Borrowings under the senior secured credit facilities bear
interest at a rate equal to, at our option, either
(a) LIBOR for deposits in the applicable currency plus an
applicable margin or (b) the higher of (1) the prime
rate of Bank of America, N.A. and (2) the federal funds
effective rate plus 0.50%, plus an applicable margin. The
applicable margins in effect for borrowings as of
December 31, 2009 are (v) under the asset-based
revolving credit facility, 0.50% with respect to base rate
borrowings and 1.50% with respect to LIBOR borrowings,
(w) under the senior secured revolving credit facility,
0.75% with respect to base rate borrowings and 1.75% with
respect to LIBOR borrowings, (x) under the term loan A
facility, 0.50% with respect to base rate borrowings and 1.50%
with respect to LIBOR borrowings, (y) under the term loan B
facility, 1.25% with respect to base rate borrowings and 2.25%
with respect to LIBOR borrowings, and (z) under the
European term loan facility, 2.00% with respect to LIBOR
borrowings. Certain of the applicable margins may be reduced or
increased depending on our leverage ratios.
In addition to paying interest on outstanding principal under
the senior secured credit facilities, we are required to pay a
commitment fee to the lenders under the revolving credit
facilities in respect of the unutilized commitments thereunder.
The commitment fee rate as of December 31, 2009 is 0.375%
per annum for the revolving credit facility and the asset-based
revolving credit facility. The commitment fee rates may
fluctuate due to changes in specified leverage ratios. We must
also pay customary letter of credit fees.
Prepayments
The cash flow credit facility requires us to prepay outstanding
term loans, subject to certain exceptions, with:
•
50% (which percentage will be reduced to 25% if our total
leverage ratio is 5.50x or less and to 0% if our total leverage
ratio is 5.00x or less) of our annual excess cash flow;
•
100% of the net cash proceeds of all nonordinary course asset
sales or other dispositions of property, other than the
Receivables Collateral, as defined below, if we do not
(1) reinvest or commit to reinvest those proceeds in assets
to be used in our business or to make certain other permitted
investments within 15 months as long as, in the case of any
such commitment to reinvest or make certain other permitted
investments, such investment is completed within such
15-month
period or, if later, within 180 days after such commitment
is made or (2) apply such proceeds within 15 months to
repay debt of HCA Inc. that was outstanding on the effective
date of the Merger scheduled to mature prior to the earliest
final maturity of the senior secured credit facilities then
outstanding; and
•
100% of the net cash proceeds of any incurrence of debt, other
than proceeds from the receivables facilities and other debt
permitted under the senior secured credit facilities.
The foregoing mandatory prepayments are applied among the term
loan facilities (1) during the first three years after the
effective date of the Merger, pro rata to such facilities based
on the respective aggregate amounts of unpaid principal
installments thereof due during such period, with amounts
allocated to each facility being applied to the remaining
installments thereof in direct order of maturity and
(2) thereafter, pro rata to such facilities, with amounts
allocated to each facility being applied, in the case of the
term loan A facility, pro rata to the remaining installments
thereof and, in the case of the term loan B facility or the
European term loan facility, to the next eight unpaid scheduled
installments of principal of such facility and then pro rata to
the remaining amortization payments under such facility.
Notwithstanding the foregoing, (i) proceeds of asset sales
by foreign subsidiaries are applied solely to prepay European
term loans until such term loans have been repaid in full and
(ii) we are not required to prepay loans under the term
loan A facility or the term loan B facility with net cash
proceeds of asset sales or with excess cash flow, in each case
attributable to foreign subsidiaries, to the extent that the
repatriation of such amounts is prohibited or delayed by
applicable local law or would result in material adverse tax
consequences.
The asset-based revolving credit facility requires us to prepay
outstanding loans if borrowings exceed the borrowing base.
We may voluntarily repay outstanding loans under the senior
secured credit facilities at any time without premium or
penalty, other than customary “breakage” costs with
respect to LIBOR loans.
Amortization
We are required to repay the loans under the term loan
facilities as follows:
•
the term loan A facility amortizes in quarterly installments
such that the aggregate amount of the original funded principal
amount of such facility repaid pursuant to such amortization
payments in each year, commencing with the year ending
December 31, 2007, is equal to $112.5 million in years
1 and 2, $225 million in years 3 and 4, $450 million
in year 5 and $1.625 billion in year 6; and
•
each of the term loan B facility and the European term loan
facility amortizes in equal quarterly installments that
commenced on March 31, 2007 in aggregate annual amounts
equal to 1% of the original funded principal amount of such
facility, with the balance being payable on the final maturity
date of such term loans.
Due to prior mandatory prepayments, amortization payments under
the term loan A facility are not required until June 30,2011, and no further amortization payments are required for
either the term loan B facility or the European term loan.
Principal amounts outstanding under the revolving credit
facilities are due and payable in full at maturity, six years
from the date of the closing of the senior secured credit
facilities.
Guarantee
and Security
All obligations under the senior secured credit facilities are
unconditionally guaranteed by substantially all existing and
future, direct and indirect, wholly-owned material domestic
subsidiaries that are “Unrestricted Subsidiaries”
under the 1993 Indenture (except for certain special purpose
subsidiaries that only guarantee and pledge their assets under
the asset-based revolving credit facility), and the obligations
under the European term loan facility are also unconditionally
guaranteed by HCA Inc. and each of our existing and future
wholly owned material subsidiaries formed under the laws of
England and Wales, subject, in each of the foregoing cases, to
any applicable legal, regulatory or contractual constraints and
to the requirement that such guarantee does not cause adverse
tax consequences.
All obligations under the asset-based revolving credit facility,
and the guarantees of those obligations, are secured, subject to
permitted liens and other exceptions, by a first-priority lien
on substantially all of the receivables of the borrowers and
each guarantor under such asset-based revolving credit facility
(the “Receivables Collateral”).
All obligations under the cash flow credit facility and the
guarantees of such obligations, are secured, subject to
permitted liens and other exceptions, by:
•
a first-priority lien on the capital stock owned by HCA Inc. or
by any U.S. guarantor in each of their respective
first-tier subsidiaries (limited, in the case of foreign
subsidiaries, to 65% of the voting stock of such subsidiaries);
•
a first-priority lien on substantially all present and future
assets of HCA Inc. and of each U.S. guarantor other than
(i) “Principal Properties” (as defined in the
1993 Indenture), except for certain “Principal
Properties” the aggregate amount of indebtedness secured
thereby in respect of the cash flow credit facility and the
first lien notes and any future first lien obligations, taken as
a whole, do not exceed 10% of “Consolidated Net Tangible
Assets” (as defined under the 1993 Indenture),
(ii) certain other real properties and (iii) deposit
accounts, other bank or securities accounts, cash, leaseholds,
motor-vehicles and certain other exceptions (such collateral
under this and the preceding bullet, the “Non-Receivables
Collateral”); and
•
a second-priority lien on certain of the Receivables Collateral
(such portion of the Receivables Collateral, the “Shared
Receivables Collateral”; the Receivables Collateral that
does not secure such cash flow credit facility on a
second-priority basis is referred to as the “Separate
Receivables Collateral”).
The obligations of the borrowers and the guarantors under the
European term loan facility are also secured by substantially
all present and future assets of the European subsidiary
borrower and each European guarantor (the “European
Collateral”), subject to permitted liens and other
exceptions (including, without limitation, exceptions for
deposit accounts, other bank or securities accounts, cash,
leaseholds, motor-vehicles and certain other exceptions) and
subject to such security interests otherwise being permitted by
applicable law and contract and not resulting in adverse tax
consequences. Neither our first lien notes nor our second lien
notes are secured by any of the European Collateral.
Certain
Covenants and Events of Default
The senior secured credit facilities contain a number of
covenants that, among other things, restrict, subject to certain
exceptions, our ability to:
•
incur additional indebtedness;
•
create liens;
•
enter into sale and leaseback transactions;
•
engage in mergers or consolidations;
•
sell or transfer assets;
•
pay dividends and distributions or repurchase our capital stock;
•
make investments, loans or advances;
•
prepay certain subordinated indebtedness, the second lien notes
and certain other indebtedness existing on the effective date of
the Merger (“Retained Indebtedness”), subject to
exceptions, including for repayments of Retained Indebtedness
maturing prior to the senior secured credit facilities and, in
certain cases, to satisfaction of a maximum first lien leverage
condition;
•
make certain acquisitions;
•
engage in certain transactions with affiliates;
•
make certain material amendments to agreements governing certain
subordinated indebtedness, the second lien notes or Retained
Indebtedness; and
•
change our lines of business. In addition, the senior secured
credit facilities require us to maintain the following financial
covenants:
•
in the case of the asset-based revolving credit facility, a
minimum interest coverage ratio (applicable only when
availability under such facility is less than 10% of the
borrowing base thereunder); and
•
in the case of the other senior secured credit facilities, a
maximum total leverage ratio.
The senior secured credit facilities also contain certain
customary affirmative covenants and events of default, including
a change of control.
Senior
Secured Notes
Overview
of Senior Secured First Lien Notes
As of March 31, 2010, we had $4.150 billion aggregate
principal amount of senior secured first lien notes consisting
of:
•
$1.500 billion aggregate principal amount of
81/2% senior
secured notes due 2019 issued on April 22, 2009 at a price
of 96.755% of their face value, resulting in $1.451 billion
of gross proceeds;
•
$1.250 billion aggregate principal amount of
77/8% senior
secured notes due 2020 issued on August 11, 2009 at a price
of 98.254% of their face value, resulting in $1.228 billion
of gross proceeds.
$1.400 billion aggregate principal amount of
71/4% senior
secured first lien notes due 2020 issued on March 10, 2010
at a price of 99.095% of their face value, resulting in
$1.387 billion of gross proceeds.
We refer to these notes issued on April 22, 2009,
August 11, 2009 and March 10, 2010 as the “first
lien notes” and the indentures governing the first lien
notes as the “first lien indentures.”
The first lien notes and the related guarantees are secured by
first-priority liens, subject to permitted liens, on our and our
subsidiary guarantors’ assets, subject to certain
exceptions, that secure our cash flow credit facility on a
first-priority basis and are secured by second-priority liens,
subject to permitted liens, on our and our subsidiary
guarantors’ assets that secure our asset-based revolving
credit facility on a first-priority basis and our cash flow
credit facility on a second-priority basis.
Overview
of Senior Secured Second Lien Notes
As of December 31, 2009, we had $6.088 billion
aggregate principal amount of senior secured second lien notes
consisting of:
•
$4.200 billion of second lien notes (comprised of
$1.000 billion of
91/8% notes
due 2014 and $3.200 billion of
91/4% notes
due 2016) and $1.500 billion of
95/8%
cash/103/8%
pay-in-kind
second lien toggle notes due 2016 (which toggle notes allow us,
at our option, to pay interest in-kind during the first five
years at the higher interest rate of
103/8%).
We elected in November 2008 to pay interest in-kind in the
amount of $78 million for the interest period ending in May
2009.
•
$310 million aggregate principal amount of
97/8% senior
secured notes due 2017.
We refer to these notes as the “second lien notes”
and, together with the first lien notes, the “secured
notes.” We refer to the indentures governing the second
lien notes as the “second lien indentures” and,
together with the first lien indentures, the “indentures
governing the secured notes.”
These second lien notes and the related guarantees are secured
by second-priority liens, subject to permitted liens, on our and
our subsidiary guarantors’ assets, subject to certain
exceptions, that secure our cash flow credit facility on a
first-priority basis and are secured by third-priority liens,
subject to permitted liens, on our and our subsidiary
guarantors’ assets that secure our asset-based revolving
credit facility on a first-priority basis and our cash flow
credit facility on a second-priority basis.
Optional
Redemption
The indentures governing the secured notes permit us to redeem
some or all of the secured notes at any time at redemption
prices described or set forth in the respective indenture. In
particular, in the event of an equity offering, we may, for
approximately three years following the date of issuance of that
series, redeem up to 35% of the principal amount of such series
at a redemption price equal to 100% plus the amount of the
respective coupon, using the net cash proceeds raised in the
equity offering.
Change
of Control
In addition, the indentures governing the secured notes provide
that, upon the occurrence of a change of control as defined
therein, each holder of secured notes has the right to require
us to repurchase some or all of such holder’s secured notes
at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the
repurchase date.
Covenants
The indentures governing the secured notes contain covenants
limiting, among other things, our ability and the ability of our
restricted subsidiaries to, subject to certain exceptions:
•
incur additional debt or issue certain preferred stock;
•
pay dividends on or make certain distributions of our capital
stock or make other restricted payments;
consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets.
The indentures governing the secured notes also contain a
covenant limiting our ability to prepay certain series of
unsecured notes based on the maturity of those unsecured notes.
In particular, the indenture governing the first lien notes
issued in April 2009 permits us to prepay only those unsecured
notes maturing on or prior to April 15, 2019, the indenture
governing the first lien notes issued in August 2009 permits us
to prepay only those unsecured notes maturing on or prior to
February 15, 2020 and the indentures governing the notes
issued in November 2006 and in February 2009 permit us to prepay
only those unsecured notes maturing on or prior to
November 15, 2016.
Events
of Default
The indentures governing the secured notes also provide for
events of default which, if any of them occurs, would permit or
require the principal of and accrued interest on the secured
notes to become or to be declared due and payable.
Other
Secured Indebtedness
As of December 31, 2009, we had approximately
$362 million of capital leases and other secured debt
outstanding.
Under our lease with HRT of Roanoke, Inc., effective
December 20, 2005, we make annual payments for rent and
additional expenses for the use of premises in Roanoke and
Salem, Virginia. The rent payments will increase each year
beginning January 1, 2007 by the lesser of 3% or the change
in the Consumer Price Index. The lease is for a fixed term of
12 years with the option to extend the lease for another
ten years.
Under our lease with Medical City Dallas Limited, effective
March 18, 2004, we make annual payments for rent for the
use of premises that are a part of a complex known as
“Medical City Dallas” located in Dallas, Texas. The
rent payment is adjusted yearly based on the fair market value
of the premises and a capitalization rate. The initial term is
240 months with the option to extend for two more terms of
240 months each.
Unsecured
Indebtedness Overview
As of December 31, 2009, we had outstanding an aggregate
principal amount of $6.293 billion and
£121 million of senior notes and debentures,
consisting of the following series:
•
$440,020,000 aggregate principal amount of 8.75% Senior
Notes due 2010;
•
£121,359,000 aggregate principal amount of
8.75% Senior Notes due 2010;
•
$273,321,000 aggregate principal amount of 7.875% Senior
Notes due 2011;
•
$402,499,000 aggregate principal amount of 6.95% Senior
Notes due 2012;
•
$500,000,000 aggregate principal amount of 6.30% Senior
Notes due 2012;
•
$500,000,000 aggregate principal amount of 6.25% Senior
Notes due 2013;
•
$500,000,000 aggregate principal amount of 6.75% Senior
Notes due 2013;
•
$500,000,000 aggregate principal amount of 5.75% Senior
Notes due 2014;
•
$750,000,000 aggregate principal amount of 6.375% Senior
Notes due 2015;
•
$1,000,000,000 aggregate principal amount of 6.50% Senior
Notes due 2016;
$291,436,000 aggregate principal amount of 7.69% Notes due
2025;
•
$250,000,000 aggregate principal amount of 7.50% Senior
Notes due 2033;
•
$150,000,000 aggregate principal amount of 7.19% Debentures
due 2015;
•
$135,645,000 aggregate principal amount of 7.50% Debentures
due 2023;
•
$150,000,000 aggregate principal amount of 8.36% Debentures
due 2024;
•
$150,000,000 aggregate principal amount of 7.05% Debentures
due 2027;
•
$100,000,000 aggregate principal amount of 7.75% Debentures
due 2036; and
•
$200,000,000 aggregate principal amount of 7.50% Debentures
due 2095.
As of December 31, 2009, we also had outstanding
$121,180,000 aggregate principal amount of our 8.70% Medium Term
Notes due 2010; $121,110,000 aggregate principal amount of our
9.00% Medium Term Notes due 2014; and $125,000,000 aggregate
principal amount of our 7.58% Medium Term Notes due 2025.
All of our outstanding series of senior notes, debentures and
medium term notes, which we refer to collectively as the
“unsecured notes,” were issued under an indenture,
which we refer to as the “1993 Indenture.”
Optional
Redemption
If permitted by the respective supplemental indenture, we are
permitted to redeem some or all of that series of unsecured
notes at any time at redemption prices described or set forth in
such supplemental indenture.
Covenants
The 1993 Indenture contains covenants limiting, among other
things, our ability
and/or the
ability of our subsidiaries to (subject to certain exceptions):
•
assume or guarantee indebtedness or obligation secured by
mortgages, liens, pledges or other encumbrances;
•
enter into sale and lease-back transactions with respect to any
“Principal Property” (as such term is defined in the
1993 Indenture);
•
create, incur, issue, assume or otherwise become liable with
respect to, extend the maturity of, or become responsible for
the payment of, any debt or preferred stock; and
•
consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets.
In addition, 1993 Indenture provides that the aggregate amount
of all other indebtedness of HCA secured by mortgages on
“Principal Properties” (as such term is defined in the
1993 Indenture) together with the aggregate principal amount of
all indebtedness of restricted subsidiaries (as such term is
defined in the 1993 Indenture) and the attributable debt in
respect of sale-leasebacks of Principal Properties, may not
exceed 15% of the consolidated net tangible assets of HCA and
its consolidated subsidiaries, subject to exceptions for certain
permitted mortgages and debt.
Events
of Default
The 1993 Indenture contains certain events of default, which, if
any of them occurs, would permit or require the principal of and
accrued interest on such series to become or to be declared due
and payable.
HCA and the guarantors of the outstanding notes have entered
into registration rights agreements with the initial purchasers
of the outstanding notes in which we agreed, under certain
circumstances, to use our reasonable best efforts to file one or
more registration statements relating to offers to exchange the
outstanding notes for exchange notes and to complete the
exchange offers within 450 days after the date of original
issuance of the outstanding notes. Each series of exchange notes
will have terms identical in all material respects to the
corresponding series of outstanding notes, except that the
exchange notes will not contain terms with respect to transfer
restrictions, registration rights and additional interest for
failure to observe certain obligations in the registration
rights agreements. The outstanding notes were issued on
February 19, 2009, April 22, 2009, August 11,2009 and March 10, 2010.
Under the circumstances set forth below, HCA and the guarantors
will use our reasonable best efforts to cause the SEC to declare
effective one or more shelf registration statements with respect
to the resale of the outstanding notes within the time periods
specified in the applicable registration rights agreement and
keep the applicable statement effective from the effective date
of the shelf registration statement until the expiration of the
one-year period referred to in Rule 144 under the
Securities Act applicable to securities held by non-affiliates
under the Securities Act (or a shorter period that will
terminate when all the notes of that series covered by the shelf
registration statement have been sold pursuant to the shelf
registration statement or are freely tradable). These
circumstances include:
•
if any changes in law, SEC rules or regulations or applicable
interpretations thereof by the SEC do not permit us to effect
the exchange offers as contemplated by the registration rights
agreements;
•
if the exchange offer for any series of notes is not consummated
within 450 days after the date of issuance of the
corresponding outstanding notes;
•
if any initial purchaser of any series of outstanding notes so
requests, within 450 days after the date of issuance of
such outstanding notes, with respect to the outstanding notes
held by it that are not eligible to be exchanged for the
exchange notes; or
•
if any holder notifies us, within 450 days after the date
of issuance of the applicable outstanding notes, that
(1) it is prohibited by applicable law or SEC policy from
participating in the applicable exchange offer, (2) it may
not resell exchange notes acquired by it in the applicable
exchange offer to the public without delivering a prospectus and
that this prospectus is not appropriate or available for such
resales by such holder or (3) it is a broker-dealer and
holds outstanding notes of that series acquired directly from us
or one of our affiliates.
Under the registration rights agreements, if HCA fails to
complete the exchange offers (other than in the event we file a
shelf registration statement) or the shelf registration
statement, if required thereby, is not declared effective, in
either case on or prior to 450 days after the issue date of
the corresponding series of outstanding notes (the “target
registration date”), the interest rate on each series of
those outstanding notes will be increased by (x) 0.25% per
annum for the first
90-day
period immediately following the target registration date and
(y) an additional 0.25% per annum with respect to each
subsequent
90-day
period, in each case, until the exchange offer for that series
is completed or a shelf registration statement, if required, is
declared effective by the SEC or the outstanding notes of that
series cease to constitute transfer restricted notes, up to a
maximum of 1.00% per annum of additional interest per series of
outstanding notes. Copies of the registration rights agreements
have been filed as exhibits to the registration statement of
which this prospectus is a part.
If you wish to exchange your outstanding notes for exchange
notes in the exchange offers, you will be required to make the
following written representations:
•
you are not our affiliate or an affiliate of any guarantor
within the meaning of Rule 405 of the Securities Act;
you have no arrangement or understanding with any person to
participate in a distribution (within the meaning of the
Securities Act) of the exchange notes in violation of the
provisions of the Securities Act;
•
you are not engaged in, and do not intend to engage in, a
distribution of the exchange notes; and
•
you are acquiring the exchange notes in the ordinary course of
your business.
Each broker-dealer that receives exchange notes for its own
account in exchange for outstanding notes, where the
broker-dealer acquired the outstanding notes as a result of
market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with
any resale of such exchange notes. Please see “Plan of
Distribution.”
Resale of
Exchange Notes
Based on interpretations by the SEC set forth in no-action
letters issued to third parties, we believe that you may resell
or otherwise transfer exchange notes issued in the exchange
offers without complying with the registration and prospectus
delivery provisions of the Securities Act if:
•
you are not our affiliate or an affiliate of any guarantor
within the meaning of Rule 405 under the Securities Act;
•
you do not have an arrangement or understanding with any person
to participate in a distribution of the exchange notes;
•
you are not engaged in, and do not intend to engage in, a
distribution of the exchange notes; and
•
you are acquiring the exchange notes in the ordinary course of
your business.
If you are our affiliate or an affiliate of any guarantor, or
are engaging in, or intend to engage in, or have any arrangement
or understanding with any person to participate in, a
distribution of the exchange notes, or are not acquiring the
exchange notes in the ordinary course of your business:
•
you cannot rely on the position of the SEC set forth in
Morgan Stanley & Co. Incorporated (available
June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in
the SEC’s letter to Shearman & Sterling,
dated July 2, 1993, or similar no-action letters; and
•
in the absence of an exception from the position stated
immediately above, you must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any resale of the exchange notes.
This prospectus may be used for an offer to resell, resale or
other transfer of exchange notes only as specifically set forth
in this prospectus. With regard to broker-dealers, only
broker-dealers that acquired the outstanding notes as a result
of market-making activities or other trading activities may
participate in the exchange offers. Each broker-dealer that
receives exchange notes for its own account in exchange for
outstanding notes, where such outstanding notes were acquired by
such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of the exchange
notes. Please read “Plan of Distribution” for more
details regarding the transfer of exchange notes.
Terms of
the Exchange Offers
On the terms and subject to the conditions set forth in this
prospectus and in the accompanying letters of transmittal, HCA
will accept for exchange in the exchange offers any outstanding
notes that are validly tendered and not validly withdrawn prior
to the expiration date. Outstanding notes may only be tendered
in minimum denominations of $2,000 and integral multiples of
$1,000 in excess of $2,000. HCA will issue exchange notes in
principal amount identical to outstanding notes surrendered in
the exchange offers.
The form and terms of the exchange notes will be identical in
all material respects to the form and terms of the outstanding
notes except the exchange notes will be registered under the
Securities Act, will not bear
legends restricting their transfer and will not provide for any
additional interest upon our failure to fulfill our obligations
under the registration rights agreements to complete the
exchange offers, or file, and cause to be effective, a shelf
registration statement, if required thereby, within the
specified time period. The exchange notes will evidence the same
debt as the outstanding notes. The exchange notes will be issued
under and entitled to the benefits of the indentures that
authorized the issuance of the outstanding notes. For a
description of the indentures, see “Description of the
February 2009 Notes,”“Description of the April 2009
Notes,”“Description of the August 2009 Notes”
and “Description of the March 2010 Notes.”
The exchange offers are not conditioned upon any minimum
aggregate principal amount of outstanding notes being tendered
for exchange.
As of the date of this prospectus, $310 million aggregate
principal amount of the
97/8% Senior
Secured Notes due 2017 are outstanding, $1.500 billion
aggregate principal amount of the
81/2% Senior
Secured Notes due 2019 are outstanding, $1.250 billion
aggregate principal amount of the
77/8% Senior
Secured Notes due 2020 are outstanding and $1.400 billion
of the
71/4% Senior
Secured Notes due 2020 are outstanding. This prospectus and the
letters of transmittal are being sent to all registered holders
of outstanding notes. There will be no fixed record date for
determining registered holders of outstanding notes entitled to
participate in the exchange offers. HCA intends to conduct the
exchange offers in accordance with the provisions of the
registration rights agreements, the applicable requirements of
the Securities Act and the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the rules and
regulations of the SEC. Outstanding notes that are not tendered
for exchange in the exchange offers will remain outstanding and
continue to accrue interest and will be entitled to the rights
and benefits such holders have under the indenture relating to
such holders’ series of outstanding notes and the
applicable registration rights agreement except we will not have
any further obligation to you to provide for the registration of
the outstanding notes under the applicable registration rights
agreement.
HCA will be deemed to have accepted for exchange properly
tendered outstanding notes when it has given oral or written
notice of the acceptance to the exchange agent. The exchange
agent will act as agent for the tendering holders for the
purposes of receiving the exchange notes from us and delivering
exchange notes to holders. Subject to the terms of the
registration rights agreement, HCA expressly reserves the right
to amend or terminate the exchange offers and to refuse to
accept the occurrence of any of the conditions specified below
under “— Conditions to the Exchange Offers.”
If you tender your outstanding notes in the exchange offers, you
will not be required to pay brokerage commissions or fees or,
subject to the instructions in the letter of transmittal,
transfer taxes with respect to the exchange of outstanding
notes. We will pay all charges and expenses, other than certain
applicable taxes described below in connection with the exchange
offers. It is important that you read “— Fees and
Expenses” below for more details regarding fees and
expenses incurred in the exchange offers.
Expiration
Date, Extensions and Amendments
As used in this prospectus, the term “expiration date”
means 11:59 p.m., New York City time,
on, ,
2010. However, if we, in our sole discretion, extend the period
of time for which the exchange offers are open, the term
“expiration date” will mean the latest time and date
to which we shall have extended the expiration of the exchange
offers.
To extend the period of time during which the exchange offers
are open, we will notify the exchange agent of any extension by
oral or written notice, followed by notification by press
release or other public announcement to the registered holders
of the outstanding notes no later than 9:00 a.m., New York
City time, on the next business day after the previously
scheduled expiration date.
HCA reserves the right, in its sole discretion:
•
to delay accepting for exchange any outstanding notes (only in
the case that we amend or extend the exchange offers);
to extend any of the exchange offers or to terminate any of the
exchange offers if any of the conditions set forth below under
“— Conditions to the Exchange Offers” have
not been satisfied, by giving oral or written notice of such
delay, extension or termination to the exchange agent; and
•
subject to the terms of the registration rights agreements, to
amend the terms of any of the exchange offers in any manner. In
the event of a material change in any of the exchange offers,
including the waiver of a material condition, we will extend the
offer period, if necessary, so that at least five business days
remain in such offer period following notice of the material
change.
Any delay in acceptance, extension, termination or amendment
will be followed as promptly as practicable by oral or written
notice to the registered holders of the outstanding notes. If
HCA amends any of the exchange offers in a manner that we
determine to constitute a material change, it will promptly
disclose the amendment in a manner reasonably calculated to
inform the holders of applicable outstanding notes of that
amendment.
Conditions
to the Exchange Offers
Despite any other term of the exchange offers, HCA will not be
required to accept for exchange, or to issue exchange notes in
exchange for, any outstanding notes and it may terminate or
amend any of the exchange offers as provided in this prospectus
prior to the expiration date if in its reasonable judgment:
•
the exchange offers or the making of any exchange by a holder
violates any applicable law or interpretation of the SEC; or
•
any action or proceeding has been instituted or threatened in
writing in any court or by or before any governmental agency
with respect to the exchange offers that, in our judgment, would
reasonably be expected to impair our ability to proceed with the
exchange offers.
In addition, HCA will not be obligated to accept for exchange
the outstanding notes of any holder that has not made to us:
•
the representations described under “— Purpose
and Effect of the Exchange Offers,”“— Procedures for Tendering Outstanding
Notes” and “Plan of Distribution”; or
•
any other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make
available to us an appropriate form for registration of the
exchange notes under the Securities Act.
HCA expressly reserves the right at any time or at various times
to extend the period of time during which the exchange offers
are open. Consequently, HCA may delay acceptance of any
outstanding notes by giving oral or written notice of such
extension to their holders. HCA will return any outstanding
notes that it does not accept for exchange for any reason
without expense to their tendering holder promptly after the
expiration or termination of the exchange offers.
HCA expressly reserves the right to amend or terminate any of
the exchange offers and to reject for exchange any outstanding
notes not previously accepted for exchange, upon the occurrence
of any of the conditions of the exchange offers specified above.
HCA will give oral or written notice of any extension,
amendment, non-acceptance or termination to the holders of the
outstanding notes as promptly as practicable. In the case of any
extension, such notice will be issued no later than
9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
These conditions are for our sole benefit, and HCA may assert
them regardless of the circumstances that may give rise to them
or waive them in whole or in part at any or at various times
prior to the expiration date in our sole discretion. If HCA
fails at any time to exercise any of the foregoing rights, this
failure will not constitute a waiver of such right. Each such
right will be deemed an ongoing right that it may assert at any
time or at various times prior to the expiration date.
In addition, HCA will not accept for exchange any outstanding
notes tendered, and will not issue exchange notes in exchange
for any such outstanding notes, if at such time any stop order
is threatened or in
effect with respect to the registration statement of which this
prospectus constitutes a part or the qualification of the
applicable indenture under the Trust Indenture Act of 1939
(the “TIA”).
Procedures
for Tendering Outstanding Notes
To tender your outstanding notes in the exchange offers, you
must comply with either of the following:
•
complete, sign and date the letter of transmittal, or a
facsimile of the letter of transmittal, have the signature(s) on
the letter of transmittal guaranteed if required by the letter
of transmittal and mail or
•
deliver such letter of transmittal or facsimile thereof to the
exchange agent at the address set forth below under
“— Exchange Agent” prior to the expiration
date; or
•
comply with DTC’s Automated Tender Offer Program procedures
described below.
In addition, either:
•
the exchange agent must receive certificates for outstanding
notes along with the letter of transmittal prior to the
expiration date;
•
the exchange agent must receive a timely confirmation of
book-entry transfer of outstanding notes into the exchange
agent’s account at DTC according to the procedures for
book-entry transfer described below or a properly transmitted
agent’s message prior to the expiration date; or
•
you must comply with the guaranteed delivery procedures
described below.
Your tender, if not withdrawn prior to the expiration date,
constitutes an agreement between us and you upon the terms and
subject to the conditions described in this prospectus and in
the letter of transmittal.
The method of delivery of outstanding notes, letters of
transmittal and all other required documents to the exchange
agent is at your election and risk. We recommend that instead of
delivery by mail, you use an overnight or hand delivery service,
properly insured. In all cases, you should allow sufficient time
to assure timely delivery to the exchange agent before the
expiration date. You should not send letters of transmittal or
certificates representing outstanding notes to us. You may
request that your broker, dealer, commercial bank, trust company
or nominee effect the above transactions for you.
If you are a beneficial owner whose outstanding notes are
registered in the name of a broker, dealer, commercial bank,
trust company or other nominee and you wish to tender your
outstanding notes, you should promptly contact the registered
holder and instruct the registered holder to tender on your
behalf. If you wish to tender the outstanding notes yourself,
you must, prior to completing and executing the letter of
transmittal and delivering your outstanding notes, either:
•
make appropriate arrangements to register ownership of the
outstanding notes in your name; or
•
obtain a properly completed bond power from the registered
holder of outstanding notes.
The transfer of registered ownership may take considerable time
and may not be able to be completed prior to the expiration date.
Signatures on the letter of transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by a member
firm of a registered national securities exchange or of the
Financial Industry Regulatory Authority, Inc., a commercial bank
or trust company having an office or correspondent in the United
States or another “eligible guarantor institution”
within the meaning of
Rule 17A(d)-15
under the Exchange Act unless the outstanding notes surrendered
for exchange are tendered:
•
by a registered holder of the outstanding notes who has not
completed the box entitled “Special Registration
Instructions” or “Special Delivery Instructions”
on the letter of transmittal; or
•
for the account of an eligible guarantor institution.
If the letter of transmittal is signed by a person other than
the registered holder of any outstanding notes listed on the
outstanding notes, such outstanding notes must be endorsed or
accompanied by a properly completed bond
power. The bond power must be signed by the registered holder as
the registered holder’s name appears on the outstanding
notes, and an eligible guarantor institution must guarantee the
signature on the bond power.
If the letter of transmittal, any certificates representing
outstanding notes or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or
representative capacity, those persons should also indicate when
signing and, unless waived by us, they should also submit
evidence satisfactory to us of their authority to so act.
The exchange agent and DTC have confirmed that any financial
institution that is a participant in DTC’s system may use
DTC’s Automated Tender Offer Program to tender outstanding
notes. Participants in the program may, instead of physically
completing and signing the letter of transmittal and delivering
it to the exchange agent, electronically transmit their
acceptance of the exchange by causing DTC to transfer the
outstanding notes to the exchange agent in accordance with
DTC’s Automated Tender Offer Program procedures for
transfer. DTC will then send an agent’s message to the
exchange agent. The term “agent’s message” means
a message transmitted by DTC, received by the exchange agent and
forming part of the book-entry confirmation, which states that:
•
DTC has received an express acknowledgment from a participant in
its Automated Tender Offer Program that is tendering outstanding
notes that are the subject of the book-entry confirmation;
•
the participant has received and agrees to be bound by the terms
of the letter of transmittal, or in the case of an agent’s
message relating to guaranteed delivery, that such participant
has received and agrees to be bound by the notice of guaranteed
delivery; and
•
we may enforce that agreement against such participant. DTC is
referred to herein as a “book-entry transfer facility.”
Acceptance
of Exchange Notes
In all cases, HCA will promptly issue exchange notes for
outstanding notes that it has accepted for exchange under the
exchange offers only after the exchange agent timely receives:
•
outstanding notes or a timely book-entry confirmation of such
outstanding notes into the exchange agent’s account at the
book-entry transfer facility; and
•
a properly completed and duly executed letter of transmittal and
all other required documents or a properly transmitted
agent’s message.
By tendering outstanding notes pursuant to the exchange offers,
you will represent to us that, among other things:
•
you are not our affiliate or an affiliate of any guarantor
within the meaning of Rule 405 under the Securities Act;
•
you do not have an arrangement or understanding with any person
or entity to participate in a distribution of the exchange
notes; and
•
you are acquiring the exchange notes in the ordinary course of
your business.
In addition, each broker-dealer that is to receive exchange
notes for its own account in exchange for outstanding notes must
represent that such outstanding notes were acquired by that
broker-dealer as a result of market-making activities or other
trading activities and must acknowledge that it will deliver a
prospectus that meets the requirements of the Securities Act in
connection with any resale of the exchange notes. The letters of
transmittal state that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an “underwriter” within the meaning of the
Securities Act. See “Plan of Distribution.”
HCA will interpret the terms and conditions of the exchange
offers, including the letters of transmittal and the
instructions to the letters of transmittal, and will resolve all
questions as to the validity, form, eligibility, including time
of receipt and acceptance of outstanding notes tendered for
exchange. Our determinations in this regard will be final and
binding on all parties. HCA reserves the absolute right to
reject
any and all tenders of any particular outstanding notes not
properly tendered or to not accept any particular outstanding
notes if the acceptance might, in its or its counsel’s
judgment, be unlawful. We also reserve the absolute right to
waive any defects or irregularities as to any particular
outstanding notes prior to the expiration date.
Unless waived, any defects or irregularities in connection with
tenders of outstanding notes for exchange must be cured within
such reasonable period of time as we determine. Neither HCA, the
exchange agent nor any other person will be under any duty to
give notification of any defect or irregularity with respect to
any tender of outstanding notes for exchange, nor will any of
them incur any liability for any failure to give notification.
Any outstanding notes received by the exchange agent that are
not properly tendered and as to which the irregularities have
not been cured or waived will be returned by the exchange agent
to the tendering holder, unless otherwise provided in the letter
of transmittal, promptly after the expiration date.
Book-Entry
Delivery Procedures
Promptly after the date of this prospectus, the exchange agent
will establish an account with respect to the outstanding notes
at DTC and, as the book-entry transfer facility, for purposes of
the exchange offers. Any financial institution that is a
participant in the book-entry transfer facility’s system
may make book-entry delivery of the outstanding notes by causing
the book-entry transfer facility to transfer those outstanding
notes into the exchange agent’s account at the facility in
accordance with the facility’s procedures for such
transfer. To be timely, book-entry delivery of outstanding notes
requires receipt of a confirmation of a book-entry transfer, a
“book-entry confirmation,” prior to the expiration
date. In addition, although delivery of outstanding notes may be
effected through book-entry transfer into the exchange
agent’s account at the book-entry transfer facility, the
letter of transmittal or a manually signed facsimile thereof,
together with any required signature guarantees and any other
required documents, or an “agent’s message,” as
defined below, in connection with a book-entry transfer, must,
in any case, be delivered or transmitted to and received by the
exchange agent at its address set forth on the cover page of the
letter of transmittal prior to the expiration date to receive
exchange notes for tendered outstanding notes, or the guaranteed
delivery procedure described below must be complied with. Tender
will not be deemed made until such documents are received by the
exchange agent. Delivery of documents to the book-entry transfer
facility does not constitute delivery to the exchange agent.
Holders of outstanding notes who are unable to deliver
confirmation of the book-entry tender of their outstanding notes
into the exchange agent’s account at the book-entry
transfer facility or all other documents required by the letter
of transmittal to the exchange agent on or prior to the
expiration date must tender their outstanding notes according to
the guaranteed delivery procedures described below.
Guaranteed
Delivery Procedures
If you wish to tender your outstanding notes but your
outstanding notes are not immediately available or you cannot
deliver your outstanding notes, the letter of transmittal or any
other required documents to the exchange agent or comply with
the procedures under DTC’s Automatic Tender Offer Program
in the case of outstanding notes, prior to the expiration date,
you may still tender if:
•
the tender is made through an eligible guarantor institution;
•
prior to the expiration date, the exchange agent receives from
such eligible guarantor institution either a properly completed
and duly executed notice of guaranteed delivery, by facsimile
transmission, mail, or hand delivery or a properly transmitted
agent’s message and notice of guaranteed delivery, that
(1) sets forth your name and address, the certificate
number(s) of such outstanding notes and the principal amount of
outstanding notes tendered; (2) states that the tender is
being made thereby; and (3) guarantees that, within three
New York Stock Exchange trading days after the expiration date,
the letter of transmittal, or facsimile thereof, together with
the outstanding notes or a book-entry confirmation, and any
other documents required by the letter of transmittal, will be
deposited by the eligible guarantor institution with the
exchange agent; and
the exchange agent receives the properly completed and executed
letter of transmittal or facsimile thereof, as well as
certificate(s) representing all tendered outstanding notes in
proper form for transfer or a book-entry confirmation of
transfer of the outstanding notes into the exchange agent’s
account at DTC and all other documents required by the letter of
transmittal within three New York Stock Exchange trading days
after the expiration date.
Upon request, the exchange agent will send to you a notice of
guaranteed delivery if you wish to tender your outstanding notes
according to the guaranteed delivery procedures.
Withdrawal
Rights
Except as otherwise provided in this prospectus, you may
withdraw your tender of outstanding notes at any time prior to
11:59 p.m., New York City time, on the expiration date.
For a withdrawal to be effective:
•
the exchange agent must receive a written notice, which may be
by telegram, telex, facsimile or letter, of withdrawal at its
address set forth below under “— Exchange
Agent”; or
•
you must comply with the appropriate procedures of DTC’s
Automated Tender Offer Program system.
•
Any notice of withdrawal must:
•
specify the name of the person who tendered the outstanding
notes to be withdrawn;
•
identify the outstanding notes to be withdrawn, including the
certificate numbers and principal amount of the outstanding
notes; and
•
where certificates for outstanding notes have been transmitted,
specify the name in which such outstanding notes were
registered, if different from that of the withdrawing holder.
If certificates for outstanding notes have been delivered or
otherwise identified to the exchange agent, then, prior to the
release of such certificates, you must also submit:
•
the serial numbers of the particular certificates to be
withdrawn; and
•
a signed notice of withdrawal with signatures guaranteed by an
eligible institution unless you are an eligible guarantor
institution.
If outstanding notes have been tendered pursuant to the
procedures for book-entry transfer described above, any notice
of withdrawal must specify the name and number of the account at
the book-entry transfer facility to be credited with the
withdrawn outstanding notes and otherwise comply with the
procedures of the facility. We will determine all questions as
to the validity, form and eligibility, including time of receipt
of notices of withdrawal, and our determination will be final
and binding on all parties. Any outstanding notes so withdrawn
will be deemed not to have been validly tendered for exchange
for purposes of the exchange offers. Any outstanding notes that
have been tendered for exchange but that are not exchanged for
any reason will be returned to their holder, without cost to the
holder, or, in the case of book-entry transfer, the outstanding
notes will be credited to an account at the book-entry transfer
facility, promptly after withdrawal, rejection of tender or
termination of the exchange offers. Properly withdrawn
outstanding notes may be retendered by following the procedures
described under “— Procedures for Tendering
Outstanding Notes” above at any time on or prior to the
expiration date.
Exchange
Agent
The Bank of New York Mellon has been appointed as the exchange
agent for the exchange offers. You should direct all executed
letters of transmittal and all questions and requests for
assistance, requests for
additional copies of this prospectus or of the letter of
transmittal and requests for notices of guaranteed delivery to
the exchange agent addressed as follows:
By Registered or
Certified Mail:
By Regular Mail:
By Overnight Courier or
Hand Delivery:
The Bank of New York Mellon
101 Barclay Street — 7 East New York, NY10286
Corporate Trust Operations
Reorganization Unit
Attn: Evangeline R. Gonzales
Telephone:
212-815-3738
The Bank of New York Mellon
101 Barclay Street — 7 East New York, NY10286
Corporate Trust Operations
Reorganization Unit
Attn: Evangeline R. Gonzales
Telephone: 212-815-3738
The Bank of New York Mellon
101 Barclay Street — 7 East New York, NY10286
Corporate Trust Operations
Reorganization Unit
Attn: Evangeline R. Gonzales
Telephone: 212-815-3738
By Facsimile Transmission
(eligible institutions only):
If you deliver the letter of transmittal to an address other
than the one set forth above or transmit instructions via
facsimile to a number other than the one set forth above, that
delivery or those instructions will not be effective.
Fees and
Expenses
The registration rights agreements provide that we will bear all
expenses in connection with the performance of our obligations
relating to the registration of the exchange notes and the
conduct of the exchange offers. These expenses include
registration and filing fees, accounting and legal fees and
printing costs, among others. We will pay the exchange agent
reasonable and customary fees for its services and reasonable
out-of-pocket
expenses. We will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for customary mailing and
handling expenses incurred by them in forwarding this prospectus
and related documents to their clients that are holders of
outstanding notes and for handling or tendering for such clients.
We have not retained any dealer-manager in connection with the
exchange offers and will not pay any fee or commission to any
broker, dealer, nominee or other person, other than the exchange
agent, for soliciting tenders of outstanding notes pursuant to
the exchange offers.
Accounting
Treatment
We will record the exchange notes in our accounting records at
the same carrying value as the outstanding notes, which is the
aggregate principal amount as reflected in our accounting
records on the date of exchanges. Accordingly, we will not
recognize any gain or loss for accounting purposes upon the
consummation of the exchange offers. We will record the expenses
of the exchange offers as incurred.
Transfer
Taxes
We will pay all transfer taxes, if any, applicable to the
exchanges of outstanding notes under the exchange offers. The
tendering holder, however, will be required to pay any transfer
taxes, whether imposed on the registered holder or any other
person, if:
•
certificates representing outstanding notes for principal
amounts not tendered or accepted for exchange are to be
delivered to, or are to be issued in the name of, any person
other than the registered holder of outstanding notes tendered;
•
tendered outstanding notes are registered in the name of any
person other than the person signing the letter of
transmittal; or
a transfer tax is imposed for any reason other than the exchange
of outstanding notes under the exchange offers.
If satisfactory evidence of payment of such taxes is not
submitted with the letter of transmittal, the amount of such
transfer taxes will be billed to that tendering holder.
Holders who tender their outstanding notes for exchange will not
be required to pay any transfer taxes. However, holders who
instruct us to register exchange notes in the name of, or
request that outstanding notes not tendered or not accepted in
the exchange offers be returned to, a person other than the
registered tendering holder will be required to pay any
applicable transfer tax.
Consequences
of Failure to Exchange
If you do not exchange your outstanding notes for exchange notes
under the exchange offers, your outstanding notes will remain
subject to the restrictions on transfer of such outstanding
notes:
•
as set forth in the legend printed on the outstanding notes as a
consequence of the issuance of the outstanding notes pursuant to
the exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable
state securities laws; and
•
as otherwise set forth in the offering memoranda distributed in
connection with the private offerings of the outstanding notes.
In general, you may not offer or sell your outstanding notes
unless they are registered under the Securities Act or if the
offer or sale is exempt from registration under the Securities
Act and applicable state securities laws. Except as required by
the registration rights agreements, we do not intend to register
resales of the outstanding notes under the Securities Act.
Other
Participating in the exchange offers is voluntary, and you
should carefully consider whether to accept. You are urged to
consult your financial and tax advisors in making your own
decision on what action to take.
We may in the future seek to acquire untendered outstanding
notes in open market or privately negotiated transactions,
through subsequent exchange offers or otherwise. We have no
present plans to acquire any outstanding notes that are not
tendered in the exchange offers or to file a registration
statement to permit resales of any untendered outstanding notes.
Certain terms used in this description are defined under the
subheading “Certain Definitions.” In this description,
the terms “we,”“our,”“us” and “the Company” each
refer to HCA Inc. (the “Issuer”) and its
consolidated Subsidiaries.
The Issuer issued $310.0 million aggregate principal amount
of
97/8% senior
secured notes due 2017 (the “Notes”) under an
indenture dated as of February 19, 2009 (the
“Indenture”) among the Issuer, the Guarantors
and The Bank of New York Mellon Trust Company, N.A., as
trustee (the “Trustee”). The Notes were issued
in a private transaction that is not subject to the registration
requirements of the Securities Act. Except as set forth herein,
the terms of the Notes are substantially identical and include
those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act.
The following description is only a summary of the material
provisions of the Indenture, does not purport to be complete and
is qualified in its entirety by reference to the provisions of
those agreements, including the definitions therein of certain
terms used below. We urge you to read the Indenture because it,
and not this description, defines your rights as Holders of the
Notes.
Brief
Description of Notes
The Notes:
•
are general senior obligations of the Issuer;
•
are secured on a second-priority basis, equally and ratably with
the 2006 Notes and all future obligations of the Issuer and the
Guarantors under any future Junior Lien Obligations, by all of
the assets of the Issuer and the Guarantors which are not
Principal Properties and which secure the General Credit
Facility (other than the European Collateral), subject to the
Liens securing the Issuer’s and the Guarantors’
obligations under the General Credit Facility and any other
Priority Lien Obligations and other Permitted Liens;
•
are secured on a third-priority basis, equally and ratably with
the 2006 Notes and all future obligations of the Issuer and the
Guarantors under any future Junior Lien Obligations, by all of
the assets of the Issuer and the Guarantors securing the ABL
Facility which also secure the General Credit Facility, subject
to the Liens securing the Issuer’s and the Guarantors’
obligations under the Senior Credit Facilities and any other
Priority Lien Obligations and other Permitted Liens;
•
are effectively subordinated, to the extent of the value of the
assets securing such Indebtedness (which, in any event, exclude
the European Collateral, which does not secure the Notes), to
the Issuer’s and the Guarantors’ obligations under the
General Credit Facility and any future Priority Lien
Obligations, that will be secured (A) on a first-priority
basis by the same assets of the Issuers and the Guarantors that
secure the Notes and by certain other assets of the Issuer and
the Guarantors, including the Principal Properties, that do not
secure the Notes and (B) on a second-priority basis by the
Shared Receivables Collateral;
•
are effectively subordinated to the Issuer’s and the
Guarantors’ obligations under the ABL Facility, to the
extent of the value of the Shared Receivables Collateral;
•
are effectively subordinated to any obligations secured by
Permitted Liens, to the extent of the value of the assets of the
Issuer and the Guarantors subject to those Permitted Liens;
•
are structurally subordinated to any existing and future
indebtedness and liabilities of non-guarantor Subsidiaries,
including the ABL Financing Entities and the Issuer’s
Foreign Subsidiaries and any Unrestricted Subsidiaries;
rank equally in right of payment with all existing and future
senior Indebtedness of the Issuer and the Guarantors but, to the
extent of the value of the Collateral, are effectively senior to
all of the Issuer’s and the Guarantors’ unsecured
senior Indebtedness (including the Existing Notes);
•
are senior in right of payment to any future Subordinated
Indebtedness (as defined with respect to the Notes) of the
Issuer;
•
are initially unconditionally guaranteed on a joint and several
and senior basis by each Restricted Subsidiary that guarantees
the General Credit Facility (other than any Foreign
Subsidiary); and
•
are subject to registration with the SEC pursuant to the
Registration Rights Agreement.
Guarantees
The Guarantors, as primary obligors and not merely as sureties,
jointly and severally fully and unconditionally guarantee, on a
senior basis, the performance and full and punctual payment when
due, whether at maturity, by acceleration or otherwise, of all
obligations of the Issuer under the Indenture and the Notes,
whether for payment of principal of, premium, if any, or
interest or Additional Interest in respect of the Notes,
expenses, indemnification or otherwise, on the terms set forth
in the Indenture by executing the Indenture.
The Restricted Subsidiaries which guarantee the General Credit
Facility guarantee the Notes. Each of the Guarantees of the
Notes is a general senior obligation of each Guarantor and is
secured by a second-priority lien on all of the assets of each
Guarantor which secure the General Credit Facility and which are
not Principal Properties and by a third-priority lien on all of
the assets of each Guarantor which secure the ABL Facility. The
Guarantees rank equally in right of payment with all existing
and future senior Indebtedness of the Guarantor but, to the
extent of the value of the Collateral, are effectively senior to
all of the Guarantor’s unsecured senior Indebtedness and,
to the extent of the Collateral, are effectively subordinated to
the Guarantor’s Obligations under the Senior Credit
Facilities and any future Priority Lien Obligations. The
Guarantees are senior in right of payment to all existing and
future Subordinated Indebtedness of each Guarantor. The Notes
are structurally subordinated to Indebtedness and other
liabilities of Subsidiaries of the Issuer that do not Guarantee
the Notes.
Not all of the Issuer’s Subsidiaries Guarantee the Notes.
In the event of a bankruptcy, liquidation or reorganization of
any of these non-guarantor Subsidiaries, the non-guarantor
Subsidiaries will pay the holders of their debt and their trade
creditors before they will be able to distribute any of their
assets to the Issuer. None of our Subsidiaries which are
“Restricted Subsidiaries” for purposes of the Existing
Notes Indenture, Foreign Subsidiaries, ABL Financing Entities,
non-Wholly Owned Subsidiaries or any Receivables Subsidiaries
guarantee the Notes. For the year ended December 31, 2009,
our non-guarantor Subsidiaries accounted for approximately
$12.468 billion, or 41.5%, of our total revenues. As of
December 31, 2009, our non-guarantor Subsidiaries held
approximately $9.672 billion, or 40.1%, of our total assets and
approximately $6.750 billion, or 21.1%, of our total
liabilities. See Note 16 to our consolidated financial
statements included in this prospectus.
The obligations of each Guarantor under its Guarantee are
limited as necessary to prevent the Guarantee from constituting
a fraudulent conveyance under applicable law.
Any entity that makes a payment under its Guarantee is entitled
upon payment in full of all guaranteed obligations under the
Indenture to a contribution from each other Guarantor in an
amount equal to such other Guarantor’s pro rata portion of
such payment based on the respective net assets of all the
Guarantors at the time of such payment determined in accordance
with GAAP.
If a Guarantee were rendered voidable, it could be subordinated
by a court to all other indebtedness (including guarantees and
other contingent liabilities) of the Guarantor, and, depending
on the amount of such indebtedness, a Guarantor’s liability
on its Guarantee could be reduced to zero. See “Risk
Factors — Risks Related to the Notes —
Federal and state fraudulent transfer laws may permit a court to
void the guarantees, and, if that occurs, you may not receive
any payment on the notes.”
Each Guarantee by a Guarantor provides by its terms that it will
be automatically and unconditionally released and discharged
upon:
(1) (a) any sale, exchange or transfer (by merger or
otherwise) of the Capital Stock of such Guarantor (including any
sale, exchange or transfer), after which the applicable
Guarantor is no longer a Restricted Subsidiary or all or
substantially all the assets of such Guarantor, which sale,
exchange or transfer is made in compliance with the applicable
provisions of the Indenture;
(b) the release or discharge of the guarantee by such
Guarantor of the Senior Credit Facilities or such other
guarantee that resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under
such guarantee;
(c) the designation of any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in compliance with the
applicable provisions of the Indenture; or
(d) the exercise by the Issuer of its legal defeasance
option or covenant defeasance option as described under
“Legal Defeasance and Covenant Defeasance” or the
discharge of the Issuer’s obligations under the Indenture
in accordance with the terms of the Indenture; and
(2) such Guarantor delivering to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for in the
Indenture relating to such transaction have been complied with.
Holding
Company Structure
The Issuer is a holding company for its Subsidiaries, with no
material operations of its own and only limited assets.
Accordingly, the Issuer is dependent upon the distribution of
the earnings of its Subsidiaries, whether in the form of
dividends, advances or payments on account of intercompany
obligations, to service its debt obligations.
Security
General
The Notes and the Guarantees are secured by perfected
second-priority security interests in the Non-Receivables
Collateral (second in priority to the Liens on the
Non-Receivables Collateral securing the First Lien Obligations)
and by perfected third-priority security interests in the Shared
Receivables Collateral (third in priority to the first-priority
and second-priority Liens on the Shared Receivables Collateral
securing the ABL Obligations and the First Lien Obligations,
respectively), in each case, equally and ratably with the 2006
Notes and subject to Permitted Liens. Notwithstanding the
foregoing, neither the Notes nor the Guarantees are secured by
the European Collateral or the Separate Receivables Collateral
and, until after the Discharge of the First Lien Obligations,
the Notes and the Guarantees will not be secured by any
Principal Properties. Upon the Discharge of First Lien
Obligations and so long as no First Lien Obligations are
outstanding, the Principal Properties that constituted
“Collateral” under the First Lien Security Documents
Facility will become Collateral with respect to the Notes,
subject to the same limitation on the amount of Obligations
secured thereby as contained in the First Lien Security
Documents. See also “— Certain Limitations on the
Collateral” below. Priority Lien Secured Parties have
rights and remedies with respect to the Collateral that, if
exercised, could adversely affect the value of the Collateral or
the ability of the respective agents under the Intercreditor
Agreements to realize or foreclose on the Collateral on behalf
of holders of the Notes. For a description of the Shared
Receivables Collateral and the Non-Receivables Collateral, see
“Description of Other Indebtedness — Senior
Secured Credit Facilities — Guarantee and
Security.”
The Issuer and the Guarantors are and will be able to incur
additional Indebtedness in the future which could share in the
Collateral, including additional First Lien Obligations,
additional ABL Obligations, additional Junior Lien Obligations
and Obligations secured by Permitted Liens. The amount of such
additional Obligations is and will be limited by the covenant
described under “Certain Covenants — Liens”
and the covenant described under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of
Disqualified Stock and Preferred Stock.” Under certain
circumstances, the amount of any such additional Obligations
could be significant.
After-Acquired
Collateral
From and after the Issue Date and subject to certain limitations
and exceptions, (a) if the Issuer or any Guarantor creates
any additional security interest upon any property or asset that
would constitute Collateral to secure any First Lien Obligations
(other than Principal Properties prior to the Discharge of First
Lien Obligations and so long as no First Lien Obligations are
outstanding and other than European Collateral and Separate
Receivables Collateral), it must concurrently grant a
second-priority perfected security interest (subject to
Permitted Liens) upon such property as security for the Notes
and (b) if the Issuer or any Guarantor creates any
additional security interest upon any property or asset that
would constitute Shared Receivables Collateral to secure any
Priority Lien Obligations, it must concurrently grant a
third-priority perfected security interest (subject to Permitted
Liens) upon such property as security for the Notes.
Liens
with Respect to the Collateral
Security
Documents and Intercreditor Agreements
The Issuer, the Guarantors and the Junior Lien Collateral Agent
entered into Security Documents in connection with the 2006
Notes with respect to the Collateral defining the terms of the
security interests that secure the 2006 Notes and the Guarantees
with respect to such Collateral and that will define the terms
of the security interests that secure the Notes and the
Guarantees with respect to such collateral. These security
interests secure the payment and performance when due of all of
the Obligations of the Issuers and the Guarantors under the
Notes, the Indenture, the Guarantees and the Security Documents,
as provided in the Security Documents.
The Junior Lien Collateral Agent will enter into a joinder to
the General Intercreditor Agreement dated as of
November 17, 2006 by and among the trustee under the 2006
Notes and the administrative agent under the General Credit
Facility (as the same may be amended from time to time, the
“General Intercreditor Agreement”) with respect
to the Collateral. The First Lien Collateral Agent is initially
the Collateral Agent under the General Credit Facility. The
Junior Lien Collateral Agent will initially be the trustee under
the 2006 Notes. Pursuant to the terms of the General
Intercreditor Agreement, prior to the Discharge of First Lien
Obligations, the First Lien Collateral Agent, acting on behalf
of the First Lien Secured Parties, will determine the time and
method by which the security interests in the Collateral will be
enforced and will have the sole and exclusive right to manage,
perform and enforce the terms of the Security Documents relating
to the Collateral and to exercise and enforce all privileges,
rights and remedies thereunder according to its direction,
including to take or retake control or possession of such
Collateral and to hold, prepare for sale, marshall, process,
sell, lease, dispose of or liquidate such Collateral, including,
without limitation, following the occurrence of a Default or
Event of Default under the Indenture. The Junior Lien Collateral
Agent will not be permitted to enforce the security interests
even if any Event of Default under the Indenture has occurred
and the Notes have been accelerated except (a) in any
insolvency or liquidation proceeding, solely as necessary to
file a proof of claim or statement of interest with respect to
the Junior Lien Obligations or (b) as necessary to take any
action in order to prove, preserve, perfect or protect (but not
enforce) its security interest and rights in, and the perfection
and priority of its Lien on, the Collateral. See “Risk
Factors — Risks Related to the Notes — The
lien ranking provisions of the indenture and other agreements
relating to the collateral securing the 2009 second lien notes
will limit the rights of holders of the 2009 second lien notes
with respect to that collateral, even during an event of
default.” After the Discharge of First Lien Obligations,
the Junior Lien Collateral Agent in accordance with the
provisions of the Junior Lien Documents will distribute all cash
proceeds (after payment of the costs of enforcement and
collateral administration and any other amounts owed to the
Junior Lien Collateral Agent) of the Collateral received by it
under the Security Documents for the ratable benefit of the
holders of Junior Lien Obligations. The proceeds from the sale
of the Collateral remaining after the satisfaction of all First
Lien Obligations may not be sufficient to satisfy the Junior
Lien Obligations. By its nature some or all of the Collateral is
and will be illiquid and may have no readily
The Junior Lien Collateral Agent, for itself and on behalf of
each Junior Lien Secured Party, has agreed pursuant to the
General Intercreditor Agreement that (a) it will not (and
thereby waives any right to) take any action to challenge,
contest or support any other Person in contesting or
challenging, directly or indirectly, in any proceeding
(including any insolvency or liquidation proceeding), the
validity, perfection, priority or enforceability of a Lien
securing any First Lien Obligations held (or purported to be
held) by or on behalf of the First Lien Collateral Agent or any
of the First Lien Secured Parties or any agent or trustee
therefor in any Collateral or other First Lien Collateral and
(b) it will not oppose or otherwise contest (or support any
other Person contesting) any request for judicial relief made in
any court by the First Lien Collateral Agent or any First Lien
Secured Parties relating to the lawful enforcement of any First
Priority Lien on Collateral or other First Lien Collateral.
In addition, the Security Documents provide that, prior to the
Discharge of First Lien Obligations, (1) the First Lien
Collateral Agent may take actions with respect to the Collateral
(including the release of Collateral and the manner of
realization (subject to the provisions described under
“— Release of Collateral”)) without the
consent of the Junior Lien Collateral Agent or other Junior Lien
Secured Parties and (2) the Issuer and the Guarantors may
require the Junior Lien Collateral Agent to agree to modify the
Security Documents, or the General Intercreditor Agreement,
without the consent of the Junior Lien Collateral Agent or other
Junior Lien Secured Parties, to secure additional extensions of
credit and add additional First Lien Secured Parties or Junior
Lien Secured Parties so long as such modifications do not
expressly violate the provisions of the General Credit Facility
or the Indenture. In addition, the General Intercreditor
Agreement provides that with respect to Collateral in the event
that the First Lien Collateral Agent or the First Lien Secured
Parties enter into any amendment, waiver or consent in respect
of or replace any of the First Lien Security Documents for the
purpose of adding to, or deleting from, or waiving or consenting
to any departures from any provisions of, any First Lien
Security Document or changing in any manner the rights of the
First Lien Collateral Agent, the First Lien Secured Parties, the
Issuer or any Guarantor thereunder (including the release of any
Liens in Collateral in accordance with the provisions described
under “— Release of Collateral”), then such
amendment, waiver or consent shall apply automatically to any
comparable provision of each comparable Security Document in
favor of the Junior Lien Obligations without the consent of the
Junior Lien Collateral Agent, any Junior Lien Representative or
any Junior Lien Secured Party and without any action by the
Junior Lien Collateral Agent, any Junior Lien Representative,
the Issuer or any Guarantor; provided that such
amendment, waiver or consent does not materially adversely
affect the rights of the Junior Lien Secured Parties or the
interests of the Junior Lien Secured Parties in the Collateral
in a manner materially different from that affecting the rights
of the First Lien Secured Parties thereunder or therein. Any
provider of additional extensions of credit shall be entitled to
rely on the determination of an Officer that such modifications
do not expressly violate the provisions of the General Credit
Facility or the Indenture if such determination is set forth in
an Officer’s Certificate delivered to such provider.
So long as the Discharge of First Lien Obligations has not
occurred, the Collateral or proceeds thereof received in
connection with the sale or other disposition of, or collection
on, such Non-Receivables Collateral upon the exercise of
remedies will be applied by the First Lien Collateral Agent to
the First Lien Obligations in such order as specified in the
relevant First Lien Documents until the Discharge of First Lien
Obligations has occurred. Upon the Discharge of First Lien
Obligations, the First Lien Collateral Agent shall deliver to
the Junior Lien Collateral Agent (for the benefit of all Junior
Lien Secured Parties) any remaining proceeds of Collateral held
by it in the same form as received, with any necessary
endorsements or as a court of competent jurisdiction may
otherwise direct to be applied by the Junior Lien Collateral
Agent to the Junior Lien Obligations in such order as specified
in the Junior Lien Documents.
In addition, so long as the Discharge of First Lien Obligations
has not occurred, neither the Junior Lien Collateral Agent nor
any Junior Lien Representative shall acquire or hold any Lien on
any assets of the Issuer or any Subsidiary (and neither the
Issuer nor any Subsidiary shall grant such Lien) securing any
Junior Lien Obligations that are not also subject to the First
Priority Lien in respect of the First Lien Obligations under the
First Lien Documents. If the Junior Lien Collateral Agent or any
Junior Lien Representative shall acquire or hold any Lien on any
assets of the Issuer or any Subsidiary that is not also subject
to the First Priority Lien in respect of the First Lien
Obligations under the First Lien Documents, then such Junior
Lien Collateral Agent or other Junior Lien Representative shall,
without the need for any further consent of any party and
notwithstanding anything to the contrary in any other document,
be deemed to also hold and have held such Lien for the benefit
of the First Lien Collateral Agent as security for the First
Lien Obligations (subject to the lien priority and other terms
hereof).
The Junior Lien Collateral Agent and each other Junior Lien
Secured Party will agree that any Lien purported to be granted
on any Collateral as security for First Lien Obligations shall
be deemed to be and shall be deemed to remain senior in all
respects and prior to all Liens on the Collateral securing any
Junior Lien Obligations for all purposes regardless of whether
the Lien purported to be granted is found to be improperly
granted, improperly perfected, preferential, a fraudulent
conveyance or legally or otherwise deficient or invalid, in
whole or in part, in any manner.
Any Collateral or proceeds thereof received by any Junior Lien
Secured Party at a time when such receipt is not expressly
permitted by the terms of the General Intercreditor Agreement or
prior to the Discharge of First Lien Obligations shall be
segregated and held in trust for the benefit of and forthwith
paid over to the First Lien Collateral Agent (and/or its
designees) for the benefit of the First Lien Secured Parties in
the same form as received, with any necessary endorsements or as
a court of competent jurisdiction may otherwise direct.
If any First Lien Secured Party is required in any insolvency or
liquidation proceeding or otherwise to turn over or otherwise
pay to the estate of the Issuer or any other Guarantor (or any
trustee, receiver or similar person therefor), because the
payment of such amount was declared to be fraudulent or
preferential in any respect or for any other reason, any amount
(a “Recovery”), whether received as proceeds of
security, enforcement of any right of setoff or otherwise, then
as among the parties hereto, the First Lien Obligations shall be
deemed to be reinstated to the extent of such Recovery and to be
outstanding as if such payment had not occurred and such First
Lien Secured Party shall be entitled to a reinstatement of First
Lien Obligations with respect to all such recovered amounts and
shall have all rights hereunder. If the General Intercreditor
Agreement shall have been terminated prior to such Recovery, the
General Intercreditor Agreement shall be reinstated in full
force and effect, and such prior termination shall not diminish,
release, discharge, impair or otherwise affect the obligations
of the parties thereto. Any Collateral or other First Lien
Collateral or proceeds thereof received by any Junior Lien
Secured Party prior to the time of such Recovery shall be deemed
to have been received prior to the Discharge of First Lien
Obligations and subject to the provisions of the immediately
preceding paragraph.
In addition, if at any time in connection with or after the
Discharge of First Lien Obligations the Issuer either in
connection therewith or thereafter enters into any Refinancing
of any First Lien Document evidencing a First Lien Obligation,
then such Discharge of First Lien Obligations shall
automatically be deemed not to have occurred for all purposes of
the General Intercreditor Agreement, the First Lien Documents
and the Junior Lien Documents, and the obligations under such
Refinancing shall automatically be treated as First Lien
Obligations for all purposes of the General Intercreditor
Agreement, including for purposes of the Lien priorities and
rights in respect of Collateral set forth therein, the related
documents shall be treated as First Lien Documents for all
purposes of the General Intercreditor Agreement and the first
lien collateral agent under such Refinanced First Lien Documents
shall be First Lien Collateral Agent for all purposes of the
General Intercreditor Agreement.
The General Intercreditor Agreement provides that, prior to the
Discharge of First Lien Obligations, neither the Junior Lien
Collateral Agent nor any other Junior Lien Secured Parties may
assert or enforce any right of marshalling accorded to a junior
lienholder, as against the First Lien Collateral Agent or any
First Lien Secured Party (in their capacity as priority
lienholders). Following the Discharge of First Lien Obligations,
the Junior Lien Secured Parties may assert their right under the
Uniform Commercial Code or otherwise to any proceeds remaining
following a sale or other disposition of Collateral by, or on
behalf of, the First Lien Collateral Agent or the First Lien
Secured Parties. This waiver of all rights of marshalling prior
to
the Discharge of First Lien Obligations may result in proceeds
from the sale of Collateral (in which the Junior Lien Secured
Parties have second-priority Liens) being applied to repay First
Lien Obligations prior to the application of the proceeds of
Shared Receivables Collateral (in which the Junior Lien Secured
Parties have third-priority Liens), the Principal Properties (in
which the Junior Lien Secured Parties will not have a security
interest prior to the Discharge of First Lien Obligations and
during any time that any First Lien Obligations are outstanding)
or the European Collateral or the Separate Receivables
Collateral (in which the Junior Lien Secured Parties will not
have a security interest). In that scenario, Junior Lien Secured
Parties may recover less than they would have if such proceeds
were applied in the order most favorable to the Junior Lien
Secured Parties.
So long as the Discharge of First Lien Obligations has not
occurred, whether or not any insolvency or liquidation
proceeding has been commenced by or against the Issuer or any
Guarantor, (i) neither the Junior Lien Collateral Agent,
any Junior Lien Representative nor any Junior Lien Secured Party
will (x) exercise or seek to exercise any rights or
remedies (including setoff or the right to credit bid debt
(except as set forth in the next paragraph below)) with respect
to any Collateral in respect of any applicable Junior Lien
Obligations, or institute any action or proceeding with respect
to such rights or remedies (including any action of
foreclosure), (y) contest, protest or otherwise object to
any foreclosure or enforcement proceeding or action brought with
respect to the Collateral or any other collateral by the First
Lien Collateral Agent or any First Lien Secured Party in respect
of the First Lien Obligations, the exercise of any right by the
First Lien Collateral Agent or any First Lien Secured Party (or
any agent or sub-agent on their behalf) in respect of the First
Lien Obligations under any control agreement, lockbox agreement,
landlord waiver or bailee’s letter or similar agreement or
arrangement to which the Junior Lien Collateral Agent, any
Junior Lien Representative or any Junior Lien Secured Party
either is a party or may have rights as a third-party
beneficiary, or any other exercise by any such party of any
rights and remedies as a secured party relating to the
Collateral or any other collateral under the First Lien
Documents or otherwise in respect of First Lien Obligations, or
(z) object to any waiver or forbearance by the First Lien
Secured Parties from or in respect of bringing or pursuing any
foreclosure proceeding or action or any other exercise of any
rights or remedies relating to the Collateral or any other
collateral in respect of First Lien Obligations and
(ii) except as otherwise provided in the General
Intercreditor Agreement, the First Lien Collateral Agent and the
First Lien Secured Parties shall have the sole and exclusive
right to enforce rights, exercise remedies (including setoff and
the right to credit bid their debt), marshal, process and make
determinations regarding the release, disposition or
restrictions, or waiver or forbearance of rights or remedies
with respect to the Collateral without any consultation with or
the consent of the Junior Lien Collateral Agent, any Junior Lien
Representative or any Junior Lien Secured Party.
Notwithstanding the foregoing, the General Intercreditor
Agreement shall not be construed to in any way limit or impair
the right of any Junior Lien Secured Party from exercising a
credit bid with respect to the Junior Lien Obligations in a sale
or other disposition of Collateral under Section 363 of the
Bankruptcy Code; provided that in connection with and
immediately after giving effect to such sale and credit bid
there occurs a Discharge of First Lien Obligations.
In addition, the Junior Lien Collateral Agent, each Junior Lien
Representative and each other Junior Lien Secured Party have
agreed that if the Issuer or any Guarantor is subject to any
insolvency or liquidation proceeding:
(1) if the First Lien Collateral Agent acting on behalf of
First Lien Secured Parties desires to permit the use of cash
collateral or to permit the Issuer or any Guarantor to obtain
financing under Section 363 or Section 364 of the
Bankruptcy Code or any similar provision in any Bankruptcy Law
(“DIP Financing”), including if such DIP
Financing is secured by Liens senior in priority to the Liens
securing the Notes or other Junior Lien Obligations, then the
Junior Lien Collateral Agent and each Junior Lien
Representative, on behalf of itself and each applicable Junior
Lien Secured Party, agrees not to object to such use of cash
collateral or DIP Financing and will not request adequate
protection or any other relief in connection therewith (except
to the extent permitted by the General Intercreditor Agreement,
as set forth below) and, to the extent the Liens securing the
First Lien Obligations are subordinated or pari passu
with such DIP Financing, will subordinate its Liens in the
Collateral and any other collateral to
such DIP Financing (and all Obligations relating thereto) on the
same basis as they are subordinated to the First Lien
Obligations;
(2) none of them will object to, or otherwise contest (or
support any other Person contesting), any motion for relief from
the automatic stay or from any injunction against foreclosure or
enforcement in respect of the First Lien Obligations made by the
First Lien Collateral Agent or any First Lien Secured Party;
(3) none of them will object to, or otherwise contest (or
support any other Person contesting), any order relating to a
sale of assets of any Issuer or Guarantor for which the First
Lien Collateral Agent has consented that provides, to the extent
that sale is to be free and clear of Liens, that the Liens
securing the First Lien Obligations and the Junior Lien
Obligations will attach to the proceeds of the sale on the same
basis of priority as the existing Liens in accordance with the
General Intercreditor Agreement;
(4) none of them will seek relief from the automatic stay
or any other stay in any insolvency or liquidation proceeding in
respect of the Collateral or any other First Lien Collateral,
without the prior written consent of the First Lien Collateral
Agent;
(5) none of them will object to, or otherwise contest (or
support any other Person contesting), (a) any request by
the First Lien Collateral Agent or any First Lien Secured Party
for adequate protection or (b) any objection by the First
Lien Collateral Agent or any First Lien Secured Party to any
motion, relief, action or proceeding based on the First Lien
Collateral Agent’s or such First Lien Secured Party’s
claiming a lack of adequate protection;
(6) none of them will assert or enforce (or support any
Person asserting or enforcing) any claim under
Section 506(c) of the Bankruptcy Code senior to or on a
parity with the Liens securing the First Lien Obligations for
costs or expenses of preserving or disposing of any Collateral
or First Lien Collateral;
(7) none of them will oppose or otherwise contest (or
support any other Person contesting) any lawful exercise by the
First Lien Collateral Agent or any First Lien Secured Party of
the right to credit bid First Lien Obligations at any sale of
Collateral or First Lien Collateral; and
(8) none of them will challenge (or support any other
person challenging) the validity, enforceability, perfection or
priority of the First Priority Liens on Collateral or First Lien
Collateral (and the General Intercreditor Agreement will provide
that the First Lien Secured Parties agree that none of them will
challenge the validity, enforceability, perfection or priority
of the Liens in favor of the Trustee and each other Junior Lien
Secured Party on the Collateral).
In addition, neither the Junior Lien Collateral Agent, any
Junior Lien Representative nor any other Junior Lien Secured
Party will file or prosecute in any insolvency or liquidation
proceeding any motion for adequate protection (or any comparable
request for relief) based upon their respective security
interests in the Collateral, except that:
(1) any of them may freely seek and obtain relief granting
a junior Lien co-extensive in all respects with, but
subordinated to, all Liens granted in the insolvency or
liquidation proceeding to, or for the benefit of, the First Lien
Secured Parties (and the General Intercreditor Agreement will
provide that the First Lien Secured Parties will not object to
the granting of such a junior Lien); and
(2) any of them may freely seek and obtain any relief upon
a motion for adequate protection (or any comparable relief),
without any condition or restriction whatsoever, at any time
after the Discharge of First Lien Obligations.
Without limiting the generality of any provisions of the General
Intercreditor Agreement, any vote to accept, and any other act
to support the confirmation or approval of, any Non-Conforming
Plan of Reorganization shall be inconsistent with and,
accordingly, a violation of the terms of the General
Intercreditor Agreement, and the First Lien Collateral Agent
shall be entitled to have any such vote to accept a Non-
Conforming Plan of Reorganization dismissed and any such support
of any Non-Conforming Plan of Reorganization withdrawn.
Subject to the terms of the Security Documents, the Issuer and
the Guarantors have the right to remain in possession and retain
exclusive control of the Collateral securing the Notes and the
Junior Lien Obligations (other than securities, instruments and
chattel paper constituting part of the Collateral and deposited
with the First Lien Collateral Agent in accordance with the
provisions of the First Lien Security Documents and any Shared
Receivables Collateral subject to a control agreement under the
circumstances described in the First Lien Security Documents),
to freely operate the Collateral and to collect, invest and
dispose of any income therefrom.
The Junior Lien Collateral Agent and each Junior Lien
Representative, on behalf of the Junior Lien Secured Parties,
have acknowledged and agreed in the General Intercreditor
Agreement that (a) the Junior Lien Secured Parties’
claims against the Issuer
and/or any
Guarantor in respect of the Collateral constitute junior claims
separate and apart (and of a different class) from the senior
claims of the First Lien Secured Parties against the Issuer and
the Guarantor in respect of the Collateral, (b) the First
Lien Obligations include all interest that accrues after the
commencement of any insolvency or liquidation proceeding of the
Issuer or any Guarantor at the rate provided for in the
applicable First Lien Documents governing the same, whether or
not a claim for post-petition interest is allowed or allowable
in any such insolvency or liquidation proceeding and
(c) the Intercreditor Agreement constitutes a
“subordination agreement” under Section 510 of
the Bankruptcy Code.
Release
of Collateral
The Issuer and the Guarantors will be entitled to the release of
property and other assets constituting Collateral from the Liens
securing the Notes and the Junior Lien Obligations under any one
or more of the following circumstances:
(1) to enable us to consummate the sale, transfer or other
disposition of such property or assets to the extent not
prohibited under the covenant described under
“— Repurchase at the Option of
Holders — Asset Sales”;
(2) the release of Excess Proceeds or Collateral Excess
Proceeds that remain unexpended after the conclusion of an Asset
Sale Offer or a Collateral Asset Sale Offer conducted in
accordance with the Indenture;
(3) in the case of a Guarantor that is released from its
Guarantee with respect to the Notes pursuant to the terms of the
Indenture, the release of the property and assets of such
Guarantor;
(4) with the consent of the holders of at least 75% of the
aggregate principal amount of the Notes then outstanding and
affected thereby and a majority of all Junior Lien Obligations
(including the Notes) then outstanding and affected thereby
(including, without limitation, consents obtained in connection
with a tender offer or exchange offer for, or purchase of,
Junior Lien Obligations); or
(5) as described under “— Amendment,
Supplement and Waiver” below.
The Junior Liens on any Collateral securing the Junior Lien
Obligations will also terminate and be released automatically if
the First Priority Liens on such Collateral securing First Lien
Obligations are released by the First Lien Collateral Agent on
behalf of the First Lien Secured Parties, unless such release
occurs in connection with, and after giving effect to, a
Discharge of First Lien Obligations, which discharge is not in
connection with a foreclosure of, or other exercise of remedies
with respect to, Collateral by the First Lien Secured Parties
(such discharge not in connection with any such foreclosure or
exercise of remedies, a “Payment Discharge”)
(provided that, in the case of a Payment Discharge, the
Liens on any Collateral disposed of in connection with the
satisfaction in whole or in part of First Lien Obligations shall
be automatically released but any proceeds thereof not used for
purposes of the Discharge of First Lien Obligations or otherwise
in accordance with the Indenture shall be subject to Liens in
favor of the Junior Lien Secured Parties). In the event of a
Payment Discharge, the Junior Liens on Collateral shall become
first-
priority security interests, subject to Permitted Liens, any
intercreditor agreements or arrangements among Junior Lien
Secured Parties permitted under the General Intercreditor
Agreement and, with respect to Shared Receivables Collateral,
subject to the Shared Receivables Intercreditor Agreement;
provided that if the Issuer or the Guarantors incur at
any time thereafter any new or replacement First Lien
Obligations permitted under the Indenture, then such Payment
Discharge shall automatically be deemed not to have occurred for
all purposes of the General Intercreditor Agreement, the First
Lien Documents and the Junior Lien Documents, and such new
Obligations shall automatically be treated as First Lien
Obligations for all purposes of the General Intercreditor
Agreement, including for purposes of the Lien priorities and
rights in respect of Collateral set forth therein, and the
related documents shall be treated as First Lien Documents.
To the extent necessary and for so long as required for such
Subsidiary not to be subject to any requirement pursuant to
Rule 3-16
of
Regulation S-X
under the Securities Act to file separate financial statements
with the SEC (or any other governmental agency), the Capital
Stock of any Subsidiary of the Company (excluding Healthtrust,
Inc. — The Hospital Company, a Delaware corporation
and its successors and assigns) shall not be included in the
Collateral with respect to the respective Notes so affected (as
described under “— Certain Limitations on the
Collateral”) and shall not be subject to the Liens securing
such Notes and the Junior Lien Obligations.
The Junior Liens on the Collateral securing the Notes and the
Guarantees also will be released upon (i) payment in full
of the principal of, together with accrued and unpaid interest
(including Additional Interest, if any) on, the Notes and all
other Obligations under the Indenture, the Guarantees and the
Security Documents (including the 2006 Notes) that are due and
payable at or prior to the time such principal, together with
accrued and unpaid interest (including Additional Interest, if
any), are paid or (ii) a legal defeasance or covenant
defeasance under the Indenture as described below under
“Legal Defeasance and Covenant Defeasance” or a
discharge of the Indenture as described under “Satisfaction
and Discharge.”
Any certificate or opinion required by Section 314(d) of
the Trust Indenture Act may be made by an Officer of the
Company, except in cases where Section 314(d) requires that
such certificate or opinion be made by an independent engineer,
appraiser or other expert.
Notwithstanding anything to the contrary herein, the Issuer and
its Subsidiaries are not required to comply with all or any
portion of Section 314(d) of the Trust Indenture Act
if they determine, in good faith based on advice of counsel,
that under the terms of that section
and/or any
interpretation or guidance as to the meaning thereof of the SEC
and its staff, including “no action” letters or
exemptive orders, all or any portion of Section 314(d) of
the Trust Indenture Act is inapplicable to the released
Collateral.
Without limiting the generality of the foregoing, certain no
action letters issued by the SEC have permitted an indenture
qualified under the Trust Indenture Act to contain
provisions permitting the release of collateral from Liens under
such indenture in the ordinary course of the issuer’s
business without requiring the issuer to provide certificates
and other documents under Section 314(d) of the
Trust Indenture Act. The Issuer and the Guarantors may,
subject to the provisions of the Indenture, among other things,
without any release or consent by the Junior Lien Collateral
Agent, conduct ordinary course activities with respect to the
Collateral, including, without limitation:
•
selling or otherwise disposing of, in any transaction or series
of related transactions, any property subject to the Lien of the
Security Documents that has become worn out, defective, obsolete
or not used or useful in the business;
•
abandoning, terminating, canceling, releasing or making
alterations in or substitutions of any leases or contracts
subject to the Lien of the Indenture or any of the Security
Documents;
•
surrendering or modifying any franchise, license or permit
subject to the Lien of the Security Documents that it may own or
under which it may be operating;
•
altering, repairing, replacing, changing the location or
position of and adding to its structures, machinery, systems,
equipment, fixtures and appurtenances;
selling, transferring or otherwise disposing of inventory in the
ordinary course of business;
•
collecting accounts receivable in the ordinary course of
business as permitted by the covenant described under
“Repurchase at the Option of Holders — Asset
Sales”;
•
making cash payments (including for the repayment of
Indebtedness or interest) from cash that is at any time part of
the Collateral in the ordinary course of business that are not
otherwise prohibited by the Indenture and the Security
Documents; and
•
abandoning any intellectual property that is no longer used or
useful in the Issuer’s business.
The Issuer must deliver an Officer’s Certificate to the
Junior Lien Collateral Agent within 30 calendar days following
the end of each six-month period beginning on May 15 and
November 15 of each year, to the effect that all such releases
and withdrawals during the preceding six-month period in the
ordinary course of the Issuer’s or the Guarantors’
business, as described in the preceding paragraph, were not
prohibited by the Indenture.
Shared
Receivables Intercreditor Agreement
In addition, the Junior Lien Collateral Agent, has entered into
a joinder to the Shared Receivables Intercreditor Agreement
dated as of November 17, 2006 by and among the trustee
under the 2006 Notes, the administrative agent under the General
Credit Facility and the administrative agent under the ABL
Facility (as the same may be amended from time to time, the
“Shared Receivables Intercreditor Agreement”)
with respect to the Shared Receivables Collateral. The Shared
Receivables Intercreditor Agreement contains provisions with
respect to the Shared Receivables Collateral and the relative
rights, privileges and obligations relating thereto as between
(a) the Junior Lien Collateral Agent, the other Junior Lien
Secured Parties, the First Lien Collateral Agent and the First
Lien Secured Parties and (b) the collateral agent with
respect to the ABL Facility (the “ABL Collateral
Agent”) and the ABL Secured Parties. The Shared
Receivables Intercreditor Agreement provides for first-priority
Liens in the Shared Receivables Collateral in favor of the ABL
Secured Parties, second-priority Liens in the Shared Receivables
Collateral in favor of the First Lien Secured Parties and
third-priority security interests in the Shared Receivables
Collateral in favor of the Junior Lien Secured Parties, in each
case, subject to Permitted Liens. The relative rights,
privileges and obligations with respect to the Shared
Receivables Collateral of the ABL Secured Parties, on the one
hand, and the Junior Lien Collateral Agent, the other Junior
Lien Secured Parties, the First Lien Collateral Agent and the
First Lien Secured Parties, on the other, are substantially
identical to the relative rights, privileges and obligations
with respect to the Non-Receivables Collateral of the First Lien
Secured Parties, on the one hand, and the Junior Lien Secured
Parties, on the other, respectively, except that the Liens of
the Junior Lien Secured Parties in the Shared Receivables
Collateral are third-priority Liens and except to the extent
customary or necessary with respect to collateral of the type
that constitutes Shared Receivables Collateral.
Certain
Limitations on the Collateral
The Collateral securing the Notes does not include any of the
following assets:
(1) the property or assets owned by any Subsidiary of the
Issuer that is not a Guarantor, including each ABL Financing
Entity;
(2) any rights or interests of the Issuer or any Guarantor
in, to or under any agreement, contract, license, instrument,
document or other general intangible (referred to solely for
purposes of this clause (2) as a
“Contract”), any intellectual property or any
security or other investment property (i) to the extent the
security interest in such Collateral is prohibited by any
applicable contract, agreement or other instrument without the
consent of any other party thereto (other than a party to the
General Credit Facility or the Indenture or, in the case of
investment property, a Wholly-Owned Subsidiary), (ii) to
the extent the security interest in such Contract would give any
other party (other than a party to the General Credit Facility
or the Indenture or, in the case of investment property, a
Wholly-Owned Subsidiary) to such Collateral the right to
terminate its obligations thereunder or (iii) to the extent
all necessary consents to such grant of a security interest have
not been obtained from the other parties thereto (other than to
the
extent that any such prohibition referred to in clauses (i),
(ii) and (iii) would be rendered ineffective pursuant
to
Sections 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any
successor provision or provisions) of any relevant jurisdiction
or any other applicable law); provided that this
limitation shall not affect, limit, restrict or impair the grant
by the Issuer or such Guarantor of a security interest in any
account receivable or any money or other amounts due or to
become due under any Contract;
(3) any equipment of the Issuer or any Guarantor that is
subject to, or secured by, a Capitalized Lease Obligation or
Purchase Money Obligations and any equipment that constitutes an
asset of an entity acquired in a transaction permitted by the
Indenture to the extent that such equipment subject to a Lien
permitted by the Indenture and the terms of the Indebtedness
secured by such Lien prohibit assignment of, or granting of a
security interest in, the Issuer’s or such Guarantor’s
rights and interests therein (other than to the extent that any
such prohibition would be rendered ineffective pursuant to
Sections 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any
successor provision or provisions) of any relevant jurisdiction
or any other applicable law); provided that immediately
upon the repayment of all Indebtedness secured by such Lien, the
Issuer or the Guarantor, as the case may be, shall be deemed to
have granted a security interest in all the rights and interests
with respect to such equipment;
(4) any Voting Stock that is issued by any Foreign
Subsidiary, if and to the extent that the inclusion of such
Voting Stock in the Collateral would cause the Collateral
pledged by the Issuer or the applicable Guarantor, as the case
may be, to include in the aggregate more than 65% of the total
combined voting power of all classes of Voting Stock of such
Foreign Subsidiary;
(5) any Capital Stock that is issued by a Subsidiary that
is not owned directly by the Issuer or a Guarantor;
(6) prior to the Discharge of First Lien Obligations and so
long as any First Lien Obligations are outstanding, any
Principal Properties;
(7) any Capital Stock and other securities of a Subsidiary
(excluding Healthtrust, Inc. — The Hospital Company, a
Delaware corporation and its successors and assigns) to the
extent that the pledge of such Capital Stock and other
securities results in the Company’s being required to file
separate financial statements of such Subsidiary with the SEC,
but only to the extent necessary to not be subject to such
requirement and only for so long as such requirement is in
existence and only with respect to the relevant Notes affected;
provided that neither the Issuer nor any Subsidiary shall
take any action in the form of a reorganization, merger or other
restructuring a principal purpose of which is to provide for the
release of the Lien on any Capital Stock pursuant to this clause
(7). In addition, in the event that
Rule 3-16
of
Regulation S-X
under the Securities Act is amended, modified or interpreted by
the SEC to require (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted,
which would require) the filing with the SEC (or any other
governmental agency) of separate financial statements of any
Subsidiary of the Company (excluding Healthtrust,
Inc. — The Hospital Company, a Delaware corporation
and its successors and assigns) due to the fact that such
Subsidiary’s Capital Stock secures the Notes affected
thereby, then the Capital Stock of such Subsidiary will
automatically be deemed not to be part of the Collateral
securing the relevant Notes affected thereby but only to the
extent necessary to not be subject to such requirement and only
for so long as required to not be subject to such requirement.
In such event, the Security Documents may be amended or
modified, without the consent of any holder of such Notes, to
the extent necessary to release the security interests in favor
of the applicable collateral agents on the shares of Capital
Stock that are so deemed to no longer constitute part of the
Collateral for the relevant Notes. In the event that
Rule 3-16
of
Regulation S-X
under the Securities Act is amended, modified or interpreted by
the SEC to permit (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted,
which would permit) such Subsidiary’s Capital Stock to
secure the Notes in excess of the amount then pledged without
the filing with the SEC (or any other governmental agency) of
separate financial statements of such Subsidiary, then the
Capital Stock of such Subsidiary will automatically be deemed to
be a part of the Collateral for the relevant Notes but only to
the extent necessary to not be subject to any such financial
statement requirement;
(8) certain non-Principal Properties that do not constitute
Non-Receivables Collateral;
(9) any deposit accounts, other bank or securities accounts
or cash of the Issuer or any Guarantor;
(10) any leaseholds and motor vehicles of the Issuer or any
Guarantor;
(11) any Capital Stock or securities convertible into or
exchangeable for Capital Stock (i) if, in the reasonable
judgment of the Issuer, the cost or other consequences of
pledging such Collateral shall be excessive in view of the
benefits to be obtained by the Junior Lien Secured Parties
therefrom or (ii) the pledge of such Collateral would
result in adverse tax consequences to the Issuer or any of its
Subsidiaries as reasonably determined by the Issuer and
identified in writing to the Junior Lien Collateral Agent;
(12) any collateral to the extent the grant of the security
interest therein would violate any requirement of law; and
(13) proceeds and products from any and all of the
foregoing excluded collateral described in clauses (1)
through (12), unless such proceeds or products would otherwise
constitute Collateral securing the Notes.
Sufficiency
of Collateral
The fair market value of the Collateral is subject to
fluctuations based on factors that include, among others, the
condition of the healthcare industry, the ability to sell the
Collateral in an orderly sale, general economic conditions, the
availability of buyers and similar factors. The amount to be
received upon a sale of the Collateral would also be dependent
on numerous factors, including, but not limited to, the actual
fair market value of the Collateral at such time and the timing
and the manner of the sale. By their nature, portions of the
Collateral may be illiquid and may have no readily ascertainable
market value. Accordingly, there can be no assurance that the
Collateral can be sold in a short period of time or in an
orderly manner. In addition, in the event of a bankruptcy, the
ability of the holders to realize upon any of the Collateral may
be subject to certain bankruptcy law limitations as described
below.
Certain
Bankruptcy Limitations
The right of the Trustee to repossess and dispose of the
Collateral upon the occurrence of an Event of Default would be
significantly impaired by any Bankruptcy Law in the event that a
bankruptcy case were to be commenced by or against the Company
or any Guarantor prior to the Trustee’s having repossessed
and disposed of the Collateral. Upon the commencement of a case
for relief under the Bankruptcy Code, a secured creditor such as
the Trustee is prohibited from repossessing its security from a
debtor in a bankruptcy case, or from disposing of security
without bankruptcy court approval.
In view of the broad equitable powers of a U.S. bankruptcy
court, it is impossible to predict how long payments under the
Notes could be delayed following commencement of a bankruptcy
case, whether or when the Trustee could repossess or dispose of
the Collateral, the value of the Collateral at any time during a
bankruptcy case or whether or to what extent holders of the
Notes would be compensated for any delay in payment or loss of
value of the Collateral. The Bankruptcy Code permits only the
payment
and/or
accrual of post-petition interest, costs and attorneys’
fees to a secured creditor during a debtor’s bankruptcy
case to the extent the value of such creditor’s interest in
the Collateral is determined by the bankruptcy court to exceed
the aggregate outstanding principal amount of the obligations
secured by the Collateral.
Furthermore, in the event a domestic or foreign bankruptcy court
determines that the value of the Collateral is not sufficient to
repay all amounts due on the Notes, the holders of the Notes
would hold secured claims only to the extent of the value of the
Collateral to which the holders of the Notes are entitled, and
unsecured claims with respect to such shortfall.
Paying
Agent and Registrar for the Notes
The Issuer must maintain one or more paying agents for the Notes
in the Borough of Manhattan, City of New York or Atlanta,
Georgia. The initial paying agent for the Notes is the Trustee.
The Issuer must also maintain a registrar with offices in the
Borough of Manhattan, City of New York or Atlanta, Georgia. The
initial registrar is the Trustee. The registrar maintains a
register reflecting ownership of the Notes outstanding from time
to time and makes payments on and facilitates transfer of Notes
on behalf of the Issuer.
The Issuer may change the paying agents or the registrars
without prior notice to the Holders. The Issuer or any of its
Subsidiaries may act as a paying agent or registrar.
Transfer
and Exchange
A Holder may transfer or exchange Notes in accordance with the
Indenture. The registrar and the Trustee may require a Holder to
furnish appropriate endorsements and transfer documents in
connection with a transfer of Notes. Holders will be required to
pay all taxes due on transfer. The Issuer is not required to
transfer or exchange any Note selected for redemption. Also, the
Issuer is not required to transfer or exchange any Note for a
period of 15 days before a selection of Notes to be
redeemed.
Principal,
Maturity and Interest
The Issuer issued $310.0 million in aggregate principal
amount of Notes in a private transaction that was not subject to
the registration requirements of the Securities Act. The Notes
will mature on February 15, 2017. Subject to compliance
with the covenant described below under the caption
“Certain Covenants — Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock,” the Issuer may issue additional Notes, from time to
time under the Indenture (any such Notes, “Additional
Notes”). Except as described under “Amendment,
Supplement and Waiver,” the Notes offered by the Issuer and
any Additional Notes subsequently issued under the Indenture
will be treated as a single class for all purposes under the
Indenture, including waivers, amendments, redemptions and offers
to purchase. Unless the context requires otherwise, references
to “Notes” for all purposes of the Indenture and this
“Description of the February 2009 Notes” include any
Additional Notes that are actually issued.
Interest on the Notes accrues at the rate of
97/8%
per annum and is payable semi-annually in arrears on February 15
and August 15, commencing August 15, 2009, to the Holders
of record on the immediately preceding February 1 and
August 1. Interest on the Notes accrues from the most
recent date to which interest has been paid or, if no interest
has been paid, from and including the Issue Date. Interest on
the Notes will be computed on the basis of a
360-day year
comprised of twelve
30-day
months.
Additional
Interest
Additional Interest may accrue on the Notes in certain
circumstances pursuant to the Registration Rights Agreement. All
references in the Indenture, in any context, to any interest or
other amount payable on or with respect to the Notes shall be
deemed to include any Additional Interest pursuant to the
Registration Rights Agreement. Principal of, premium, if any,
and interest on the Notes will be payable at the office or
agency of the Issuer maintained for such purpose within the City
and State of New York or, at the option of the Issuer, payment
of interest may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of
Holders; provided that all payments of principal,
premium, if any, and interest with respect to the Notes
represented by one or more global notes registered in the name
of or held by DTC or its nominee will be made by wire transfer
of immediately available funds to the accounts specified by the
Holder or Holders thereof. Until otherwise designated by the
Issuer, the Issuer’s office or agency in New York is the
office of the Trustee maintained for such purpose.
Mandatory
Redemption; Offers to Purchase; Open Market Purchases
The Issuer is not required to make any mandatory redemption or
sinking fund payments with respect to the Notes. However, under
certain circumstances, the Issuer may be required to offer to
purchase Notes as described under the caption “Repurchase
at the Option of Holders.” The Issuer may at any time and
from time to time purchase Notes in the open market or otherwise.
Except as set forth below, the Issuer is not entitled to redeem
Notes at its option prior to February 15, 2013.
At any time prior to February 15, 2013, the Issuer may
redeem all or a part of the Notes, upon not less than 30 nor
more than 60 days’ prior notice mailed by first-class
mail to the registered address of each Holder or otherwise in
accordance with the procedures of DTC, at a redemption price
equal to 100% of the principal amount of the Notes redeemed plus
the Applicable Premium as of, and accrued and unpaid interest
and Additional Interest, if any, to the date of redemption (the
“Redemption Date”), subject to the rights
of Holders of Notes on the relevant record date to receive
interest due on the relevant interest payment date.
On and after February 15, 2013, the Issuer may redeem the
Notes, in whole or in part, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to
the registered address of each Holder or otherwise in accordance
with the procedures of DTC, at the redemption prices (expressed
as percentages of principal amount of the Notes to be redeemed)
set forth below, plus accrued and unpaid interest thereon and
Additional Interest, if any, to the applicable
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
twelve-month period beginning on February 15 of each of the
years indicated below:
Year
Percentage
2013
104.938%
2014
102.469%
2015 and thereafter
100.000%
In addition, until February 15, 2012, the Issuer may, at
its option, on one or more occasions redeem up to 35% of the
aggregate principal amount of Notes at a redemption price equal
to 109.875% of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable 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, with
the net cash proceeds of one or more Equity Offerings;
provided that at least 50% of the sum of the original
aggregate principal amount of Notes issued under the Indenture
and the original principal amount of any Additional Notes that
are Notes issued under the Indenture after the Issue Date
remains outstanding immediately after the occurrence of each
such redemption; provided further that each such
redemption occurs within 90 days of the date of closing of
each such Equity Offering.
Any notice of any redemption may be given prior to the
redemption thereof, and any such redemption or notice may, at
the Issuer’s discretion, be subject to one or more
conditions precedent, including, but not limited to, completion
of an Equity Offering or other corporate transaction.
If the Issuer redeems less than all of the outstanding Notes,
the Trustee shall select the Notes to be redeemed in the manner
described under “Repurchase at the Option of
Holders — Selection and Notice.”
Repurchase
at the Option of Holders
Change
of Control
The Notes provide that if a Change of Control occurs, unless the
Issuer has previously or concurrently mailed a redemption notice
with respect to all the outstanding Notes as described under
“Optional Redemption,” the Issuer will make an offer
to purchase all of the Notes pursuant to the offer described
below (the “Change of Control Offer”) at a
price in cash (the “Change of Control Payment”)
equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Additional Interest, if any, to
the date of purchase, subject to the right of Holders of the
Notes of record on the relevant record date to receive interest
due on the relevant interest payment date. Within 30 days
following any Change of Control, the Issuer will send notice of
such Change of Control Offer by first-class mail, with a copy to
the Trustee, to each
Holder of Notes to the address of such Holder appearing in the
security register with a copy to the Trustee or otherwise in
accordance with the procedures of DTC, with the following
information:
(1) that a Change of Control Offer is being made pursuant
to the covenant entitled “Change of Control” and that
all Notes properly tendered pursuant to such Change of Control
Offer will be accepted for payment by the Issuer;
(2) the purchase price and the purchase date, which will be
no earlier than 30 days nor later than 60 days from
the date such notice is mailed (the “Change of Control
Payment Date”);
(3) that any Note not properly tendered will remain
outstanding and continue to accrue interest;
(4) that unless the Issuer defaults in the payment of the
Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer will cease to accrue
interest on the Change of Control Payment Date;
(5) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to
surrender such Notes, with the form entitled “Option of
Holder to Elect Purchase” on the reverse of such Notes
completed, to the paying agent specified in the notice at the
address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their
tendered Notes and their election to require the Issuer to
purchase such Notes; provided that the paying agent
receives, not later than the close of business on the
30th day following the date of the Change of Control
notice, a telegram, facsimile transmission or letter setting
forth the name of the Holder of the Notes, the principal amount
of Notes tendered for purchase, and a statement that such Holder
is withdrawing its tendered Notes and its election to have such
Notes purchased;
(7) that if the Issuer is redeeming less than all of the
Notes, the Holders of the remaining Notes will be issued new
Notes and such new Notes will be equal in principal amount to
the unpurchased portion of the Notes surrendered. The
unpurchased portion of the Notes must be equal to $2,000 or an
integral multiple of $1,000 in excess thereof; and
(8) the other instructions, as determined by us, consistent
with the covenant described hereunder, that a Holder must follow.
The Issuer will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of Notes
pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the provisions of the Indenture, the Issuer will comply with the
applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in the
Indenture by virtue thereof.
On the Change of Control Payment Date, the Issuer will, to the
extent permitted by law,
(1) accept for payment all Notes issued by it or portions
thereof properly tendered pursuant to the Change of Control
Offer;
(2) deposit with the paying agent an amount equal to the
aggregate Change of Control Payment in respect of all Notes or
portions thereof so tendered; and
(3) deliver, or cause to be delivered, to the Trustee for
cancellation the Notes so accepted together with an
Officer’s Certificate to the Trustee stating that such
Notes or portions thereof have been tendered to and purchased by
the Issuer.
The Senior Credit Facilities will, and future credit agreements
or other agreements relating to Senior Indebtedness to which the
Issuer becomes a party may, provide that certain change of
control events with respect to the Issuer would constitute a
default thereunder (including a Change of Control under the
Indenture). If we experience a change of control that triggers a
default under our Senior Credit Facilities, we
could seek a waiver of such default or seek to refinance our
Senior Credit Facilities. In the event we do not obtain such a
waiver or refinance the Senior Credit Facilities, such default
could result in amounts outstanding under our Senior Credit
Facilities being declared due and payable and could cause a
Receivables Facility to be wound down.
Our ability to pay cash to the Holders of Notes following the
occurrence of a Change of Control may be limited by our
then-existing financial resources. Therefore, sufficient funds
may not be available when necessary to make any required
repurchases.
The Change of Control purchase feature of the Notes may in
certain circumstances make more difficult or discourage a sale
or takeover of us and, thus, the removal of incumbent
management. The Change of Control purchase feature is a result
of negotiations between the Initial Purchasers and us. After the
Issue Date, we have no present intention to engage in a
transaction involving a Change of Control, although it is
possible that we could decide to do so in the future. Subject to
the limitations discussed below, we could, in the future, enter
into certain transactions, including acquisitions, refinancings
or other recapitalizations, that would not constitute a Change
of Control under the Indenture, but that could increase the
amount of indebtedness outstanding at such time or otherwise
affect our capital structure or credit ratings. Restrictions on
our ability to incur additional Indebtedness are contained in
the covenants described under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock” and
“Certain Covenants — Liens.” Such
restrictions in the Indenture can be waived only with the
consent of the Holders of a majority in principal amount of the
Notes then outstanding. Except for the limitations contained in
such covenants, however, the Indenture will not contain any
covenants or provisions that may afford Holders of the Notes
protection in the event of a highly leveraged transaction.
The Issuer will 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 the
Indenture applicable to a Change of Control Offer made by us and
purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer. Notwithstanding anything to the
contrary herein, a Change of Control Offer may be made in
advance of a Change of Control, conditional upon such Change of
Control, if a definitive agreement is in place for the Change of
Control at the time of making of the Change of Control Offer.
The definition of “Change of Control” includes a
disposition of all or substantially all of the assets of the
Issuer to any Person. Although there is a limited body of case
law interpreting the phrase “substantially all,” there
is no precise established definition of the phrase under
applicable law. Accordingly, in certain circumstances there may
be a degree of uncertainty as to whether a particular
transaction would involve a disposition of “all or
substantially all” of the assets of the Issuer. As a
result, it may be unclear as to whether a Change of Control has
occurred and whether a Holder of Notes may require the Issuer to
make an offer to repurchase the Notes as described above.
The provisions under the Indenture relating to the Issuer’s
obligation to make an offer to repurchase the Notes as a result
of a Change of Control may be waived or modified with the
written consent of the Holders of a majority in principal amount
of the Notes.
Asset
Sales
The Indenture provides that the Issuer will not, and will not
permit any of its Restricted Subsidiaries to consummate,
directly or indirectly, an Asset Sale, unless:
(1) the Issuer or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at
least equal to the fair market value (as determined in good
faith by the Issuer) of the assets sold or otherwise disposed
of; and
(2) except in the case of a Permitted Asset Swap, at least
75% of the consideration therefor received by the Issuer or such
Restricted Subsidiary, as the case may be, is in the form of
cash or Cash Equivalents; provided that the amount of:
(a) any liabilities (as shown on the Issuer’s or such
Restricted Subsidiary’s most recent balance sheet or in the
footnotes thereto) of the Issuer or such Restricted Subsidiary,
other than liabilities that are by their terms subordinated to
the Notes, that are assumed by the transferee of any such assets
and for which the Issuer and all of its Restricted Subsidiaries
have been validly released by all creditors in writing,
(b) any securities received by the Issuer or such
Restricted Subsidiary from such transferee that are converted by
the Issuer or such Restricted Subsidiary into cash (to the
extent of the cash received) within 180 days following the
closing of such Asset Sale, and
(c) any Designated Non-cash Consideration received by the
Issuer or such Restricted Subsidiary in such Asset Sale having
an aggregate fair market value, taken together with all other
Designated Non-cash Consideration received pursuant to this
clause (c) that is at that time outstanding, not to exceed
5% of Total Assets at the time of the receipt of such Designated
Non-cash Consideration, with the fair market value of each item
of Designated Non-cash Consideration being measured at the time
received and without giving effect to subsequent changes in
value,
shall be deemed to be cash for purposes of this provision and
for no other purpose.
Within 450 days after the receipt of any Net Proceeds of
any Asset Sale, the Issuer or such Restricted Subsidiary, at its
option, may apply the Net Proceeds from such Asset Sale,
(1) to permanently reduce:
(a) Obligations under Priority Lien Obligations and to
correspondingly reduce commitments with respect thereto;
(b) Obligations under Senior Indebtedness (other than any
Junior Lien Obligation) that is secured by a Lien permitted
under the Indenture (which Lien is senior to the Lien of the
Notes with respect to the Collateral), and to correspondingly
reduce commitments with respect thereto;
(c) Obligations under Junior Lien Obligations (and to
correspondingly reduce commitments with respect thereto) through
open-market purchases (to the extent such purchases are at or
above 100% of the principal amount thereof) or by making an
Asset Sale Offer or a Collateral Asset Sale Offer in accordance
with the procedures set forth below; provided that the
Issuer shall equally and ratably reduce Obligations under the
Notes as provided under “Optional Redemption”, through
open-market purchases or otherwise by making an offer (in
accordance with the procedures set forth below for an Asset Sale
Offer or a Collateral Asset Sale Offer) to all Holders to
purchase their Notes at 100% of the principal amount thereof,
plus the amount of accrued but unpaid interest, if any, on the
amount of the Notes that would otherwise be prepaid;
(d) Obligations under the Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
November 15, 2016; provided that, at the time of,
and after giving effect to, such repurchase, redemption or
defeasance, the aggregate amount of Net Proceeds used to
repurchase, redeem or defease Existing Notes pursuant to this
subclause (d) following the Issue Date shall not exceed 5%
of the consolidated total assets of the Issuer and its
subsidiaries at such time; or
(e) Indebtedness of a Restricted Subsidiary that is not a
Guarantor, other than Indebtedness owed to the Issuer or another
Restricted Subsidiary (or any affiliate thereof);
(2) to make (a) an Investment in any one or more
businesses, provided that such Investment in any business
is in the form of the acquisition of Capital Stock and results
in the Issuer or another of its Restricted Subsidiaries, as the
case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary,
(b) capital expenditures or (c) acquisitions of other
assets, in each of (a), (b) and (c), used or useful in a
Similar Business; or
(3) to make an investment in (a) any one or more
businesses, provided that such Investment in any business
is in the form of the acquisition of Capital Stock and results
in the Issuer or another of its Restricted Subsidiaries, as the
case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary,
(b) properties or (c) acquisitions of other assets
that, in each of (a), (b) and (c), replace the businesses,
properties
and/or
assets that are the subject of such Asset Sale;
provided that, in the case of clauses (2) and
(3) above, a binding commitment shall be treated as a
permitted application of the Net Proceeds from the date of such
commitment so long as the Issuer, or such other Restricted
Subsidiary enters into such commitment with the good faith
expectation that such Net Proceeds will be applied to satisfy
such commitment within 180 days of such commitment (an
“Acceptable Commitment”) and, in the event any
Acceptable Commitment is later cancelled or terminated for any
reason before the Net Proceeds are applied in connection
therewith, the Issuer or such Restricted Subsidiary enters into
another Acceptable Commitment (a “Second
Commitment”) within 180 days of such cancellation
or termination; provided, further, that if any
Second Commitment is later cancelled or terminated for any
reason before such Net Proceeds are applied, then such Net
Proceeds shall constitute Excess Proceeds.
Any Net Proceeds from Asset Sales of Collateral that are not
invested or applied as set forth in the first sentence of the
preceding paragraph will be deemed to constitute
“Collateral Excess Proceeds.” When the
aggregate amount of Collateral Excess Proceeds exceeds
$200.0 million, the Issuer shall make an offer to all
Holders of the Notes and, if required by the terms of any Junior
Lien Obligations, including the 2006 Notes, which are not
subordinated to the Notes or Obligations secured by a Lien
permitted under the Indenture (which Lien is not subordinate to
the Lien of the Notes with respect to the Collateral), to the
holders of such Junior Lien Obligations or such other
Obligations (a “Collateral Asset Sale Offer”),
to purchase the maximum aggregate principal amount of the Notes
and such Junior Lien Obligations or such other Obligations that
is a minimum of $2,000 or an integral multiple of $1,000 in
excess thereof that may be purchased out of the Collateral
Excess Proceeds at an offer price in cash in an amount equal to
100% of the principal amount thereof, plus accrued and unpaid
interest and Additional Interest, if any, to the date fixed for
the closing of such offer, in accordance with the procedures set
forth in the Indenture. The Issuer will commence a Collateral
Asset Sale Offer with respect to Collateral Excess Proceeds
within ten Business Days after the date that Collateral Excess
Proceeds exceed $200.0 million by mailing the notice
required pursuant to the terms of the Indenture, with a copy to
the Trustee.
Any Net Proceeds from Asset Sales of non-Collateral that are not
invested or applied as provided and within the time period set
forth in the first sentence of the second preceding paragraph
will be deemed to constitute “Excess Proceeds.”
When the aggregate amount of Excess Proceeds exceeds
$200.0 million, the Issuer shall make an offer to all
Holders of the Notes and, if required or permitted by the terms
of any Senior Indebtedness, to the holders of such Senior
Indebtedness (an “Asset Sale Offer”), to
purchase the maximum aggregate principal amount of the Notes and
such Senior Indebtedness that is a minimum of $2,000 or an
integral multiple of $1,000 in excess thereof that may be
purchased out of the Excess Proceeds at an offer price in cash
in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Additional Interest, if any, to
the date fixed for the closing of such offer, in accordance with
the procedures set forth in the Indenture. The Issuer will
commence an Asset Sale Offer with respect to Excess Proceeds
within ten Business Days after the date that Excess Proceeds
exceed $200.0 million by mailing the notice required
pursuant to the terms of the Indenture, with a copy to the
Trustee.
To the extent that the aggregate amount of Notes and such Junior
Lien Obligations or Obligations secured by a Lien permitted by
the Indenture (which Lien is not subordinate to the Lien of the
Notes with respect to the Collateral) tendered pursuant to a
Collateral Asset Sale Offer is less than the Collateral Excess
Proceeds, the Issuer may use any remaining Collateral Excess
Proceeds for general corporate purposes, subject to other
covenants contained in the Indenture. To the extent that the
aggregate amount of Notes and such Senior Indebtedness tendered
pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Issuer may use any remaining Excess Proceeds for
general corporate purposes, subject to other covenants contained
in the Indenture. If the aggregate principal amount of Notes or
Junior Lien Obligations or such other Obligations surrendered by
such holders thereof exceeds the amount of Collateral Excess
Proceeds, the Trustee shall select the Notes and such Junior
Lien Obligations or such other Obligations to be purchased on a
pro rata basis
based on the accreted value or principal amount of the Notes or
such Junior Lien Obligations or such other Obligations tendered.
If the aggregate principal amount of Notes or the Senior
Indebtedness surrendered by such holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes
and such Senior Indebtedness to be purchased on a pro rata basis
based on the accreted value or principal amount of the Notes or
such Senior Indebtedness tendered. Upon completion of any such
Collateral Asset Sale Offer or Asset Sale Offer, the amount of
Collateral Excess Proceeds or Excess Proceeds, as the case may
be, shall be reset at zero. Additionally, the Issuer may, at its
option, make a Collateral Asset Sale Offer or an Asset Sale
Offer using proceeds from any Asset Sale at any time after
consummation of such Asset Sale; provided that such
Collateral Asset Sale Offer or Asset Sale Offer shall be in an
aggregate amount of not less than $50.0 million. Upon
consummation of such Collateral Asset Sale Offer or Asset Sale
Offer, any Net Proceeds not required to be used to purchase
Notes shall not be deemed Excess Proceeds.
Pending the final application of any Net Proceeds pursuant to
this covenant, the holder of such Net Proceeds may apply such
Net Proceeds temporarily to reduce Indebtedness outstanding
under a revolving credit facility or otherwise invest such Net
Proceeds in any manner not prohibited by the Indenture.
The Issuer will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of the Notes
pursuant to a Collateral Asset Sale Offer or an Asset Sale
Offer. To the extent that the provisions of any securities laws
or regulations conflict with the provisions of the Indenture,
the Issuer will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.
Selection
and Notice
If the Issuer is redeeming less than all of the Notes issued by
it at any time, the Trustee will select the Notes to be redeemed
(a) if the Notes are listed on any national securities
exchange, in compliance with the requirements of the principal
national securities exchange on which the Notes are listed,
(b) on a pro rata basis to the extent practicable or
(c) by lot or such other similar method in accordance with
the procedures of DTC.
Notices of purchase or redemption shall be mailed by first-class
mail, postage prepaid, at least 30 but not more than
60 days before the purchase or Redemption Date to each
Holder of Notes at such Holder’s registered address or
otherwise in accordance with the procedures of DTC, except that
redemption notices may be mailed more than 60 days prior to
a Redemption Date if the notice is issued in connection
with a defeasance of the Notes or a satisfaction and discharge
of the Indenture. If any Note is to be purchased or redeemed in
part only, any notice of purchase or redemption that relates to
such Note shall state the portion of the principal amount
thereof that has been or is to be purchased or redeemed.
The Issuer will issue a new Note in a principal amount equal to
the unredeemed portion of the original Note in the name of the
Holder upon cancellation of the original Note. Notes called for
redemption become due on the date fixed for redemption. On and
after the Redemption Date, interest ceases to accrue on
Notes or portions thereof called for redemption.
Certain
Covenants
Set forth below are summaries of certain covenants contained in
the Indenture. If on any date following the Issue Date
(i) the Notes have Investment Grade Ratings from both
Rating Agencies, and (ii) no Default has occurred and is
continuing under the Indenture (the occurrence of the events
described in the foregoing clauses (i) and (ii) being
collectively referred to as a “Covenant Suspension
Event”), the Issuer and the Restricted Subsidiaries
will not be subject to the following covenants (collectively,
the “Suspended Covenants”):
(3) “— Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
(4) clause (4) of the first paragraph of
“— Merger, Consolidation or Sale of All or
Substantially All Assets”;
(5) “— Transactions with
Affiliates”; and
(6) “— Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.”
In the event that the Issuer and the Restricted Subsidiaries are
not subject to the Suspended Covenants under the Indenture for
any period of time as a result of the foregoing, and on any
subsequent date (the “Reversion Date”) one or
both of the Rating Agencies (a) withdraw their Investment
Grade Rating or downgrade the rating assigned to the Notes below
an Investment Grade Rating
and/or
(b) the Issuer or any of its Affiliates enters into an
agreement to effect a transaction that would result in a Change
of Control and one or more of the Rating Agencies indicate that
if consummated, such transaction (alone or together with any
related recapitalization or refinancing transactions) would
cause such Rating Agency to withdraw its Investment Grade Rating
or downgrade the ratings assigned to the Notes below an
Investment Grade Rating, then the Issuer and the Restricted
Subsidiaries will thereafter again be subject to the Suspended
Covenants under the Indenture with respect to future events,
including, without limitation, a proposed transaction described
in clause (b) above.
The period of time between the Suspension Date and the Reversion
Date is referred to in this description as the
“Suspension Period.” Additionally, upon the
occurrence of a Covenant Suspension Event, the amount of Excess
Proceeds from Net Proceeds shall be reset at zero. In the event
of any such reinstatement, no action taken or omitted to be
taken by the Issuer or any of its Restricted Subsidiaries prior
to such reinstatement will give rise to a Default or Event of
Default under the Indentures with respect to Notes; provided
that (1) with respect to Restricted Payments made after
any such reinstatement, the amount of Restricted Payments made
will be calculated as though the covenant described under the
caption “— Limitation on Restricted
Payments” had been in effect prior to, but not during the
Suspension Period, provided that any Subsidiaries
designated as Unrestricted Subsidiaries during the Suspension
Period shall automatically become Restricted Subsidiaries on the
Reversion Date (subject to the Issuer’s right to
subsequently designate them as Unrestricted Subsidiaries in
compliance with the covenants set out below), and (2) all
Indebtedness incurred, or Disqualified Stock or Preferred Stock
issued, during the Suspension Period will be classified to have
been incurred or issued pursuant to clause (3) of the
second paragraph of “— Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock.”
There can be no assurance that the Notes will ever achieve or
maintain Investment Grade Ratings.
Limitation
on Restricted Payments
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(I) declare or pay any dividend or make any payment or
distribution on account of the Issuer’s, or any of its
Restricted Subsidiaries’ Equity Interests, including any
dividend or distribution payable in connection with any merger
or consolidation other than:
(a) dividends or distributions by the Issuer payable solely
in Equity Interests (other than Disqualified Stock) of the
Issuer; or
(b) dividends or distributions by a Restricted Subsidiary
so long as, in the case of any dividend or distribution payable
on or in respect of any class or series of securities issued by
a Restricted Subsidiary other than a Wholly-Owned Subsidiary,
the Issuer or a Restricted Subsidiary receives at least its pro
rata share of such dividend or distribution in accordance with
its Equity Interests in such class or series of securities;
(II) purchase, redeem, defease or otherwise acquire or
retire for value any Equity Interests of the Issuer or any
direct or indirect parent of the Issuer, including in connection
with any merger or consolidation;
(III) make any principal payment on, or redeem, repurchase,
defease or otherwise acquire or retire for value in each case,
prior to any scheduled repayment, sinking fund payment or
maturity, any Subordinated Indebtedness, other than:
(a) Indebtedness permitted under clauses (7) and
(8) of the covenant described under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”; or
(b) the purchase, repurchase or other acquisition of
Subordinated Indebtedness 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
purchase, repurchase or acquisition; or
(IV) make any Restricted Investment
(all such payments and other actions set forth in
clauses (I) through (IV) above (other than any
exception thereto) being collectively referred to as
“Restricted Payments”), unless, at the time of
such Restricted Payment:
(1) no Default shall have occurred and be continuing or
would occur as a consequence thereof;
(2) immediately after giving effect to such transaction on
a pro forma basis, the Issuer could incur $1.00 of additional
Indebtedness under the provisions of the first paragraph of the
covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”; and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Issuer and
its Restricted Subsidiaries after November 17, 2006
(including Restricted Payments permitted by clauses (1), (2)
(with respect to the payment of dividends on Refunding Capital
Stock (as defined below) pursuant to clause (b) thereof
only), (6)(c), (9) and (14) of the next succeeding
paragraph, but excluding all other Restricted Payments permitted
by the next succeeding paragraph), is less than the sum of
(without duplication):
(a) 50% of the Consolidated Net Income of the Issuer for
the period (taken as one accounting period) beginning
October 1, 2006, to the end of the Issuer’s most
recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment,
or, in the case such Consolidated Net Income for such period is
a deficit, minus 100% of such deficit; plus
(b) 100% of the aggregate net cash proceeds and the fair
market value, as determined in good faith by the Issuer, of
marketable securities or other property received by the Issuer
since immediately after November 17, 2006 (other than net
cash proceeds to the extent such net cash proceeds have been
used to incur Indebtedness, Disqualified Stock or Preferred
Stock pursuant to clause (12)(a) of the second paragraph of
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”) from
the issue or sale of:
(i) (A) Equity Interests of the Issuer, including
Treasury Capital Stock (as defined below), but excluding cash
proceeds and the fair market value, as determined in good faith
by the Issuer, of marketable securities or other property
received from the sale of:
(x) Equity Interests to members of management, directors or
consultants of the Issuer, any direct or indirect parent company
of the Issuer and the Issuer’s Subsidiaries after
November 17, 2006 to the extent such amounts have been
applied to Restricted Payments made in accordance with
clause (4) of the next succeeding paragraph; and
(B) to the extent such net cash proceeds
are actually contributed to the Issuer, Equity Interests of the
Issuer’s direct or indirect parent companies (excluding
contributions of the proceeds from the sale of Designated
Preferred Stock of such companies or contributions to the extent
such amounts have been applied to Restricted Payments made in
accordance with clause (4) of the next succeeding
paragraph); or
(ii) debt securities of the Issuer that have been converted
into or exchanged for such Equity Interests of the Issuer;
provided, however, that this clause (b) shall
not include the proceeds from (V) Refunding Capital Stock
(as defined below), (W) Equity Interests or convertible
debt securities of the Issuer sold to a Restricted Subsidiary,
as the case may be, (X) Disqualified Stock or debt
securities that have been converted into Disqualified Stock,
(Y) Excluded Contributions or (Z) the Delayed Equity
Amount; plus
(c) 100% of the aggregate amount of cash and the fair
market value, as determined in good faith by the Issuer, of
marketable securities or other property contributed to the
capital of the Issuer following November 17, 2006 (other
than net cash proceeds to the extent such net cash proceeds
(i) have been used to incur Indebtedness, Disqualified
Stock or Preferred Stock pursuant to clause (12)(a) of the
second paragraph of “— Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock,” (ii) are contributed by a Restricted
Subsidiary, (iii) constitute Excluded Contributions or
(iv) constitute the Delayed Equity Amount); plus
(d) 100% of the aggregate amount received in cash and the
fair market value, as determined in good faith by the Issuer, of
marketable securities or other property received by means of:
(i) the sale or other disposition (other than to the Issuer
or a Restricted Subsidiary) of Restricted Investments made by
the Issuer or its Restricted Subsidiaries and repurchases and
redemptions of such Restricted Investments from the Issuer or
its Restricted Subsidiaries and repayments of loans or advances,
and releases of guarantees, which constitute Restricted
Investments by the Issuer or its Restricted Subsidiaries, in
each case after November 17, 2006; or
(ii) the sale (other than to the Issuer or a Restricted
Subsidiary) of the stock of an Unrestricted Subsidiary or a
distribution from an Unrestricted Subsidiary (other than in each
case to the extent the Investment in such Unrestricted
Subsidiary was made by the Issuer or a Restricted Subsidiary
pursuant to clause (7) of the next succeeding paragraph or
to the extent such Investment constituted a Permitted
Investment) or a dividend from an Unrestricted Subsidiary after
November 17, 2006; plus
(e) in the case of the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary after November 17,2006, the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Issuer in good
faith (or if such fair market value exceeds $250.0 million,
in writing by an Independent Financial Advisor), at the time of
the redesignation of such Unrestricted Subsidiary as a
Restricted Subsidiary other than to the extent the Investment in
such Unrestricted Subsidiary was made by the Issuer or a
Restricted Subsidiary pursuant to clause (7) of the next
succeeding paragraph or to the extent such Investment
constituted a Permitted Investment.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after
the date of declaration thereof, if at the date of declaration
such payment would have complied with the provisions of the
Indenture;
(2) (a) the redemption, repurchase, retirement or
other acquisition of any Equity Interests (“Treasury
Capital Stock”) or Subordinated Indebtedness of the
Issuer or any Equity Interests of any direct or indirect parent
company of the Issuer, in exchange for, or out of the proceeds
of the substantially concurrent sale (other than to a Restricted
Subsidiary) of, Equity Interests of the Issuer or any direct or
indirect parent company of the Issuer to the extent contributed
to the Issuer (in each case, other than any
Disqualified Stock) (“Refunding Capital Stock”)
and (b) if immediately prior to the retirement of Treasury
Capital Stock, the declaration and payment of dividends thereon
was permitted under clause (6) of this paragraph, the
declaration and payment of dividends on the Refunding Capital
Stock (other than Refunding Capital Stock the proceeds of which
were used to redeem, repurchase, retire or otherwise acquire any
Equity Interests of any direct or indirect parent company of the
Issuer) in an aggregate amount per year no greater than the
aggregate amount of dividends per annum that were declarable and
payable on such Treasury Capital Stock immediately prior to such
retirement;
(3) the redemption, repurchase or other acquisition or
retirement of Subordinated Indebtedness of the Issuer or a
Guarantor made in exchange for, or out of the proceeds of the
substantially concurrent sale of, new Indebtedness of the Issuer
or a Guarantor, as the case may be, which is incurred in
compliance with “— Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” so long as:
(a) the principal amount (or accreted value) of such new
Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus any accrued and unpaid
interest on, the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired for value, plus the amount of
any reasonable premium (including reasonable tender premiums),
defeasance costs and any reasonable fees and expenses incurred
in connection with the issuance of such new Indebtedness;
(b) such new Indebtedness is subordinated to the Notes or
the applicable Guarantee at least to the same extent as such
Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired for value;
(c) such new Indebtedness has a final scheduled maturity
date equal to or later than the final scheduled maturity date of
the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired; and
(d) such new Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the remaining Weighted Average
Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired;
(4) a Restricted Payment to pay for the repurchase,
retirement or other acquisition or retirement for value of
Equity Interests (other than Disqualified Stock) of the Issuer
or any of its direct or indirect parent companies held by any
future, present or former employee, director or consultant of
the Issuer, any of its Subsidiaries or any of its direct or
indirect parent companies pursuant to any management equity plan
or stock option plan or any other management or employee benefit
plan or agreement, including any Equity Interests rolled over by
management of the Company or any of its direct or indirect
parent companies in connection with the Transaction;
provided, however, that the aggregate Restricted
Payments made under this clause (4) do not exceed in any
calendar year $75.0 million (which shall increase to
$150.0 million subsequent to the consummation of an
underwritten public Equity Offering by the Issuer or any direct
or indirect parent entity of the Issuer) (with unused amounts in
any calendar year being carried over to succeeding calendar
years subject to a maximum (without giving effect to the
following proviso) of $225.0 million in any calendar year
(which shall increase to $450.0 million subsequent to the
consummation of an underwritten public Equity Offering by the
Issuer or any direct or indirect parent corporation of the
Issuer)); provided further that such amount in any
calendar year may be increased by an amount not to exceed:
(a) the cash proceeds from the sale of Equity Interests
(other than Disqualified Stock) of the Issuer and, to the extent
contributed to the Issuer, Equity Interests of any of the
Issuer’s direct or indirect parent companies, in each case
to members of management, directors or consultants of the
Issuer, any of its Subsidiaries or any of its direct or indirect
parent companies that occurs after November 17, 2006, to
the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of
Restricted Payments by virtue of clause (3) of the
preceding paragraph; plus
(b) the cash proceeds of key man life insurance policies
received by the Issuer or its Restricted Subsidiaries after
November 17, 2006; less
(c) the amount of any Restricted Payments previously made
with the cash proceeds described in clauses (a) and
(b) of this clause (4);
and provided, further, that cancellation of
Indebtedness owing to the Issuer or any Restricted Subsidiary
from members of management of the Issuer, any of the
Issuer’s direct or indirect parent companies or any of the
Issuer’s Restricted Subsidiaries in connection with a
repurchase of Equity Interests of the Issuer or any of its
direct or indirect parent companies will not be deemed to
constitute a Restricted Payment for purposes of this covenant or
any other provision of the Indenture;
(5) the declaration and payment of dividends to holders of
any class or series of Disqualified Stock of the Issuer or any
of its Restricted Subsidiaries or any class or series of
Preferred Stock of any Restricted Subsidiary issued in
accordance with the covenant described under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock” to the
extent such dividends are included in the definition of
“Fixed Charges”;
(6) (a) the declaration and payment of dividends to
holders of any class or series of Designated Preferred Stock
(other than Disqualified Stock) issued by the Issuer after
November 17, 2006;
(b) the declaration and payment of dividends to a direct or
indirect parent company of the Issuer, the proceeds of which
will be used to fund the payment of dividends to holders of any
class or series of Designated Preferred Stock (other than
Disqualified Stock) of such parent corporation issued after the
Issue Date; provided that the amount of dividends paid
pursuant to this clause (b) shall not exceed the aggregate
amount of cash actually contributed to the Issuer from the sale
of such Designated Preferred Stock; or
(c) the declaration and payment of dividends on Refunding
Capital Stock that is Preferred Stock in excess of the dividends
declarable and payable thereon pursuant to clause (2) of
this paragraph;
provided, however, in the case of each of
(a) and (c) of this clause (6), that for the most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the
date of issuance of such Designated Preferred Stock or the
declaration of such dividends on Refunding Capital Stock that is
Preferred Stock, after giving effect to such issuance or
declaration on a pro forma basis, the Issuer and its Restricted
Subsidiaries on a consolidated basis would have had a Fixed
Charge Coverage Ratio of at least 2.00 to 1.00;
(7) Investments in Unrestricted Subsidiaries having an
aggregate fair market value, taken together with all other
Investments made pursuant to this clause (7) that are at
the time outstanding, without giving effect to the sale of an
Unrestricted Subsidiary to the extent the proceeds of such sale
do not consist of cash or marketable securities, not to exceed
2.5% of Total Assets at the time of such Investment (with the
fair market value of each Investment being measured at the time
made and without giving effect to subsequent changes in value);
(8) repurchases of Equity Interests deemed to occur upon
exercise of stock options or warrants if such Equity Interests
represent a portion of the exercise price of such options or
warrants;
(9) the declaration and payment of dividends on the
Issuer’s common stock (or the payment of dividends to any
direct or indirect parent entity to fund a payment of dividends
on such entity’s common stock), following consummation of
the first public offering of the Issuer’s common stock or
the common stock of any of its direct or indirect parent
companies after November 17, 2006, of up to 6% per annum of
the net cash proceeds received by or contributed to the Issuer
in or from any such public offering, other than public offerings
with respect to the Issuer’s common stock registered on
Form S-8
and other than any public sale constituting an Excluded
Contribution;
(10) Restricted Payments that are made with Excluded
Contributions;
(11) other Restricted Payments in an aggregate amount taken
together with all other Restricted Payments made pursuant to
this clause (11) not to exceed 3.0% of Total Assets at the
time made;
(12) distributions or payments of Receivables Fees;
(13) any Restricted Payment used to fund amounts owed to
Affiliates (including dividends to any direct or indirect parent
of the Issuer to permit payment by such parent of such amount),
in each case to the extent permitted by the covenant described
under “— Transactions with Affiliates”;
(14) the repurchase, redemption or other acquisition or
retirement for value of any Subordinated Indebtedness in
accordance with the provisions similar to those described under
the captions “Repurchase at the Option of
Holders — Change of Control” and “Repurchase
at the Option of Holders — Asset Sales”;
provided that all Notes tendered by Holders in connection
with a Change of Control Offer, Collateral Asset Sale Offer or
Asset Sale Offer, as applicable, have been repurchased, redeemed
or acquired for value;
(15) the declaration and payment of dividends by the Issuer
to, or the making of loans to, any direct or indirect parent in
amounts required for any direct or indirect parent companies to
pay, in each case without duplication,
(a) franchise and excise taxes and other fees, taxes and
expenses required to maintain their corporate existence;
(b) foreign, federal, state and local income taxes, to the
extent such income taxes are attributable to the income of the
Issuer and its Restricted Subsidiaries and, to the extent of the
amount actually received from its Unrestricted Subsidiaries, in
amounts required to pay such taxes to the extent attributable to
the income of such Unrestricted Subsidiaries; provided
that in each case the amount of such payments in any fiscal
year does not exceed the amount that the Issuer and its
Restricted Subsidiaries would be required to pay in respect of
foreign, federal, state and local taxes for such fiscal year
were the Issuer, its Restricted Subsidiaries and its
Unrestricted Subsidiaries (to the extent described above) to pay
such taxes separately from any such parent entity;
(c) for as long as Hercules Holding II, LLC is a parent of
the Issuer, distributions equal to any taxable income of
Hercules Holding II, LLC resulting from the Hedging Arrangements
multiplied by 45%;
(d) customary salary, bonus and other benefits payable to
officers and employees of any direct or indirect parent company
of the Issuer to the extent such salaries, bonuses and other
benefits are attributable to the ownership or operation of the
Issuer and its Restricted Subsidiaries;
(e) general corporate operating and overhead costs and
expenses of any direct or indirect parent company of the Issuer
to the extent such costs and expenses are attributable to the
ownership or operation of the Issuer and its Restricted
Subsidiaries; and
(f) fees and expenses other than to Affiliates of the
Issuer related to any unsuccessful equity or debt offering of
such parent entity; and
(16) the distribution, by dividend or otherwise, of shares
of Capital Stock of, or Indebtedness owed to the Issuer or a
Restricted Subsidiary by, Unrestricted Subsidiaries (other than
Unrestricted Subsidiaries, the primary assets of which are cash
and/or Cash
Equivalents);
provided, however, that at the time of, and after
giving effect to, any Restricted Payment permitted under
clauses (11) and (16), no Default shall have occurred and
be continuing or would occur as a consequence thereof.
As of the Issue Date, all of the Issuer’s Subsidiaries were
Restricted Subsidiaries. The Issuer will not permit any
Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the last sentence of the definition of
“Unrestricted Subsidiary.” For purposes of designating
any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Issuer and its Restricted
Subsidiaries (except to the
extent repaid) in the Subsidiary so designated will be deemed to
be Restricted Payments in an amount determined as set forth in
the last sentence of the definition of “Investment.”
Such designation will be permitted only if a Restricted Payment
in such amount would be permitted at such time, whether pursuant
to the first paragraph of this covenant or under clause (7),
(10) or (11) of the second paragraph of this covenant,
or pursuant to the definition of “Permitted
Investments,” and if such Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. Unrestricted
Subsidiaries will not be subject to any of the restrictive
covenants set forth in the Indenture.
Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise (collectively,
“incur” and collectively, an
“incurrence”) with respect to any Indebtedness
(including Acquired Indebtedness), and the Issuer will not issue
any shares of Disqualified Stock and will not permit any
Restricted Subsidiary to issue any shares of Disqualified Stock
or Preferred Stock; provided, however, that the
Issuer may incur Indebtedness (including Acquired Indebtedness)
or issue shares of Disqualified Stock, and any of its Restricted
Subsidiaries may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock and issue
shares of Preferred Stock, if the Fixed Charge Coverage Ratio on
a consolidated basis for the Issuer and its Restricted
Subsidiaries’ most recently ended four fiscal quarters for
which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock or Preferred Stock is issued
would have been at least 2.00 to 1.00, determined on a pro forma
basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred,
or the Disqualified Stock or Preferred Stock had been issued, as
the case may be, and the application of proceeds therefrom had
occurred at the beginning of such four-quarter period;
provided, further, that Restricted Subsidiaries that are
not Guarantors may not incur Indebtedness or Disqualified Stock
or Preferred Stock if, after giving pro forma effect to such
incurrence or issuance (including a pro forma application of the
net proceeds therefrom), more than an aggregate of
$2,000.0 million of Indebtedness or Disqualified Stock or
Preferred Stock of Restricted Subsidiaries that are not
Guarantors would be outstanding pursuant to this paragraph and
clauses (12), (14) and (19) below at such time.
The foregoing limitations will not apply to:
(1) the incurrence of Indebtedness under (x) Credit
Facilities (other than the ABL Facility) by the Issuer or any of
its Restricted Subsidiaries and the issuance and creation of
letters of credit and bankers’ acceptances thereunder (with
letters of credit and bankers’ acceptances being deemed to
have a principal amount equal to the face amount thereof), up to
an aggregate principal amount of $16,500.0 million
outstanding at any one time and (y) the ABL Facility by the
Issuer or any of its Restricted Subsidiaries and the issuance
and creation of letters of credit and bankers’ acceptances
thereunder (with letters of credit and bankers’ acceptances
being deemed to have a principal amount equal to the face amount
thereof), up to an aggregate principal amount equal to the ABL
Facility Cap;
(2) the incurrence by the Issuer and any Guarantor of
Indebtedness represented by the Notes (including any Guarantee)
(other than any Additional Notes and any Exchange Notes
(including Guarantees thereof));
(3) Indebtedness of the Issuer and its Restricted
Subsidiaries in existence on the Issue Date (other than
Indebtedness described in clauses (1) and (2)), including
the 2006 Notes and the Existing Notes;
(4) Indebtedness consisting of Capitalized Lease
Obligations and Purchase Money Obligations; so long as such
Indebtedness exists at the date of such purchase, lease or
improvement, or is created within 270 days thereafter;
(5) Indebtedness incurred by the Issuer or any of its
Restricted Subsidiaries constituting reimbursement obligations
with respect to letters of credit issued in the ordinary course
of business, including letters of credit in respect of
workers’ compensation, medical malpractice or employee
health claims, or other Indebtedness with respect to
reimbursement-type obligations regarding workers’
compensation,
medical malpractice or employee health claims; provided,
however, that upon the drawing of such letters of credit
or the incurrence of such Indebtedness, such obligations are
reimbursed within 30 days following such drawing or
incurrence;
(6) Indebtedness arising from agreements of the Issuer or
its Restricted Subsidiaries providing for indemnification,
adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of
any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary for the purpose of
financing such acquisition; provided, however,
that such Indebtedness is not reflected on the balance sheet of
the Issuer, or any of its Restricted Subsidiaries (contingent
obligations referred to in a footnote to financial statements
and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of
this clause (6));
(7) Indebtedness of the Issuer to a Restricted Subsidiary;
provided that any such Indebtedness owing to a Restricted
Subsidiary that is not a Guarantor is expressly subordinated in
right of payment to the Notes; provided, further,
that any subsequent issuance or transfer of any Capital Stock or
any other event which results in any Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such Indebtedness (except to the Issuer or
another Restricted Subsidiary) shall be deemed, in each case, to
be an incurrence of such Indebtedness;
(8) Indebtedness of a Restricted Subsidiary to the Issuer
or another Restricted Subsidiary; provided that if a
Guarantor incurs such Indebtedness to a Restricted Subsidiary
that is not a Guarantor, such Indebtedness is expressly
subordinated in right of payment to the Guarantee of the Notes
of such Guarantor; provided, further, that any
subsequent transfer of any such Indebtedness (except to the
Issuer or another Restricted Subsidiary) shall be deemed, in
each case, to be an incurrence of such Indebtedness not
permitted by this clause (8);
(9) shares of Preferred Stock of a Restricted Subsidiary
issued to the Issuer or another Restricted Subsidiary;
provided that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or
any other subsequent transfer of any such shares of Preferred
Stock (except to the Issuer or another of its Restricted
Subsidiaries) shall be deemed in each case to be an issuance of
such shares of Preferred Stock not permitted by this clause (9);
(10) Hedging Obligations (excluding Hedging Obligations
entered into for speculative purposes) for the purpose of
limiting interest rate risk with respect to any Indebtedness
permitted to be incurred pursuant to
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock,”
exchange rate risk or commodity pricing risk;
(11) obligations in respect of performance, bid, appeal and
surety bonds and completion guarantees provided by the Issuer or
any of its Restricted Subsidiaries in the ordinary course of
business;
(12) (a) Indebtedness or Disqualified Stock of the
Issuer and Indebtedness, Disqualified Stock or Preferred Stock
of the Issuer or any Restricted Subsidiary equal to 200.0% of
the net cash proceeds received by the Issuer since immediately
after November 17, 2006 from the issue or sale of Equity
Interests of the Issuer or cash contributed to the capital of
the Issuer (in each case, other than Excluded Contributions or
proceeds of Disqualified Stock or sales of Equity Interests to
the Issuer or any of its Subsidiaries) as determined in
accordance with clauses (3)(b) and (3)(c) of the first paragraph
of “— Limitation on Restricted Payments” to
the extent such net cash proceeds or cash have not been applied
pursuant to such clauses to make Restricted Payments or to make
other Investments, payments or exchanges pursuant to the second
paragraph of “— Limitation on Restricted
Payments” or to make Permitted Investments (other than
Permitted Investments specified in clauses (1) and
(3) of the definition thereof) and (b) Indebtedness or
Disqualified Stock of Issuer and Indebtedness, Disqualified
Stock or Preferred Stock of the Issuer or any Restricted
Subsidiary not otherwise permitted hereunder in an aggregate
principal amount or liquidation preference, which when
aggregated with the principal amount and liquidation preference
of all other Indebtedness, Disqualified Stock and Preferred
Stock then
outstanding and incurred pursuant to this clause (12)(b), does
not at any one time outstanding exceed $1,500.0 million;
provided, however, that on a pro forma basis,
together with any amounts incurred and outstanding by Restricted
Subsidiaries that are not Guarantors pursuant to the second
proviso to the first paragraph of this covenant and
clauses (14) and (19), no more than $2,000.0 million
of Indebtedness, Disqualified Stock or Preferred Stock at any
one time outstanding and incurred pursuant to this clause
(12)(b) shall be incurred by Restricted Subsidiaries that are
not Guarantors (it being understood that any Indebtedness,
Disqualified Stock or Preferred Stock incurred pursuant to this
clause (12)(b) shall cease to be deemed incurred or outstanding
for purposes of this clause (12)(b) but shall be deemed incurred
for the purposes of the first paragraph of this covenant from
and after the first date on which the Issuer or such Restricted
Subsidiary could have incurred such Indebtedness, Disqualified
Stock or Preferred Stock under the first paragraph of this
covenant without reliance on this clause (12)(b));
(13) the incurrence or issuance by the Issuer or any
Restricted Subsidiary of Indebtedness, Disqualified Stock or
Preferred Stock which serves to refund or refinance any
Indebtedness, Disqualified Stock or Preferred Stock of the
Issuer or any Restricted Subsidiary incurred as permitted under
the first paragraph of this covenant and clauses (2), (3),
(4) and (12)(a) above, this clause (13) and
clause (14) below or any Indebtedness, Disqualified Stock
or Preferred Stock of the Issuer or any Restricted Subsidiary
issued to so refund or refinance such Indebtedness, Disqualified
Stock or Preferred Stock of the Issuer or any Restricted
Subsidiary including additional Indebtedness, Disqualified Stock
or Preferred Stock incurred to pay premiums (including
reasonable tender premiums), defeasance costs and fees in
connection therewith (the “Refinancing
Indebtedness”) prior to its respective maturity;
provided, however, that such Refinancing
Indebtedness:
(a) has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is incurred which is not less than
the remaining Weighted Average Life to Maturity of the
Indebtedness, Disqualified Stock or Preferred Stock being
refunded or refinanced,
(b) to the extent such Refinancing Indebtedness refinances
(i) Indebtedness subordinated or pari passu to the
Notes or any Guarantee thereof, such Refinancing Indebtedness is
subordinated or pari passu to the Notes or the Guarantee
at least to the same extent as the Indebtedness being refinanced
or refunded or (ii) Disqualified Stock or Preferred Stock,
such Refinancing Indebtedness must be Disqualified Stock or
Preferred Stock, respectively, and
(c) shall not include Indebtedness, Disqualified Stock or
Preferred Stock of a Subsidiary of the Issuer that is not a
Guarantor that refinances Indebtedness, Disqualified Stock or
Preferred Stock of the Issuer or a Guarantor;
and, provided, further, that subclause (a) of
this clause (13) will not apply to any refunding or
refinancing of any Priority Lien Obligations and Obligations
secured by Permitted Liens;
(14) Indebtedness, Disqualified Stock or Preferred Stock of
(x) the Issuer or a Restricted Subsidiary incurred to
finance an acquisition or (y) Persons that are acquired by
the Issuer or any Restricted Subsidiary or merged into the
Issuer or a Restricted Subsidiary in accordance with the terms
of the Indenture; provided that after giving effect to
such acquisition or merger, either
(a) the Issuer would be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first sentence of this
covenant, or
(b) the Fixed Charge Coverage Ratio of the Issuer and the
Restricted Subsidiaries is greater than immediately prior to
such acquisition or merger;
provided, however, that on a pro forma basis,
together with amounts incurred and outstanding pursuant to the
second proviso to the first paragraph of this covenant and
clauses (12) and (19), no more than $2,000.0 million
of Indebtedness, Disqualified Stock or Preferred Stock at any
one time outstanding and incurred by Restricted Subsidiaries
that are not Guarantors pursuant to this clause (14) shall
be incurred and outstanding;
(15) 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 that such Indebtedness is
extinguished within two Business Days of its incurrence;
(16) Indebtedness of the Issuer or any of its Restricted
Subsidiaries supported by a letter of credit issued pursuant to
any Credit Facilities, in a principal amount not in excess of
the stated amount of such letter of credit;
(17) (a) any guarantee by the Issuer or a Restricted
Subsidiary of Indebtedness or other obligations of any
Restricted Subsidiary, so long as the incurrence of such
Indebtedness incurred by such Restricted Subsidiary is permitted
under the terms of the Indenture, or (b) any guarantee by a
Restricted Subsidiary of Indebtedness of the Issuer; provided
that such guarantee is incurred in accordance with the
covenant described below under “— Limitation on
Guarantees of Indebtedness by Restricted Subsidiaries”;
(18) Indebtedness of Foreign Subsidiaries of the Issuer in
an amount not to exceed at any one time outstanding and together
with any other Indebtedness incurred under this clause (18)
7.5% of the Total Assets of the Foreign Subsidiaries (it being
understood that any Indebtedness incurred pursuant to this
clause (18) shall cease to be deemed incurred or
outstanding for purposes of this clause (18) but shall be
deemed incurred for the purposes of the first paragraph of this
covenant from and after the first date on which the Issuer or
such Restricted Subsidiaries could have incurred such
Indebtedness under the first paragraph of this covenant without
reliance on this clause (18));
(19) Indebtedness, Disqualified Stock or Preferred Stock of
a Restricted Subsidiary incurred to finance or assumed in
connection with an acquisition in a principal amount not to
exceed $200.0 million in the aggregate at any one time
outstanding together with all other Indebtedness, Disqualified
Stock and/or
Preferred Stock issued under this clause (19) (it being
understood that any Indebtedness, Disqualified Stock or
Preferred Stock incurred pursuant to this clause (19) shall
cease to be deemed incurred or outstanding for purposes of this
clause (19) but shall be deemed incurred for the purposes
of the first paragraph of this covenant from and after the first
date on which such Restricted Subsidiary could have incurred
such Indebtedness, Disqualified Stock or Preferred Stock under
the first paragraph of this covenant without reliance on this
clause (19)); provided, however, that on a pro
forma basis, together with amounts incurred and outstanding by
Restricted Subsidiaries that are not Guarantors pursuant to the
second proviso to the first paragraph of this covenant and
clauses (12) and (14), no more than $2,000.0 million
of Indebtedness would be incurred and outstanding by Restricted
Subsidiaries that are not Guarantors;
(20) Indebtedness of the Issuer or any of its Restricted
Subsidiaries consisting of (i) the financing of insurance
premiums or (ii) take-or-pay obligations contained in
supply arrangements, in each case, incurred in the ordinary
course of business;
(21) Indebtedness consisting of Indebtedness issued by the
Issuer or any of its Restricted Subsidiaries to current or
former officers, directors and employees thereof, their
respective estates, spouses or former spouses, in each case to
finance the purchase or redemption of Equity Interests of the
Issuer or any direct or indirect parent company of the Issuer to
the extent described in clause (4) of the second paragraph
under the caption “— Limitation on Restricted
Payments”;
(22) Physician Support Obligations incurred by the Issuer
or any Restricted Subsidiary; and
(23) Indebtedness of the Issuer or any of its Restricted
Subsidiaries undertaken in connection with cash management and
related activities with respect to any Subsidiary or joint
venture operating one or more healthcare facilities, including,
without limitation, hospitals, ambulatory surgery centers,
outpatient diagnostic centers or imaging centers, in each case,
in the ordinary course of business.
For purposes of determining compliance with this covenant:
(1) in the event that an item of Indebtedness, Disqualified
Stock or Preferred Stock (or any portion thereof) meets the
criteria of more than one of the categories of permitted
Indebtedness, Disqualified Stock or Preferred Stock described in
clauses (1) through (23) above or is entitled to be
incurred pursuant
to the first paragraph of this covenant, the Issuer, in its sole
discretion, will classify or reclassify such item of
Indebtedness, Disqualified Stock or Preferred Stock (or any
portion thereof) and will only be required to include the amount
and type of such Indebtedness, Disqualified Stock or Preferred
Stock in one of the above clauses; provided that all
Indebtedness outstanding under the Credit Facilities on
November 17, 2006 will be treated as incurred on
November 17, 2006 under clause (1) of the preceding
paragraph; and
(2) at the time of incurrence, the Issuer will be entitled
to divide and classify an item of Indebtedness in more than one
of the types of Indebtedness described in the first and second
paragraphs above.
Accrual of interest, the accretion of accreted value and the
payment of interest in the form of additional Indebtedness,
Disqualified Stock or Preferred Stock will not be deemed to be
an incurrence of Indebtedness, Disqualified Stock or Preferred
Stock for purposes of this covenant.
For purposes of determining compliance with any
U.S. dollar-denominated restriction on the incurrence of
Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was incurred, in the case
of term debt, or first committed, in the case of revolving
credit debt; provided that if such Indebtedness is
incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the
applicable U.S. dollar-denominated restriction to be
exceeded if calculated at the relevant currency exchange rate in
effect on the date of such refinancing, such
U.S. dollar-denominated restriction shall be deemed not to
have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being refinanced.
The principal amount of any Indebtedness incurred to refinance
other Indebtedness, if incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the
currency exchange rate applicable to the currencies in which
such respective Indebtedness is denominated that is in effect on
the date of such refinancing.
The Indenture will provide that the Issuer will not, and will
not permit any Guarantor to, directly or indirectly, incur any
Indebtedness (including Acquired Indebtedness) that is
subordinated or junior in right of payment to any Indebtedness
of the Issuer or such Guarantor, as the case may be, unless such
Indebtedness is expressly subordinated in right of payment to
the Notes or such Guarantor’s Guarantee to the extent and
in the same manner as such Indebtedness is subordinated to other
Indebtedness of the Issuer or such Guarantor, as the case may be.
The Indenture will not treat (1) unsecured Indebtedness as
subordinated or junior to Secured Indebtedness merely because it
is unsecured or (2) Senior Indebtedness as subordinated or
junior to any other Senior Indebtedness merely because it has a
junior priority with respect to the same collateral.
Limitation
on Prepayment or Modification of Existing Notes
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly purchase, redeem,
defease or otherwise acquire or retire for value any of the
Existing Notes prior to the final maturity date thereof (as in
effect on November 17, 2006); provided that the
Issuer may:
(1) purchase, redeem, defease or otherwise acquire or
retire for value any of the Existing Notes which have a final
maturity date (as in effect on November 17, 2006) on
or prior to December 31, 2011; and
(2) purchase, redeem, defease or otherwise acquire or
retire for value any other Existing Notes which have a final
maturity date (as in effect on November 17, 2006) on
or prior to November 15, 2016; provided that, in the
case of any such prepayment funded with the proceeds of the
issuance of Secured Indebtedness, at the time of incurrence and
after giving pro forma effect thereto and to the application of
the proceeds thereof, (x) the Consolidated Secured Debt
Ratio would be no greater than 5.25 to 1.0 and (y) the
Consolidated Leverage Ratio would be no greater than 7.0 to 1.0.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, amend the Existing Notes Indenture, or any
supplemental indenture in respect thereof, in any way to advance
the final maturity date or shorten the Weighted Average Life to
Maturity of any series of the Existing Notes such that any
Existing Notes with a maturity date following the maturity of
the Notes would have a maturity date on or prior to the date one
year following the maturity date of the
91/4%
2006 Notes or which would prohibit the making of the Guarantees
or the creation of Liens in favor of the Notes and the
Guarantees on the Collateral.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, designate any additional subsidiaries as
“Restricted Subsidiaries” (as defined in the Existing
Notes Indenture) for purposes of the Existing Notes Indenture.
Liens
The Issuer will not, and will not permit any Guarantor to,
directly or indirectly, create, incur, assume or suffer to exist
any Lien (except Permitted Liens) that secures obligations under
any Indebtedness or any related Guarantee, on any asset or
property of the Issuer or any Guarantor, or any income or
profits therefrom, or assign or convey any right to receive
income therefrom, unless:
(1) in the case of Liens securing Subordinated
Indebtedness, the Notes and related Guarantees are secured by a
Lien on such property, assets or proceeds that is senior in
priority to such Liens; or
(2) in all other cases, the Notes or the Guarantees are
equally and ratably secured or are secured by a Lien on such
property, assets or proceeds that is senior in priority to such
Liens;
except that the foregoing shall not apply to (a) Liens
securing the Notes and the related Guarantees, (b) Liens
securing Indebtedness permitted to be incurred under Credit
Facilities, including any letter of credit relating thereto,
that was permitted by the terms of the Indenture to be incurred
pursuant to clause (1) of the second paragraph under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”;
provided that, with respect to Liens securing Obligations
permitted under this subclause (b), the Notes and the related
Guarantees are secured by Liens on the assets subject to such
Liens (except any European Collateral) to the extent, with the
priority and subject to intercreditor arrangements, in each case
no less favorable to the holders of the Notes than those
described under “Security” above and (c) Liens
which are senior in priority to the Liens securing the Notes and
related Guarantees and are incurred to secure Obligations in
respect of any Indebtedness permitted to be incurred pursuant to
the covenant described above under “— Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”; provided that, with respect to
Liens securing Obligations permitted under this subclause (c),
(i) at the time of incurrence and after giving pro forma
effect thereto, the ratio of (1) the aggregate amount of
Indebtedness subject to a Lien incurred pursuant to
subclause (b) above, this subclause (c) and
clause (6) of the definition of “Permitted Liens”
(other than Liens securing Indebtedness incurred pursuant to
clauses (4) and (18) of the covenant described above
under “— Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”) to
(2) the Issuer’s EBITDA for the most recently ended
four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which
such event for which such calculation is being made shall occur,
in each case with such pro forma adjustments to Indebtedness and
EBITDA as are appropriate and consistent with the pro forma
adjustment provisions set forth in the definition of Fixed
Charge Coverage Ratio would be no greater than 4.25 to 1.0 and
(ii) the Notes and the Guarantees are secured by Liens with
the priority and subject to intercreditor arrangements no less
favorable to the holders of the Notes than those described under
“— Security” above.
Merger,
Consolidation or Sale of All or Substantially All
Assets
The Issuer may not consolidate or merge with or into or wind up
into (whether or not the Issuer is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or
more related transactions, to any Person unless:
(1) the Issuer is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if
other than the Issuer) or to which such sale, assignment,
transfer, lease,
conveyance or other disposition will have been made is a
corporation organized or existing under the laws of the
jurisdiction of organization of the Issuer or the laws of the
United States, any state thereof, the District of Columbia, or
any territory thereof (such Person, as the case may be, being
herein called the “Successor Company”);
(2) the Successor Company, if other than the Issuer,
expressly assumes all the obligations of the Issuer under the
Notes and the Security Documents pursuant to supplemental
indentures or other documents or instruments in form reasonably
satisfactory to the Trustee;
(3) immediately after such transaction, no Default exists;
(4) immediately after giving pro forma effect to such
transaction and any related financing transactions, as if such
transactions had occurred at the beginning of the applicable
four-quarter period,
(a) the Successor Company would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first sentence of
the covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock,” or
(b) the Fixed Charge Coverage Ratio for the Successor
Company, the Issuer and its Restricted Subsidiaries would be
greater than such ratio for the Issuer and its Restricted
Subsidiaries immediately prior to such transaction;
(5) each Guarantor, unless it is the other party to the
transactions described above, in which case clause (b) of
the second succeeding paragraph shall apply, shall have by
supplemental indenture confirmed that its Guarantee shall apply
to such Person’s obligations under the Indenture, the Notes
and the Registration Rights Agreement;
(6) the Collateral owned by the Successor Company will
(a) continue to constitute Collateral under the Indenture
and the Security Documents, (b) be subject to a Lien in
favor of the Junior Lien Collateral Agent for the benefit of the
Trustee and the Holders of the Notes and (c) not be subject
to any other Lien, other than Permitted Liens;
(7) to the extent any assets of the Person which is merged
or consolidated with or into the Successor Company are assets of
the type which would constitute Collateral under the Security
Documents, the Successor Company will take such action as may be
reasonably necessary to cause such property and assets to be
made subject to the Lien of the Security Documents in the manner
and to the extent required in the Indenture or any of the
Security Documents and shall take all reasonably necessary
action so that such Lien is perfected to the extent required by
the Security Documents; and
(8) the Issuer shall have delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with the Indenture and,
if a supplemental indenture or any supplement to any Security
Document is required in connection with such transaction, such
supplement shall comply with the applicable provisions of the
Indenture.
The Successor Company will succeed to, and be substituted for
the Issuer, as the case may be, under the Indenture, the
Guarantees and the Notes, as applicable. Notwithstanding the
foregoing clauses (3) and (4),
(1) any Restricted Subsidiary may consolidate with or merge
into or transfer all or part of its properties and assets to the
Issuer, and
(2) the Issuer may merge with an Affiliate of the Issuer,
as the case may be, solely for the purpose of reincorporating
the Issuer in a State of the United States or any state thereof,
the District of Columbia or any territory thereof so long as the
amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby.
Subject to certain limitations described in the Indenture
governing release of a Guarantee upon the sale, disposition or
transfer of a Guarantor, no Guarantor will, and the Issuer will
not permit any Guarantor to,
consolidate or merge with or into or wind up into (whether or
not the Issuer or Guarantor is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or
more related transactions, to any Person unless:
(1) (a) such Guarantor is the surviving corporation or
the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) or to which such sale,
assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation, partnership, limited
partnership, limited liability corporation or trust organized or
existing under the laws of the jurisdiction of organization of
such Guarantor, as the case may be, or the laws of the United
States, any state thereof, the District of Columbia, or any
territory thereof (such Guarantor or such Person, as the case
may be, being herein called the “Successor
Person”);
(b) the Successor Person, if other than such Guarantor,
expressly assumes all the obligations of such Guarantor under
the Indenture and such Guarantor’s related Guarantee
pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;
(c) immediately after such transaction, no Default
exists; and
(d) the Issuer shall have delivered to the Trustee an
Officer’s Certificate, each stating that such
consolidation, merger or transfer and such supplemental
indentures, if any, comply with the Indenture; or
(2) the transaction is made in compliance with the covenant
described under “Repurchase at the Option of
Holders — Asset Sales.”
Subject to certain limitations described in the Indenture, the
Successor Person will succeed to, and be substituted for, such
Guarantor under the Indenture and such Guarantor’s
Guarantee. Notwithstanding the foregoing, any Guarantor may
(i) merge into or transfer all or part of its properties
and assets to another Guarantor or the Issuer, (ii) merge
with an Affiliate of the Company solely for the purpose of
reincorporating the Guarantor in the United States, any state
thereof, the District of Columbia or any territory thereof or
(iii) convert into a corporation, partnership, limited
partnership, limited liability corporation or trust organized or
existing under the laws of the jurisdiction of organization of
such Guarantor.
Transactions
with Affiliates
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate
of the Issuer (each of the foregoing, an “Affiliate
Transaction”) involving aggregate payments or
consideration in excess of $40.0 million, unless:
(1) such Affiliate Transaction is on terms that are not
materially less favorable to the Issuer or its relevant
Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Issuer or such Restricted
Subsidiary with an unrelated Person on an arm’s-length
basis; and
(2) the Issuer delivers to the Trustee with respect to any
Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in
excess of $80.0 million, a resolution adopted by the
majority of the board of directors of the Issuer approving such
Affiliate Transaction and set forth in an Officer’s
Certificate certifying that such Affiliate Transaction complies
with clause (1) above.
The foregoing provisions will not apply to the following:
(1) transactions between or among the Issuer or any of its
Restricted Subsidiaries;
(2) Restricted Payments permitted by the provisions of the
Indenture described above under the covenant
“— Limitation on Restricted Payments” and
the definition of “Permitted Investments”;
(3) the payment of management, consulting, monitoring and
advisory fees and related expenses to the Investors and the
Frist Entities pursuant to the Sponsor Management Agreement
(plus any unpaid
management, consulting, monitoring and advisory fees and related
expenses accrued in any prior year) and the termination fees
pursuant to the Sponsor Management Agreement, in each case as in
effect on the Issue Date, or any amendment thereto (so long as
any such amendment is not disadvantageous in the good faith
judgment of the board of directors of the Issuer to the Holders
when taken as a whole as compared to the Sponsor Management
Agreement in effect on the Issue Date);
(4) the payment of reasonable and customary fees paid to,
and indemnities provided for the benefit of, officers,
directors, employees or consultants of Issuer, any of its direct
or indirect parent companies or any of its Restricted
Subsidiaries;
(5) transactions in which the Issuer or any of its
Restricted Subsidiaries, as the case may be, delivers to the
Trustee a letter from an Independent Financial Advisor stating
that such transaction is fair to the Issuer or such Restricted
Subsidiary from a financial point of view or stating that the
terms are not materially less favorable to the Issuer or its
relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Issuer or such
Restricted Subsidiary with an unrelated Person on an
arm’s-length basis;
(6) any agreement as in effect as of the Issue Date, or any
amendment thereto (so long as any such amendment is not
disadvantageous to the Holders when taken as a whole as compared
to the applicable agreement as in effect on the Issue Date);
(7) the existence of, or the performance by the Issuer or
any of its Restricted Subsidiaries of its obligations under the
terms of, any stockholders agreement (including any registration
rights agreement or purchase agreement related thereto) to which
it is a party as of the Issue Date and any similar agreements
which it may enter into thereafter; provided,
however, that the existence of, or the performance by the
Issuer or any of its Restricted Subsidiaries of obligations
under any future amendment to any such existing agreement or
under any similar agreement entered into after the Issue Date
shall only be permitted by this clause (7) to the extent
that the terms of any such amendment or new agreement are not
otherwise disadvantageous to the Holders when taken as a whole;
(8) [reserved];
(9) transactions with customers, clients, suppliers, or
purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the
terms of the Indenture which are fair to the Issuer and its
Restricted Subsidiaries, in the reasonable determination of the
board of directors of the Issuer or the senior management
thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated
party;
(10) the issuance of Equity Interests (other than
Disqualified Stock) of the Issuer to any Permitted Holder or to
any director, officer, employee or consultant;
(11) sales of accounts receivable, or participations
therein, in connection with the ABL Facility and any Receivables
Facility;
(12) payments by the Issuer or any of its Restricted
Subsidiaries to any of the Investors made for any financial
advisory, financing, underwriting or placement services or in
respect of other investment banking activities, including,
without limitation, in connection with acquisitions or
divestitures, which payments are approved by a majority of the
board of directors of the Issuer in good faith;
(13) payments or loans (or cancellation of loans) to
employees or consultants of the Issuer, any of its direct or
indirect parent companies or any of its Restricted Subsidiaries
and employment agreements, stock option plans and other similar
arrangements with such employees or consultants which, in each
case, are approved by the Issuer in good faith;
(14) investments by the Investors or the Frist Entities in
securities of the Issuer or any of its Restricted Subsidiaries
so long as (i) the investment is being offered generally to
other investors on the same or more favorable terms and
(ii) the investment constitutes less than 5% of the
proposed or outstanding issue amount of such class of securities;
(15) payments to or from, and transactions with, any joint
venture owning or operating one or more healthcare facilities,
including, without limitation, hospitals, ambulatory surgery
centers, outpatient diagnostic centers or imaging centers, in
each case in the ordinary course of business (including, without
limitation, any cash management activities related
thereto); and
(16) payments by the Issuer (and any direct or indirect
parent thereof) and its Subsidiaries pursuant to tax sharing
agreements among the Issuer (and any such parent) and its
Subsidiaries on customary terms to the extent attributable to
the ownership or operation of the Issuer and its Subsidiaries;
provided that in each case the amount of such payments in
any fiscal year does not exceed the amount that the Issuer, its
Restricted Subsidiaries and its Unrestricted Subsidiaries (to
the extent of amounts received from Unrestricted Subsidiaries)
would be required to pay in respect of foreign, federal, state
and local taxes for such fiscal year were the Issuer and its
Restricted Subsidiaries (to the extent described above) to pay
such taxes separately from any such parent entity.
Dividend
and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Issuer will not, and will not permit any of its Restricted
Subsidiaries that are not Guarantors to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or consensual restriction on the
ability of any such Restricted Subsidiary to:
(1) (a) pay dividends or make any other distributions
to the Issuer or any of its Restricted Subsidiaries on its
Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or
(b) pay any Indebtedness owed to the Issuer or any of its
Restricted Subsidiaries;
(2) make loans or advances to the Issuer or any of its
Restricted Subsidiaries; or
(3) sell, lease or transfer any of its properties or assets
to the Issuer or any of its Restricted Subsidiaries, except (in
each case) for such encumbrances or restrictions existing under
or by reason of:
(a) contractual encumbrances or restrictions in effect on
the Issue Date, including pursuant to the Senior Credit
Facilities and the related documentation, the Existing Notes
Indenture and the related documentation and the 2006 Notes
Indenture and the related documentation;
(b) the Indenture and the Notes;
(c) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the
nature discussed in clause (3) above on the property so
acquired;
(d) applicable law or any applicable rule, regulation or
order;
(e) any agreement or other instrument of a Person acquired
by the Issuer or any Restricted Subsidiary in existence at the
time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other
than the Person and its Subsidiaries, or the property or assets
of the Person and its Subsidiaries, so acquired;
(f) contracts for the sale of assets, including customary
restrictions with respect to a Subsidiary of the Issuer pursuant
to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary;
(g) Secured Indebtedness that limits the right of the
debtor to dispose of the assets securing such Indebtedness that
is otherwise permitted to be incurred pursuant to the covenants
described under “— Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” and “— Liens”;
(h) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the
ordinary course of business;
(i) other Indebtedness, Disqualified Stock or Preferred
Stock of Foreign Subsidiaries permitted to be incurred
subsequent to the Issue Date pursuant to the provisions of the
covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”;
(j) customary provisions in joint venture agreements and
other agreements or arrangements relating solely to such joint
venture;
(k) customary provisions contained in leases or licenses of
intellectual property and other agreements, in each case entered
into in the ordinary course of business;
(l) any encumbrances or restrictions of the type referred
to in clauses (1), (2) and (3) above imposed by any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the
contracts, instruments or obligations referred to in
clauses (a) through (k) above; provided that
such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
are, in the good faith judgment of the Issuer, no more
restrictive with respect to such encumbrance and other
restrictions taken as a whole than those prior to such
amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing; and
(m) restrictions created in connection with any Receivables
Facility that, in the good faith determination of the Issuer,
are necessary or advisable to effect the transactions
contemplated under such Receivables Facility.
Limitation
on Guarantees of Indebtedness by Restricted
Subsidiaries
The Issuer will not permit any of its Wholly-Owned Subsidiaries
that are Restricted Subsidiaries (and non-Wholly-Owned
Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee
other capital markets debt securities of the Issuer or any
Guarantor), other than a Guarantor, a Foreign Subsidiary or a
Receivables Subsidiary, to guarantee the payment of any
Indebtedness of the Issuer or any other Guarantor unless:
(1) such Restricted Subsidiary within 30 days executes
and delivers a supplemental indenture to the Indenture providing
for a Guarantee by such Restricted Subsidiary, except that with
respect to a guarantee of Indebtedness of the Issuer or any
Guarantor:
(a) if the Notes or such Guarantor’s Guarantee is
subordinated in right of payment to such Indebtedness, the
Guarantee under the supplemental indenture shall be subordinated
to such Restricted Subsidiary’s guarantee with respect to
such Indebtedness substantially to the same extent as the Notes
are subordinated to such Indebtedness; and
(b) if such Indebtedness is by its express terms
subordinated in right of payment to the Notes or such
Guarantor’s Guarantee, any such guarantee by such
Restricted Subsidiary with respect to such Indebtedness shall be
subordinated in right of payment to such Guarantee substantially
to the same extent as such Indebtedness is subordinated to the
Notes; and
(2) such Restricted Subsidiary waives, and will not in any
manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other
rights against the Issuer or any other Restricted Subsidiary as
a result of any payment by such Restricted Subsidiary under its
Guarantee;
provided that this covenant shall not be applicable to
(i) any guarantee of any Restricted Subsidiary that existed
at the time such Person became a Restricted Subsidiary and was
not incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary and (ii) guarantees
of the ABL Facility by the ABL Financing Entities or of any
Receivables Facility by any Receivables Subsidiary.
Reports
and Other Information
Notwithstanding that the Issuer may not be subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act or otherwise report on an annual and quarterly
basis on forms provided for such annual
and quarterly reporting pursuant to rules and regulations
promulgated by the SEC, the Indenture will require the Issuer to
file with the SEC (and make available to the Trustee and Holders
of the Notes (without exhibits), without cost to any Holder,
within 15 days after it files them with the SEC) from and
after the Issue Date,
(1) within 90 days (or any other time period then in
effect under the rules and regulations of the Exchange Act with
respect to the filing of a
Form 10-K
by a non-accelerated filer) after the end of each fiscal year,
annual reports on
Form 10-K,
or any successor or comparable form, containing the information
required to be contained therein, or required in such successor
or comparable form;
(2) within 45 days after the end of each of the first
three fiscal quarters of each fiscal year, reports on
Form 10-Q
containing all quarterly information that would be required to
be contained in Form
10-Q, or any
successor or comparable form;
(3) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on
Form 8-K,
or any successor or comparable form; and
(4) any other information, documents and other reports
which the Issuer would be required to file with the SEC if it
were subject to Section 13 or 15(d) of the Exchange Act;
in each case in a manner that complies in all material respects
with the requirements specified in such form; provided
that the Issuer shall not be so obligated to file such
reports with the SEC if the SEC does not permit such filing, in
which event the Issuer will make available such information to
prospective purchasers of Notes, in addition to providing such
information to the Trustee and the Holders of the Notes, in each
case within 15 days after the time the Issuer would be
required to file such information with the SEC if it were
subject to Section 13 or 15(d) of the Exchange Act. In
addition, to the extent not satisfied by the foregoing, the
Issuer will agree that, for so long as any Notes are
outstanding, it will furnish to Holders and to securities
analysts and prospective investors, upon their request, the
information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
In the event that any direct or indirect parent company of the
Issuer becomes a Guarantor of the Notes, the Indenture will
permit the Issuer to satisfy its obligations in this covenant
with respect to financial information relating to the Issuer by
furnishing financial information relating to such parent;
provided that the same is accompanied by consolidating
information that explains in reasonable detail the differences
between the information relating to such parent, on the one
hand, and the information relating to the Issuer and its
Restricted Subsidiaries on a standalone basis, on the other hand.
Notwithstanding the foregoing, such requirements shall be deemed
satisfied prior to the commencement of the exchange offer or the
effectiveness of the shelf registration statement described in
the Registration Rights Agreement (1) by the filing with
the SEC of the exchange offer registration statement or shelf
registration statement (or any other similar registration
statement), and any amendments thereto, with such financial
information that satisfies
Regulation S-X,
subject to exceptions consistent with the presentation of
financial information in the Offering Memorandum, to the extent
filed within the times specified above, or (2) by posting
reports that would be required to be filed substantially in the
form required by the SEC on the Company’s website (or that
of any of its parent companies) or providing such reports to the
Trustee within 15 days after the time the Issuer would be
required to file such information with the SEC if it were
subject to Section 13 or 15(d) of the Exchange Act, the
financial information (including a “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” section) that would be required to be included
in such reports, subject to exceptions consistent with the
presentation of financial information in the Offering
Memorandum, to the extent filed within the times specified above.
Events of
Default and Remedies
The Indenture provides that each of the following is an
“Event of Default”:
(1) default in payment when due and payable, upon
redemption, acceleration or otherwise, of principal of, or
premium, if any, on the Notes;
(2) default for 30 days or more in the payment when
due of interest or Additional Interest on or with respect to the
Notes;
(3) failure by the Issuer or any Guarantor for 60 days
after receipt of written notice given by the Trustee or the
Holders of not less 30% in principal amount of the Notes to
comply with any of its obligations, covenants or agreements
(other than a default referred to in clauses (1) and
(2) above) contained in the Indenture or the Notes;
(4) default under any mortgage, indenture or instrument
under which there is issued or by which there is secured or
evidenced any Indebtedness for money borrowed by the Issuer or
any of its Restricted Subsidiaries or the payment of which is
guaranteed by the Issuer or any of its Restricted Subsidiaries,
other than Indebtedness owed to the Issuer or a Restricted
Subsidiary, whether such Indebtedness or guarantee now exists or
is created after the issuance of the Notes, if both:
(a) such default either results from the failure to pay any
principal of such Indebtedness at its stated final maturity
(after giving effect to any applicable grace periods) or relates
to an obligation other than the obligation to pay principal of
any such Indebtedness at its stated final maturity and results
in the holder or holders of such Indebtedness causing such
Indebtedness to become due prior to its stated maturity; and
(b) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in
default for failure to pay principal at stated final maturity
(after giving effect to any applicable grace periods), or the
maturity of which has been so accelerated, aggregate
$200.0 million or more at any one time outstanding;
(5) failure by the Issuer or any Significant Subsidiary to
pay final judgments aggregating in excess of
$200.0 million, which final judgments remain unpaid,
undischarged and unstayed for a period of more than 60 days
after such judgment becomes final, and in the event such
judgment is covered by insurance, an enforcement proceeding has
been commenced by any creditor upon such judgment or decree
which is not promptly stayed;
(6) certain events of bankruptcy or insolvency with respect
to the Issuer or any Significant Subsidiary;
(7) the Guarantee of any Significant Subsidiary shall for
any reason cease to be in full force and effect or be declared
null and void or any responsible officer of any Guarantor that
is a Significant Subsidiary, as the case may be, denies that it
has any further liability under its Guarantee or gives notice to
such effect, other than by reason of the termination of the
Indenture or the release of any such Guarantee in accordance
with the Indenture; or
(8) with respect to any Collateral having a fair market
value in excess of $200 million, individually or in the
aggregate, (a) the security interest under the Security
Documents, at any time, ceases to be in full force and effect
for any reason other than in accordance with the terms of the
Indenture, the Security Documents and the Intercreditor
Agreements, (b) any security interest created thereunder or
under the Indenture is declared invalid or unenforceable by a
court of competent jurisdiction or (c) the Issuer or any
Guarantor asserts, in any pleading in any court of competent
jurisdiction, that any such security interest is invalid or
unenforceable.
If any Event of Default (other than of a type specified in
clause (6) above) occurs and is continuing under the
Indenture, the Trustee or the Holders of at least 30% in
principal amount of the then total outstanding Notes may declare
the principal, premium, if any, interest and any other monetary
obligations on all the then outstanding Notes to be due and
payable immediately.
Upon the effectiveness of such declaration, such principal and
interest will be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising under
clause (6) of the first paragraph of this section, all
outstanding Notes will become due and payable without further
action or notice. The Indenture will provide that the Trustee
may withhold from the Holders notice of any continuing Default,
except a Default relating to the payment of principal, premium,
if any, or interest, if it determines that
withholding notice is in their interest. In addition, the
Trustee shall have no obligation to accelerate the Notes if in
the best judgment of the Trustee acceleration is not in the best
interest of the Holders of the Notes.
The Indenture provides that the Holders of a majority in
aggregate principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default and its consequences under the
Indenture except a continuing Default in the payment of interest
on, premium, if any, or the principal of any Note held by a
non-consenting Holder. In the event of any Event of Default
specified in clause (4) above, such Event of Default and
all consequences thereof (excluding any resulting payment
default, other than as a result of acceleration of the Notes)
shall be annulled, waived and rescinded, automatically and
without any action by the Trustee or the Holders, if within
20 days after such Event of Default arose:
(1) the Indebtedness or guarantee that is the basis for
such Event of Default has been discharged; or
(2) holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise
to such Event of Default; or
(3) the default that is the basis for such Event of Default
has been cured.
Subject to the provisions of the Indenture relating to the
duties of the Trustee thereunder, in case an Event of Default
occurs and is continuing, the Trustee will be under no
obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders of
the Notes unless the Holders have offered to the Trustee
reasonable indemnity or security against any loss, liability or
expense. Except to enforce the right to receive payment of
principal, premium, if any, or interest when due, no Holder of a
Note may pursue any remedy with respect to the Indenture or the
Notes unless:
(1) such Holder has previously given the Trustee notice
that an Event of Default is continuing;
(2) Holders of at least 30% in principal amount of the
total outstanding Notes have requested the Trustee to pursue the
remedy;
(3) Holders of the Notes have offered the Trustee
reasonable security or indemnity against any loss, liability or
expense;
(4) the Trustee has not complied with such request within
60 days after the receipt thereof and the offer of security
or indemnity; and
(5) Holders of a majority in principal amount of the total
outstanding Notes have not given the Trustee a direction
inconsistent with such request within such
60-day
period.
Subject to certain restrictions, under the Indenture the Holders
of a majority in principal amount of the total outstanding Notes
are given the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the
Trustee determines is unduly prejudicial to the rights of any
other Holder of a Note or that would involve the Trustee in
personal liability.
The Indenture provides that the Issuer is required to deliver to
the Trustee annually a statement regarding compliance with the
Indenture, and the Issuer is required, within five Business
Days, upon becoming aware of any Default, to deliver to the
Trustee a statement specifying such Default.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of
the Issuer or any Guarantor or any of their parent companies
(other than the Issuer and the Guarantors) shall have any
liability for any obligations of the Issuer or the Guarantors
under the Notes, the Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of such obligations
or their creation. Each Holder by accepting the Notes waives and
releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes. Such waiver
may not be effective to waive liabilities under the federal
securities laws, and it is the view of the SEC that such a
waiver is against public policy.
Legal
Defeasance and Covenant Defeasance
The obligations of the Issuer and the Guarantors under the
Indenture will terminate (other than certain obligations) and
will be released upon payment in full of all of the Notes. The
Issuer may, at its option and at any time, elect to have all of
its obligations discharged with respect to the Notes and have
the Issuer’s and each Guarantor’s obligation
discharged with respect to its Guarantee (“Legal
Defeasance”) and cure all then existing Events of
Default except for:
(1) the rights of Holders of Notes to receive payments in
respect of the principal of, premium, if any, and interest on
the Notes when such payments are due solely out of the trust
created pursuant to the Indenture;
(2) the Issuer’s obligations with respect to Notes
concerning issuing temporary Notes, registration of such Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance
of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of
the Trustee, and the Issuer’s obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Issuer may, at its option and at any time,
elect to have its obligations and those of each Guarantor
released with respect to certain covenants that are described in
the Indenture (“Covenant Defeasance”) and
thereafter any omission to comply with such obligations shall
not constitute a Default with respect to the Notes. In the event
Covenant Defeasance occurs, certain events (not including
bankruptcy, receivership, rehabilitation and insolvency events
pertaining to the Issuer) described under “Events of
Default and Remedies” will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant
Defeasance with respect to the Notes:
(1) the Issuer must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders of the Notes, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and
interest due on the Notes on the stated maturity date or on the
redemption date, as the case may be, of such principal, premium,
if any, or interest on such Notes, and the Issuer must specify
whether such Notes are being defeased to maturity or to a
particular redemption date;
(2) in the case of Legal Defeasance, the Issuer shall have
delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions,
(a) the Issuer has received from, or there has been
published by, the United States Internal Revenue Service a
ruling, or
(b) since the issuance of the Notes, there has been a
change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, subject to customary
assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax
purposes, as applicable, as a result of such Legal Defeasance
and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Issuer shall
have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary
assumptions and
exclusions, the Holders of the Notes will not recognize income,
gain or loss for U.S. federal income tax purposes as a
result of such Covenant Defeasance and will be subject to such
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;
(4) no Default (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith) shall have
occurred and be continuing on the date of such deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under the Senior Credit Facilities or any other material
agreement or instrument (other than the Indenture) to which the
Issuer or any Guarantor is a party or by which the Issuer or any
Guarantor is bound (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith);
(6) the Issuer shall have delivered to the Trustee an
Opinion of Counsel to the effect that, as of the date of such
opinion and subject to customary assumptions and exclusions
following the deposit, the trust funds will not be subject to
the effect of Section 547 of Title 11 of the United
States Code;
(7) the Issuer shall have delivered to the Trustee an
Officer’s Certificate stating that the deposit was not made
by the Issuer with the intent of defeating, hindering, delaying
or defrauding any creditors of the Issuer or any Guarantor or
others; and
(8) the Issuer shall have delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel (which
Opinion of Counsel may be subject to customary assumptions and
exclusions) each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with.
Satisfaction
and Discharge
The Indenture will be discharged and will cease to be of further
effect as to all Notes, when either:
(1) all Notes theretofore authenticated and delivered,
except lost, stolen or destroyed Notes which have been replaced
or paid and Notes for whose payment money has theretofore been
deposited in trust, have been delivered to the Trustee for
cancellation; or
(2) (a) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable by reason
of the making of a notice of redemption or otherwise, will
become due and payable within one year or may be called for
redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Issuer, and the
Issuer or any Guarantor has irrevocably deposited or caused to
be deposited with the Trustee as trust funds in trust solely for
the benefit of the Holders of the Notes, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest to pay and
discharge the entire indebtedness on the Notes not theretofore
delivered to the Trustee for cancellation for principal,
premium, if any, and accrued interest to the date of maturity or
redemption;
(b) no Default (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith) with
respect to the Indenture or the Notes shall have occurred and be
continuing on the date of such deposit or shall occur as a
result of such deposit, and such deposit will not result in a
breach or violation of, or constitute a default under, the
Senior Credit Facilities or any other material agreement or
instrument (other than the Indenture) to which the Issuer or any
Guarantor is a party or by which the Issuer or any Guarantor is
bound (other than that resulting from borrowing funds to be
applied to make such deposit and any similar and simultaneous
deposit relating to other Indebtedness and, in each case, the
granting of Liens in connection therewith);
(c) the Issuer has paid or caused to be paid all sums
payable by it under the Indenture; and
(d) the Issuer has delivered irrevocable instructions to
the Trustee to apply the deposited money toward the payment of
the Notes at maturity or the redemption date, as the case may be.
In addition, the Issuer must deliver an Officer’s
Certificate and an Opinion of Counsel to the Trustee stating
that all conditions precedent to satisfaction and discharge have
been satisfied.
Amendment,
Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the
Indenture, any Guarantee, any Security Document and the Notes
may be amended or supplemented with the consent of the Holders
of at least a majority in principal amount of the Notes then
outstanding, including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes, and
any existing Default or compliance with any provision of the
Indenture, the Notes issued thereunder, any Guarantee or the
Security Documents may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Notes,
other than Notes beneficially owned by the Issuer or its
Affiliates (including consents obtained in connection with a
purchase of or tender offer or exchange offer for the Notes).
The Indenture provides that, without the consent of each
affected Holder of Notes, an amendment or waiver may not, with
respect to any Notes held by a non-consenting Holder:
(1) reduce the principal amount of such Notes whose Holders
must consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed final
maturity of any such Note or alter or waive the provisions with
respect to the redemption of such Notes (other than provisions
relating to the covenants described above under the caption
“Repurchase at the Option of Holders”);
(3) reduce the rate of or change the time for payment of
interest on any Note;
(4) waive a Default in the payment of principal of or
premium, if any, or interest on the Notes, except a rescission
of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver
of the payment default that resulted from such acceleration, or
in respect of a covenant or provision contained in the Indenture
or any Guarantee which cannot be amended or modified without the
consent of all Holders;
(5) make any Note payable in money other than that stated
therein;
(6) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of or premium, if any, or interest
on the Notes;
(7) make any change in these amendment and waiver
provisions;
(8) impair the right of any Holder to receive payment of
principal of, or interest on such Holder’s Notes 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 Notes;
(9) make any change to or modify the ranking of the Notes
or the subordination of the Liens with respect to the Notes that
would adversely affect the Holders; or
(10) except as expressly permitted by the Indenture, modify
the Guarantees of any Significant Subsidiary in any manner
adverse to the Holders of the Notes.
In addition, without the consent of at least 75% in aggregate
principal amount of Notes then outstanding, an amendment,
supplement or waiver may not:
(1) modify any Security Document or the provisions of the
Indenture dealing with the Security Documents or application of
trust moneys, or otherwise release any Collateral, in any manner
materially adverse to the Holders other than in accordance with
the Indenture, the Security Documents and the Intercreditor
Agreements; or
(2) modify any Intercreditor Agreement in any manner
materially adverse to the Holders other than in accordance with
the Indenture, the Security Documents and the Intercreditor
Agreements.
Notwithstanding the foregoing, the Issuer, any Guarantor (with
respect to a Guarantee or the Indenture to which it is a party)
and the Trustee may amend or supplement the Indenture, any
Security Document and any Guarantee or Notes without the consent
of any Holder;
(1) to cure any ambiguity, omission, mistake, defect or
inconsistency;
(2) to provide for uncertificated Notes of such series in
addition to or in place of certificated Notes;
(3) to comply with the covenant relating to mergers,
consolidations and sales of assets;
(4) to provide for the assumption of the Issuer’s or
any Guarantor’s obligations to the Holders;
(5) to make any change that would provide any additional
rights or benefits to the Holders or that does not adversely
affect the legal rights under the Indenture of any such Holder;
(6) to add covenants for the benefit of the Holders or to
surrender any right or power conferred upon the Issuer or any
Guarantor;
(7) to comply with requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the
Trust Indenture Act;
(8) to evidence and provide for the acceptance and
appointment under the Indenture of a successor Trustee
thereunder pursuant to the requirements thereof;
(9) to provide for the issuance of Exchange Notes or
private exchange notes, which are identical to Exchange Notes
except that they are not freely transferable;
(10) to add a Guarantor under the Indenture;
(11) to conform the text of the Indenture, Security
Documents, Guarantees or the Notes to any provision of the
“Description of Notes” section of the Offering
Memorandum to the extent that such provision in such
“Description of Notes” section was intended to be a
verbatim recitation of a provision of the Indenture, Security
Documents, Guarantee or Notes;
(12) to make any amendment to the provisions of the
Indenture relating to the transfer and legending of Notes as
permitted by the Indenture, including, without limitation to
facilitate the issuance and administration of the Notes;
provided, however, that (i) compliance with
the Indenture as so amended would not result in Notes being
transferred in violation of the Securities Act or any applicable
securities law and (ii) such amendment does not materially
and adversely affect the rights of Holders to transfer Notes;
(13) to mortgage, pledge, hypothecate or grant any other
Lien in favor of the Trustee for the benefit of the Holders of
the Notes, as additional security for the payment and
performance of all or any portion of the Obligations, in any
property or assets, including any which are required to be
mortgaged, pledged or hypothecated, or in which a Lien is
required to be granted to or for the benefit of the Trustee or
the Collateral Agent pursuant to the Indenture, any of the
Security Documents or otherwise; or
(14) to release Collateral from the Lien of the Indenture
and the Security Documents when permitted or required by the
Security Documents or the Indenture.
The consent of the Holders is not necessary under the Indenture
to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the
proposed amendment.
Notices
Notices given by publication will be deemed given on the first
date on which publication is made and notices given by
first-class mail, postage prepaid, will be deemed given five
calendar days after mailing.
The Indenture contains certain limitations on the rights of the
Trustee thereunder, should it become a creditor of the Issuer,
to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in
other transactions; however, if it acquires any conflicting
interest it must eliminate such conflict within 90 days,
apply to the SEC for permission to continue or resign.
The Indenture provides that the Holders of a majority in
principal amount of the outstanding Notes have the right to
direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event
of Default shall occur (which shall not be cured), the Trustee
will be required, in the exercise of its power, to use the
degree of care of a prudent person in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under
no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of the Notes, unless such
Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
Governing
Law
The Indenture, the Notes and any Guarantee are governed by and
construed in accordance with the laws of the State of New York.
Certain
Definitions
Set forth below are certain defined terms used in the Indenture.
For purposes of the Indenture, unless otherwise specifically
indicated, the term “consolidated” with respect
to any Person refers to such Person on a consolidated basis in
accordance with GAAP, but excluding from such consolidation any
Unrestricted Subsidiary as if such Unrestricted Subsidiary were
not an Affiliate of such Person.
“2006 Notes”means the $1,000,000,000 aggregate
principal amount of
91/8% Senior
Secured Notes due 2014, the $3,200,000,000 aggregate principal
amount of
91/4% Senior
Secured Notes due 2016 and the $1,500,000,000
95/8%/103/8% Senior
Secured Toggle Notes due 2016, each issued by the Issuer under
the 2006 Notes Indenture.
“2006 Notes Indenture” means that certain
Indenture, dated as of November 17, 2006, among the Issuer,
the guarantors named on Schedule I thereto and The Bank of
New York, as trustee.
“ABL Facility” means the Asset-Based Revolving
Credit Agreement entered into as of November 17, 2006 by
and among the Issuer, the lenders party thereto in their
capacities as lenders thereunder and Bank of America, N.A., as
Administrative Agent, including any guarantees, collateral
documents, instruments and agreements executed in connection
therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements, refundings or refinancings
thereof and any indentures or credit facilities or commercial
paper facilities with banks or other institutional lenders or
investors that replace, refund or refinance any part of the
loans, notes, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing
facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof (provided that
such increase in borrowings is permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”
above).
“ABL Facility Cap” means an amount equal to the
greater of (x) $2,000.0 million and (y) 75% of
the consolidated accounts receivable of the Issuer and its
subsidiaries determined in accordance with GAAP.
“ABL Financing Entity” means the Issuer and
certain of its subsidiaries from time to time named as borrowers
or guarantors under the ABL Facility.
“ABL Obligations” means Obligations under the
ABL Facility.
“ABL Secured Parties” means each of
(i) the ABL Collateral Agent on behalf of itself and the
lenders under the ABL Facility and lenders or their affiliates
counterparty to related Hedging Obligations and (ii) each
other holder of ABL Obligations.
“Acquired Indebtedness” means, with respect to
any specified Person,
(1) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Restricted
Subsidiary of such specified Person, including Indebtedness
incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Restricted Subsidiary
of such specified Person, and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
“Additional Interest” means all additional
interest then owing pursuant to the Registration Rights
Agreement.
“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 purposes of this definition, “control”
(including, with correlative meanings, the terms
“controlling,”“controlled by” and
“under common control with”), as used with respect to
any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise.
“Applicable Premium” means, with respect to any
Note on any Redemption Date, the greater of:
(1) 1.0% of the principal amount of such Note; and
(2) the excess, if any, of (a) the present value at
such Redemption Date of (i) the redemption price of such
Note at February 15, 2013 (such redemption price being set
forth in the tables appearing above under the caption
“Optional Redemption”), plus (ii) all required
interest payments due on such Note through February 15,2013 (excluding accrued but unpaid interest to the
Redemption Date), computed using a discount rate equal to
the Treasury Rate as of such Redemption Date plus
50 basis points; over (b) the principal amount of such
Note.
“Asset Sale” means:
(1) the sale, conveyance, transfer or other disposition,
whether in a single transaction or a series of related
transactions, of property or assets (including by way of a Sale
and Lease-Back Transaction) of the Issuer or any of its
Restricted Subsidiaries (each referred to in this definition as
a “disposition”); or
(2) the issuance or sale of Equity Interests of any
Restricted Subsidiary, whether in a single transaction or a
series of related transactions (other than Preferred Stock of
Restricted Subsidiaries issued in compliance with the covenant
described under “Certain Covenants — Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”);
in each case, other than:
(a) any disposition of Cash Equivalents or Investment Grade
Securities or obsolete or worn out equipment in the ordinary
course of business or any disposition of inventory or goods (or
other assets) held for sale in the ordinary course of business;
(b) the disposition of all or substantially all of the
assets of the Issuer in a manner permitted pursuant to the
provisions described above under “Certain
Covenants — Merger, Consolidation or Sale of All or
Substantially All Assets” or any disposition that
constitutes a Change of Control pursuant to the Indenture;
(c) the making of any Restricted Payment or Permitted
Investment that is permitted to be made, and is made, under the
covenant described above under “Certain
Covenants — Limitation on Restricted Payments”;
(d) any disposition of assets or issuance or sale of Equity
Interests of any Restricted Subsidiary in any transaction or
series of related transactions with an aggregate fair market
value of less than $100.0 million;
(e) any disposition of property or assets or issuance of
securities by a Restricted Subsidiary of the Issuer to the
Issuer or by the Issuer or a Restricted Subsidiary of the Issuer
to another Restricted Subsidiary of the Issuer;
(f) to the extent allowable under Section 1031 of the
Code or any comparable or successor provision, any exchange of
like property (excluding any boot thereon) for use in a Similar
Business;
(g) the lease, assignment or sub-lease of any real or
personal property in the ordinary course of business;
(h) any issuance or sale of Equity Interests in, or
Indebtedness or other securities of, an Unrestricted Subsidiary;
(i) foreclosures on assets;
(j) sales of accounts receivable, or participations
therein, in connection with the ABL Facility or any Receivables
Facility;
(k) any financing transaction with respect to property
built or acquired by the Issuer or any Restricted Subsidiary
after November 17, 2006, including Sale and Lease-Back
Transactions and asset securitizations permitted by the
Indenture;
(l) dispositions in the ordinary course of business by any
Restricted Subsidiary (including, without limitation, HCI)
engaged in the insurance business in order to provide insurance
to the Issuer and its Subsidiaries;
(m) sales, transfers and other dispositions of Investments
in joint ventures to the extent required by, or made pursuant
to, customary buy/sell arrangements between the joint venture
parties set forth in joint venture arrangements and similar
binding arrangements;
(n) any issuance or sale of Equity Interests or
dispositions in connection with ordinary course syndications of
Subsidiaries or joint ventures owning or operating one or more
healthcare facilities, including, without limitation, hospitals,
ambulatory surgery centers, outpatient diagnostic centers or
imaging centers in any transaction or series of related
transactions with an aggregate fair market value of less than
$100.0 million; and
(o) any issuance or sale of Equity Interests of any
Restricted Subsidiary (including, without limitation,
HealthTrust Purchasing Group, L.P.) to any Person operating in a
Similar Business for which such Restricted Subsidiary provides
shared purchasing, billing, collection or similar services in
the ordinary course of business.
“Asset Sale Offer” has the meaning set forth in
the fourth paragraph under “Repurchase at the Option of
Holders — Asset Sales.”
“Bankruptcy Code” means Title 11 of the
United States Code, as amended.
“Bankruptcy Law” means the Bankruptcy Code and
any similar federal, state or foreign law for the relief of
debtors.
“Business Day” means each day which is not a
Legal Holiday.
“Capital Stock” means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
“Capitalized Lease Obligation” means, at the
time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time
be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance
with GAAP.
“Capitalized Software Expenditures” means, for
any period, the aggregate of all expenditures (whether paid in
cash or accrued as liabilities) by a Person and its Restricted
Subsidiaries during such period in respect of purchased software
or internally developed software and software enhancements that,
in conformity with GAAP, are or are required to be reflected as
capitalized costs on the consolidated balance sheet of a Person
and its Restricted Subsidiaries.
“Cash Equivalents” means:
(1) United States dollars;
(2) euros or any national currency of any participating
member state of the EMU or such local currencies held by the
Company and its Restricted Subsidiaries from time to time in the
ordinary course of business;
(3) securities issued or directly and fully and
unconditionally guaranteed or insured by the
U.S. government (or any agency or instrumentality thereof
the securities of which are unconditionally guaranteed as a full
faith and credit obligation of the U.S. government) with
maturities of 24 months or less from the date of
acquisition;
(4) certificates of deposit, time deposits and eurodollar
time deposits with maturities of one year or less from the date
of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case
with any commercial bank having capital and surplus of not less
than $500.0 million in the case of U.S. banks and
$100.0 million (or the U.S. dollar equivalent as of
the date of determination) in the case of
non-U.S. banks;
(5) repurchase obligations for underlying securities of the
types described in clauses (3) and (4) entered into
with any financial institution meeting the qualifications
specified in clause (4) above;
(6) commercial paper rated at least
P-1 by
Moody’s or at least
A-1 by
S&P and in each case maturing within 24 months after
the date of creation thereof;
(7) marketable short-term money market and similar
securities having a rating of at least
P-2 or
A-2 from
either Moody’s or S&P, respectively (or, if at any
time neither Moody’s nor S&P shall be rating such
obligations, an equivalent rating from another Rating Agency)
and in each case maturing within 24 months after the date
of creation thereof;
(8) investment funds investing 95% of their assets in
securities of the types described in clauses (1) through
(7) above;
(9) readily marketable direct obligations issued by any
state, commonwealth or territory of the United States or any
political subdivision or taxing authority thereof having an
Investment Grade Rating from either Moody’s or S&P
with maturities of 24 months or less from the date of
acquisition;
(10) Indebtedness or Preferred Stock issued by Persons with
a rating of A or higher from S&P or A2 or higher from
Moody’s with maturities of 24 months or less from the
date of acquisition; and
(11) Investments with average maturities of 24 months
or less from the date of acquisition in money market funds rated
AAA- (or the equivalent thereof) or better by S&P or Aaa3
(or the equivalent thereof) or better by Moody’s.
Notwithstanding the foregoing, Cash Equivalents shall include
amounts denominated in currencies other than those set forth in
clauses (1) and (2) above; provided that such
amounts are converted into any currency listed in
clauses (1) and (2) as promptly as practicable and in
any event within ten Business Days following the receipt of such
amounts.
“Change of Control” means the occurrence of any
of the following:
(1) the sale, lease or transfer, in one or a series of
related transactions, of all or substantially all of the assets
of the Issuer and its Subsidiaries, taken as a whole, to any
Person other than a Permitted Holder; or
(2) the Issuer becomes aware (by way of a report or any
other filing pursuant to Section 13(d) of the Exchange Act,
proxy, vote, written notice or otherwise) of the acquisition by
any Person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the
meaning of
Rule 13d-5(b)(1)
under the Exchange Act), other than the Permitted Holders, in a
single transaction or in a related series of transactions, by
way of merger, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of
Rule 13d-3
under the Exchange Act, or any successor provision) of 50% or
more of the total voting power of the Voting Stock of the Issuer
or any of its direct or indirect parent companies holding
directly or indirectly 100% of the total voting power of the
Voting Stock of the Issuer.
“Code” means the Internal Revenue Code of 1986,
as amended, or any successor thereto.
“Collateral” means, collectively, the Shared
Receivables Collateral and Non-Receivables Collateral.
“Collateral Asset Sale Offer” has the meaning
set forth in the third paragraph under “Repurchase at the
Option of Holders — Asset Sales.”
“Collateral Excess Proceeds” has the meaning
set forth in the third paragraph under “Repurchase at the
Option of Holders — Asset Sales.”
“Consolidated Depreciation and Amortization
Expense” means with respect to any Person for any
period, the total amount of depreciation and amortization
expense, including the amortization of deferred financing fees,
debt issuance costs, commissions, fees and expenses and
Capitalized Software Expenditures, of such Person and its
Restricted Subsidiaries for such period on a consolidated basis
and otherwise determined in accordance with GAAP.
“Consolidated Interest Expense” means, with
respect to any Person for any period, without duplication, the
sum of:
(1) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, to the extent such
expense was deducted (and not added back) in computing
Consolidated Net Income (including (a) amortization of
original issue discount resulting from the issuance of
Indebtedness at less than par, (b) all commissions,
discounts and other fees and charges owed with respect to
letters of credit or bankers’ acceptances,
(c) non-cash interest payments (but excluding any non-cash
interest expense attributable to the movement in the mark to
market valuation of Hedging Obligations or other derivative
instruments pursuant to GAAP), (d) the interest component
of Capitalized Lease Obligations, and (e) net payments, if
any, pursuant to interest rate Hedging Obligations with respect
to Indebtedness, and excluding (u) accretion or accrual of
discounted liabilities not constituting Indebtedness,
(v) any expense resulting from the discounting of the
Existing Notes or other Indebtedness in connection with the
application of recapitalization accounting or, if applicable,
purchase accounting, (w) any Additional Interest and any
comparable “additional interest” with respect to other
securities, (x) amortization of deferred financing fees,
debt issuance costs, commissions, fees and expenses,
(y) any expensing of bridge, commitment and other financing
fees and (z) commissions, discounts, yield and other fees
and charges (including any interest expense) related to any
Receivables Facility); plus
(2) consolidated capitalized interest of such Person and
its Restricted Subsidiaries for such period, whether paid or
accrued; less
(3) interest income for such period.
For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with
GAAP.
“Consolidated Leverage Ratio”, with respect to
any Person as of any date of determination, means the ratio of
(x) Consolidated Total Indebtedness of such Person as of
the end of the most recent fiscal quarter for which internal
financial statements are available immediately preceding the
date on which such event for which such calculation is being
made shall occur to (y) the aggregate amount of EBITDA of
such Person for the period of the most recently ended four full
consecutive fiscal quarters for which internal financial
statements are available immediately preceding the date on which
such event for which such calculation is being made shall occur,
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 “Fixed Charge Coverage Ratio.”
“Consolidated Net Income” means, with respect
to any Person for any period, the aggregate of the Net Income of
such Person for such period, on a consolidated basis, and
otherwise determined in accordance with GAAP; provided,
however, that, without duplication,
(1) any after-tax effect of extraordinary, non-recurring or
unusual gains or losses (less all fees and expenses relating
thereto) or expenses, severance, relocation costs, consolidation
and closing costs, integration and facilities opening costs,
business optimization costs, transition costs, restructuring
costs, signing, retention or completion bonuses, and
curtailments or modifications to pension and post-retirement
employee benefit plans shall be excluded,
(2) the cumulative effect of a change in accounting
principles during such period shall be excluded,
(3) any after-tax effect of income (loss) from disposed,
abandoned or discontinued operations and any net after-tax gains
or losses on disposal of disposed, abandoned, transferred,
closed or discontinued operations shall be excluded,
(4) any after-tax effect of gains or losses (less all fees
and expenses relating thereto) attributable to asset
dispositions or abandonments other than in the ordinary course
of business, as determined in good faith by the Issuer, shall be
excluded,
(5) the Net Income for such period of any Person that is an
Unrestricted Subsidiary shall be excluded, and, solely for the
purpose of determining the amount available for Restricted
Payments under clause 3(a) of the first paragraph of
“Certain Covenants — Limitation on Restricted
Payments,” the Net Income for such period of any Person
that is not a Subsidiary or that is accounted for by the equity
method of accounting shall be excluded; provided that
Consolidated Net Income of the Issuer shall be increased by the
amount of dividends or distributions or other payments that are
actually paid in cash (or to the extent converted into cash) to
the referent Person or a Restricted Subsidiary thereof in
respect of such period,
(6) solely for the purpose of determining the amount
available for Restricted Payments under clause (3)(a) of the
first paragraph of “Certain Covenants —
Limitation on Restricted Payments,” the Net Income for such
period of any Restricted Subsidiary (other than any Guarantor)
shall be excluded to the extent that the declaration or payment
of dividends or similar distributions by that Restricted
Subsidiary of its Net Income is not at the date of determination
wholly permitted without any prior governmental approval (which
has not been obtained) or, directly or indirectly, by the
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, or
governmental regulation applicable to that Restricted Subsidiary
or its stockholders, unless such restriction with respect to the
payment of dividends or similar distributions has been legally
waived; provided that Consolidated Net Income of the
Issuer will be increased by the amount of dividends or other
distributions or other payments actually paid in cash (or
to the extent converted into cash) or Cash Equivalents to the
Issuer or a Restricted Subsidiary thereof in respect of such
period, to the extent not already included therein,
(7) effects of adjustments (including the effects of such
adjustments pushed down to the Issuer and its Restricted
Subsidiaries) in the property, equipment, inventory, software
and other intangible assets, deferred revenue and debt line
items in such Person’s consolidated financial statements
pursuant to GAAP resulting from the application of
recapitalization accounting or, if applicable, purchase
accounting in relation to the Transactions or any consummated
acquisition or the amortization or write-off of any amounts
thereof, net of taxes, shall be excluded,
(8) any after-tax effect of income (loss) from the early
extinguishment of Indebtedness or Hedging Obligations or other
derivative instruments shall be excluded,
(9) any impairment charge or asset write-off, including,
without limitation, impairment charges or asset write-offs
related to intangible assets, long-lived assets or investments
in debt and equity securities, in each case, pursuant to GAAP
and the amortization of intangibles arising pursuant to GAAP
shall be excluded,
(10) any non-cash compensation expense recorded from grants
of stock appreciation or similar rights, stock options,
restricted stock or other rights, and any cash charges
associated with the rollover, acceleration or payout of Equity
Interests by management of the Company or any of its direct or
indirect parent companies in connection with the Transaction,
shall be excluded,
(11) any fees and expenses incurred during such period, or
any amortization thereof for such period, in connection with any
acquisition, Investment, Asset Sale, issuance or repayment of
Indebtedness, issuance of Equity Interests, refinancing
transaction or amendment or modification of any debt instrument
(in each case, including any such transaction consummated prior
to the Issue Date and any such transaction undertaken but not
completed) and any charges or non-recurring merger costs
incurred during such period as a result of any such transaction
shall be excluded,
(12) accruals and reserves that are established or adjusted
within twelve months after November 17, 2006 that are so
required to be established as a result of the Transaction in
accordance with GAAP, or changes as a result of adoption or
modification of accounting policies, shall be excluded, and
(13) to the extent covered by insurance and actually
reimbursed, or, so long as the Issuer has made a determination
that there exists reasonable evidence that such amount will in
fact be reimbursed by the insurer and only to the extent that
such amount is (a) not denied by the applicable carrier in
writing within 180 days and (b) in fact reimbursed
within 365 days of the date of such evidence (with a
deduction for any amount so added back to the extent not so
reimbursed within 365 days), expenses with respect to
liability or casualty events or business interruption shall be
excluded.
Notwithstanding the foregoing, for the purpose of the covenant
described under “Certain Covenants — Limitation
on Restricted Payments” only (other than clause (3)(d)
thereof), there shall be excluded from Consolidated Net Income
any income arising from any sale or other disposition of
Restricted Investments made by the Issuer and its Restricted
Subsidiaries, any repurchases and redemptions of Restricted
Investments from the Issuer and its Restricted Subsidiaries, any
repayments of loans and advances which constitute Restricted
Investments by the Issuer or any of its Restricted Subsidiaries,
any sale of the stock of an Unrestricted Subsidiary or any
distribution or dividend from an Unrestricted Subsidiary, in
each case only to the extent such amounts increase the amount of
Restricted Payments permitted under such covenant pursuant to
clause (3)(d) thereof.
“Consolidated Secured Debt Ratio” as of any
date of determination, means the ratio of (1) Consolidated
Total Indebtedness of the Issuer and its Restricted Subsidiaries
that is secured by Liens as of the end of the most recent fiscal
period for which internal financial statements are available
immediately preceding the date on which such event for which
such calculation is being made shall occur to (2) the
Issuer’s EBITDA for the most recently ended four full
fiscal quarters for which internal financial statements are
available immediately preceding the date on which such event for
which such calculation is being made shall occur, 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 “Fixed Charge Coverage Ratio.”
“Consolidated Total Indebtedness” means, as at
any date of determination, an amount equal to the sum of
(1) the aggregate amount of all outstanding Indebtedness of
the Issuer and its Restricted Subsidiaries on a consolidated
basis consisting of Indebtedness for borrowed money, Obligations
in respect of Capitalized Lease Obligations and debt obligations
evidenced by promissory notes and similar instruments (and
excluding, for the avoidance of doubt, all obligations relating
to Receivables Facilities) and (2) the aggregate amount of
all outstanding Disqualified Stock of the Issuer and all
Preferred Stock of its Restricted Subsidiaries on a consolidated
basis, with the amount of such Disqualified Stock and Preferred
Stock equal to the greater of their respective voluntary or
involuntary liquidation preferences and maximum fixed repurchase
prices, in each case determined on a consolidated basis in
accordance with GAAP. For purposes hereof, the “maximum
fixed repurchase price” of any Disqualified Stock or
Preferred Stock that does not have a fixed repurchase price
shall be calculated in accordance with the terms of such
Disqualified Stock or Preferred Stock as if such Disqualified
Stock or Preferred Stock were purchased on any date on which
Consolidated Total Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified
Stock or Preferred Stock, such fair market value shall be
determined reasonably and in good faith by the Issuer.
“Contingent Obligations” means, with respect to
any Person, any obligation of such Person guaranteeing any
leases, dividends or other obligations that do not constitute
Indebtedness (“primary obligations”) of any
other Person (the “primary obligor”) in any
manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not
contingent,
(1) to purchase any such primary obligation or any property
constituting direct or indirect security therefor,
(2) to advance or supply funds
(a) for the purchase or payment of any such primary
obligation, or
(b) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, or
(3) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment
of such primary obligation against loss in respect thereof.
“Credit Facilities” means, with respect to the
Issuer or any of its Restricted Subsidiaries, one or more debt
facilities, including the Senior Credit Facilities, or other
financing arrangements (including, without limitation,
commercial paper facilities or indentures) providing for
revolving credit loans, term loans, letters of credit or other
long-term indebtedness, including any notes, mortgages,
guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments,
supplements, modifications, extensions, renewals, restatements
or refundings thereof and any indentures or credit facilities or
commercial paper facilities that replace, refund or refinance
any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement,
refunding or refinancing facility or indenture that increases
the amount permitted to be borrowed thereunder or alters the
maturity thereof (provided that such increase in
borrowings is permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”) or
adds Restricted Subsidiaries as additional borrowers or
guarantors thereunder and whether by the same or any other
agent, lender or group of lenders.
“Default” means any event that is, or with the
passage of time or the giving of notice or both would be, an
Event of Default.
“Delayed Equity Amount” means any equity
contribution of the Investors, the Frist Entities or certain
other management investors described in the offering memorandum
relating to the 2006 Second Priority Notes on or before
March 31, 2007, the proceeds of which are used to repay
borrowings under the senior secured
revolving credit facility included in the General Credit
Facility or the ABL Facility in the manner described in such
offering memorandum.
“Designated Non-cash Consideration” means the
fair market value of non-cash consideration received by the
Issuer or a Restricted Subsidiary in connection with an Asset
Sale that is so designated as Designated Non-cash Consideration
pursuant to an Officer’s Certificate, setting forth the
basis of such valuation, executed by the principal financial
officer of the Issuer, less the amount of cash or Cash
Equivalents received in connection with a subsequent sale of or
collection on such Designated Non-cash Consideration.
“Designated Preferred Stock” means Preferred
Stock of the Issuer or any parent corporation thereof (in each
case other than Disqualified Stock) that is issued for cash
(other than to a Restricted Subsidiary or an employee stock
ownership plan or trust established by the Issuer or any of its
Subsidiaries) and is so designated as Designated Preferred
Stock, pursuant to an Officer’s Certificate executed by the
principal financial officer of the Issuer or the applicable
parent corporation thereof, as the case may be, on the issuance
date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause (3) of the first paragraph
under “Certain Covenants — Limitation on
Restricted Payments.”
“Discharge of First Lien Obligations” shall
mean the satisfaction and discharge of all of the First Lien
Obligations in full in cash, pursuant to the First Lien
Documents and the General Intercreditor Agreement.
“Disqualified Stock” means, with respect to any
Person, any Capital Stock of such Person which, by its terms, or
by the terms of any security into which it is convertible or for
which it is putable or exchangeable, or upon the happening of
any event, matures or is mandatorily redeemable (other than
solely as a result of a change of control or asset sale)
pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof (other than
solely as a result of a change of control or asset sale), in
whole or in part, in each case prior to the date 91 days
after the earlier of the maturity date of the Notes or the date
the Notes are no longer outstanding; provided,
however, that if such Capital Stock is issued to any plan
for the benefit of employees of the Issuer or its Subsidiaries
or by any such plan to such employees, such Capital Stock shall
not constitute Disqualified Stock solely because it may be
required to be repurchased by the Issuer or its Subsidiaries in
order to satisfy applicable statutory or regulatory obligations.
“EBITDA” means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such
period
(1) increased (without duplication) by:
(a) provision for taxes based on income or profits or
capital gains, including, without limitation, foreign, federal,
state, franchise and similar taxes (such as the Pennsylvania
capital tax) and foreign withholding taxes (including penalties
and interest related to such taxes or arising from tax
examinations) of such Person paid or accrued during such period
deducted (and not added back) in computing Consolidated Net
Income; plus
(b) Fixed Charges of such Person for such period (including
(x) net losses on Hedging Obligations or other derivative
instruments entered into for the purpose of hedging interest
rate risk and (y) costs of surety bonds in connection with
financing activities, in each case, to the extent included in
Fixed Charges), together with items excluded from the definition
of “Consolidated Interest Expense” pursuant to clauses
(1)(u), (v), (w), (x), (y) and (z) of the definition
thereof, and, in each such case, to the extent the same were
deducted (and not added back) in calculating such Consolidated
Net Income; plus
(c) Consolidated Depreciation and Amortization Expense of
such Person for such period to the extent the same was deducted
(and not added back) in computing Consolidated Net Income;
plus
(d) any expenses or charges (other than depreciation or
amortization expense) related to any Equity Offering, Permitted
Investment, acquisition, disposition, recapitalization or the
incurrence of Indebtedness permitted to be incurred by the
Indenture (including a refinancing thereof) (whether or not
successful), including (i) such fees, expenses or charges
related to the offering of the Notes and
any Credit Facilities and (ii) any amendment or other
modification of the Notes, and, in each case, deducted (and not
added back) in computing Consolidated Net Income; plus
(e) the amount of any restructuring charge or reserve
deducted (and not added back) in such period in computing
Consolidated Net Income, including any one-time costs incurred
in connection with acquisitions after November 17, 2006 and
costs related to the closure
and/or
consolidation of facilities; plus
(f) any other non-cash charges, including any write-offs or
write-downs, reducing Consolidated Net Income for such period
(provided that if any such non-cash charges represent an
accrual or reserve for potential cash items in any future
period, the cash payment in respect thereof in such future
period shall be subtracted from EBITDA to such extent, and
excluding amortization of a prepaid cash item that was paid in a
prior period); plus
(g) the amount of any minority interest expense consisting
of income attributable to minority equity interests of third
parties deducted (and not added back) in such period in
calculating Consolidated Net Income; plus
(h) the amount of management, monitoring, consulting and
advisory fees and related expenses paid in such period to the
Investors and the Frist Entities to the extent otherwise
permitted under “Certain Covenants — Transactions
with Affiliates”; plus
(i) the amount of net cost savings projected by the Issuer
in good faith to be realized as a result of specified actions
taken or to be taken (calculated on a pro forma basis as though
such cost savings had been realized on the first day of such
period), net of the amount of actual benefits realized during
such period from such actions; provided that
(w) such cost savings are reasonably identifiable and
factually supportable, (x) such actions have been taken or
are to be taken within 15 months after the date of
determination to take such action, (y) no cost savings
shall be added pursuant to this clause (i) to the extent
duplicative of any expenses or charges relating to such cost
savings that are included in clause (e) above with respect
to such period and (z) the aggregate amount of cost savings
added pursuant to this clause (i) shall not exceed
$150.0 million for any four consecutive quarter period
(which adjustments may be incremental to pro forma adjustments
made pursuant to the second paragraph of the definition of
“Fixed Charge Coverage Ratio”); plus
(j) the amount of loss on sales of receivables and related
assets to the Receivables Subsidiary in connection with a
Receivables Facility; plus
(k) any costs or expense incurred by the Issuer or a
Restricted Subsidiary pursuant to any management equity plan or
stock option plan or any other management or employee benefit
plan or agreement or any stock subscription or shareholder
agreement, to the extent that such cost or expenses are funded
with cash proceeds contributed to the capital of the Issuer or
net cash proceeds of an issuance of Equity Interests of the
Issuer (other than Disqualified Stock) solely to the extent that
such net cash proceeds are excluded from the calculation set
forth in clause (3) of the first paragraph under
“Certain Covenants — Limitation on Restricted
Payments”;
(2) decreased by (without duplication) non-cash gains
increasing Consolidated Net Income of such Person for such
period, excluding any non-cash gains to the extent they
represent the reversal of an accrual or reserve for a potential
cash item that reduced EBITDA in any prior period; and
(3) increased or decreased by (without duplication):
(a) any net gain or loss resulting in such period from
Hedging Obligations and the application of Statement of
Financial Accounting Standards No. 133; plus or
minus, as applicable,
(b) any net gain or loss resulting in such period from
currency translation gains or losses related to currency
remeasurements of Indebtedness (including any net loss or gain
resulting from Hedging Obligations for currency exchange risk).
“EMU” means the economic and monetary union as
contemplated in the Treaty on European Union.
“Equity Interests” means Capital Stock and all
warrants, options or other rights to acquire Capital Stock, but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock.
“Equity Offering” means any public or private
sale of common stock or Preferred Stock of the Issuer or any of
its direct or indirect parent companies (excluding Disqualified
Stock), other than:
(1) public offerings with respect to the Issuer’s or
any direct or indirect parent company’s common stock
registered on
Form S-8;
(2) issuances to any Subsidiary of the Issuer; and
(3) any such public or private sale that constitutes an
Excluded Contribution.
“euro” means the single currency of
participating member states of the EMU.
“European Collateral” has the meaning set forth
under “Description of Other Indebtedness — Senior
Secured Credit Facilities — Guarantees and
Security.”
“Event of Default” has the meaning set forth
under “Events of Default and Remedies.”
“Excess Proceeds” has the meaning set forth in
the fourth paragraph under “Repurchase at the Option of
Holders — Asset Sales.”
“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the
SEC promulgated thereunder.
“Exchange Notes” means any notes issued in
exchange for the Notes pursuant to the Registration Rights
Agreement or similar agreement.
“Excluded Contribution” means net cash
proceeds, marketable securities or Qualified Proceeds received
by the Issuer after November 17, 2006 from
(1) contributions to its common equity capital, and
(2) the sale (other than to a Subsidiary of the Issuer or
to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement of the Issuer)
of Capital Stock (other than Disqualified Stock and Designated
Preferred Stock) of the Issuer,
in each case designated as Excluded Contributions pursuant to an
Officer’s Certificate executed by the principal financial
officer of the Issuer on the date such capital contributions are
made or the date such Equity Interests are sold, as the case may
be, which are excluded from the calculation set forth in
clause (3) of the first paragraph under “Certain
Covenants — Limitation on Restricted Payments.”
“Existing Notes” means the $121.2 million
aggregate principal amount of 8.700% medium-term notes due 2010,
$691.2 million aggregate principal amount of
8.750% notes due 2010, £150.0 million aggregate
principal amount of 8.750% notes due 2010,
$475.8 million aggregate principal amount of
7.875% notes due 2011, $500.0 million aggregate
principal amount of 6.950% notes due 2012,
$500.0 million aggregate principal amount of
6.300% notes due 2012, $500.0 million aggregate
principal amount of 6.250% notes due 2013,
$500.0 million aggregate principal amount of
6.750% notes due 2013, $500.0 million aggregate
principal amount of 5.750% notes due 2014,
$121.1 million aggregate principal amount of 9.000% medium
term notes due 2014, $750.0 million aggregate principal
amount of 6.375% notes due 2015, $150.0 million
aggregate principal amount of 7.190% debentures due 2015,
$1,000.0 million aggregate principal amount of
6.500% notes due 2016, $135.6 million aggregate
principal amount of 7.500% debentures due 2023,
$150.0 million aggregate principal amount of
8.360% debentures due 2024, $291.4 million aggregate
principal amount of 7.690% notes due 2025,
$125.0 million aggregate principal amount of 7.580%
medium-term notes due 2025, $150.0 million aggregate
principal amount of 7.050% debentures due 2027,
$250.0 million aggregate principal amount of
7.500% notes due 2033, $100.0 million aggregate
principal amount of 7.750% debentures due 2036 and
$200.0 million aggregate principal amount of
7.500% debentures due 2095, each issued by the Issuer and
outstanding on November 17, 2006.
“Existing Notes Indenture” means that certain
Indenture, dated as of December 16, 1993, between Columbia
Healthcare Corporation and The First National Bank of Chicago,
as Trustee, as amended by the First Supplemental Indenture,
dated as of May 25, 2000, between the Issuer and Bank One
Trust Company, N.A., as Trustee, the Second Supplemental
Indenture, dated as of July 1, 2001, between the Issuer and
Bank One Trust Company, N.A., as Trustee, and the Third
Supplemental Indenture, dated as of December 5, 2001,
between the Issuer and The Bank of New York, as Trustee.
“First Lien Collateral” means all of the assets
of the Issuer or any Guarantor, whether real, personal or mixed,
with respect to which a Lien has been granted as security for
any First Lien Obligations pursuant to a First Lien Document.
“First Lien Collateral Agent” shall mean Bank
of America, N.A., in its capacity as administrative agent and
collateral agent for the lenders and other secured parties under
the General Credit Facility and the other First Lien Documents,
together with its successors and permitted assigns under the
General Credit Facility exercising substantially the same rights
and powers; and in each case provided that if such First Lien
Collateral Agent is not Bank of America, N.A., such First Lien
Collateral Agent shall have become a party to the Intercreditor
Agreements and the other applicable First Lien Security
Documents.
“First Lien Documents” means the credit,
guarantee and security documents governing the First Lien
Obligations, including, without limitation, the General Credit
Facility and the First Lien Security Documents.
“First Lien Obligations” shall mean
(a) all General Credit Facility Obligations and
(b) all other Obligations of the Issuer and its
Subsidiaries under any refinancings of the General Credit
Facility Obligations (and any related Hedging Obligations). For
the avoidance of doubt, Obligations with respect to the ABL
Facility shall not constitute First Lien Obligations.
“First Lien Secured Parties” means, at any
relevant time, the holders of First Lien Obligations at such
time, including, without limitation, the lenders and agents
under the General Credit Facility and the First Lien Collateral
Agent.
“First Lien Security Documents” means the
Security Documents (as defined in the General Credit Facility)
and any other agreement, document or instrument pursuant to
which a Lien is granted or purported to be granted securing
First Lien Obligations or under which rights or remedies with
respect to such Liens are governed.
“First Priority Liens” means the first priority
Liens securing the First Lien Obligations.
“Fixed Charge Coverage Ratio” means, with
respect to any Person for any period, the ratio of EBITDA of
such Person for such period to the Fixed Charges of such Person
for such period. In the event that the Issuer or any Restricted
Subsidiary incurs, assumes, guarantees, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred
under any revolving credit facility unless such Indebtedness has
been permanently repaid and has not been replaced) or issues or
redeems Disqualified Stock or Preferred Stock subsequent to the
commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to or simultaneously with
the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the “Fixed Charge Coverage Ratio
Calculation Date”), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, redemption, retirement or
extinguishment of Indebtedness, or such issuance or redemption
of Disqualified Stock or Preferred Stock, as if the same had
occurred at the beginning of the applicable four-quarter period.
For purposes of making the computation referred to above,
Investments, acquisitions, dispositions, mergers, consolidations
and disposed operations (as determined in accordance with GAAP)
that have been made by the Issuer or any of its Restricted
Subsidiaries during the four-quarter reference period or
subsequent to such reference period and on or prior to or
simultaneously with the Fixed Charge Coverage Ratio Calculation
Date shall be calculated on a pro forma basis assuming that all
such Investments, acquisitions, dispositions, mergers,
consolidations and disposed operations (and the change in any
associated fixed charge obligations and the change in EBITDA
resulting therefrom) had occurred on the first day of the
four-quarter reference period. If, since the beginning of such
period, any Person that subsequently became a Restricted
Subsidiary or was merged with or into the Issuer or any of its
Restricted Subsidiaries since the beginning of such period shall
have made any Investment, acquisition, disposition, merger,
consolidation or disposed operation that would have required
adjustment pursuant to this definition, then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition,
disposition, merger, consolidation or disposed operation had
occurred at the beginning of the applicable four-quarter period.
For purposes of this definition, whenever pro forma effect is to
be given to a transaction, the pro forma calculations shall be
made in good faith by a responsible financial or accounting
officer of the Issuer. 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 Fixed Charge Coverage Ratio Calculation Date had been the
applicable rate for the entire period (taking into account any
Hedging Obligations applicable to such Indebtedness). Interest
on a Capitalized Lease Obligation shall be deemed to accrue at
an interest rate reasonably determined by a responsible
financial or accounting officer of the Issuer to be the rate of
interest implicit in such Capitalized Lease Obligation in
accordance with GAAP. For purposes of making the computation
referred to above, interest on any Indebtedness under a
revolving credit facility computed on a pro forma basis shall be
computed based upon the average daily balance of such
Indebtedness during the applicable period except as set forth in
the first paragraph of this definition. Interest on Indebtedness
that may optionally be determined at an interest rate based upon
a factor of a prime or similar rate, a eurocurrency interbank
offered rate or other rate shall be deemed to have been based
upon the rate actually chosen, or, if none, then based upon such
optional rate chosen as the Issuer may designate.
“Fixed Charges” means, with respect to any
Person for any period, the sum of:
(1) Consolidated Interest Expense of such Person for such
period;
(2) all cash dividends or other distributions paid
(excluding items eliminated in consolidation) on any series of
Preferred Stock during such period; and
(3) all cash dividends or other distributions paid
(excluding items eliminated in consolidation) on any series of
Disqualified Stock during such period.
“Foreign Subsidiary” means, with respect to any
Person, any Restricted Subsidiary of such Person that is not
organized or existing under the laws of the United States, any
state thereof or the District of Columbia and any Restricted
Subsidiary of such Foreign Subsidiary.
“Frist Entities” means Dr. Thomas F.
Frist, Jr., any Person controlled by Dr. Frist and any
charitable organization selected by Dr. Frist that holds
Equity Interests of the Issuer on November 17, 2006.
“GAAP” means generally accepted accounting
principles in the United States which are in effect on
November 17, 2006.
“General Credit Facility” means the credit
agreement entered into as of November 17, 2006 by and among
the Issuer, the European subsidiary borrowers party thereto, the
lenders party thereto in their capacities as lenders thereunder
and Bank of America, N.A., as U.S. Administrative Agent and
as European Administrative Agent, including any guarantees,
collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements,
modifications, extensions, renewals, restatements, refundings or
refinancings thereof and any indentures or credit facilities or
commercial paper facilities with banks or other institutional
lenders or investors that replace, refund or refinance any part
of the loans, notes, other credit facilities or commitments
thereunder, including any such replacement, refunding or
refinancing facility or indenture that increases the amount
borrowable thereunder or alters the maturity thereof
(provided that such increase in borrowings is permitted
under “Certain Covenants — Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock” above).
“General Credit Facility Obligations” means
“Obligations” as defined in the General Credit
Facility.
“General Intercreditor Agreement” has the
meaning set forth under “Security — Liens with
Respect to the Collateral.”
“Government Securities” means securities that
are:
(1) direct obligations of the United States of America for
the timely payment of which its full faith and credit is
pledged; or
(2) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United
States of America,
which, in either case, are not callable or redeemable at the
option of the issuers thereof, and shall also include a
depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act), as custodian with
respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities
held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by
law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the
Government Securities or the specific payment of principal of or
interest on the Government Securities evidenced by such
depository receipt.
“guarantee” means a guarantee (other than by
endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner
(including letters of credit and reimbursement agreements in
respect thereof), of all or any part of any Indebtedness or
other obligations.
“Guarantee” means the guarantee by any
Guarantor of the Issuer’s Obligations under the Indenture.
“Guarantor” means each Restricted Subsidiary
that Guarantees the Notes in accordance with the terms of the
Indenture.
“HCI” means Health Care Indemnity, Inc., an
insurance company formed under the laws of the State of Colorado
and a Wholly-Owned Subsidiary of the Issuer.
“Hedging Arrangements” means the fixed-pay
interest rate swap agreements, entered into by Hercules Holding
on or about September 13, 2006 and with respect to which
the Issuer will be the counterparty in connection with the
Recapitalization, relating to $8,000 million of the
outstanding principal amount under the First Lien Obligations
and the ABL Obligations.
“Hedging Obligations” means, with respect to
any Person, the obligations of such Person under any interest
rate swap agreement, interest rate cap agreement, interest rate
collar agreement, commodity swap agreement, commodity cap
agreement, commodity collar agreement, foreign exchange
contract, currency swap agreement or similar agreement providing
for the transfer or mitigation of interest rate or currency
risks either generally or under specific contingencies.
“Holder” means the Person in whose name a Note
is registered on the registrar’s books.
“Indebtedness” means, with respect to any
Person, without duplication:
(1) any indebtedness (including principal and premium) of
such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers’ acceptances
(or, without duplication, reimbursement agreements in respect
thereof);
(c) representing the balance deferred and unpaid of the
purchase price of any property (including Capitalized Lease
Obligations), except (i) any such balance that constitutes
a trade payable or similar obligation to a trade creditor, in
each case accrued in the ordinary course of business and
(ii) any earn-out obligations until such obligation becomes
a liability on the balance sheet of such Person in accordance
with GAAP; or
if and to the extent that any of the foregoing Indebtedness
(other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with
GAAP;
(2) to the extent not otherwise included, any obligation by
such Person to be liable for, or to pay, as obligor, guarantor
or otherwise on, the obligations of the type referred to in
clause (1) of a third Person (whether or not such items
would appear upon the balance sheet of the such obligor or
guarantor), other than by endorsement of negotiable instruments
for collection in the ordinary course of business; and
(3) to the extent not otherwise included, the obligations
of the type referred to in clause (1) of a third Person
secured by a Lien on any asset owned by such first Person,
whether or not such Indebtedness is assumed by such first Person;
provided, however, that notwithstanding the
foregoing, Indebtedness shall be deemed not to include
(a) Contingent Obligations incurred in the ordinary course
of business or (b) obligations under or in respect of
Receivables Facilities.
“Independent Financial Advisor” means an
accounting, appraisal, investment banking firm or consultant to
Persons engaged in Similar Businesses of nationally recognized
standing that is, in the good faith judgment of the Issuer,
qualified to perform the task for which it has been engaged.
“Initial Purchasers” means Banc of America
Securities LLC, Citigroup Global Markets, Inc., J.P. Morgan
Securities Inc., Wachovia Capital Markets, LLC and the other
initial purchasers party to the purchase agreement related to
the Notes.
“insolvency or liquidation proceeding” means:
(1) any case commenced by or against the Issuer or any
Guarantor under any Bankruptcy Law for the relief of debtors,
any other proceeding for the reorganization, recapitalization or
adjustment or marshalling of the assets or liabilities of the
Issuer or any Guarantor, any receivership or assignment for the
benefit of creditors relating to the Issuer or any Guarantor or
any similar case or proceeding relative to the Issuer or any
Guarantor or its creditors, as such, in each case whether or not
voluntary;
(2) any liquidation, dissolution, marshalling of assets or
liabilities or other winding up of or relating to the Issuer or
any Guarantor, in each case whether or not voluntary and whether
or not involving bankruptcy or insolvency; or
(3) any other proceeding of any type or nature in which
substantially all claims of creditors of the Issuer or any
Guarantor are determined and any payment or distribution is or
may be made on account of such claims.
“Intercreditor Agreements” means, collectively,
the Shared Receivables Intercreditor Agreement and the General
Intercreditor Agreement.
“Investment Grade Rating” means a rating equal
to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P, or an equivalent rating by
any other Rating Agency.
“Investment Grade Securities” means:
(1) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents);
(2) debt securities or debt instruments with an Investment
Grade Rating, but excluding any debt securities or instruments
constituting loans or advances among the Issuer and its
Subsidiaries;
(3) investments in any fund that invests exclusively in
investments of the type described in clauses (1) and
(2) which fund may also hold immaterial amounts of cash
pending investment or distribution; and
(4) corresponding instruments in countries other than the
United States customarily utilized for high quality investments.
“Investments” means, with respect to any
Person, all investments by such Person in other Persons
(including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding
accounts receivable, trade credit, advances to customers,
commissions, travel and similar advances to officers and
employees, in each case made in the ordinary course of
business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities issued by any
other Person and investments that are required by GAAP to be
classified on the balance sheet (excluding the footnotes) of the
Issuer in the same manner as the other investments included in
this definition to the extent such transactions involve the
transfer of cash or other property. For purposes of the
definition of “Unrestricted Subsidiary” and the
covenant described under “Certain Covenants —
Limitation on Restricted Payments”:
(1) “Investments” shall include the portion
(proportionate to the Issuer’s equity interest in such
Subsidiary) of the fair market value of the net assets of a
Subsidiary of the Issuer 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 Issuer shall be deemed to continue
to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to:
(a) the Issuer’s “Investment” in such
Subsidiary at the time of such redesignation; less
(b) the portion (proportionate to the Issuer 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, in each case as determined in good faith by
the Issuer.
“Investors” means Bain Capital Partners, LLC,
Kohlberg Kravis Roberts & Co. L.P., Merrill Lynch
Global Partners, Inc. and each of their respective Affiliates
but not including, however, any portfolio companies of any of
the foregoing.
“Issuer” has the meaning set forth in the first
paragraph under “General”; provided that when
used in the context of determining the fair market value of an
asset or liability under the Indenture, “Issuer” shall
be deemed to mean the board of directors of the Issuer when the
fair market value is equal to or in excess of
$500.0 million (unless otherwise expressly stated).
“Junior Lien Collateral Agent” shall mean
(i) so long as the Notes are outstanding, The Bank of
New York Mellon, in its capacity as trustee and collateral
agent for the holders of the 2006 Notes and other secured
parties under the 2006 Notes Indenture and the Security
Documents (including the Holders), and (ii) at any time
thereafter, such agent or trustee as is designated “Junior
Lien Collateral Agent” by Junior Lien Secured Parties
holding a majority in principal amount of the Junior Lien
Obligations then outstanding or pursuant to such other
arrangements as agreed to among the holders of the Junior Lien
Obligations, it being understood that as of the Issue Date, the
trustee under the 2006 Notes Indenture shall be the Junior Lien
Collateral Agent.
“Junior Lien Documents” means the credit and
security documents governing the Junior Lien Obligations,
including, without limitation, the Indenture, the related
Security Documents and Intercreditor Agreements.
“Junior Lien Obligations” means the Notes and
Obligations with respect to other Indebtedness (including the
2006 Notes and any permitted refinancing thereof) permitted to
be incurred under the Indenture and the General Credit Facility
which is by its terms intended to be secured equally and ratably
with the Notes or on a basis junior to the Liens securing the
Notes; provided such Lien is permitted to be incurred
under the Indenture and the General Credit Facility;
provided, further, that the holders of such Indebtedness
or their Junior Lien Representative is a party to the Security
Documents in accordance with the terms thereof and has appointed
the Junior Lien Collateral Agent as collateral agent for such
holders of Junior Lien Obligations with respect to all or a
portion of the Collateral.
“Junior Lien Representative” means any duly
authorized representative of any holders of Junior Lien
Obligations, which representative is party to the Security
Documents.
“Junior Lien Secured Parties” means
(i) Holders (including the Holders of any Additional Notes
subsequently issued under and in compliance with the terms of
the Indenture), (ii) the Junior Lien Collateral Agent and
(iii) the holders from time to time of any other Junior
Lien Obligations and each Junior Lien Representative.
“Junior Liens” means the Liens securing the
Junior Lien Obligations.
“Legal Holiday” means a Saturday, a Sunday or a
day on which commercial banking institutions are not required to
be open in the State of New York.
“Lien” means, with respect to any asset, any
mortgage, lien (statutory or otherwise), pledge, hypothecation,
charge, security interest, preference, priority or encumbrance
of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction;
provided that in no event shall an operating lease be
deemed to constitute a Lien.
“Moody’s” means Moody’s Investors
Service, Inc. and any successor to its rating agency business.
“Net Income” means, with respect to any Person,
the net income (loss) of such Person, determined in accordance
with GAAP and before any reduction in respect of Preferred Stock
dividends.
“Net Proceeds” means the aggregate cash
proceeds received by the Issuer or any of its Restricted
Subsidiaries in respect of any Asset Sale, including any cash
received upon the sale or other disposition of any Designated
Non-cash Consideration received in any Asset Sale, net of the
direct costs relating to such Asset Sale and the sale or
disposition of such Designated Non-cash Consideration, including
legal, accounting and investment banking fees, and brokerage and
sales commissions, any relocation expenses incurred as a result
thereof, taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax
sharing arrangements), amounts required to be applied to the
repayment of principal, premium, if any, and interest on Senior
Indebtedness required (other than required by clause (1) of
the second paragraph of “Repurchase at the Option of
Holders — Asset Sales”) to be paid as a result of
such transaction and any deduction of appropriate amounts to be
provided by the Issuer or any of its Restricted Subsidiaries as
a reserve in accordance with GAAP against any liabilities
associated with the asset disposed of in such transaction and
retained by the Issuer or any of its Restricted Subsidiaries
after such sale or other disposition thereof, including pension
and other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification
obligations associated with such transaction.
“Non-Conforming Plan of Reorganization” means
any Plan of Reorganization that grants the Junior Lien
Collateral Agent or any Junior Lien Secured Party any right or
benefit, directly or indirectly, which right or benefit is
prohibited at such time by the provisions of the General
Intercreditor Agreement.
“Non-Receivables Collateral” has the meaning
set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantee and Security,” subject to
the provisions of the third and fourth sentences of the first
paragraph under “— Security —
General.”
“Obligations” means any principal, interest
(including any interest accruing subsequent to the filing of a
petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under
applicable state, federal or foreign law), premium, penalties,
fees, indemnifications, reimbursements (including reimbursement
obligations with respect to letters of credit and bankers’
acceptances), damages and other liabilities, and guarantees of
payment of such principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities,
payable under the documentation governing any Indebtedness.
“Offering Memorandum” means the offering
memorandum, dated February 11, 2009, relating to the
initial private offering of the Notes.
“Officer” means the Chairman of the Board, the
Chief Executive Officer, the President, any Executive Vice
President, Senior Vice President or Vice President, the
Treasurer or the Secretary of the Issuer or a Guarantor, as
applicable.
“Officer’s Certificate” means a
certificate signed on behalf of the Issuer by an Officer of the
Issuer or on behalf of a Guarantor by an Officer of such
Guarantor, who must be the principal executive officer, the
principal financial officer, the treasurer or the principal
accounting officer of the Issuer or Guarantor, as applicable,
that meets the requirements set forth in the Indenture.
“Opinion of Counsel” means a written opinion
from legal counsel who is acceptable to the Trustee. The counsel
may be an employee of or counsel to the Issuer or the Trustee.
“Permitted Asset Swap” means the concurrent
purchase and sale or exchange of Related Business Assets or a
combination of Related Business Assets and cash or Cash
Equivalents between the Issuer or any of its Restricted
Subsidiaries and another Person; provided, that any cash
or Cash Equivalents received must be applied in accordance with
the covenant described under “Repurchase at the Option of
Holders — Asset Sales.”
“Permitted Holders” means each of the
Investors, the Frist Entities, the Management Participants (as
defined in the Offering Memorandum), Citigroup Inc. and Banc of
America Securities LLC (which institutions are assignees of
certain equity commitments of the Investors as of
November 17, 2006) that are holders of Equity Interests of
the Issuer (or any of its direct or indirect parent companies)
and any group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act or any successor
provision) of which any of the foregoing are members;
provided that, in the case of such group and without
giving effect to the existence of such group or any other group,
such Investors, Frist Entities, members of management and
assignees of the equity commitments of the Investors,
collectively, have beneficial ownership of more than 50% of the
total voting power of the Voting Stock of the Issuer or any of
its direct or indirect parent companies.
“Permitted Investments” means:
(1) any Investment in the Issuer or any of its Restricted
Subsidiaries;
(2) any Investment in cash and Cash Equivalents or
Investment Grade Securities;
(3) any Investment by the Issuer or any of its Restricted
Subsidiaries in a Person that is engaged in a Similar Business
if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary; or
(b) such Person, in one transaction or a series of related
transactions, is merged or consolidated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Issuer or a Restricted Subsidiary,
and, in each case, any Investment held by such Person;
provided that such Investment was not acquired by such
Person in contemplation of such acquisition, merger,
consolidation or transfer;
(4) any Investment in securities or other assets not
constituting cash, Cash Equivalents or Investment Grade
Securities and received in connection with an Asset Sale made
pursuant to the provisions described under “Repurchase at
the Option of Holders — Asset Sales” or any other
disposition of assets not constituting an Asset Sale;
(5) any Investment existing on the Issue Date;
(6) any Investment acquired by the Issuer or any of its
Restricted Subsidiaries:
(a) in exchange for any other Investment or accounts
receivable held by the Issuer 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 Issuer or any of
its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any
secured Investment in default;
(7) Hedging Obligations permitted under clause (10) of
the second paragraph of the covenant described in “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
(8) any Investment in a Similar Business having an
aggregate fair market value, taken together with all other
Investments made pursuant to this clause (8) that are at
that time outstanding, not to exceed 5% of Total Assets at the
time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving
effect to subsequent changes in value);
(9) Investments the payment for which consists of Equity
Interests (exclusive of Disqualified Stock) of the Issuer or any
of its direct or indirect parent companies; provided,
however, that such Equity Interests will not increase the
amount available for Restricted Payments under clause (3)
of the first paragraph under the covenant described in
“Certain Covenants — Limitations on Restricted
Payments”;
(10) guarantees of Indebtedness permitted under the
covenant described in “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
(11) any transaction to the extent it constitutes an
Investment that is permitted and made in accordance with the
provisions of the second paragraph of the covenant described
under “Certain Covenants — Transactions with
Affiliates” (except transactions described in clauses (2),
(5) and (9) of such paragraph);
(12) Investments consisting of purchases and acquisitions
of inventory, supplies, material or equipment;
(13) additional Investments having an aggregate fair market
value, taken together with all other Investments made pursuant
to this clause (13) that are at that time outstanding
(without giving effect to the sale of an Unrestricted Subsidiary
to the extent the proceeds of such sale do not consist of cash
or marketable securities), not to exceed 5% of Total Assets at
the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving
effect to subsequent changes in value);
(14) Investments relating to an ABL Financing Entity or a
Receivables Subsidiary that, in the good faith determination of
the Issuer, are necessary or advisable to effect the ABL
Facility or any Receivables Facility, as the case may be;
(15) advances to, or guarantees of Indebtedness of,
employees not in excess of $50.0 million outstanding at any
one time, in the aggregate;
(16) loans and advances to officers, directors and
employees for business-related travel expenses, moving expenses
and other similar expenses, in each case incurred in the
ordinary course of business or consistent with past practices or
to fund such Person’s purchase of Equity Interests of the
Issuer or any direct or indirect parent company thereof;
(17) Physician Support Obligations made by the Issuer or
any Restricted Subsidiary;
(18) any Investment in any joint venture existing on the
Issue Date that owns or operates one or more healthcare
facilities, including, without limitation, hospitals, ambulatory
surgery centers, outpatient diagnostic centers or imaging
centers to the extent contemplated by the organizational
documents of such joint venture as in existence on the Issue
Date;
(19) any Investment in the ordinary course of business or
as may be required by applicable law by any Restricted
Subsidiary (including, without limitation, HCI) engaged in the
insurance business in order to provide insurance to the Issuer
and its Subsidiaries;
(20) any Investment pursuant to any customary buy/sell
arrangement in favor of investors or joint venture parties in
connection with syndications of healthcare facilities,
including, without limitation, hospitals, ambulatory surgery
centers, outpatient diagnostic centers or imaging
centers; and
(21) any Investment in any Subsidiary or any joint venture
in connection with intercompany cash management arrangements or
related activities arising in the ordinary course of business.
“Permitted Liens” means, with respect to any
Person:
(1) pledges or deposits by such Person under workmen’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 U.S. government bonds to secure surety or appeal
bonds to which such Person is a party, 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 overdue for a period of more than 30 days 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 if
adequate reserves with respect thereto are maintained on the
books of such Person in accordance with GAAP;
(3) Liens for taxes, assessments or other governmental
charges not yet overdue for a period of more than 30 days
or payable or subject to penalties for nonpayment or which are
being contested in good faith by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto
are maintained on the books of such Person in accordance with
GAAP;
(4) Liens in favor of issuers of performance and surety
bonds or bid bonds or with respect to other regulatory
requirements or letters of credit issued pursuant to the request
of and for the account of such Person in the ordinary course of
its business;
(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 properties 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 permitted to be incurred
pursuant to clause (4), (12), (13), (18) or (19) of
the second paragraph under “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”; provided
that (a) Liens securing Indebtedness, Disqualified
Stock or Preferred Stock permitted to be incurred pursuant to
clause (13) relate only to Refinancing Indebtedness that
serves to refund or refinance Indebtedness, Disqualified Stock
or Preferred Stock incurred under clause (4) or
(12) of the second paragraph under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock,”
(b) Liens securing Indebtedness permitted to be incurred
pursuant to clause (18) extend only to the assets of
Foreign Subsidiaries, (c) Liens securing Indebtedness
permitted to be incurred pursuant to clause (19) are solely
on acquired property or the assets of the acquired entity, as
the case may be and (d) Liens securing Indebtedness,
Disqualified Stock or Preferred Stock permitted to be incurred
pursuant to clause (4) of the second paragraph under
“Certain Covenants — Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” extend only to the assets so financed, purchased,
constructed or improved;
(7) Liens existing on the Issue Date (other than Liens in
favor of (i) the lenders under the Senior Credit Facilities
ranking senior to the Liens securing the Notes and (ii) the
holders of the 2006 Notes);
(8) Liens on property or shares of stock of a Person at the
time such Person becomes a Subsidiary; provided,
however, such Liens are not created or incurred in
connection with, or in contemplation of,
such other Person becoming such a Subsidiary; provided,
further, however, that such Liens may not extend
to any other property owned by the Issuer or any of its
Restricted Subsidiaries;
(9) Liens on property at the time the Issuer or a
Restricted Subsidiary acquired the property, including any
acquisition by means of a merger or consolidation with or into
the Issuer or any of its Restricted Subsidiaries;
provided, however, that such Liens are not created
or incurred in connection with, or in contemplation of, such
acquisition; provided, further, however,
that the Liens may not extend to any other property owned by the
Issuer or any of its Restricted Subsidiaries;
(10) Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Issuer or another Restricted
Subsidiary permitted to be incurred in accordance with the
covenant described under “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
(11) Liens securing Hedging Obligations so long as the
related Indebtedness is, and is permitted to be under the
Indenture, secured by a Lien on the same property securing such
Hedging Obligations;
(12) Liens on specific items of inventory or other goods
and proceeds of any Person securing such Person’s
obligations in respect of bankers’ acceptances issued or
created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(13) leases, subleases, licenses or sublicenses granted to
others in the ordinary course of business which do not
materially interfere with the ordinary conduct of the business
of the Issuer or any of its Restricted Subsidiaries and do not
secure any Indebtedness;
(14) Liens arising from Uniform Commercial Code financing
statement filings regarding operating leases entered into by the
Issuer and its Restricted Subsidiaries in the ordinary course of
business;
(15) Liens in favor of the Issuer or any Guarantor;
(16) Liens on equipment of the Issuer or any of its
Restricted Subsidiaries granted in the ordinary course of
business;
(17) Liens on accounts receivable and related assets
incurred in connection with a Receivables Facility;
(18) Liens to secure any refinancing, refunding, extension,
renewal or replacement (or successive refinancing, refunding,
extensions, renewals or replacements) as a whole, or in part, of
any Indebtedness secured by any Lien referred to in the
foregoing clauses (6), (7), (8) and (9); provided,
however, that (a) such new Lien shall be limited to
all or part of the same property that secured the original Lien
(plus improvements on such property), 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 clauses (6), (7), (8) and
(9) at the time the original Lien became a Permitted Lien
under the Indenture, and (ii) an amount necessary to pay
any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement;
(19) deposits made in the ordinary course of business to
secure liability to insurance carriers;
(20) other Liens securing obligations incurred in the
ordinary course of business which obligations do not exceed
$100.0 million at any one time outstanding;
(21) Liens securing judgments for the payment of money not
constituting an Event of Default under clause (5) under the
caption “Events of Default and Remedies” so long as
such Liens are adequately bonded and any appropriate legal
proceedings that may have been duly initiated for the review of
such judgment have not been finally terminated or the period
within which such proceedings may be initiated has not expired;
(22) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
in connection with the importation of goods in the ordinary
course of business;
(23) Liens (i) of a collection bank arising under
Section 4-210
of the Uniform Commercial Code, or any comparable or successor
provision, on items in the course of collection,
(ii) attaching to commodity trading accounts or other
commodity brokerage accounts incurred in the ordinary course of
business, and (iii) in favor of banking institutions
arising as a matter of law encumbering deposits (including the
right of set-off) and which are within the general parameters
customary in the banking industry;
(24) Liens deemed to exist in connection with Investments
in repurchase agreements permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
provided that such Liens do not extend to any assets
other than those that are the subject of such repurchase
agreements;
(25) Liens encumbering reasonable customary initial
deposits and margin deposits and similar Liens attaching to
commodity trading accounts or other brokerage accounts incurred
in the ordinary course of business and not for speculative
purposes;
(26) Liens that are contractual rights of set-off
(i) relating to the establishment of depository relations
with banks not given in connection with the issuance of
Indebtedness, (ii) relating to pooled deposit or sweep
accounts of the Issuer or any of its Restricted Subsidiaries to
permit satisfaction of overdraft or similar obligations incurred
in the ordinary course of business of the Issuer and its
Restricted Subsidiaries or (iii) relating to purchase
orders and other agreements entered into with customers of the
Issuer or any of its Restricted Subsidiaries in the ordinary
course of business; and
(27) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale or
purchase of goods entered into by the Issuer or any Restricted
Subsidiary in the ordinary course of business.
For purposes of this definition, the term
“Indebtedness” shall be deemed to include interest on
such Indebtedness.
“Person” means any individual, corporation,
limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
“Physician Support Obligation” means (1) a
loan to or on behalf of, or a guarantee of Indebtedness or
income of, a physician or healthcare professional providing
service to patients in the service area of a healthcare facility
operated by the Issuer, any of its Restricted Subsidiaries or
any affiliated joint venture otherwise permitted by the
Indenture made or given by the Issuer or any Restricted
Subsidiary of the Issuer in the ordinary course of business and
pursuant to a written agreement having a period not to exceed
five years or (2) guarantees by the Issuer or any
Restricted Subsidiary of the Issuer of leases and loans to
acquire property (real or personal) for or on behalf of a
physician or healthcare professional providing service to
patients in the service area of a healthcare facility operated
by the Issuer, any of its Restricted Subsidiaries or any
affiliated joint venture otherwise permitted by the Indenture.
“Plan of Reorganization” means any plan of
reorganization, plan of liquidation, agreement for composition,
or other type of plan of arrangement proposed in or in
connection with any insolvency or liquidation proceeding.
“Preferred Stock” means any Equity Interest
with preferential rights of payment of dividends or upon
liquidation, dissolution or winding up.
“Principal Property” means each acute care
hospital providing general medical and surgical services
(excluding equipment, personal property and hospitals that
primarily provide specialty medical services, such as
psychiatric and obstetrical and gynecological services) owned
solely by the Issuer
and/or one
or more of its Subsidiaries (used in this definition as defined
in the Existing Notes Indenture) and located in the United
States of America.
“Priority Lien Obligations” means,
collectively, ABL Obligations and First Lien Obligations.
“Priority Lien Secured Parties” means,
collectively, the ABL Secured Parties and the First Lien Secured
Parties.
“Purchase Money Obligations” means any
Indebtedness incurred to finance or refinance the acquisition,
leasing, construction or improvement of property (real or
personal) or assets (other than Capital Stock), and whether
acquired through the direct acquisition of such property or
assets, or otherwise.
“Qualified Proceeds” means assets that are used
or useful in, or Capital Stock of any Person engaged in, a
Similar Business; provided that the fair market value of
any such assets or Capital Stock shall be determined by the
Issuer in good faith.
“Rating Agencies” means Moody’s and
S&P or if Moody’s or S&P or both shall not make a
rating on the Notes publicly available, a nationally recognized
statistical rating agency or agencies, as the case may be,
selected by the Issuer which shall be substituted for
Moody’s or S&P or both, as the case may be.
“Receivables Facility” means any of one or more
receivables financing facilities as amended, supplemented,
modified, extended, renewed, restated or refunded from time to
time, the Obligations of which are non-recourse (except for
customary representations, warranties, covenants and indemnities
made in connection with such facilities) to the Issuer or any of
its Restricted Subsidiaries (other than a Receivables
Subsidiary) pursuant to which the Issuer or any of its
Restricted Subsidiaries purports to sell its accounts receivable
to either (a) a Person that is not a Restricted Subsidiary
or (b) a Receivables Subsidiary that in turn funds such
purchase by purporting to sell its accounts receivable to a
Person that is not a Restricted Subsidiary or by borrowing from
such a Person or from another Receivables Subsidiary that in
turn funds itself by borrowing from such a Person.
“Receivables Fees” means distributions or
payments made directly or by means of discounts with respect to
any accounts receivable or participation interest therein issued
or sold in connection with, and other fees paid to a Person that
is not a Restricted Subsidiary in connection with any
Receivables Facility.
“Receivables Subsidiary” means any Subsidiary
formed for the purpose of facilitating or entering into one or
more Receivables Facilities, and in each case engages only in
activities reasonably related or incidental thereto.
“Redemption Date” has the meaning set
forth under “Optional Redemption.”
“Registration Rights Agreement” means the
Registration Rights Agreement related to the Notes, dated as of
the Issue Date, among the Issuer, the Guarantors and the Initial
Purchasers.
“Related Business Assets” means assets (other
than cash or Cash Equivalents) used or useful in a Similar
Business; provided that any assets received by the Issuer
or a Restricted Subsidiary in exchange for assets transferred by
the Issuer or a Restricted Subsidiary will not be deemed to be
Related Business Assets if they consist of securities of a
Person, unless upon receipt of the securities of such Person,
such Person would become a Restricted Subsidiary.
“Restricted Investment” means an Investment
other than a Permitted Investment.
“Restricted Subsidiary” means, at any time, any
direct or indirect Subsidiary of the Issuer (including any
Foreign Subsidiary) that is not then an Unrestricted Subsidiary;
provided, however, that upon an Unrestricted
Subsidiary’s ceasing to be an Unrestricted Subsidiary, such
Subsidiary shall be included in the definition of
“Restricted Subsidiary.”
“S&P” means Standard &
Poor’s, a division of The McGraw-Hill Companies, Inc., and
any successor to its rating agency business.
“Sale and Lease-Back Transaction” means any
arrangement providing for the leasing by the Issuer or any of
its Restricted Subsidiaries of any real or tangible personal
property, which property has been or is to be sold or
transferred by the Issuer or such Restricted Subsidiary to a
third Person in contemplation of such leasing.
“SEC” means the U.S. Securities and
Exchange Commission.
“Secured Indebtedness” means any Indebtedness
of the Issuer or any of its Restricted Subsidiaries secured by a
Lien.
“Securities Act” means the Securities Act of
1933, as amended, and the rules and regulations of the SEC
promulgated thereunder.
“Security Documents” means, collectively, the
Intercreditor Agreements, the security agreements relating to
the Collateral and the mortgages and instruments filed and
recorded in appropriate jurisdictions to preserve and protect
the Liens on the Collateral (including, without limitation,
financing statements under the Uniform Commercial Code of the
relevant states) applicable to the Collateral, each as in effect
on the Issue Date and as amended, amended and restated,
modified, renewed or replaced from time to time.
“Senior Credit Facilities” means the ABL
Facility and the General Credit Facility.
“Senior Indebtedness” means:
(1) all Indebtedness of the Issuer or any Guarantor
outstanding under the Senior Credit Facilities or Notes and
related Guarantees (including interest accruing on or after the
filing of any petition in bankruptcy or similar proceeding or
for reorganization of the Issuer or any Guarantor (at the rate
provided for in the documentation with respect thereto,
regardless of whether or not a claim for post-filing interest is
allowed in such proceedings)), and any and all other fees,
expense reimbursement obligations, indemnification amounts,
penalties, and other amounts (whether existing on the Issue Date
or thereafter created or incurred) and all obligations of the
Issuer or any Guarantor to reimburse any bank or other Person in
respect of amounts paid under letters of credit, acceptances or
other similar instruments;
(2) all Hedging Obligations (and guarantees thereof) owing
to a Lender (as defined in the Senior Credit Facilities) or any
Affiliate of such Lender (or any Person that was a Lender or an
Affiliate of such Lender at the time the applicable agreement
giving rise to such Hedging Obligation was entered into);
provided that such Hedging Obligations are permitted to
be incurred under the terms of the Indenture;
(3) any other Indebtedness of the Issuer or any Guarantor
permitted to be incurred under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred
expressly provides that it is subordinated in right of payment
to the Notes or any related Guarantee; and
(4) all Obligations with respect to the items listed in the
preceding clauses (1), (2) and (3);
provided, however, that Senior Indebtedness shall
not include:
(a) any obligation of such Person to the Issuer or any of
its Subsidiaries;
(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
(e) that portion of any Indebtedness which at the time of
incurrence is incurred in violation of the Indenture.
“Separate Receivables Collateral” has the
meaning set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantees and Security.”
“Shared Receivables Collateral” has the meaning
set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantees and Security.”
“Shared Receivables Intercreditor Agreement”
has the meaning set forth under “Security — Liens
with Respect to Shared Receivables Collateral.”
“Significant Subsidiary” means any Restricted
Subsidiary that would be a “significant subsidiary” as
defined in Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such regulation
is in effect on the Issue Date.
“Similar Business” means any business conducted
or proposed to be conducted by the Issuer and its Restricted
Subsidiaries on the Issue Date or any business that is similar,
reasonably related, incidental or ancillary thereto.
“Sponsor Management Agreement” means the
management agreement between certain of the management companies
associated with the Investors, the Frist Entities and the Issuer.
“Subordinated Indebtedness” means, with respect
to the Notes,
(1) any Indebtedness of the Issuer which is by its terms
subordinated in right of payment to the Notes, and
(2) any Indebtedness of any Guarantor which is by its terms
subordinated in right of payment to the Guarantee of such entity
of the Notes.
“Subsidiary” means, with respect to any Person:
(1) any corporation, association, or other business entity
(other than a partnership, joint venture, limited liability
company or similar entity) of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of
determination owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that
Person or a combination thereof or is consolidated under GAAP
with such Person at such time; and
(2) any partnership, joint venture, limited liability
company or similar entity of which
(x) more than 50% of the capital accounts, distribution
rights, total equity and voting interests or general or limited
partnership interests, as applicable, are owned or controlled,
directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof
whether in the form of membership, general, special or limited
partnership or otherwise, and
(y) such Person or any Restricted Subsidiary of such Person
is a controlling general partner or otherwise controls such
entity.
“Total Assets” means the total assets of the
Issuer and its Restricted Subsidiaries on a consolidated basis,
as shown on the most recent consolidated balance sheet of the
Issuer or such other Person as may be expressly stated.
“Transaction” means the transactions
contemplated by the Transaction Agreement, the issuance of the
Notes and borrowings under the Senior Credit Facilities as in
effect on November 17, 2006.
“Transaction Agreement” means the Agreement and
Plan of Merger, dated as of July 24, 2006, between Hercules
Holding II, LLC, Hercules Acquisition Corporation and the
Issuer, as the same may be amended prior to the Issue Date.
“Treasury Rate” means, as of any
Redemption Date, the yield to maturity as of such
Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) that has
become publicly available at least two Business Days prior to
the Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source of similar
market data)) most nearly equal to the period from the
Redemption Date to February 15, 2013; provided,
however, that if the period from the Redemption Date
to February 15, 2013 is less than one year, the weekly
average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year will be
used.
“Trust Indenture Act” means the
Trust Indenture Act of 1939, as amended (15 U.S.C.
§§ 77aaa-777bbbb).
(1) any Subsidiary of the Issuer which at the time of
determination is an Unrestricted Subsidiary (as designated by
the Issuer, as provided below); and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Issuer may designate any Subsidiary of the Issuer (including
any existing Subsidiary and any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Equity Interests
or Indebtedness of, or owns or holds any Lien on, any property
of, the Issuer or any Subsidiary of the Issuer (other than
solely any Subsidiary of the Subsidiary to be so designated);
provided that
(1) any Unrestricted Subsidiary must be an entity of which
the Equity Interests entitled to cast at least a majority of the
votes that may be cast by all Equity Interests having ordinary
voting power for the election of directors or Persons performing
a similar function are owned, directly or indirectly, by the
Issuer;
(2) such designation complies with the covenants described
under “Certain Covenants — Limitation on
Restricted Payments”; and
(3) each of:
(a) the Subsidiary to be so designated; and
(b) its Subsidiaries
has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness
pursuant to which the lender has recourse to any of the assets
of the Issuer or any Restricted Subsidiary.
The Issuer may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that, immediately after
giving effect to such designation, no Default shall have
occurred and be continuing and either:
(1) the Issuer could incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test
described in the first paragraph under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred
Stock”; or
(2) the Fixed Charge Coverage Ratio for the Issuer and its
Restricted Subsidiaries would be greater than such ratio for the
Issuer and its Restricted Subsidiaries immediately prior to such
designation, in each case on a pro forma basis taking into
account such designation.
Any such designation by the Issuer shall be notified by the
Issuer to the Trustee by promptly filing with the Trustee a copy
of the resolution of the board of directors of the Issuer or any
committee thereof giving effect to such designation and an
Officer’s Certificate certifying that such designation
complied with the foregoing provisions.
“Voting Stock” of any Person as of any date
means the Capital Stock of such Person that is at the time
entitled to vote in the election of the board of directors of
such Person.
“Weighted Average Life to Maturity” means, when
applied to any Indebtedness, Disqualified Stock or Preferred
Stock, as the case may be, at any date, the quotient obtained by
dividing:
(1) the sum of the products of the number of years from the
date of determination to the date of each successive scheduled
principal payment of such Indebtedness or redemption or similar
payment with respect to such Disqualified Stock or Preferred
Stock multiplied by the amount of such payment; by
(2) the sum of all such payments.
“Wholly-Owned Subsidiary” of any Person means a
Subsidiary of such Person, 100% of the outstanding Equity
Interests of which (other than directors’ qualifying
shares) shall at the time be owned by such Person or by one or
more Wholly-Owned Subsidiaries of such Person.
Certain terms used in this description are defined under the
subheading “Certain Definitions. ” In this
description, the terms “we,”“our,”“us” and “the
Company” each refer to HCA Inc. (the
“Issuer”) and its consolidated Subsidiaries.
The Issuer issued $1,500,000,000 aggregate principal amount of
81/2% senior
secured notes due 2019 (the “Notes”) under an
indenture dated as of the closing date of the offering of the
Notes (the “Indenture”) among the Issuer, the
Guarantors and Law Debenture Trust Company of New York, as
trustee (the “Trustee”), Deutsche Bank
Trust Company Americas, as Paying Agent, Registrar and
Transfer Agent and Bank of America, N.A., as collateral agent.
The Notes were issued in a private transaction that is not
subject to the registration requirements of the Securities Act.
Except as set forth herein, the terms of the Notes include those
stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act.
The following description is only a summary of the material
provisions of the Indenture, does not purport to be complete and
is qualified in its entirety by reference to the provisions of
those agreements, including the definitions therein of certain
terms used below. We urge you to read the Indenture because it,
and not this description, defines your rights as Holders of the
Notes.
Brief
Description of Notes
The Notes:
•
are general senior obligations of the Issuer;
•
are secured on a first-priority basis, equally and ratably with
all existing and future obligations of the Issuer and the
Guarantors under any existing and future First Lien Obligations,
by all of the assets of the Issuer and the Guarantors which
secure the General Credit Facility (other than the European
Collateral), subject to the Liens securing the Issuer’s and
the Guarantors’ ABL Obligations and other Permitted Liens;
•
are secured on a second-priority basis, equally and ratably with
all existing and future obligations of the Issuer and the
Guarantors under any existing and future First Lien Obligations,
by all of the assets of the Issuer and the Guarantors securing
the ABL Facility which also secure the General Credit Facility,
subject to the Liens securing the Issuer’s and the
Guarantors’ ABL Obligations and other Permitted Liens;
•
are effectively subordinated to the Issuer’s and the
Guarantors’ obligations under the ABL Facility, to the
extent of the value of the Shared Receivables Collateral;
•
are effectively subordinated to any obligations secured by
Permitted Liens, to the extent of the value of the assets of the
Issuer and the Guarantors subject to those Permitted Liens;
•
are structurally subordinated to any existing and future
indebtedness and liabilities of non-guarantor Subsidiaries,
including the ABL Financing Entities and the Issuer’s
Foreign Subsidiaries and any Unrestricted Subsidiaries and
including indebtedness under the Company’s senior secured
European term loan facility included in the General Credit
Facility;
•
rank equally in right of payment with all existing and future
senior Indebtedness of the Issuer and the Guarantors but, to the
extent of the value of the Collateral, are effectively senior to
all of the Issuer’s and the Guarantors’ unsecured
senior Indebtedness (including the Existing Notes) and Junior
Lien Obligations (including the Existing Second Priority Notes);
•
are senior in right of payment to any future Subordinated
Indebtedness (as defined with respect to the Notes) of the
Issuer;
are initially unconditionally guaranteed on a joint and several
and senior basis by each Restricted Subsidiary that guarantees
the General Credit Facility (other than any Foreign
Subsidiary); and
•
are subject to registration with the SEC pursuant to the
Registration Rights Agreement.
Guarantees
The Guarantors, as primary obligors and not merely as sureties,
jointly and severally fully and unconditionally guarantee, on a
senior basis, the performance and full and punctual payment when
due, whether at maturity, by acceleration or otherwise, of all
obligations of the Issuer under the Indenture and the Notes,
whether for payment of principal of, premium, if any, or
interest or Additional Interest in respect of the Notes,
expenses, indemnification or otherwise, on the terms set forth
in the Indenture by executing the Indenture.
The Restricted Subsidiaries which guarantee the General Credit
Facility guarantee the Notes. Each of the Guarantees of the
Notes is a general senior obligation of each Guarantor and is
secured by a first-priority lien on all of the assets of each
Guarantor which secure the General Credit Facility (other than
the European Collateral) and by a second-priority lien on all of
the assets of each Guarantor which secure the ABL Facility. The
Guarantees rank equally in right of payment with all existing
and future senior Indebtedness of the Guarantor but, to the
extent of the value of the Collateral, are effectively senior to
all of the Guarantor’s unsecured senior Indebtedness and
Junior Lien Obligations and, to the extent of the Shared
Receivables Collateral, are effectively subordinated to the
Guarantor’s Obligations under the ABL Facility and any
future ABL Obligations. The Guarantees are senior in right of
payment to all existing and future Subordinated Indebtedness of
each Guarantor. The Notes are structurally subordinated to
Indebtedness and other liabilities of Subsidiaries of the Issuer
that do not Guarantee the Notes.
Not all of the Issuer’s Subsidiaries Guarantee the Notes.
In the event of a bankruptcy, liquidation or reorganization of
any of these non-guarantor Subsidiaries, the non-guarantor
Subsidiaries will pay the holders of their debt and their trade
creditors before they will be able to distribute any of their
assets to the Issuer. None of our Subsidiaries which are
“Restricted Subsidiaries” for purposes of the Existing
Notes Indenture, Foreign Subsidiaries, ABL Financing Entities,
non-Wholly Owned Subsidiaries or any Receivables Subsidiaries
guarantee the Notes. For the year ended December 31, 2009,
our non-guarantor Subsidiaries accounted for approximately
$12.468 billion, or 41.5%, of our total revenues. As of
December 31, 2009, our non-guarantor Subsidiaries held
approximately $9.672 billion, or 40.1%, of our total assets and
approximately $6.750 billion, or 21.1%, of our total
liabilities. See Note 16 to our consolidated financial
statements included in this prospectus.
The obligations of each Guarantor under its Guarantee are
limited as necessary to prevent the Guarantee from constituting
a fraudulent conveyance under applicable law.
Any entity that makes a payment under its Guarantee is entitled
upon payment in full of all guaranteed obligations under the
Indenture to a contribution from each other Guarantor in an
amount equal to such other Guarantor’s pro rata portion of
such payment based on the respective net assets of all the
Guarantors at the time of such payment determined in accordance
with GAAP.
If a Guarantee were rendered voidable, it could be subordinated
by a court to all other indebtedness (including guarantees and
other contingent liabilities) of the Guarantor, and, depending
on the amount of such indebtedness, a Guarantor’s liability
on its Guarantee could be reduced to zero. See “Risk
Factors — Risks Related to the Notes —
Federal and state fraudulent transfer laws may permit a court to
void the guarantees, and, if that occurs, you may not receive
any payment on the notes.”
Each Guarantee by a Guarantor provides by its terms that it will
be automatically and unconditionally released and discharged
upon:
(1) (a) any sale, exchange or transfer (by merger or
otherwise) of the Capital Stock of such Guarantor (including any
sale, exchange or transfer), after which the applicable
Guarantor is no longer a
Restricted Subsidiary or all or substantially all the assets of
such Guarantor, which sale, exchange or transfer is made in
compliance with the applicable provisions of the Indenture;
(b) the release or discharge of the guarantee by such
Guarantor of the Senior Credit Facilities or such other
guarantee that resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under
such guarantee;
(c) the designation of any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in compliance with the
applicable provisions of the Indenture; or
(d) the exercise by the Issuer of its legal defeasance
option or covenant defeasance option as described under
“Legal Defeasance and Covenant Defeasance” or the
discharge of the Issuer’s obligations under the Indenture
in accordance with the terms of the Indenture; and
(2) such Guarantor delivering to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for in the
Indenture relating to such transaction have been complied with.
Holding
Company Structure
The Issuer is a holding company for its Subsidiaries, with no
material operations of its own and only limited assets.
Accordingly, the Issuer is dependent upon the distribution of
the earnings of its Subsidiaries, whether in the form of
dividends, advances or payments on account of intercompany
obligations, to service its debt obligations.
Security
General
The Notes and the Guarantees are secured by perfected
first-priority security interests in the Non-Receivables
Collateral and by perfected second-priority security interests
in the Shared Receivables Collateral (second in priority to the
first-priority Liens on the Shared Receivables Collateral
securing the ABL Obligations), in each case, subject to
Permitted Liens. Notwithstanding the foregoing, neither the
Notes nor the Guarantees are secured by the European Collateral
or the Separate Receivables Collateral. The ABL Secured Parties
have rights and remedies with respect to the Shared Receivables
Collateral that, if exercised, could adversely affect the value
of the Shared Receivables Collateral or the ability of the
respective agents under the Intercreditor Agreements to realize
or foreclose on the Shared Receivables Collateral on behalf of
the First Lien Secured Parties. First Lien Secured Parties other
than the Holders of the Notes have rights and remedies with
respect to the Collateral that, if exercised, could also
adversely affect the value of the Collateral on behalf of the
Holders of the Notes, particularly the rights described below
under “— First Lien Intercreditor
Agreement.” For a description of the Shared Receivables
Collateral and the Non-Receivables Collateral, see
“Description of Other Indebtedness — Senior
Secured Credit Facilities — Guarantee and
Security.”
The Issuer and the Guarantors are and will be able to incur
additional Indebtedness in the future which could share in the
Collateral, including additional First Lien Obligations,
additional ABL Obligations, additional Junior Lien Obligations
and Obligations secured by Permitted Liens. The amount of such
additional Obligations is and will be limited by the covenant
described under “Certain Covenants — Liens”
and the covenant described under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock.”
Under certain circumstances, the amount of any such additional
Obligations could be significant.
After-Acquired
Collateral
From and after the Issue Date and subject to certain limitations
and exceptions, (a) if the Issuer or any Guarantor creates
any additional security interest upon any property or asset that
would constitute Collateral to secure any First Lien Obligations
(other than European Collateral and Separate Receivables
Collateral), it must concurrently grant a first-priority
perfected security interest (subject to Permitted Liens) upon
such property as security for the Notes and (b) if the
Issuer or any Guarantor creates any additional security interest
upon any
property or asset that would constitute Shared Receivables
Collateral to secure any ABL Obligations, it must concurrently
grant a second-priority perfected security interest (subject to
Permitted Liens) upon such property as security for the Notes.
Liens
with Respect to the Collateral
The Issuer, the Guarantors and the First Lien Collateral Agent
entered into Security Documents in connection with the General
Credit Facility with respect to the Collateral defining the
terms of the security interests that secure the General Credit
Facility with respect to such Collateral and that defines the
terms of the security interests that secure the Notes and the
Guarantees with respect to such Collateral. These security
interests secure the payment and performance when due of all of
the Obligations of the Issuers and the Guarantors under the
Notes, the Indenture, the Guarantees and the Security Documents,
as provided in the Security Documents.
First
Lien Intercreditor Agreement
The Trustee and the First Lien Collateral Agent have entered
into a First Lien Intercreditor Agreement (as the same may be
amended from time to time, the “First Lien Intercreditor
Agreement”) with the Authorized Representative of the
General Credit Facility Obligations with respect to the
Collateral, which may be amended from time to time without the
consent of the Holders to add other parties holding First Lien
Obligations permitted to be incurred under the Indenture,
General Credit Facility and the First Lien Intercreditor
Agreement. The First Lien Collateral Agent is initially the
collateral agent under the General Credit Facility.
Under the First Lien Intercreditor Agreement, as described
below, the “Applicable Authorized Representative” has
the right to direct foreclosures and take other actions with
respect to the Common Collateral, and the Authorized
Representatives of other Series of First Lien Obligations have
no right to take actions with respect to the Common Collateral.
The Applicable Authorized Representative is the administrative
agent under the General Credit Facility, and the Trustee for the
Holders, as Authorized Representative in respect of the Notes,
will have no rights to take any action under the First Lien
Intercreditor Agreement.
The administrative agent under the General Credit Facility will
remain the Applicable Authorized Representative until the
earlier of (1) the Discharge of General Credit Facility
Obligations and (2) the Non-Controlling Authorized
Representative Enforcement Date (such date, the
“Applicable Authorized Agent Date”). After the
Applicable Authorized Agent Date, the Applicable Authorized
Representative will be the Authorized Representative of the
Series of Additional First Lien Obligations that constitutes the
largest outstanding principal amount of any then outstanding
Series of First Lien Obligations, other than the General Credit
Facility Obligations, with respect to the Common Collateral (the
“Major Non-Controlling Authorized
Representative”).
The “Non-Controlling Authorized Representative
Enforcement Date” is the date that is 90 days
(throughout which
90-day
period the applicable Authorized Representative was the Major
Non-Controlling Authorized Representative) after the occurrence
of both (a) an event of default, as defined in the
Indenture or other applicable indenture for that Series of First
Lien Obligations, and (b) the First Lien Collateral
Agent’s and each other Authorized Representative’s
receipt of written notice from that Authorized Representative
certifying that (i) such Authorized Representative is the
Major Non-Controlling Authorized Representative and that an
event of default, as defined in the Indenture or other
applicable indenture for that Series of First Lien Obligations,
has occurred and is continuing and (ii) the First Lien
Obligations of that Series are currently due and payable in full
(whether as a result of acceleration thereof or otherwise) in
accordance with the Indenture or other applicable indenture for
that Series of First Lien Obligations; provided that the
Non-Controlling Authorized Representative Enforcement Date shall
be stayed and shall not occur and shall be deemed not to have
occurred with respect to any Shared Collateral (1) at any
time the administrative agent under the General Credit Facility
or the First Lien Collateral Agent has commenced and is
diligently pursuing any enforcement action with respect to such
Common Collateral or (2) at any time the Issuer or the
Guarantor that has granted
a security interest in such Common Collateral is then a debtor
under or with respect to (or otherwise subject to) any
insolvency or liquidation proceeding.
The Applicable Authorized Representative shall have the sole
right to instruct the First Lien Collateral Agent to act or
refrain from acting with respect to the Common Collateral,
(b) the First Lien Collateral Agent shall not follow any
instructions with respect to such Common Collateral from any
representative of any Non-Controlling Secured Party or other
First Lien Secured Party (other than the Applicable Authorized
Representative), and (c) no Authorized Representative of
any Non-Controlling Secured Party or other First Lien Secured
Party (other than the Applicable Authorized Representative) will
instruct the First Lien Collateral Agent to commence any
judicial or non-judicial foreclosure proceedings with respect
to, seek to have a trustee, receiver, liquidator or similar
official appointed for or over, attempt any action to take
possession of, exercise any right, remedy or power with respect
to, or otherwise take any action to enforce its interests in or
realize upon, or take any other action available to it in
respect of, the Common Collateral.
Notwithstanding the equal priority of the Liens, the First Lien
Collateral Agent, acting on the instructions of the Applicable
Authorized Representative, may deal with the Common Collateral
as if such Applicable Authorized Representative had a senior
Lien on such Collateral. No representative of any
Non-Controlling Secured Party may contest, protest or object to
any foreclosure proceeding or action brought by the First Lien
Collateral Agent, Applicable Authorized Representative or
Controlling Secured Party. The Trustee and each other Authorized
Representative agrees that it will not accept any Lien on any
Collateral for the benefit of the Holders (other than funds
deposited for the discharge or defeasance of the Notes) other
than pursuant to the First Lien Security Documents. Each of the
First Lien Secured Parties also agrees that it will not contest
or support any other person in contesting, in any proceeding
(including any insolvency or liquidation proceeding), the
perfection, priority, validity or enforceability of a Lien held
by or on behalf of any of the First Lien Secured Parties in all
or any part of the Collateral, or the provisions of the First
Lien Intercreditor Agreement.
If a First Lien Event of Default has occurred and is continuing
and the First Lien Collateral Agent is taking action to enforce
rights in respect of any Common Collateral, or any distribution
is made with respect to any Common Collateral in any bankruptcy
case of the Issuer or any Guarantor, the proceeds of any sale,
collection or other liquidation of any such Collateral by the
First Lien Collateral Agent or any other First Lien Secured
Party (or received pursuant to any other intercreditor
agreement), as applicable, and proceeds of any such distribution
(subject, in the case of any such distribution, to the paragraph
immediately following) to which the First Lien Obligations are
entitled under any other intercreditor agreement shall be
applied among the First Lien Obligations to the payment in full
of the First Lien Obligations on a ratable basis, after payment
of all amounts owing to the First Lien Collateral Agent.
Notwithstanding the foregoing, with respect to any Common
Collateral for which a third party (other than a First Lien
Secured Party) has a lien or security interest that is junior in
priority to the security interest of any Series of First Lien
Obligations but senior (as determined by appropriate legal
proceedings in the case of any dispute) to the security interest
of any other Series of First Lien Obligations (such third party,
an “Intervening Creditor”), the value of any
Common Collateral or proceeds which are allocated to such
Intervening Creditor shall be deducted on a ratable basis solely
from the Common Collateral or proceeds to be distributed in
respect of the Series of First Lien Obligations with respect to
which such Impairment exists.
None of the First Lien Secured Parties may institute any suit or
assert in any suit, bankruptcy, insolvency or other proceeding
any claim against the First Lien Collateral Agent or any other
First Lien Secured Party seeking damages from or other relief by
way of specific performance, instructions or otherwise with
respect to any Common Collateral. In addition, none of the First
Lien Secured Parties may seek to have any Common Collateral or
any part thereof marshaled upon any foreclosure or other
disposition of such Collateral. If any First Lien Secured Party
obtains possession of any Common Collateral or realizes any
proceeds or payment in respect thereof, at any time prior to the
discharge of each of the First Lien Obligations, then it must
hold such Common Collateral, proceeds or payment in trust for
the other First Lien Secured Parties and promptly transfer such
Common Collateral, proceeds or payment to the First Lien
Collateral Agent to be distributed in accordance with the First
Lien Intercreditor Agreement.
If the Issuer or any Guarantor becomes subject to any bankruptcy
case, the First Lien Intercreditor Agreement provides that
(1) if the Issuer or any Guarantor shall, as
debtor(s)-in-possession, move for approval of financing (the
“DIP Financing”) to be provided by one or more
lenders (the “DIP Lenders”) under
Section 364 of the Bankruptcy Code or the use of cash
collateral under Section 363 of the Bankruptcy Code, each
First Lien Secured Party will agree not to object to any such
financing or to the Liens on the Common Collateral securing the
same (the “DIP Financing Liens”) or to any use
of cash collateral that constitutes Common Collateral, unless
any Controlling Secured Party, or an Authorized Representative
of any Controlling Secured Party, shall then oppose or object to
such DIP Financing or such DIP Financing Liens or use of cash
collateral (and (i) to the extent that such DIP Financing
Liens are senior to the Liens on any such Common Collateral for
the benefit of the Controlling Secured Parties, each
Non-Controlling Secured Party will subordinate its Liens with
respect to such Common Collateral on the same terms as the Liens
of the Controlling Secured Parties (other than any Liens of any
First Lien Secured Parties constituting DIP Financing Liens) are
subordinated thereto, and (ii) to the extent that such DIP
Financing Liens rank pari passu with the Liens on any
such Common Collateral granted to secure the First Lien
Obligations of the Controlling Secured Parties, each
Non-Controlling Secured Party will confirm the priorities with
respect to such Common Collateral as set forth in the First Lien
Intercreditor Agreement), in each case so long as;
(A) the First Lien Secured Parties of each Series retain
the benefit of their Liens on all such Common Collateral pledged
to the DIP Lenders, including proceeds thereof arising after the
commencement of such proceeding, with the same priority
vis-a-vis
all the other First Lien Secured Parties (other than any Liens
of the First Lien Secured Parties constituting DIP Financing
Liens) as existed prior to the commencement of the bankruptcy
case,
(B) the First Lien Secured Parties of each Series are
granted Liens on any additional collateral pledged to any First
Lien Secured Parties as adequate protection or otherwise in
connection with such DIP Financing or use of cash collateral,
with the same priority
vis-a-vis
the First Lien Secured Parties as set forth in the First Lien
Intercreditor Agreement,
(C) if any amount of such DIP Financing or cash collateral
is applied to repay any of the First Lien Obligations, such
amount is applied pursuant to the First Lien Intercreditor
Agreement, and
(D) if any First Lien Secured Parties are granted adequate
protection, including in the form of periodic payments, in
connection with such DIP Financing or use of cash collateral,
the proceeds of such adequate protection is applied pursuant to
the First Lien Intercreditor Agreement;
provided that the First Lien Secured Parties of each
Series shall have a right to object to the grant of a Lien to
secure the DIP Financing over any Collateral subject to Liens in
favor of the First Lien Secured Parties of such Series or its
representative that shall not constitute Common Collateral; and
provided, further, that the First Lien Secured
Parties receiving adequate protection shall not object to any
other First Lien Secured Party receiving adequate protection
comparable to any adequate protection granted to such First Lien
Secured Parties in connection with a DIP Financing or use of
cash collateral.
The First Lien Secured Parties acknowledge that the First Lien
Obligations of any Series may, subject to the limitations set
forth in the other First Lien Documents, be increased, extended,
renewed, replaced, restated, supplemented, restructured, repaid,
refunded, refinanced or otherwise amended or modified from time
to time, all without affecting the priorities set forth in the
First Lien Intercreditor Agreement defining the relative rights
of the First Lien Secured Parties of any Series.
Additional
General Intercreditor Agreement
The First Lien Collateral Agent is a party to an Additional
General Intercreditor Agreement dated the Issue Date, (as the
same may be amended from time to time, the “Additional
General Intercreditor Agreement”), by and among the
First Lien Collateral Agent, the Junior Lien Collateral Agent
and the trustees under the Existing Second Priority Notes
Indentures, by which the Notes are given the same ranking and
rights with respect to the Collateral as provided to the General
Credit Facility under the General Intercreditor Agreement, dated
as of November 17, 2006, by and among the First Lien
Collateral Agent and the Junior Lien
Collateral Agent. Pursuant to the terms of the Additional
General Intercreditor Agreement and subject to the First-Lien
Intercreditor Agreement, prior to the Discharge of New First
Lien Obligations, the First Lien Collateral Agent, acting on
behalf of the New First Lien Secured Parties, will
determine the time and method by which the security interests in
the Collateral will be enforced and will have the sole and
exclusive right to manage, perform and enforce the terms of the
Security Documents relating to the Collateral and to exercise
and enforce all privileges, rights and remedies thereunder
according to its direction, including to take or retake control
or possession of such Collateral and to hold, prepare for sale,
marshall, process, sell, lease, dispose of or liquidate such
Collateral, including, without limitation, following the
occurrence of a Default or Event of Default under the Indenture.
The Junior Lien Collateral Agent will not be permitted to
enforce the security interests even if any event of default
under an Existing Second Priority Notes Indenture has occurred
and the Existing Second Priority Notes issued thereunder have
been accelerated except (a) in any insolvency or
liquidation proceeding, solely as necessary to file a proof of
claim or statement of interest with respect to the Junior Lien
Obligations or (b) as necessary to take any action in order
to prove, preserve, perfect or protect (but not enforce) its
security interest and rights in, and the perfection and priority
of its Lien on, the Collateral.
The Junior Lien Collateral Agent, for itself and on behalf of
each Junior Lien Secured Party, has agreed pursuant to the
Additional General Intercreditor Agreement that (a) it will
not (and thereby waives any right to) take any action to
challenge, contest or support any other Person in contesting or
challenging, directly or indirectly, in any proceeding
(including any insolvency or liquidation proceeding), the
validity, perfection, priority or enforceability of a Lien
securing any New First Lien Obligations held (or purported to be
held) by or on behalf of the First Lien Collateral Agent or any
of the New First Lien Secured Parties or any agent or trustee
therefor in any Collateral or other collateral securing both the
New First Lien Obligations and any Junior Lien Obligations and
(b) it will not oppose or otherwise contest (or support any
other Person contesting) any request for judicial relief made in
any court by the First Lien Collateral Agent or any New First
Lien Secured Parties relating to the lawful enforcement of any
First Priority Lien on Collateral or other collateral securing
both the New First Lien Obligations and any Junior Lien
Obligations.
In addition, the Security Documents provide that, subject to the
First Lien Intercreditor Agreement, prior to the Discharge of
New First Lien Obligations, the First Lien Collateral Agent may
take actions with respect to the Collateral (including the
release of Collateral and the manner of realization (subject to
the provisions described under “— Release of
Collateral”)) without the consent of the Junior Lien
Collateral Agent or other Junior Lien Secured Parties.
The Collateral or proceeds thereof received in connection with
the sale or other disposition of, or collection on, such
Non-Receivables Collateral upon the exercise of remedies will be
applied to the First Lien Obligations to be distributed in
accordance with the First Lien Intercreditor Agreement prior to
application to any Junior Lien Obligations in such order as
specified in the relevant First Lien Documents until the
Discharge of New First Lien Obligations has occurred.
In addition, so long as the Discharge of New First Lien
Obligations has not occurred, neither the Junior Lien Collateral
Agent nor any Junior Lien Representative shall acquire or hold
any Lien on any assets of the Issuer or any Subsidiary (and
neither the Issuer nor any Subsidiary shall grant such Lien)
securing any Junior Lien Obligations that are not also subject
to the First Priority Lien in respect of the New First Lien
Obligations under the First Lien Documents.
The Junior Lien Collateral Agent and each other Junior Lien
Secured Party agrees that any Lien purported to be granted on
any collateral as security for New First Lien Obligations shall
be deemed to be and shall be deemed to remain senior in all
respects and prior to all Liens on such collateral securing any
Junior Lien Obligations for all purposes regardless of whether
the Lien purported to be granted is found to be improperly
granted, improperly perfected, preferential, a fraudulent
conveyance or legally or otherwise deficient in any manner.
If any New First Lien Secured Party is required in any
insolvency or liquidation proceeding or otherwise to turn over
or otherwise pay to the estate of the Issuer or any other
Guarantor (or any trustee, receiver or similar person therefor),
because the payment of such amount was declared to be fraudulent
or preferential in
any respect or for any other reason, any amount (a
“Recovery”), whether received as proceeds of
security, enforcement of any right of setoff or otherwise, then
as among the parties hereto, the New First Lien Obligations
shall be deemed to be reinstated to the extent of such Recovery
and to be outstanding as if such payment had not occurred and
such New First Lien Secured Party shall be entitled to a
reinstatement of New First Lien Obligations with respect to all
such recovered amounts and shall have all rights hereunder. If
the Additional General Intercreditor Agreement shall have been
terminated prior to such Recovery, the Additional General
Intercreditor Agreement shall be reinstated in full force and
effect, and such prior termination shall not diminish, release,
discharge, impair or otherwise affect the obligations of the
parties thereto.
The Additional General Intercreditor Agreement provides that so
long as the Discharge of New First Lien Obligations has not
occurred, whether or not any insolvency or liquidation
proceeding has been commenced by or against the Issuer or any
Guarantor, (i) neither the Junior Lien Collateral Agent,
any Junior Lien Representative nor any Junior Lien Secured Party
will (x) exercise or seek to exercise any rights or
remedies (including setoff or the right to credit bid debt
(except under limited circumstances)) with respect to any
collateral securing both the New First Lien Obligations and any
Junior Lien Obligations in respect of any applicable Junior Lien
Obligations, or institute any action or proceeding with respect
to such rights or remedies (including any action of
foreclosure), (y) contest, protest or otherwise object to
any foreclosure or enforcement proceeding or action brought with
respect to the Collateral or any other collateral by the First
Lien Collateral Agent or any New First Lien Secured Party in
respect of the New First Lien Obligations, the exercise of any
right by the First Lien Collateral Agent or any New First
Lien Secured Party (or any agent or
sub-agent on
their behalf) in respect of the New First Lien Obligations under
any control agreement, lockbox agreement, landlord waiver or
bailee’s letter or similar agreement or arrangement to
which the Junior Lien Collateral Agent, any Junior Lien
Representative or any Junior Lien Secured Party either is a
party or may have rights as a third-party beneficiary, or any
other exercise by any such party of any rights and remedies as a
secured party relating to such collateral or any other
collateral under the First Lien Documents or otherwise in
respect of New First Lien Obligations, or (z) object to any
waiver or forbearance by the First Lien Secured Parties from or
in respect of bringing or pursuing any foreclosure proceeding or
action or any other exercise of any rights or remedies relating
to such collateral or any other collateral in respect of New
First Lien Obligations and (ii) except as otherwise
provided in the Additional General Intercreditor Agreement, the
First Lien Collateral Agent and the New First Lien Secured
Parties shall have the sole and exclusive right to enforce
rights, exercise remedies (including setoff and the right to
credit bid their debt), marshal, process and make determinations
regarding the release, disposition or restrictions, or waiver or
forbearance of rights or remedies with respect to such
collateral without any consultation with or the consent of the
Junior Lien Collateral Agent, any Junior Lien Representative or
any Junior Lien Secured Party.
In addition, the Junior Lien Collateral Agent, each Junior Lien
Representative and each other Junior Lien Secured Party have
agreed, among other things, that if the Issuer or any Guarantor
is subject to any insolvency or liquidation proceeding if the
First Lien Collateral Agent, subject to the First Lien
Intercreditor Agreement, desires to permit the use of cash
collateral or to permit the Issuer or any Guarantor to obtain
financing under Section 363 or Section 364 of the
Bankruptcy Code or any similar provision in any Bankruptcy Law
(“DIP Financing”), including if such DIP
Financing is secured by Liens senior in priority to the Liens
securing the Junior Lien Obligations, then the Junior Lien
Collateral Agent and each Junior Lien Representative, on behalf
of itself and each applicable Junior Lien Secured Party, agrees
not to object to such use of cash collateral or DIP Financing
and will not request adequate protection or any other relief in
connection therewith (except to the extent permitted by the
Additional General Intercreditor Agreement) and, to the extent
the Liens securing the new First Lien Obligations are
subordinated or pari passu with such DIP Financing, will
subordinate its Liens in the Collateral and any other collateral
to such DIP Financing (and all Obligations relating thereto) on
the same basis as they are subordinated to the New First Lien
Obligations.
Subject to the terms of the Security Documents, the Issuer and
the Guarantors have the right to remain in possession and retain
exclusive control of the Collateral securing the Notes and the
Notes Obligations (other than securities, instruments and
chattel paper constituting part of the Collateral and deposited
with the First Lien Collateral Agent in accordance with the
provisions of the First Lien Security Documents and any Shared
Receivables Collateral subject to a control agreement under the
circumstances described in the First Lien
Security Documents), to freely operate the Collateral and to
collect, invest and dispose of any income therefrom.
Release
of Collateral
Under the First Lien Intercreditor Agreement, if at any time the
Applicable Authorized Representative forecloses upon or
otherwise exercises remedies against any Common Collateral, then
(whether or not any insolvency or liquidation proceeding is
pending at the time) the Liens in favor of the First Lien
Collateral Agent for the benefit of the Trustee and the Holders
of the Notes and each other Series of First Lien Secured Parties
upon such Common Collateral will automatically be released and
discharged. However, any proceeds of any Common Collateral
realized therefrom will be applied as described under
“— First Lien Intercreditor Agreement.”
Under the Additional Receivables Intercreditor Agreement, if at
any time the Issuer or any Guarantor or any ABL Secured Party
delivers notice that any Shared Receivables Collateral is sold,
transferred or otherwise disposed of by the owner of that
Collateral in a transaction permitted under the ABL Facility,
the General Credit Facility and the Indenture or the ABL Secured
Parties are releasing or have released their Liens on such
Shared Receivables Collateral in connection with a disposition
in connection with an exercise of remedies with respect to such
Collateral, then the Liens on such Shared Receivables Collateral
securing New First Lien Obligations or Junior Lien Obligations
will automatically be released and discharged as and when, but
only to the extent, such Liens on such Shared Receivables
Collateral securing ABL Obligations are released and discharged,
provided that in the case of a disposition in connection with an
exercise of remedies, any proceeds thereof not applied to repay
ABL Obligations shall be subject to the Liens securing the First
Lien Obligations and the Junior Lien Obligations and shall be
applied pursuant to the Additional Receivables Intercreditor
Agreement and the First Lien Intercreditor Agreement.
The Issuer and the Guarantors will be entitled to the release of
property and other assets constituting Collateral from the Liens
securing the Notes and the Notes Obligations under any one or
more of the following circumstances:
(1) to enable us to consummate the sale, transfer or other
disposition of such property or assets to the extent not
prohibited under the covenant described under
“— Repurchase at the Option of
Holders — Asset Sales”;
(2) the release of Excess Proceeds or Collateral Excess
Proceeds that remain unexpended after the conclusion of an Asset
Sale Offer or a Collateral Asset Sale Offer conducted in
accordance with the Indenture;
(3) in the case of a Guarantor that is released from its
Guarantee with respect to the Notes pursuant to the terms of the
Indenture, the release of the property and assets of such
Guarantor;
(4) with the consent of the holders of at least 75% of the
aggregate principal amount of the Notes then outstanding and
affected thereby and a majority of all Junior Lien Obligations
(including the Existing Second Priority Notes) then outstanding
and affected thereby (including, without limitation, consents
obtained in connection with a tender offer or exchange offer
for, or purchase of, Junior Lien Obligations); or
(5) as described under “— Amendment,
Supplement and Waiver” below.
To the extent necessary and for so long as required for such
Subsidiary not to be subject to any requirement pursuant to
Rule 3-16
of
Regulation S-X
under the Securities Act to file separate financial statements
with the SEC (or any other governmental agency), the Capital
Stock of any Subsidiary of the Company (excluding Healthtrust,
Inc. — The Hospital Company, a Delaware corporation
and its successors and assigns) shall not be included in the
Collateral with respect to the respective Notes so affected (as
described under “— Certain Limitations on the
Collateral”) and shall not be subject to the Liens securing
such Notes and the Notes Obligations.
The Liens on the Collateral securing the Notes and the
Guarantees also will be released upon (i) payment in full
of the principal of, together with accrued and unpaid interest
(including Additional Interest, if any) on, the Notes and all
other Obligations under the Indenture, the Guarantees and the
Security Documents that are due and payable at or prior to the
time such principal, together with accrued and unpaid interest
(including Additional Interest, if any), are paid or (ii) a
legal defeasance or covenant defeasance under the Indenture as
described below under “Legal Defeasance and Covenant
Defeasance” or a discharge of the Indenture as described
under “Satisfaction and Discharge.”
Any certificate or opinion required by Section 314(d) of
the Trust Indenture Act may be made by an Officer of the
Company, except in cases where Section 314(d) requires that
such certificate or opinion be made by an independent engineer,
appraiser or other expert.
Notwithstanding anything to the contrary herein, the Issuer and
its Subsidiaries are not required to comply with all or any
portion of Section 314(d) of the Trust Indenture Act
if they determine, in good faith based on advice of counsel,
that under the terms of that section
and/or any
interpretation or guidance as to the meaning thereof of the SEC
and its staff, including “no action” letters or
exemptive orders, all or any portion of Section 314(d) of
the Trust Indenture Act is inapplicable to the released
Collateral.
Without limiting the generality of the foregoing, certain no
action letters issued by the SEC have permitted an indenture
qualified under the Trust Indenture Act to contain
provisions permitting the release of collateral from Liens under
such indenture in the ordinary course of the issuer’s
business without requiring the issuer to provide certificates
and other documents under Section 314(d) of the
Trust Indenture Act. The Issuer and the Guarantors may,
subject to the provisions of the Indenture, among other things,
without any release or consent by the First Lien Collateral
Agent, conduct ordinary course activities with respect to the
Collateral, including, without limitation:
•
selling or otherwise disposing of, in any transaction or series
of related transactions, any property subject to the Lien of the
Security Documents that has become worn out, defective, obsolete
or not used or useful in the business;
•
abandoning, terminating, canceling, releasing or making
alterations in or substitutions of any leases or contracts
subject to the Lien of the Indenture or any of the Security
Documents;
•
surrendering or modifying any franchise, license or permit
subject to the Lien of the Security Documents that it may own or
under which it may be operating;
•
altering, repairing, replacing, changing the location or
position of and adding to its structures, machinery, systems,
equipment, fixtures and appurtenances;
•
granting a license of any intellectual property;
•
selling, transferring or otherwise disposing of inventory in the
ordinary course of business;
•
collecting accounts receivable in the ordinary course of
business as permitted by the covenant described under
“Repurchase at the Option of Holders — Asset
Sales”;
•
making cash payments (including for the repayment of
Indebtedness or interest) from cash that is at any time part of
the Collateral in the ordinary course of business that are not
otherwise prohibited by the Indenture and the Security
Documents; and
•
abandoning any intellectual property that is no longer used or
useful in the Issuer’s business.
The Issuer must deliver an Officer’s Certificate to the
First Lien Collateral Agent within 30 calendar days following
the end of each six-month period beginning on May 15 and
November 15 of each year, to the effect that all such releases
and withdrawals during the preceding six-month period in the
ordinary course of the Issuer’s or the Guarantors’
business, as described in the preceding paragraph, were not
prohibited by the Indenture.
In addition, the First Lien Collateral Agent is a party to an
Additional Receivables Intercreditor Agreement, dated the Issue
Date, (as the same may be amended from time to time, the
“Additional Receivables Intercreditor
Agreement”), by and between the First Lien Collateral
Agent and the collateral agent under the ABL Facility (the
“ABL Collateral Agent”), by which the Notes are
given the same ranking and rights with respect to the Shared
Receivables Collateral as provided to the General Credit
Facility under the Receivables Intercreditor Agreement dated as
of November 17, 2006 by and among the Junior Lien
Collateral Agent, the First Lien Collateral Agent and the ABL
Collateral Agent. The Additional Receivables Intercreditor
Agreement contains provisions with respect to the Shared
Receivables Collateral and the relative rights, privileges and
obligations relating thereto as between (a) the First Lien
Collateral Agent and the New First Lien Secured Parties and
(b) the ABL Collateral Agent and the ABL Secured Parties.
The Additional Receivables Intercreditor Agreement provides for
first-priority Liens in the Shared Receivables Collateral in
favor of the ABL Secured Parties and junior priority Liens in
the Shared Receivables Collateral in favor of the New First Lien
Secured Parties, subject to Permitted Liens. The relative
rights, privileges and obligations with respect to the Shared
Receivables Collateral of the ABL Secured Parties, on the one
hand, and the New First Lien Secured Parties, on the other, are
substantially similar to the relative rights, privileges and
obligations with respect to the Non-Receivables Collateral of
the New First Lien Secured Parties, on the one hand, and the
Junior Lien Secured Parties, on the other, respectively, except
that the Liens of the New First Lien Secured Parties in the
Shared Receivables Collateral are second-priority Liens and the
Liens of the ABL Secured Parties in the Shared Receivables
Collateral are first-priority liens and except to the extent
customary or necessary with respect to collateral of the type
that constitutes Shared Receivables Collateral.
The relative rights, privileges and obligations with respect to
the Shared Receivables Collateral (a) as between the First
Lien Collateral Agent and the First Lien Secured Parties, on the
one hand, and the Junior Lien Collateral Agent and the Junior
Lien Secured Parties, on the other, are governed by the
Additional General Intercreditor Agreement described above and
(b) as among the First Lien Secured Parties, are governed
by the First Lien Intercreditor Agreement described above.
Certain
Limitations on the Collateral
The Collateral securing the Notes does not include any of the
following assets:
(1) the property or assets owned by any Subsidiary of the
Issuer that is not a Guarantor, including each ABL Financing
Entity;
(2) any rights or interests of the Issuer or any Guarantor
in, to or under any agreement, contract, license, instrument,
document or other general intangible (referred to solely for
purposes of this clause (2) as a
“Contract”), any intellectual property or any
security or other investment property (i) to the extent the
security interest in such Collateral is prohibited by any
applicable contract, agreement or other instrument without the
consent of any other party thereto (other than a party to the
General Credit Facility or the Indenture or, in the case of
investment property, a Wholly-Owned Subsidiary), (ii) to
the extent the security interest in such Contract would give any
other party (other than a party to the General Credit Facility
or the Indenture or, in the case of investment property, a
Wholly-Owned Subsidiary) to such Collateral the right to
terminate its obligations thereunder or (iii) to the extent
all necessary consents to such grant of a security interest have
not been obtained from the other parties thereto (other than to
the extent that any such prohibition referred to in clauses (i),
(ii) and (iii) would be rendered ineffective pursuant
to
Sections 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any
successor provision or provisions) of any relevant jurisdiction
or any other applicable law); provided that this
limitation shall not affect, limit, restrict or impair the grant
by the Issuer or such Guarantor of a security interest in any
account receivable or any money or other amounts due or to
become due under any Contract;
(3) any equipment of the Issuer or any Guarantor that is
subject to, or secured by, a Capitalized Lease Obligation or
Purchase Money Obligations and any equipment that constitutes an
asset of an entity acquired in a transaction permitted by the
Indenture to the extent that such equipment subject to a Lien
permitted by the Indenture and the terms of the Indebtedness
secured by such Lien prohibit assignment of, or granting of a
security interest in, the Issuer’s or such Guarantor’s
rights and interests therein (other than to the extent that any
such prohibition would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial
Code (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law); provided that
immediately upon the repayment of all Indebtedness secured by
such Lien, the Issuer or the Guarantor, as the case may be,
shall be deemed to have granted a security interest in all the
rights and interests with respect to such equipment;
(4) any Voting Stock that is issued by any Foreign
Subsidiary, if and to the extent that the inclusion of such
Voting Stock in the Collateral would cause the Collateral
pledged by the Issuer or the applicable Guarantor, as the case
may be, to include in the aggregate more than 65% of the total
combined voting power of all classes of Voting Stock of such
Foreign Subsidiary;
(5) any Capital Stock that is issued by a Subsidiary that
is not owned directly by the Issuer or a Guarantor;
(6) any Capital Stock and other securities of a Subsidiary
(excluding Healthtrust, Inc. — The Hospital Company, a
Delaware corporation and its successors and assigns) to the
extent that the pledge of such Capital Stock and other
securities results in the Company’s being required to file
separate financial statements of such Subsidiary with the SEC,
but only to the extent necessary to not be subject to such
requirement and only for so long as such requirement is in
existence and only with respect to the relevant Notes affected;
provided that neither the Issuer nor any Subsidiary shall
take any action in the form of a reorganization, merger or other
restructuring a principal purpose of which is to provide for the
release of the Lien on any Capital Stock pursuant to this clause
(6). In addition, in the event that
Rule 3-16
of
Regulation S-X
under the Securities Act is amended, modified or interpreted by
the SEC to require (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted,
which would require) the filing with the SEC (or any other
governmental agency) of separate financial statements of any
Subsidiary of the Company (excluding Healthtrust,
Inc. — The Hospital Company, a Delaware corporation
and its successors and assigns) due to the fact that such
Subsidiary’s Capital Stock secures the Notes affected
thereby, then the Capital Stock of such Subsidiary will
automatically be deemed not to be part of the Collateral
securing the relevant Notes affected thereby but only to the
extent necessary to not be subject to such requirement and only
for so long as required to not be subject to such requirement.
In such event, the Security Documents may be amended or
modified, without the consent of any holder of such Notes, to
the extent necessary to release the security interests in favor
of the First Lien Collateral Agent on the shares of Capital
Stock that are so deemed to no longer constitute part of the
Collateral for the relevant Notes. In the event that
Rule 3-16
of
Regulation S-X
under the Securities Act is amended, modified or interpreted by
the SEC to permit (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted,
which would permit) such Subsidiary’s Capital Stock to
secure the Notes in excess of the amount then pledged without
the filing with the SEC (or any other governmental agency) of
separate financial statements of such Subsidiary, then the
Capital Stock of such Subsidiary will automatically be deemed to
be a part of the Collateral for the relevant Notes;
(7) certain non-Principal Properties that do not constitute
Non-Receivables Collateral;
(8) any deposit accounts, other bank or securities accounts
or cash of the Issuer or any Guarantor;
(9) any leaseholds and motor vehicles of the Issuer or any
Guarantor;
(10) any Capital Stock or securities convertible into or
exchangeable for Capital Stock (i) if, in the reasonable
judgment of the Issuer, the cost or other consequences of
pledging such Collateral shall be excessive in view of the
benefits to be obtained by the First Lien Secured Parties
therefrom or (ii) the pledge of such Collateral would
result in adverse tax consequences to the Issuer or any of its
Subsidiaries as reasonably determined by the Issuer and
identified in writing to the First Lien Collateral Agent;
(11) any collateral to the extent the grant of the security
interest therein would violate any requirement of law; and
(12) proceeds and products from any and all of the
foregoing excluded collateral described in clauses (1)
through (11), unless such proceeds or products would otherwise
constitute Collateral securing the Notes.
Sufficiency
of Collateral
The fair market value of the Collateral is subject to
fluctuations based on factors that include, among others, the
condition of the health care industry, the ability to sell the
Collateral in an orderly sale, general economic conditions, the
availability of buyers and similar factors. The amount to be
received upon a sale of the Collateral would also be dependent
on numerous factors, including, but not limited to, the actual
fair market value of the Collateral at such time and the timing
and the manner of the sale. By their nature, portions of the
Collateral may be illiquid and may have no readily ascertainable
market value. Accordingly, there can be no assurance that the
Collateral can be sold in a short period of time or in an
orderly manner. In addition, in the event of a bankruptcy, the
ability of the holders to realize upon any of the Collateral may
be subject to certain bankruptcy law limitations as described
below.
Certain
Bankruptcy Limitations
The right of the Trustee to repossess and dispose of the
Collateral upon the occurrence of an Event of Default would be
significantly impaired by any Bankruptcy Law in the event that a
bankruptcy case were to be commenced by or against the Company
or any Guarantor prior to the Trustee’s having repossessed
and disposed of the Collateral. Upon the commencement of a case
for relief under the Bankruptcy Code, a secured creditor such as
the Trustee is prohibited from repossessing its security from a
debtor in a bankruptcy case, or from disposing of security
without bankruptcy court approval.
In view of the broad equitable powers of a U.S. bankruptcy
court, it is impossible to predict how long payments under the
Notes could be delayed following commencement of a bankruptcy
case, whether or when the Trustee could repossess or dispose of
the Collateral, the value of the Collateral at any time during a
bankruptcy case or whether or to what extent Holders of the
Notes would be compensated for any delay in payment or loss of
value of the Collateral. The Bankruptcy Code permits only the
payment
and/or
accrual of post-petition interest, costs and attorneys’
fees to a secured creditor during a debtor’s bankruptcy
case to the extent the value of such creditor’s interest in
the Collateral is determined by the bankruptcy court to exceed
the aggregate outstanding principal amount of the obligations
secured by the Collateral.
Furthermore, in the event a domestic or foreign bankruptcy court
determines that the value of the Collateral is not sufficient to
repay all amounts due on the Notes, the Holders of the Notes
would hold secured claims only to the extent of the value of the
Collateral to which the Holders of the Notes are entitled, and
unsecured claims with respect to such shortfall.
Paying
Agent and Registrar for the Notes
The Issuer must maintain one or more paying agents for the Notes
in the Borough of Manhattan, City of New York. The initial
paying agent for the Notes is Deutsche Bank Trust Company
Americas.
The Issuer must also maintain a registrar with offices in the
Borough of Manhattan, City of New York. The initial registrar is
Deutsche Bank Trust Company Americas. The registrar
maintains a register reflecting ownership of the Notes
outstanding from time to time and makes payments on and
facilitates transfer of Notes on behalf of the Issuer.
The Issuer may change the paying agents or the registrars
without prior notice to the Holders. The Issuer or any of its
Subsidiaries may act as a paying agent or registrar.
Transfer
and Exchange
A Holder may transfer or exchange Notes in accordance with the
Indenture. The registrar and the Trustee may require a Holder to
furnish appropriate endorsements and transfer documents in
connection with a transfer of Notes. Holders will be required to
pay all taxes due on transfer. The Issuer is not required to
transfer or
exchange any Note selected for redemption. Also, the Issuer is
not required to transfer or exchange any Note for a period of
15 days before a selection of Notes to be redeemed.
Principal,
Maturity and Interest
The Issuer issued $1,500,000,000 in aggregate principal amount
of Notes in a private transaction that was not subject to the
registration requirements of the Securities Act. The Notes will
mature on April 15, 2019. Subject to compliance with the
covenant described below under the caption “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock,”
the Issuer may issue additional Notes, from time to time under
the Indenture (any such Notes, “Additional
Notes”). Except as described under “Amendment,
Supplement and Waiver,” the Notes offered by the Issuer and
any Additional Notes subsequently issued under the Indenture
will be treated as a single class for all purposes under the
Indenture, including waivers, amendments, redemptions and offers
to purchase. Unless the context requires otherwise, references
to “Notes” for all purposes of the Indenture and this
“Description of the April 2009 Notes” include any
Additional Notes that are actually issued.
Interest on the Notes accrues at the rate of
81/2%
per annum and is payable semi-annually in arrears on
April 15 and October 15, commencing October 15,2009, to the Holders of record on the immediately preceding
April 1 and October 1. Interest on the Notes accrues
from the most recent date to which interest has been paid or, if
no interest has been paid, from and including the Issue Date.
Interest on the Notes is computed on the basis of a
360-day year
comprised of twelve
30-day
months.
Additional
Interest
Additional Interest may accrue on the Notes in certain
circumstances pursuant to the Registration Rights Agreement. All
references in the Indenture, in any context, to any interest or
other amount payable on or with respect to the Notes shall be
deemed to include any Additional Interest pursuant to the
Registration Rights Agreement. Principal of, premium, if any,
and interest on the Notes will be payable at the office or
agency of the Issuer maintained for such purpose within the City
and State of New York or, at the option of the Issuer, payment
of interest may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of
Holders; provided that all payments of principal,
premium, if any, and interest with respect to the Notes
represented by one or more global notes registered in the name
of or held by DTC or its nominee will be made by wire transfer
of immediately available funds to the accounts specified by the
Holder or Holders thereof. Until otherwise designated by the
Issuer, the Issuer’s office or agency in New York is the
office of the Registrar and Paying Agent maintained for such
purpose.
Mandatory
Redemption; Offers to Purchase; Open Market Purchases
The Issuer is not required to make any mandatory redemption or
sinking fund payments with respect to the Notes. However, under
certain circumstances, the Issuer may be required to offer to
purchase Notes as described under the caption “Repurchase
at the Option of Holders.” The Issuer may at any time and
from time to time purchase Notes in the open market or otherwise.
Optional
Redemption
Except as set forth below, the Issuer is not entitled to redeem
Notes at its option prior to April 15, 2014.
At any time prior to April 15, 2014, the Issuer may redeem
all or a part of the Notes, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to
the registered address of each Holder or otherwise in accordance
with the procedures of DTC, at a redemption price equal to 100%
of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and
Additional Interest, if any, to the date of redemption (the
“Redemption Date”), subject to the rights
of Holders of the Notes on the relevant record date to receive
interest due on the relevant interest payment date.
On and after April 15, 2014 the Issuer may redeem the
Notes, in whole or in part, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to
the registered address of each Holder or
otherwise in accordance with the procedures of DTC, at the
redemption prices (expressed as percentages of principal amount
of the Notes to be redeemed) set forth below, plus accrued and
unpaid interest thereon and Additional Interest, if any, to the
applicable 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
twelve-month period beginning on April 15 of each of the
years indicated below:
Year
Percentage
2014
104.250
%
2015
102.833
%
2016
101.417
%
2017 and thereafter
100.000
%
In addition, until April 15, 2012, the Issuer may, at its
option, on one or more occasions redeem up to 35% of the
aggregate principal amount of Notes at a redemption price equal
to 108.500% of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable 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, with
the net cash proceeds of one or more Equity Offerings;
provided that at least 50% of the sum of the original
aggregate principal amount of Notes issued under the Indenture
and the original principal amount of any Additional Notes that
are Notes issued under the Indenture after the Issue Date
remains outstanding immediately after the occurrence of each
such redemption; provided further that each such
redemption occurs within 90 days of the date of closing of
each such Equity Offering.
Any notice of any redemption may be given prior to the
redemption thereof, and any such redemption or notice may, at
the Issuer’s discretion, be subject to one or more
conditions precedent, including, but not limited to, completion
of an Equity Offering or other corporate transaction.
If the Issuer redeems less than all of the outstanding Notes,
the Registrar and Paying Agent shall select the Notes to be
redeemed in the manner described under “Repurchase at the
Option of Holders — Selection and Notice.”
Repurchase
at the Option of Holders
Change
of Control
The Notes provide that if a Change of Control occurs, unless the
Issuer has previously or concurrently mailed a redemption notice
with respect to all the outstanding Notes as described under
“Optional Redemption,” the Issuer will make an offer
to purchase all of the Notes pursuant to the offer described
below (the “Change of Control Offer”) at a
price in cash (the “Change of Control Payment”)
equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Additional Interest, if any, to
the date of purchase, subject to the right of Holders of the
Notes of record on the relevant record date to receive interest
due on the relevant interest payment date. Within 30 days
following any Change of Control, the Issuer will send notice of
such Change of Control Offer by first-class mail, with a copy to
the Trustee and the Registrar, to each Holder of Notes to the
address of such Holder appearing in the security register with a
copy to the Trustee and the Registrar or otherwise in accordance
with the procedures of DTC, with the following information:
(1) that a Change of Control Offer is being made pursuant
to the covenant entitled “Change of Control” and that
all Notes properly tendered pursuant to such Change of Control
Offer will be accepted for payment by the Issuer;
(2) the purchase price and the purchase date, which will be
no earlier than 30 days nor later than 60 days from
the date such notice is mailed (the “Change of Control
Payment Date”);
(3) that any Note not properly tendered will remain
outstanding and continue to accrue interest;
(4) that unless the Issuer defaults in the payment of the
Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer will cease to accrue
interest on the Change of Control Payment Date;
(5) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to
surrender such Notes, with the form entitled “Option of
Holder to Elect Purchase” on the reverse of such Notes
completed, to the paying agent specified in the notice at the
address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their
tendered Notes and their election to require the Issuer to
purchase such Notes; provided that the paying agent
receives, not later than the close of business on the
30th day following the date of the Change of Control
notice, a telegram, facsimile transmission or letter setting
forth the name of the Holder of the Notes, the principal amount
of Notes tendered for purchase, and a statement that such Holder
is withdrawing its tendered Notes and its election to have such
Notes purchased;
(7) that if the Issuer is redeeming less than all of the
Notes, the Holders of the remaining Notes will be issued new
Notes and such new Notes will be equal in principal amount to
the unpurchased portion of the Notes surrendered. The
unpurchased portion of the Notes must be equal to $2,000 or an
integral multiple of $1,000 in excess thereof; and
(8) the other instructions, as determined by us, consistent
with the covenant described hereunder, that a Holder must follow.
The Issuer will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of Notes
pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the provisions of the Indenture, the Issuer will comply with the
applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in the
Indenture by virtue thereof.
On the Change of Control Payment Date, the Issuer will, to the
extent permitted by law,
(1) accept for payment all Notes issued by it or portions
thereof properly tendered pursuant to the Change of Control
Offer;
(2) deposit with the paying agent an amount equal to the
aggregate Change of Control Payment in respect of all Notes or
portions thereof so tendered; and
(3) deliver, or cause to be delivered, to the Trustee for
cancellation the Notes so accepted together with an
Officer’s Certificate to the Trustee stating that such
Notes or portions thereof have been tendered to and purchased by
the Issuer.
The Senior Credit Facilities provide, and future credit
agreements or other agreements relating to Senior Indebtedness
to which the Issuer becomes a party may provide, that certain
change of control events with respect to the Issuer would
constitute a default thereunder (including a Change of Control
under the Indenture). If we experience a change of control that
triggers a default under our Senior Credit Facilities, we could
seek a waiver of such default or seek to refinance our Senior
Credit Facilities. In the event we do not obtain such a waiver
or refinance the Senior Credit Facilities, such default could
result in amounts outstanding under our Senior Credit Facilities
being declared due and payable and could cause a Receivables
Facility to be wound down.
Our ability to pay cash to the Holders of the Notes following
the occurrence of a Change of Control may be limited by our
then-existing financial resources. Therefore, sufficient funds
may not be available when necessary to make any required
repurchases.
The Change of Control purchase feature of the Notes may in
certain circumstances make more difficult or discourage a sale
or takeover of us and, thus, the removal of incumbent
management. The Change of
Control purchase feature is a result of negotiations between the
Initial Purchasers and us. After the Issue Date, we have no
present intention to engage in a transaction involving a Change
of Control, although it is possible that we could decide to do
so in the future. Subject to the limitations discussed below, we
could, in the future, enter into certain transactions, including
acquisitions, refinancings or other recapitalizations, that
would not constitute a Change of Control under the Indenture,
but that could increase the amount of indebtedness outstanding
at such time or otherwise affect our capital structure or credit
ratings. Restrictions on our ability to incur additional
Indebtedness are contained in the covenants described under
“Certain Covenants — Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” and “Certain Covenants — Liens.”
Such restrictions in the Indenture can be waived only with the
consent of the Holders of a majority in principal amount of the
Notes then outstanding. Except for the limitations contained in
such covenants, however, the Indenture will not contain any
covenants or provisions that may afford Holders of the Notes
protection in the event of a highly leveraged transaction.
The Issuer will 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 the
Indenture applicable to a Change of Control Offer made by us and
purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer. Notwithstanding anything to the
contrary herein, a Change of Control Offer may be made in
advance of a Change of Control, conditional upon such Change of
Control, if a definitive agreement is in place for the Change of
Control at the time of making of the Change of Control Offer.
The definition of “Change of Control” includes a
disposition of all or substantially all of the assets of the
Issuer to any Person. Although there is a limited body of case
law interpreting the phrase “substantially all,” there
is no precise established definition of the phrase under
applicable law. Accordingly, in certain circumstances there may
be a degree of uncertainty as to whether a particular
transaction would involve a disposition of “all or
substantially all” of the assets of the Issuer. As a
result, it may be unclear as to whether a Change of Control has
occurred and whether a Holder of Notes may require the Issuer to
make an offer to repurchase the Notes as described above.
The provisions under the Indenture relating to the Issuer’s
obligation to make an offer to repurchase the Notes as a result
of a Change of Control may be waived or modified with the
written consent of the Holders of a majority in principal amount
of the Notes.
Asset
Sales
The Indenture provides that the Issuer will not, and will not
permit any of its Restricted Subsidiaries to consummate,
directly or indirectly, an Asset Sale, unless:
(1) the Issuer or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at
least equal to the fair market value (as determined in good
faith by the Issuer) of the assets sold or otherwise disposed
of; and
(2) except in the case of a Permitted Asset Swap, at least
75% of the consideration therefor received by the Issuer or such
Restricted Subsidiary, as the case may be, is in the form of
cash or Cash Equivalents; provided that the amount of:
(a) any liabilities (as shown on the Issuer’s or such
Restricted Subsidiary’s most recent balance sheet or in the
footnotes thereto) of the Issuer or such Restricted Subsidiary,
other than liabilities that are by their terms subordinated to
the Notes, that are assumed by the transferee of any such assets
and for which the Issuer and all of its Restricted Subsidiaries
have been validly released by all creditors in writing,
(b) any securities received by the Issuer or such
Restricted Subsidiary from such transferee that are converted by
the Issuer or such Restricted Subsidiary into cash (to the
extent of the cash received) within 180 days following the
closing of such Asset Sale, and
(c) any Designated Non-cash Consideration received by the
Issuer or such Restricted Subsidiary in such Asset Sale having
an aggregate fair market value, taken together with all other
Designated Non-cash Consideration received pursuant to this
clause (c) that is at that time outstanding, not to exceed
5% of Total Assets at the time of the receipt of such Designated
Non-cash Consideration, with the fair market value of each item
of Designated Non-cash Consideration being measured at the time
received and without giving effect to subsequent changes in
value,
shall be deemed to be cash for purposes of this provision and
for no other purpose.
Within 450 days after the receipt of any Net Proceeds of
any Asset Sale, the Issuer or such Restricted Subsidiary, at its
option, may apply the Net Proceeds from such Asset Sale,
(1) to permanently reduce:
(a) Obligations constituting First Lien Obligations (and,
if the Indebtedness repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto)
(provided that (x) to the extent that the terms of
First Lien Obligations other than Obligations under the Notes
require that such First Lien Obligations are repaid with the Net
Proceeds of Asset Sales prior to repayment of other
Indebtedness, the Issuer and its Restricted Subsidiaries shall
be entitled to repay such other First Lien Obligations prior to
repaying the Obligations under the Notes and (y) subject to
the foregoing clause (x), if the Issuer or any Guarantor shall
so reduce First Lien Obligations, the Issuer will equally and
ratably reduce Obligations under the Notes through open-market
purchases (provided that such purchases are at or above
100% of the principal amount thereof) or by making an offer (in
accordance with the procedures set forth below for an Asset Sale
Offer) to all holders to purchase at a purchase price equal to
100% of the principal amount thereof, plus accrued and unpaid
interest and additional interest, if any, on the pro rata
principal amount of Notes);
(b) Obligations under the Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
the maturity date of the Notes; provided that, at the
time of, and after giving effect to, such repurchase, redemption
or defeasance, the aggregate amount of Net Proceeds used to
repurchase, redeem or defease Existing Notes pursuant to this
subclause (b) following the Issue Date shall not exceed 5%
of the consolidated total assets of the Issuer and is
subsidiaries at such time; or
(c) Indebtedness of a Restricted Subsidiary that is not a
Guarantor, other than Indebtedness owed to the Issuer or another
Restricted Subsidiary (or any affiliate thereof);
(2) to make (a) an Investment in any one or more
businesses, provided that such Investment in any business
is in the form of the acquisition of Capital Stock and results
in the Issuer or another of its Restricted Subsidiaries, as the
case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary,
(b) capital expenditures or (c) acquisitions of other
assets, in each of (a), (b) and (c), used or useful in a
Similar Business; or
(3) to make an investment in (a) any one or more
businesses, provided that such Investment in any business
is in the form of the acquisition of Capital Stock and results
in the Issuer or another of its Restricted Subsidiaries, as the
case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary,
(b) properties or (c) acquisitions of other assets
that, in each of (a), (b) and (c), replace the businesses,
properties
and/or
assets that are the subject of such Asset Sale;
provided that, in the case of clauses (2) and
(3) above, a binding commitment shall be treated as a
permitted application of the Net Proceeds from the date of such
commitment so long as the Issuer, or such other Restricted
Subsidiary enters into such commitment with the good faith
expectation that such Net Proceeds will be applied to satisfy
such commitment within 180 days of such commitment (an
“Acceptable Commitment”) and, in the event any
Acceptable Commitment is later cancelled or terminated for any
reason before the Net Proceeds are applied in connection
therewith, the Issuer or such Restricted Subsidiary enters into
another Acceptable Commitment (a “Second
Commitment”) within 180 days of such cancellation
or termination;
provided, further, that if any Second Commitment
is later cancelled or terminated for any reason before such Net
Proceeds are applied, then such Net Proceeds shall constitute
Excess Proceeds.
Any Net Proceeds from Asset Sales of Collateral that are not
invested or applied as set forth in the first sentence of the
preceding paragraph will be deemed to constitute
“Collateral Excess Proceeds.” When the
aggregate amount of Collateral Excess Proceeds exceeds
$200.0 million, the Issuer shall make an offer to all
Holders of the Notes and, if required by the terms of any First
Lien Obligations or Obligations secured by a Lien permitted
under the Indenture (which Lien is not subordinate to the Lien
of the Notes with respect to the Collateral), to the holders of
such First Lien Obligations or such other Obligations (a
“Collateral Asset Sale Offer”), to purchase the
maximum aggregate principal amount of the Notes and such First
Lien Obligations or such other Obligations that is a minimum of
$2,000 or an integral multiple of $1,000 in excess thereof that
may be purchased out of the Collateral Excess Proceeds at an
offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest and Additional
Interest, if any, to the date fixed for the closing of such
offer, in accordance with the procedures set forth in the
Indenture. The Issuer will commence a Collateral Asset Sale
Offer with respect to Collateral Excess Proceeds within ten
Business Days after the date that Collateral Excess Proceeds
exceed $200.0 million by mailing the notice required
pursuant to the terms of the Indenture, with a copy to the
Trustee.
Any Net Proceeds from Asset Sales of non-Collateral that are not
invested or applied as provided and within the time period set
forth in the first sentence of the second preceding paragraph
will be deemed to constitute “Excess Proceeds.”
When the aggregate amount of Excess Proceeds exceeds
$200.0 million, the Issuer shall make an offer to all
Holders of the Notes and, if required or permitted by the terms
of any Senior Indebtedness, to the holders of such Senior
Indebtedness (an “Asset Sale Offer”), to
purchase the maximum aggregate principal amount of the Notes and
such Senior Indebtedness that is a minimum of $2,000 or an
integral multiple of $1,000 in excess thereof that may be
purchased out of the Excess Proceeds at an offer price in cash
in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Additional Interest, if any, to
the date fixed for the closing of such offer, in accordance with
the procedures set forth in the Indenture. The Issuer will
commence an Asset Sale Offer with respect to Excess Proceeds
within ten Business Days after the date that Excess Proceeds
exceed $200.0 million by mailing the notice required
pursuant to the terms of the Indenture, with a copy to the
Trustee.
To the extent that the aggregate amount of Notes and such other
First Lien Obligations or Obligations secured by a Lien
permitted by the Indenture (which Lien is not subordinate to the
Lien of the Notes with respect to the Collateral) tendered
pursuant to a Collateral Asset Sale Offer is less than the
Collateral Excess Proceeds, the Issuer may use any remaining
Collateral Excess Proceeds for general corporate purposes,
subject to other covenants contained in the Indenture. To the
extent that the aggregate amount of Notes and such Senior
Indebtedness tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Issuer may use any remaining
Excess Proceeds for general corporate purposes, subject to other
covenants contained in the Indenture. If the aggregate principal
amount of Notes or other First Lien Obligations or such other
Obligations surrendered by such holders thereof exceeds the
amount of Collateral Excess Proceeds, the Trustee shall select
the Notes and such other First Lien Obligations or such other
Obligations to be purchased on a pro rata basis based on the
accreted value or principal amount of the Notes or such other
First Lien Obligations or such other Obligations tendered.
If the aggregate principal amount of Notes or the Senior
Indebtedness surrendered by such holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes
and such Senior Indebtedness to be purchased on a pro rata basis
based on the accreted value or principal amount of the Notes or
such Senior Indebtedness tendered. Upon completion of any such
Collateral Asset Sale Offer or Asset Sale Offer, the amount of
Collateral Excess Proceeds or Excess Proceeds, as the case may
be, shall be reset at zero. Additionally, the Issuer may, at its
option, make a Collateral Asset Sale Offer or an Asset Sale
Offer using proceeds from any Asset Sale at any time after
consummation of such Asset Sale; provided that such
Collateral Asset Sale Offer or Asset Sale Offer shall be in an
aggregate amount of not less than $50.0 million. Upon
consummation of such Collateral Asset Sale Offer or Asset Sale
Offer, any Net Proceeds not required to be used to purchase
Notes shall not be deemed Excess Proceeds.
Pending the final application of any Net Proceeds pursuant to
this covenant, the holder of such Net Proceeds may apply such
Net Proceeds temporarily to reduce Indebtedness outstanding
under a revolving credit facility or otherwise invest such Net
Proceeds in any manner not prohibited by the Indenture.
The Issuer will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of the Notes
pursuant to a Collateral Asset Sale Offer or an Asset Sale
Offer. To the extent that the provisions of any securities laws
or regulations conflict with the provisions of the Indenture,
the Issuer will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.
Selection
and Notice
If the Issuer is redeeming less than all of the Notes issued by
it at any time, the Registrar and Paying Agent will select the
Notes to be redeemed (a) if the Notes are listed on any
national securities exchange, in compliance with the
requirements of the principal national securities exchange on
which the Notes are listed, (b) on a pro rata basis to the
extent practicable or (c) by lot or such other similar
method in accordance with the procedures of DTC.
Notices of purchase or redemption shall be mailed by first-class
mail, postage prepaid, at least 30 but not more than
60 days before the purchase or Redemption Date to each
Holder of Notes at such Holder’s registered address or
otherwise in accordance with the procedures of DTC, except that
redemption notices may be mailed more than 60 days prior to
a Redemption Date if the notice is issued in connection
with a defeasance of the Notes or a satisfaction and discharge
of the Indenture. If any Note is to be purchased or redeemed in
part only, any notice of purchase or redemption that relates to
such Note shall state the portion of the principal amount
thereof that has been or is to be purchased or redeemed.
The Issuer will issue a new Note in a principal amount equal to
the unredeemed portion of the original Note in the name of the
Holder upon cancellation of the original Note. Notes called for
redemption become due on the date fixed for redemption. On and
after the Redemption Date, interest ceases to accrue on
Notes or portions thereof called for redemption.
Certain
Covenants
Set forth below are summaries of certain covenants contained in
the Indenture. If on any date following the Issue Date
(i) the Notes have Investment Grade Ratings from both
Rating Agencies, and (ii) no Default has occurred and is
continuing under the Indenture (the occurrence of the events
described in the foregoing clauses (i) and (ii) being
collectively referred to as a “Covenant Suspension
Event”), the Issuer and the Restricted Subsidiaries
will not be subject to the following covenants (collectively,
the “Suspended Covenants”):
(1) “Repurchase at the Option of Holders”;
(2) “— Limitation on Restricted Payments”;
(3) “— Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
(4) clause (4) of the first paragraph of
“— Merger, Consolidation or Sale of All or
Substantially All Assets”;
(5) “— Transactions with
Affiliates”; and
(6) “— Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.”
In the event that the Issuer and the Restricted Subsidiaries are
not subject to the Suspended Covenants under the Indenture for
any period of time as a result of the foregoing, and on any
subsequent date (the “Reversion Date”) one or
both of the Rating Agencies (a) withdraw their Investment
Grade Rating or downgrade the rating assigned to the Notes below
an Investment Grade Rating
and/or
(b) the Issuer or any of its Affiliates enters into an
agreement to effect a transaction that would result in a Change
of Control and one or more of the Rating Agencies indicate that
if consummated, such transaction (alone or together with any
related recapitalization or refinancing transactions) would
cause such Rating Agency to withdraw its
Investment Grade Rating or downgrade the ratings assigned to the
Notes below an Investment Grade Rating, then the Issuer and the
Restricted Subsidiaries will thereafter again be subject to the
Suspended Covenants under the Indenture with respect to future
events, including, without limitation, a proposed transaction
described in clause (b) above.
The period of time between the Suspension Date and the Reversion
Date is referred to in this description as the
“Suspension Period.” Additionally, upon the
occurrence of a Covenant Suspension Event, the amount of Excess
Proceeds from Net Proceeds shall be reset at zero. In the event
of any such reinstatement, no action taken or omitted to be
taken by the Issuer or any of its Restricted Subsidiaries prior
to such reinstatement will give rise to a Default or Event of
Default under the Indentures with respect to Notes; provided
that (1) with respect to Restricted Payments made after
any such reinstatement, the amount of Restricted Payments made
will be calculated as though the covenant described under the
caption “— Limitation on Restricted
Payments” had been in effect prior to, but not during the
Suspension Period, provided that any Subsidiaries
designated as Unrestricted Subsidiaries during the Suspension
Period shall automatically become Restricted Subsidiaries on the
Reversion Date (subject to the Issuer’s right to
subsequently designate them as Unrestricted Subsidiaries in
compliance with the covenants set out below), and (2) all
Indebtedness incurred, or Disqualified Stock or Preferred Stock
issued, during the Suspension Period will be classified to have
been incurred or issued pursuant to clause (3) of the
second paragraph of “— Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock.”
There can be no assurance that the Notes will ever achieve or
maintain Investment Grade Ratings.
Limitation
on Restricted Payments
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(I) declare or pay any dividend or make any payment or
distribution on account of the Issuer’s, or any of its
Restricted Subsidiaries’ Equity Interests, including any
dividend or distribution payable in connection with any merger
or consolidation other than:
(a) dividends or distributions by the Issuer payable solely
in Equity Interests (other than Disqualified Stock) of the
Issuer; or
(b) dividends or distributions by a Restricted Subsidiary
so long as, in the case of any dividend or distribution payable
on or in respect of any class or series of securities issued by
a Restricted Subsidiary other than a Wholly-Owned Subsidiary,
the Issuer or a Restricted Subsidiary receives at least its pro
rata share of such dividend or distribution in accordance with
its Equity Interests in such class or series of securities;
(II) purchase, redeem, defease or otherwise acquire or
retire for value any Equity Interests of the Issuer or any
direct or indirect parent of the Issuer, including in connection
with any merger or consolidation;
(III) make any principal payment on, or redeem, repurchase,
defease or otherwise acquire or retire for value in each case,
prior to any scheduled repayment, sinking fund payment or
maturity, any Subordinated Indebtedness, other than:
(a) Indebtedness permitted under clauses (7) and
(8) of the covenant described under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”; or
(b) the purchase, repurchase or other acquisition of
Subordinated Indebtedness 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
purchase, repurchase or acquisition; or
(all such payments and other actions set forth in
clauses (I) through (IV) above (other than any
exception thereto) being collectively referred to as
“Restricted Payments”), unless, at the time of
such Restricted Payment:
(1) no Default shall have occurred and be continuing or
would occur as a consequence thereof;
(2) immediately after giving effect to such transaction on
a pro forma basis, the Issuer could incur $1.00 of additional
Indebtedness under the provisions of the first paragraph of the
covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”; and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Issuer and
its Restricted Subsidiaries after November 17, 2006
(including Restricted Payments permitted by clauses (1), (2)
(with respect to the payment of dividends on Refunding Capital
Stock (as defined below) pursuant to clause (b) thereof
only), (6)(c), (9) and (14) of the next succeeding
paragraph, but excluding all other Restricted Payments permitted
by the next succeeding paragraph), is less than the sum of
(without duplication):
(a) 50% of the Consolidated Net Income of the Issuer for
the period (taken as one accounting period) beginning
October 1, 2006, to the end of the Issuer’s most
recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment,
or, in the case such Consolidated Net Income for such period is
a deficit, minus 100% of such deficit; plus
(b) 100% of the aggregate net cash proceeds and the fair
market value, as determined in good faith by the Issuer, of
marketable securities or other property received by the Issuer
since immediately after November 17, 2006 (other than net
cash proceeds to the extent such net cash proceeds have been
used to incur Indebtedness, Disqualified Stock or Preferred
Stock pursuant to clause (12)(a) of the second paragraph of
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”) from
the issue or sale of:
(i) (A) Equity Interests of the Issuer, including
Treasury Capital Stock (as defined below), but excluding cash
proceeds and the fair market value, as determined in good faith
by the Issuer, of marketable securities or other property
received from the sale of:
(x) Equity Interests to members of management, directors or
consultants of the Issuer, any direct or indirect parent company
of the Issuer and the Issuer’s Subsidiaries after
November 17, 2006 to the extent such amounts have been
applied to Restricted Payments made in accordance with
clause (4) of the next succeeding paragraph; and
(y) Designated Preferred Stock; and
(B) to the extent such net cash proceeds are actually
contributed to the Issuer, Equity Interests of the Issuer’s
direct or indirect parent companies (excluding contributions of
the proceeds from the sale of Designated Preferred Stock of such
companies or contributions to the extent such amounts have been
applied to Restricted Payments made in accordance with
clause (4) of the next succeeding paragraph); or
(ii) debt securities of the Issuer that have been converted
into or exchanged for such Equity Interests of the Issuer;
provided, however, that this clause (b) shall
not include the proceeds from (V) Refunding Capital Stock
(as defined below), (W) Equity Interests or convertible
debt securities of the Issuer sold to a Restricted Subsidiary,
as the case may be, (X) Disqualified Stock or debt
securities that have been converted into Disqualified Stock,
(Y) Excluded Contributions or (Z) the Delayed Equity
Amount; plus
(c) 100% of the aggregate amount of cash and the fair
market value, as determined in good faith by the Issuer, of
marketable securities or other property contributed to the
capital of the Issuer following November 17, 2006 (other
than net cash proceeds to the extent such net cash proceeds
(i) have been used to incur Indebtedness, Disqualified
Stock or Preferred Stock pursuant to clause (12)(a) of the
second
paragraph of “— Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock,” (ii) are contributed by a Restricted
Subsidiary, (iii) constitute Excluded Contributions or
(iv) constitute the Delayed Equity Amount); plus
(d) 100% of the aggregate amount received in cash and the
fair market value, as determined in good faith by the Issuer, of
marketable securities or other property received by means of:
(i) the sale or other disposition (other than to the Issuer
or a Restricted Subsidiary) of Restricted Investments made by
the Issuer or its Restricted Subsidiaries and repurchases and
redemptions of such Restricted Investments from the Issuer or
its Restricted Subsidiaries and repayments of loans or advances,
and releases of guarantees, which constitute Restricted
Investments by the Issuer or its Restricted Subsidiaries, in
each case after November 17, 2006; or
(ii) the sale (other than to the Issuer or a Restricted
Subsidiary) of the stock of an Unrestricted Subsidiary or a
distribution from an Unrestricted Subsidiary (other than in each
case to the extent the Investment in such Unrestricted
Subsidiary was made by the Issuer or a Restricted Subsidiary
pursuant to clause (7) of the next succeeding paragraph or
to the extent such Investment constituted a Permitted
Investment) or a dividend from an Unrestricted Subsidiary after
November 17, 2006; plus
(e) in the case of the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary after November 17,2006, the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Issuer in good
faith (or if such fair market value exceeds $250.0 million,
in writing by an Independent Financial Advisor), at the time of
the redesignation of such Unrestricted Subsidiary as a
Restricted Subsidiary other than to the extent the Investment in
such Unrestricted Subsidiary was made by the Issuer or a
Restricted Subsidiary pursuant to clause (7) of the next
succeeding paragraph or to the extent such Investment
constituted a Permitted Investment.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after
the date of declaration thereof, if at the date of declaration
such payment would have complied with the provisions of the
Indenture;
(2) (a) the redemption, repurchase, retirement or
other acquisition of any Equity Interests (“Treasury
Capital Stock”) or Subordinated Indebtedness of the
Issuer or any Equity Interests of any direct or indirect parent
company of the Issuer, in exchange for, or out of the proceeds
of the substantially concurrent sale (other than to a Restricted
Subsidiary) of, Equity Interests of the Issuer or any direct or
indirect parent company of the Issuer to the extent contributed
to the Issuer (in each case, other than any Disqualified Stock)
(“Refunding Capital Stock”) and (b) if
immediately prior to the retirement of Treasury Capital Stock,
the declaration and payment of dividends thereon was permitted
under clause (6) of this paragraph, the declaration and
payment of dividends on the Refunding Capital Stock (other than
Refunding Capital Stock the proceeds of which were used to
redeem, repurchase, retire or otherwise acquire any Equity
Interests of any direct or indirect parent company of the
Issuer) in an aggregate amount per year no greater than the
aggregate amount of dividends per annum that were declarable and
payable on such Treasury Capital Stock immediately prior to such
retirement;
(3) the redemption, repurchase or other acquisition or
retirement of Subordinated Indebtedness of the Issuer or a
Guarantor made in exchange for, or out of the proceeds of the
substantially concurrent sale of, new Indebtedness of the Issuer
or a Guarantor, as the case may be, which is incurred in
compliance with “— Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” so long as:
(a) the principal amount (or accreted value) of such new
Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus any accrued and unpaid
interest on, the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired for value, plus the amount of
any reasonable premium (including reasonable tender premiums),
defeasance costs and
any reasonable fees and expenses incurred in connection with the
issuance of such new Indebtedness;
(b) such new Indebtedness is subordinated to the Notes or
the applicable Guarantee at least to the same extent as such
Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired for value;
(c) such new Indebtedness has a final scheduled maturity
date equal to or later than the final scheduled maturity date of
the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired; and
(d) such new Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the remaining Weighted Average
Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired;
(4) a Restricted Payment to pay for the repurchase,
retirement or other acquisition or retirement for value of
Equity Interests (other than Disqualified Stock) of the Issuer
or any of its direct or indirect parent companies held by any
future, present or former employee, director or consultant of
the Issuer, any of its Subsidiaries or any of its direct or
indirect parent companies pursuant to any management equity plan
or stock option plan or any other management or employee benefit
plan or agreement, including any Equity Interests rolled over by
management of the Company or any of its direct or indirect
parent companies in connection with the Transaction;
provided, however, that the aggregate Restricted
Payments made under this clause (4) do not exceed in any
calendar year $75.0 million (which shall increase to
$150.0 million subsequent to the consummation of an
underwritten public Equity Offering by the Issuer or any direct
or indirect parent entity of the Issuer) (with unused amounts in
any calendar year being carried over to succeeding calendar
years subject to a maximum (without giving effect to the
following proviso) of $225.0 million in any calendar year
(which shall increase to $450.0 million subsequent to the
consummation of an underwritten public Equity Offering by the
Issuer or any direct or indirect parent corporation of the
Issuer)); provided further that such amount in any
calendar year may be increased by an amount not to exceed:
(a) the cash proceeds from the sale of Equity Interests
(other than Disqualified Stock) of the Issuer and, to the extent
contributed to the Issuer, Equity Interests of any of the
Issuer’s direct or indirect parent companies, in each case
to members of management, directors or consultants of the
Issuer, any of its Subsidiaries or any of its direct or indirect
parent companies that occurs after November 17, 2006, to
the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of
Restricted Payments by virtue of clause (3) of the
preceding paragraph; plus
(b) the cash proceeds of key man life insurance policies
received by the Issuer or its Restricted Subsidiaries after
November 17, 2006; less
(c) the amount of any Restricted Payments previously made
with the cash proceeds described in clauses (a) and
(b) of this clause (4);
and provided, further, that cancellation of
Indebtedness owing to the Issuer or any Restricted Subsidiary
from members of management of the Issuer, any of the
Issuer’s direct or indirect parent companies or any of the
Issuer’s Restricted Subsidiaries in connection with a
repurchase of Equity Interests of the Issuer or any of its
direct or indirect parent companies will not be deemed to
constitute a Restricted Payment for purposes of this covenant or
any other provision of the Indenture;
(5) the declaration and payment of dividends to holders of
any class or series of Disqualified Stock of the Issuer or any
of its Restricted Subsidiaries or any class or series of
Preferred Stock of any Restricted Subsidiary issued in
accordance with the covenant described under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock” to the
extent such dividends are included in the definition of
“Fixed Charges”;
(6) (a) the declaration and payment of dividends to
holders of any class or series of Designated Preferred Stock
(other than Disqualified Stock) issued by the Issuer after
November 17, 2006;
(b) the declaration and payment of dividends to a direct or
indirect parent company of the Issuer, the proceeds of which
will be used to fund the payment of dividends to holders of any
class or series of Designated Preferred Stock (other than
Disqualified Stock) of such parent corporation issued after the
Issue Date; provided that the amount of dividends paid
pursuant to this clause (b) shall not exceed the aggregate
amount of cash actually contributed to the Issuer from the sale
of such Designated Preferred Stock; or
(c) the declaration and payment of dividends on Refunding
Capital Stock that is Preferred Stock in excess of the dividends
declarable and payable thereon pursuant to clause (2) of
this paragraph;
provided, however, in the case of each of
(a) and (c) of this clause (6), that for the most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the
date of issuance of such Designated Preferred Stock or the
declaration of such dividends on Refunding Capital Stock that is
Preferred Stock, after giving effect to such issuance or
declaration on a pro forma basis, the Issuer and its Restricted
Subsidiaries on a consolidated basis would have had a Fixed
Charge Coverage Ratio of at least 2.00 to 1.00;
(7) Investments in Unrestricted Subsidiaries having an
aggregate fair market value, taken together with all other
Investments made pursuant to this clause (7) that are at
the time outstanding, without giving effect to the sale of an
Unrestricted Subsidiary to the extent the proceeds of such sale
do not consist of cash or marketable securities, not to exceed
2.5% of Total Assets at the time of such Investment (with the
fair market value of each Investment being measured at the time
made and without giving effect to subsequent changes in value);
(8) repurchases of Equity Interests deemed to occur upon
exercise of stock options or warrants if such Equity Interests
represent a portion of the exercise price of such options or
warrants;
(9) the declaration and payment of dividends on the
Issuer’s common stock (or the payment of dividends to any
direct or indirect parent entity to fund a payment of dividends
on such entity’s common stock), following consummation of
the first public offering of the Issuer’s common stock or
the common stock of any of its direct or indirect parent
companies after November 17, 2006, of up to 6% per annum of
the net cash proceeds received by or contributed to the Issuer
in or from any such public offering, other than public offerings
with respect to the Issuer’s common stock registered on
Form S-8
and other than any public sale constituting an Excluded
Contribution;
(10) Restricted Payments that are made with Excluded
Contributions;
(11) other Restricted Payments in an aggregate amount taken
together with all other Restricted Payments made pursuant to
this clause (11) not to exceed 3.0% of Total Assets at the
time made;
(12) distributions or payments of Receivables Fees;
(13) any Restricted Payment used to fund amounts owed to
Affiliates (including dividends to any direct or indirect parent
of the Issuer to permit payment by such parent of such amount),
in each case to the extent permitted by the covenant described
under “— Transactions with Affiliates”;
(14) the repurchase, redemption or other acquisition or
retirement for value of any Subordinated Indebtedness in
accordance with the provisions similar to those described under
the captions “Repurchase at the Option of
Holders — Change of Control” and “Repurchase
at the Option of Holders — Asset Sales”;
provided that all Notes tendered by Holders in connection
with a Change of Control Offer, Collateral Asset Sale Offer or
Asset Sale Offer, as applicable, have been repurchased, redeemed
or acquired for value;
(15) the declaration and payment of dividends by the Issuer
to, or the making of loans to, any direct or indirect parent in
amounts required for any direct or indirect parent companies to
pay, in each case without duplication,
(a) franchise and excise taxes and other fees, taxes and
expenses required to maintain their corporate existence;
(b) foreign, federal, state and local income taxes, to the
extent such income taxes are attributable to the income of the
Issuer and its Restricted Subsidiaries and, to the extent of the
amount actually received from its Unrestricted Subsidiaries, in
amounts required to pay such taxes to the extent attributable to
the income of such Unrestricted Subsidiaries; provided
that in each case the amount of such payments in any fiscal
year does not exceed the amount that the Issuer and its
Restricted Subsidiaries would be required to pay in respect of
foreign, federal, state and local taxes for such fiscal year
were the Issuer, its Restricted Subsidiaries and its
Unrestricted Subsidiaries (to the extent described above) to pay
such taxes separately from any such parent entity;
(c) for as long as Hercules Holding II, LLC is a parent of
the Issuer, distributions equal to any taxable income of
Hercules Holding II, LLC resulting from the Hedging Arrangements
multiplied by 45%;
(d) customary salary, bonus and other benefits payable to
officers and employees of any direct or indirect parent company
of the Issuer to the extent such salaries, bonuses and other
benefits are attributable to the ownership or operation of the
Issuer and its Restricted Subsidiaries;
(e) general corporate operating and overhead costs and
expenses of any direct or indirect parent company of the Issuer
to the extent such costs and expenses are attributable to the
ownership or operation of the Issuer and its Restricted
Subsidiaries; and
(f) fees and expenses other than to Affiliates of the
Issuer related to any unsuccessful equity or debt offering of
such parent entity; and
(16) the distribution, by dividend or otherwise, of shares
of Capital Stock of, or Indebtedness owed to the Issuer or a
Restricted Subsidiary by, Unrestricted Subsidiaries (other than
Unrestricted Subsidiaries, the primary assets of which are cash
and/or Cash
Equivalents);
provided, however, that at the time of, and after
giving effect to, any Restricted Payment permitted under
clauses (11) and (16), no Default shall have occurred and
be continuing or would occur as a consequence thereof.
As of the Issue Date, all of the Issuer’s Subsidiaries were
Restricted Subsidiaries. The Issuer will not permit any
Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the last sentence of the definition of
“Unrestricted Subsidiary.” For purposes of designating
any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Issuer and its Restricted
Subsidiaries (except to the extent repaid) in the Subsidiary so
designated will be deemed to be Restricted Payments in an amount
determined as set forth in the last sentence of the definition
of “Investment.” Such designation will be permitted
only if a Restricted Payment in such amount would be permitted
at such time, whether pursuant to the first paragraph of this
covenant or under clause (7), (10) or (11) of the
second paragraph of this covenant, or pursuant to the definition
of “Permitted Investments,” and if such Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
Unrestricted Subsidiaries will not be subject to any of the
restrictive covenants set forth in the Indenture.
Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise (collectively,
“incur” and collectively, an
“incurrence”) with respect to any Indebtedness
(including Acquired Indebtedness), and the Issuer will not issue
any shares of Disqualified Stock and will not permit any
Restricted Subsidiary to issue any shares of Disqualified Stock
or Preferred Stock; provided, however, that the
Issuer may
incur Indebtedness (including Acquired Indebtedness) or issue
shares of Disqualified Stock, and any of its Restricted
Subsidiaries may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock and issue
shares of Preferred Stock, if the Fixed Charge Coverage Ratio on
a consolidated basis for the Issuer and its Restricted
Subsidiaries’ most recently ended four fiscal quarters for
which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock or Preferred Stock is issued
would have been at least 2.00 to 1.00, determined on a pro forma
basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred,
or the Disqualified Stock or Preferred Stock had been issued, as
the case may be, and the application of proceeds therefrom had
occurred at the beginning of such four-quarter period;
provided, further, that Restricted Subsidiaries that are
not Guarantors may not incur Indebtedness or Disqualified Stock
or Preferred Stock if, after giving pro forma effect to such
incurrence or issuance (including a pro forma application of the
net proceeds therefrom), more than an aggregate of
$2,000.0 million of Indebtedness or Disqualified Stock or
Preferred Stock of Restricted Subsidiaries that are not
Guarantors would be outstanding pursuant to this paragraph and
clauses (12), (14) and (19) below at such time.
The foregoing limitations will not apply to:
(1) the incurrence of Indebtedness under (x) Credit
Facilities (other than the ABL Facility) by the Issuer or any of
its Restricted Subsidiaries and the issuance and creation of
letters of credit and bankers’ acceptances thereunder (with
letters of credit and bankers’ acceptances being deemed to
have a principal amount equal to the face amount thereof), up to
an aggregate principal amount of $16,500.0 million
(including any Indebtedness incurred and represented by the
Notes (including the Guarantees) or any Additional First Lien
Obligations by the Issuer or any Guarantor, the proceeds of
which Notes or Additional First Lien Obligations are used to
repay such Credit Facilities) outstanding at any one time and
(y) the ABL Facility by the Issuer or any of its Restricted
Subsidiaries and the issuance and creation of letters of credit
and bankers’ acceptances thereunder (with letters of credit
and bankers’ acceptances being deemed to have a principal
amount equal to the face amount thereof), up to an aggregate
principal amount equal to the ABL Facility Cap;
(2) reserved;
(3) Indebtedness of the Issuer and its Restricted
Subsidiaries in existence on the Issue Date (other than
Indebtedness described in clause (1)), including the Existing
Second Priority Notes and the Existing Notes;
(4) Indebtedness consisting of Capitalized Lease
Obligations and Purchase Money Obligations; so long as such
Indebtedness exists at the date of such purchase, lease or
improvement, or is created within 270 days thereafter;
(5) Indebtedness incurred by the Issuer or any of its
Restricted Subsidiaries constituting reimbursement obligations
with respect to letters of credit issued in the ordinary course
of business, including letters of credit in respect of
workers’ compensation, medical malpractice or employee
health claims, or other Indebtedness with respect to
reimbursement-type obligations regarding workers’
compensation, medical malpractice or employee health claims;
provided, however, that upon the drawing of such
letters of credit or the incurrence of such Indebtedness, such
obligations are reimbursed within 30 days following such
drawing or incurrence;
(6) Indebtedness arising from agreements of the Issuer or
its Restricted Subsidiaries providing for indemnification,
adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of
any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary for the purpose of
financing such acquisition; provided, however,
that such Indebtedness is not reflected on the balance sheet of
the Issuer, or any of its Restricted Subsidiaries (contingent
obligations referred to in a footnote to financial statements
and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of
this clause (6));
(7) Indebtedness of the Issuer to a Restricted Subsidiary;
provided that any such Indebtedness owing to a Restricted
Subsidiary that is not a Guarantor is expressly subordinated in
right of payment to the Notes; provided, further,
that any subsequent issuance or transfer of any Capital Stock or
any other event which results in any Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such Indebtedness (except to the Issuer or
another Restricted Subsidiary) shall be deemed, in each case, to
be an incurrence of such Indebtedness;
(8) Indebtedness of a Restricted Subsidiary to the Issuer
or another Restricted Subsidiary; provided that if a
Guarantor incurs such Indebtedness to a Restricted Subsidiary
that is not a Guarantor, such Indebtedness is expressly
subordinated in right of payment to the Guarantee of the Notes
of such Guarantor; provided, further, that any
subsequent transfer of any such Indebtedness (except to the
Issuer or another Restricted Subsidiary) shall be deemed, in
each case, to be an incurrence of such Indebtedness not
permitted by this clause (8);
(9) shares of Preferred Stock of a Restricted Subsidiary
issued to the Issuer or another Restricted Subsidiary;
provided that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or
any other subsequent transfer of any such shares of Preferred
Stock (except to the Issuer or another of its Restricted
Subsidiaries) shall be deemed in each case to be an issuance of
such shares of Preferred Stock not permitted by this clause (9);
(10) Hedging Obligations (excluding Hedging Obligations
entered into for speculative purposes) for the purpose of
limiting interest rate risk with respect to any Indebtedness
permitted to be incurred pursuant to
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock,”
exchange rate risk or commodity pricing risk;
(11) obligations in respect of performance, bid, appeal and
surety bonds and completion guarantees provided by the Issuer or
any of its Restricted Subsidiaries in the ordinary course of
business;
(12) (a) Indebtedness or Disqualified Stock of the
Issuer and Indebtedness, Disqualified Stock or Preferred Stock
of the Issuer or any Restricted Subsidiary equal to 200.0% of
the net cash proceeds received by the Issuer since immediately
after November 17, 2006 from the issue or sale of Equity
Interests of the Issuer or cash contributed to the capital of
the Issuer (in each case, other than Excluded Contributions or
proceeds of Disqualified Stock or sales of Equity Interests to
the Issuer or any of its Subsidiaries) as determined in
accordance with clauses (3)(b) and (3)(c) of the first paragraph
of “— Limitation on Restricted Payments” to
the extent such net cash proceeds or cash have not been applied
pursuant to such clauses to make Restricted Payments or to make
other Investments, payments or exchanges pursuant to the second
paragraph of “— Limitation on Restricted
Payments” or to make Permitted Investments (other than
Permitted Investments specified in clauses (1) and
(3) of the definition thereof) and (b) Indebtedness or
Disqualified Stock of Issuer and Indebtedness, Disqualified
Stock or Preferred Stock of the Issuer or any Restricted
Subsidiary not otherwise permitted hereunder in an aggregate
principal amount or liquidation preference, which when
aggregated with the principal amount and liquidation preference
of all other Indebtedness, Disqualified Stock and Preferred
Stock then outstanding and incurred pursuant to this clause
(12)(b), does not at any one time outstanding exceed
$1,500.0 million; provided, however, that on
a pro forma basis, together with any amounts incurred and
outstanding by Restricted Subsidiaries that are not Guarantors
pursuant to the second proviso to the first paragraph of this
covenant and clauses (14) and (19), no more than
$2,000.0 million of Indebtedness, Disqualified Stock or
Preferred Stock at any one time outstanding and incurred
pursuant to this clause (12)(b) shall be incurred by Restricted
Subsidiaries that are not Guarantors (it being understood that
any Indebtedness, Disqualified Stock or Preferred Stock incurred
pursuant to this clause (12)(b) shall cease to be deemed
incurred or outstanding for purposes of this clause (12)(b) but
shall be deemed incurred for the purposes of the first paragraph
of this covenant from and after the first date on which the
Issuer or such Restricted Subsidiary could have incurred such
Indebtedness, Disqualified Stock or Preferred Stock under the
first paragraph of this covenant without reliance on this clause
(12)(b));
(13) the incurrence or issuance by the Issuer or any
Restricted Subsidiary of Indebtedness, Disqualified Stock or
Preferred Stock which serves to refund or refinance any
Indebtedness, Disqualified Stock or Preferred Stock of the
Issuer or any Restricted Subsidiary incurred as permitted under
the first paragraph of this covenant and clauses (3),
(4) and (12)(a) above, this clause (13) and
clause (14) below or any Indebtedness, Disqualified Stock
or Preferred Stock of the Issuer or any Restricted Subsidiary
issued to so refund or refinance such Indebtedness, Disqualified
Stock or Preferred Stock of the Issuer or any Restricted
Subsidiary including additional Indebtedness, Disqualified Stock
or Preferred Stock incurred to pay premiums (including
reasonable tender premiums), defeasance costs and fees in
connection therewith (the “Refinancing
Indebtedness”) prior to its respective maturity;
provided, however, that such Refinancing
Indebtedness:
(a) has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is incurred which is not less than
the remaining Weighted Average Life to Maturity of the
Indebtedness, Disqualified Stock or Preferred Stock being
refunded or refinanced,
(b) to the extent such Refinancing Indebtedness refinances
(i) Indebtedness subordinated or pari passu to the
Notes or any Guarantee thereof, such Refinancing Indebtedness is
subordinated or pari passu to the Notes or the Guarantee
at least to the same extent as the Indebtedness being refinanced
or refunded or (ii) Disqualified Stock or Preferred Stock,
such Refinancing Indebtedness must be Disqualified Stock or
Preferred Stock, respectively, and
(c) shall not include Indebtedness, Disqualified Stock or
Preferred Stock of a Subsidiary of the Issuer that is not a
Guarantor that refinances Indebtedness, Disqualified Stock or
Preferred Stock of the Issuer or a Guarantor;
and, provided, further, that subclause (a) of
this clause (13) will not apply to any refunding or
refinancing of any ABL Obligations and Obligations secured by
Permitted Liens;
(14) Indebtedness, Disqualified Stock or Preferred Stock of
(x) the Issuer or a Restricted Subsidiary incurred to
finance an acquisition or (y) Persons that are acquired by
the Issuer or any Restricted Subsidiary or merged into the
Issuer or a Restricted Subsidiary in accordance with the terms
of the Indenture; provided that after giving effect to
such acquisition or merger, either
(a) the Issuer would be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first sentence of this
covenant, or
(b) the Fixed Charge Coverage Ratio of the Issuer and the
Restricted Subsidiaries is greater than immediately prior to
such acquisition or merger;
provided, however, that on a pro forma basis,
together with amounts incurred and outstanding pursuant to the
second proviso to the first paragraph of this covenant and
clauses (12) and (19), no more than $2,000.0 million
of Indebtedness, Disqualified Stock or Preferred Stock at any
one time outstanding and incurred by Restricted Subsidiaries
that are not Guarantors pursuant to this clause (14) shall
be incurred and outstanding;
(15) 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 that such Indebtedness is
extinguished within two Business Days of its incurrence;
(16) Indebtedness of the Issuer or any of its Restricted
Subsidiaries supported by a letter of credit issued pursuant to
any Credit Facilities, in a principal amount not in excess of
the stated amount of such letter of credit;
(17) (a) any guarantee by the Issuer or a Restricted
Subsidiary of Indebtedness or other obligations of any
Restricted Subsidiary, so long as the incurrence of such
Indebtedness incurred by such Restricted Subsidiary is permitted
under the terms of the Indenture, or (b) any guarantee by a
Restricted Subsidiary of Indebtedness of the Issuer; provided
that such guarantee is incurred in accordance with the
covenant described below under “— Limitation on
Guarantees of Indebtedness by Restricted Subsidiaries”;
(18) Indebtedness of Foreign Subsidiaries of the Issuer in
an amount not to exceed at any one time outstanding and together
with any other Indebtedness incurred under this clause (18)
7.5% of the Total Assets of the Foreign Subsidiaries (it being
understood that any Indebtedness incurred pursuant to this
clause (18) shall cease to be deemed incurred or
outstanding for purposes of this clause (18) but shall be
deemed incurred for the purposes of the first paragraph of this
covenant from and after the first date on which the Issuer or
such Restricted Subsidiaries could have incurred such
Indebtedness under the first paragraph of this covenant without
reliance on this clause (18));
(19) Indebtedness, Disqualified Stock or Preferred Stock of
a Restricted Subsidiary incurred to finance or assumed in
connection with an acquisition in a principal amount not to
exceed $200.0 million in the aggregate at any one time
outstanding together with all other Indebtedness, Disqualified
Stock and/or
Preferred Stock issued under this clause (19) (it being
understood that any Indebtedness, Disqualified Stock or
Preferred Stock incurred pursuant to this clause (19) shall
cease to be deemed incurred or outstanding for purposes of this
clause (19) but shall be deemed incurred for the purposes
of the first paragraph of this covenant from and after the first
date on which such Restricted Subsidiary could have incurred
such Indebtedness, Disqualified Stock or Preferred Stock under
the first paragraph of this covenant without reliance on this
clause (19)); provided, however, that on a pro
forma basis, together with amounts incurred and outstanding by
Restricted Subsidiaries that are not Guarantors pursuant to the
second proviso to the first paragraph of this covenant and
clauses (12) and (14), no more than $2,000.0 million
of Indebtedness would be incurred and outstanding by Restricted
Subsidiaries that are not Guarantors;
(20) Indebtedness of the Issuer or any of its Restricted
Subsidiaries consisting of (i) the financing of insurance
premiums or
(ii) take-or-pay
obligations contained in supply arrangements, in each case,
incurred in the ordinary course of business;
(21) Indebtedness consisting of Indebtedness issued by the
Issuer or any of its Restricted Subsidiaries to current or
former officers, directors and employees thereof, their
respective estates, spouses or former spouses, in each case to
finance the purchase or redemption of Equity Interests of the
Issuer or any direct or indirect parent company of the Issuer to
the extent described in clause (4) of the second paragraph
under the caption “— Limitation on Restricted
Payments”;
(22) Physician Support Obligations incurred by the Issuer
or any Restricted Subsidiary; and
(23) Indebtedness of the Issuer or any of its Restricted
Subsidiaries undertaken in connection with cash management and
related activities with respect to any Subsidiary or joint
venture operating one or more health care facilities, including,
without limitation, hospitals, ambulatory surgery centers,
outpatient diagnostic centers or imaging centers, in each case,
in the ordinary course of business.
For purposes of determining compliance with this covenant:
(1) in the event that an item of Indebtedness, Disqualified
Stock or Preferred Stock (or any portion thereof) meets the
criteria of more than one of the categories of permitted
Indebtedness, Disqualified Stock or Preferred Stock described in
clauses (1) through (23) above or is entitled to be
incurred pursuant to the first paragraph of this covenant, the
Issuer, in its sole discretion, will classify or reclassify such
item of Indebtedness, Disqualified Stock or Preferred Stock (or
any portion thereof) and will only be required to include the
amount and type of such Indebtedness, Disqualified Stock or
Preferred Stock in one of the above clauses; provided
that all Indebtedness outstanding under the Credit
Facilities on November 17, 2006 will be treated as incurred
on November 17, 2006 under clause (1) of the preceding
paragraph; and
(2) at the time of incurrence, the Issuer will be entitled
to divide and classify an item of Indebtedness in more than one
of the types of Indebtedness described in the first and second
paragraphs above.
Accrual of interest, the accretion of accreted value and the
payment of interest in the form of additional Indebtedness,
Disqualified Stock or Preferred Stock will not be deemed to be
an incurrence of Indebtedness, Disqualified Stock or Preferred
Stock for purposes of this covenant.
For purposes of determining compliance with any
U.S. dollar-denominated restriction on the incurrence of
Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was incurred, in the case
of term debt, or first committed, in the case of revolving
credit debt; provided that if such Indebtedness is
incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the
applicable U.S. dollar-denominated restriction to be
exceeded if calculated at the relevant currency exchange rate in
effect on the date of such refinancing, such
U.S. dollar-denominated restriction shall be deemed not to
have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being refinanced.
The principal amount of any Indebtedness incurred to refinance
other Indebtedness, if incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the
currency exchange rate applicable to the currencies in which
such respective Indebtedness is denominated that is in effect on
the date of such refinancing.
The Indenture provides that the Issuer will not, and will not
permit any Guarantor to, directly or indirectly, incur any
Indebtedness (including Acquired Indebtedness) that is
subordinated or junior in right of payment to any Indebtedness
of the Issuer or such Guarantor, as the case may be, unless such
Indebtedness is expressly subordinated in right of payment to
the Notes or such Guarantor’s Guarantee to the extent and
in the same manner as such Indebtedness is subordinated to other
Indebtedness of the Issuer or such Guarantor, as the case may be.
The Indenture does not treat (1) unsecured Indebtedness as
subordinated or junior to Secured Indebtedness merely because it
is unsecured or (2) Senior Indebtedness as subordinated or
junior to any other Senior Indebtedness merely because it has a
junior priority with respect to the same collateral.
Limitation
on Prepayment or Modification of Existing Notes
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly purchase, redeem,
defease or otherwise acquire or retire for value any of the
Existing Notes prior to the final maturity date thereof (as in
effect on the Issue Date); provided that the Issuer may:
(1) purchase, redeem, defease or otherwise acquire or
retire for value any of the Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
December 31, 2011; and
(2) purchase, redeem, defease or otherwise acquire or
retire for value any other Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
the maturity date of the Notes; provided that, in the
case of any such prepayment funded with the proceeds of the
issuance of Secured Indebtedness, at the time of incurrence and
after giving pro forma effect thereto and to the application of
the proceeds thereof, (x) the Consolidated Secured Debt
Ratio would be no greater than 5.25 to 1.0 and (y) the
Consolidated Leverage Ratio would be no greater than 7.0 to 1.0.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, amend the Existing Notes Indenture, or any
supplemental indenture in respect thereof, in any way to advance
the final maturity date or shorten the Weighted Average Life to
Maturity of any series of the Existing Notes such that any
Existing Notes with a maturity date following the maturity of
the Notes would have a maturity date on or prior to the date one
year following the maturity date of the Notes or which would
prohibit the making of the Guarantees or the creation of Liens
in favor of the Notes and the Guarantees on the Collateral.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, designate any additional subsidiaries as
“Restricted Subsidiaries” (as defined in the Existing
Notes Indenture) for purposes of the Existing Notes Indenture.
The Issuer will not, and will not permit any Guarantor to,
directly or indirectly, create, incur, assume or suffer to exist
any Lien (except Permitted Liens) that secures obligations under
any Indebtedness or any related Guarantee, on any asset or
property of the Issuer or any Guarantor, or any income or
profits therefrom, or assign or convey any right to receive
income therefrom, other than Liens securing Indebtedness that
are junior in priority to the Liens on such property, assets or
proceeds securing the Notes and related Guarantees.
The foregoing shall not apply to (a) Liens securing the
Notes and the related Guarantees, (b) Liens securing
Indebtedness permitted to be incurred under Credit Facilities,
including any letter of credit relating thereto, that was
permitted by the terms of the Indenture to be incurred pursuant
to clause (1) of the second paragraph under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”;
provided that, with respect to Liens securing Obligations
permitted under this subclause (b), the Notes and the related
Guarantees are secured by Liens on the assets subject to such
Liens (except any European Collateral) to the extent, with the
priority and subject to intercreditor arrangements, in each case
no less favorable to the Holders of the Notes than those
described under “Security” above and (c) Liens
which are pari passu in priority to the Liens securing
the Notes and related Guarantees and are incurred to secure
Obligations in respect of any Indebtedness permitted to be
incurred pursuant to the covenant described above under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”;
provided that, with respect to Liens securing Obligations
permitted under this subclause (c), at the time of incurrence
and after giving pro forma effect thereto, the ratio of
(1) the aggregate amount of Indebtedness secured by
property, assets or proceeds that secure the Notes and related
Guarantees that are subject to a Lien that is pari passu
or senior in priority to the Liens securing the Notes and
the related Guarantees incurred pursuant to subclause (b)
above, this subclause (c) and clause (6) of the
definition of “Permitted Liens” (other than Liens
securing Indebtedness incurred pursuant to clauses (4) and
(18) of the covenant described above under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”) to
(2) the Issuer’s EBITDA for the most recently ended
four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which
such event for which such calculation is being made shall occur,
in each case with such pro forma adjustments to Indebtedness and
EBITDA as are appropriate and consistent with the pro forma
adjustment provisions set forth in the definition of Fixed
Charge Coverage Ratio would be no greater than 4.25 to 1.0;
provided that, with respect to Liens securing Obligations
permitted under this subclause (c), the Notes and the related
Guarantees are secured by Liens on the assets subject to such
Liens (except any European Collateral) to the extent, with the
priority and subject to intercreditor arrangements, in each case
no less favorable to the Holders of the Notes than those
described under “Security” above.
Merger,
Consolidation or Sale of All or Substantially All
Assets
The Issuer may not consolidate or merge with or into or wind up
into (whether or not the Issuer is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or
more related transactions, to any Person unless:
(1) the Issuer is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if
other than the Issuer) or to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been
made is a corporation organized or existing under the laws of
the jurisdiction of organization of the Issuer or the laws of
the United States, any state thereof, the District of Columbia,
or any territory thereof (such Person, as the case may be, being
herein called the “Successor Company”);
(2) the Successor Company, if other than the Issuer,
expressly assumes all the obligations of the Issuer under the
Notes and the Security Documents pursuant to supplemental
indentures or other documents or instruments in form reasonably
satisfactory to the Trustee;
(3) immediately after such transaction, no Default exists;
(4) immediately after giving pro forma effect to such
transaction and any related financing transactions, as if such
transactions had occurred at the beginning of the applicable
four-quarter period,
(a) the Successor Company would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first sentence of
the covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock,” or
(b) the Fixed Charge Coverage Ratio for the Successor
Company, the Issuer and its Restricted Subsidiaries would be
greater than such ratio for the Issuer and its Restricted
Subsidiaries immediately prior to such transaction;
(5) each Guarantor, unless it is the other party to the
transactions described above, in which case clause (b) of
the second succeeding paragraph shall apply, shall have by
supplemental indenture confirmed that its Guarantee shall apply
to such Person’s obligations under the Indenture, the Notes
and the Registration Rights Agreement;
(6) the Collateral owned by the Successor Company will
(a) continue to constitute Collateral under the Indenture
and the Security Documents, (b) be subject to a Lien in
favor of the Junior Lien Collateral Agent for the benefit of the
Trustee and the Holders of the Notes and (c) not be subject
to any other Lien, other than Permitted Liens;
(7) to the extent any assets of the Person which is merged
or consolidated with or into the Successor Company are assets of
the type which would constitute Collateral under the Security
Documents, the Successor Company will take such action as may be
reasonably necessary to cause such property and assets to be
made subject to the Lien of the Security Documents in the manner
and to the extent required in the Indenture or any of the
Security Documents and shall take all reasonably necessary
action so that such Lien is perfected to the extent required by
the Security Documents; and
(8) the Issuer shall have delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with the Indenture and,
if a supplemental indenture or any supplement to any Security
Document is required in connection with such transaction, such
supplement shall comply with the applicable provisions of the
Indenture.
The Successor Company will succeed to, and be substituted for
the Issuer, as the case may be, under the Indenture, the
Guarantees and the Notes, as applicable. Notwithstanding the
foregoing clauses (3) and (4),
(1) any Restricted Subsidiary may consolidate with or merge
into or transfer all or part of its properties and assets to the
Issuer, and
(2) the Issuer may merge with an Affiliate of the Issuer,
as the case may be, solely for the purpose of reincorporating
the Issuer in a State of the United States or any state thereof,
the District of Columbia or any territory thereof so long as the
amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby.
Subject to certain limitations described in the Indenture
governing release of a Guarantee upon the sale, disposition or
transfer of a Guarantor, no Guarantor will, and the Issuer will
not permit any Guarantor to, consolidate or merge with or into
or wind up into (whether or not the Issuer or Guarantor is the
surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to
any Person unless:
(1) (a) such Guarantor is the surviving corporation or
the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) or to which such sale,
assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation, partnership, limited
partnership, limited liability corporation or trust organized or
existing under the laws of the jurisdiction of organization of
such Guarantor, as the case may be, or the laws of the United
States, any state thereof, the District
of Columbia, or any territory thereof (such Guarantor or such
Person, as the case may be, being herein called the
“Successor Person”);
(b) the Successor Person, if other than such Guarantor,
expressly assumes all the obligations of such Guarantor under
the Indenture and such Guarantor’s related Guarantee
pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;
(c) immediately after such transaction, no Default
exists; and
(d) the Issuer shall have delivered to the Trustee an
Officer’s Certificate, each stating that such
consolidation, merger or transfer and such supplemental
indentures, if any, comply with the Indenture; or
(2) the transaction is made in compliance with the covenant
described under “Repurchase at the Option of
Holders — Asset Sales.”
Subject to certain limitations described in the Indenture, the
Successor Person will succeed to, and be substituted for, such
Guarantor under the Indenture and such Guarantor’s
Guarantee. Notwithstanding the foregoing, any Guarantor may
(i) merge into or transfer all or part of its properties
and assets to another Guarantor or the Issuer, (ii) merge
with an Affiliate of the Company solely for the purpose of
reincorporating the Guarantor in the United States, any state
thereof, the District of Columbia or any territory thereof or
(iii) convert into a corporation, partnership, limited
partnership, limited liability corporation or trust organized or
existing under the laws of the jurisdiction of organization of
such Guarantor.
Transactions
with Affiliates
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate
of the Issuer (each of the foregoing, an “Affiliate
Transaction”) involving aggregate payments or
consideration in excess of $40.0 million, unless:
(1) such Affiliate Transaction is on terms that are not
materially less favorable to the Issuer or its relevant
Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Issuer or such Restricted
Subsidiary with an unrelated Person on an arm’s-length
basis; and
(2) the Issuer delivers to the Trustee with respect to any
Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in
excess of $80.0 million, a resolution adopted by the
majority of the board of directors of the Issuer approving such
Affiliate Transaction and set forth in an Officer’s
Certificate certifying that such Affiliate Transaction complies
with clause (1) above.
The foregoing provisions will not apply to the following:
(1) transactions between or among the Issuer or any of its
Restricted Subsidiaries;
(2) Restricted Payments permitted by the provisions of the
Indenture described above under the covenant
“— Limitation on Restricted Payments” and
the definition of “Permitted Investments”;
(3) the payment of management, consulting, monitoring and
advisory fees and related expenses to the Investors and the
Frist Entities pursuant to the Sponsor Management Agreement
(plus any unpaid management, consulting, monitoring and advisory
fees and related expenses accrued in any prior year) and the
termination fees pursuant to the Sponsor Management Agreement,
in each case as in effect on the Issue Date, or any amendment
thereto (so long as any such amendment is not disadvantageous in
the good faith judgment of the board of directors of the Issuer
to the Holders when taken as a whole as compared to the Sponsor
Management Agreement in effect on the Issue Date);
(4) the payment of reasonable and customary fees paid to,
and indemnities provided for the benefit of, officers,
directors, employees or consultants of Issuer, any of its direct
or indirect parent companies or any of its Restricted
Subsidiaries;
(5) transactions in which the Issuer or any of its
Restricted Subsidiaries, as the case may be, delivers to the
Trustee a letter from an Independent Financial Advisor stating
that such transaction is fair to the Issuer or such Restricted
Subsidiary from a financial point of view or stating that the
terms are not materially less favorable to the Issuer or its
relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Issuer or such
Restricted Subsidiary with an unrelated Person on an
arm’s-length basis;
(6) any agreement as in effect as of the Issue Date, or any
amendment thereto (so long as any such amendment is not
disadvantageous to the Holders when taken as a whole as compared
to the applicable agreement as in effect on the Issue Date);
(7) the existence of, or the performance by the Issuer or
any of its Restricted Subsidiaries of its obligations under the
terms of, any stockholders agreement (including any registration
rights agreement or purchase agreement related thereto) to which
it is a party as of the Issue Date and any similar agreements
which it may enter into thereafter; provided,
however, that the existence of, or the performance by the
Issuer or any of its Restricted Subsidiaries of obligations
under any future amendment to any such existing agreement or
under any similar agreement entered into after the Issue Date
shall only be permitted by this clause (7) to the extent
that the terms of any such amendment or new agreement are not
otherwise disadvantageous to the Holders when taken as a whole;
(8) reserved;
(9) transactions with customers, clients, suppliers, or
purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the
terms of the Indenture which are fair to the Issuer and its
Restricted Subsidiaries, in the reasonable determination of the
board of directors of the Issuer or the senior management
thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated
party;
(10) the issuance of Equity Interests (other than
Disqualified Stock) of the Issuer to any Permitted Holder or to
any director, officer, employee or consultant;
(11) sales of accounts receivable, or participations
therein, in connection with the ABL Facility and any Receivables
Facility;
(12) payments by the Issuer or any of its Restricted
Subsidiaries to any of the Investors made for any financial
advisory, financing, underwriting or placement services or in
respect of other investment banking activities, including,
without limitation, in connection with acquisitions or
divestitures, which payments are approved by a majority of the
board of directors of the Issuer in good faith;
(13) payments or loans (or cancellation of loans) to
employees or consultants of the Issuer, any of its direct or
indirect parent companies or any of its Restricted Subsidiaries
and employment agreements, stock option plans and other similar
arrangements with such employees or consultants which, in each
case, are approved by the Issuer in good faith;
(14) investments by the Investors or the Frist Entities in
securities of the Issuer or any of its Restricted Subsidiaries
so long as (i) the investment is being offered generally to
other investors on the same or more favorable terms and
(ii) the investment constitutes less than 5% of the
proposed or outstanding issue amount of such class of securities;
(15) payments to or from, and transactions with, any joint
venture owning or operating one or more health care facilities,
including, without limitation, hospitals, ambulatory surgery
centers, outpatient diagnostic centers or imaging centers, in
each case in the ordinary course of business (including, without
limitation, any cash management activities related
thereto); and
(16) payments by the Issuer (and any direct or indirect
parent thereof) and its Subsidiaries pursuant to tax sharing
agreements among the Issuer (and any such parent) and its
Subsidiaries on customary terms to the extent attributable to
the ownership or operation of the Issuer and its Subsidiaries;
provided that in each case the amount of such payments in
any fiscal year does not exceed the amount that the Issuer, its
Restricted Subsidiaries and its Unrestricted Subsidiaries (to
the extent of amounts received from Unrestricted Subsidiaries)
would be required to pay in respect of foreign, federal, state
and local taxes for such fiscal year were the Issuer and its
Restricted Subsidiaries (to the extent described above) to pay
such taxes separately from any such parent entity.
Dividend
and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Issuer will not, and will not permit any of its Restricted
Subsidiaries that are not Guarantors to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or consensual restriction on the
ability of any such Restricted Subsidiary to:
(1) (a) pay dividends or make any other distributions
to the Issuer or any of its Restricted Subsidiaries on its
Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or
(b) pay any Indebtedness owed to the Issuer or any of its
Restricted Subsidiaries;
(2) make loans or advances to the Issuer or any of its
Restricted Subsidiaries; or
(3) sell, lease or transfer any of its properties or assets
to the Issuer or any of its Restricted Subsidiaries,
except (in each case) for such encumbrances or restrictions
existing under or by reason of:
(a) contractual encumbrances or restrictions in effect on
the Issue Date, including pursuant to the Senior Credit
Facilities and the related documentation, the Existing Notes
Indenture and the related documentation and the Existing Second
Priority Notes Indentures and the related documentation;
(b) the Indenture and the Notes;
(c) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the
nature discussed in clause (3) above on the property so
acquired;
(d) applicable law or any applicable rule, regulation or
order;
(e) any agreement or other instrument of a Person acquired
by the Issuer or any Restricted Subsidiary in existence at the
time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other
than the Person and its Subsidiaries, or the property or assets
of the Person and its Subsidiaries, so acquired;
(f) contracts for the sale of assets, including customary
restrictions with respect to a Subsidiary of the Issuer pursuant
to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary;
(g) Secured Indebtedness that limits the right of the
debtor to dispose of the assets securing such Indebtedness that
is otherwise permitted to be incurred pursuant to the covenants
described under “— Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” and “— Liens”;
(h) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the
ordinary course of business;
(i) other Indebtedness, Disqualified Stock or Preferred
Stock of Foreign Subsidiaries permitted to be incurred
subsequent to the Issue Date pursuant to the provisions of the
covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”;
(j) customary provisions in joint venture agreements and
other agreements or arrangements relating solely to such joint
venture;
(k) customary provisions contained in leases or licenses of
intellectual property and other agreements, in each case entered
into in the ordinary course of business;
(l) any encumbrances or restrictions of the type referred
to in clauses (1), (2) and (3) above imposed by any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the
contracts, instruments or obligations referred to in
clauses (a) through (k) above; provided that
such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
are, in the good faith judgment of the Issuer, no more
restrictive with respect to such encumbrance and other
restrictions taken as a whole than those prior to such
amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing; and
(m) restrictions created in connection with any Receivables
Facility that, in the good faith determination of the Issuer,
are necessary or advisable to effect the transactions
contemplated under such Receivables Facility.
Limitation
on Guarantees of Indebtedness by Restricted
Subsidiaries
The Issuer will not permit any of its Wholly-Owned Subsidiaries
that are Restricted Subsidiaries (and non-Wholly-Owned
Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee
other capital markets debt securities of the Issuer or any
Guarantor), other than a Guarantor, a Foreign Subsidiary or a
Receivables Subsidiary, to guarantee the payment of any
Indebtedness of the Issuer or any other Guarantor unless:
(1) such Restricted Subsidiary within 30 days executes
and delivers a supplemental indenture to the Indenture providing
for a Guarantee by such Restricted Subsidiary, except that with
respect to a guarantee of Indebtedness of the Issuer or any
Guarantor:
(a) if the Notes or such Guarantor’s Guarantee is
subordinated in right of payment to such Indebtedness, the
Guarantee under the supplemental indenture shall be subordinated
to such Restricted Subsidiary’s guarantee with respect to
such Indebtedness substantially to the same extent as the Notes
are subordinated to such Indebtedness; and
(b) if such Indebtedness is by its express terms
subordinated in right of payment to the Notes or such
Guarantor’s Guarantee, any such guarantee by such
Restricted Subsidiary with respect to such Indebtedness shall be
subordinated in right of payment to such Guarantee substantially
to the same extent as such Indebtedness is subordinated to the
Notes; and
(2) such Restricted Subsidiary waives, and will not in any
manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other
rights against the Issuer or any other Restricted Subsidiary as
a result of any payment by such Restricted Subsidiary under its
Guarantee;
provided that this covenant shall not be applicable to
(i) any guarantee of any Restricted Subsidiary that existed
at the time such Person became a Restricted Subsidiary and was
not incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary and (ii) guarantees
of the ABL Facility by the ABL Financing Entities or of any
Receivables Facility by any Receivables Subsidiary.
Reports
and Other Information
Notwithstanding that the Issuer may not be subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act or otherwise report on an annual and quarterly
basis on forms provided for such annual and quarterly reporting
pursuant to rules and regulations promulgated by the SEC, the
Indenture requires
the Issuer to file with the SEC (and make available to the
Trustee and Holders of the Notes (without exhibits), without
cost to any Holder, within 15 days after it files them with
the SEC) from and after the Issue Date,
(1) within 90 days (or any other time period then in
effect under the rules and regulations of the Exchange Act with
respect to the filing of a
Form 10-K
by a non-accelerated filer) after the end of each fiscal year,
annual reports on
Form 10-K,
or any successor or comparable form, containing the information
required to be contained therein, or required in such successor
or comparable form;
(2) within 45 days after the end of each of the first
three fiscal quarters of each fiscal year, reports on
Form 10-Q
containing all quarterly information that would be required to
be contained in Form
10-Q, or any
successor or comparable form;
(3) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on
Form 8-K,
or any successor or comparable form; and
(4) any other information, documents and other reports
which the Issuer would be required to file with the SEC if it
were subject to Section 13 or 15(d) of the Exchange Act;
in each case in a manner that complies in all material respects
with the requirements specified in such form; provided
that the Issuer shall not be so obligated to file such
reports with the SEC if the SEC does not permit such filing, in
which event the Issuer will make available such information to
prospective purchasers of Notes, in addition to providing such
information to the Trustee and the Holders of the Notes, in each
case within 15 days after the time the Issuer would be
required to file such information with the SEC if it were
subject to Section 13 or 15(d) of the Exchange Act. In
addition, to the extent not satisfied by the foregoing, the
Issuer will agree that, for so long as any Notes are
outstanding, it will furnish to Holders and to securities
analysts and prospective investors, upon their request, the
information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
In the event that any direct or indirect parent company of the
Issuer becomes a Guarantor of the Notes, the Indenture permits
the Issuer to satisfy its obligations in this covenant with
respect to financial information relating to the Issuer by
furnishing financial information relating to such parent;
provided that the same is accompanied by consolidating
information that explains in reasonable detail the differences
between the information relating to such parent, on the one
hand, and the information relating to the Issuer and its
Restricted Subsidiaries on a standalone basis, on the other hand.
Notwithstanding the foregoing, such requirements shall be deemed
satisfied prior to the commencement of the exchange offer or the
effectiveness of the shelf registration statement described in
the Registration Rights Agreement (1) by the filing with
the SEC of the exchange offer registration statement or shelf
registration statement (or any other similar registration
statement), and any amendments thereto, with such financial
information that satisfies
Regulation S-X,
subject to exceptions consistent with the presentation of
financial information in the Offering Memorandum, to the extent
filed within the times specified above, or (2) by posting
reports that would be required to be filed substantially in the
form required by the SEC on the Company’s website (or that
of any of its parent companies) or providing such reports to the
Trustee within 15 days after the time the Issuer would be
required to file such information with the SEC if it were
subject to Section 13 or 15(d) of the Exchange Act, the
financial information (including a “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” section) that would be required to be included
in such reports, subject to exceptions consistent with the
presentation of financial information in the Offering
Memorandum, to the extent filed within the times specified above.
Events of
Default and Remedies
The Indenture provides that each of the following is an
“Event of Default”:
(1) default in payment when due and payable, upon
redemption, acceleration or otherwise, of principal of, or
premium, if any, on the Notes;
(2) default for 30 days or more in the payment when
due of interest or Additional Interest on or with respect to the
Notes;
(3) failure by the Issuer or any Guarantor for 60 days
after receipt of written notice given by the Trustee or the
Holders of not less than 30% in principal amount of the Notes to
comply with any of its obligations, covenants or agreements
(other than a default referred to in clauses (1) and
(2) above) contained in the Indenture or the Notes;
(4) default under any mortgage, indenture or instrument
under which there is issued or by which there is secured or
evidenced any Indebtedness for money borrowed by the Issuer or
any of its Restricted Subsidiaries or the payment of which is
guaranteed by the Issuer or any of its Restricted Subsidiaries,
other than Indebtedness owed to the Issuer or a Restricted
Subsidiary, whether such Indebtedness or guarantee now exists or
is created after the issuance of the Notes, if both:
(a) such default either results from the failure to pay any
principal of such Indebtedness at its stated final maturity
(after giving effect to any applicable grace periods) or relates
to an obligation other than the obligation to pay principal of
any such Indebtedness at its stated final maturity and results
in the holder or holders of such Indebtedness causing such
Indebtedness to become due prior to its stated maturity; and
(b) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in
default for failure to pay principal at stated final maturity
(after giving effect to any applicable grace periods), or the
maturity of which has been so accelerated, aggregate
$200.0 million or more at any one time outstanding;
(5) failure by the Issuer or any Significant Subsidiary to
pay final judgments aggregating in excess of
$200.0 million, which final judgments remain unpaid,
undischarged and unstayed for a period of more than 60 days
after such judgment becomes final, and in the event such
judgment is covered by insurance, an enforcement proceeding has
been commenced by any creditor upon such judgment or decree
which is not promptly stayed;
(6) certain events of bankruptcy or insolvency with respect
to the Issuer or any Significant Subsidiary;
(7) the Guarantee of any Significant Subsidiary shall for
any reason cease to be in full force and effect or be declared
null and void or any responsible officer of any Guarantor that
is a Significant Subsidiary, as the case may be, denies that it
has any further liability under its Guarantee or gives notice to
such effect, other than by reason of the termination of the
Indenture or the release of any such Guarantee in accordance
with the Indenture; or
(8) with respect to any Collateral having a fair market
value in excess of $200 million, individually or in the
aggregate, (a) the security interest under the Security
Documents, at any time, ceases to be in full force and effect
for any reason other than in accordance with the terms of the
Indenture, the Security Documents and the Intercreditor
Agreements, (b) any security interest created thereunder or
under the Indenture is declared invalid or unenforceable by a
court of competent jurisdiction or (c) the Issuer or any
Guarantor asserts, in any pleading in any court of competent
jurisdiction, that any such security interest is invalid or
unenforceable.
If any Event of Default (other than of a type specified in
clause (6) above) occurs and is continuing under the
Indenture, the Trustee or the Holders of at least 30% in
principal amount of the then total outstanding Notes may declare
the principal, premium, if any, interest and any other monetary
obligations on all the then outstanding Notes to be due and
payable immediately.
Upon the effectiveness of such declaration, such principal and
interest will be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising under
clause (6) of the first paragraph of this section, all
outstanding Notes will become due and payable without further
action or notice. The Indenture will provide that the Trustee
may withhold from the Holders notice of any continuing Default,
except a Default relating to the payment of principal, premium,
if any, or interest, if it determines that withholding notice is
in their interest. In addition, the Trustee shall have no
obligation to accelerate the Notes if in the best judgment of
the Trustee acceleration is not in the best interest of the
Holders of the Notes.
The Indenture provides that the Holders of a majority in
aggregate principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default and its consequences under the
Indenture except a continuing Default in the payment of interest
on, premium, if any, or the principal of any Note held by a
non-consenting Holder. In the event of any Event of Default
specified in clause (4) above, such Event of Default and
all consequences thereof (excluding any resulting payment
default, other than as a result of acceleration of the Notes)
shall be annulled, waived and rescinded, automatically and
without any action by the Trustee or the Holders, if within
20 days after such Event of Default arose:
(1) the Indebtedness or guarantee that is the basis for
such Event of Default has been discharged; or
(2) holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise
to such Event of Default; or
(3) the default that is the basis for such Event of Default
has been cured.
Subject to the provisions of the Indenture relating to the
duties of the Trustee thereunder, in case an Event of Default
occurs and is continuing, the Trustee will be under no
obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders of
the Notes unless the Holders have offered to the Trustee
indemnity or security reasonably satisfactory to it against any
loss, liability or expense. Except to enforce the right to
receive payment of principal, premium, if any, or interest when
due, no Holder of a Note may pursue any remedy with respect to
the Indenture or the Notes unless:
(1) such Holder has previously given the Trustee notice
that an Event of Default is continuing;
(2) Holders of at least 30% in principal amount of the
total outstanding Notes have requested the Trustee to pursue the
remedy;
(3) Holders of the Notes have offered the Trustee
reasonable security or indemnity against any loss, liability or
expense;
(4) the Trustee has not complied with such request within
60 days after the receipt thereof and the offer of security
or indemnity; and
(5) Holders of a majority in principal amount of the total
outstanding Notes have not given the Trustee a direction
inconsistent with such request within such
60-day
period.
Subject to certain restrictions, under the Indenture the Holders
of a majority in principal amount of the total outstanding Notes
are given the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the
Trustee determines is unduly prejudicial to the rights of any
other Holder of a Note or that would involve the Trustee in
personal liability.
The Indenture provides that the Issuer is required to deliver to
the Trustee annually a statement regarding compliance with the
Indenture, and the Issuer is required, within five Business
Days, upon becoming aware of any Default, to deliver to the
Trustee a statement specifying such Default.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of
the Issuer or any Guarantor or any of their parent companies
(other than the Issuer and the Guarantors) shall have any
liability for any obligations of the Issuer or the Guarantors
under the Notes, the Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of such obligations
or their creation. Each Holder by accepting the Notes waives and
releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes. Such waiver may not
be effective to waive liabilities under the federal securities
laws, and it is the view of the SEC that such a waiver is
against public policy.
The obligations of the Issuer and the Guarantors under the
Indenture will terminate (other than certain obligations) and
will be released upon payment in full of all of the Notes. The
Issuer may, at its option and at any time, elect to have all of
its obligations discharged with respect to the Notes and have
the Issuer’s and each Guarantor’s obligation
discharged with respect to its Guarantee (“Legal
Defeasance”) and cure all then existing Events of
Default except for:
(1) the rights of Holders of the Notes to receive payments
in respect of the principal of, premium, if any, and interest on
the Notes when such payments are due solely out of the trust
created pursuant to the Indenture;
(2) the Issuer’s obligations with respect to Notes
concerning issuing temporary Notes, registration of such Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance
of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of
the Trustee, and the Issuer’s obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Issuer may, at its option and at any time,
elect to have its obligations and those of each Guarantor
released with respect to certain covenants that are described in
the Indenture (“Covenant Defeasance”) and
thereafter any omission to comply with such obligations shall
not constitute a Default with respect to the Notes. In the event
Covenant Defeasance occurs, certain events (not including
bankruptcy, receivership, rehabilitation and insolvency events
pertaining to the Issuer) described under “Events of
Default and Remedies” will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant
Defeasance with respect to the Notes:
(1) the Issuer must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders of the Notes, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and
interest due on the Notes on the stated maturity date or on the
redemption date, as the case may be, of such principal, premium,
if any, or interest on such Notes, and the Issuer must specify
whether such Notes are being defeased to maturity or to a
particular redemption date;
(2) in the case of Legal Defeasance, the Issuer shall have
delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions,
(a) the Issuer has received from, or there has been
published by, the United States Internal Revenue Service a
ruling, or
(b) since the issuance of the Notes, there has been a
change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, subject to customary
assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax
purposes, as applicable, as a result of such Legal Defeasance
and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Issuer shall
have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax
purposes as a result of such Covenant Defeasance and will be
subject to such 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;
(4) no Default (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith) shall have
occurred and be continuing on the date of such deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under the Senior Credit Facilities or any other material
agreement or instrument (other than the Indenture) to which the
Issuer or any Guarantor is a party or by which the Issuer or any
Guarantor is bound (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith);
(6) the Issuer shall have delivered to the Trustee an
Opinion of Counsel to the effect that, as of the date of such
opinion and subject to customary assumptions and exclusions
following the deposit, the trust funds will not be subject to
the effect of Section 547 of Title 11 of the United
States Code;
(7) the Issuer shall have delivered to the Trustee an
Officer’s Certificate stating that the deposit was not made
by the Issuer with the intent of defeating, hindering, delaying
or defrauding any creditors of the Issuer or any Guarantor or
others; and
(8) the Issuer shall have delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel (which
Opinion of Counsel may be subject to customary assumptions and
exclusions) each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with.
Satisfaction
and Discharge
The Indenture will be discharged and will cease to be of further
effect as to all Notes, when either:
(1) all Notes theretofore authenticated and delivered,
except lost, stolen or destroyed Notes which have been replaced
or paid and Notes for whose payment money has theretofore been
deposited in trust, have been delivered to the Trustee for
cancellation; or
(2) (a) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable by reason
of the making of a notice of redemption or otherwise, will
become due and payable within one year or may be called for
redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Issuer, and the
Issuer or any Guarantor has irrevocably deposited or caused to
be deposited with the Trustee as trust funds in trust solely for
the benefit of the Holders of the Notes, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest to pay and
discharge the entire indebtedness on the Notes not theretofore
delivered to the Trustee for cancellation for principal,
premium, if any, and accrued interest to the date of maturity or
redemption;
(b) no Default (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith) with
respect to the Indenture or the Notes shall have occurred and be
continuing on the date of such deposit or shall occur as a
result of such deposit, and such deposit will not result in a
breach or violation of, or constitute a default under, the
Senior Credit Facilities or any other material agreement or
instrument (other than the Indenture) to which the Issuer or any
Guarantor is a party or by which the Issuer or any Guarantor is
bound (other than that resulting from borrowing funds to be
applied to make such deposit and any similar and simultaneous
deposit relating to other Indebtedness and, in each case, the
granting of Liens in connection therewith);
(c) the Issuer has paid or caused to be paid all sums
payable by it under the Indenture; and
(d) the Issuer has delivered irrevocable instructions to
the Trustee to apply the deposited money toward the payment of
the Notes at maturity or the redemption date, as the case may be.
In addition, the Issuer must deliver an Officer’s
Certificate and an Opinion of Counsel to the Trustee stating
that all conditions precedent to satisfaction and discharge have
been satisfied.
Amendment,
Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the
Indenture, any Guarantee, any Security Document and the Notes
may be amended or supplemented with the consent of the Holders
of at least a majority in principal amount of the Notes then
outstanding, including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes, and
any existing Default or compliance with any provision of the
Indenture, the Notes issued thereunder, any Guarantee or the
Security Documents may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Notes,
other than Notes beneficially owned by the Issuer or its
Affiliates (including consents obtained in connection with a
purchase of or tender offer or exchange offer for the Notes).
The Indenture provides that, without the consent of each
affected Holder of Notes, an amendment or waiver may not, with
respect to any Notes held by a non-consenting Holder:
(1) reduce the principal amount of such Notes whose Holders
must consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed final
maturity of any such Note or alter or waive the provisions with
respect to the redemption of such Notes (other than provisions
relating to the covenants described above under the caption
“Repurchase at the Option of Holders”);
(3) reduce the rate of or change the time for payment of
interest on any Note;
(4) waive a Default in the payment of principal of or
premium, if any, or interest on the Notes, except a rescission
of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver
of the payment default that resulted from such acceleration, or
in respect of a covenant or provision contained in the Indenture
or any Guarantee which cannot be amended or modified without the
consent of all Holders;
(5) make any Note payable in money other than that stated
therein;
(6) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of or premium, if any, or interest
on the Notes;
(7) make any change in these amendment and waiver
provisions;
(8) impair the right of any Holder to receive payment of
principal of, or interest on such Holder’s Notes 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 Notes;
(9) make any change to or modify the ranking of the Notes
or the subordination of the Liens with respect to the Notes that
would adversely affect the Holders; or
(10) except as expressly permitted by the Indenture, modify
the Guarantees of any Significant Subsidiary in any manner
adverse to the Holders of the Notes.
In addition, without the consent of at least 75% in aggregate
principal amount of Notes then outstanding, an amendment,
supplement or waiver may not:
(1) modify any Security Document or the provisions of the
Indenture dealing with the Security Documents or application of
trust moneys, or otherwise release any Collateral, in any manner
materially adverse to the Holders other than in accordance with
the Indenture, the Security Documents and the Intercreditor
Agreements; or
(2) modify any Intercreditor Agreement in any manner
materially adverse to the Holders other than in accordance with
the Indenture, the Security Documents and the Intercreditor
Agreements.
Notwithstanding the foregoing, the Issuer, any Guarantor (with
respect to a Guarantee or the Indenture to which it is a party)
and the Trustee may amend or supplement the Indenture, any
Security Document and any Guarantee or Notes without the consent
of any Holder;
(1) to cure any ambiguity, omission, mistake, defect or
inconsistency;
(2) to provide for uncertificated Notes of such series in
addition to or in place of certificated Notes;
(3) to comply with the covenant relating to mergers,
consolidations and sales of assets;
(4) to provide for the assumption of the Issuer’s or
any Guarantor’s obligations to the Holders;
(5) to make any change that would provide any additional
rights or benefits to the Holders or that does not adversely
affect the legal rights under the Indenture of any such Holder;
(6) to add covenants for the benefit of the Holders or to
surrender any right or power conferred upon the Issuer or any
Guarantor;
(7) to comply with requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the
Trust Indenture Act;
(8) to evidence and provide for the acceptance and
appointment under the Indenture of a successor Trustee
thereunder pursuant to the requirements thereof;
(9) to provide for the issuance of Exchange Notes or
private exchange notes, which are identical to Exchange Notes
except that they are not freely transferable;
(10) to add a Guarantor under the Indenture;
(11) to conform the text of the Indenture, Security
Documents, Guarantees or the Notes to any provision of the
“Description of Notes” section of the Offering
Memorandum to the extent that such provision in such
“Description of Notes” section was intended to be a
verbatim recitation of a provision of the Indenture, Security
Documents, Guarantee or Notes;
(12) to make any amendment to the provisions of the
Indenture relating to the transfer and legending of Notes as
permitted by the Indenture, including, without limitation to
facilitate the issuance and administration of the Notes;
provided, however, that (i) compliance with
the Indenture as so amended would not result in Notes being
transferred in violation of the Securities Act or any applicable
securities law and (ii) such amendment does not materially
and adversely affect the rights of Holders to transfer Notes;
(13) to mortgage, pledge, hypothecate or grant any other
Lien in favor of the Trustee for the benefit of the Holders of
the Notes, as additional security for the payment and
performance of all or any portion of the Obligations, in any
property or assets, including any which are required to be
mortgaged, pledged or hypothecated, or in which a Lien is
required to be granted to or for the benefit of the Trustee or
the Collateral Agent pursuant to the Indenture, any of the
Security Documents or otherwise;
(14) to release Collateral from the Lien of the Indenture
and the Security Documents when permitted or required by the
Security Documents or the Indenture; or
(15) to add Additional First Lien Secured Parties or
additional ABL Secured Parties, to any Security Documents.
The consent of the Holders is not necessary under the Indenture
to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the
proposed amendment.
Notices
Notices given by publication will be deemed given on the first
date on which publication is made and notices given by
first-class mail, postage prepaid, will be deemed given five
calendar days after mailing.
The Indenture contains certain limitations on the rights of the
Trustee thereunder, should it become a creditor of the Issuer,
to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in
other transactions; however, if it acquires any conflicting
interest it must eliminate such conflict within 90 days,
apply to the SEC for permission to continue or resign.
The Indenture provides that the Holders of a majority in
principal amount of the outstanding Notes have the right to
direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event
of Default shall occur (which shall not be cured), the Trustee
will be required, in the exercise of its power, to use the
degree of care of a prudent person in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under
no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of the Notes, unless such
Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
Governing
Law
The Indenture, the Notes and any Guarantee are governed by and
construed in accordance with the laws of the State of New York.
Certain
Definitions
Set forth below are certain defined terms used in the Indenture.
For purposes of the Indenture, unless otherwise specifically
indicated, the term “consolidated” with respect
to any Person refers to such Person on a consolidated basis in
accordance with GAAP, but excluding from such consolidation any
Unrestricted Subsidiary as if such Unrestricted Subsidiary were
not an Affiliate of such Person.
“2006 Second Priority Notes”means the
$1,000,000,000 aggregate principal amount of
91/8% Senior
Secured Notes due 2014, the $3,200,000,000 aggregate principal
amount of
91/4% Senior
Secured Notes due 2016 and the $1,500,000,000
95/8%/103/8% Senior
Secured Toggle Notes due 2016, each issued by the Issuer under
the 2006 Second Priority Notes Indenture.
“2006 Second Priority Notes Indenture” means
that certain Indenture, dated as of November 17, 2006,
among the Issuer, the guarantors named on Schedule I
thereto and The Bank of New York, as trustee.
“2009 Second Priority Notes”means the
$310,000,000 aggregate principal amount of
97/8% Senior
Secured Notes due 2017, issued by the Issuer under the 2009
Second Priority Notes Indenture.
“2009 Second Priority Notes Indenture” means
that certain Indenture, dated as of February 19, 2009,
among the Issuer, the guarantors named on Schedule I
thereto, The Bank of New York Mellon Trust Company, N.A.,
as trustee, and The Bank of New York Mellon, as collateral agent.
“ABL Facility” means the Amended and Restated
Asset-Based Revolving Credit Agreement, dated as of
June 20, 2007, by and among the Issuer, the lenders party
thereto in their capacities as lenders thereunder and Bank of
America, N.A., as Administrative Agent, as amended as of
March 2, 2009, including any guarantees, collateral
documents, instruments and agreements executed in connection
therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements, refundings or refinancings
thereof and any indentures or credit facilities or commercial
paper facilities with banks or other institutional lenders or
investors that replace, refund or refinance any part of the
loans, notes, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing
facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof (provided that
such increase in borrowings is permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”
above).
“ABL Facility Cap” means an amount equal to the
greater of (x) $2,000.0 million and (y) 75% of
the consolidated accounts receivable of the Issuer and its
subsidiaries determined in accordance with GAAP.
“ABL Financing Entity” means the Issuer and
certain of its subsidiaries from time to time named as borrowers
or guarantors under the ABL Facility.
“ABL Obligations” means Obligations under the
ABL Facility.
“ABL Secured Parties” means each of
(i) the ABL Collateral Agent on behalf of itself and the
lenders under the ABL Facility and lenders or their affiliates
counterparty to related Hedging Obligations and (ii) each
other holder of ABL Obligations.
“Acquired Indebtedness” means, with respect to
any specified Person,
(1) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Restricted
Subsidiary of such specified Person, including Indebtedness
incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Restricted Subsidiary
of such specified Person, and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
“Additional First Lien Obligations” shall have
the meaning given such term by the U.S. Security Agreement
and shall include the Notes Obligations.
“Additional First Lien Secured Party” means the
holders of any Additional First Lien Obligations, including the
Holders, and any Authorized Representative with respect thereto,
including the Trustee.
“Additional General Intercreditor Agreement”
has the meaning set forth under “Security —
Additional General Intercreditor Agreement.”
“Additional Interest” means all additional
interest then owing pursuant to the Registration Rights
Agreement.
“Additional Receivables Intercreditor
Agreement” has the meaning set forth under
“Security — Additional Receivables Intercreditor
Agreement.”
“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 purposes of this definition, “control”
(including, with correlative meanings, the terms
“controlling,”“controlled by” and
“under common control with”), as used with respect to
any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise.
“Applicable Authorized Representative”means,
with respect to any Common Collateral, (i) until the
earlier of (x) the Discharge of General Credit Facility
Obligations and (y) the Non-Controlling Authorized
Representative Enforcement Date, the administrative agent under
the General Credit Facility and (ii) from and after the
earlier of (x) the Discharge of General Credit Facility
Obligations and (y) the Non-Controlling Authorized
Representative Enforcement Date, the Major Non-Controlling
Authorized Representative.
“Applicable Premium” means, with respect to any
Note on any Redemption Date, the greater of:
(1) 1.0% of the principal amount of such Note; and
(2) the excess, if any, of (a) the present value at
such Redemption Date of (i) the redemption price of such
Note at April 15, 2014 (such redemption price being set
forth in the tables appearing above under the caption
“Optional Redemption”), plus (ii) all required
interest payments due on such Note through April 15, 2014
(excluding accrued but unpaid interest to the
Redemption Date), computed using a discount rate equal to
the Treasury Rate as of such Redemption Date plus
50 basis points; over (b) the principal amount of such
Note.
(1) the sale, conveyance, transfer or other disposition,
whether in a single transaction or a series of related
transactions, of property or assets (including by way of a Sale
and Lease-Back Transaction) of the Issuer or any of its
Restricted Subsidiaries (each referred to in this definition as
a “disposition”); or
(2) the issuance or sale of Equity Interests of any
Restricted Subsidiary, whether in a single transaction or a
series of related transactions (other than Preferred Stock of
Restricted Subsidiaries issued in compliance with the covenant
described under “Certain Covenants — Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”);
in each case, other than:
(a) any disposition of Cash Equivalents or Investment Grade
Securities or obsolete or worn out equipment in the ordinary
course of business or any disposition of inventory or goods (or
other assets) held for sale in the ordinary course of business;
(b) the disposition of all or substantially all of the
assets of the Issuer in a manner permitted pursuant to the
provisions described above under “Certain
Covenants — Merger, Consolidation or Sale of All or
Substantially All Assets” or any disposition that
constitutes a Change of Control pursuant to the Indenture;
(c) the making of any Restricted Payment or Permitted
Investment that is permitted to be made, and is made, under the
covenant described above under “Certain
Covenants — Limitation on Restricted Payments”;
(d) any disposition of assets or issuance or sale of Equity
Interests of any Restricted Subsidiary in any transaction or
series of related transactions with an aggregate fair market
value of less than $100.0 million;
(e) any disposition of property or assets or issuance of
securities by a Restricted Subsidiary of the Issuer to the
Issuer or by the Issuer or a Restricted Subsidiary of the Issuer
to another Restricted Subsidiary of the Issuer;
(f) to the extent allowable under Section 1031 of the
Code or any comparable or successor provision, any exchange of
like property (excluding any boot thereon) for use in a Similar
Business;
(g) the lease, assignment or sub-lease of any real or
personal property in the ordinary course of business;
(h) any issuance or sale of Equity Interests in, or
Indebtedness or other securities of, an Unrestricted Subsidiary;
(i) foreclosures on assets;
(j) sales of accounts receivable, or participations
therein, in connection with the ABL Facility or any Receivables
Facility;
(k) any financing transaction with respect to property
built or acquired by the Issuer or any Restricted Subsidiary
after November 17, 2006, including Sale and Lease-Back
Transactions and asset securitizations permitted by the
Indenture;
(l) dispositions in the ordinary course of business by any
Restricted Subsidiary (including, without limitation, HCI)
engaged in the insurance business in order to provide insurance
to the Issuer and its Subsidiaries;
(m) sales, transfers and other dispositions of Investments
in joint ventures to the extent required by, or made pursuant
to, customary buy/sell arrangements between the joint venture
parties set forth in joint venture arrangements and similar
binding arrangements;
(n) any issuance or sale of Equity Interests or
dispositions in connection with ordinary course syndications of
Subsidiaries or joint ventures owning or operating one or more
health care facilities, including, without limitation,
hospitals, ambulatory surgery centers, outpatient diagnostic
centers or imaging centers in any transaction or series of
related transactions with an aggregate fair market value of less
than $100.0 million; and
(o) any issuance or sale of Equity Interests of any
Restricted Subsidiary (including, without limitation,
HealthTrust Purchasing Group, L.P.) to any Person operating in a
Similar Business for which such Restricted Subsidiary provides
shared purchasing, billing, collection or similar services in
the ordinary course of business.
“Asset Sale Offer” has the meaning set forth in
the fourth paragraph under “Repurchase at the Option of
Holders — Asset Sales.”
“Authorized Representative” means (i) in
the case of any General Credit Facility Obligations or the
General Credit Facility Secured Parties, the administrative
agent under the General Credit Facility, (ii) in the case
of the Notes Obligations or the Holders, the Trustee and
(iii) in the case of any Series of Additional First Lien
Obligations or Additional First Lien Secured Parties that become
subject to the First Lien Intercreditor Agreement, the
Authorized Representative named for such Series in the
applicable joinder agreement.
“Bankruptcy Code” means Title 11 of the
United States Code, as amended.
“Bankruptcy Law” means the Bankruptcy Code and
any similar federal, state or foreign law for the relief of
debtors.
“Business Day” means each day which is not a
Legal Holiday.
“Capital Stock” means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
“Capitalized Lease Obligation” means, at the
time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time
be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance
with GAAP.
“Capitalized Software Expenditures” means, for
any period, the aggregate of all expenditures (whether paid in
cash or accrued as liabilities) by a Person and its Restricted
Subsidiaries during such period in respect of purchased software
or internally developed software and software enhancements that,
in conformity with GAAP, are or are required to be reflected as
capitalized costs on the consolidated balance sheet of a Person
and its Restricted Subsidiaries.
“Cash Equivalents” means:
(1) United States dollars;
(2) euros or any national currency of any participating
member state of the EMU or such local currencies held by the
Company and its Restricted Subsidiaries from time to time in the
ordinary course of business;
(3) securities issued or directly and fully and
unconditionally guaranteed or insured by the
U.S. government (or any agency or instrumentality thereof
the securities of which are unconditionally
guaranteed as a full faith and credit obligation of the
U.S. government) with maturities of 24 months or less
from the date of acquisition;
(4) certificates of deposit, time deposits and eurodollar
time deposits with maturities of one year or less from the date
of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case
with any commercial bank having capital and surplus of not less
than $500.0 million in the case of U.S. banks and
$100.0 million (or the U.S. dollar equivalent as of
the date of determination) in the case of
non-U.S. banks;
(5) repurchase obligations for underlying securities of the
types described in clauses (3) and (4) entered into
with any financial institution meeting the qualifications
specified in clause (4) above;
(6) commercial paper rated at least
P-1 by
Moody’s or at least
A-1 by
S&P and in each case maturing within 24 months after
the date of creation thereof;
(7) marketable short-term money market and similar
securities having a rating of at least
P-2 or
A-2 from
either Moody’s or S&P, respectively (or, if at any
time neither Moody’s nor S&P shall be rating such
obligations, an equivalent rating from another Rating Agency)
and in each case maturing within 24 months after the date
of creation thereof;
(8) investment funds investing 95% of their assets in
securities of the types described in clauses (1) through
(7) above;
(9) readily marketable direct obligations issued by any
state, commonwealth or territory of the United States or any
political subdivision or taxing authority thereof having an
Investment Grade Rating from either Moody’s or S&P
with maturities of 24 months or less from the date of
acquisition;
(10) Indebtedness or Preferred Stock issued by Persons with
a rating of A or higher from S&P or A2 or higher from
Moody’s with maturities of 24 months or less from the
date of acquisition; and
(11) Investments with average maturities of 24 months
or less from the date of acquisition in money market funds rated
AAA- (or the equivalent thereof) or better by S&P or Aaa3
(or the equivalent thereof) or better by Moody’s.
Notwithstanding the foregoing, Cash Equivalents shall include
amounts denominated in currencies other than those set forth in
clauses (1) and (2) above; provided that such
amounts are converted into any currency listed in
clauses (1) and (2) as promptly as practicable and in
any event within ten Business Days following the receipt of such
amounts.
“Change of Control” means the occurrence of any
of the following:
(1) the sale, lease or transfer, in one or a series of
related transactions, of all or substantially all of the assets
of the Issuer and its Subsidiaries, taken as a whole, to any
Person other than a Permitted Holder; or
(2) the Issuer becomes aware (by way of a report or any
other filing pursuant to Section 13(d) of the Exchange Act,
proxy, vote, written notice or otherwise) of the acquisition by
any Person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the
meaning of
Rule 13d-5(b)(1)
under the Exchange Act), other than the Permitted Holders, in a
single transaction or in a related series of transactions, by
way of merger, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of
Rule 13d-3
under the Exchange Act, or any successor provision) of 50% or
more of the total voting power of the Voting Stock of the Issuer
or any of its direct or indirect parent companies holding
directly or indirectly 100% of the total voting power of the
Voting Stock of the Issuer.
“Code” means the Internal Revenue Code of 1986,
as amended, or any successor thereto.
“Collateral” means, collectively, the Shared
Receivables Collateral and Non-Receivables Collateral.
“Collateral Asset Sale Offer” has the meaning
set forth in the third paragraph under “Repurchase at the
Option of Holders — Asset Sales.”
“Collateral Excess Proceeds” has the meaning
set forth in the third paragraph under “Repurchase at the
Option of Holders — Asset Sales.”
“Common Collateral”means, at any time,
Collateral in which the holders of two or more Series of First
Lien Obligations (or their respective Authorized
Representatives) hold a valid and perfected security interest at
such time. If more than two Series of First Lien Obligations are
outstanding at any time and the holders of less than all Series
of First Lien Obligations hold a valid and perfected security
interest in any Collateral at such time then such Collateral
shall constitute Common Collateral for those Series of First
Lien Obligations that hold a valid security interest in such
Collateral at such time and shall not constitute Common
Collateral for any Series which does not have a valid and
perfected security interest in such Collateral at such time.
“Consolidated Depreciation and Amortization
Expense” means with respect to any Person for any
period, the total amount of depreciation and amortization
expense, including the amortization of deferred financing fees,
debt issuance costs, commissions, fees and expenses and
Capitalized Software Expenditures, of such Person and its
Restricted Subsidiaries for such period on a consolidated basis
and otherwise determined in accordance with GAAP.
“Consolidated Interest Expense” means, with
respect to any Person for any period, without duplication, the
sum of:
(1) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, to the extent such
expense was deducted (and not added back) in computing
Consolidated Net Income (including (a) amortization of
original issue discount resulting from the issuance of
Indebtedness at less than par, (b) all commissions,
discounts and other fees and charges owed with respect to
letters of credit or bankers’ acceptances,
(c) non-cash interest payments (but excluding any non-cash
interest expense attributable to the movement in the mark to
market valuation of Hedging Obligations or other derivative
instruments pursuant to GAAP), (d) the interest component
of Capitalized Lease Obligations, and (e) net payments, if
any, pursuant to interest rate Hedging Obligations with respect
to Indebtedness, and excluding (u) accretion or accrual of
discounted liabilities not constituting Indebtedness,
(v) any expense resulting from the discounting of the
Existing Notes or other Indebtedness in connection with the
application of recapitalization accounting or, if applicable,
purchase accounting, (w) any Additional Interest and any
comparable “additional interest” with respect to other
securities, (x) amortization of deferred financing fees,
debt issuance costs, commissions, fees and expenses,
(y) any expensing of bridge, commitment and other financing
fees and (z) commissions, discounts, yield and other fees
and charges (including any interest expense) related to any
Receivables Facility); plus
(2) consolidated capitalized interest of such Person and
its Restricted Subsidiaries for such period, whether paid or
accrued; less
(3) interest income for such period.
For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with
GAAP.
“Consolidated Leverage Ratio”, with respect to
any Person as of any date of determination, means the ratio of
(x) Consolidated Total Indebtedness of such Person as of
the end of the most recent fiscal quarter for which internal
financial statements are available immediately preceding the
date on which such event for which such calculation is being
made shall occur to (y) the aggregate amount of EBITDA of
such Person for the period of the most recently ended four full
consecutive fiscal quarters for which internal financial
statements are available immediately preceding the date on which
such event for which such calculation is being made shall occur,
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 “Fixed Charge Coverage Ratio.”
“Consolidated Net Income” means, with respect
to any Person for any period, the aggregate of the Net Income of
such Person for such period, on a consolidated basis, and
otherwise determined in accordance with GAAP; provided,
however, that, without duplication,
(1) any after-tax effect of extraordinary, non-recurring or
unusual gains or losses (less all fees and expenses relating
thereto) or expenses, severance, relocation costs, consolidation
and closing costs, integration and facilities opening costs,
business optimization costs, transition costs, restructuring
costs, signing, retention or completion bonuses, and
curtailments or modifications to pension and post-retirement
employee benefit plans shall be excluded,
(2) the cumulative effect of a change in accounting
principles during such period shall be excluded,
(3) any after-tax effect of income (loss) from disposed,
abandoned or discontinued operations and any net after-tax gains
or losses on disposal of disposed, abandoned, transferred,
closed or discontinued operations shall be excluded,
(4) any after-tax effect of gains or losses (less all fees
and expenses relating thereto) attributable to asset
dispositions or abandonments other than in the ordinary course
of business, as determined in good faith by the Issuer, shall be
excluded,
(5) the Net Income for such period of any Person that is an
Unrestricted Subsidiary shall be excluded, and, solely for the
purpose of determining the amount available for Restricted
Payments under clause 3(a) of the first paragraph of
“Certain Covenants — Limitation on Restricted
Payments,” the Net Income for such period of any Person
that is not a Subsidiary or that is accounted for by the equity
method of accounting shall be excluded; provided that
Consolidated Net Income of the Issuer shall be increased by the
amount of dividends or distributions or other payments that are
actually paid in cash (or to the extent converted into cash) to
the referent Person or a Restricted Subsidiary thereof in
respect of such period,
(6) solely for the purpose of determining the amount
available for Restricted Payments under clause (3)(a) of the
first paragraph of “Certain Covenants —
Limitation on Restricted Payments,” the Net Income for such
period of any Restricted Subsidiary (other than any Guarantor)
shall be excluded to the extent that the declaration or payment
of dividends or similar distributions by that Restricted
Subsidiary of its Net Income is not at the date of determination
wholly permitted without any prior governmental approval (which
has not been obtained) or, directly or indirectly, by the
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, or
governmental regulation applicable to that Restricted Subsidiary
or its stockholders, unless such restriction with respect to the
payment of dividends or similar distributions has been legally
waived; provided that Consolidated Net Income of the
Issuer will be increased by the amount of dividends or other
distributions or other payments actually paid in cash (or to the
extent converted into cash) or Cash Equivalents to the Issuer or
a Restricted Subsidiary thereof in respect of such period, to
the extent not already included therein,
(7) effects of adjustments (including the effects of such
adjustments pushed down to the Issuer and its Restricted
Subsidiaries) in the property, equipment, inventory, software
and other intangible assets, deferred revenues and debt line
items in such Person’s consolidated financial statements
pursuant to GAAP resulting from the application of
recapitalization accounting or, if applicable, purchase
accounting in relation to the Transactions or any consummated
acquisition or the amortization or write-off of any amounts
thereof, net of taxes, shall be excluded,
(8) any after-tax effect of income (loss) from the early
extinguishment of Indebtedness or Hedging Obligations or other
derivative instruments shall be excluded,
(9) any impairment charge or asset write-off, including,
without limitation, impairment charges or asset write-offs
related to intangible assets, long-lived assets or investments
in debt and equity securities, in each case, pursuant to GAAP
and the amortization of intangibles arising pursuant to GAAP
shall be excluded,
(10) any non-cash compensation expense recorded from grants
of stock appreciation or similar rights, stock options,
restricted stock or other rights, and any cash charges
associated with the rollover, acceleration or payout of Equity
Interests by management of the Company or any of its direct or
indirect parent companies in connection with the Transaction,
shall be excluded,
(11) any fees and expenses incurred during such period, or
any amortization thereof for such period, in connection with any
acquisition, Investment, Asset Sale, issuance or repayment of
Indebtedness, issuance of Equity Interests, refinancing
transaction or amendment or modification of any debt instrument
(in each case, including any such transaction consummated prior
to the Issue Date and any such transaction undertaken but not
completed) and any charges or non-recurring merger costs
incurred during such period as a result of any such transaction
shall be excluded,
(12) accruals and reserves that are established or adjusted
within twelve months after November 17, 2006 that are so
required to be established as a result of the Transaction in
accordance with GAAP, or changes as a result of adoption or
modification of accounting policies, shall be excluded, and
(13) to the extent covered by insurance and actually
reimbursed, or, so long as the Issuer has made a determination
that there exists reasonable evidence that such amount will in
fact be reimbursed by the insurer and only to the extent that
such amount is (a) not denied by the applicable carrier in
writing within 180 days and (b) in fact reimbursed
within 365 days of the date of such evidence (with a
deduction for any amount so added back to the extent not so
reimbursed within 365 days), expenses with respect to
liability or casualty events or business interruption shall be
excluded.
Notwithstanding the foregoing, for the purpose of the covenant
described under “Certain Covenants — Limitation
on Restricted Payments” only (other than clause (3)(d)
thereof), there shall be excluded from Consolidated Net Income
any income arising from any sale or other disposition of
Restricted Investments made by the Issuer and its Restricted
Subsidiaries, any repurchases and redemptions of Restricted
Investments from the Issuer and its Restricted Subsidiaries, any
repayments of loans and advances which constitute Restricted
Investments by the Issuer or any of its Restricted Subsidiaries,
any sale of the stock of an Unrestricted Subsidiary or any
distribution or dividend from an Unrestricted Subsidiary, in
each case only to the extent such amounts increase the amount of
Restricted Payments permitted under such covenant pursuant to
clause (3)(d) thereof.
“Consolidated Net Tangible Assets”means the
total amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom
(a) all current liabilities as disclosed on the
consolidated balance sheet of the Issuer (excluding any thereof
which are by their terms extendible or renewable at the option
of the obligor thereon to a time more than 12 months after
the time as of which the amount thereof is being computed and
further excluding any deferred income taxes that are included in
current liabilities) and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and
other like intangible assets, all as set forth on the most
recent consolidated balance sheet of the Issuer and computed in
accordance with generally accepted accounting principles.
“Consolidated Secured Debt Ratio” as of any
date of determination, means the ratio of (1) Consolidated
Total Indebtedness of the Issuer and its Restricted Subsidiaries
that is secured by Liens as of the end of the most recent fiscal
period for which internal financial statements are available
immediately preceding the date on which such event for which
such calculation is being made shall occur to (2) the
Issuer’s EBITDA for the most recently ended four full
fiscal quarters for which internal financial statements are
available immediately preceding the date on which such event for
which such calculation is being made shall occur, 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 “Fixed Charge Coverage Ratio.”
“Consolidated Total Indebtedness” means, as at
any date of determination, an amount equal to the sum of
(1) the aggregate amount of all outstanding Indebtedness of
the Issuer and its Restricted Subsidiaries on a consolidated
basis consisting of Indebtedness for borrowed money, Obligations
in respect of Capitalized Lease Obligations and debt obligations
evidenced by promissory notes and similar instruments (and
excluding, for
the avoidance of doubt, all obligations relating to Receivables
Facilities) and (2) the aggregate amount of all outstanding
Disqualified Stock of the Issuer and all Preferred Stock of its
Restricted Subsidiaries on a consolidated basis, with the amount
of such Disqualified Stock and Preferred Stock equal to the
greater of their respective voluntary or involuntary liquidation
preferences and maximum fixed repurchase prices, in each case
determined on a consolidated basis in accordance with GAAP. For
purposes hereof, the “maximum fixed repurchase price”
of any Disqualified Stock or Preferred Stock that does not have
a fixed repurchase price shall be calculated in accordance with
the terms of such Disqualified Stock or Preferred Stock as if
such Disqualified Stock or Preferred Stock were purchased on any
date on which Consolidated Total Indebtedness shall be required
to be determined pursuant to the Indenture, and if such price is
based upon, or measured by, the fair market value of such
Disqualified Stock or Preferred Stock, such fair market value
shall be determined reasonably and in good faith by the Issuer.
“Contingent Obligations” means, with respect to
any Person, any obligation of such Person guaranteeing any
leases, dividends or other obligations that do not constitute
Indebtedness (“primary obligations”) of any
other Person (the “primary obligor”) in any
manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not
contingent,
(1) to purchase any such primary obligation or any property
constituting direct or indirect security therefor,
(2) to advance or supply funds
(a) for the purchase or payment of any such primary
obligation, or
(b) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, or
(3) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment
of such primary obligation against loss in respect thereof.
“Controlling Secured Parties” means, with
respect to any Common Collateral, the Series of First Lien
Secured Parties whose Authorized Representative is the
Applicable Authorized Representative for such Common Collateral.
“Credit Facilities” means, with respect to the
Issuer or any of its Restricted Subsidiaries, one or more debt
facilities, including the Senior Credit Facilities, or other
financing arrangements (including, without limitation,
commercial paper facilities or indentures) providing for
revolving credit loans, term loans, letters of credit or other
long-term indebtedness, including any notes, mortgages,
guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments,
supplements, modifications, extensions, renewals, restatements
or refundings thereof and any indentures or credit facilities or
commercial paper facilities that replace, refund or refinance
any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement,
refunding or refinancing facility or indenture that increases
the amount permitted to be borrowed thereunder or alters the
maturity thereof (provided that such increase in
borrowings is permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”) or
adds Restricted Subsidiaries as additional borrowers or
guarantors thereunder and whether by the same or any other
agent, lender or group of lenders.
“Default” means any event that is, or with the
passage of time or the giving of notice or both would be, an
Event of Default.
“Delayed Equity Amount” means any equity
contribution of the Investors, the Frist Entities or certain
other management investors described in the offering memorandum
relating to the 2006 Second Priority Notes on or before
March 31, 2007, the proceeds of which are used to repay
borrowings under the senior secured revolving credit facility
included in the General Credit Facility or the ABL Facility in
the manner described in the offering memorandum relating to the
2006 Second Priority Notes.
“Designated Non-cash Consideration” means the
fair market value of non-cash consideration received by the
Issuer or a Restricted Subsidiary in connection with an Asset
Sale that is so designated as Designated Non-cash Consideration
pursuant to an Officer’s Certificate, setting forth the
basis of such valuation, executed by the principal financial
officer of the Issuer, less the amount of cash or Cash
Equivalents received in connection with a subsequent sale of or
collection on such Designated Non-cash Consideration.
“Designated Preferred Stock” means Preferred
Stock of the Issuer or any parent corporation thereof (in each
case other than Disqualified Stock) that is issued for cash
(other than to a Restricted Subsidiary or an employee stock
ownership plan or trust established by the Issuer or any of its
Subsidiaries) and is so designated as Designated Preferred
Stock, pursuant to an Officer’s Certificate executed by the
principal financial officer of the Issuer or the applicable
parent corporation thereof, as the case may be, on the issuance
date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause (3) of the first paragraph
under “Certain Covenants — Limitation on
Restricted Payments.”
“Discharge of New First Lien Obligations”
means, except to the extent any such New First Lien Obligations
are reinstated pursuant to the Additional General Intercreditor
Agreement, the discharge or legal defeasance or covenant
defeasance of the Indenture in accordance with its terms;
provided that the Discharge of New First Lien Obligations
shall not be deemed to have occurred if such payments are made
with proceeds of other New First Lien Obligations that
constitute and exchange or replacement for or a refinancing, in
whole or in part, of such New First Lien Obligations. In the
event the New First Lien Obligations are modified and such
Obligations are paid over time or otherwise modified pursuant to
Section 1129 of the Bankruptcy Code, the New First Lien
Obligations shall be deemed to be discharged when the final
payment is made, in cash, in respect of such indebtedness and
any obligations pursuant to such new indebtedness shall have
been satisfied.
“Discharge of General Credit Facility
Obligations” means, with respect to any Common
Collateral, the date on which the General Credit Facility
Obligations are no longer secured by such Common Collateral;
provided that the Discharge of General Credit Facility
Obligations shall not be deemed to have occurred in connection
with a refinancing of such General Credit Facility Obligations
with additional First Lien Obligations secured by such Common
Collateral under an agreement relating to Additional First Lien
Obligations which has been designated in writing by the
administrative agent under the General Credit Facility so
refinanced to the First Lien Collateral Agent and each other
Authorized Representative as the General Credit Facility for
purposes of the First Lien Intercreditor Agreement.
“Disqualified Stock” means, with respect to any
Person, any Capital Stock of such Person which, by its terms, or
by the terms of any security into which it is convertible or for
which it is putable or exchangeable, or upon the happening of
any event, matures or is mandatorily redeemable (other than
solely as a result of a change of control or asset sale)
pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof (other than
solely as a result of a change of control or asset sale), in
whole or in part, in each case prior to the date 91 days
after the earlier of the maturity date of the Notes or the date
the Notes are no longer outstanding; provided,
however, that if such Capital Stock is issued to any plan
for the benefit of employees of the Issuer or its Subsidiaries
or by any such plan to such employees, such Capital Stock shall
not constitute Disqualified Stock solely because it may be
required to be repurchased by the Issuer or its Subsidiaries in
order to satisfy applicable statutory or regulatory obligations.
“EBITDA” means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such
period
(1) increased (without duplication) by:
(a) provision for taxes based on income or profits or
capital gains, including, without limitation, foreign, federal,
state, franchise and similar taxes (such as the Pennsylvania
capital tax) and foreign withholding taxes (including penalties
and interest related to such taxes or arising from tax
examinations) of such Person paid or accrued during such period
deducted (and not added back) in computing Consolidated Net
Income; plus
(b) Fixed Charges of such Person for such period (including
(x) net losses on Hedging Obligations or other derivative
instruments entered into for the purpose of hedging interest
rate risk and (y) costs of surety bonds in connection with
financing activities, in each case, to the extent included in
Fixed Charges), together with items excluded from the definition
of “Consolidated Interest Expense” pursuant to clauses
(1)(u), (v), (w), (x), (y) and (z) of the definition
thereof, and, in each such case, to the extent the same were
deducted (and not added back) in calculating such Consolidated
Net Income; plus
(c) Consolidated Depreciation and Amortization Expense of
such Person for such period to the extent the same was deducted
(and not added back) in computing Consolidated Net Income;
plus
(d) any expenses or charges (other than depreciation or
amortization expense) related to any Equity Offering, Permitted
Investment, acquisition, disposition, recapitalization or the
incurrence of Indebtedness permitted to be incurred by the
Indenture (including a refinancing thereof) (whether or not
successful), including (i) such fees, expenses or charges
related to the offering of the Notes and any Credit Facilities
and (ii) any amendment or other modification of the Notes,
and, in each case, deducted (and not added back) in computing
Consolidated Net Income; plus
(e) the amount of any restructuring charge or reserve
deducted (and not added back) in such period in computing
Consolidated Net Income, including any one-time costs incurred
in connection with acquisitions after November 17, 2006 and
costs related to the closure
and/or
consolidation of facilities; plus
(f) any other non-cash charges, including any write-offs or
write-downs, reducing Consolidated Net Income for such period
(provided that if any such non-cash charges represent an
accrual or reserve for potential cash items in any future
period, the cash payment in respect thereof in such future
period shall be subtracted from EBITDA to such extent, and
excluding amortization of a prepaid cash item that was paid in a
prior period); plus
(g) the amount of any minority interest expense consisting
of income attributable to minority equity interests of third
parties deducted (and not added back) in such period in
calculating Consolidated Net Income; plus
(h) the amount of management, monitoring, consulting and
advisory fees and related expenses paid in such period to the
Investors and the Frist Entities to the extent otherwise
permitted under “Certain Covenants — Transactions
with Affiliates”; plus
(i) the amount of net cost savings projected by the Issuer
in good faith to be realized as a result of specified actions
taken or to be taken (calculated on a pro forma basis as though
such cost savings had been realized on the first day of such
period), net of the amount of actual benefits realized during
such period from such actions; provided that
(w) such cost savings are reasonably identifiable and
factually supportable, (x) such actions have been taken or
are to be taken within 15 months after the date of
determination to take such action, (y) no cost savings
shall be added pursuant to this clause (i) to the extent
duplicative of any expenses or charges relating to such cost
savings that are included in clause (e) above with respect
to such period and (z) the aggregate amount of cost savings
added pursuant to this clause (i) shall not exceed
$150.0 million for any four consecutive quarter period
(which adjustments may be incremental to pro forma adjustments
made pursuant to the second paragraph of the definition of
“Fixed Charge Coverage Ratio”); plus
(j) the amount of loss on sales of receivables and related
assets to the Receivables Subsidiary in connection with a
Receivables Facility; plus
(k) any costs or expense incurred by the Issuer or a
Restricted Subsidiary pursuant to any management equity plan or
stock option plan or any other management or employee benefit
plan or agreement or any stock subscription or shareholder
agreement, to the extent that such cost or expenses are funded
with cash proceeds contributed to the capital of the Issuer or
net cash proceeds of an issuance of Equity Interests of the
Issuer (other than Disqualified Stock) solely to the extent that
such net cash proceeds are excluded from the calculation set
forth in clause (3) of the first paragraph under
“Certain Covenants — Limitation on Restricted
Payments”;
(2) decreased by (without duplication) non-cash gains
increasing Consolidated Net Income of such Person for such
period, excluding any non-cash gains to the extent they
represent the reversal of an accrual or reserve for a potential
cash item that reduced EBITDA in any prior period; and
(3) increased or decreased by (without duplication):
(a) any net gain or loss resulting in such period from
Hedging Obligations and the application of Statement of
Financial Accounting Standards No. 133; plus or
minus, as applicable,
(b) any net gain or loss resulting in such period from
currency translation gains or losses related to currency
remeasurements of Indebtedness (including any net loss or gain
resulting from Hedging Obligations for currency exchange risk).
“EMU” means the economic and monetary union as
contemplated in the Treaty on European Union.
“Equity Interests” means Capital Stock and all
warrants, options or other rights to acquire Capital Stock, but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock.
“Equity Offering” means any public or private
sale of common stock or Preferred Stock of the Issuer or any of
its direct or indirect parent companies (excluding Disqualified
Stock), other than:
(1) public offerings with respect to the Issuer’s or
any direct or indirect parent company’s common stock
registered on
Form S-8;
(2) issuances to any Subsidiary of the Issuer; and
(3) any such public or private sale that constitutes an
Excluded Contribution.
“euro” means the single currency of
participating member states of the EMU.
“European Collateral” has the meaning set forth
under “Description of Other Indebtedness — Senior
Secured Credit Facilities — Guarantees and
Security.”
“Event of Default” has the meaning set forth
under “Events of Default and Remedies.”
“Excess Proceeds” has the meaning set forth in
the fourth paragraph under “Repurchase at the Option of
Holders — Asset Sales.”
“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the
SEC promulgated thereunder.
“Exchange Notes” means any notes issued in
exchange for the Notes pursuant to the Registration Rights
Agreement or similar agreement.
“Excluded Contribution” means net cash
proceeds, marketable securities or Qualified Proceeds received
by the Issuer after November 17, 2006 from
(1) contributions to its common equity capital, and
(2) the sale (other than to a Subsidiary of the Issuer or
to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement of the Issuer)
of Capital Stock (other than Disqualified Stock and Designated
Preferred Stock) of the Issuer,
in each case designated as Excluded Contributions pursuant to an
Officer’s Certificate executed by the principal financial
officer of the Issuer on the date such capital contributions are
made or the date such Equity Interests are sold, as the case may
be, which are excluded from the calculation set forth in
clause (3) of the first paragraph under “Certain
Covenants — Limitation on Restricted Payments.”
“Existing Notes” means the $121.2 million
aggregate principal amount of 8.700% medium-term notes due 2010,
$691.2 million aggregate principal amount of
8.750% notes due 2010, £150.0 million aggregate
principal amount of 8.750% notes due 2010,
$475.8 million aggregate principal amount of
7.875% notes due 2011, $500.0 million aggregate
principal amount of 6.950% notes due 2012,
$500.0 million aggregate principal amount of
6.300% notes due 2012, $500.0 million aggregate
principal amount of 6.250% notes due 2013,
$500.0 million aggregate principal amount of
6.750% notes due 2013, $500.0 million aggregate
principal amount of 5.750% notes due 2014,
$121.1 million aggregate principal amount of 9.000% medium
term notes due 2014, $750.0 million aggregate principal
amount of 6.375% notes due 2015, $150.0 million
aggregate
principal amount of 7.190% debentures due 2015,
$1,000.0 million aggregate principal amount of
6.500% notes due 2016, $135.6 million aggregate
principal amount of 7.500% debentures due 2023,
$150.0 million aggregate principal amount of
8.360% debentures due 2024, $291.4 million aggregate
principal amount of 7.690% notes due 2025,
$125.0 million aggregate principal amount of 7.580%
medium-term notes due 2025, $150.0 million aggregate
principal amount of 7.050% debentures due 2027,
$250.0 million aggregate principal amount of
7.500% notes due 2033, $100.0 million aggregate
principal amount of 7.750% debentures due 2036 and
$200.0 million aggregate principal amount of
7.500% debentures due 2095, each issued by the Issuer and
outstanding on November 17, 2006.
“Existing Notes Indenture” means that certain
Indenture, dated as of December 16, 1993, between Columbia
Healthcare Corporation and The First National Bank of Chicago,
as Trustee, as amended by the First Supplemental Indenture,
dated as of May 25, 2000, between the Issuer and Bank One
Trust Company, N.A., as Trustee, the Second Supplemental
Indenture, dated as of July 1, 2001, between the Issuer and
Bank One Trust Company, N.A., as Trustee, and the Third
Supplemental Indenture, dated as of December 5, 2001,
between the Issuer and The Bank of New York, as Trustee.
“Existing Second Priority Notes”means the 2006
Second Priority Notes and the 2009 Second Priority Notes and any
refinancings thereof permitted pursuant to the terms of the
Indenture.
“Existing Second Priority Notes Indentures”
means the 2006 Second Priority Notes Indenture and the 2009
Second Priority Notes Indenture.
“First Lien Collateral Agent” shall mean Bank
of America, N.A., in its capacity as administrative agent and
collateral agent for the lenders and other secured parties under
the General Credit Facility and the other First Lien Documents
and in its capacity as collateral agent for the New First Lien
Secured Parties, together with its successors and permitted
assigns under the General Credit Facility, the Indenture and the
First Lien Documents exercising substantially the same rights
and powers; and in each case provided that if such First
Lien Collateral Agent is not Bank of America, N.A., such First
Lien Collateral Agent shall have become a party to the
Additional General Intercreditor Agreement, the General
Intercreditor Agreement, dated as of November 17, 2006,
among the First Lien Collateral Agent and the Junior Lien
Collateral Agent, and the other applicable First Lien Security
Documents.
“First Lien Documents” means the credit,
guarantee and security documents governing the New First Lien
Obligations, including, without limitation, the Indenture and
the First Lien Security Documents.
“First Lien Event of Default” means an
“Event of Default” under and as defined in the General
Credit Facility, the Indenture or any other First Lien Documents
governing First Lien Obligations.
“First Lien Obligations” means, collectively,
(a) all General Credit Facility Obligations, (b) the
Notes Obligations and (c) any Series of Additional First
Lien Obligations. For the avoidance of doubt, Obligations with
respect to the ABL Facility will not constitute First Lien
Obligations.
“First Lien Secured Parties” means (a) the
“Secured Parties,” as defined in the General Credit
Facility, (b) the New First Lien Secured Parties and
(c) any Additional First Lien Secured Parties.
“First Lien Security Documents” means the
Security Documents (as defined in the Indenture) and any other
agreement, document or instrument pursuant to which a Lien is
granted or purported to be granted securing New First Lien
Obligations or under which rights or remedies with respect to
such Liens are governed, in each case to the extent relating to
the collateral securing both the New First Lien Obligations and
any Junior Lien Obligations.
“First Priority Liens” means the first priority
Liens securing the New First Lien Obligations.
“Fixed Charge Coverage Ratio” means, with
respect to any Person for any period, the ratio of EBITDA of
such Person for such period to the Fixed Charges of such Person
for such period. In the event that the Issuer or any Restricted
Subsidiary incurs, assumes, guarantees, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred
under any revolving credit facility unless such Indebtedness has
been permanently repaid and has not been replaced) or issues or
redeems Disqualified Stock or Preferred Stock
subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but prior to or
simultaneously with the event for which the calculation of the
Fixed Charge Coverage Ratio is made (the “Fixed Charge
Coverage Ratio Calculation Date”), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma
effect to such incurrence, assumption, guarantee, redemption,
retirement or extinguishment of Indebtedness, or such issuance
or redemption of Disqualified Stock or Preferred Stock, as if
the same had occurred at the beginning of the applicable
four-quarter period.
For purposes of making the computation referred to above,
Investments, acquisitions, dispositions, mergers, consolidations
and disposed operations (as determined in accordance with GAAP)
that have been made by the Issuer or any of its Restricted
Subsidiaries during the four-quarter reference period or
subsequent to such reference period and on or prior to or
simultaneously with the Fixed Charge Coverage Ratio Calculation
Date shall be calculated on a pro forma basis assuming that all
such Investments, acquisitions, dispositions, mergers,
consolidations and disposed operations (and the change in any
associated fixed charge obligations and the change in EBITDA
resulting therefrom) had occurred on the first day of the
four-quarter reference period. If, since the beginning of such
period, any Person that subsequently became a Restricted
Subsidiary or was merged with or into the Issuer or any of its
Restricted Subsidiaries since the beginning of such period shall
have made any Investment, acquisition, disposition, merger,
consolidation or disposed operation that would have required
adjustment pursuant to this definition, then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition,
disposition, merger, consolidation or disposed operation had
occurred at the beginning of the applicable four-quarter period.
For purposes of this definition, whenever pro forma effect is to
be given to a transaction, the pro forma calculations shall be
made in good faith by a responsible financial or accounting
officer of the Issuer. 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 Fixed Charge Coverage Ratio Calculation Date had been the
applicable rate for the entire period (taking into account any
Hedging Obligations applicable to such Indebtedness). Interest
on a Capitalized Lease Obligation shall be deemed to accrue at
an interest rate reasonably determined by a responsible
financial or accounting officer of the Issuer to be the rate of
interest implicit in such Capitalized Lease Obligation in
accordance with GAAP. For purposes of making the computation
referred to above, interest on any Indebtedness under a
revolving credit facility computed on a pro forma basis shall be
computed based upon the average daily balance of such
Indebtedness during the applicable period except as set forth in
the first paragraph of this definition. Interest on Indebtedness
that may optionally be determined at an interest rate based upon
a factor of a prime or similar rate, a eurocurrency interbank
offered rate or other rate shall be deemed to have been based
upon the rate actually chosen, or, if none, then based upon such
optional rate chosen as the Issuer may designate.
“Fixed Charges” means, with respect to any
Person for any period, the sum of:
(1) Consolidated Interest Expense of such Person for such
period;
(2) all cash dividends or other distributions paid
(excluding items eliminated in consolidation) on any series of
Preferred Stock during such period; and
(3) all cash dividends or other distributions paid
(excluding items eliminated in consolidation) on any series of
Disqualified Stock during such period.
“Foreign Subsidiary” means, with respect to any
Person, any Restricted Subsidiary of such Person that is not
organized or existing under the laws of the United States, any
state thereof or the District of Columbia and any Restricted
Subsidiary of such Foreign Subsidiary.
“Frist Entities” means Dr. Thomas F.
Frist, Jr., any Person controlled by Dr. Frist and any
charitable organization selected by Dr. Frist that holds
Equity Interests of the Issuer on November 17, 2006.
“GAAP” means generally accepted accounting
principles in the United States which are in effect on
November 17, 2006.
“General Credit Facility” means the credit
agreement entered into as of November 17, 2006 by and among
the Issuer, the European subsidiary borrowers party thereto, the
lenders party thereto in their capacities as lenders thereunder
and Bank of America, N.A., as U.S. Administrative Agent and
as European Administrative Agent, as amended as of
February 16, 2007 and as further amended as of
March 2, 2009, including any guarantees, collateral
documents, instruments and agreements executed in connection
therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements, refundings or refinancings
thereof and any indentures or credit facilities or commercial
paper facilities with banks or other institutional lenders or
investors that replace, refund or refinance any part of the
loans, notes, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing
facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof (provided that
such increase in borrowings is permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”
above).
“General Credit Facility Obligations” means
“Obligations” as defined in the General Credit
Facility.
“Government Securities” means securities that
are:
(1) direct obligations of the United States of America for
the timely payment of which its full faith and credit is
pledged; or
(2) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United
States of America,
which, in either case, are not callable or redeemable at the
option of the issuers thereof, and shall also include a
depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act), as custodian with
respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities
held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by
law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the
Government Securities or the specific payment of principal of or
interest on the Government Securities evidenced by such
depository receipt.
“Guarantee” means a guarantee (other than by
endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner
(including letters of credit and reimbursement agreements in
respect thereof), of all or any part of any Indebtedness or
other obligations.
“Guarantee” means the guarantee by any
Guarantor of the Issuer’s Obligations under the Indenture.
“Guarantor” means each Restricted Subsidiary
that Guarantees the Notes in accordance with the terms of the
Indenture.
“HCI” means Health Care Indemnity, Inc., an
insurance company formed under the laws of the State of Colorado
and a Wholly-Owned Subsidiary of the Issuer.
“Hedging Arrangements” means the fixed-pay
interest rate swap agreements, entered into by Hercules Holding
on or about September 13, 2006 and with respect to which
the Issuer will be the counterparty in connection with the
Recapitalization, relating to $8,000 million of the
outstanding principal amount under the First Lien Obligations
and the ABL Obligations.
“Hedging Obligations” means, with respect to
any Person, the obligations of such Person under any interest
rate swap agreement, interest rate cap agreement, interest rate
collar agreement, commodity swap agreement, commodity cap
agreement, commodity collar agreement, foreign exchange
contract, currency swap agreement or similar agreement providing
for the transfer or mitigation of interest rate or currency
risks either generally or under specific contingencies.
“Holder” means the Person in whose name a Note
is registered on the registrar’s books.
“Impairment” means, with respect to any Series
of First Lien Obligations, (i) any determination by a court
of competent jurisdiction that (x) any of the First Lien
Obligations of such Series are unenforceable under applicable
law or are subordinated to any other obligations (other than
another Series of First Lien Obligations), (y) any of the
First Lien Obligations of such Series do not have an enforceable
security interest in any of the Collateral securing any other
Series of First Lien Obligations
and/or
(z) any intervening security interest exists securing any
other obligations (other than another Series of First Lien
Obligations) on a basis ranking prior to the security interest
of such Series of First Lien Obligations but junior to the
security interest of any other Series of First Lien Obligations
or (ii) the existence of any Collateral for any other
Series of First Lien Obligations that is not Common Collateral.
“Indebtedness” means, with respect to any
Person, without duplication:
(1) any indebtedness (including principal and premium) of
such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers’ acceptances
(or, without duplication, reimbursement agreements in respect
thereof);
(c) representing the balance deferred and unpaid of the
purchase price of any property (including Capitalized Lease
Obligations), except (i) any such balance that constitutes
a trade payable or similar obligation to a trade creditor, in
each case accrued in the ordinary course of business and
(ii) any earn-out obligations until such obligation becomes
a liability on the balance sheet of such Person in accordance
with GAAP; or
(d) representing any Hedging Obligations;
if and to the extent that any of the foregoing Indebtedness
(other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with
GAAP;
(2) to the extent not otherwise included, any obligation by
such Person to be liable for, or to pay, as obligor, guarantor
or otherwise on, the obligations of the type referred to in
clause (1) of a third Person (whether or not such items
would appear upon the balance sheet of the such obligor or
guarantor), other than by endorsement of negotiable instruments
for collection in the ordinary course of business; and
(3) to the extent not otherwise included, the obligations
of the type referred to in clause (1) of a third Person
secured by a Lien on any asset owned by such first Person,
whether or not such Indebtedness is assumed by such first Person;
provided, however, that notwithstanding the
foregoing, Indebtedness shall be deemed not to include
(a) Contingent Obligations incurred in the ordinary course
of business or (b) obligations under or in respect of
Receivables Facilities.
“Independent Financial Advisor” means an
accounting, appraisal, investment banking firm or consultant to
Persons engaged in Similar Businesses of nationally recognized
standing that is, in the good faith judgment of the Issuer,
qualified to perform the task for which it has been engaged.
“Initial Purchasers” means Citigroup Global
Markets Inc., Banc of America Securities LLC, J.P. Morgan
Securities Inc., Deutsche Bank Securities Inc., Goldman, Sachs
& Co. and the other initial purchasers party to the
purchase agreement related to the Notes.
“insolvency or liquidation proceeding” means:
(1) any case commenced by or against the Issuer or any
Guarantor under any Bankruptcy Law for the relief of debtors,
any other proceeding for the reorganization, recapitalization or
adjustment or marshalling of the assets or liabilities of the
Issuer or any Guarantor, any receivership or assignment for the
benefit of creditors relating to the Issuer or any Guarantor or
any similar case or proceeding relative to the Issuer or any
Guarantor or its creditors, as such, in each case whether or not
voluntary;
(2) any liquidation, dissolution, marshalling of assets or
liabilities or other winding up of or relating to the Issuer or
any Guarantor, in each case whether or not voluntary and whether
or not involving bankruptcy or insolvency; or
(3) any other proceeding of any type or nature in which
substantially all claims of creditors of the Issuer or any
Guarantor are determined and any payment or distribution is or
may be made on account of such claims.
“Intercreditor Agreements” means, collectively,
the First Lien Intercreditor Agreement, the Additional
Receivables Intercreditor Agreement and the Additional General
Intercreditor Agreement.
“Investment Grade Rating” means a rating equal
to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P, or an equivalent rating by
any other Rating Agency.
“Investment Grade Securities” means:
(1) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents);
(2) debt securities or debt instruments with an Investment
Grade Rating, but excluding any debt securities or instruments
constituting loans or advances among the Issuer and its
Subsidiaries;
(3) investments in any fund that invests exclusively in
investments of the type described in clauses (1) and
(2) which fund may also hold immaterial amounts of cash
pending investment or distribution; and
(4) corresponding instruments in countries other than the
United States customarily utilized for high quality investments.
“Investments” means, with respect to any
Person, all investments by such Person in other Persons
(including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding
accounts receivable, trade credit, advances to customers,
commissions, travel and similar advances to officers and
employees, in each case made in the ordinary course of
business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities issued by any
other Person and investments that are required by GAAP to be
classified on the balance sheet (excluding the footnotes) of the
Issuer in the same manner as the other investments included in
this definition to the extent such transactions involve the
transfer of cash or other property. For purposes of the
definition of “Unrestricted Subsidiary” and the
covenant described under “Certain Covenants —
Limitation on Restricted Payments”:
(1) “Investments” shall include the portion
(proportionate to the Issuer’s equity interest in such
Subsidiary) of the fair market value of the net assets of a
Subsidiary of the Issuer 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 Issuer shall be deemed to continue
to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to:
(a) the Issuer’s “Investment” in such
Subsidiary at the time of such redesignation; less
(b) the portion (proportionate to the Issuer 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, in each case as determined in good faith by
the Issuer.
“Investors” means Bain Capital Partners, LLC,
Kohlberg Kravis Roberts & Co. L.P., Merrill Lynch
Global Private Equity, Inc. (formerly known as Merrill Lynch
Global Partners, Inc.) and each of their respective Affiliates
but not including, however, any portfolio companies of any of
the foregoing.
“Issuer” has the meaning set forth in the first
paragraph under “General”; provided that when
used in the context of determining the fair market value of an
asset or liability under the Indenture, “Issuer” shall
be
deemed to mean the board of directors of the Issuer when the
fair market value is equal to or in excess of
$500.0 million (unless otherwise expressly stated).
“Junior Lien Collateral Agent” shall mean
(i) so long as the 2006 Second Priority Notes are
outstanding, the trustee under the 2006 Second Priority Notes
Indenture, in its capacity as trustee and collateral agent for
the holders of 2006 Second Priority Notes and other secured
parties under the 2006 Second Priority Notes Indenture and the
related security documents (including the holders of the 2009
Second Priority Notes), and (ii) at any time thereafter,
such agent or trustee as is designated “Junior Lien
Collateral Agent” by Junior Lien Secured Parties holding a
majority in principal amount of the Junior Lien Obligations then
outstanding or pursuant to such other arrangements as agreed to
among the holders of the Junior Lien Obligations, it being
understood that as of the Issue Date, the trustee under the 2006
Second Priority Notes Indenture shall be the Junior Lien
Collateral Agent.
“Junior Lien Documents” means the credit and
security documents governing the Junior Lien Obligations,
including, without limitation, the Existing Second Priority
Notes Indentures, the related security documents and
intercreditor agreements.
“Junior Lien Obligations” means the Existing
Second Priority Notes and Obligations with respect to other
Indebtedness permitted to be incurred under the Existing Second
Priority Notes Indentures and the General Credit Facility which
is by its terms intended to be secured equally and ratably with
the Existing Second Priority Notes or on a basis junior to the
Liens securing the Existing Second Priority Notes; provided
such Lien is permitted to be incurred under the Existing
Second Priority Notes Indentures and the General Credit
Facility; provided, further, that the holders of such
Indebtedness or their Junior Lien Representative is a party to
the applicable security documents in accordance with the terms
thereof and has appointed the Junior Lien Collateral Agent as
collateral agent for such holders of Junior Lien Obligations
with respect to all or a portion of the Collateral.
“Junior Lien Representative” means any duly
authorized representative of any holders of Junior Lien
Obligations, which representative is party to the applicable
security documents.
“Junior Lien Secured Parties” means
(i) holders of Existing Second Priority Notes (including
the holders of any Additional Notes (as defined in the Existing
Second Priority Notes Indentures) subsequently issued under and
in compliance with the terms of the Existing Second Priority
Notes Indentures), (ii) the Junior Lien Collateral Agent
and (iii) the holders from time to time of any other Junior
Lien Obligations and each Junior Lien Representative.
“Legal Holiday” means a Saturday, a Sunday or a
day on which commercial banking institutions are not required to
be open in the State of New York.
“Lien” means, with respect to any asset, any
mortgage, lien (statutory or otherwise), pledge, hypothecation,
charge, security interest, preference, priority or encumbrance
of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction;
provided that in no event shall an operating lease be
deemed to constitute a Lien.
“Major Non-Controlling Authorized
Representative” has the meaning set forth under
“Security — First Lien Intercreditor.”
“Moody’s” means Moody’s Investors
Service, Inc. and any successor to its rating agency business.
“Net Income” means, with respect to any Person,
the net income (loss) of such Person, determined in accordance
with GAAP and before any reduction in respect of Preferred Stock
dividends.
“Net Proceeds” means the aggregate cash
proceeds received by the Issuer or any of its Restricted
Subsidiaries in respect of any Asset Sale, including any cash
received upon the sale or other disposition of any Designated
Non-cash Consideration received in any Asset Sale, net of the
direct costs relating to such Asset Sale
and the sale or disposition of such Designated Non-cash
Consideration, including legal, accounting and investment
banking fees, and brokerage and sales commissions, any
relocation expenses incurred as a result thereof, taxes paid or
payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment
of principal, premium, if any, and interest on Senior
Indebtedness required (other than required by clause (1) of
the second paragraph of “Repurchase at the Option of
Holders — Asset Sales”) to be paid as a result of
such transaction and any deduction of appropriate amounts to be
provided by the Issuer or any of its Restricted Subsidiaries as
a reserve in accordance with GAAP against any liabilities
associated with the asset disposed of in such transaction and
retained by the Issuer or any of its Restricted Subsidiaries
after such sale or other disposition thereof, including pension
and other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification
obligations associated with such transaction.
“New First Lien Obligations” means all advances
to, and debts, liabilities, obligations, covenants and duties
of, the Issuer or any Guarantor arising under the Indenture and
any other First Lien Documents, whether or not direct or
indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter
arising and including interest and fees that accrue after the
commencement by or against the Issuer, any Guarantor or any
Affiliate thereof of any proceeding in bankruptcy or insolvency
law naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims
in such proceeding.
“New First Lien Secured Parties” means, at any
relevant time, the holders of New First Lien Obligations at such
time, including without limitation the Trustee, the Registrar,
Paying Agent and Transfer Agent, and the Holders (including the
Holders of any Additional Notes subsequently issued under and in
compliance with the terms of the Indenture).
“Non-Conforming Plan of Reorganization” means
any Plan of Reorganization that grants the Junior Lien
Collateral Agent or any Junior Lien Secured Party any right or
benefit, directly or indirectly, which right or benefit is
prohibited at such time by the provisions of the Additional
General Intercreditor Agreement.
“Non-Controlling Authorized Representative Enforcement
Date” has the meaning set forth under
“Security — First Lien Intercreditor.”
“Non-Controlling Secured Parties” means, with
respect to any Common Collateral, the First Lien Secured Parties
which are not Controlling Secured Parties with respect to such
Common Collateral.
“Non-Receivables Collateral” has the meaning
set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantee and Security,” subject to
the provisions of the second sentence of the first paragraph
under “— Security — General.”
“Notes Documents” means the credit and security
documents governing the Notes Obligations, including, without
limitation, the Indenture, the related Security Documents and
Intercreditor Agreements.
“Notes Obligations” means Obligations in
respect of the Notes, the Indenture or the Security Documents,
including, for the avoidance of doubt, obligations in respect of
exchange notes and guarantees thereof.
“Obligations” means any principal, interest
(including any interest accruing subsequent to the filing of a
petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under
applicable state, federal or foreign law), premium, penalties,
fees, indemnifications, reimbursements (including reimbursement
obligations with respect to letters of credit and bankers’
acceptances), damages and other liabilities, and guarantees of
payment of such principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities,
payable under the documentation governing any Indebtedness.
“Offering Memorandum” means the offering
memorandum, dated April 15, 2009, relating to the initial
private offering of the Notes.
“Officer” means the Chairman of the Board, the
Chief Executive Officer, the President, any Executive Vice
President, Senior Vice President or Vice President, the
Treasurer or the Secretary of the Issuer or a Guarantor, as
applicable.
“Officer’s Certificate” means a
certificate signed on behalf of the Issuer by an Officer of the
Issuer or on behalf of a Guarantor by an Officer of such
Guarantor, who must be the principal executive officer, the
principal financial officer, the treasurer or the principal
accounting officer of the Issuer or Guarantor, as applicable,
that meets the requirements set forth in the Indenture.
“Opinion of Counsel” means a written opinion
from legal counsel who is acceptable to the Trustee. The counsel
may be an employee of or counsel to the Issuer or the Trustee.
“Permitted Asset Swap” means the concurrent
purchase and sale or exchange of Related Business Assets or a
combination of Related Business Assets and cash or Cash
Equivalents between the Issuer or any of its Restricted
Subsidiaries and another Person; provided, that any cash
or Cash Equivalents received must be applied in accordance with
the covenant described under “Repurchase at the Option of
Holders — Asset Sales.”
“Permitted Holders” means each of the
Investors, the Frist Entities, members of management of the
Issuer (or its direct or indirect parent), Citigroup Inc. and
Banc of America Securities LLC (which institutions were
assignees of certain equity commitments of the Investors as of
November 17, 2006) that are holders of Equity Interests of
the Issuer (or any of its direct or indirect parent companies)
and any group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act or any successor
provision) of which any of the foregoing are members;
provided that, in the case of such group and without
giving effect to the existence of such group or any other group,
such Investors, Frist Entities, members of management and
assignees of the equity commitments of the Investors,
collectively, have beneficial ownership of more than 50% of the
total voting power of the Voting Stock of the Issuer or any of
its direct or indirect parent companies.
“Permitted Investments” means:
(1) any Investment in the Issuer or any of its Restricted
Subsidiaries;
(2) any Investment in cash and Cash Equivalents or
Investment Grade Securities;
(3) any Investment by the Issuer or any of its Restricted
Subsidiaries in a Person that is engaged in a Similar Business
if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary; or
(b) such Person, in one transaction or a series of related
transactions, is merged or consolidated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Issuer or a Restricted Subsidiary,
and, in each case, any Investment held by such Person;
provided that such Investment was not acquired by such
Person in contemplation of such acquisition, merger,
consolidation or transfer;
(4) any Investment in securities or other assets not
constituting cash, Cash Equivalents or Investment Grade
Securities and received in connection with an Asset Sale made
pursuant to the provisions described under “Repurchase at
the Option of Holders — Asset Sales” or any other
disposition of assets not constituting an Asset Sale;
(5) any Investment existing on the Issue Date;
(6) any Investment acquired by the Issuer or any of its
Restricted Subsidiaries:
(a) in exchange for any other Investment or accounts
receivable held by the Issuer 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 Issuer or any of
its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any
secured Investment in default;
(7) Hedging Obligations permitted under clause (10) of
the second paragraph of the covenant described in “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
(8) any Investment in a Similar Business having an
aggregate fair market value, taken together with all other
Investments made pursuant to this clause (8) that are at
that time outstanding, not to exceed 5% of Total Assets at the
time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving
effect to subsequent changes in value);
(9) Investments the payment for which consists of Equity
Interests (exclusive of Disqualified Stock) of the Issuer or any
of its direct or indirect parent companies; provided,
however, that such Equity Interests will not increase the
amount available for Restricted Payments under clause (3)
of the first paragraph under the covenant described in
“Certain Covenants — Limitations on Restricted
Payments”;
(10) guarantees of Indebtedness permitted under the
covenant described in “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
(11) any transaction to the extent it constitutes an
Investment that is permitted and made in accordance with the
provisions of the second paragraph of the covenant described
under “Certain Covenants — Transactions with
Affiliates” (except transactions described in clauses (2),
(5) and (9) of such paragraph);
(12) Investments consisting of purchases and acquisitions
of inventory, supplies, material or equipment;
(13) additional Investments having an aggregate fair market
value, taken together with all other Investments made pursuant
to this clause (13) that are at that time outstanding
(without giving effect to the sale of an Unrestricted Subsidiary
to the extent the proceeds of such sale do not consist of cash
or marketable securities), not to exceed 5% of Total Assets at
the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving
effect to subsequent changes in value);
(14) Investments relating to an ABL Financing Entity or a
Receivables Subsidiary that, in the good faith determination of
the Issuer, are necessary or advisable to effect the ABL
Facility or any Receivables Facility, as the case may be;
(15) advances to, or guarantees of Indebtedness of,
employees not in excess of $50.0 million outstanding at any
one time, in the aggregate;
(16) loans and advances to officers, directors and
employees for business-related travel expenses, moving expenses
and other similar expenses, in each case incurred in the
ordinary course of business or consistent with past practices or
to fund such Person’s purchase of Equity Interests of the
Issuer or any direct or indirect parent company thereof;
(17) Physician Support Obligations made by the Issuer or
any Restricted Subsidiary;
(18) any Investment in any joint venture existing on the
Issue Date that owns or operates one or more health care
facilities, including, without limitation, hospitals, ambulatory
surgery centers, outpatient diagnostic centers or imaging
centers to the extent contemplated by the organizational
documents of such joint venture as in existence on the Issue
Date;
(19) any Investment in the ordinary course of business or
as may be required by applicable law by any Restricted
Subsidiary (including, without limitation, HCI) engaged in the
insurance business in order to provide insurance to the Issuer
and its Subsidiaries;
(20) any Investment pursuant to any customary buy/sell
arrangement in favor of investors or joint venture parties in
connection with syndications of health care facilities,
including, without limitation, hospitals, ambulatory surgery
centers, outpatient diagnostic centers or imaging
centers; and
(21) any Investment in any Subsidiary or any joint venture
in connection with intercompany cash management arrangements or
related activities arising in the ordinary course of business.
“Permitted Liens” means, with respect to any
Person:
(1) pledges or deposits by such Person under workmen’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 U.S. government bonds to secure surety or appeal
bonds to which such Person is a party, 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 overdue for a period of more than 30 days 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 if
adequate reserves with respect thereto are maintained on the
books of such Person in accordance with GAAP;
(3) Liens for taxes, assessments or other governmental
charges not yet overdue for a period of more than 30 days
or payable or subject to penalties for nonpayment or which are
being contested in good faith by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto
are maintained on the books of such Person in accordance with
GAAP;
(4) Liens in favor of issuers of performance and surety
bonds or bid bonds or with respect to other regulatory
requirements or letters of credit issued pursuant to the request
of and for the account of such Person in the ordinary course of
its business;
(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 properties 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 permitted to be incurred
pursuant to clause (4), (12), (13), (18) or (19) of
the second paragraph under “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”; provided
that (a) Liens securing Indebtedness, Disqualified
Stock or Preferred Stock permitted to be incurred pursuant to
clause (13) relate only to Refinancing Indebtedness that
serves to refund or refinance Indebtedness, Disqualified Stock
or Preferred Stock incurred under clause (4) or
(12) of the second paragraph under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock,”
(b) Liens securing Indebtedness permitted to be incurred
pursuant to clause (18) extend only to the assets of
Foreign Subsidiaries, (c) Liens securing Indebtedness
permitted to be incurred pursuant to clause (19) are solely
on acquired property or the assets of the acquired entity, as
the case may be and (d) Liens securing Indebtedness,
Disqualified Stock or Preferred Stock permitted to be incurred
pursuant to clause (4) of the second paragraph under
“Certain Covenants — Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” extend only to the assets so financed, purchased,
constructed or improved;
(7) Liens existing on the Issue Date (other than Liens in
favor of (i) the lenders under the Senior Credit Facilities
and (ii) the holders of the Existing Second Priority Notes);
(8) Liens on property or shares of stock of a Person at the
time such Person becomes a Subsidiary; provided,
however, such Liens are not created or incurred in
connection with, or in contemplation of, such other Person
becoming such a Subsidiary; provided, further,
however, that such Liens may not extend to any other
property owned by the Issuer or any of its Restricted
Subsidiaries;
(9) Liens on property at the time the Issuer or a
Restricted Subsidiary acquired the property, including any
acquisition by means of a merger or consolidation with or into
the Issuer or any of its Restricted Subsidiaries;
provided, however, that such Liens are not created
or incurred in connection with, or in contemplation of, such
acquisition; provided, further, however,
that the Liens may not extend to any other property owned by the
Issuer or any of its Restricted Subsidiaries;
(10) Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Issuer or another Restricted
Subsidiary permitted to be incurred in accordance with the
covenant described under “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
(11) Liens securing Hedging Obligations so long as the
related Indebtedness is, and is permitted to be under the
Indenture, secured by a Lien on the same property securing such
Hedging Obligations;
(12) Liens on specific items of inventory or other goods
and proceeds of any Person securing such Person’s
obligations in respect of bankers’ acceptances issued or
created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(13) leases, subleases, licenses or sublicenses granted to
others in the ordinary course of business which do not
materially interfere with the ordinary conduct of the business
of the Issuer or any of its Restricted Subsidiaries and do not
secure any Indebtedness;
(14) Liens arising from Uniform Commercial Code financing
statement filings regarding operating leases entered into by the
Issuer and its Restricted Subsidiaries in the ordinary course of
business;
(15) Liens in favor of the Issuer or any Guarantor;
(16) Liens on equipment of the Issuer or any of its
Restricted Subsidiaries granted in the ordinary course of
business;
(17) Liens on accounts receivable and related assets
incurred in connection with a Receivables Facility;
(18) Liens to secure any refinancing, refunding, extension,
renewal or replacement (or successive refinancing, refunding,
extensions, renewals or replacements) as a whole, or in part, of
any Indebtedness secured by any Lien referred to in the
foregoing clauses (6), (7), (8) and (9); provided,
however, that (a) such new Lien shall be limited to
all or part of the same property that secured the original Lien
(plus improvements on such property), 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 clauses (6), (7), (8) and
(9) at the time the original Lien became a Permitted Lien
under the Indenture, and (ii) an amount necessary to pay
any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement;
(19) deposits made in the ordinary course of business to
secure liability to insurance carriers;
(20) other Liens securing obligations incurred in the
ordinary course of business which obligations do not exceed
$100.0 million at any one time outstanding;
(21) Liens securing judgments for the payment of money not
constituting an Event of Default under clause (5) under the
caption “Events of Default and Remedies” so long as
such Liens are adequately bonded and any appropriate legal
proceedings that may have been duly initiated for the review of
such judgment have not been finally terminated or the period
within which such proceedings may be initiated has not expired;
(22) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
in connection with the importation of goods in the ordinary
course of business;
(23) Liens (i) of a collection bank arising under
Section 4-210
of the Uniform Commercial Code, or any comparable or successor
provision, on items in the course of collection,
(ii) attaching to commodity
trading accounts or other commodity brokerage accounts incurred
in the ordinary course of business, and (iii) in favor of
banking institutions arising as a matter of law encumbering
deposits (including the right of set-off) and which are within
the general parameters customary in the banking industry;
(24) Liens deemed to exist in connection with Investments
in repurchase agreements permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
provided that such Liens do not extend to any assets
other than those that are the subject of such repurchase
agreements;
(25) Liens encumbering reasonable customary initial
deposits and margin deposits and similar Liens attaching to
commodity trading accounts or other brokerage accounts incurred
in the ordinary course of business and not for speculative
purposes;
(26) Liens that are contractual rights of set-off
(i) relating to the establishment of depository relations
with banks not given in connection with the issuance of
Indebtedness, (ii) relating to pooled deposit or sweep
accounts of the Issuer or any of its Restricted Subsidiaries to
permit satisfaction of overdraft or similar obligations incurred
in the ordinary course of business of the Issuer and its
Restricted Subsidiaries or (iii) relating to purchase
orders and other agreements entered into with customers of the
Issuer or any of its Restricted Subsidiaries in the ordinary
course of business;
(27) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale or
purchase of goods entered into by the Issuer or any Restricted
Subsidiary in the ordinary course of business; and
(28) Liens that rank junior to the Liens securing the Notes
securing the Junior Lien Obligations.
For purposes of this definition, the term
“Indebtedness” shall be deemed to include interest on
such Indebtedness.
“Person” means any individual, corporation,
limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
“Physician Support Obligation” means (1) a
loan to or on behalf of, or a guarantee of Indebtedness or
income of, a physician or health care professional providing
service to patients in the service area of a health care
facility operated by the Issuer, any of its Restricted
Subsidiaries or any affiliated joint venture otherwise permitted
by the Indenture made or given by the Issuer or any Restricted
Subsidiary of the Issuer in the ordinary course of business and
pursuant to a written agreement having a period not to exceed
five years or (2) guarantees by the Issuer or any
Restricted Subsidiary of the Issuer of leases and loans to
acquire property (real or personal) for or on behalf of a
physician or health care professional providing service to
patients in the service area of a health care facility operated
by the Issuer, any of its Restricted Subsidiaries or any
affiliated joint venture otherwise permitted by the Indenture.
“Plan of Reorganization” means any plan of
reorganization, plan of liquidation, agreement for composition,
or other type of plan of arrangement proposed in or in
connection with any insolvency or liquidation proceeding.
“Preferred Stock” means any Equity Interest
with preferential rights of payment of dividends or upon
liquidation, dissolution or winding up.
“Principal Property” means each acute care
hospital providing general medical and surgical services
(excluding equipment, personal property and hospitals that
primarily provide specialty medical services, such as
psychiatric and obstetrical and gynecological services) owned
solely by the Issuer
and/or one
or more of its Subsidiaries (used in this definition as defined
in the Existing Notes Indenture) and located in the United
States of America.
“Purchase Money Obligations” means any
Indebtedness incurred to finance or refinance the acquisition,
leasing, construction or improvement of property (real or
personal) or assets (other than Capital Stock), and whether
acquired through the direct acquisition of such property or
assets, or otherwise.
“Qualified Proceeds” means assets that are used
or useful in, or Capital Stock of any Person engaged in, a
Similar Business; provided that the fair market value of
any such assets or Capital Stock shall be determined by the
Issuer in good faith.
“Rating Agencies” means Moody’s and
S&P or if Moody’s or S&P or both shall not make a
rating on the Notes publicly available, a nationally recognized
statistical rating agency or agencies, as the case may be,
selected by the Issuer which shall be substituted for
Moody’s or S&P or both, as the case may be.
“Receivables Facility” means any of one or more
receivables financing facilities as amended, supplemented,
modified, extended, renewed, restated or refunded from time to
time, the Obligations of which are non-recourse (except for
customary representations, warranties, covenants and indemnities
made in connection with such facilities) to the Issuer or any of
its Restricted Subsidiaries (other than a Receivables
Subsidiary) pursuant to which the Issuer or any of its
Restricted Subsidiaries purports to sell its accounts receivable
to either (a) a Person that is not a Restricted Subsidiary
or (b) a Receivables Subsidiary that in turn funds such
purchase by purporting to sell its accounts receivable to a
Person that is not a Restricted Subsidiary or by borrowing from
such a Person or from another Receivables Subsidiary that in
turn funds itself by borrowing from such a Person.
“Receivables Fees” means distributions or
payments made directly or by means of discounts with respect to
any accounts receivable or participation interest therein issued
or sold in connection with, and other fees paid to a Person that
is not a Restricted Subsidiary in connection with any
Receivables Facility.
“Receivables Subsidiary” means any Subsidiary
formed for the purpose of facilitating or entering into one or
more Receivables Facilities, and in each case engages only in
activities reasonably related or incidental thereto.
“Redemption Date” has the meaning set
forth under “Optional Redemption.”
“Registration Rights Agreement” means the
Registration Rights Agreement related to the Notes, dated as of
the Issue Date, among the Issuer, the Guarantors and the Initial
Purchasers.
“Related Business Assets” means assets (other
than cash or Cash Equivalents) used or useful in a Similar
Business; provided that any assets received by the Issuer
or a Restricted Subsidiary in exchange for assets transferred by
the Issuer or a Restricted Subsidiary will not be deemed to be
Related Business Assets if they consist of securities of a
Person, unless upon receipt of the securities of such Person,
such Person would become a Restricted Subsidiary.
“Restricted Investment” means an Investment
other than a Permitted Investment.
“Restricted Subsidiary” means, at any time, any
direct or indirect Subsidiary of the Issuer (including any
Foreign Subsidiary) that is not then an Unrestricted Subsidiary;
provided, however, that upon an Unrestricted
Subsidiary’s ceasing to be an Unrestricted Subsidiary, such
Subsidiary shall be included in the definition of
“Restricted Subsidiary.”
“S&P” means Standard &
Poor’s, a division of The McGraw-Hill Companies, Inc., and
any successor to its rating agency business.
“Sale and Lease-Back Transaction” means any
arrangement providing for the leasing by the Issuer or any of
its Restricted Subsidiaries of any real or tangible personal
property, which property has been or is to be sold or
transferred by the Issuer or such Restricted Subsidiary to a
third Person in contemplation of such leasing.
“SEC” means the U.S. Securities and
Exchange Commission.
“Secured Indebtedness” means any Indebtedness
of the Issuer or any of its Restricted Subsidiaries secured by a
Lien.
“Securities Act” means the Securities Act of
1933, as amended, and the rules and regulations of the SEC
promulgated thereunder.
“Security Agreement” means the amended and
restated Security Agreement, dated as of March 2, 2009, by
and among the Issuer, the subsidiary grantors named therein and
the First Lien Collateral Agent, as the same may be further
amended, restated or modified from time to time, to which the
Trustee, as Authorized Representative for the Holders will be
joined on the Issue Date.
“Security Documents” means, collectively, the
Intercreditor Agreements, the Security Agreement, other security
agreements relating to the Collateral and the mortgages and
instruments filed and recorded in appropriate jurisdictions to
preserve and protect the Liens on the Collateral (including,
without limitation, financing statements under the Uniform
Commercial Code of the relevant states) applicable to the
Collateral, each as in effect on the Issue Date and as amended,
amended and restated, modified, renewed or replaced from time to
time.
“Senior Credit Facilities” means the ABL
Facility and the General Credit Facility.
“Senior Indebtedness” means:
(1) all Indebtedness of the Issuer or any Guarantor
outstanding under the Senior Credit Facilities or Notes and
related Guarantees (including interest accruing on or after the
filing of any petition in bankruptcy or similar proceeding or
for reorganization of the Issuer or any Guarantor (at the rate
provided for in the documentation with respect thereto,
regardless of whether or not a claim for post-filing interest is
allowed in such proceedings)), and any and all other fees,
expense reimbursement obligations, indemnification amounts,
penalties, and other amounts (whether existing on the Issue Date
or thereafter created or incurred) and all obligations of the
Issuer or any Guarantor to reimburse any bank or other Person in
respect of amounts paid under letters of credit, acceptances or
other similar instruments;
(2) all Hedging Obligations (and guarantees thereof) owing
to a Lender (as defined in the Senior Credit Facilities) or any
Affiliate of such Lender (or any Person that was a Lender or an
Affiliate of such Lender at the time the applicable agreement
giving rise to such Hedging Obligation was entered into);
provided that such Hedging Obligations are permitted to
be incurred under the terms of the Indenture;
(3) any other Indebtedness of the Issuer or any Guarantor
permitted to be incurred under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred
expressly provides that it is subordinated in right of payment
to the Notes or any related Guarantee; and
(4) all Obligations with respect to the items listed in the
preceding clauses (1), (2) and (3);
provided, however, that Senior Indebtedness shall
not include:
(a) any obligation of such Person to the Issuer or any of
its Subsidiaries;
(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
(e) that portion of any Indebtedness which at the time of
incurrence is incurred in violation of the Indenture.
“Separate Receivables Collateral” has the
meaning set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantees and Security.”
“Series”means (a) with respect to the
First Lien Secured Parties, each of (i) the General Credit
Facility Secured Parties (in their capacities as such),
(ii) the Holders and the Trustee, each in their capacity as
such) and (iii) the Additional First Lien Secured Parties
that become subject to the First Lien Intercreditor Agreement
after the date hereof that are represented by a common
Authorized Representative (in its capacity as such for such
Additional First Lien Secured Parties) and (b) with respect
to any First Lien Obligations, each of (i) the General
Credit Facility Obligations, (ii) the Notes Obligations and
(iii) the Additional First Lien Obligations incurred
pursuant to any applicable agreement, which pursuant to any
joinder agreement, are to be represented under the First Lien
Intercreditor Agreement by a common Authorized Representative
(in its capacity as such for such Additional First Lien
Obligations).
“Shared Receivables Collateral” has the meaning
set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantees and Security.”
“Significant Subsidiary” means any Restricted
Subsidiary that would be a “significant subsidiary” as
defined in Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such regulation
is in effect on the Issue Date.
“Similar Business” means any business conducted
or proposed to be conducted by the Issuer and its Restricted
Subsidiaries on the Issue Date or any business that is similar,
reasonably related, incidental or ancillary thereto.
“Sponsor Management Agreement” means the
management agreement between certain of the management companies
associated with the Investors, the Frist Entities and the Issuer.
“Subordinated Indebtedness” means, with respect
to the Notes,
(1) any Indebtedness of the Issuer which is by its terms
subordinated in right of payment to the Notes, and
(2) any Indebtedness of any Guarantor which is by its terms
subordinated in right of payment to the Guarantee of such entity
of the Notes.
“Subsidiary” means, with respect to any Person:
(1) any corporation, association, or other business entity
(other than a partnership, joint venture, limited liability
company or similar entity) of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of
determination owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that
Person or a combination thereof or is consolidated under GAAP
with such Person at such time; and
(2) any partnership, joint venture, limited liability
company or similar entity of which
(x) more than 50% of the capital accounts, distribution
rights, total equity and voting interests or general or limited
partnership interests, as applicable, are owned or controlled,
directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof
whether in the form of membership, general, special or limited
partnership or otherwise, and
(y) such Person or any Restricted Subsidiary of such Person
is a controlling general partner or otherwise controls such
entity.
“Total Assets” means the total assets of the
Issuer and its Restricted Subsidiaries on a consolidated basis,
as shown on the most recent consolidated balance sheet of the
Issuer or such other Person as may be expressly stated.
“Transaction” means the transactions
contemplated by the Transaction Agreement, the issuance of the
Notes and borrowings under the Senior Credit Facilities as in
effect on November 17, 2006.
“Transaction Agreement” means the Agreement and
Plan of Merger, dated as of July 24, 2006, between Hercules
Holding II, LLC, Hercules Acquisition Corporation and the
Issuer, as the same may be amended prior to the Issue Date.
“Treasury Rate” means, as of any
Redemption Date, the yield to maturity as of such
Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) that has
become publicly available at least two Business Days prior to
the Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source of similar
market data)) most nearly equal to the period from the
Redemption Date to April 15, 2014;
provided, however, that if the period from the
Redemption Date to April 15, 2014 is less than one
year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year
will be used.
“Trust Indenture Act” means the
Trust Indenture Act of 1939, as amended (15 U.S.C.
§§ 77aaa-777bbbb).
“Unrestricted Subsidiary” means:
(1) any Subsidiary of the Issuer which at the time of
determination is an Unrestricted Subsidiary (as designated by
the Issuer, as provided below); and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Issuer may designate any Subsidiary of the Issuer (including
any existing Subsidiary and any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Equity Interests
or Indebtedness of, or owns or holds any Lien on, any property
of, the Issuer or any Subsidiary of the Issuer (other than
solely any Subsidiary of the Subsidiary to be so designated);
provided that
(1) any Unrestricted Subsidiary must be an entity of which
the Equity Interests entitled to cast at least a majority of the
votes that may be cast by all Equity Interests having ordinary
voting power for the election of directors or Persons performing
a similar function are owned, directly or indirectly, by the
Issuer;
(2) such designation complies with the covenants described
under “Certain Covenants — Limitation on
Restricted Payments”; and
(3) each of:
(a) the Subsidiary to be so designated; and
(b) its Subsidiaries
has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness
pursuant to which the lender has recourse to any of the assets
of the Issuer or any Restricted Subsidiary.
The Issuer may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that, immediately after
giving effect to such designation, no Default shall have
occurred and be continuing and either:
(1) the Issuer could incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test
described in the first paragraph under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred
Stock”; or
(2) the Fixed Charge Coverage Ratio for the Issuer and its
Restricted Subsidiaries would be greater than such ratio for the
Issuer and its Restricted Subsidiaries immediately prior to such
designation, in each case on a pro forma basis taking into
account such designation.
Any such designation by the Issuer shall be notified by the
Issuer to the Trustee by promptly filing with the Trustee a copy
of the resolution of the board of directors of the Issuer or any
committee thereof giving effect to such designation and an
Officer’s Certificate certifying that such designation
complied with the foregoing provisions.
“Voting Stock” of any Person as of any date
means the Capital Stock of such Person that is at the time
entitled to vote in the election of the board of directors of
such Person.
“Weighted Average Life to Maturity” means, when
applied to any Indebtedness, Disqualified Stock or Preferred
Stock, as the case may be, at any date, the quotient obtained by
dividing:
(1) the sum of the products of the number of years from the
date of determination to the date of each successive scheduled
principal payment of such Indebtedness or redemption or similar
payment with respect to such Disqualified Stock or Preferred
Stock multiplied by the amount of such payment; by
(2) the sum of all such payments.
“Wholly-Owned Subsidiary” of any Person means a
Subsidiary of such Person, 100% of the outstanding Equity
Interests of which (other than directors’ qualifying
shares) shall at the time be owned by such Person or by one or
more Wholly-Owned Subsidiaries of such Person.
Certain terms used in this description are defined under the
subheading “Certain Definitions.” In this description,
the terms “we,”“our,”“us” and “the Company” each
refer to HCA Inc. (the “Issuer”) and its
consolidated Subsidiaries.
The Issuer issued $1,250,000,000 aggregate principal amount of
77/8% senior
secured notes due 2020 (the “Notes”) under an
indenture dated as of the closing date of the offering of the
Notes (the “Indenture”) among the Issuer, the
Guarantors and Law Debenture Trust Company of New York, as
trustee (the “Trustee”), and Deutsche Bank
Trust Company Americas, as Paying Agent, Registrar and
Transfer Agent. The Notes were issued in a private transaction
that is not subject to the registration requirements of the
Securities Act. Except as set forth herein, the terms of the
Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act.
The following description is only a summary of the material
provisions of the Indenture, does not purport to be complete and
is qualified in its entirety by reference to the provisions of
those agreements, including the definitions therein of certain
terms used below. We urge you to read the Indenture because it,
and not this description, defines your rights as Holders of the
Notes.
Brief
Description of Notes
The Notes:
•
are general senior obligations of the Issuer;
•
are secured on a first-priority basis, equally and ratably with
all existing and future obligations of the Issuer and the
Guarantors under any existing and future First Lien Obligations,
by all of the assets of the Issuer and the Guarantors which
secure the General Credit Facility (other than the European
Collateral), subject to the Liens securing the Issuer’s and
the Guarantors’ ABL Obligations and other Permitted Liens;
•
are secured on a second-priority basis, equally and ratably with
all existing and future obligations of the Issuer and the
Guarantors under any existing and future First Lien Obligations,
by all of the assets of the Issuer and the Guarantors securing
the ABL Facility which also secure the General Credit Facility,
subject to the Liens securing the Issuer’s and the
Guarantors’ ABL Obligations and other Permitted Liens;
•
are effectively subordinated to the Issuer’s and the
Guarantors’ obligations under the ABL Facility, to the
extent of the value of the Shared Receivables Collateral;
•
are effectively subordinated to any obligations secured by
Permitted Liens, to the extent of the value of the assets of the
Issuer and the Guarantors subject to those Permitted Liens;
•
are structurally subordinated to any existing and future
indebtedness and liabilities of non-guarantor Subsidiaries,
including the ABL Financing Entities and the Issuer’s
Foreign Subsidiaries and any Unrestricted Subsidiaries and
including indebtedness under the Company’s senior secured
European term loan facility included in the General Credit
Facility;
•
rank equally in right of payment with all existing and future
senior Indebtedness of the Issuer and the Guarantors but, to the
extent of the value of the Collateral, are effectively senior to
all of the Issuer’s and the Guarantors’ unsecured
senior Indebtedness (including the Existing Notes) and Junior
Lien Obligations (including the Existing Second Priority Notes);
•
are senior in right of payment to any future Subordinated
Indebtedness (as defined with respect to the Notes) of the
Issuer;
are initially unconditionally guaranteed on a joint and several
and senior basis by each Restricted Subsidiary that guarantees
the General Credit Facility (other than any Foreign
Subsidiary); and
•
are subject to registration with the SEC pursuant to the
Registration Rights Agreement.
Guarantees
The Guarantors, as primary obligors and not merely as sureties,
jointly and severally fully and unconditionally guarantee, on a
senior basis, the performance and full and punctual payment when
due, whether at maturity, by acceleration or otherwise, of all
obligations of the Issuer under the Indenture and the Notes,
whether for payment of principal of, premium, if any, or
interest or Additional Interest in respect of the Notes,
expenses, indemnification or otherwise, on the terms set forth
in the Indenture by executing the Indenture.
The Restricted Subsidiaries which guarantee the General Credit
Facility guarantee the Notes. Each of the Guarantees of the
Notes is a general senior obligation of each Guarantor and is
secured by a first-priority lien on all of the assets of each
Guarantor which secure the General Credit Facility (other than
the European Collateral) and by a second-priority lien on all of
the assets of each Guarantor which secure the ABL Facility. The
Guarantees rank equally in right of payment with all existing
and future senior Indebtedness of the Guarantor but, to the
extent of the value of the Collateral, are effectively senior to
all of the Guarantor’s unsecured senior Indebtedness and
Junior Lien Obligations and, to the extent of the Shared
Receivables Collateral, are effectively subordinated to the
Guarantor’s Obligations under the ABL Facility and any
future ABL Obligations. The Guarantees are senior in right of
payment to all existing and future Subordinated Indebtedness of
each Guarantor. The Notes are structurally subordinated to
Indebtedness and other liabilities of Subsidiaries of the Issuer
that do not Guarantee the Notes.
Not all of the Issuer’s Subsidiaries Guarantee the Notes.
In the event of a bankruptcy, liquidation or reorganization of
any of these non-guarantor Subsidiaries, the non-guarantor
Subsidiaries will pay the holders of their debt and their trade
creditors before they will be able to distribute any of their
assets to the Issuer. None of our Subsidiaries which are
“Restricted Subsidiaries” for purposes of the Existing
Notes Indenture, Foreign Subsidiaries, ABL Financing Entities,
non-Wholly Owned Subsidiaries or any Receivables Subsidiaries
will guarantee the Notes. For the year ended December 31,2009, our non-guarantor Subsidiaries accounted for approximately
$12.468 billion, or 41.5%, of our total revenues. As of
December 31, 2009, our non-guarantor Subsidiaries held
approximately $9.672 billion, or 40.1%, of our total assets and
approximately $6.750 billion, or 21.1%, of our total
liabilities. See Note 16 to our consolidated financial
statements included in this prospectus.
The obligations of each Guarantor under its Guarantee are
limited as necessary to prevent the Guarantee from constituting
a fraudulent conveyance under applicable law.
Any entity that makes a payment under its Guarantee is entitled
upon payment in full of all guaranteed obligations under the
Indenture to a contribution from each other Guarantor in an
amount equal to such other Guarantor’s pro rata portion of
such payment based on the respective net assets of all the
Guarantors at the time of such payment determined in accordance
with GAAP.
If a Guarantee were rendered voidable, it could be subordinated
by a court to all other indebtedness (including guarantees and
other contingent liabilities) of the Guarantor, and, depending
on the amount of such indebtedness, a Guarantor’s liability
on its Guarantee could be reduced to zero. See “Risk
Factors — Risks Related to the Notes —
Federal and state fraudulent transfer laws may permit a court to
void the guarantees, and, if that occurs, you may not receive
any payments on the notes.”
Each Guarantee by a Guarantor provides by its terms that it will
be automatically and unconditionally released and discharged
upon:
(1) (a) any sale, exchange or transfer (by merger or
otherwise) of the Capital Stock of such Guarantor (including any
sale, exchange or transfer), after which the applicable
Guarantor is no longer a
Restricted Subsidiary or all or substantially all the assets of
such Guarantor, which sale, exchange or transfer is made in
compliance with the applicable provisions of the Indenture;
(b) the release or discharge of the guarantee by such
Guarantor of the Senior Credit Facilities or such other
guarantee that resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under
such guarantee;
(c) the designation of any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in compliance with the
applicable provisions of the Indenture; or
(d) the exercise by the Issuer of its legal defeasance
option or covenant defeasance option as described under
“Legal Defeasance and Covenant Defeasance” or the
discharge of the Issuer’s obligations under the Indenture
in accordance with the terms of the Indenture; and
(2) such Guarantor delivering to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for in the
Indenture relating to such transaction have been complied with.
Holding
Company Structure
The Issuer is a holding company for its Subsidiaries, with no
material operations of its own and only limited assets.
Accordingly, the Issuer is dependent upon the distribution of
the earnings of its Subsidiaries, whether in the form of
dividends, advances or payments on account of intercompany
obligations, to service its debt obligations.
Security
General
The Notes and the Guarantees are secured by perfected
first-priority security interests in the Non-Receivables
Collateral and by perfected second-priority security interests
in the Shared Receivables Collateral (second in priority to the
first-priority Liens on the Shared Receivables Collateral
securing the ABL Obligations), in each case, subject to
Permitted Liens. Notwithstanding the foregoing, neither the
Notes nor the Guarantees are secured by the European Collateral
or the Separate Receivables Collateral. The ABL Secured Parties
have rights and remedies with respect to the Shared Receivables
Collateral that, if exercised, could adversely affect the value
of the Shared Receivables Collateral or the ability of the
respective agents under the Intercreditor Agreements to realize
or foreclose on the Shared Receivables Collateral on behalf of
the First Lien Secured Parties. First Lien Secured Parties other
than the Holders of the Notes have rights and remedies with
respect to the Collateral that, if exercised, could also
adversely affect the value of the Collateral on behalf of the
Holders of the Notes, particularly the rights described below
under “— First Lien Intercreditor
Agreement.” For a description of the Shared Receivables
Collateral and the Non-Receivables Collateral, see
“Description of Other Indebtedness — Senior
Secured Credit Facilities — Guarantee and
Security.”
The Issuer and the Guarantors are and will be able to incur
additional Indebtedness in the future which could share in the
Collateral, including additional First Lien Obligations,
additional ABL Obligations, additional Junior Lien Obligations
and Obligations secured by Permitted Liens. The amount of such
additional Obligations is and will be limited by the covenant
described under “Certain Covenants — Liens”
and the covenant described under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock.”
Under certain circumstances, the amount of any such additional
Obligations could be significant.
After-Acquired
Collateral
From and after the Issue Date and subject to certain limitations
and exceptions, (a) if the Issuer or any Guarantor creates
any additional security interest upon any property or asset that
would constitute Collateral to secure any First Lien Obligations
(other than European Collateral and Separate Receivables
Collateral), it must concurrently grant a first-priority
perfected security interest (subject to Permitted Liens) upon
such property as
security for the Notes and (b) if the Issuer or any
Guarantor creates any additional security interest upon any
property or asset that would constitute Shared Receivables
Collateral to secure any ABL Obligations, it must concurrently
grant a second-priority perfected security interest (subject to
Permitted Liens) upon such property as security for the Notes.
Liens
with Respect to the Collateral
The Issuer, the Guarantors and the First Lien Collateral Agent
entered into Security Documents in connection with the General
Credit Facility and the Existing First Priority Notes with
respect to the Collateral defining the terms of the security
interests that secure the General Credit Facility and the
Existing First Priority Notes with respect to such Collateral
and that define the terms of the security interests that secure
the Notes and the Guarantees with respect to such Collateral.
These security interests secure the payment and performance when
due of all of the Obligations of the Issuers and the Guarantors
under the Notes, the Indenture, the Guarantees and the Security
Documents, as provided in the Security Documents.
First
Lien Intercreditor Agreement
The First Lien Collateral Agent has entered into, and the
Trustee, as authorized representative for the holders of the
notes, has consented to, a First Lien Intercreditor Agreement
(as the same may be amended from time to time, the
“First Lien Intercreditor Agreement”) with the
Authorized Representative of the General Credit Facility
Obligations with respect to the Collateral, which may be amended
from time to time without the consent of the Holders to add
other parties holding First Lien Obligations permitted to be
incurred under the Indenture, General Credit Facility, the
Existing First Priority Notes Indenture and the First Lien
Intercreditor Agreement. The First Lien Collateral Agent is
initially the collateral agent under the General Credit Facility.
Under the First Lien Intercreditor Agreement, as described
below, the “Applicable Authorized Representative” has
the right to direct foreclosures and take other actions with
respect to the Common Collateral, and the Authorized
Representatives of other Series of First Lien Obligations have
no right to take actions with respect to the Common Collateral.
The Applicable Authorized Representative is the administrative
agent under the General Credit Facility, and the Trustee for the
Holders, as Authorized Representative in respect of the Notes,
will have no rights to take any action under the First Lien
Intercreditor Agreement. Because the Existing First Priority
Notes were issued in a greater aggregate principal amount than
expected for the Notes and the covenants and events of default
under the Existing First Priority Notes Indenture are
substantially identical to those described herein, the
Authorized Representative for the Notes is unlikely to become
the Major Non-Controlling Authorized Representative at a time
when the Existing First Priority Notes are outstanding.
The administrative agent under the General Credit Facility will
remain the Applicable Authorized Representative until the
earlier of (1) the Discharge of General Credit Facility
Obligations and (2) the Non-Controlling Authorized
Representative Enforcement Date (such date, the
“Applicable Authorized Agent Date”). After the
Applicable Authorized Agent Date, the Applicable Authorized
Representative will be the Authorized Representative of the
Series of Additional First Lien Obligations that constitutes the
largest outstanding principal amount of any then outstanding
Series of First Lien Obligations, other than the General Credit
Facility Obligations, with respect to the Common Collateral (the
“Major Non-Controlling Authorized
Representative”).
The “Non-Controlling Authorized Representative
Enforcement Date” is the date that is 90 days
(throughout which
90-day
period the applicable Authorized Representative was the Major
Non-Controlling Authorized Representative) after the occurrence
of both (a) an event of default, as defined in the
Indenture or other applicable indenture for that Series of First
Lien Obligations, and (b) the First Lien Collateral
Agent’s and each other Authorized Representative’s
receipt of written notice from that Authorized Representative
certifying that (i) such Authorized Representative is the
Major Non-Controlling Authorized Representative and that an
event of default, as defined in the Indenture or other
applicable indenture for that Series of First Lien Obligations,
has occurred and is continuing and (ii) the First Lien
Obligations of that Series are currently due
and payable in full (whether as a result of acceleration thereof
or otherwise) in accordance with the Indenture or other
applicable indenture for that Series of First Lien Obligations;
provided that the Non-Controlling Authorized
Representative Enforcement Date shall be stayed and shall not
occur and shall be deemed not to have occurred with respect to
any Shared Collateral (1) at any time the administrative
agent under the General Credit Facility or the First Lien
Collateral Agent has commenced and is diligently pursuing any
enforcement action with respect to such Common Collateral or
(2) at any time the Issuer or the Guarantor that has
granted a security interest in such Common Collateral is then a
debtor under or with respect to (or otherwise subject to) any
insolvency or liquidation proceeding.
The Applicable Authorized Representative shall have the sole
right to instruct the First Lien Collateral Agent to act or
refrain from acting with respect to the Common Collateral,
(b) the First Lien Collateral Agent shall not follow any
instructions with respect to such Common Collateral from any
representative of any Non-Controlling Secured Party or other
First Lien Secured Party (other than the Applicable Authorized
Representative), and (c) no Authorized Representative of
any Non-Controlling Secured Party or other First Lien Secured
Party (other than the Applicable Authorized Representative) will
instruct the First Lien Collateral Agent to commence any
judicial or non-judicial foreclosure proceedings with respect
to, seek to have a trustee, receiver, liquidator or similar
official appointed for or over, attempt any action to take
possession of, exercise any right, remedy or power with respect
to, or otherwise take any action to enforce its interests in or
realize upon, or take any other action available to it in
respect of, the Common Collateral.
Notwithstanding the equal priority of the Liens, the First Lien
Collateral Agent, acting on the instructions of the Applicable
Authorized Representative, may deal with the Common Collateral
as if such Applicable Authorized Representative had a senior
Lien on such Collateral. No representative of any
Non-Controlling Secured Party may contest, protest or object to
any foreclosure proceeding or action brought by the First Lien
Collateral Agent, Applicable Authorized Representative or
Controlling Secured Party. The Trustee and each other Authorized
Representative agrees that it will not accept any Lien on any
Collateral for the benefit of the Holders (other than funds
deposited for the discharge or defeasance of the Notes) other
than pursuant to the First Lien Security Documents. Each of the
New First Lien Secured Parties also agrees that it will not
contest or support any other person in contesting, in any
proceeding (including any insolvency or liquidation proceeding),
the perfection, priority, validity or enforceability of a Lien
held by or on behalf of any of the New First Lien Secured
Parties in all or any part of the Collateral, or the provisions
of the First Lien Intercreditor Agreement.
If a First Lien Event of Default has occurred and is continuing
and the First Lien Collateral Agent is taking action to enforce
rights in respect of any Common Collateral, or any distribution
is made with respect to any Common Collateral in any bankruptcy
case of the Issuer or any Guarantor, the proceeds of any sale,
collection or other liquidation of any such Collateral by the
First Lien Collateral Agent or any other First Lien Secured
Party (or received pursuant to any other intercreditor
agreement), as applicable, and proceeds of any such distribution
(subject, in the case of any such distribution, to the paragraph
immediately following) to which the First Lien Obligations are
entitled under any other intercreditor agreement shall be
applied among the First Lien Obligations to the payment in full
of the First Lien Obligations on a ratable basis, after payment
of all amounts owing to the First Lien Collateral Agent.
Notwithstanding the foregoing, with respect to any Common
Collateral for which a third party (other than a First Lien
Secured Party) has a lien or security interest that is junior in
priority to the security interest of any Series of First Lien
Obligations but senior (as determined by appropriate legal
proceedings in the case of any dispute) to the security interest
of any other Series of First Lien Obligations (such third party,
an “Intervening Creditor”), the value of any
Common Collateral or proceeds which are allocated to such
Intervening Creditor shall be deducted on a ratable basis solely
from the Common Collateral or proceeds to be distributed in
respect of the Series of First Lien Obligations with respect to
which such Impairment exists.
None of the First Lien Secured Parties may institute any suit or
assert in any suit, bankruptcy, insolvency or other proceeding
any claim against the First Lien Collateral Agent or any other
First Lien Secured Party seeking damages from or other relief by
way of specific performance, instructions or otherwise with
respect to any Common Collateral. In addition, none of the First
Lien Secured Parties may seek to have any Common
Collateral or any part thereof marshaled upon any foreclosure or
other disposition of such Collateral. If any First Lien Secured
Party obtains possession of any Common Collateral or realizes
any proceeds or payment in respect thereof, at any time prior to
the discharge of each of the First Lien Obligations, then it
must hold such Common Collateral, proceeds or payment in trust
for the other First Lien Secured Parties and promptly transfer
such Common Collateral, proceeds or payment to the First Lien
Collateral Agent to be distributed in accordance with the First
Lien Intercreditor Agreement.
If the Issuer or any Guarantor becomes subject to any bankruptcy
case, the First Lien Intercreditor Agreement provides that
(1) if the Issuer or any Guarantor shall, as
debtor(s)-in-possession, move for approval of financing (the
“DIP Financing”) to be provided by one or more
lenders (the “DIP Lenders”) under
Section 364 of the Bankruptcy Code or the use of cash
collateral under Section 363 of the Bankruptcy Code, each
First Lien Secured Party will agree not to object to any such
financing or to the Liens on the Common Collateral securing the
same (the “DIP Financing Liens”) or to any use
of cash collateral that constitutes Common Collateral, unless
any Controlling Secured Party, or an Authorized Representative
of any Controlling Secured Party, shall then oppose or object to
such DIP Financing or such DIP Financing Liens or use of cash
collateral (and (i) to the extent that such DIP Financing
Liens are senior to the Liens on any such Common Collateral for
the benefit of the Controlling Secured Parties, each
Non-Controlling Secured Party will subordinate its Liens with
respect to such Common Collateral on the same terms as the Liens
of the Controlling Secured Parties (other than any Liens of any
First Lien Secured Parties constituting DIP Financing Liens) are
subordinated thereto, and (ii) to the extent that such DIP
Financing Liens rank pari passu with the Liens on any
such Common Collateral granted to secure the First Lien
Obligations of the Controlling Secured Parties, each
Non-Controlling Secured Party will confirm the priorities with
respect to such Common Collateral as set forth in the First Lien
Intercreditor Agreement), in each case so long as:
(A) the First Lien Secured Parties of each Series retain
the benefit of their Liens on all such Common Collateral pledged
to the DIP Lenders, including proceeds thereof arising after the
commencement of such proceeding, with the same priority
vis-a-vis
all the other First Lien Secured Parties (other than any Liens
of the First Lien Secured Parties constituting DIP Financing
Liens) as existed prior to the commencement of the bankruptcy
case,
(B) the First Lien Secured Parties of each Series are
granted Liens on any additional collateral pledged to any First
Lien Secured Parties as adequate protection or otherwise in
connection with such DIP Financing or use of cash collateral,
with the same priority
vis-a-vis
the First Lien Secured Parties as set forth in the First Lien
Intercreditor Agreement,
(C) if any amount of such DIP Financing or cash collateral
is applied to repay any of the First Lien Obligations, such
amount is applied pursuant to the First Lien Intercreditor
Agreement, and
(D) if any First Lien Secured Parties are granted adequate
protection, including in the form of periodic payments, in
connection with such DIP Financing or use of cash collateral,
the proceeds of such adequate protection is applied pursuant to
the First Lien Intercreditor Agreement;
provided that the First Lien Secured Parties of each
Series shall have a right to object to the grant of a Lien to
secure the DIP Financing over any Collateral subject to Liens in
favor of the First Lien Secured Parties of such Series or its
representative that shall not constitute Common Collateral; and
provided, further, that the First Lien Secured
Parties receiving adequate protection shall not object to any
other First Lien Secured Party receiving adequate protection
comparable to any adequate protection granted to such First Lien
Secured Parties in connection with a DIP Financing or use of
cash collateral.
The First Lien Secured Parties acknowledge that the First Lien
Obligations of any Series may, subject to the limitations set
forth in the other First Lien Documents, be increased, extended,
renewed, replaced, restated, supplemented, restructured, repaid,
refunded, refinanced or otherwise amended or modified from time
to time, all without affecting the priorities set forth in the
First Lien Intercreditor Agreement defining the relative rights
of the First Lien Secured Parties of any Series.
The First Lien Collateral Agent is a party to an Additional
General Intercreditor Agreement dated the Issue Date (as the
same may be amended from time to time, the “Additional
General Intercreditor Agreement”), by and among the
First Lien Collateral Agent, the Junior Lien Collateral Agent
and the trustees under the Existing Second Priority Notes
Indentures and the Existing First Priority Notes Indenture, by
which the Notes are given the same ranking and rights with
respect to the Collateral as provided to the General Credit
Facility under the General Intercreditor Agreement, dated as of
November 17, 2006, by and among the First Lien Collateral
Agent and the Junior Lien Collateral Agent. Pursuant to the
terms of the Additional General Intercreditor Agreement and
subject to the First Lien Intercreditor Agreement, prior to the
Discharge of New First Lien Obligations, the First Lien
Collateral Agent, acting on behalf of the New First Lien
Secured Parties, will determine the time and method by which the
security interests in the Collateral will be enforced and will
have the sole and exclusive right to manage, perform and enforce
the terms of the Security Documents relating to the Collateral
and to exercise and enforce all privileges, rights and remedies
thereunder according to its direction, including to take or
retake control or possession of such Collateral and to hold,
prepare for sale, marshall, process, sell, lease, dispose of or
liquidate such Collateral, including, without limitation,
following the occurrence of a Default or Event of Default under
the Indenture. The Junior Lien Collateral Agent will not be
permitted to enforce the security interests even if any event of
default under an Existing Second Priority Notes Indenture has
occurred and the Existing Second Priority Notes issued
thereunder have been accelerated except (a) in any
insolvency or liquidation proceeding, solely as necessary to
file a proof of claim or statement of interest with respect to
the Junior Lien Obligations or (b) as necessary to take any
action in order to prove, preserve, perfect or protect (but not
enforce) its security interest and rights in, and the perfection
and priority of its Lien on, the Collateral.
The Junior Lien Collateral Agent, for itself and on behalf of
each Junior Lien Secured Party, has agreed pursuant to the
Additional General Intercreditor Agreement that (a) it will
not (and thereby waives any right to) take any action to
challenge, contest or support any other Person in contesting or
challenging, directly or indirectly, in any proceeding
(including any insolvency or liquidation proceeding), the
validity, perfection, priority or enforceability of a Lien
securing any New First Lien Obligations held (or purported to be
held) by or on behalf of the First Lien Collateral Agent or any
of the New First Lien Secured Parties or any agent or trustee
therefor in any Collateral or other collateral securing both the
New First Lien Obligations and any Junior Lien Obligations and
(b) it will not oppose or otherwise contest (or support any
other Person contesting) any request for judicial relief made in
any court by the First Lien Collateral Agent or any New First
Lien Secured Parties relating to the lawful enforcement of any
First Priority Lien on Collateral or other collateral securing
both the New First Lien Obligations and any Junior Lien
Obligations.
In addition, the Security Documents provide that, subject to the
First Lien Intercreditor Agreement, prior to the Discharge of
New First Lien Obligations, the First Lien Collateral Agent may
take actions with respect to the Collateral (including the
release of Collateral and the manner of realization (subject to
the provisions described under “— Release of
Collateral”)) without the consent of the Junior Lien
Collateral Agent or other Junior Lien Secured Parties.
The Collateral or proceeds thereof received in connection with
the sale or other disposition of, or collection on, such
Non-Receivables Collateral upon the exercise of remedies will be
applied to the First Lien Obligations to be distributed in
accordance with the First Lien Intercreditor Agreement prior to
application to any Junior Lien Obligations in such order as
specified in the relevant First Lien Documents until the
Discharge of New First Lien Obligations has occurred.
In addition, so long as the Discharge of New First Lien
Obligations has not occurred, neither the Junior Lien Collateral
Agent nor any Junior Lien Representative shall acquire or hold
any Lien on any assets of the Issuer or any Subsidiary (and
neither the Issuer nor any Subsidiary shall grant such Lien)
securing any Junior Lien Obligations that are not also subject
to the First Priority Lien in respect of the New First Lien
Obligations under the New First Lien Documents.
The Junior Lien Collateral Agent and each other Junior Lien
Secured Party agrees that any Lien purported to be granted on
any collateral as security for New First Lien Obligations shall
be deemed to be and
shall be deemed to remain senior in all respects and prior to
all Liens on such collateral securing any Junior Lien
Obligations for all purposes regardless of whether the Lien
purported to be granted is found to be improperly granted,
improperly perfected, preferential, a fraudulent conveyance or
legally or otherwise deficient in any manner.
If any New First Lien Secured Party is required in any
insolvency or liquidation proceeding or otherwise to turn over
or otherwise pay to the estate of the Issuer or any other
Guarantor (or any trustee, receiver or similar person therefor),
because the payment of such amount was declared to be fraudulent
or preferential in any respect or for any other reason, any
amount (a “Recovery”), whether received as
proceeds of security, enforcement of any right of setoff or
otherwise, then as among the parties hereto, the New First Lien
Obligations shall be deemed to be reinstated to the extent of
such Recovery and to be outstanding as if such payment had not
occurred and such New First Lien Secured Party shall be
entitled to a reinstatement of New First Lien Obligations with
respect to all such recovered amounts and shall have all rights
hereunder. If the Additional General Intercreditor Agreement
shall have been terminated prior to such Recovery, the
Additional General Intercreditor Agreement shall be reinstated
in full force and effect, and such prior termination shall not
diminish, release, discharge, impair or otherwise affect the
obligations of the parties thereto.
The Additional General Intercreditor Agreement provides that so
long as the Discharge of New First Lien Obligations has not
occurred, whether or not any insolvency or liquidation
proceeding has been commenced by or against the Issuer or any
Guarantor, (i) neither the Junior Lien Collateral Agent,
any Junior Lien Representative nor any Junior Lien Secured Party
will (x) exercise or seek to exercise any rights or
remedies (including setoff or the right to credit bid debt
(except under limited circumstances)) with respect to any
collateral securing both the New First Lien Obligations and any
Junior Lien Obligations in respect of any applicable Junior Lien
Obligations, or institute any action or proceeding with respect
to such rights or remedies (including any action of
foreclosure), (y) contest, protest or otherwise object to
any foreclosure or enforcement proceeding or action brought with
respect to the Collateral or any other collateral by the First
Lien Collateral Agent or any New First Lien Secured Party in
respect of the New First Lien Obligations, the exercise of any
right by the First Lien Collateral Agent or any New First
Lien Secured Party (or any agent or
sub-agent on
their behalf) in respect of the New First Lien Obligations under
any control agreement, lockbox agreement, landlord waiver or
bailee’s letter or similar agreement or arrangement to
which the Junior Lien Collateral Agent, any Junior Lien
Representative or any Junior Lien Secured Party either is a
party or may have rights as a third-party beneficiary, or any
other exercise by any such party of any rights and remedies as a
secured party relating to such collateral or any other
collateral under the New First Lien Documents or otherwise in
respect of New First Lien Obligations, or (z) object to any
waiver or forbearance by the First Lien Secured Parties from or
in respect of bringing or pursuing any foreclosure proceeding or
action or any other exercise of any rights or remedies relating
to such collateral or any other collateral in respect of New
First Lien Obligations and (ii) except as otherwise
provided in the Additional General Intercreditor Agreement, the
First Lien Collateral Agent and the New First Lien Secured
Parties shall have the sole and exclusive right to enforce
rights, exercise remedies (including setoff and the right to
credit bid their debt), marshal, process and make determinations
regarding the release, disposition or restrictions, or waiver or
forbearance of rights or remedies with respect to such
collateral without any consultation with or the consent of the
Junior Lien Collateral Agent, any Junior Lien Representative or
any Junior Lien Secured Party.
In addition, the Junior Lien Collateral Agent, each Junior Lien
Representative and each other Junior Lien Secured Party have
agreed, among other things, that if the Issuer or any Guarantor
is subject to any insolvency or liquidation proceeding if the
First Lien Collateral Agent, subject to the First Lien
Intercreditor Agreement, desires to permit the use of cash
collateral or to permit the Issuer or any Guarantor to obtain
financing under Section 363 or Section 364 of the
Bankruptcy Code or any similar provision in any Bankruptcy Law
(“DIP Financing”), including if such DIP
Financing is secured by Liens senior in priority to the Liens
securing the Junior Lien Obligations, then the Junior Lien
Collateral Agent and each Junior Lien Representative, on behalf
of itself and each applicable Junior Lien Secured Party, agrees
not to object to such use of cash collateral or DIP Financing
and will not request adequate protection or any other relief in
connection therewith (except to the extent permitted by the
Additional General Intercreditor Agreement) and, to the extent
the Liens securing the new First Lien Obligations are
subordinated or pari passu with such DIP Financing, will
subordinate its
Liens in the Collateral and any other collateral to such DIP
Financing (and all Obligations relating thereto) on the same
basis as they are subordinated to the New First Lien Obligations.
Subject to the terms of the Security Documents, the Issuer and
the Guarantors have the right to remain in possession and retain
exclusive control of the Collateral securing the Notes and the
Notes Obligations (other than securities, instruments and
chattel paper constituting part of the Collateral and deposited
with the First Lien Collateral Agent in accordance with the
provisions of the First Lien Security Documents and any Shared
Receivables Collateral subject to a control agreement under the
circumstances described in the First Lien Security Documents),
to freely operate the Collateral and to collect, invest and
dispose of any income therefrom.
Release
of Collateral
Under the First Lien Intercreditor Agreement, if at any time the
Applicable Authorized Representative forecloses upon or
otherwise exercises remedies against any Common Collateral, then
(whether or not any insolvency or liquidation proceeding is
pending at the time) the Liens in favor of the First Lien
Collateral Agent for the benefit of the Trustee and the Holders
of the Notes and each other Series of First Lien Secured Parties
upon such Common Collateral will automatically be released and
discharged. However, any proceeds of any Common Collateral
realized therefrom will be applied as described under
“— First Lien Intercreditor Agreement.”
Under the Additional Receivables Intercreditor Agreement, if at
any time the Issuer or any Guarantor or any ABL Secured Party
delivers notice that any Shared Receivables Collateral is sold,
transferred or otherwise disposed of by the owner of that
Collateral in a transaction permitted under the ABL Facility,
the General Credit Facility and the Indenture or the ABL Secured
Parties are releasing or have released their Liens on such
Shared Receivables Collateral in connection with a disposition
in connection with an exercise of remedies with respect to such
Collateral, then the Liens on such Shared Receivables Collateral
securing New First Lien Obligations or Junior Lien Obligations
will automatically be released and discharged as and when, but
only to the extent, such Liens on such Shared Receivables
Collateral securing ABL Obligations are released and discharged,
provided that in the case of a disposition in connection with an
exercise of remedies, any proceeds thereof not applied to repay
ABL Obligations shall be subject to the Liens securing the First
Lien Obligations and the Junior Lien Obligations and shall be
applied pursuant to the Additional Receivables Intercreditor
Agreement and the First Lien Intercreditor Agreement.
The Issuer and the Guarantors will be entitled to the release of
property and other assets constituting Collateral from the Liens
securing the Notes and the Notes Obligations under any one or
more of the following circumstances:
(1) to enable us to consummate the sale, transfer or other
disposition of such property or assets to the extent not
prohibited under the covenant described under
“— Repurchase at the Option of
Holders — Asset Sales”;
(2) the release of Excess Proceeds or Collateral Excess
Proceeds that remain unexpended after the conclusion of an Asset
Sale Offer or a Collateral Asset Sale Offer conducted in
accordance with the Indenture;
(3) in the case of a Guarantor that is released from its
Guarantee with respect to the Notes pursuant to the terms of the
Indenture, the release of the property and assets of such
Guarantor;
(4) with the consent of the holders of at least 75% of the
aggregate principal amount of the Notes then outstanding and
affected thereby and a majority of all Junior Lien Obligations
(including the Existing Second Priority Notes) then outstanding
and affected thereby (including, without limitation, consents
obtained in connection with a tender offer or exchange offer
for, or purchase of, Junior Lien Obligations); or
(5) as described under “— Amendment,
Supplement and Waiver” below.
To the extent necessary and for so long as required for such
Subsidiary not to be subject to any requirement pursuant to
Rule 3-16
of
Regulation S-X
under the Securities Act to file separate financial statements
with the SEC (or any other governmental agency), the Capital
Stock of any Subsidiary of the Company (excluding Healthtrust,
Inc. — The Hospital Company, a Delaware corporation
and its successors and assigns) shall not be included in the
Collateral with respect to the Notes (as described under
“— Certain Limitations on the Collateral”)
and shall not be subject to the Liens securing the Notes and the
Notes Obligations.
The Liens on the Collateral securing the Notes and the
Guarantees also will be released upon (i) payment in full
of the principal of, together with accrued and unpaid interest
(including Additional Interest, if any) on, the Notes and all
other Obligations under the Indenture, the Guarantees and the
Security Documents that are due and payable at or prior to the
time such principal, together with accrued and unpaid interest
(including Additional Interest, if any), are paid or (ii) a
legal defeasance or covenant defeasance under the Indenture as
described below under “Legal Defeasance and Covenant
Defeasance” or a discharge of the Indenture as described
under “Satisfaction and Discharge.”
Any certificate or opinion required by Section 314(d) of
the Trust Indenture Act may be made by an Officer of the
Company, except in cases where Section 314(d) requires that
such certificate or opinion be made by an independent engineer,
appraiser or other expert.
Notwithstanding anything to the contrary herein, the Issuer and
its Subsidiaries are not required to comply with all or any
portion of Section 314(d) of the Trust Indenture Act
if they determine, in good faith based on advice of counsel,
that under the terms of that section
and/or any
interpretation or guidance as to the meaning thereof of the SEC
and its staff, including “no action” letters or
exemptive orders, all or any portion of Section 314(d) of
the Trust Indenture Act is inapplicable to the released
Collateral.
Without limiting the generality of the foregoing, certain no
action letters issued by the SEC have permitted an indenture
qualified under the Trust Indenture Act to contain
provisions permitting the release of collateral from Liens under
such indenture in the ordinary course of the issuer’s
business without requiring the issuer to provide certificates
and other documents under Section 314(d) of the
Trust Indenture Act. The Issuer and the Guarantors may,
subject to the provisions of the Indenture, among other things,
without any release or consent by the First Lien Collateral
Agent, conduct ordinary course activities with respect to the
Collateral, including, without limitation:
•
selling or otherwise disposing of, in any transaction or series
of related transactions, any property subject to the Lien of the
Security Documents that has become worn out, defective, obsolete
or not used or useful in the business;
•
abandoning, terminating, canceling, releasing or making
alterations in or substitutions of any leases or contracts
subject to the Lien of the Indenture or any of the Security
Documents;
•
surrendering or modifying any franchise, license or permit
subject to the Lien of the Security Documents that it may own or
under which it may be operating;
•
altering, repairing, replacing, changing the location or
position of and adding to its structures, machinery, systems,
equipment, fixtures and appurtenances;
•
granting a license of any intellectual property;
•
selling, transferring or otherwise disposing of inventory in the
ordinary course of business;
•
collecting accounts receivable in the ordinary course of
business as permitted by the covenant described under
“Repurchase at the Option of Holders — Asset
Sales”;
•
making cash payments (including for the repayment of
Indebtedness or interest) from cash that is at any time part of
the Collateral in the ordinary course of business that are not
otherwise prohibited by the Indenture and the Security
Documents; and
•
abandoning any intellectual property that is no longer used or
useful in the Issuer’s business.
The Issuer must deliver an Officer’s Certificate to the
First Lien Collateral Agent within 30 calendar days following
the end of each six-month period beginning on May 15 and
November 15 of each year, to the effect that all such releases
and withdrawals during the preceding six-month period in the
ordinary course of the Issuer’s or the Guarantors’
business, as described in the preceding paragraph, were not
prohibited by the Indenture.
Additional
Receivables Intercreditor Agreement
In addition, the First Lien Collateral Agent is a party to an
Additional Receivables Intercreditor Agreement, dated the Issue
Date (as the same may be amended from time to time, the
“Additional Receivables Intercreditor
Agreement”), by and between the First Lien Collateral
Agent and the collateral agent under the ABL Facility (the
“ABL Collateral Agent”), by which the Notes are
given the same ranking and rights with respect to the Shared
Receivables Collateral as provided to the General Credit
Facility under the Receivables Intercreditor Agreement dated as
of November 17, 2006 by and among the Junior Lien
Collateral Agent, the First Lien Collateral Agent and the ABL
Collateral Agent. The Additional Receivables Intercreditor
Agreement contains provisions with respect to the Shared
Receivables Collateral and the relative rights, privileges and
obligations relating thereto as between (a) the First Lien
Collateral Agent and the New First Lien Secured Parties and
(b) the ABL Collateral Agent and the ABL Secured Parties.
The Additional Receivables Intercreditor Agreement provides for
first-priority Liens in the Shared Receivables Collateral in
favor of the ABL Secured Parties and junior priority Liens in
the Shared Receivables Collateral in favor of the New First Lien
Secured Parties, subject to Permitted Liens. The relative
rights, privileges and obligations with respect to the Shared
Receivables Collateral of the ABL Secured Parties, on the one
hand, and the New First Lien Secured Parties, on the other, are
substantially similar to the relative rights, privileges and
obligations with respect to the Non-Receivables Collateral of
the New First Lien Secured Parties, on the one hand, and the
Junior Lien Secured Parties, on the other, respectively, except
that the Liens of the New First Lien Secured Parties in the
Shared Receivables Collateral are second-priority Liens and the
Liens of the ABL Secured Parties in the Shared Receivables
Collateral are first-priority liens and except to the extent
customary or necessary with respect to collateral of the type
that constitutes Shared Receivables Collateral.
The relative rights, privileges and obligations with respect to
the Shared Receivables Collateral (a) as between the First
Lien Collateral Agent and the New First Lien Secured Parties, on
the one hand, and the Junior Lien Collateral Agent and the
Junior Lien Secured Parties, on the other, are governed by the
Additional General Intercreditor Agreement described above and
(b) as among the First Lien Secured Parties, are governed
by the First Lien Intercreditor Agreement described above.
Certain
Limitations on the Collateral
The Collateral securing the Notes does not include any of the
following assets:
(1) the property or assets owned by any Subsidiary of the
Issuer that is not a Guarantor, including each ABL Financing
Entity;
(2) any rights or interests of the Issuer or any Guarantor
in, to or under any agreement, contract, license, instrument,
document or other general intangible (referred to solely for
purposes of this clause (2) as a
“Contract”), any intellectual property or any
security or other investment property (i) to the extent the
security interest in such Collateral is prohibited by any
applicable contract, agreement or other instrument without the
consent of any other party thereto (other than a party to the
General Credit Facility or the Indenture or, in the case of
investment property, a Wholly-Owned Subsidiary), (ii) to
the extent the security interest in such Contract would give any
other party (other than a party to the General Credit Facility
or the Indenture or, in the case of investment property, a
Wholly-Owned Subsidiary) to such Collateral the right to
terminate its obligations thereunder or (iii) to the extent
all necessary consents to such grant of a security interest have
not been obtained from the other parties thereto (other than to
the extent that any such prohibition referred to in clauses (i),
(ii) and (iii) would be rendered ineffective pursuant
to
Sections 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any
successor provision or provisions) of any relevant jurisdiction
or any other applicable law); provided that this
limitation shall not affect, limit, restrict or impair the grant
by the Issuer or such Guarantor of a security interest in any
account receivable or any money or other amounts due or to
become due under any Contract;
(3) any equipment of the Issuer or any Guarantor that is
subject to, or secured by, a Capitalized Lease Obligation or
Purchase Money Obligations and any equipment that constitutes an
asset of an entity acquired in a transaction permitted by the
Indenture to the extent that such equipment subject to a Lien
permitted by the Indenture and the terms of the Indebtedness
secured by such Lien prohibit assignment of, or granting of a
security interest in, the Issuer’s or such Guarantor’s
rights and interests therein (other than to the extent that any
such prohibition would be rendered ineffective pursuant to
Sections 9-406,
9-407, 9-408
or 9-409 of the Uniform Commercial Code (or any successor
provision or provisions) of any relevant jurisdiction or any
other applicable law); provided that immediately upon the
repayment of all Indebtedness secured by such Lien, the Issuer
or the Guarantor, as the case may be, shall be deemed to have
granted a security interest in all the rights and interests with
respect to such equipment;
(4) any Voting Stock that is issued by any Foreign
Subsidiary, if and to the extent that the inclusion of such
Voting Stock in the Collateral would cause the Collateral
pledged by the Issuer or the applicable Guarantor, as the case
may be, to include in the aggregate more than 65% of the total
combined voting power of all classes of Voting Stock of such
Foreign Subsidiary;
(5) any Capital Stock that is issued by a Subsidiary that
is not owned directly by the Issuer or a Guarantor;
(6) any Capital Stock and other securities of a Subsidiary
(excluding Healthtrust, Inc. — The Hospital Company, a
Delaware corporation and its successors and assigns) to the
extent that the pledge of such Capital Stock and other
securities results in the Company’s being required to file
separate financial statements of such Subsidiary with the SEC,
but only to the extent necessary to not be subject to such
requirement and only for so long as such requirement is in
existence and only with respect to the relevant Notes affected;
provided that neither the Issuer nor any Subsidiary shall
take any action in the form of a reorganization, merger or other
restructuring a principal purpose of which is to provide for the
release of the Lien on any Capital Stock pursuant to this clause
(6). In addition, in the event that
Rule 3-16
of
Regulation S-X
under the Securities Act is amended, modified or interpreted by
the SEC to require (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted,
which would require) the filing with the SEC (or any other
governmental agency) of separate financial statements of any
Subsidiary of the Company (excluding Healthtrust,
Inc. — The Hospital Company, a Delaware corporation
and its successors and assigns) due to the fact that such
Subsidiary’s Capital Stock secures the Notes affected
thereby, then the Capital Stock of such Subsidiary will
automatically be deemed not to be part of the Collateral
securing the relevant Notes affected thereby but only to the
extent necessary to not be subject to such requirement and only
for so long as required to not be subject to such requirement.
In such event, the Security Documents may be amended or
modified, without the consent of any holder of such Notes, to
the extent necessary to release the security interests in favor
of the First Lien Collateral Agent on the shares of Capital
Stock that are so deemed to no longer constitute part of the
Collateral for the relevant Notes. In the event that
Rule 3-16
of
Regulation S-X
under the Securities Act is amended, modified or interpreted by
the SEC to permit (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted,
which would permit) such Subsidiary’s Capital Stock to
secure the Notes in excess of the amount then pledged without
the filing with the SEC (or any other governmental agency) of
separate financial statements of such Subsidiary, then the
Capital Stock of such Subsidiary will automatically be deemed to
be a part of the Collateral for the relevant Notes;
(7) certain non-Principal Properties that do not constitute
Non-Receivables Collateral;
(8) any deposit accounts, other bank or securities accounts
or cash of the Issuer or any Guarantor;
(9) any leaseholds and motor vehicles of the Issuer or any
Guarantor;
(10) any Capital Stock or securities convertible into or
exchangeable for Capital Stock (i) if, in the reasonable
judgment of the Issuer, the cost or other consequences of
pledging such Collateral shall be
excessive in view of the benefits to be obtained by the First
Lien Secured Parties therefrom or (ii) the pledge of such
Collateral would result in adverse tax consequences to the
Issuer or any of its Subsidiaries as reasonably determined by
the Issuer and identified in writing to the First Lien
Collateral Agent;
(11) any collateral to the extent the grant of the security
interest therein would violate any requirement of law; and
(12) proceeds and products from any and all of the
foregoing excluded collateral described in clauses (1)
through (11), unless such proceeds or products would otherwise
constitute Collateral securing the Notes.
Sufficiency
of Collateral
The fair market value of the Collateral is subject to
fluctuations based on factors that include, among others, the
condition of the health care industry, the ability to sell the
Collateral in an orderly sale, general economic conditions, the
availability of buyers and similar factors. The amount to be
received upon a sale of the Collateral would also be dependent
on numerous factors, including, but not limited to, the actual
fair market value of the Collateral at such time and the timing
and the manner of the sale. By their nature, portions of the
Collateral may be illiquid and may have no readily ascertainable
market value. Accordingly, there can be no assurance that the
Collateral can be sold in a short period of time or in an
orderly manner. In addition, in the event of a bankruptcy, the
ability of the holders to realize upon any of the Collateral may
be subject to certain bankruptcy law limitations as described
below.
Certain
Bankruptcy Limitations
The right of the Trustee to repossess and dispose of the
Collateral upon the occurrence of an Event of Default would be
significantly impaired by any Bankruptcy Law in the event that a
bankruptcy case were to be commenced by or against the Company
or any Guarantor prior to the Trustee’s having repossessed
and disposed of the Collateral. Upon the commencement of a case
for relief under the Bankruptcy Code, a secured creditor such as
the Trustee is prohibited from repossessing its security from a
debtor in a bankruptcy case, or from disposing of security
without bankruptcy court approval.
In view of the broad equitable powers of a U.S. bankruptcy
court, it is impossible to predict how long payments under the
Notes could be delayed following commencement of a bankruptcy
case, whether or when the Trustee could repossess or dispose of
the Collateral, the value of the Collateral at any time during a
bankruptcy case or whether or to what extent Holders of the
Notes would be compensated for any delay in payment or loss of
value of the Collateral. The Bankruptcy Code permits only the
payment
and/or
accrual of post-petition interest, costs and attorneys’
fees to a secured creditor during a debtor’s bankruptcy
case to the extent the value of such creditor’s interest in
the Collateral is determined by the bankruptcy court to exceed
the aggregate outstanding principal amount of the obligations
secured by the Collateral.
Furthermore, in the event a domestic or foreign bankruptcy court
determines that the value of the Collateral is not sufficient to
repay all amounts due on the Notes, the Holders of the Notes
would hold secured claims only to the extent of the value of the
Collateral to which the Holders of the Notes are entitled, and
unsecured claims with respect to such shortfall.
Paying
Agent and Registrar for the Notes
The Issuer must maintain one or more paying agents for the Notes
in the Borough of Manhattan, City of New York. The initial
paying agent for the Notes is Deutsche Bank Trust Company
Americas.
The Issuer must also maintain a registrar with offices in the
Borough of Manhattan, City of New York. The initial registrar is
Deutsche Bank Trust Company Americas. The registrar
maintains a register reflecting ownership of the Notes
outstanding from time to time and makes payments on and
facilitates transfer of Notes on behalf of the Issuer.
The Issuer may change the paying agents or the registrars
without prior notice to the Holders. The Issuer or any of its
Subsidiaries may act as a paying agent or registrar.
Transfer
and Exchange
A Holder may transfer or exchange Notes in accordance with the
Indenture. The registrar and the Trustee may require a Holder to
furnish appropriate endorsements and transfer documents in
connection with a transfer of Notes. Holders will be required to
pay all taxes due on transfer. The Issuer is not required to
transfer or exchange any Note selected for redemption. Also, the
Issuer is not required to transfer or exchange any Note for a
period of 15 days before a selection of Notes to be
redeemed.
Principal,
Maturity and Interest
The Issuer issued $1,250,000,000 in aggregate principal amount
of Notes in a private transaction that was not subject to the
registration requirements of the Securities Act. The Notes will
mature on February 15, 2020. Subject to compliance with the
covenant described below under the caption “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock,”
the Issuer may issue additional Notes, from time to time under
the Indenture (any such Notes, “Additional
Notes”). Except as described under “Amendment,
Supplement and Waiver,” the Notes offered by the Issuer and
any Additional Notes subsequently issued under the Indenture
will be treated as a single class for all purposes under the
Indenture, including waivers, amendments, redemptions and offers
to purchase. Unless the context requires otherwise, references
to “Notes” for all purposes of the Indenture and this
“Description of the August 2009 Notes” include
any Additional Notes that are actually issued.
Interest on the Notes accrues at the rate of
77/8%
per annum and is payable semi-annually in arrears on
February 15 and August 15, commencing
February 15, 2010, to the Holders of record on the
immediately preceding February 1 and August 1.
Interest on the Notes accrues from the most recent date to which
interest has been paid or, if no interest has been paid, from
and including the Issue Date. Interest on the Notes is computed
on the basis of a
360-day year
comprised of twelve
30-day
months.
Additional
Interest
Additional Interest may accrue on the Notes in certain
circumstances pursuant to the Registration Rights Agreement. All
references in the Indenture, in any context, to any interest or
other amount payable on or with respect to the Notes shall be
deemed to include any Additional Interest pursuant to the
Registration Rights Agreement. Principal of, premium, if any,
and interest on the Notes will be payable at the office or
agency of the Issuer maintained for such purpose within the City
and State of New York or, at the option of the Issuer, payment
of interest may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of
Holders; provided that all payments of principal,
premium, if any, and interest with respect to the Notes
represented by one or more global notes registered in the name
of or held by DTC or its nominee will be made by wire transfer
of immediately available funds to the accounts specified by the
Holder or Holders thereof. Until otherwise designated by the
Issuer, the Issuer’s office or agency in New York is the
office of the Registrar and Paying Agent maintained for such
purpose.
Mandatory
Redemption; Offers to Purchase; Open Market Purchases
The Issuer is not required to make any mandatory redemption or
sinking fund payments with respect to the Notes. However, under
certain circumstances, the Issuer may be required to offer to
purchase Notes as described under the caption “Repurchase
at the Option of Holders.” The Issuer may at any time and
from time to time purchase Notes in the open market or otherwise.
Optional
Redemption
Except as set forth below, the Issuer is not entitled to redeem
Notes at its option prior to August 15, 2014.
At any time prior to August 15, 2014, the Issuer may redeem
all or a part of the Notes, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to
the registered address of each Holder or otherwise in accordance
with the procedures of DTC, at a redemption price equal to 100%
of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and
Additional Interest, if any, to the date of redemption (the
“Redemption Date”), subject to the rights
of Holders of the Notes on the relevant record date to receive
interest due on the relevant interest payment date.
On and after August 15, 2014 the Issuer may redeem the
Notes, in whole or in part, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to
the registered address of each Holder or otherwise in accordance
with the procedures of DTC, at the redemption prices (expressed
as percentages of principal amount of the Notes to be redeemed)
set forth below, plus accrued and unpaid interest thereon and
Additional Interest, if any, to the applicable
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
twelve-month period beginning on August 15 of each of the
years indicated below:
Year
Percentage
2014
103.938
%
2015
102.625
%
2016
101.313
%
2017 and thereafter
100.000
%
In addition, until August 15, 2012, the Issuer may, at its
option, on one or more occasions redeem up to 35% of the
aggregate principal amount of Notes at a redemption price equal
to 107.875% of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable 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, with
the net cash proceeds of one or more Equity Offerings;
provided that at least 50% of the sum of the original
aggregate principal amount of Notes issued under the Indenture
and the original principal amount of any Additional Notes that
are Notes issued under the Indenture after the Issue Date
remains outstanding immediately after the occurrence of each
such redemption; provided further that each such
redemption occurs within 90 days of the date of closing of
each such Equity Offering.
Any notice of any redemption may be given prior to the
redemption thereof, and any such redemption or notice may, at
the Issuer’s discretion, be subject to one or more
conditions precedent, including, but not limited to, completion
of an Equity Offering or other corporate transaction.
If the Issuer redeems less than all of the outstanding Notes,
the Registrar and Paying Agent shall select the Notes to be
redeemed in the manner described under “Repurchase at the
Option of Holders — Selection and Notice.”
Repurchase
at the Option of Holders
Change
of Control
The Notes provide that if a Change of Control occurs, unless the
Issuer has previously or concurrently mailed a redemption notice
with respect to all the outstanding Notes as described under
“Optional Redemption,” the Issuer will make an offer
to purchase all of the Notes pursuant to the offer described
below (the “Change of Control Offer”) at a
price in cash (the “Change of Control Payment”)
equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Additional Interest, if any, to
the date of purchase, subject to the right of Holders of the
Notes of record on the relevant record date to receive interest
due on the relevant interest payment date. Within 30 days
following any Change of Control, the Issuer will send notice of
such Change of Control Offer by first-class mail, with a copy to
the Trustee and the Registrar, to each Holder of Notes to the
address of such Holder appearing in the security register with a
copy
to the Trustee and the Registrar or otherwise in accordance with
the procedures of DTC, with the following information:
(1) that a Change of Control Offer is being made pursuant
to the covenant entitled “Change of Control” and that
all Notes properly tendered pursuant to such Change of Control
Offer will be accepted for payment by the Issuer;
(2) the purchase price and the purchase date, which will be
no earlier than 30 days nor later than 60 days from
the date such notice is mailed (the “Change of Control
Payment Date”);
(3) that any Note not properly tendered will remain
outstanding and continue to accrue interest;
(4) that unless the Issuer defaults in the payment of the
Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer will cease to accrue
interest on the Change of Control Payment Date;
(5) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to
surrender such Notes, with the form entitled “Option of
Holder to Elect Purchase” on the reverse of such Notes
completed, to the paying agent specified in the notice at the
address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their
tendered Notes and their election to require the Issuer to
purchase such Notes; provided that the paying agent
receives, not later than the close of business on the
30th day following the date of the Change of Control
notice, a telegram, facsimile transmission or letter setting
forth the name of the Holder of the Notes, the principal amount
of Notes tendered for purchase, and a statement that such Holder
is withdrawing its tendered Notes and its election to have such
Notes purchased;
(7) that if the Issuer is redeeming less than all of the
Notes, the Holders of the remaining Notes will be issued new
Notes and such new Notes will be equal in principal amount to
the unpurchased portion of the Notes surrendered. The
unpurchased portion of the Notes must be equal to $2,000 or an
integral multiple of $1,000 in excess thereof; and
(8) the other instructions, as determined by us, consistent
with the covenant described hereunder, that a Holder must follow.
The Issuer will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of Notes
pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the provisions of the Indenture, the Issuer will comply with the
applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in the
Indenture by virtue thereof.
On the Change of Control Payment Date, the Issuer will, to the
extent permitted by law,
(1) accept for payment all Notes issued by it or portions
thereof properly tendered pursuant to the Change of Control
Offer;
(2) deposit with the paying agent an amount equal to the
aggregate Change of Control Payment in respect of all Notes or
portions thereof so tendered; and
(3) deliver, or cause to be delivered, to the Trustee for
cancellation the Notes so accepted together with an
Officer’s Certificate to the Trustee stating that such
Notes or portions thereof have been tendered to and purchased by
the Issuer.
The Senior Credit Facilities provide, and future credit
agreements or other agreements relating to Senior Indebtedness
to which the Issuer becomes a party may provide, that certain
change of control events with respect to the Issuer would
constitute a default thereunder (including a Change of Control
under the Indenture). If we experience a change of control that
triggers a default under our Senior Credit Facilities, we
could seek a waiver of such default or seek to refinance our
Senior Credit Facilities. In the event we do not obtain such a
waiver or refinance the Senior Credit Facilities, such default
could result in amounts outstanding under our Senior Credit
Facilities being declared due and payable and could cause a
Receivables Facility to be wound down.
Our ability to pay cash to the Holders of the Notes following
the occurrence of a Change of Control may be limited by our
then-existing financial resources. Therefore, sufficient funds
may not be available when necessary to make any required
repurchases.
The Change of Control purchase feature of the Notes may in
certain circumstances make more difficult or discourage a sale
or takeover of us and, thus, the removal of incumbent
management. The Change of Control purchase feature is a result
of negotiations between the Initial Purchasers and us. After the
Issue Date, we have no present intention to engage in a
transaction involving a Change of Control, although it is
possible that we could decide to do so in the future. Subject to
the limitations discussed below, we could, in the future, enter
into certain transactions, including acquisitions, refinancings
or other recapitalizations, that would not constitute a Change
of Control under the Indenture, but that could increase the
amount of indebtedness outstanding at such time or otherwise
affect our capital structure or credit ratings. Restrictions on
our ability to incur additional Indebtedness are contained in
the covenants described under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock” and
“Certain Covenants — Liens.” Such
restrictions in the Indenture can be waived only with the
consent of the Holders of a majority in principal amount of the
Notes then outstanding. Except for the limitations contained in
such covenants, however, the Indenture will not contain any
covenants or provisions that may afford Holders of the Notes
protection in the event of a highly leveraged transaction.
The Issuer will 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 the
Indenture applicable to a Change of Control Offer made by us and
purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer. Notwithstanding anything to the
contrary herein, a Change of Control Offer may be made in
advance of a Change of Control, conditional upon such Change of
Control, if a definitive agreement is in place for the Change of
Control at the time of making of the Change of Control Offer.
The definition of “Change of Control” includes a
disposition of all or substantially all of the assets of the
Issuer to any Person. Although there is a limited body of case
law interpreting the phrase “substantially all,” there
is no precise established definition of the phrase under
applicable law. Accordingly, in certain circumstances there may
be a degree of uncertainty as to whether a particular
transaction would involve a disposition of “all or
substantially all” of the assets of the Issuer. As a
result, it may be unclear as to whether a Change of Control has
occurred and whether a Holder of Notes may require the Issuer to
make an offer to repurchase the Notes as described above.
The provisions under the Indenture relating to the Issuer’s
obligation to make an offer to repurchase the Notes as a result
of a Change of Control may be waived or modified with the
written consent of the Holders of a majority in principal amount
of the Notes.
Asset
Sales
The Indenture provides that the Issuer will not, and will not
permit any of its Restricted Subsidiaries to consummate,
directly or indirectly, an Asset Sale, unless:
(1) the Issuer or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at
least equal to the fair market value (as determined in good
faith by the Issuer) of the assets sold or otherwise disposed
of; and
(2) except in the case of a Permitted Asset Swap, at least
75% of the consideration therefor received by the Issuer or such
Restricted Subsidiary, as the case may be, is in the form of
cash or Cash Equivalents; provided that the amount of:
(a) any liabilities (as shown on the Issuer’s or such
Restricted Subsidiary’s most recent balance sheet or in the
footnotes thereto) of the Issuer or such Restricted Subsidiary,
other than liabilities that are by their terms subordinated to
the Notes, that are assumed by the transferee of any such assets
and for which the Issuer and all of its Restricted Subsidiaries
have been validly released by all creditors in writing,
(b) any securities received by the Issuer or such
Restricted Subsidiary from such transferee that are converted by
the Issuer or such Restricted Subsidiary into cash (to the
extent of the cash received) within 180 days following the
closing of such Asset Sale, and
(c) any Designated Non-cash Consideration received by the
Issuer or such Restricted Subsidiary in such Asset Sale having
an aggregate fair market value, taken together with all other
Designated Non-cash Consideration received pursuant to this
clause (c) that is at that time outstanding, not to exceed
5% of Total Assets at the time of the receipt of such Designated
Non-cash Consideration, with the fair market value of each item
of Designated Non-cash Consideration being measured at the time
received and without giving effect to subsequent changes in
value,
shall be deemed to be cash for purposes of this provision and
for no other purpose.
Within 450 days after the receipt of any Net Proceeds of
any Asset Sale, the Issuer or such Restricted Subsidiary, at its
option, may apply the Net Proceeds from such Asset Sale,
(1) to permanently reduce:
(a) Obligations constituting First Lien Obligations (and,
if the Indebtedness repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto)
(provided that (x) to the extent that the terms of
First Lien Obligations other than Obligations under the Notes
require that such First Lien Obligations are repaid with the Net
Proceeds of Asset Sales prior to repayment of other
Indebtedness, the Issuer and its Restricted Subsidiaries shall
be entitled to repay such other First Lien Obligations prior to
repaying the Obligations under the Notes and (y) subject to
the foregoing clause (x), if the Issuer or any Guarantor shall
so reduce First Lien Obligations, the Issuer will equally and
ratably reduce Obligations under the Notes through open-market
purchases (provided that such purchases are at or above
100% of the principal amount thereof) or by making an offer (in
accordance with the procedures set forth below for an Asset Sale
Offer) to all holders to purchase at a purchase price equal to
100% of the principal amount thereof, plus accrued and unpaid
interest and additional interest, if any, on the pro rata
principal amount of Notes);
(b) Obligations under the Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
the maturity date of the Notes; provided that, at the
time of, and after giving effect to, such repurchase, redemption
or defeasance, the aggregate amount of Net Proceeds used to
repurchase, redeem or defease Existing Notes pursuant to this
subclause (b) following the Issue Date shall not exceed 5%
of the consolidated total assets of the Issuer and is
subsidiaries at such time; or
(c) Indebtedness of a Restricted Subsidiary that is not a
Guarantor, other than Indebtedness owed to the Issuer or another
Restricted Subsidiary (or any affiliate thereof);
(2) to make (a) an Investment in any one or more
businesses, provided that such Investment in any business
is in the form of the acquisition of Capital Stock and results
in the Issuer or another of its Restricted Subsidiaries, as the
case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary,
(b) capital expenditures or (c) acquisitions of other
assets, in each of (a), (b) and (c), used or useful in a
Similar Business; or
(3) to make an investment in (a) any one or more
businesses, provided that such Investment in any business
is in the form of the acquisition of Capital Stock and results
in the Issuer or another of its Restricted Subsidiaries, as the
case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary,
(b) properties or (c) acquisitions of other assets
that, in each of (a), (b) and (c), replace the businesses,
properties
and/or
assets that are the subject of such Asset Sale;
provided that, in the case of clauses (2) and
(3) above, a binding commitment shall be treated as a
permitted application of the Net Proceeds from the date of such
commitment so long as the Issuer, or such other Restricted
Subsidiary enters into such commitment with the good faith
expectation that such Net Proceeds will be applied to satisfy
such commitment within 180 days of such commitment (an
“Acceptable Commitment”) and, in the event any
Acceptable Commitment is later cancelled or terminated for any
reason before the Net Proceeds are applied in connection
therewith, the Issuer or such Restricted Subsidiary enters into
another Acceptable Commitment (a “Second
Commitment”) within 180 days of such cancellation
or termination; provided, further, that if any
Second Commitment is later cancelled or terminated for any
reason before such Net Proceeds are applied, then such Net
Proceeds shall constitute Excess Proceeds.
Any Net Proceeds from Asset Sales of Collateral that are not
invested or applied as set forth in the first sentence of the
preceding paragraph will be deemed to constitute
“Collateral Excess Proceeds.” When the
aggregate amount of Collateral Excess Proceeds exceeds
$200.0 million, the Issuer shall make an offer to all
Holders of the Notes and, if required by the terms of any First
Lien Obligations or Obligations secured by a Lien permitted
under the Indenture (which Lien is not subordinate to the Lien
of the Notes with respect to the Collateral), to the holders of
such First Lien Obligations or such other Obligations (a
“Collateral Asset Sale Offer”), to purchase the
maximum aggregate principal amount of the Notes and such First
Lien Obligations or such other Obligations that is a minimum of
$2,000 or an integral multiple of $1,000 in excess thereof that
may be purchased out of the Collateral Excess Proceeds at an
offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest and Additional
Interest, if any, to the date fixed for the closing of such
offer, in accordance with the procedures set forth in the
Indenture. The Issuer will commence a Collateral Asset Sale
Offer with respect to Collateral Excess Proceeds within ten
Business Days after the date that Collateral Excess Proceeds
exceed $200.0 million by mailing the notice required
pursuant to the terms of the Indenture, with a copy to the
Trustee.
Any Net Proceeds from Asset Sales of non-Collateral that are not
invested or applied as provided and within the time period set
forth in the first sentence of the second preceding paragraph
will be deemed to constitute “Excess Proceeds.”
When the aggregate amount of Excess Proceeds exceeds
$200.0 million, the Issuer shall make an offer to all
Holders of the Notes and, if required or permitted by the terms
of any Senior Indebtedness, to the holders of such Senior
Indebtedness (an “Asset Sale Offer”), to
purchase the maximum aggregate principal amount of the Notes and
such Senior Indebtedness that is a minimum of $2,000 or an
integral multiple of $1,000 in excess thereof that may be
purchased out of the Excess Proceeds at an offer price in cash
in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Additional Interest, if any, to
the date fixed for the closing of such offer, in accordance with
the procedures set forth in the Indenture. The Issuer will
commence an Asset Sale Offer with respect to Excess Proceeds
within ten Business Days after the date that Excess Proceeds
exceed $200.0 million by mailing the notice required
pursuant to the terms of the Indenture, with a copy to the
Trustee.
To the extent that the aggregate amount of Notes and such other
First Lien Obligations or Obligations secured by a Lien
permitted by the Indenture (which Lien is not subordinate to the
Lien of the Notes with respect to the Collateral) tendered
pursuant to a Collateral Asset Sale Offer is less than the
Collateral Excess Proceeds, the Issuer may use any remaining
Collateral Excess Proceeds for general corporate purposes,
subject to other covenants contained in the Indenture. To the
extent that the aggregate amount of Notes and such Senior
Indebtedness tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Issuer may use any remaining
Excess Proceeds for general corporate purposes, subject to other
covenants contained in the Indenture. If the aggregate principal
amount of Notes or other First Lien Obligations or such other
Obligations surrendered by such holders thereof exceeds the
amount of Collateral Excess Proceeds, the Trustee shall select
the Notes and such other First Lien Obligations or such other
Obligations to be purchased on a pro rata basis based on the
accreted value or principal amount of the Notes or such other
First Lien Obligations or such other Obligations tendered.
If the aggregate principal amount of Notes or the Senior
Indebtedness surrendered by
such holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes and such Senior Indebtedness to
be purchased on a pro rata basis based on the accreted value or
principal amount of the Notes or such Senior Indebtedness
tendered. Upon completion of any such Collateral Asset Sale
Offer or Asset Sale Offer, the amount of Collateral Excess
Proceeds or Excess Proceeds, as the case may be, shall be reset
at zero. Additionally, the Issuer may, at its option, make a
Collateral Asset Sale Offer or an Asset Sale Offer using
proceeds from any Asset Sale at any time after consummation of
such Asset Sale; provided that such Collateral Asset Sale
Offer or Asset Sale Offer shall be in an aggregate amount of not
less than $50.0 million. Upon consummation of such
Collateral Asset Sale Offer or Asset Sale Offer, any Net
Proceeds not required to be used to purchase Notes shall not be
deemed Excess Proceeds.
Pending the final application of any Net Proceeds pursuant to
this covenant, the holder of such Net Proceeds may apply such
Net Proceeds temporarily to reduce Indebtedness outstanding
under a revolving credit facility or otherwise invest such Net
Proceeds in any manner not prohibited by the Indenture.
The Issuer will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of the Notes
pursuant to a Collateral Asset Sale Offer or an Asset Sale
Offer. To the extent that the provisions of any securities laws
or regulations conflict with the provisions of the Indenture,
the Issuer will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.
Selection
and Notice
If the Issuer is redeeming less than all of the Notes issued by
it at any time, the Registrar and Paying Agent will select the
Notes to be redeemed (a) if the Notes are listed on any
national securities exchange, in compliance with the
requirements of the principal national securities exchange on
which the Notes are listed, (b) on a pro rata basis to the
extent practicable or (c) by lot or such other similar
method in accordance with the procedures of DTC.
Notices of purchase or redemption shall be mailed by first-class
mail, postage prepaid, at least 30 but not more than
60 days before the purchase or Redemption Date to each
Holder of Notes at such Holder’s registered address or
otherwise in accordance with the procedures of DTC, except that
redemption notices may be mailed more than 60 days prior to
a Redemption Date if the notice is issued in connection
with a defeasance of the Notes or a satisfaction and discharge
of the Indenture. If any Note is to be purchased or redeemed in
part only, any notice of purchase or redemption that relates to
such Note shall state the portion of the principal amount
thereof that has been or is to be purchased or redeemed.
The Issuer will issue a new Note in a principal amount equal to
the unredeemed portion of the original Note in the name of the
Holder upon cancellation of the original Note. Notes called for
redemption become due on the date fixed for redemption. On and
after the Redemption Date, interest ceases to accrue on
Notes or portions thereof called for redemption.
Certain
Covenants
Set forth below are summaries of certain covenants contained in
the Indenture. If on any date following the Issue Date
(i) the Notes have Investment Grade Ratings from both
Rating Agencies, and (ii) no Default has occurred and is
continuing under the Indenture (the occurrence of the events
described in the foregoing clauses (i) and (ii) being
collectively referred to as a “Covenant Suspension
Event”), the Issuer and the Restricted Subsidiaries
will not be subject to the following covenants (collectively,
the “Suspended Covenants”):
(1) “Repurchase at the Option of Holders”;
(2) “— Limitation on Restricted Payments”;
(3) “— Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
(4) clause (4) of the first paragraph of
“— Merger, Consolidation or Sale of All or
Substantially All Assets”;
(5) “— Transactions with
Affiliates”; and
(6) “— Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.”
In the event that the Issuer and the Restricted Subsidiaries are
not subject to the Suspended Covenants under the Indenture for
any period of time as a result of the foregoing, and on any
subsequent date (the “Reversion Date”) one or
both of the Rating Agencies (a) withdraw their Investment
Grade Rating or downgrade the rating assigned to the Notes below
an Investment Grade Rating
and/or
(b) the Issuer or any of its Affiliates enters into an
agreement to effect a transaction that would result in a Change
of Control and one or more of the Rating Agencies indicate that
if consummated, such transaction (alone or together with any
related recapitalization or refinancing transactions) would
cause such Rating Agency to withdraw its Investment Grade Rating
or downgrade the ratings assigned to the Notes below an
Investment Grade Rating, then the Issuer and the Restricted
Subsidiaries will thereafter again be subject to the Suspended
Covenants under the Indenture with respect to future events,
including, without limitation, a proposed transaction described
in clause (b) above.
The period of time between the Suspension Date and the Reversion
Date is referred to in this description as the
“Suspension Period.” Additionally, upon the
occurrence of a Covenant Suspension Event, the amount of Excess
Proceeds from Net Proceeds shall be reset at zero. In the event
of any such reinstatement, no action taken or omitted to be
taken by the Issuer or any of its Restricted Subsidiaries prior
to such reinstatement will give rise to a Default or Event of
Default under the Indentures with respect to Notes; provided
that (1) with respect to Restricted Payments made after
any such reinstatement, the amount of Restricted Payments made
will be calculated as though the covenant described under the
caption “— Limitation on Restricted
Payments” had been in effect prior to, but not during the
Suspension Period, provided that any Subsidiaries
designated as Unrestricted Subsidiaries during the Suspension
Period shall automatically become Restricted Subsidiaries on the
Reversion Date (subject to the Issuer’s right to
subsequently designate them as Unrestricted Subsidiaries in
compliance with the covenants set out below), and (2) all
Indebtedness incurred, or Disqualified Stock or Preferred Stock
issued, during the Suspension Period will be classified to have
been incurred or issued pursuant to clause (3) of the
second paragraph of “— Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock.”
There can be no assurance that the Notes will ever achieve or
maintain Investment Grade Ratings.
Limitation
on Restricted Payments
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(I) declare or pay any dividend or make any payment or
distribution on account of the Issuer’s, or any of its
Restricted Subsidiaries’ Equity Interests, including any
dividend or distribution payable in connection with any merger
or consolidation other than:
(a) dividends or distributions by the Issuer payable solely
in Equity Interests (other than Disqualified Stock) of the
Issuer; or
(b) dividends or distributions by a Restricted Subsidiary
so long as, in the case of any dividend or distribution payable
on or in respect of any class or series of securities issued by
a Restricted Subsidiary other than a Wholly-Owned Subsidiary,
the Issuer or a Restricted Subsidiary receives at least its pro
rata share of such dividend or distribution in accordance with
its Equity Interests in such class or series of securities;
(II) purchase, redeem, defease or otherwise acquire or
retire for value any Equity Interests of the Issuer or any
direct or indirect parent of the Issuer, including in connection
with any merger or consolidation;
(III) make any principal payment on, or redeem, repurchase,
defease or otherwise acquire or retire for value in each case,
prior to any scheduled repayment, sinking fund payment or
maturity, any Subordinated Indebtedness, other than:
(a) Indebtedness permitted under clauses (7) and
(8) of the covenant described under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”; or
(b) the purchase, repurchase or other acquisition of
Subordinated Indebtedness 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
purchase, repurchase or acquisition; or
(IV) make any Restricted Investment
(all such payments and other actions set forth in
clauses (I) through (IV) above (other than any
exception thereto) being collectively referred to as
“Restricted Payments”), unless, at the time of
such Restricted Payment:
(1) no Default shall have occurred and be continuing or
would occur as a consequence thereof;
(2) immediately after giving effect to such transaction on
a pro forma basis, the Issuer could incur $1.00 of additional
Indebtedness under the provisions of the first paragraph of the
covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”; and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Issuer and
its Restricted Subsidiaries after November 17, 2006
(including Restricted Payments permitted by clauses (1), (2)
(with respect to the payment of dividends on Refunding Capital
Stock (as defined below) pursuant to clause (b) thereof
only), (6)(c), (9) and (14) of the next succeeding
paragraph, but excluding all other Restricted Payments permitted
by the next succeeding paragraph), is less than the sum of
(without duplication):
(a) 50% of the Consolidated Net Income of the Issuer for
the period (taken as one accounting period) beginning
October 1, 2006, to the end of the Issuer’s most
recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment,
or, in the case such Consolidated Net Income for such period is
a deficit, minus 100% of such deficit; plus
(b) 100% of the aggregate net cash proceeds and the fair
market value, as determined in good faith by the Issuer, of
marketable securities or other property received by the Issuer
since immediately after November 17, 2006 (other than net
cash proceeds to the extent such net cash proceeds have been
used to incur Indebtedness, Disqualified Stock or Preferred
Stock pursuant to clause (12)(a) of the second paragraph of
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”) from
the issue or sale of:
(i) (A) Equity Interests of the Issuer, including
Treasury Capital Stock (as defined below), but excluding cash
proceeds and the fair market value, as determined in good faith
by the Issuer, of marketable securities or other property
received from the sale of:
(x) Equity Interests to members of management, directors or
consultants of the Issuer, any direct or indirect parent company
of the Issuer and the Issuer’s Subsidiaries after
November 17, 2006 to the extent such amounts have been
applied to Restricted Payments made in accordance with
clause (4) of the next succeeding paragraph; and
(y) Designated Preferred Stock; and
(B) to the extent such net cash proceeds are actually
contributed to the Issuer, Equity Interests of the Issuer’s
direct or indirect parent companies (excluding contributions of
the proceeds from the sale of Designated Preferred Stock of such
companies or contributions to the extent such amounts
have been applied to Restricted Payments made in accordance with
clause (4) of the next succeeding paragraph); or
(ii) debt securities of the Issuer that have been converted
into or exchanged for such Equity Interests of the Issuer;
provided, however, that this clause (b) shall
not include the proceeds from (V) Refunding Capital Stock
(as defined below), (W) Equity Interests or convertible
debt securities of the Issuer sold to a Restricted Subsidiary,
as the case may be, (X) Disqualified Stock or debt
securities that have been converted into Disqualified Stock,
(Y) Excluded Contributions or (Z) the Delayed Equity
Amount; plus
(c) 100% of the aggregate amount of cash and the fair
market value, as determined in good faith by the Issuer, of
marketable securities or other property contributed to the
capital of the Issuer following November 17, 2006 (other
than net cash proceeds to the extent such net cash proceeds
(i) have been used to incur Indebtedness, Disqualified
Stock or Preferred Stock pursuant to clause (12)(a) of the
second paragraph of “— Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock,” (ii) are contributed by a Restricted
Subsidiary, (iii) constitute Excluded Contributions or
(iv) constitute the Delayed Equity Amount); plus
(d) 100% of the aggregate amount received in cash and the
fair market value, as determined in good faith by the Issuer, of
marketable securities or other property received by means of:
(i) the sale or other disposition (other than to the Issuer
or a Restricted Subsidiary) of Restricted Investments made by
the Issuer or its Restricted Subsidiaries and repurchases and
redemptions of such Restricted Investments from the Issuer or
its Restricted Subsidiaries and repayments of loans or advances,
and releases of guarantees, which constitute Restricted
Investments by the Issuer or its Restricted Subsidiaries, in
each case after November 17, 2006; or
(ii) the sale (other than to the Issuer or a Restricted
Subsidiary) of the stock of an Unrestricted Subsidiary or a
distribution from an Unrestricted Subsidiary (other than in each
case to the extent the Investment in such Unrestricted
Subsidiary was made by the Issuer or a Restricted Subsidiary
pursuant to clause (7) of the next succeeding paragraph or
to the extent such Investment constituted a Permitted
Investment) or a dividend from an Unrestricted Subsidiary after
November 17, 2006; plus
(e) in the case of the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary after November 17,2006, the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Issuer in good
faith (or if such fair market value exceeds $250.0 million,
in writing by an Independent Financial Advisor), at the time of
the redesignation of such Unrestricted Subsidiary as a
Restricted Subsidiary other than to the extent the Investment in
such Unrestricted Subsidiary was made by the Issuer or a
Restricted Subsidiary pursuant to clause (7) of the next
succeeding paragraph or to the extent such Investment
constituted a Permitted Investment.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after
the date of declaration thereof, if at the date of declaration
such payment would have complied with the provisions of the
Indenture;
(2) (a) the redemption, repurchase, retirement or
other acquisition of any Equity Interests (“Treasury
Capital Stock”) or Subordinated Indebtedness of the
Issuer or any Equity Interests of any direct or indirect parent
company of the Issuer, in exchange for, or out of the proceeds
of the substantially concurrent sale (other than to a Restricted
Subsidiary) of, Equity Interests of the Issuer or any direct or
indirect parent company of the Issuer to the extent contributed
to the Issuer (in each case, other than any Disqualified Stock)
(“Refunding Capital Stock”) and (b) if
immediately prior to the retirement of Treasury Capital Stock,
the declaration and payment of dividends thereon was permitted
under clause (6) of this paragraph, the declaration and
payment of dividends on the Refunding Capital Stock (other than
Refunding Capital Stock the proceeds of which were used to
redeem, repurchase, retire or otherwise acquire any Equity
Interests of any direct or indirect parent company of the
Issuer) in an aggregate
amount per year no greater than the aggregate amount of
dividends per annum that were declarable and payable on such
Treasury Capital Stock immediately prior to such retirement;
(3) the redemption, repurchase or other acquisition or
retirement of Subordinated Indebtedness of the Issuer or a
Guarantor made in exchange for, or out of the proceeds of the
substantially concurrent sale of, new Indebtedness of the Issuer
or a Guarantor, as the case may be, which is incurred in
compliance with “— Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” so long as:
(a) the principal amount (or accreted value) of such new
Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus any accrued and unpaid
interest on, the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired for value, plus the amount of
any reasonable premium (including reasonable tender premiums),
defeasance costs and any reasonable fees and expenses incurred
in connection with the issuance of such new Indebtedness;
(b) such new Indebtedness is subordinated to the Notes or
the applicable Guarantee at least to the same extent as such
Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired for value;
(c) such new Indebtedness has a final scheduled maturity
date equal to or later than the final scheduled maturity date of
the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired; and
(d) such new Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the remaining Weighted Average
Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired;
(4) a Restricted Payment to pay for the repurchase,
retirement or other acquisition or retirement for value of
Equity Interests (other than Disqualified Stock) of the Issuer
or any of its direct or indirect parent companies held by any
future, present or former employee, director or consultant of
the Issuer, any of its Subsidiaries or any of its direct or
indirect parent companies pursuant to any management equity plan
or stock option plan or any other management or employee benefit
plan or agreement, including any Equity Interests rolled over by
management of the Company or any of its direct or indirect
parent companies in connection with the Transaction;
provided, however, that the aggregate Restricted
Payments made under this clause (4) do not exceed in any
calendar year $75.0 million (which shall increase to
$150.0 million subsequent to the consummation of an
underwritten public Equity Offering by the Issuer or any direct
or indirect parent entity of the Issuer) (with unused amounts in
any calendar year being carried over to succeeding calendar
years subject to a maximum (without giving effect to the
following proviso) of $225.0 million in any calendar year
(which shall increase to $450.0 million subsequent to the
consummation of an underwritten public Equity Offering by the
Issuer or any direct or indirect parent corporation of the
Issuer)); provided further that such amount in any
calendar year may be increased by an amount not to exceed:
(a) the cash proceeds from the sale of Equity Interests
(other than Disqualified Stock) of the Issuer and, to the extent
contributed to the Issuer, Equity Interests of any of the
Issuer’s direct or indirect parent companies, in each case
to members of management, directors or consultants of the
Issuer, any of its Subsidiaries or any of its direct or indirect
parent companies that occurs after November 17, 2006, to
the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of
Restricted Payments by virtue of clause (3) of the
preceding paragraph; plus
(b) the cash proceeds of key man life insurance policies
received by the Issuer or its Restricted Subsidiaries after
November 17, 2006; less
(c) the amount of any Restricted Payments previously made
with the cash proceeds described in clauses (a) and
(b) of this clause (4);
and provided, further, that cancellation of
Indebtedness owing to the Issuer or any Restricted Subsidiary
from members of management of the Issuer, any of the
Issuer’s direct or indirect parent companies or any of the
Issuer’s Restricted Subsidiaries in connection with a
repurchase of Equity Interests of the Issuer or any of its
direct or indirect parent companies will not be deemed to
constitute a Restricted Payment for purposes of this covenant or
any other provision of the Indenture;
(5) the declaration and payment of dividends to holders of
any class or series of Disqualified Stock of the Issuer or any
of its Restricted Subsidiaries or any class or series of
Preferred Stock of any Restricted Subsidiary issued in
accordance with the covenant described under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock” to the
extent such dividends are included in the definition of
“Fixed Charges”;
(6) (a) the declaration and payment of dividends to
holders of any class or series of Designated Preferred Stock
(other than Disqualified Stock) issued by the Issuer after
November 17, 2006;
(b) the declaration and payment of dividends to a direct or
indirect parent company of the Issuer, the proceeds of which
will be used to fund the payment of dividends to holders of any
class or series of Designated Preferred Stock (other than
Disqualified Stock) of such parent corporation issued after the
Issue Date; provided that the amount of dividends paid
pursuant to this clause (b) shall not exceed the aggregate
amount of cash actually contributed to the Issuer from the sale
of such Designated Preferred Stock; or
(c) the declaration and payment of dividends on Refunding
Capital Stock that is Preferred Stock in excess of the dividends
declarable and payable thereon pursuant to clause (2) of
this paragraph;
provided, however, in the case of each of
(a) and (c) of this clause (6), that for the most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the
date of issuance of such Designated Preferred Stock or the
declaration of such dividends on Refunding Capital Stock that is
Preferred Stock, after giving effect to such issuance or
declaration on a pro forma basis, the Issuer and its Restricted
Subsidiaries on a consolidated basis would have had a Fixed
Charge Coverage Ratio of at least 2.00 to 1.00;
(7) Investments in Unrestricted Subsidiaries having an
aggregate fair market value, taken together with all other
Investments made pursuant to this clause (7) that are at
the time outstanding, without giving effect to the sale of an
Unrestricted Subsidiary to the extent the proceeds of such sale
do not consist of cash or marketable securities, not to exceed
2.5% of Total Assets at the time of such Investment (with the
fair market value of each Investment being measured at the time
made and without giving effect to subsequent changes in value);
(8) repurchases of Equity Interests deemed to occur upon
exercise of stock options or warrants if such Equity Interests
represent a portion of the exercise price of such options or
warrants;
(9) the declaration and payment of dividends on the
Issuer’s common stock (or the payment of dividends to any
direct or indirect parent entity to fund a payment of dividends
on such entity’s common stock), following consummation of
the first public offering of the Issuer’s common stock or
the common stock of any of its direct or indirect parent
companies after November 17, 2006, of up to 6% per annum of
the net cash proceeds received by or contributed to the Issuer
in or from any such public offering, other than public offerings
with respect to the Issuer’s common stock registered on
Form S-8
and other than any public sale constituting an Excluded
Contribution;
(10) Restricted Payments that are made with Excluded
Contributions;
(11) other Restricted Payments in an aggregate amount taken
together with all other Restricted Payments made pursuant to
this clause (11) not to exceed 3.0% of Total Assets at the
time made;
(12) distributions or payments of Receivables Fees;
(13) any Restricted Payment used to fund amounts owed to
Affiliates (including dividends to any direct or indirect parent
of the Issuer to permit payment by such parent of such amount),
in each case to the extent permitted by the covenant described
under “— Transactions with Affiliates”;
(14) the repurchase, redemption or other acquisition or
retirement for value of any Subordinated Indebtedness in
accordance with the provisions similar to those described under
the captions “Repurchase at the Option of
Holders — Change of Control” and “Repurchase
at the Option of Holders — Asset Sales”;
provided that all Notes tendered by Holders in connection
with a Change of Control Offer, Collateral Asset Sale Offer or
Asset Sale Offer, as applicable, have been repurchased, redeemed
or acquired for value;
(15) the declaration and payment of dividends by the Issuer
to, or the making of loans to, any direct or indirect parent in
amounts required for any direct or indirect parent companies to
pay, in each case without duplication,
(a) franchise and excise taxes and other fees, taxes and
expenses required to maintain their corporate existence;
(b) foreign, federal, state and local income taxes, to the
extent such income taxes are attributable to the income of the
Issuer and its Restricted Subsidiaries and, to the extent of the
amount actually received from its Unrestricted Subsidiaries, in
amounts required to pay such taxes to the extent attributable to
the income of such Unrestricted Subsidiaries; provided
that in each case the amount of such payments in any fiscal
year does not exceed the amount that the Issuer and its
Restricted Subsidiaries would be required to pay in respect of
foreign, federal, state and local taxes for such fiscal year
were the Issuer, its Restricted Subsidiaries and its
Unrestricted Subsidiaries (to the extent described above) to pay
such taxes separately from any such parent entity;
(c) for as long as Hercules Holding II, LLC is a parent of
the Issuer, distributions equal to any taxable income of
Hercules Holding II, LLC resulting from the Hedging Arrangements
multiplied by 45%;
(d) customary salary, bonus and other benefits payable to
officers and employees of any direct or indirect parent company
of the Issuer to the extent such salaries, bonuses and other
benefits are attributable to the ownership or operation of the
Issuer and its Restricted Subsidiaries;
(e) general corporate operating and overhead costs and
expenses of any direct or indirect parent company of the Issuer
to the extent such costs and expenses are attributable to the
ownership or operation of the Issuer and its Restricted
Subsidiaries; and
(f) fees and expenses other than to Affiliates of the
Issuer related to any unsuccessful equity or debt offering of
such parent entity; and
(16) the distribution, by dividend or otherwise, of shares
of Capital Stock of, or Indebtedness owed to the Issuer or a
Restricted Subsidiary by, Unrestricted Subsidiaries (other than
Unrestricted Subsidiaries, the primary assets of which are cash
and/or Cash
Equivalents);
provided, however, that at the time of, and after
giving effect to, any Restricted Payment permitted under
clauses (11) and (16), no Default shall have occurred and
be continuing or would occur as a consequence thereof.
As of the Issue Date, all of the Issuer’s Subsidiaries were
Restricted Subsidiaries. The Issuer will not permit any
Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the last sentence of the definition of
“Unrestricted Subsidiary.” For purposes of designating
any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Issuer and its Restricted
Subsidiaries (except to the extent repaid) in the Subsidiary so
designated will be deemed to be Restricted Payments in an amount
determined as set forth in the last sentence of the definition
of “Investment.” Such designation will be permitted
only if a Restricted Payment in such amount would be permitted
at such time, whether pursuant to the first paragraph of this
covenant or under clause (7), (10) or (11) of the
second paragraph of this covenant,
or pursuant to the definition of “Permitted
Investments,” and if such Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. Unrestricted
Subsidiaries will not be subject to any of the restrictive
covenants set forth in the Indenture.
Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise (collectively,
“incur” and collectively, an
“incurrence”) with respect to any Indebtedness
(including Acquired Indebtedness), and the Issuer will not issue
any shares of Disqualified Stock and will not permit any
Restricted Subsidiary to issue any shares of Disqualified Stock
or Preferred Stock; provided, however, that the
Issuer may incur Indebtedness (including Acquired Indebtedness)
or issue shares of Disqualified Stock, and any of its Restricted
Subsidiaries may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock and issue
shares of Preferred Stock, if the Fixed Charge Coverage Ratio on
a consolidated basis for the Issuer and its Restricted
Subsidiaries’ most recently ended four fiscal quarters for
which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock or Preferred Stock is issued
would have been at least 2.00 to 1.00, determined on a pro forma
basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred,
or the Disqualified Stock or Preferred Stock had been issued, as
the case may be, and the application of proceeds therefrom had
occurred at the beginning of such four-quarter period;
provided, further, that Restricted Subsidiaries that are
not Guarantors may not incur Indebtedness or Disqualified Stock
or Preferred Stock if, after giving pro forma effect to such
incurrence or issuance (including a pro forma application of the
net proceeds therefrom), more than an aggregate of
$2,000.0 million of Indebtedness or Disqualified Stock or
Preferred Stock of Restricted Subsidiaries that are not
Guarantors would be outstanding pursuant to this paragraph and
clauses (12), (14) and (19) below at such time.
The foregoing limitations will not apply to:
(1) the incurrence of Indebtedness under (x) Credit
Facilities (other than the ABL Facility) by the Issuer or any of
its Restricted Subsidiaries and the issuance and creation of
letters of credit and bankers’ acceptances thereunder (with
letters of credit and bankers’ acceptances being deemed to
have a principal amount equal to the face amount thereof), up to
an aggregate principal amount of $16,500.0 million
(including any Indebtedness incurred and represented by the
Existing First Priority Notes (including the related
guarantees), the Notes (including the Guarantees) or any
Additional First Lien Obligations by the Issuer or any
Guarantor, the proceeds of which Notes or Additional First Lien
Obligations are used to repay such Credit Facilities)
outstanding at any one time and (y) the ABL Facility by the
Issuer or any of its Restricted Subsidiaries and the issuance
and creation of letters of credit and bankers’ acceptances
thereunder (with letters of credit and bankers’ acceptances
being deemed to have a principal amount equal to the face amount
thereof), up to an aggregate principal amount equal to the ABL
Facility Cap;
(2) reserved;
(3) Indebtedness of the Issuer and its Restricted
Subsidiaries in existence on the Issue Date (other than
Indebtedness described in clause (1)), including the Existing
Second Priority Notes and the Existing Notes;
(4) Indebtedness consisting of Capitalized Lease
Obligations and Purchase Money Obligations; so long as such
Indebtedness exists at the date of such purchase, lease or
improvement, or is created within 270 days thereafter;
(5) Indebtedness incurred by the Issuer or any of its
Restricted Subsidiaries constituting reimbursement obligations
with respect to letters of credit issued in the ordinary course
of business, including letters of credit in respect of
workers’ compensation, medical malpractice or employee
health claims, or other Indebtedness with respect to
reimbursement-type obligations regarding workers’
compensation, medical malpractice or employee health claims;
provided, however, that upon the drawing of such
letters
of credit or the incurrence of such Indebtedness, such
obligations are reimbursed within 30 days following such
drawing or incurrence;
(6) Indebtedness arising from agreements of the Issuer or
its Restricted Subsidiaries providing for indemnification,
adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of
any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary for the purpose of
financing such acquisition; provided, however,
that such Indebtedness is not reflected on the balance sheet of
the Issuer, or any of its Restricted Subsidiaries (contingent
obligations referred to in a footnote to financial statements
and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of
this clause (6));
(7) Indebtedness of the Issuer to a Restricted Subsidiary;
provided that any such Indebtedness owing to a Restricted
Subsidiary that is not a Guarantor is expressly subordinated in
right of payment to the Notes; provided, further,
that any subsequent issuance or transfer of any Capital Stock or
any other event which results in any Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such Indebtedness (except to the Issuer or
another Restricted Subsidiary) shall be deemed, in each case, to
be an incurrence of such Indebtedness;
(8) Indebtedness of a Restricted Subsidiary to the Issuer
or another Restricted Subsidiary; provided that if a
Guarantor incurs such Indebtedness to a Restricted Subsidiary
that is not a Guarantor, such Indebtedness is expressly
subordinated in right of payment to the Guarantee of the Notes
of such Guarantor; provided, further, that any
subsequent transfer of any such Indebtedness (except to the
Issuer or another Restricted Subsidiary) shall be deemed, in
each case, to be an incurrence of such Indebtedness not
permitted by this clause (8);
(9) shares of Preferred Stock of a Restricted Subsidiary
issued to the Issuer or another Restricted Subsidiary;
provided that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or
any other subsequent transfer of any such shares of Preferred
Stock (except to the Issuer or another of its Restricted
Subsidiaries) shall be deemed in each case to be an issuance of
such shares of Preferred Stock not permitted by this clause (9);
(10) Hedging Obligations (excluding Hedging Obligations
entered into for speculative purposes) for the purpose of
limiting interest rate risk with respect to any Indebtedness
permitted to be incurred pursuant to
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock,”
exchange rate risk or commodity pricing risk;
(11) obligations in respect of performance, bid, appeal and
surety bonds and completion guarantees provided by the Issuer or
any of its Restricted Subsidiaries in the ordinary course of
business;
(12) (a) Indebtedness or Disqualified Stock of the
Issuer and Indebtedness, Disqualified Stock or Preferred Stock
of the Issuer or any Restricted Subsidiary equal to 200.0% of
the net cash proceeds received by the Issuer since immediately
after November 17, 2006 from the issue or sale of Equity
Interests of the Issuer or cash contributed to the capital of
the Issuer (in each case, other than Excluded Contributions or
proceeds of Disqualified Stock or sales of Equity Interests to
the Issuer or any of its Subsidiaries) as determined in
accordance with clauses (3)(b) and (3)(c) of the first paragraph
of “— Limitation on Restricted Payments” to
the extent such net cash proceeds or cash have not been applied
pursuant to such clauses to make Restricted Payments or to make
other Investments, payments or exchanges pursuant to the second
paragraph of “— Limitation on Restricted
Payments” or to make Permitted Investments (other than
Permitted Investments specified in clauses (1) and
(3) of the definition thereof) and (b) Indebtedness or
Disqualified Stock of Issuer and Indebtedness, Disqualified
Stock or Preferred Stock of the Issuer or any Restricted
Subsidiary not otherwise permitted hereunder in an aggregate
principal amount or liquidation preference, which when
aggregated with the principal amount and liquidation preference
of all other Indebtedness, Disqualified Stock and Preferred
Stock then outstanding and incurred pursuant to this clause
(12)(b), does not at any one time outstanding exceed
$1,500.0 million; provided, however, that on
a pro forma basis, together with any amounts incurred and
outstanding by Restricted Subsidiaries that are not Guarantors
pursuant to the second proviso to the first paragraph of this
covenant and clauses (14) and (19), no more than
$2,000.0 million of Indebtedness, Disqualified Stock or
Preferred Stock at any one time outstanding and incurred
pursuant to this clause (12)(b) shall be incurred by Restricted
Subsidiaries that are not Guarantors (it being understood that
any Indebtedness, Disqualified Stock or Preferred Stock incurred
pursuant to this clause (12)(b) shall cease to be deemed
incurred or outstanding for purposes of this clause (12)(b) but
shall be deemed incurred for the purposes of the first paragraph
of this covenant from and after the first date on which the
Issuer or such Restricted Subsidiary could have incurred such
Indebtedness, Disqualified Stock or Preferred Stock under the
first paragraph of this covenant without reliance on this clause
(12)(b));
(13) the incurrence or issuance by the Issuer or any
Restricted Subsidiary of Indebtedness, Disqualified Stock or
Preferred Stock which serves to refund or refinance any
Indebtedness, Disqualified Stock or Preferred Stock of the
Issuer or any Restricted Subsidiary incurred as permitted under
the first paragraph of this covenant and clauses (3),
(4) and (12)(a) above, this clause (13) and
clause (14) below or any Indebtedness, Disqualified Stock
or Preferred Stock of the Issuer or any Restricted Subsidiary
issued to so refund or refinance such Indebtedness, Disqualified
Stock or Preferred Stock of the Issuer or any Restricted
Subsidiary including additional Indebtedness, Disqualified Stock
or Preferred Stock incurred to pay premiums (including
reasonable tender premiums), defeasance costs and fees in
connection therewith (the “Refinancing
Indebtedness”) prior to its respective maturity;
provided, however, that such Refinancing
Indebtedness:
(a) has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is incurred which is not less than
the remaining Weighted Average Life to Maturity of the
Indebtedness, Disqualified Stock or Preferred Stock being
refunded or refinanced,
(b) to the extent such Refinancing Indebtedness refinances
(i) Indebtedness subordinated or pari passu to the
Notes or any Guarantee thereof, such Refinancing Indebtedness is
subordinated or pari passu to the Notes or the Guarantee
at least to the same extent as the Indebtedness being refinanced
or refunded or (ii) Disqualified Stock or Preferred Stock,
such Refinancing Indebtedness must be Disqualified Stock or
Preferred Stock, respectively, and
(c) shall not include Indebtedness, Disqualified Stock or
Preferred Stock of a Subsidiary of the Issuer that is not a
Guarantor that refinances Indebtedness, Disqualified Stock or
Preferred Stock of the Issuer or a Guarantor;
and, provided, further, that subclause (a) of
this clause (13) will not apply to any refunding or
refinancing of any ABL Obligations and Obligations secured by
Permitted Liens;
(14) Indebtedness, Disqualified Stock or Preferred Stock of
(x) the Issuer or a Restricted Subsidiary incurred to
finance an acquisition or (y) Persons that are acquired by
the Issuer or any Restricted Subsidiary or merged into the
Issuer or a Restricted Subsidiary in accordance with the terms
of the Indenture; provided that after giving effect to
such acquisition or merger, either
(a) the Issuer would be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first sentence of this
covenant, or
(b) the Fixed Charge Coverage Ratio of the Issuer and the
Restricted Subsidiaries is greater than immediately prior to
such acquisition or merger;
provided, however, that on a pro forma basis,
together with amounts incurred and outstanding pursuant to the
second proviso to the first paragraph of this covenant and
clauses (12) and (19), no more than $2,000.0 million
of Indebtedness, Disqualified Stock or Preferred Stock at any
one time outstanding and incurred by Restricted Subsidiaries
that are not Guarantors pursuant to this clause (14) shall
be incurred and outstanding;
(15) 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 that such Indebtedness is
extinguished within two Business Days of its incurrence;
(16) Indebtedness of the Issuer or any of its Restricted
Subsidiaries supported by a letter of credit issued pursuant to
any Credit Facilities, in a principal amount not in excess of
the stated amount of such letter of credit;
(17) (a) any guarantee by the Issuer or a Restricted
Subsidiary of Indebtedness or other obligations of any
Restricted Subsidiary, so long as the incurrence of such
Indebtedness incurred by such Restricted Subsidiary is permitted
under the terms of the Indenture, or (b) any guarantee by a
Restricted Subsidiary of Indebtedness of the Issuer; provided
that such guarantee is incurred in accordance with the
covenant described below under “— Limitation on
Guarantees of Indebtedness by Restricted Subsidiaries”;
(18) Indebtedness of Foreign Subsidiaries of the Issuer in
an amount not to exceed at any one time outstanding and together
with any other Indebtedness incurred under this clause (18)
7.5% of the Total Assets of the Foreign Subsidiaries (it being
understood that any Indebtedness incurred pursuant to this
clause (18) shall cease to be deemed incurred or
outstanding for purposes of this clause (18) but shall be
deemed incurred for the purposes of the first paragraph of this
covenant from and after the first date on which the Issuer or
such Restricted Subsidiaries could have incurred such
Indebtedness under the first paragraph of this covenant without
reliance on this clause (18));
(19) Indebtedness, Disqualified Stock or Preferred Stock of
a Restricted Subsidiary incurred to finance or assumed in
connection with an acquisition in a principal amount not to
exceed $200.0 million in the aggregate at any one time
outstanding together with all other Indebtedness, Disqualified
Stock and/or
Preferred Stock issued under this clause (19) (it being
understood that any Indebtedness, Disqualified Stock or
Preferred Stock incurred pursuant to this clause (19) shall
cease to be deemed incurred or outstanding for purposes of this
clause (19) but shall be deemed incurred for the purposes
of the first paragraph of this covenant from and after the first
date on which such Restricted Subsidiary could have incurred
such Indebtedness, Disqualified Stock or Preferred Stock under
the first paragraph of this covenant without reliance on this
clause (19)); provided, however, that on a pro
forma basis, together with amounts incurred and outstanding by
Restricted Subsidiaries that are not Guarantors pursuant to the
second proviso to the first paragraph of this covenant and
clauses (12) and (14), no more than $2,000.0 million
of Indebtedness would be incurred and outstanding by Restricted
Subsidiaries that are not Guarantors;
(20) Indebtedness of the Issuer or any of its Restricted
Subsidiaries consisting of (i) the financing of insurance
premiums or
(ii) take-or-pay
obligations contained in supply arrangements, in each case,
incurred in the ordinary course of business;
(21) Indebtedness consisting of Indebtedness issued by the
Issuer or any of its Restricted Subsidiaries to current or
former officers, directors and employees thereof, their
respective estates, spouses or former spouses, in each case to
finance the purchase or redemption of Equity Interests of the
Issuer or any direct or indirect parent company of the Issuer to
the extent described in clause (4) of the second paragraph
under the caption “— Limitation on Restricted
Payments”;
(22) Physician Support Obligations incurred by the Issuer
or any Restricted Subsidiary; and
(23) Indebtedness of the Issuer or any of its Restricted
Subsidiaries undertaken in connection with cash management and
related activities with respect to any Subsidiary or joint
venture operating one or more health care facilities, including,
without limitation, hospitals, ambulatory surgery centers,
outpatient diagnostic centers or imaging centers, in each case,
in the ordinary course of business.
For purposes of determining compliance with this covenant:
(1) in the event that an item of Indebtedness, Disqualified
Stock or Preferred Stock (or any portion thereof) meets the
criteria of more than one of the categories of permitted
Indebtedness, Disqualified Stock or Preferred Stock described in
clauses (1) through (23) above or is entitled to be
incurred pursuant
to the first paragraph of this covenant, the Issuer, in its sole
discretion, will classify or reclassify such item of
Indebtedness, Disqualified Stock or Preferred Stock (or any
portion thereof) and will only be required to include the amount
and type of such Indebtedness, Disqualified Stock or Preferred
Stock in one of the above clauses; provided that all
Indebtedness outstanding under the Credit Facilities on
November 17, 2006 will be treated as incurred on
November 17, 2006 under clause (1) of the preceding
paragraph; and
(2) at the time of incurrence, the Issuer will be entitled
to divide and classify an item of Indebtedness in more than one
of the types of Indebtedness described in the first and second
paragraphs above.
Accrual of interest, the accretion of accreted value and the
payment of interest in the form of additional Indebtedness,
Disqualified Stock or Preferred Stock will not be deemed to be
an incurrence of Indebtedness, Disqualified Stock or Preferred
Stock for purposes of this covenant.
For purposes of determining compliance with any
U.S. dollar-denominated restriction on the incurrence of
Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was incurred, in the case
of term debt, or first committed, in the case of revolving
credit debt; provided that if such Indebtedness is
incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the
applicable U.S. dollar-denominated restriction to be
exceeded if calculated at the relevant currency exchange rate in
effect on the date of such refinancing, such
U.S. dollar-denominated restriction shall be deemed not to
have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being refinanced.
The principal amount of any Indebtedness incurred to refinance
other Indebtedness, if incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the
currency exchange rate applicable to the currencies in which
such respective Indebtedness is denominated that is in effect on
the date of such refinancing.
The Indenture provides that the Issuer will not, and will not
permit any Guarantor to, directly or indirectly, incur any
Indebtedness (including Acquired Indebtedness) that is
subordinated or junior in right of payment to any Indebtedness
of the Issuer or such Guarantor, as the case may be, unless such
Indebtedness is expressly subordinated in right of payment to
the Notes or such Guarantor’s Guarantee to the extent and
in the same manner as such Indebtedness is subordinated to other
Indebtedness of the Issuer or such Guarantor, as the case may be.
The Indenture does not treat (1) unsecured Indebtedness as
subordinated or junior to Secured Indebtedness merely because it
is unsecured or (2) Senior Indebtedness as subordinated or
junior to any other Senior Indebtedness merely because it has a
junior priority with respect to the same collateral.
Limitation
on Prepayment or Modification of Existing Notes
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly purchase, redeem,
defease or otherwise acquire or retire for value any of the
Existing Notes prior to the final maturity date thereof (as in
effect on the Issue Date); provided that the Issuer may:
(1) purchase, redeem, defease or otherwise acquire or
retire for value any of the Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
December 31, 2011; and
(2) purchase, redeem, defease or otherwise acquire or
retire for value any other Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
the maturity date of the Notes; provided that, in the
case of any such prepayment funded with the proceeds of the
issuance of Secured Indebtedness, at the time of incurrence and
after giving pro forma effect thereto and to the application of
the proceeds thereof, (x) the Consolidated Secured Debt
Ratio would be no greater than 5.25 to 1.0 and (y) the
Consolidated Leverage Ratio would be no greater than 7.0 to 1.0.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, amend the Existing Notes Indenture, or any
supplemental indenture in respect thereof, in any way to advance
the final maturity date or shorten the Weighted Average Life to
Maturity of any series of the Existing Notes such that any
Existing Notes with a maturity date following the maturity of
the Notes would have a maturity date on or prior to the date one
year following the maturity date of the Notes or which would
prohibit the making of the Guarantees or the creation of Liens
in favor of the Notes and the Guarantees on the Collateral.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, designate any additional subsidiaries as
“Restricted Subsidiaries” (as defined in the Existing
Notes Indenture) for purposes of the Existing Notes Indenture.
Liens
The Issuer will not, and will not permit any Guarantor to,
directly or indirectly, create, incur, assume or suffer to exist
any Lien (except Permitted Liens) that secures obligations under
any Indebtedness or any related guarantee, on any asset or
property of the Issuer or any Guarantor, or any income or
profits therefrom, or assign or convey any right to receive
income therefrom, other than Liens securing Indebtedness that
are junior in priority to the Liens on such property, assets or
proceeds securing the Notes and related Guarantees.
The foregoing shall not apply to (a) Liens securing the
Notes and the related Guarantees, (b) Liens securing
Indebtedness permitted to be incurred under Credit Facilities,
including any letter of credit relating thereto, that was
permitted by the terms of the Indenture to be incurred pursuant
to clause (1) of the second paragraph under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”;
provided that, with respect to Liens securing Obligations
permitted under this subclause (b), the Notes and the related
Guarantees are secured by Liens on the assets subject to such
Liens (except any European Collateral) to the extent, with the
priority and subject to intercreditor arrangements, in each case
no less favorable to the Holders of the Notes than those
described under “Security” above and (c) Liens
which are pari passu in priority to the Liens securing
the Notes and related Guarantees and are incurred to secure
Obligations in respect of any Indebtedness permitted to be
incurred pursuant to the covenant described above under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”;
provided that, with respect to Liens securing Obligations
permitted under this subclause (c), at the time of incurrence
and after giving pro forma effect thereto, the ratio of
(1) the aggregate amount of Indebtedness secured by
property, assets or proceeds that secure the Notes and related
Guarantees that are subject to a Lien that is pari passu
or senior in priority to the Liens securing the Notes and
the related Guarantees incurred pursuant to subclause (b)
above, this subclause (c) and clause (6) of the
definition of “Permitted Liens” (other than Liens
securing Indebtedness incurred pursuant to clauses (4) and
(18) of the covenant described above under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”) to
(2) the Issuer’s EBITDA for the most recently ended
four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which
such event for which such calculation is being made shall occur,
in each case with such pro forma adjustments to Indebtedness and
EBITDA as are appropriate and consistent with the pro forma
adjustment provisions set forth in the definition of Fixed
Charge Coverage Ratio would be no greater than 4.25 to 1.0;
provided that, with respect to Liens securing Obligations
permitted under this subclause (c), the Notes and the related
Guarantees are secured by Liens on the assets subject to such
Liens (except any European Collateral) to the extent, with the
priority and subject to intercreditor arrangements, in each case
no less favorable to the Holders of the Notes than those
described under “Security” above.
Merger,
Consolidation or Sale of All or Substantially All
Assets
The Issuer may not consolidate or merge with or into or wind up
into (whether or not the Issuer is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or
more related transactions, to any Person unless:
(1) the Issuer is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if
other than the Issuer) or to which such sale, assignment,
transfer, lease,
conveyance or other disposition will have been made is a
corporation organized or existing under the laws of the
jurisdiction of organization of the Issuer or the laws of the
United States, any state thereof, the District of Columbia, or
any territory thereof (such Person, as the case may be, being
herein called the “Successor Company”);
(2) the Successor Company, if other than the Issuer,
expressly assumes all the obligations of the Issuer under the
Notes and the Security Documents pursuant to supplemental
indentures or other documents or instruments in form reasonably
satisfactory to the Trustee;
(3) immediately after such transaction, no Default exists;
(4) immediately after giving pro forma effect to such
transaction and any related financing transactions, as if such
transactions had occurred at the beginning of the applicable
four-quarter period,
(a) the Successor Company would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first sentence of
the covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock,” or
(b) the Fixed Charge Coverage Ratio for the Successor
Company, the Issuer and its Restricted Subsidiaries would be
greater than such ratio for the Issuer and its Restricted
Subsidiaries immediately prior to such transaction;
(5) each Guarantor, unless it is the other party to the
transactions described above, in which case clause (b) of
the second succeeding paragraph shall apply, shall have by
supplemental indenture confirmed that its Guarantee shall apply
to such Person’s obligations under the Indenture, the Notes
and the Registration Rights Agreement;
(6) the Collateral owned by the Successor Company will
(a) continue to constitute Collateral under the Indenture
and the Security Documents, (b) be subject to a Lien in
favor of the Junior Lien Collateral Agent for the benefit of the
Trustee and the Holders of the Notes and (c) not be subject
to any other Lien, other than Permitted Liens and other Liens
permitted under the covenant described under
“— Liens”;
(7) to the extent any assets of the Person which is merged
or consolidated with or into the Successor Company are assets of
the type which would constitute Collateral under the Security
Documents, the Successor Company will take such action as may be
reasonably necessary to cause such property and assets to be
made subject to the Lien of the Security Documents in the manner
and to the extent required in the Indenture or any of the
Security Documents and shall take all reasonably necessary
action so that such Lien is perfected to the extent required by
the Security Documents; and
(8) the Issuer shall have delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with the Indenture and,
if a supplemental indenture or any supplement to any Security
Document is required in connection with such transaction, such
supplement shall comply with the applicable provisions of the
Indenture.
The Successor Company will succeed to, and be substituted for
the Issuer, as the case may be, under the Indenture, the
Guarantees and the Notes, as applicable. Notwithstanding the
foregoing clauses (3) and (4),
(1) any Restricted Subsidiary may consolidate with or merge
into or transfer all or part of its properties and assets to the
Issuer, and
(2) the Issuer may merge with an Affiliate of the Issuer,
as the case may be, solely for the purpose of reincorporating
the Issuer in a State of the United States or any state thereof,
the District of Columbia or any territory thereof so long as the
amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby.
Subject to certain limitations described in the Indenture
governing release of a Guarantee upon the sale, disposition or
transfer of a Guarantor, no Guarantor will, and the Issuer will
not permit any Guarantor to, consolidate or merge with or into
or wind up into (whether or not the Issuer or Guarantor is the
surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to
any Person unless:
(1) (a) such Guarantor is the surviving corporation or
the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) or to which such sale,
assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation, partnership, limited
partnership, limited liability corporation or trust organized or
existing under the laws of the jurisdiction of organization of
such Guarantor, as the case may be, or the laws of the United
States, any state thereof, the District of Columbia, or any
territory thereof (such Guarantor or such Person, as the case
may be, being herein called the “Successor
Person”);
(b) the Successor Person, if other than such Guarantor,
expressly assumes all the obligations of such Guarantor under
the Indenture and such Guarantor’s related Guarantee
pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;
(c) immediately after such transaction, no Default
exists; and
(d) the Issuer shall have delivered to the Trustee an
Officer’s Certificate, each stating that such
consolidation, merger or transfer and such supplemental
indentures, if any, comply with the Indenture; or
(2) the transaction is made in compliance with the covenant
described under “Repurchase at the Option of
Holders — Asset Sales.”
Subject to certain limitations described in the Indenture, the
Successor Person will succeed to, and be substituted for, such
Guarantor under the Indenture and such Guarantor’s
Guarantee. Notwithstanding the foregoing, any Guarantor may
(i) merge into or transfer all or part of its properties
and assets to another Guarantor or the Issuer, (ii) merge
with an Affiliate of the Company solely for the purpose of
reincorporating the Guarantor in the United States, any state
thereof, the District of Columbia or any territory thereof or
(iii) convert into a corporation, partnership, limited
partnership, limited liability corporation or trust organized or
existing under the laws of the jurisdiction of organization of
such Guarantor.
Transactions
with Affiliates
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate
of the Issuer (each of the foregoing, an “Affiliate
Transaction”) involving aggregate payments or
consideration in excess of $40.0 million, unless:
(1) such Affiliate Transaction is on terms that are not
materially less favorable to the Issuer or its relevant
Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Issuer or such Restricted
Subsidiary with an unrelated Person on an arm’s-length
basis; and
(2) the Issuer delivers to the Trustee with respect to any
Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in
excess of $80.0 million, a resolution adopted by the
majority of the board of directors of the Issuer approving such
Affiliate Transaction and set forth in an Officer’s
Certificate certifying that such Affiliate Transaction complies
with clause (1) above.
The foregoing provisions will not apply to the following:
(1) transactions between or among the Issuer or any of its
Restricted Subsidiaries;
(2) Restricted Payments permitted by the provisions of the
Indenture described above under the covenant
“— Limitation on Restricted Payments” and
the definition of “Permitted Investments”;
(3) the payment of management, consulting, monitoring and
advisory fees and related expenses to the Investors and the
Frist Entities pursuant to the Sponsor Management Agreement
(plus any unpaid management, consulting, monitoring and advisory
fees and related expenses accrued in any prior year) and the
termination fees pursuant to the Sponsor Management Agreement,
in each case as in effect on the Issue Date, or any amendment
thereto (so long as any such amendment is not disadvantageous in
the good faith judgment of the board of directors of the Issuer
to the Holders when taken as a whole as compared to the Sponsor
Management Agreement in effect on the Issue Date);
(4) the payment of reasonable and customary fees paid to,
and indemnities provided for the benefit of, officers,
directors, employees or consultants of Issuer, any of its direct
or indirect parent companies or any of its Restricted
Subsidiaries;
(5) transactions in which the Issuer or any of its
Restricted Subsidiaries, as the case may be, delivers to the
Trustee a letter from an Independent Financial Advisor stating
that such transaction is fair to the Issuer or such Restricted
Subsidiary from a financial point of view or stating that the
terms are not materially less favorable to the Issuer or its
relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Issuer or such
Restricted Subsidiary with an unrelated Person on an
arm’s-length basis;
(6) any agreement as in effect as of the Issue Date, or any
amendment thereto (so long as any such amendment is not
disadvantageous to the Holders when taken as a whole as compared
to the applicable agreement as in effect on the Issue Date);
(7) the existence of, or the performance by the Issuer or
any of its Restricted Subsidiaries of its obligations under the
terms of, any stockholders agreement (including any registration
rights agreement or purchase agreement related thereto) to which
it is a party as of the Issue Date and any similar agreements
which it may enter into thereafter; provided,
however, that the existence of, or the performance by the
Issuer or any of its Restricted Subsidiaries of obligations
under any future amendment to any such existing agreement or
under any similar agreement entered into after the Issue Date
shall only be permitted by this clause (7) to the extent
that the terms of any such amendment or new agreement are not
otherwise disadvantageous to the Holders when taken as a whole;
(8) reserved;
(9) transactions with customers, clients, suppliers, or
purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the
terms of the Indenture which are fair to the Issuer and its
Restricted Subsidiaries, in the reasonable determination of the
board of directors of the Issuer or the senior management
thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated
party;
(10) the issuance of Equity Interests (other than
Disqualified Stock) of the Issuer to any Permitted Holder or to
any director, officer, employee or consultant;
(11) sales of accounts receivable, or participations
therein, in connection with the ABL Facility and any Receivables
Facility;
(12) payments by the Issuer or any of its Restricted
Subsidiaries to any of the Investors made for any financial
advisory, financing, underwriting or placement services or in
respect of other investment banking activities, including,
without limitation, in connection with acquisitions or
divestitures, which payments are approved by a majority of the
board of directors of the Issuer in good faith;
(13) payments or loans (or cancellation of loans) to
employees or consultants of the Issuer, any of its direct or
indirect parent companies or any of its Restricted Subsidiaries
and employment agreements, stock option plans and other similar
arrangements with such employees or consultants which, in each
case, are approved by the Issuer in good faith;
(14) investments by the Investors or the Frist Entities in
securities of the Issuer or any of its Restricted Subsidiaries
so long as (i) the investment is being offered generally to
other investors on the
same or more favorable terms and (ii) the investment
constitutes less than 5% of the proposed or outstanding issue
amount of such class of securities;
(15) payments to or from, and transactions with, any joint
venture owning or operating one or more health care facilities,
including, without limitation, hospitals, ambulatory surgery
centers, outpatient diagnostic centers or imaging centers, in
each case in the ordinary course of business (including, without
limitation, any cash management activities related
thereto); and
(16) payments by the Issuer (and any direct or indirect
parent thereof) and its Subsidiaries pursuant to tax sharing
agreements among the Issuer (and any such parent) and its
Subsidiaries on customary terms to the extent attributable to
the ownership or operation of the Issuer and its Subsidiaries;
provided that in each case the amount of such payments in
any fiscal year does not exceed the amount that the Issuer, its
Restricted Subsidiaries and its Unrestricted Subsidiaries (to
the extent of amounts received from Unrestricted Subsidiaries)
would be required to pay in respect of foreign, federal, state
and local taxes for such fiscal year were the Issuer and its
Restricted Subsidiaries (to the extent described above) to pay
such taxes separately from any such parent entity.
Dividend
and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Issuer will not, and will not permit any of its Restricted
Subsidiaries that are not Guarantors to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or consensual restriction on the
ability of any such Restricted Subsidiary to:
(1) (a) pay dividends or make any other distributions
to the Issuer or any of its Restricted Subsidiaries on its
Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or
(b) pay any Indebtedness owed to the Issuer or any of its
Restricted Subsidiaries;
(2) make loans or advances to the Issuer or any of its
Restricted Subsidiaries; or
(3) sell, lease or transfer any of its properties or assets
to the Issuer or any of its Restricted Subsidiaries,
except (in each case) for such encumbrances or restrictions
existing under or by reason of:
(a) contractual encumbrances or restrictions in effect on
the Issue Date, including pursuant to the Senior Credit
Facilities and the related documentation, the Existing Notes
Indenture and the related documentation, the Existing Second
Priority Notes Indentures and the related documentation and the
Existing First Priority Notes Indenture and the related
documentation;
(b) the Indenture and the Notes;
(c) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the
nature discussed in clause (3) above on the property so
acquired;
(d) applicable law or any applicable rule, regulation or
order;
(e) any agreement or other instrument of a Person acquired
by the Issuer or any Restricted Subsidiary in existence at the
time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other
than the Person and its Subsidiaries, or the property or assets
of the Person and its Subsidiaries, so acquired;
(f) contracts for the sale of assets, including customary
restrictions with respect to a Subsidiary of the Issuer pursuant
to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary;
(g) Secured Indebtedness that limits the right of the
debtor to dispose of the assets securing such Indebtedness that
is otherwise permitted to be incurred pursuant to the covenants
described under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock” and
“— Liens”;
(h) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the
ordinary course of business;
(i) other Indebtedness, Disqualified Stock or Preferred
Stock of Foreign Subsidiaries permitted to be incurred
subsequent to the Issue Date pursuant to the provisions of the
covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”;
(j) customary provisions in joint venture agreements and
other agreements or arrangements relating solely to such joint
venture;
(k) customary provisions contained in leases or licenses of
intellectual property and other agreements, in each case entered
into in the ordinary course of business;
(l) any encumbrances or restrictions of the type referred
to in clauses (1), (2) and (3) above imposed by any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the
contracts, instruments or obligations referred to in
clauses (a) through (k) above; provided that
such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
are, in the good faith judgment of the Issuer, no more
restrictive with respect to such encumbrance and other
restrictions taken as a whole than those prior to such
amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing; and
(m) restrictions created in connection with any Receivables
Facility that, in the good faith determination of the Issuer,
are necessary or advisable to effect the transactions
contemplated under such Receivables Facility.
Limitation
on Guarantees of Indebtedness by Restricted
Subsidiaries
The Issuer will not permit any of its Wholly-Owned Subsidiaries
that are Restricted Subsidiaries (and non-Wholly-Owned
Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee
other capital markets debt securities of the Issuer or any
Guarantor), other than a Guarantor, a Foreign Subsidiary or a
Receivables Subsidiary, to guarantee the payment of any
Indebtedness of the Issuer or any other Guarantor unless:
(1) such Restricted Subsidiary within 30 days executes
and delivers a supplemental indenture to the Indenture providing
for a Guarantee by such Restricted Subsidiary, except that with
respect to a guarantee of Indebtedness of the Issuer or any
Guarantor:
(a) if the Notes or such Guarantor’s Guarantee is
subordinated in right of payment to such Indebtedness, the
Guarantee under the supplemental indenture shall be subordinated
to such Restricted Subsidiary’s guarantee with respect to
such Indebtedness substantially to the same extent as the Notes
are subordinated to such Indebtedness; and
(b) if such Indebtedness is by its express terms
subordinated in right of payment to the Notes or such
Guarantor’s Guarantee, any such guarantee by such
Restricted Subsidiary with respect to such Indebtedness shall be
subordinated in right of payment to such Guarantee substantially
to the same extent as such Indebtedness is subordinated to the
Notes; and
(2) such Restricted Subsidiary waives, and will not in any
manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other
rights against the Issuer or any other Restricted Subsidiary as
a result of any payment by such Restricted Subsidiary under its
Guarantee;
provided that this covenant shall not be applicable to
(i) any guarantee of any Restricted Subsidiary that existed
at the time such Person became a Restricted Subsidiary and was
not incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary and (ii) guarantees
of the ABL Facility by the ABL Financing Entities or of any
Receivables Facility by any Receivables Subsidiary.
Notwithstanding that the Issuer may not be subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act or otherwise report on an annual and quarterly
basis on forms provided for such annual and quarterly reporting
pursuant to rules and regulations promulgated by the SEC, the
Indenture will require the Issuer to file with the SEC (and make
available to the Trustee and Holders of the Notes (without
exhibits), without cost to any Holder, within 15 days after
it files them with the SEC) from and after the Issue Date,
(1) within 90 days (or any other time period then in
effect under the rules and regulations of the Exchange Act with
respect to the filing of a
Form 10-K
by a non-accelerated filer) after the end of each fiscal year,
annual reports on
Form 10-K,
or any successor or comparable form, containing the information
required to be contained therein, or required in such successor
or comparable form;
(2) within 45 days after the end of each of the first
three fiscal quarters of each fiscal year, reports on
Form 10-Q
containing all quarterly information that would be required to
be contained in Form
10-Q, or any
successor or comparable form;
(3) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on
Form 8-K,
or any successor or comparable form; and
(4) any other information, documents and other reports
which the Issuer would be required to file with the SEC if it
were subject to Section 13 or 15(d) of the Exchange Act;
in each case in a manner that complies in all material respects
with the requirements specified in such form; provided
that the Issuer shall not be so obligated to file such
reports with the SEC if the SEC does not permit such filing, in
which event the Issuer will make available such information to
prospective purchasers of Notes, in addition to providing such
information to the Trustee and the Holders of the Notes, in each
case within 15 days after the time the Issuer would be
required to file such information with the SEC if it were
subject to Section 13 or 15(d) of the Exchange Act. In
addition, to the extent not satisfied by the foregoing, the
Issuer will agree that, for so long as any Notes are
outstanding, it will furnish to Holders and to securities
analysts and prospective investors, upon their request, the
information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
In the event that any direct or indirect parent company of the
Issuer becomes a Guarantor of the Notes, the Indenture permits
the Issuer to satisfy its obligations in this covenant with
respect to financial information relating to the Issuer by
furnishing financial information relating to such parent;
provided that the same is accompanied by consolidating
information that explains in reasonable detail the differences
between the information relating to such parent, on the one
hand, and the information relating to the Issuer and its
Restricted Subsidiaries on a standalone basis, on the other hand.
Notwithstanding the foregoing, such requirements shall be deemed
satisfied prior to the commencement of the exchange offer or the
effectiveness of the shelf registration statement described in
the Registration Rights Agreement (1) by the filing with
the SEC of the exchange offer registration statement or shelf
registration statement (or any other similar registration
statement), and any amendments thereto, with such financial
information that satisfies
Regulation S-X,
subject to exceptions consistent with the presentation of
financial information in the Offering Memorandum, to the extent
filed within the times specified above, or (2) by posting
reports that would be required to be filed substantially in the
form required by the SEC on the Company’s website (or that
of any of its parent companies) or providing such reports to the
Trustee within 15 days after the time the Issuer would be
required to file such information with the SEC if it were
subject to Section 13 or 15(d) of the Exchange Act, the
financial information (including a “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” section) that would be required to be included
in such reports, subject to exceptions consistent with the
presentation of financial information in the Offering
Memorandum, to the extent filed within the times specified above.
The Indenture provides that each of the following is an
“Event of Default”:
(1) default in payment when due and payable, upon
redemption, acceleration or otherwise, of principal of, or
premium, if any, on the Notes;
(2) default for 30 days or more in the payment when
due of interest or Additional Interest on or with respect to the
Notes;
(3) failure by the Issuer or any Guarantor for 60 days
after receipt of written notice given by the Trustee or the
Holders of not less than 30% in principal amount of the Notes to
comply with any of its obligations, covenants or agreements
(other than a default referred to in clauses (1) and
(2) above) contained in the Indenture or the Notes;
(4) default under any mortgage, indenture or instrument
under which there is issued or by which there is secured or
evidenced any Indebtedness for money borrowed by the Issuer or
any of its Restricted Subsidiaries or the payment of which is
guaranteed by the Issuer or any of its Restricted Subsidiaries,
other than Indebtedness owed to the Issuer or a Restricted
Subsidiary, whether such Indebtedness or guarantee now exists or
is created after the issuance of the Notes, if both:
(a) such default either results from the failure to pay any
principal of such Indebtedness at its stated final maturity
(after giving effect to any applicable grace periods) or relates
to an obligation other than the obligation to pay principal of
any such Indebtedness at its stated final maturity and results
in the holder or holders of such Indebtedness causing such
Indebtedness to become due prior to its stated maturity; and
(b) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in
default for failure to pay principal at stated final maturity
(after giving effect to any applicable grace periods), or the
maturity of which has been so accelerated, aggregate
$200.0 million or more at any one time outstanding;
(5) failure by the Issuer or any Significant Subsidiary to
pay final judgments aggregating in excess of
$200.0 million, which final judgments remain unpaid,
undischarged and unstayed for a period of more than 60 days
after such judgment becomes final, and in the event such
judgment is covered by insurance, an enforcement proceeding has
been commenced by any creditor upon such judgment or decree
which is not promptly stayed;
(6) certain events of bankruptcy or insolvency with respect
to the Issuer or any Significant Subsidiary;
(7) the Guarantee of any Significant Subsidiary shall for
any reason cease to be in full force and effect or be declared
null and void or any responsible officer of any Guarantor that
is a Significant Subsidiary, as the case may be, denies that it
has any further liability under its Guarantee or gives notice to
such effect, other than by reason of the termination of the
Indenture or the release of any such Guarantee in accordance
with the Indenture; or
(8) with respect to any Collateral having a fair market
value in excess of $200 million, individually or in the
aggregate, (a) the security interest under the Security
Documents, at any time, ceases to be in full force and effect
for any reason other than in accordance with the terms of the
Indenture, the Security Documents and the Intercreditor
Agreements, (b) any security interest created thereunder or
under the Indenture is declared invalid or unenforceable by a
court of competent jurisdiction or (c) the Issuer or any
Guarantor asserts, in any pleading in any court of competent
jurisdiction, that any such security interest is invalid or
unenforceable.
If any Event of Default (other than of a type specified in
clause (6) above) occurs and is continuing under the
Indenture, the Trustee or the Holders of at least 30% in
principal amount of the then total outstanding Notes may declare
the principal, premium, if any, interest and any other monetary
obligations on all the then outstanding Notes to be due and
payable immediately.
Upon the effectiveness of such declaration, such principal and
interest will be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising under
clause (6) of the first paragraph of this section, all
outstanding Notes will become due and payable without further
action or notice. The Indenture provides that the Trustee may
withhold from the Holders notice of any continuing Default,
except a Default relating to the payment of principal, premium,
if any, or interest, if it determines that withholding notice is
in their interest. In addition, the Trustee shall have no
obligation to accelerate the Notes if in the best judgment of
the Trustee acceleration is not in the best interest of the
Holders of the Notes.
The Indenture provides that the Holders of a majority in
aggregate principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default and its consequences under the
Indenture except a continuing Default in the payment of interest
on, premium, if any, or the principal of any Note held by a
non-consenting Holder. In the event of any Event of Default
specified in clause (4) above, such Event of Default and
all consequences thereof (excluding any resulting payment
default, other than as a result of acceleration of the Notes)
shall be annulled, waived and rescinded, automatically and
without any action by the Trustee or the Holders, if within
20 days after such Event of Default arose:
(1) the Indebtedness or guarantee that is the basis for
such Event of Default has been discharged; or
(2) holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise
to such Event of Default; or
(3) the default that is the basis for such Event of Default
has been cured.
Subject to the provisions of the Indenture relating to the
duties of the Trustee thereunder, in case an Event of Default
occurs and is continuing, the Trustee will be under no
obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders of
the Notes unless the Holders have offered to the Trustee
indemnity or security reasonably satisfactory to it against any
loss, liability or expense. Except to enforce the right to
receive payment of principal, premium, if any, or interest when
due, no Holder of a Note may pursue any remedy with respect to
the Indenture or the Notes unless:
(1) such Holder has previously given the Trustee notice
that an Event of Default is continuing;
(2) Holders of at least 30% in principal amount of the
total outstanding Notes have requested the Trustee to pursue the
remedy;
(3) Holders of the Notes have offered the Trustee
reasonable security or indemnity against any loss, liability or
expense;
(4) the Trustee has not complied with such request within
60 days after the receipt thereof and the offer of security
or indemnity; and
(5) Holders of a majority in principal amount of the total
outstanding Notes have not given the Trustee a direction
inconsistent with such request within such
60-day
period.
Subject to certain restrictions, under the Indenture the Holders
of a majority in principal amount of the total outstanding Notes
are given the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the
Trustee determines is unduly prejudicial to the rights of any
other Holder of a Note or that would involve the Trustee in
personal liability.
The Indenture provides that the Issuer is required to deliver to
the Trustee annually a statement regarding compliance with the
Indenture, and the Issuer is required, within five Business
Days, upon becoming aware of any Default, to deliver to the
Trustee a statement specifying such Default.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of
the Issuer or any Guarantor or any of their parent companies
(other than the Issuer and the Guarantors) shall have any
liability for any obligations of the Issuer or the Guarantors
under the Notes, the Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of such obligations
or their creation. Each Holder by accepting the Notes waives and
releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes. Such waiver may not
be effective to waive liabilities under the federal securities
laws, and it is the view of the SEC that such a waiver is
against public policy.
Legal
Defeasance and Covenant Defeasance
The obligations of the Issuer and the Guarantors under the
Indenture will terminate (other than certain obligations) and
will be released upon payment in full of all of the Notes. The
Issuer may, at its option and at any time, elect to have all of
its obligations discharged with respect to the Notes and have
the Issuer’s and each Guarantor’s obligation
discharged with respect to its Guarantee (“Legal
Defeasance”) and cure all then existing Events of
Default except for:
(1) the rights of Holders of the Notes to receive payments
in respect of the principal of, premium, if any, and interest on
the Notes when such payments are due solely out of the trust
created pursuant to the Indenture;
(2) the Issuer’s obligations with respect to Notes
concerning issuing temporary Notes, registration of such Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance
of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of
the Trustee, and the Issuer’s obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Issuer may, at its option and at any time,
elect to have its obligations and those of each Guarantor
released with respect to certain covenants that are described in
the Indenture (“Covenant Defeasance”) and
thereafter any omission to comply with such obligations shall
not constitute a Default with respect to the Notes. In the event
Covenant Defeasance occurs, certain events (not including
bankruptcy, receivership, rehabilitation and insolvency events
pertaining to the Issuer) described under “Events of
Default and Remedies” will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant
Defeasance with respect to the Notes:
(1) the Issuer must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders of the Notes, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and
interest due on the Notes on the stated maturity date or on the
redemption date, as the case may be, of such principal, premium,
if any, or interest on such Notes, and the Issuer must specify
whether such Notes are being defeased to maturity or to a
particular redemption date;
(2) in the case of Legal Defeasance, the Issuer shall have
delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions,
(a) the Issuer has received from, or there has been
published by, the United States Internal Revenue Service a
ruling, or
(b) since the issuance of the Notes, there has been a
change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, subject to customary
assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax
purposes, as applicable, as a result of such Legal Defeasance
and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Issuer shall
have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax
purposes as a result of such Covenant Defeasance and will be
subject to such 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;
(4) no Default (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith) shall have
occurred and be continuing on the date of such deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under the Senior Credit Facilities or any other material
agreement or instrument (other than the Indenture) to which the
Issuer or any Guarantor is a party or by which the Issuer or any
Guarantor is bound (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith);
(6) the Issuer shall have delivered to the Trustee an
Opinion of Counsel to the effect that, as of the date of such
opinion and subject to customary assumptions and exclusions
following the deposit, the trust funds will not be subject to
the effect of Section 547 of Title 11 of the United
States Code;
(7) the Issuer shall have delivered to the Trustee an
Officer’s Certificate stating that the deposit was not made
by the Issuer with the intent of defeating, hindering, delaying
or defrauding any creditors of the Issuer or any Guarantor or
others; and
(8) the Issuer shall have delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel (which
Opinion of Counsel may be subject to customary assumptions and
exclusions) each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with.
Satisfaction
and Discharge
The Indenture will be discharged and will cease to be of further
effect as to all Notes, when either:
(1) all Notes theretofore authenticated and delivered,
except lost, stolen or destroyed Notes which have been replaced
or paid and Notes for whose payment money has theretofore been
deposited in trust, have been delivered to the Trustee for
cancellation; or
(2) (a) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable by reason
of the making of a notice of redemption or otherwise, will
become due and payable within one year or may be called for
redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Issuer, and the
Issuer or any Guarantor has irrevocably deposited or caused to
be deposited with the Trustee as trust funds in trust solely for
the benefit of the Holders of the Notes, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest to pay and
discharge the entire indebtedness on the Notes not theretofore
delivered to the Trustee for cancellation for principal,
premium, if any, and accrued interest to the date of maturity or
redemption;
(b) no Default (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of
Liens in connection therewith) with respect to the Indenture or
the Notes shall have occurred and be continuing on the date of
such deposit or shall occur as a result of such deposit, and
such deposit will not result in a breach or violation of, or
constitute a default under, the Senior Credit Facilities or any
other material agreement or instrument (other than the
Indenture) to which the Issuer or any Guarantor is a party or by
which the Issuer or any Guarantor is bound (other than that
resulting from borrowing funds to be applied to make such
deposit and any similar and simultaneous deposit relating to
other Indebtedness and, in each case, the granting of Liens in
connection therewith);
(c) the Issuer has paid or caused to be paid all sums
payable by it under the Indenture; and
(d) the Issuer has delivered irrevocable instructions to
the Trustee to apply the deposited money toward the payment of
the Notes at maturity or the redemption date, as the case may be.
In addition, the Issuer must deliver an Officer’s
Certificate and an Opinion of Counsel to the Trustee stating
that all conditions precedent to satisfaction and discharge have
been satisfied.
Amendment,
Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the
Indenture, any Guarantee, any Security Document and the Notes
may be amended or supplemented with the consent of the Holders
of at least a majority in principal amount of the Notes then
outstanding, including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes, and
any existing Default or compliance with any provision of the
Indenture, the Notes issued thereunder, any Guarantee or the
Security Documents may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Notes,
other than Notes beneficially owned by the Issuer or its
Affiliates (including consents obtained in connection with a
purchase of or tender offer or exchange offer for the Notes).
The Indenture provides that, without the consent of each
affected Holder of Notes, an amendment or waiver may not, with
respect to any Notes held by a non-consenting Holder:
(1) reduce the principal amount of such Notes whose Holders
must consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed final
maturity of any such Note or alter or waive the provisions with
respect to the redemption of such Notes (other than provisions
relating to the covenants described above under the caption
“Repurchase at the Option of Holders”);
(3) reduce the rate of or change the time for payment of
interest on any Note;
(4) waive a Default in the payment of principal of or
premium, if any, or interest on the Notes, except a rescission
of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver
of the payment default that resulted from such acceleration, or
in respect of a covenant or provision contained in the Indenture
or any Guarantee which cannot be amended or modified without the
consent of all Holders;
(5) make any Note payable in money other than that stated
therein;
(6) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of or premium, if any, or interest
on the Notes;
(7) make any change in these amendment and waiver
provisions;
(8) impair the right of any Holder to receive payment of
principal of, or interest on such Holder’s Notes 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 Notes;
(9) make any change to or modify the ranking of the Notes
or the subordination of the Liens with respect to the Notes that
would adversely affect the Holders; or
(10) except as expressly permitted by the Indenture, modify
the Guarantees of any Significant Subsidiary in any manner
adverse to the Holders of the Notes.
In addition, without the consent of at least 75% in aggregate
principal amount of Notes then outstanding, an amendment,
supplement or waiver may not:
(1) modify any Security Document or the provisions of the
Indenture dealing with the Security Documents or application of
trust moneys, or otherwise release any Collateral, in any manner
materially adverse to the Holders other than in accordance with
the Indenture, the Security Documents and the Intercreditor
Agreements; or
(2) modify any Intercreditor Agreement in any manner
materially adverse to the Holders other than in accordance with
the Indenture, the Security Documents and the Intercreditor
Agreements.
Notwithstanding the foregoing, the Issuer, any Guarantor (with
respect to a Guarantee or the Indenture to which it is a party)
and the Trustee may amend or supplement the Indenture, any
Security Document and any Guarantee or Notes without the consent
of any Holder;
(1) to cure any ambiguity, omission, mistake, defect or
inconsistency;
(2) to provide for uncertificated Notes of such series in
addition to or in place of certificated Notes;
(3) to comply with the covenant relating to mergers,
consolidations and sales of assets;
(4) to provide for the assumption of the Issuer’s or
any Guarantor’s obligations to the Holders;
(5) to make any change that would provide any additional
rights or benefits to the Holders or that does not adversely
affect the legal rights under the Indenture of any such Holder;
(6) to add covenants for the benefit of the Holders or to
surrender any right or power conferred upon the Issuer or any
Guarantor;
(7) to comply with requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the
Trust Indenture Act;
(8) to evidence and provide for the acceptance and
appointment under the Indenture of a successor Trustee
thereunder pursuant to the requirements thereof;
(9) to provide for the issuance of Exchange Notes or
private exchange notes, which are identical to Exchange Notes
except that they are not freely transferable;
(10) to add a Guarantor under the Indenture;
(11) to conform the text of the Indenture, Security
Documents, Guarantees or the Notes to any provision of the
“Description of Notes” section of the Offering
Memorandum to the extent that such provision in such
“Description of Notes” section was intended to be a
verbatim recitation of a provision of the Indenture, Security
Documents, Guarantee or Notes;
(12) to make any amendment to the provisions of the
Indenture relating to the transfer and legending of Notes as
permitted by the Indenture, including, without limitation to
facilitate the issuance and administration of the Notes;
provided, however, that (i) compliance with
the Indenture as so amended would not result in Notes being
transferred in violation of the Securities Act or any applicable
securities law and (ii) such amendment does not materially
and adversely affect the rights of Holders to transfer Notes;
(13) to mortgage, pledge, hypothecate or grant any other
Lien in favor of the Trustee for the benefit of the Holders of
the Notes, as additional security for the payment and
performance of all or any portion of the Obligations, in any
property or assets, including any which are required to be
mortgaged, pledged or hypothecated, or in which a Lien is
required to be granted to or for the benefit of the Trustee or
the Collateral Agent pursuant to the Indenture, any of the
Security Documents or otherwise;
(14) to release Collateral from the Lien of the Indenture
and the Security Documents when permitted or required by the
Security Documents or the Indenture; or
(15) to add Additional First Lien Secured Parties or
additional ABL Secured Parties, to any Security Documents.
The consent of the Holders is not necessary under the Indenture
to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the
proposed amendment.
Notices
Notices given by publication will be deemed given on the first
date on which publication is made and notices given by
first-class mail, postage prepaid, will be deemed given five
calendar days after mailing.
Concerning
the Trustee
The Indenture contains certain limitations on the rights of the
Trustee thereunder, should it become a creditor of the Issuer,
to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in
other transactions; however, if it acquires any conflicting
interest it must eliminate such conflict within 90 days,
apply to the SEC for permission to continue or resign.
The Indenture provides that the Holders of a majority in
principal amount of the outstanding Notes have the right to
direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event
of Default shall occur (which shall not be cured), the Trustee
will be required, in the exercise of its power, to use the
degree of care of a prudent person in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under
no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of the Notes, unless such
Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
Governing
Law
The Indenture, the Notes and any Guarantee are governed by and
construed in accordance with the laws of the State of New York.
Certain
Definitions
Set forth below are certain defined terms used in the Indenture.
For purposes of the Indenture, unless otherwise specifically
indicated, the term “consolidated” with respect
to any Person refers to such Person on a consolidated basis in
accordance with GAAP, but excluding from such consolidation any
Unrestricted Subsidiary as if such Unrestricted Subsidiary were
not an Affiliate of such Person.
“2006 Second Priority Notes”means the
$1,000,000,000 aggregate principal amount of
91/8% Senior
Secured Notes due 2014, the $3,200,000,000 aggregate principal
amount of
91/4% Senior
Secured Notes due 2016 and the $1,500,000,000
95/8%/103/8% Senior
Secured Toggle Notes due 2016, each issued by the Issuer under
the 2006 Second Priority Notes Indenture.
“2006 Second Priority Notes Indenture” means
that certain Indenture, dated as of November 17, 2006,
among the Issuer, the guarantors named on Schedule I
thereto and The Bank of New York Mellon, as trustee.
“2009 Second Priority Notes”means the
$310,000,000 aggregate principal amount of
97/8% Senior
Secured Notes due 2017, issued by the Issuer under the 2009
Second Priority Notes Indenture.
“2009 Second Priority Notes Indenture” means
that certain Indenture, dated as of February 19, 2009,
among the Issuer, the guarantors named on Schedule I
thereto, The Bank of New York Mellon Trust Company, N.A.,
as trustee, and The Bank of New York Mellon, as collateral agent.
“ABL Facility” means the Amended and Restated
Asset-Based Revolving Credit Agreement, dated as of
June 20, 2007, by and among the Issuer, the lenders party
thereto in their capacities as lenders thereunder and Bank of
America, N.A., as Administrative Agent, as amended as of
March 2, 2009, including any guarantees,
collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements,
modifications, extensions, renewals, restatements, refundings or
refinancings thereof and any indentures or credit facilities or
commercial paper facilities with banks or other institutional
lenders or investors that replace, refund or refinance any part
of the loans, notes, other credit facilities or commitments
thereunder, including any such replacement, refunding or
refinancing facility or indenture that increases the amount
borrowable thereunder or alters the maturity thereof
(provided that such increase in borrowings is permitted
under “Certain Covenants — Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock” above).
“ABL Facility Cap” means an amount equal to the
greater of (x) $2,000.0 million and (y) 75% of
the consolidated accounts receivable of the Issuer and its
subsidiaries determined in accordance with GAAP.
“ABL Financing Entity” means the Issuer and
certain of its subsidiaries from time to time named as borrowers
or guarantors under the ABL Facility.
“ABL Obligations” means Obligations under the
ABL Facility.
“ABL Secured Parties” means each of
(i) the ABL Collateral Agent on behalf of itself and the
lenders under the ABL Facility and lenders or their affiliates
counterparty to related Hedging Obligations and (ii) each
other holder of ABL Obligations.
“Acquired Indebtedness” means, with respect to
any specified Person,
(1) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Restricted
Subsidiary of such specified Person, including Indebtedness
incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Restricted Subsidiary
of such specified Person, and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
“Additional First Lien Obligations” shall have
the meaning given such term by the U.S. Security Agreement
and shall include the Notes Obligations.
“Additional First Lien Secured Party” means the
holders of any Additional First Lien Obligations, including the
Holders, and any Authorized Representative with respect thereto,
including the Trustee.
“Additional General Intercreditor Agreement”
has the meaning set forth under “Security —
Additional General Intercreditor Agreement.”
“Additional Interest” means all additional
interest then owing pursuant to the Registration Rights
Agreement.
“Additional Receivables Intercreditor
Agreement” has the meaning set forth under
“Security — Additional Receivables Intercreditor
Agreement.”
“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 purposes of this definition, “control”
(including, with correlative meanings, the terms
“controlling,”“controlled by” and
“under common control with”), as used with respect to
any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise.
“Applicable Authorized Representative”means,
with respect to any Common Collateral, (i) until the
earlier of (x) the Discharge of General Credit Facility
Obligations and (y) the Non-Controlling Authorized
Representative Enforcement Date, the administrative agent under
the General Credit Facility and (ii) from and after the
earlier of (x) the Discharge of General Credit Facility
Obligations and (y) the Non-Controlling Authorized
Representative Enforcement Date, the Major Non-Controlling
Authorized Representative.
“Applicable Premium” means, with respect to any
Note on any Redemption Date, the greater of:
(1) 1.0% of the principal amount of such Note; and
(2) the excess, if any, of (a) the present value at
such Redemption Date of (i) the redemption price of such
Note at August 15, 2014 (such redemption price being set
forth in the tables appearing above under the caption
“Optional Redemption”), plus (ii) all required
interest payments due on such Note through August 15, 2014
(excluding accrued but unpaid interest to the
Redemption Date), computed using a discount rate equal to
the Treasury Rate as of such Redemption Date plus
50 basis points; over (b) the principal amount of such
Note.
“Asset Sale” means:
(1) the sale, conveyance, transfer or other disposition,
whether in a single transaction or a series of related
transactions, of property or assets (including by way of a Sale
and Lease-Back Transaction) of the Issuer or any of its
Restricted Subsidiaries (each referred to in this definition as
a “disposition”); or
(2) the issuance or sale of Equity Interests of any
Restricted Subsidiary, whether in a single transaction or a
series of related transactions (other than Preferred Stock of
Restricted Subsidiaries issued in compliance with the covenant
described under “Certain Covenants — Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”);
in each case, other than:
(a) any disposition of Cash Equivalents or Investment Grade
Securities or obsolete or worn out equipment in the ordinary
course of business or any disposition of inventory or goods (or
other assets) held for sale in the ordinary course of business;
(b) the disposition of all or substantially all of the
assets of the Issuer in a manner permitted pursuant to the
provisions described above under “Certain
Covenants — Merger, Consolidation or Sale of All or
Substantially All Assets” or any disposition that
constitutes a Change of Control pursuant to the Indenture;
(c) the making of any Restricted Payment or Permitted
Investment that is permitted to be made, and is made, under the
covenant described above under “Certain
Covenants — Limitation on Restricted Payments”;
(d) any disposition of assets or issuance or sale of Equity
Interests of any Restricted Subsidiary in any transaction or
series of related transactions with an aggregate fair market
value of less than $100.0 million;
(e) any disposition of property or assets or issuance of
securities by a Restricted Subsidiary of the Issuer to the
Issuer or by the Issuer or a Restricted Subsidiary of the Issuer
to another Restricted Subsidiary of the Issuer;
(f) to the extent allowable under Section 1031 of the
Code or any comparable or successor provision, any exchange of
like property (excluding any boot thereon) for use in a Similar
Business;
(g) the lease, assignment or sub-lease of any real or
personal property in the ordinary course of business;
(h) any issuance or sale of Equity Interests in, or
Indebtedness or other securities of, an Unrestricted Subsidiary;
(i) foreclosures on assets;
(j) sales of accounts receivable, or participations
therein, in connection with the ABL Facility or any Receivables
Facility;
(k) any financing transaction with respect to property
built or acquired by the Issuer or any Restricted Subsidiary
after November 17, 2006, including Sale and Lease-Back
Transactions and asset securitizations permitted by the
Indenture;
(l) dispositions in the ordinary course of business by any
Restricted Subsidiary (including, without limitation, HCI)
engaged in the insurance business in order to provide insurance
to the Issuer and its Subsidiaries;
(m) sales, transfers and other dispositions of Investments
in joint ventures to the extent required by, or made pursuant
to, customary buy/sell arrangements between the joint venture
parties set forth in joint venture arrangements and similar
binding arrangements;
(n) any issuance or sale of Equity Interests or
dispositions in connection with ordinary course syndications of
Subsidiaries or joint ventures owning or operating one or more
health care facilities, including, without limitation,
hospitals, ambulatory surgery centers, outpatient diagnostic
centers or imaging centers in any transaction or series of
related transactions with an aggregate fair market value of less
than $100.0 million; and
(o) any issuance or sale of Equity Interests of any
Restricted Subsidiary (including, without limitation,
HealthTrust Purchasing Group, L.P.) to any Person operating in a
Similar Business for which such Restricted Subsidiary provides
shared purchasing, billing, collection or similar services in
the ordinary course of business.
“Asset Sale Offer” has the meaning set forth in
the fourth paragraph under “Repurchase at the Option of
Holders — Asset Sales.”
“Authorized Representative” means (i) in
the case of any General Credit Facility Obligations or the
General Credit Facility Secured Parties, the administrative
agent under the General Credit Facility, (ii) in the case
of the Existing First Priority Notes Obligations or the Existing
First Priority Notes, Law Debenture Trust Company of New York,
as trustee for the holders of the Existing First Priority Notes,
(iii) in the case of the Notes Obligations or the Holders,
the Trustee and (iv) in the case of any Series of
Additional First Lien Obligations or Additional First Lien
Secured Parties that become subject to the First Lien
Intercreditor Agreement, the Authorized Representative named for
such Series in the applicable joinder agreement.
“Bankruptcy Code” means Title 11 of the
United States Code, as amended.
“Bankruptcy Law” means the Bankruptcy Code and
any similar federal, state or foreign law for the relief of
debtors.
“Business Day” means each day which is not a
Legal Holiday.
“Capital Stock” means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
“Capitalized Lease Obligation” means, at the
time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time
be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance
with GAAP.
“Capitalized Software Expenditures” means, for
any period, the aggregate of all expenditures (whether paid in
cash or accrued as liabilities) by a Person and its Restricted
Subsidiaries during such period in respect of purchased software
or internally developed software and software enhancements that,
in conformity with GAAP, are or are required to be reflected as
capitalized costs on the consolidated balance sheet of a Person
and its Restricted Subsidiaries.
(2) euros or any national currency of any participating
member state of the EMU or such local currencies held by the
Company and its Restricted Subsidiaries from time to time in the
ordinary course of business;
(3) securities issued or directly and fully and
unconditionally guaranteed or insured by the
U.S. government (or any agency or instrumentality thereof
the securities of which are unconditionally guaranteed as a full
faith and credit obligation of the U.S. government) with
maturities of 24 months or less from the date of
acquisition;
(4) certificates of deposit, time deposits and eurodollar
time deposits with maturities of one year or less from the date
of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case
with any commercial bank having capital and surplus of not less
than $500.0 million in the case of U.S. banks and
$100.0 million (or the U.S. dollar equivalent as of
the date of determination) in the case of
non-U.S. banks;
(5) repurchase obligations for underlying securities of the
types described in clauses (3) and (4) entered into
with any financial institution meeting the qualifications
specified in clause (4) above;
(6) commercial paper rated at least
P-1 by
Moody’s or at least
A-1 by
S&P and in each case maturing within 24 months after
the date of creation thereof;
(7) marketable short-term money market and similar
securities having a rating of at least
P-2 or
A-2 from
either Moody’s or S&P, respectively (or, if at any
time neither Moody’s nor S&P shall be rating such
obligations, an equivalent rating from another Rating Agency)
and in each case maturing within 24 months after the date
of creation thereof;
(8) investment funds investing 95% of their assets in
securities of the types described in clauses (1) through
(7) above;
(9) readily marketable direct obligations issued by any
state, commonwealth or territory of the United States or any
political subdivision or taxing authority thereof having an
Investment Grade Rating from either Moody’s or S&P
with maturities of 24 months or less from the date of
acquisition;
(10) Indebtedness or Preferred Stock issued by Persons with
a rating of A or higher from S&P or A2 or higher from
Moody’s with maturities of 24 months or less from the
date of acquisition; and
(11) Investments with average maturities of 24 months
or less from the date of acquisition in money market funds rated
AAA- (or the equivalent thereof) or better by S&P or Aaa3
(or the equivalent thereof) or better by Moody’s.
Notwithstanding the foregoing, Cash Equivalents shall include
amounts denominated in currencies other than those set forth in
clauses (1) and (2) above; provided that such
amounts are converted into any currency listed in
clauses (1) and (2) as promptly as practicable and in
any event within ten Business Days following the receipt of such
amounts.
“Change of Control” means the occurrence of any
of the following:
(1) the sale, lease or transfer, in one or a series of
related transactions, of all or substantially all of the assets
of the Issuer and its Subsidiaries, taken as a whole, to any
Person other than a Permitted Holder; or
(2) the Issuer becomes aware (by way of a report or any
other filing pursuant to Section 13(d) of the Exchange Act,
proxy, vote, written notice or otherwise) of the acquisition by
any Person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the
meaning of
Rule 13d-5(b)(1)
under the Exchange Act), other than the Permitted Holders, in a
single
transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase
of beneficial ownership (within the meaning of
Rule 13d-3
under the Exchange Act, or any successor provision) of 50% or
more of the total voting power of the Voting Stock of the Issuer
or any of its direct or indirect parent companies holding
directly or indirectly 100% of the total voting power of the
Voting Stock of the Issuer.
“Code” means the Internal Revenue Code of 1986,
as amended, or any successor thereto.
“Collateral” means, collectively, the Shared
Receivables Collateral and Non-Receivables Collateral.
“Collateral Asset Sale Offer” has the meaning
set forth in the third paragraph under “Repurchase at the
Option of Holders — Asset Sales.”
“Collateral Excess Proceeds” has the meaning
set forth in the third paragraph under “Repurchase at the
Option of Holders — Asset Sales.”
“Common Collateral”means, at any time,
Collateral in which the holders of two or more Series of First
Lien Obligations (or their respective Authorized
Representatives) hold a valid and perfected security interest at
such time. If more than two Series of First Lien Obligations are
outstanding at any time and the holders of less than all Series
of First Lien Obligations hold a valid and perfected security
interest in any Collateral at such time then such Collateral
shall constitute Common Collateral for those Series of First
Lien Obligations that hold a valid security interest in such
Collateral at such time and shall not constitute Common
Collateral for any Series which does not have a valid and
perfected security interest in such Collateral at such time.
“Consolidated Depreciation and Amortization
Expense” means with respect to any Person for any
period, the total amount of depreciation and amortization
expense, including the amortization of deferred financing fees,
debt issuance costs, commissions, fees and expenses and
Capitalized Software Expenditures, of such Person and its
Restricted Subsidiaries for such period on a consolidated basis
and otherwise determined in accordance with GAAP.
“Consolidated Interest Expense” means, with
respect to any Person for any period, without duplication, the
sum of:
(1) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, to the extent such
expense was deducted (and not added back) in computing
Consolidated Net Income (including (a) amortization of
original issue discount resulting from the issuance of
Indebtedness at less than par, (b) all commissions,
discounts and other fees and charges owed with respect to
letters of credit or bankers’ acceptances,
(c) non-cash interest payments (but excluding any non-cash
interest expense attributable to the movement in the mark to
market valuation of Hedging Obligations or other derivative
instruments pursuant to GAAP), (d) the interest component
of Capitalized Lease Obligations, and (e) net payments, if
any, pursuant to interest rate Hedging Obligations with respect
to Indebtedness, and excluding (u) accretion or accrual of
discounted liabilities not constituting Indebtedness,
(v) any expense resulting from the discounting of the
Existing Notes or other Indebtedness in connection with the
application of recapitalization accounting or, if applicable,
purchase accounting, (w) any Additional Interest and any
comparable “additional interest” with respect to other
securities, (x) amortization of deferred financing fees,
debt issuance costs, commissions, fees and expenses,
(y) any expensing of bridge, commitment and other financing
fees and (z) commissions, discounts, yield and other fees
and charges (including any interest expense) related to any
Receivables Facility); plus
(2) consolidated capitalized interest of such Person and
its Restricted Subsidiaries for such period, whether paid or
accrued; less
(3) interest income for such period.
For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with
GAAP.
“Consolidated Leverage Ratio”, with respect to
any Person as of any date of determination, means the ratio of
(x) Consolidated Total Indebtedness of such Person as of
the end of the most recent fiscal quarter for which internal
financial statements are available immediately preceding the
date on which such event for which such calculation is being
made shall occur to (y) the aggregate amount of EBITDA of
such Person for the period of the most recently ended four full
consecutive fiscal quarters for which internal financial
statements are available immediately preceding the date on which
such event for which such calculation is being made shall occur,
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 “Fixed Charge Coverage Ratio.”
“Consolidated Net Income” means, with respect
to any Person for any period, the aggregate of the Net Income of
such Person for such period, on a consolidated basis, and
otherwise determined in accordance with GAAP; provided,
however, that, without duplication,
(1) any after-tax effect of extraordinary, non-recurring or
unusual gains or losses (less all fees and expenses relating
thereto) or expenses, severance, relocation costs, consolidation
and closing costs, integration and facilities opening costs,
business optimization costs, transition costs, restructuring
costs, signing, retention or completion bonuses, and
curtailments or modifications to pension and post-retirement
employee benefit plans shall be excluded,
(2) the cumulative effect of a change in accounting
principles during such period shall be excluded,
(3) any after-tax effect of income (loss) from disposed,
abandoned or discontinued operations and any net after-tax gains
or losses on disposal of disposed, abandoned, transferred,
closed or discontinued operations shall be excluded,
(4) any after-tax effect of gains or losses (less all fees
and expenses relating thereto) attributable to asset
dispositions or abandonments other than in the ordinary course
of business, as determined in good faith by the Issuer, shall be
excluded,
(5) the Net Income for such period of any Person that is an
Unrestricted Subsidiary shall be excluded, and, solely for the
purpose of determining the amount available for Restricted
Payments under clause 3(a) of the first paragraph of
“Certain Covenants — Limitation on Restricted
Payments,” the Net Income for such period of any Person
that is not a Subsidiary or that is accounted for by the equity
method of accounting shall be excluded; provided that
Consolidated Net Income of the Issuer shall be increased by the
amount of dividends or distributions or other payments that are
actually paid in cash (or to the extent converted into cash) to
the referent Person or a Restricted Subsidiary thereof in
respect of such period,
(6) solely for the purpose of determining the amount
available for Restricted Payments under clause (3)(a) of the
first paragraph of “Certain Covenants —
Limitation on Restricted Payments,” the Net Income for such
period of any Restricted Subsidiary (other than any Guarantor)
shall be excluded to the extent that the declaration or payment
of dividends or similar distributions by that Restricted
Subsidiary of its Net Income is not at the date of determination
wholly permitted without any prior governmental approval (which
has not been obtained) or, directly or indirectly, by the
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, or
governmental regulation applicable to that Restricted Subsidiary
or its stockholders, unless such restriction with respect to the
payment of dividends or similar distributions has been legally
waived; provided that Consolidated Net Income of the
Issuer will be increased by the amount of dividends or other
distributions or other payments actually paid in cash (or to the
extent converted into cash) or Cash Equivalents to the Issuer or
a Restricted Subsidiary thereof in respect of such period, to
the extent not already included therein,
(7) effects of adjustments (including the effects of such
adjustments pushed down to the Issuer and its Restricted
Subsidiaries) in the property, equipment, inventory, software
and other intangible assets, deferred revenues and debt line
items in such Person’s consolidated financial statements
pursuant to GAAP resulting from the application of
recapitalization accounting or, if applicable, purchase
accounting
in relation to the Transactions or any consummated acquisition
or the amortization or write-off of any amounts thereof, net of
taxes, shall be excluded,
(8) any after-tax effect of income (loss) from the early
extinguishment of Indebtedness or Hedging Obligations or other
derivative instruments shall be excluded,
(9) any impairment charge or asset write-off, including,
without limitation, impairment charges or asset write-offs
related to intangible assets, long-lived assets or investments
in debt and equity securities, in each case, pursuant to GAAP
and the amortization of intangibles arising pursuant to GAAP
shall be excluded,
(10) any non-cash compensation expense recorded from grants
of stock appreciation or similar rights, stock options,
restricted stock or other rights, and any cash charges
associated with the rollover, acceleration or payout of Equity
Interests by management of the Company or any of its direct or
indirect parent companies in connection with the Transaction,
shall be excluded,
(11) any fees and expenses incurred during such period, or
any amortization thereof for such period, in connection with any
acquisition, Investment, Asset Sale, issuance or repayment of
Indebtedness, issuance of Equity Interests, refinancing
transaction or amendment or modification of any debt instrument
(in each case, including any such transaction consummated prior
to the Issue Date and any such transaction undertaken but not
completed) and any charges or non-recurring merger costs
incurred during such period as a result of any such transaction
shall be excluded,
(12) accruals and reserves that are established or adjusted
within twelve months after November 17, 2006 that are so
required to be established as a result of the Transaction in
accordance with GAAP, or changes as a result of adoption or
modification of accounting policies, shall be excluded, and
(13) to the extent covered by insurance and actually
reimbursed, or, so long as the Issuer has made a determination
that there exists reasonable evidence that such amount will in
fact be reimbursed by the insurer and only to the extent that
such amount is (a) not denied by the applicable carrier in
writing within 180 days and (b) in fact reimbursed
within 365 days of the date of such evidence (with a
deduction for any amount so added back to the extent not so
reimbursed within 365 days), expenses with respect to
liability or casualty events or business interruption shall be
excluded.
Notwithstanding the foregoing, for the purpose of the covenant
described under “Certain Covenants — Limitation
on Restricted Payments” only (other than clause (3)(d)
thereof), there shall be excluded from Consolidated Net Income
any income arising from any sale or other disposition of
Restricted Investments made by the Issuer and its Restricted
Subsidiaries, any repurchases and redemptions of Restricted
Investments from the Issuer and its Restricted Subsidiaries, any
repayments of loans and advances which constitute Restricted
Investments by the Issuer or any of its Restricted Subsidiaries,
any sale of the stock of an Unrestricted Subsidiary or any
distribution or dividend from an Unrestricted Subsidiary, in
each case only to the extent such amounts increase the amount of
Restricted Payments permitted under such covenant pursuant to
clause (3)(d) thereof.
“Consolidated Net Tangible Assets”means the
total amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom
(a) all current liabilities as disclosed on the
consolidated balance sheet of the Issuer (excluding any thereof
which are by their terms extendible or renewable at the option
of the obligor thereon to a time more than 12 months after
the time as of which the amount thereof is being computed and
further excluding any deferred income taxes that are included in
current liabilities) and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and
other like intangible assets, all as set forth on the most
recent consolidated balance sheet of the Issuer and computed in
accordance with generally accepted accounting principles.
“Consolidated Secured Debt Ratio” as of any
date of determination, means the ratio of (1) Consolidated
Total Indebtedness of the Issuer and its Restricted Subsidiaries
that is secured by Liens as of the end of the most recent fiscal
period for which internal financial statements are available
immediately preceding the date on which such event for which
such calculation is being made shall occur to (2) the
Issuer’s EBITDA for the
most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the
date on which such event for which such calculation is being
made shall occur, 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 “Fixed Charge Coverage
Ratio.”
“Consolidated Total Indebtedness” means, as at
any date of determination, an amount equal to the sum of
(1) the aggregate amount of all outstanding Indebtedness of
the Issuer and its Restricted Subsidiaries on a consolidated
basis consisting of Indebtedness for borrowed money, Obligations
in respect of Capitalized Lease Obligations and debt obligations
evidenced by promissory notes and similar instruments (and
excluding, for the avoidance of doubt, all obligations relating
to Receivables Facilities) and (2) the aggregate amount of
all outstanding Disqualified Stock of the Issuer and all
Preferred Stock of its Restricted Subsidiaries on a consolidated
basis, with the amount of such Disqualified Stock and Preferred
Stock equal to the greater of their respective voluntary or
involuntary liquidation preferences and maximum fixed repurchase
prices, in each case determined on a consolidated basis in
accordance with GAAP. For purposes hereof, the “maximum
fixed repurchase price” of any Disqualified Stock or
Preferred Stock that does not have a fixed repurchase price
shall be calculated in accordance with the terms of such
Disqualified Stock or Preferred Stock as if such Disqualified
Stock or Preferred Stock were purchased on any date on which
Consolidated Total Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified
Stock or Preferred Stock, such fair market value shall be
determined reasonably and in good faith by the Issuer.
“Contingent Obligations” means, with respect to
any Person, any obligation of such Person guaranteeing any
leases, dividends or other obligations that do not constitute
Indebtedness (“primary obligations”) of any
other Person (the “primary obligor”) in any
manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not
contingent,
(1) to purchase any such primary obligation or any property
constituting direct or indirect security therefor,
(2) to advance or supply funds
(a) for the purchase or payment of any such primary
obligation, or
(b) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, or
(3) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment
of such primary obligation against loss in respect thereof.
“Controlling Secured Parties” means, with
respect to any Common Collateral, the Series of First Lien
Secured Parties whose Authorized Representative is the
Applicable Authorized Representative for such Common Collateral.
“Credit Facilities” means, with respect to the
Issuer or any of its Restricted Subsidiaries, one or more debt
facilities, including the Senior Credit Facilities, or other
financing arrangements (including, without limitation,
commercial paper facilities or indentures) providing for
revolving credit loans, term loans, letters of credit or other
long-term indebtedness, including any notes, mortgages,
guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments,
supplements, modifications, extensions, renewals, restatements
or refundings thereof and any indentures or credit facilities or
commercial paper facilities that replace, refund or refinance
any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement,
refunding or refinancing facility or indenture that increases
the amount permitted to be borrowed thereunder or alters the
maturity thereof (provided that such increase in
borrowings is permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”) or
adds Restricted Subsidiaries as additional borrowers or
guarantors thereunder and whether by the same or any other
agent, lender or group of lenders.
“Default” means any event that is, or with the
passage of time or the giving of notice or both would be, an
Event of Default.
“Delayed Equity Amount” means any equity
contribution of the Investors, the Frist Entities or certain
other management investors described in the offering memorandum
relating to the 2006 Second Priority Notes on or before
March 31, 2007, the proceeds of which are used to repay
borrowings under the senior secured revolving credit facility
included in the General Credit Facility or the ABL Facility in
the manner described in the offering memorandum relating to the
2006 Second Priority Notes.
“Designated Non-cash Consideration” means the
fair market value of non-cash consideration received by the
Issuer or a Restricted Subsidiary in connection with an Asset
Sale that is so designated as Designated Non-cash Consideration
pursuant to an Officer’s Certificate, setting forth the
basis of such valuation, executed by the principal financial
officer of the Issuer, less the amount of cash or Cash
Equivalents received in connection with a subsequent sale of or
collection on such Designated Non-cash Consideration.
“Designated Preferred Stock” means Preferred
Stock of the Issuer or any parent corporation thereof (in each
case other than Disqualified Stock) that is issued for cash
(other than to a Restricted Subsidiary or an employee stock
ownership plan or trust established by the Issuer or any of its
Subsidiaries) and is so designated as Designated Preferred
Stock, pursuant to an Officer’s Certificate executed by the
principal financial officer of the Issuer or the applicable
parent corporation thereof, as the case may be, on the issuance
date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause (3) of the first paragraph
under “Certain Covenants — Limitation on
Restricted Payments.”
“Discharge of New First Lien Obligations”
means, except to the extent any such New First Lien Obligations
are reinstated pursuant to the Additional General Intercreditor
Agreement, the discharge or legal defeasance or covenant
defeasance of the Indenture in accordance with its terms;
provided that the Discharge of New First Lien Obligations
shall not be deemed to have occurred if such payments are made
with proceeds of other New First Lien Obligations that
constitute and exchange or replacement for or a refinancing, in
whole or in part, of such New First Lien Obligations. In the
event the New First Lien Obligations are modified and such
Obligations are paid over time or otherwise modified pursuant to
Section 1129 of the Bankruptcy Code, the New First Lien
Obligations shall be deemed to be discharged when the final
payment is made, in cash, in respect of such indebtedness and
any obligations pursuant to such new indebtedness shall have
been satisfied.
“Discharge of General Credit Facility
Obligations” means, with respect to any Common
Collateral, the date on which the General Credit Facility
Obligations are no longer secured by such Common Collateral;
provided that the Discharge of General Credit Facility
Obligations shall not be deemed to have occurred in connection
with a refinancing of such General Credit Facility Obligations
with additional First Lien Obligations secured by such Common
Collateral under an agreement relating to Additional First Lien
Obligations which has been designated in writing by the
administrative agent under the General Credit Facility so
refinanced to the First Lien Collateral Agent and each other
Authorized Representative as the General Credit Facility for
purposes of the First Lien Intercreditor Agreement.
“Disqualified Stock” means, with respect to any
Person, any Capital Stock of such Person which, by its terms, or
by the terms of any security into which it is convertible or for
which it is putable or exchangeable, or upon the happening of
any event, matures or is mandatorily redeemable (other than
solely as a result of a change of control or asset sale)
pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof (other than
solely as a result of a change of control or asset sale), in
whole or in part, in each case prior to the date 91 days
after the earlier of the maturity date of the Notes or the date
the Notes are no longer outstanding; provided,
however, that if such Capital Stock is issued to any plan
for the benefit of employees of the Issuer or its Subsidiaries
or by any such plan to such employees, such Capital Stock shall
not constitute Disqualified Stock solely because it may be
required to be repurchased by the Issuer or its Subsidiaries in
order to satisfy applicable statutory or regulatory obligations.
“EBITDA” means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such
period
(a) provision for taxes based on income or profits or
capital gains, including, without limitation, foreign, federal,
state, franchise and similar taxes (such as the Pennsylvania
capital tax) and foreign withholding taxes (including penalties
and interest related to such taxes or arising from tax
examinations) of such Person paid or accrued during such period
deducted (and not added back) in computing Consolidated Net
Income; plus
(b) Fixed Charges of such Person for such period (including
(x) net losses on Hedging Obligations or other derivative
instruments entered into for the purpose of hedging interest
rate risk and (y) costs of surety bonds in connection with
financing activities, in each case, to the extent included in
Fixed Charges), together with items excluded from the definition
of “Consolidated Interest Expense” pursuant to clauses
(1)(u), (v), (w), (x), (y) and (z) of the definition
thereof, and, in each such case, to the extent the same were
deducted (and not added back) in calculating such Consolidated
Net Income; plus
(c) Consolidated Depreciation and Amortization Expense of
such Person for such period to the extent the same was deducted
(and not added back) in computing Consolidated Net Income;
plus
(d) any expenses or charges (other than depreciation or
amortization expense) related to any Equity Offering, Permitted
Investment, acquisition, disposition, recapitalization or the
incurrence of Indebtedness permitted to be incurred by the
Indenture (including a refinancing thereof) (whether or not
successful), including (i) such fees, expenses or charges
related to the offering of the Notes and any Credit Facilities
and (ii) any amendment or other modification of the Notes,
and, in each case, deducted (and not added back) in computing
Consolidated Net Income; plus
(e) the amount of any restructuring charge or reserve
deducted (and not added back) in such period in computing
Consolidated Net Income, including any one-time costs incurred
in connection with acquisitions after November 17, 2006 and
costs related to the closure
and/or
consolidation of facilities; plus
(f) any other non-cash charges, including any write-offs or
write-downs, reducing Consolidated Net Income for such period
(provided that if any such non-cash charges represent an
accrual or reserve for potential cash items in any future
period, the cash payment in respect thereof in such future
period shall be subtracted from EBITDA to such extent, and
excluding amortization of a prepaid cash item that was paid in a
prior period); plus
(g) the amount of any minority interest expense consisting
of income attributable to minority equity interests of third
parties deducted (and not added back) in such period in
calculating Consolidated Net Income; plus
(h) the amount of management, monitoring, consulting and
advisory fees and related expenses paid in such period to the
Investors and the Frist Entities to the extent otherwise
permitted under “Certain Covenants — Transactions
with Affiliates”; plus
(i) the amount of net cost savings projected by the Issuer
in good faith to be realized as a result of specified actions
taken or to be taken (calculated on a pro forma basis as though
such cost savings had been realized on the first day of such
period), net of the amount of actual benefits realized during
such period from such actions; provided that
(w) such cost savings are reasonably identifiable and
factually supportable, (x) such actions have been taken or
are to be taken within 15 months after the date of
determination to take such action, (y) no cost savings
shall be added pursuant to this clause (i) to the extent
duplicative of any expenses or charges relating to such cost
savings that are included in clause (e) above with respect
to such period and (z) the aggregate amount of cost savings
added pursuant to this clause (i) shall not exceed
$150.0 million for any four consecutive quarter period
(which adjustments may be incremental to pro forma adjustments
made pursuant to the second paragraph of the definition of
“Fixed Charge Coverage Ratio”); plus
(j) the amount of loss on sales of receivables and related
assets to the Receivables Subsidiary in connection with a
Receivables Facility; plus
(k) any costs or expense incurred by the Issuer or a
Restricted Subsidiary pursuant to any management equity plan or
stock option plan or any other management or employee benefit
plan or agreement or any stock subscription or shareholder
agreement, to the extent that such cost or expenses are funded
with cash proceeds contributed to the capital of the Issuer or
net cash proceeds of an issuance of Equity Interests of the
Issuer (other than Disqualified Stock) solely to the extent that
such net cash proceeds are excluded from the calculation set
forth in clause (3) of the first paragraph under
“Certain Covenants — Limitation on Restricted
Payments”;
(2) decreased by (without duplication) non-cash gains
increasing Consolidated Net Income of such Person for such
period, excluding any non-cash gains to the extent they
represent the reversal of an accrual or reserve for a potential
cash item that reduced EBITDA in any prior period; and
(3) increased or decreased by (without duplication):
(a) any net gain or loss resulting in such period from
Hedging Obligations and the application of Statement of
Financial Accounting Standards No. 133; plus or
minus, as applicable, and
(b) any net gain or loss resulting in such period from
currency translation gains or losses related to currency
remeasurements of Indebtedness (including any net loss or gain
resulting from Hedging Obligations for currency exchange risk).
“EMU” means the economic and monetary union as
contemplated in the Treaty on European Union.
“Equity Interests” means Capital Stock and all
warrants, options or other rights to acquire Capital Stock, but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock.
“Equity Offering” means any public or private
sale of common stock or Preferred Stock of the Issuer or any of
its direct or indirect parent companies (excluding Disqualified
Stock), other than:
(1) public offerings with respect to the Issuer’s or
any direct or indirect parent company’s common stock
registered on
Form S-8;
(2) issuances to any Subsidiary of the Issuer; and
(3) any such public or private sale that constitutes an
Excluded Contribution.
“euro” means the single currency of
participating member states of the EMU.
“European Collateral” has the meaning set forth
under “Description of Other Indebtedness — Senior
Secured Credit Facilities — Guarantees and
Security.”
“Event of Default” has the meaning set forth
under “Events of Default and Remedies.”
“Excess Proceeds” has the meaning set forth in
the fourth paragraph under “Repurchase at the Option of
Holders — Asset Sales.”
“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the
SEC promulgated thereunder.
“Exchange Notes” means any notes issued in
exchange for the Notes pursuant to the Registration Rights
Agreement or similar agreement.
“Excluded Contribution” means net cash
proceeds, marketable securities or Qualified Proceeds received
by the Issuer after November 17, 2006 from
(1) contributions to its common equity capital, and
(2) the sale (other than to a Subsidiary of the Issuer or
to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement of the Issuer)
of Capital Stock (other than Disqualified Stock and Designated
Preferred Stock) of the Issuer,
in each case designated as Excluded Contributions pursuant to an
Officer’s Certificate executed by the principal financial
officer of the Issuer on the date such capital contributions are
made or the date such Equity
Interests are sold, as the case may be, which are excluded from
the calculation set forth in clause (3) of the first
paragraph under “Certain Covenants — Limitation
on Restricted Payments.”
“Existing First Priority Notes” means the
$1,500,000,000 aggregate principal amount of
81/2% Senior
Secured Notes due 2019, issued by the Issuer under the Existing
First Priority Notes Indenture.
“Existing First Priority Notes Indenture” means
that certain Indenture, dated as of April 22, 2009, among
the Issuer, the guarantors named on Schedule I thereto, Law
Debenture Trust Company of New York, as trustee, and
Deutsche Bank Trust Company Americas, as paying agent,
registrar and transfer agent.
“Existing First Priority Notes Obligations”
means Obligations in respect of the Existing First Priority
Notes, the Existing First Priority Notes Indenture or the other
First Lien Documents as they relate to the Existing First
Priority Notes, including, for the avoidance of doubt,
obligations in respect of exchange notes and guarantees thereof.
“Existing Notes” means the $3.49 million
aggregate principal amount of 5.500% senior notes due 2009,
$121.2 million aggregate principal amount of 8.700%
medium-term notes due 2010, $691.2 million aggregate
principal amount of 8.750% notes due 2010,
£150.0 million aggregate principal amount of
8.750% notes due 2010, $475.8 million aggregate
principal amount of 7.875% notes due 2011,
$500.0 million aggregate principal amount of
6.950% notes due 2012, $500.0 million aggregate
principal amount of 6.300% notes due 2012,
$500.0 million aggregate principal amount of
6.250% notes due 2013, $500.0 million aggregate
principal amount of 6.750% notes due 2013,
$500.0 million aggregate principal amount of
5.750% notes due 2014, $121.1 million aggregate
principal amount of 9.000% medium term notes due 2014,
$750.0 million aggregate principal amount of
6.375% notes due 2015, $150.0 million aggregate
principal amount of 7.190% debentures due 2015,
$1,000.0 million aggregate principal amount of
6.500% notes due 2016, $135.6 million aggregate
principal amount of 7.500% debentures due 2023,
$150.0 million aggregate principal amount of
8.360% debentures due 2024, $291.4 million aggregate
principal amount of 7.690% notes due 2025,
$125.0 million aggregate principal amount of 7.580%
medium-term notes due 2025, $150.0 million aggregate
principal amount of 7.050% debentures due 2027,
$250.0 million aggregate principal amount of
7.500% notes due 2033, $100.0 million aggregate
principal amount of 7.750% debentures due 2036 and
$200.0 million aggregate principal amount of
7.500% debentures due 2095, each issued by the Issuer and
outstanding on November 17, 2006.
“Existing Notes Indenture” means that certain
Indenture, dated as of December 16, 1993, between Columbia
Healthcare Corporation and The First National Bank of Chicago,
as Trustee, as amended by the First Supplemental Indenture,
dated as of May 25, 2000, between the Issuer and Bank One
Trust Company, N.A., as Trustee, the Second Supplemental
Indenture, dated as of July 1, 2001, between the Issuer and
Bank One Trust Company, N.A., as Trustee, and the Third
Supplemental Indenture, dated as of December 5, 2001,
between the Issuer and The Bank of New York Mellon, as Trustee.
“Existing Second Priority Notes”means the 2006
Second Priority Notes and the 2009 Second Priority Notes and any
refinancings thereof permitted pursuant to the terms of the
Indenture.
“Existing Second Priority Notes Indentures”
means the 2006 Second Priority Notes Indenture and the 2009
Second Priority Notes Indenture.
“First Lien Collateral Agent” shall mean Bank
of America, N.A., in its capacity as administrative agent and
collateral agent for the lenders and other secured parties under
the General Credit Facility, the Existing First Priority Notes
Indenture and the other First Lien Documents and in its capacity
as collateral agent for the New First Lien Secured Parties,
together with its successors and permitted assigns under the
General Credit Facility, the Existing First Priority Notes
Indenture, the Indenture and the First Lien Documents exercising
substantially the same rights and powers; and in each case
provided that if such First Lien Collateral Agent is not
Bank of America, N.A., such First Lien Collateral Agent shall
have become a party to the Additional General Intercreditor
Agreement, the General Intercreditor Agreement, dated as of
November 17, 2006, among the First Lien Collateral Agent
and the Junior Lien Collateral Agent, and the other applicable
First Lien Security Documents.
“First Lien Documents” means the credit,
guarantee and security documents governing the First Lien
Obligations, including, without limitation, the Indenture and
the First Lien Security Documents.
“First Lien Event of Default” means an
“Event of Default” under and as defined in the General
Credit Facility, the Existing First Priority Notes Indenture,
the Indenture or any other First Lien Documents governing First
Lien Obligations.
“First Lien Obligations” means, collectively,
(a) all General Credit Facility Obligations, (b) the
Existing First Priority Notes Obligations, (c) the Notes
Obligations and (d) any Series of Additional First Lien
Obligations. For the avoidance of doubt, Obligations with
respect to the ABL Facility will not constitute First Lien
Obligations.
“First Lien Secured Parties” means (a) the
“Secured Parties,” as defined in the General Credit
Facility, (b) the holders of the Existing First Priority
Notes Obligations and Law Debenture Trust Company of
New York, as authorized representative for such holders,
(c) the New First Lien Secured Parties and (d) any
Additional First Lien Secured Parties.
“First Lien Security Documents” means the
Security Documents (as defined in the Indenture) and any other
agreement, document or instrument pursuant to which a Lien is
granted or purported to be granted securing New First Lien
Obligations or under which rights or remedies with respect to
such Liens are governed, in each case to the extent relating to
the collateral securing both the New First Lien Obligations and
any Junior Lien Obligations.
“First Priority Liens” means the first priority
Liens securing the New First Lien Obligations.
“Fixed Charge Coverage Ratio” means, with
respect to any Person for any period, the ratio of EBITDA of
such Person for such period to the Fixed Charges of such Person
for such period. In the event that the Issuer or any Restricted
Subsidiary incurs, assumes, guarantees, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred
under any revolving credit facility unless such Indebtedness has
been permanently repaid and has not been replaced) or issues or
redeems Disqualified Stock or Preferred Stock subsequent to the
commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to or simultaneously with
the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the “Fixed Charge Coverage Ratio
Calculation Date”), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, redemption, retirement or
extinguishment of Indebtedness, or such issuance or redemption
of Disqualified Stock or Preferred Stock, as if the same had
occurred at the beginning of the applicable four-quarter period.
For purposes of making the computation referred to above,
Investments, acquisitions, dispositions, mergers, consolidations
and disposed operations (as determined in accordance with GAAP)
that have been made by the Issuer or any of its Restricted
Subsidiaries during the four-quarter reference period or
subsequent to such reference period and on or prior to or
simultaneously with the Fixed Charge Coverage Ratio Calculation
Date shall be calculated on a pro forma basis assuming that all
such Investments, acquisitions, dispositions, mergers,
consolidations and disposed operations (and the change in any
associated fixed charge obligations and the change in EBITDA
resulting therefrom) had occurred on the first day of the
four-quarter reference period. If, since the beginning of such
period, any Person that subsequently became a Restricted
Subsidiary or was merged with or into the Issuer or any of its
Restricted Subsidiaries since the beginning of such period shall
have made any Investment, acquisition, disposition, merger,
consolidation or disposed operation that would have required
adjustment pursuant to this definition, then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition,
disposition, merger, consolidation or disposed operation had
occurred at the beginning of the applicable four-quarter period.
For purposes of this definition, whenever pro forma effect is to
be given to a transaction, the pro forma calculations shall be
made in good faith by a responsible financial or accounting
officer of the Issuer. 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 Fixed Charge Coverage Ratio Calculation Date had been the
applicable rate for the entire period (taking into account any
Hedging Obligations applicable to
such Indebtedness). Interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably
determined by a responsible financial or accounting officer of
the Issuer to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP. For
purposes of making the computation referred to above, interest
on any Indebtedness under a revolving credit facility computed
on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the applicable period
except as set forth in the first paragraph of this definition.
Interest on Indebtedness that may optionally be determined at an
interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate or other rate shall be
deemed to have been based upon the rate actually chosen, or, if
none, then based upon such optional rate chosen as the Issuer
may designate.
“Fixed Charges” means, with respect to any
Person for any period, the sum of:
(1) Consolidated Interest Expense of such Person for such
period;
(2) all cash dividends or other distributions paid
(excluding items eliminated in consolidation) on any series of
Preferred Stock during such period; and
(3) all cash dividends or other distributions paid
(excluding items eliminated in consolidation) on any series of
Disqualified Stock during such period.
“Foreign Subsidiary” means, with respect to any
Person, any Restricted Subsidiary of such Person that is not
organized or existing under the laws of the United States, any
state thereof or the District of Columbia and any Restricted
Subsidiary of such Foreign Subsidiary.
“Frist Entities” means Dr. Thomas F.
Frist, Jr., any Person controlled by Dr. Frist and any
charitable organization selected by Dr. Frist that holds
Equity Interests of the Issuer on November 17, 2006.
“GAAP” means generally accepted accounting
principles in the United States which are in effect on
November 17, 2006.
“General Credit Facility” means the credit
agreement entered into as of November 17, 2006 by and among
the Issuer, the European subsidiary borrowers party thereto, the
lenders party thereto in their capacities as lenders thereunder
and Bank of America, N.A., as U.S. Administrative Agent and
as European Administrative Agent, as amended as of
February 16, 2007, as further amended as of March 2,2009 and as further amended as of June 18, 2009, including
any guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments,
supplements, modifications, extensions, renewals, restatements,
refundings or refinancings thereof and any indentures or credit
facilities or commercial paper facilities with banks or other
institutional lenders or investors that replace, refund or
refinance any part of the loans, notes, other credit facilities
or commitments thereunder, including any such replacement,
refunding or refinancing facility or indenture that increases
the amount borrowable thereunder or alters the maturity thereof
(provided that such increase in borrowings is permitted
under “Certain Covenants — Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock” above).
“General Credit Facility Obligations” means
“Obligations” as defined in the General Credit
Facility.
“Government Securities” means securities that
are:
(1) direct obligations of the United States of America for
the timely payment of which its full faith and credit is
pledged; or
(2) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United
States of America,
which, in either case, are not callable or redeemable at the
option of the issuers thereof, and shall also include a
depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act), as custodian with
respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities
held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by
law) such custodian is not authorized to make any deduction from
the
amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the Government
Securities or the specific payment of principal of or interest
on the Government Securities evidenced by such depository
receipt.
“guarantee” means a guarantee (other than by
endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner
(including letters of credit and reimbursement agreements in
respect thereof), of all or any part of any Indebtedness or
other obligations.
“Guarantee” means the guarantee by any
Guarantor of the Issuer’s Obligations under the Indenture.
“Guarantor” means each Restricted Subsidiary
that Guarantees the Notes in accordance with the terms of the
Indenture.
“HCI” means Health Care Indemnity, Inc., an
insurance company formed under the laws of the State of Colorado
and a Wholly-Owned Subsidiary of the Issuer.
“Hedging Arrangements” means the fixed-pay
interest rate swap agreements, entered into by Hercules Holding
on or about September 13, 2006 and with respect to which
the Issuer was the counterparty in connection with the
Recapitalization, relating to $8,000 million of the
outstanding principal amount under the First Lien Obligations
and the ABL Obligations.
“Hedging Obligations” means, with respect to
any Person, the obligations of such Person under any interest
rate swap agreement, interest rate cap agreement, interest rate
collar agreement, commodity swap agreement, commodity cap
agreement, commodity collar agreement, foreign exchange
contract, currency swap agreement or similar agreement providing
for the transfer or mitigation of interest rate or currency
risks either generally or under specific contingencies.
“Holder” means the Person in whose name a Note
is registered on the registrar’s books.
“Impairment” means, with respect to any Series
of First Lien Obligations, (i) any determination by a court
of competent jurisdiction that (x) any of the First Lien
Obligations of such Series are unenforceable under applicable
law or are subordinated to any other obligations (other than
another Series of First Lien Obligations), (y) any of the
First Lien Obligations of such Series do not have an enforceable
security interest in any of the Collateral securing any other
Series of First Lien Obligations
and/or
(z) any intervening security interest exists securing any
other obligations (other than another Series of First Lien
Obligations) on a basis ranking prior to the security interest
of such Series of First Lien Obligations but junior to the
security interest of any other Series of First Lien Obligations
or (ii) the existence of any Collateral for any other
Series of First Lien Obligations that is not Common Collateral.
“Indebtedness” means, with respect to any
Person, without duplication:
(1) any indebtedness (including principal and premium) of
such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers’ acceptances
(or, without duplication, reimbursement agreements in respect
thereof);
(c) representing the balance deferred and unpaid of the
purchase price of any property (including Capitalized Lease
Obligations), except (i) any such balance that constitutes
a trade payable or similar obligation to a trade creditor, in
each case accrued in the ordinary course of business and
(ii) any earn-out obligations until such obligation becomes
a liability on the balance sheet of such Person in accordance
with GAAP; or
(d) representing any Hedging Obligations;
if and to the extent that any of the foregoing Indebtedness
(other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with
GAAP;
(2) to the extent not otherwise included, any obligation by
such Person to be liable for, or to pay, as obligor, guarantor
or otherwise on, the obligations of the type referred to in
clause (1) of a third Person (whether or not such items
would appear upon the balance sheet of the such obligor or
guarantor), other than by endorsement of negotiable instruments
for collection in the ordinary course of business; and
(3) to the extent not otherwise included, the obligations
of the type referred to in clause (1) of a third Person
secured by a Lien on any asset owned by such first Person,
whether or not such Indebtedness is assumed by such first Person;
provided, however, that notwithstanding the
foregoing, Indebtedness shall be deemed not to include
(a) Contingent Obligations incurred in the ordinary course
of business or (b) obligations under or in respect of
Receivables Facilities.
“Independent Financial Advisor” means an
accounting, appraisal, investment banking firm or consultant to
Persons engaged in Similar Businesses of nationally recognized
standing that is, in the good faith judgment of the Issuer,
qualified to perform the task for which it has been engaged.
“Initial Purchasers” means J.P. Morgan
Securities Inc., Banc of America Securities LLC, Citigroup
Global Markets Inc., Goldman, Sachs & Co., Wells Fargo
Securities, LLC and the other initial purchasers party to the
purchase agreement related to the Notes.
“insolvency or liquidation proceeding” means:
(1) any case commenced by or against the Issuer or any
Guarantor under any Bankruptcy Law for the relief of debtors,
any other proceeding for the reorganization, recapitalization or
adjustment or marshalling of the assets or liabilities of the
Issuer or any Guarantor, any receivership or assignment for the
benefit of creditors relating to the Issuer or any Guarantor or
any similar case or proceeding relative to the Issuer or any
Guarantor or its creditors, as such, in each case whether or not
voluntary;
(2) any liquidation, dissolution, marshalling of assets or
liabilities or other winding up of or relating to the Issuer or
any Guarantor, in each case whether or not voluntary and whether
or not involving bankruptcy or insolvency; or
(3) any other proceeding of any type or nature in which
substantially all claims of creditors of the Issuer or any
Guarantor are determined and any payment or distribution is or
may be made on account of such claims.
“Intercreditor Agreements” means, collectively,
the First Lien Intercreditor Agreement, the Additional
Receivables Intercreditor Agreement and the Additional General
Intercreditor Agreement.
“Investment Grade Rating” means a rating equal
to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P, or an equivalent rating by
any other Rating Agency.
“Investment Grade Securities” means:
(1) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents);
(2) debt securities or debt instruments with an Investment
Grade Rating, but excluding any debt securities or instruments
constituting loans or advances among the Issuer and its
Subsidiaries;
(3) investments in any fund that invests exclusively in
investments of the type described in clauses (1) and
(2) which fund may also hold immaterial amounts of cash
pending investment or distribution; and
(4) corresponding instruments in countries other than the
United States customarily utilized for high quality investments.
“Investments” means, with respect to any
Person, all investments by such Person in other Persons
(including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding
accounts receivable, trade credit, advances to customers,
commissions, travel and similar advances to officers
and employees, in each case made in the ordinary course of
business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities issued by any
other Person and investments that are required by GAAP to be
classified on the balance sheet (excluding the footnotes) of the
Issuer in the same manner as the other investments included in
this definition to the extent such transactions involve the
transfer of cash or other property. For purposes of the
definition of “Unrestricted Subsidiary” and the
covenant described under “Certain Covenants —
Limitation on Restricted Payments”:
(1) “Investments” shall include the portion
(proportionate to the Issuer’s equity interest in such
Subsidiary) of the fair market value of the net assets of a
Subsidiary of the Issuer 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 Issuer shall be deemed to continue
to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to:
(a) the Issuer’s “Investment” in such
Subsidiary at the time of such redesignation; less
(b) the portion (proportionate to the Issuer 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, in each case as determined in good faith by
the Issuer.
“Investors” means Bain Capital Partners, LLC,
Kohlberg Kravis Roberts & Co. L.P., Merrill Lynch
Global Private Equity, Inc. (formerly known as Merrill Lynch
Global Partners, Inc.) and each of their respective Affiliates
but not including, however, any portfolio companies of any of
the foregoing.
“Issuer” has the meaning set forth in the first
paragraph under “General”; provided that when
used in the context of determining the fair market value of an
asset or liability under the Indenture, “Issuer” shall
be deemed to mean the board of directors of the Issuer when the
fair market value is equal to or in excess of
$500.0 million (unless otherwise expressly stated).
“Junior Lien Collateral Agent” shall mean
(i) so long as the 2006 Second Priority Notes are
outstanding, the trustee under the 2006 Second Priority Notes
Indenture, in its capacity as trustee and collateral agent for
the holders of 2006 Second Priority Notes and other secured
parties under the 2006 Second Priority Notes Indenture and the
related security documents (including the holders of the 2009
Second Priority Notes), and (ii) at any time thereafter,
such agent or trustee as is designated “Junior Lien
Collateral Agent” by Junior Lien Secured Parties holding a
majority in principal amount of the Junior Lien Obligations then
outstanding or pursuant to such other arrangements as agreed to
among the holders of the Junior Lien Obligations, it being
understood that as of the Issue Date, the trustee under the 2006
Second Priority Notes Indenture shall be the Junior Lien
Collateral Agent.
“Junior Lien Documents” means the credit and
security documents governing the Junior Lien Obligations,
including, without limitation, the Existing Second Priority
Notes Indentures, the related security documents and
intercreditor agreements.
“Junior Lien Obligations” means the Existing
Second Priority Notes and Obligations with respect to other
Indebtedness permitted to be incurred under the Existing Second
Priority Notes Indentures and the Indenture which is by its
terms intended to be secured equally and ratably with the
Existing Second Priority Notes or on a basis junior to the Liens
securing the Existing Second Priority Notes; provided
such Lien is permitted to be incurred under the Existing
Second Priority Notes Indentures and the Indenture; provided,
further, that the holders of such Indebtedness or their
Junior Lien Representative is a party to the applicable security
documents in accordance with the terms thereof and has appointed
the Junior Lien Collateral Agent as collateral agent for such
holders of Junior Lien Obligations with respect to all or a
portion of the Collateral.
“Junior Lien Representative” means any duly
authorized representative of any holders of Junior Lien
Obligations, which representative is party to the applicable
security documents.
“Junior Lien Secured Parties” means
(i) holders of Existing Second Priority Notes (including
the holders of any Additional Notes (as defined in the Existing
Second Priority Notes Indentures) subsequently issued under and
in compliance with the terms of the Existing Second Priority
Notes Indentures), (ii) the Junior Lien Collateral Agent
and (iii) the holders from time to time of any other Junior
Lien Obligations and each Junior Lien Representative.
“Legal Holiday” means a Saturday, a Sunday or a
day on which commercial banking institutions are not required to
be open in the State of New York.
“Lien” means, with respect to any asset, any
mortgage, lien (statutory or otherwise), pledge, hypothecation,
charge, security interest, preference, priority or encumbrance
of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction;
provided that in no event shall an operating lease be
deemed to constitute a Lien.
“Major Non-Controlling Authorized
Representative” has the meaning set forth under
“Security — First Lien Intercreditor
Agreement.”
“Moody’s” means Moody’s Investors
Service, Inc. and any successor to its rating agency business.
“Net Income” means, with respect to any Person,
the net income (loss) of such Person, determined in accordance
with GAAP and before any reduction in respect of Preferred Stock
dividends.
“Net Proceeds” means the aggregate cash
proceeds received by the Issuer or any of its Restricted
Subsidiaries in respect of any Asset Sale, including any cash
received upon the sale or other disposition of any Designated
Non-cash Consideration received in any Asset Sale, net of the
direct costs relating to such Asset Sale and the sale or
disposition of such Designated Non-cash Consideration, including
legal, accounting and investment banking fees, and brokerage and
sales commissions, any relocation expenses incurred as a result
thereof, taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax
sharing arrangements), amounts required to be applied to the
repayment of principal, premium, if any, and interest on Senior
Indebtedness required (other than required by clause (1) of
the second paragraph of “Repurchase at the Option of
Holders — Asset Sales”) to be paid as a result of
such transaction and any deduction of appropriate amounts to be
provided by the Issuer or any of its Restricted Subsidiaries as
a reserve in accordance with GAAP against any liabilities
associated with the asset disposed of in such transaction and
retained by the Issuer or any of its Restricted Subsidiaries
after such sale or other disposition thereof, including pension
and other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification
obligations associated with such transaction.
“New First Lien Documents” means the First Lien
Documents relating to the New First Lien Obligations.
“New First Lien Obligations” means all advances
to, and debts, liabilities, obligations, covenants and duties
of, the Issuer or any Guarantor arising under the Indenture and
any other New First Lien Documents, whether or not direct or
indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter
arising and including interest and fees that accrue after the
commencement by or against the Issuer, any Guarantor or any
Affiliate thereof of any proceeding in bankruptcy or insolvency
law naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims
in such proceeding.
“New First Lien Secured Parties” means, at any
relevant time, the holders of New First Lien Obligations at such
time, including without limitation the Trustee, the Registrar,
Paying Agent and Transfer Agent, and the Holders (including the
Holders of any Additional Notes subsequently issued under and in
compliance with the terms of the Indenture).
“Non-Conforming Plan of Reorganization” means
any Plan of Reorganization that grants the Junior Lien
Collateral Agent or any Junior Lien Secured Party any right or
benefit, directly or indirectly, which right or benefit is
prohibited at such time by the provisions of the Additional
General Intercreditor Agreement.
“Non-Controlling Authorized Representative Enforcement
Date” has the meaning set forth under
“Security — First Lien Intercreditor
Agreement.”
“Non-Controlling Secured Parties” means, with
respect to any Common Collateral, the First Lien Secured Parties
which are not Controlling Secured Parties with respect to such
Common Collateral.
“Non-Receivables Collateral” has the meaning
set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantee and Security,” subject to
the provisions of the second sentence of the first paragraph
under “— Security — General.”
“Notes Documents” means the credit and security
documents governing the Notes Obligations, including, without
limitation, the Indenture, the related Security Documents and
the Intercreditor Agreements.
“Notes Obligations” means Obligations in
respect of the Notes, the Indenture or the Security Documents,
including, for the avoidance of doubt, obligations in respect of
exchange notes and guarantees thereof.
“Obligations” means any principal, interest
(including any interest accruing subsequent to the filing of a
petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under
applicable state, federal or foreign law), premium, penalties,
fees, indemnifications, reimbursements (including reimbursement
obligations with respect to letters of credit and bankers’
acceptances), damages and other liabilities, and guarantees of
payment of such principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities,
payable under the documentation governing any Indebtedness.
“Offering Memorandum” means the offering
memorandum, dated July 29, 2009, relating to the initial
private offering of the Notes.
“Officer” means the Chairman of the Board, the
Chief Executive Officer, the President, any Executive Vice
President, Senior Vice President or Vice President, the
Treasurer or the Secretary of the Issuer or a Guarantor, as
applicable.
“Officer’s Certificate” means a
certificate signed on behalf of the Issuer by an Officer of the
Issuer or on behalf of a Guarantor by an Officer of such
Guarantor, who must be the principal executive officer, the
principal financial officer, the treasurer or the principal
accounting officer of the Issuer or Guarantor, as applicable,
that meets the requirements set forth in the Indenture.
“Opinion of Counsel” means a written opinion
from legal counsel who is acceptable to the Trustee. The counsel
may be an employee of or counsel to the Issuer or the Trustee.
“Permitted Asset Swap” means the concurrent
purchase and sale or exchange of Related Business Assets or a
combination of Related Business Assets and cash or Cash
Equivalents between the Issuer or any of its Restricted
Subsidiaries and another Person; provided, that any cash
or Cash Equivalents received must be applied in accordance with
the covenant described under “Repurchase at the Option of
Holders — Asset Sales.”
“Permitted Holders” means each of the
Investors, the Frist Entities, members of management of the
Issuer (or its direct or indirect parent), Citigroup Inc. and
Banc of America Securities LLC (which institutions were
assignees of certain equity commitments of the Investors as of
November 17, 2006) that are holders of Equity Interests of
the Issuer (or any of its direct or indirect parent companies)
and any group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act or any successor
provision) of which any of the foregoing are members;
provided that, in the case of such group and without
giving effect to the existence of such group or any other group,
such Investors, Frist Entities, members of management and
assignees of the equity commitments of the Investors,
collectively, have beneficial ownership of more than 50% of the
total voting power of the Voting Stock of the Issuer or any of
its direct or indirect parent companies.
“Permitted Investments” means:
(1) any Investment in the Issuer or any of its Restricted
Subsidiaries;
(2) any Investment in cash and Cash Equivalents or
Investment Grade Securities;
(3) any Investment by the Issuer or any of its Restricted
Subsidiaries in a Person that is engaged in a Similar Business
if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary; or
(b) such Person, in one transaction or a series of related
transactions, is merged or consolidated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Issuer or a Restricted Subsidiary,
and, in each case, any Investment held by such Person;
provided that such Investment was not acquired by such
Person in contemplation of such acquisition, merger,
consolidation or transfer;
(4) any Investment in securities or other assets not
constituting cash, Cash Equivalents or Investment Grade
Securities and received in connection with an Asset Sale made
pursuant to the provisions described under “Repurchase at
the Option of Holders — Asset Sales” or any other
disposition of assets not constituting an Asset Sale;
(5) any Investment existing on the Issue Date;
(6) any Investment acquired by the Issuer or any of its
Restricted Subsidiaries:
(a) in exchange for any other Investment or accounts
receivable held by the Issuer 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 Issuer or any of
its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any
secured Investment in default;
(7) Hedging Obligations permitted under clause (10) of
the second paragraph of the covenant described in “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
(8) any Investment in a Similar Business having an
aggregate fair market value, taken together with all other
Investments made pursuant to this clause (8) that are at
that time outstanding, not to exceed 5% of Total Assets at the
time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving
effect to subsequent changes in value);
(9) Investments the payment for which consists of Equity
Interests (exclusive of Disqualified Stock) of the Issuer or any
of its direct or indirect parent companies; provided,
however, that such Equity Interests will not increase the
amount available for Restricted Payments under clause (3)
of the first paragraph under the covenant described in
“Certain Covenants — Limitations on Restricted
Payments”;
(10) guarantees of Indebtedness permitted under the
covenant described in “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
(11) any transaction to the extent it constitutes an
Investment that is permitted and made in accordance with the
provisions of the second paragraph of the covenant described
under “Certain Covenants — Transactions with
Affiliates” (except transactions described in clauses (2),
(5) and (9) of such paragraph);
(12) Investments consisting of purchases and acquisitions
of inventory, supplies, material or equipment;
(13) additional Investments having an aggregate fair market
value, taken together with all other Investments made pursuant
to this clause (13) that are at that time outstanding
(without giving effect to the sale of an Unrestricted Subsidiary
to the extent the proceeds of such sale do not consist of cash
or marketable securities), not to exceed 5% of Total Assets at
the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving
effect to subsequent changes in value);
(14) Investments relating to an ABL Financing Entity or a
Receivables Subsidiary that, in the good faith determination of
the Issuer, are necessary or advisable to effect the ABL
Facility or any Receivables Facility, as the case may be;
(15) advances to, or guarantees of Indebtedness of,
employees not in excess of $50.0 million outstanding at any
one time, in the aggregate;
(16) loans and advances to officers, directors and
employees for business-related travel expenses, moving expenses
and other similar expenses, in each case incurred in the
ordinary course of business or consistent with past practices or
to fund such Person’s purchase of Equity Interests of the
Issuer or any direct or indirect parent company thereof;
(17) Physician Support Obligations made by the Issuer or
any Restricted Subsidiary;
(18) any Investment in any joint venture existing on the
Issue Date that owns or operates one or more health care
facilities, including, without limitation, hospitals, ambulatory
surgery centers, outpatient diagnostic centers or imaging
centers to the extent contemplated by the organizational
documents of such joint venture as in existence on the Issue
Date;
(19) any Investment in the ordinary course of business or
as may be required by applicable law by any Restricted
Subsidiary (including, without limitation, HCI) engaged in the
insurance business in order to provide insurance to the Issuer
and its Subsidiaries;
(20) any Investment pursuant to any customary buy/sell
arrangement in favor of investors or joint venture parties in
connection with syndications of health care facilities,
including, without limitation, hospitals, ambulatory surgery
centers, outpatient diagnostic centers or imaging
centers; and
(21) any Investment in any Subsidiary or any joint venture
in connection with intercompany cash management arrangements or
related activities arising in the ordinary course of business.
“Permitted Liens” means, with respect to any
Person:
(1) pledges or deposits by such Person under workmen’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 U.S. government bonds to secure surety or appeal
bonds to which such Person is a party, 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 overdue for a period of more than 30 days 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 if
adequate reserves with respect thereto are maintained on the
books of such Person in accordance with GAAP;
(3) Liens for taxes, assessments or other governmental
charges not yet overdue for a period of more than 30 days
or payable or subject to penalties for nonpayment or which are
being contested in good faith by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto
are maintained on the books of such Person in accordance with
GAAP;
(4) Liens in favor of issuers of performance and surety
bonds or bid bonds or with respect to other regulatory
requirements or letters of credit issued pursuant to the request
of and for the account of such Person in the ordinary course of
its business;
(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 properties 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 permitted to be incurred
pursuant to clause (4), (12), (13), (18) or (19) of
the second paragraph under “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”; provided
that (a) Liens securing Indebtedness, Disqualified
Stock or Preferred Stock permitted to be incurred pursuant to
clause (13) relate only to Refinancing Indebtedness that
serves to refund or refinance Indebtedness, Disqualified Stock
or Preferred Stock incurred under clause (4) or
(12) of the second paragraph under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock,”
(b) Liens securing Indebtedness permitted to be incurred
pursuant to clause (18) extend only to the assets of
Foreign Subsidiaries, (c) Liens securing Indebtedness
permitted to be incurred pursuant to clause (19) are solely
on acquired property or the assets of the acquired entity, as
the case may be and (d) Liens securing Indebtedness,
Disqualified Stock or Preferred Stock permitted to be incurred
pursuant to clause (4) of the second paragraph under
“Certain Covenants — Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” extend only to the assets so financed, purchased,
constructed or improved;
(7) Liens existing on the Issue Date (other than Liens in
favor of (i) the lenders under the Senior Credit
Facilities, (ii) the holders of the Existing First Priority
Notes and (iii) the holders of the Existing Second Priority
Notes);
(8) Liens on property or shares of stock of a Person at the
time such Person becomes a Subsidiary; provided,
however, such Liens are not created or incurred in
connection with, or in contemplation of, such other Person
becoming such a Subsidiary; provided, further,
however, that such Liens may not extend to any other
property owned by the Issuer or any of its Restricted
Subsidiaries;
(9) Liens on property at the time the Issuer or a
Restricted Subsidiary acquired the property, including any
acquisition by means of a merger or consolidation with or into
the Issuer or any of its Restricted Subsidiaries;
provided, however, that such Liens are not created
or incurred in connection with, or in contemplation of, such
acquisition; provided, further, however,
that the Liens may not extend to any other property owned by the
Issuer or any of its Restricted Subsidiaries;
(10) Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Issuer or another Restricted
Subsidiary permitted to be incurred in accordance with the
covenant described under “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
(11) Liens securing Hedging Obligations so long as the
related Indebtedness is, and is permitted to be under the
Indenture, secured by a Lien on the same property securing such
Hedging Obligations;
(12) Liens on specific items of inventory or other goods
and proceeds of any Person securing such Person’s
obligations in respect of bankers’ acceptances issued or
created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(13) leases, subleases, licenses or sublicenses granted to
others in the ordinary course of business which do not
materially interfere with the ordinary conduct of the business
of the Issuer or any of its Restricted Subsidiaries and do not
secure any Indebtedness;
(14) Liens arising from Uniform Commercial Code financing
statement filings regarding operating leases entered into by the
Issuer and its Restricted Subsidiaries in the ordinary course of
business;
(15) Liens in favor of the Issuer or any Guarantor;
(16) Liens on equipment of the Issuer or any of its
Restricted Subsidiaries granted in the ordinary course of
business;
(17) Liens on accounts receivable and related assets
incurred in connection with a Receivables Facility;
(18) Liens to secure any refinancing, refunding, extension,
renewal or replacement (or successive refinancing, refunding,
extensions, renewals or replacements) as a whole, or in part, of
any Indebtedness secured by any Lien referred to in the
foregoing clauses (6), (7), (8) and (9); provided,
however, that (a) such new Lien shall be limited to
all or part of the same property that secured the original Lien
(plus improvements on such property), 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 clauses (6), (7), (8) and
(9) at the time the original Lien became a Permitted Lien
under the Indenture, and (ii) an amount necessary to pay
any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement;
(19) deposits made in the ordinary course of business to
secure liability to insurance carriers;
(20) other Liens securing obligations incurred in the
ordinary course of business which obligations do not exceed
$100.0 million at any one time outstanding;
(21) Liens securing judgments for the payment of money not
constituting an Event of Default under clause (5) under the
caption “Events of Default and Remedies” so long as
such Liens are adequately bonded and any appropriate legal
proceedings that may have been duly initiated for the review of
such judgment have not been finally terminated or the period
within which such proceedings may be initiated has not expired;
(22) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
in connection with the importation of goods in the ordinary
course of business;
(23) Liens (i) of a collection bank arising under
Section 4-210
of the Uniform Commercial Code, or any comparable or successor
provision, on items in the course of collection,
(ii) attaching to commodity trading accounts or other
commodity brokerage accounts incurred in the ordinary course of
business, and (iii) in favor of banking institutions
arising as a matter of law encumbering deposits (including the
right of set-off) and which are within the general parameters
customary in the banking industry;
(24) Liens deemed to exist in connection with Investments
in repurchase agreements permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
provided that such Liens do not extend to any assets
other than those that are the subject of such repurchase
agreements;
(25) Liens encumbering reasonable customary initial
deposits and margin deposits and similar Liens attaching to
commodity trading accounts or other brokerage accounts incurred
in the ordinary course of business and not for speculative
purposes;
(26) Liens that are contractual rights of set-off
(i) relating to the establishment of depository relations
with banks not given in connection with the issuance of
Indebtedness, (ii) relating to pooled deposit or sweep
accounts of the Issuer or any of its Restricted Subsidiaries to
permit satisfaction of overdraft or similar obligations incurred
in the ordinary course of business of the Issuer and its
Restricted Subsidiaries or (iii) relating to purchase
orders and other agreements entered into with customers of the
Issuer or any of its Restricted Subsidiaries in the ordinary
course of business;
(27) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale or
purchase of goods entered into by the Issuer or any Restricted
Subsidiary in the ordinary course of business; and
(28) Liens that rank junior to the Liens securing the Notes
securing the Junior Lien Obligations.
For purposes of this definition, the term
“Indebtedness” shall be deemed to include interest on
such Indebtedness.
“Person” means any individual, corporation,
limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
“Physician Support Obligation” means (1) a
loan to or on behalf of, or a guarantee of Indebtedness or
income of, a physician or health care professional providing
service to patients in the service area of a health care
facility operated by the Issuer, any of its Restricted
Subsidiaries or any affiliated joint venture otherwise permitted
by the Indenture made or given by the Issuer or any Restricted
Subsidiary of the Issuer in the ordinary course of business and
pursuant to a written agreement having a period not to exceed
five years or (2) guarantees by the Issuer or any
Restricted Subsidiary of the Issuer of leases and loans to
acquire property (real or personal) for or on behalf of a
physician or health care professional providing service to
patients in the service area of a health care facility operated
by the Issuer, any of its Restricted Subsidiaries or any
affiliated joint venture otherwise permitted by the Indenture.
“Plan of Reorganization” means any plan of
reorganization, plan of liquidation, agreement for composition,
or other type of plan of arrangement proposed in or in
connection with any insolvency or liquidation proceeding.
“Preferred Stock” means any Equity Interest
with preferential rights of payment of dividends or upon
liquidation, dissolution or winding up.
“Principal Property” means each acute care
hospital providing general medical and surgical services
(excluding equipment, personal property and hospitals that
primarily provide specialty medical services, such as
psychiatric and obstetrical and gynecological services) owned
solely by the Issuer
and/or one
or more of its Subsidiaries (used in this definition as defined
in the Existing Notes Indenture) and located in the United
States of America.
“Purchase Money Obligations” means any
Indebtedness incurred to finance or refinance the acquisition,
leasing, construction or improvement of property (real or
personal) or assets (other than Capital Stock), and whether
acquired through the direct acquisition of such property or
assets, or otherwise.
“Qualified Proceeds” means assets that are used
or useful in, or Capital Stock of any Person engaged in, a
Similar Business; provided that the fair market value of
any such assets or Capital Stock shall be determined by the
Issuer in good faith.
“Rating Agencies” means Moody’s and
S&P or if Moody’s or S&P or both shall not make a
rating on the Notes publicly available, a nationally recognized
statistical rating agency or agencies, as the case may be,
selected by the Issuer which shall be substituted for
Moody’s or S&P or both, as the case may be.
“Receivables Facility” means any of one or more
receivables financing facilities as amended, supplemented,
modified, extended, renewed, restated or refunded from time to
time, the Obligations of which are non-recourse (except for
customary representations, warranties, covenants and indemnities
made in connection with such facilities) to the Issuer or any of
its Restricted Subsidiaries (other than a Receivables
Subsidiary) pursuant to which the Issuer or any of its
Restricted Subsidiaries purports to sell its accounts receivable
to either (a) a Person that is not a Restricted Subsidiary
or (b) a Receivables Subsidiary that in turn funds such
purchase by purporting to sell its accounts receivable to a
Person that is not a Restricted Subsidiary or by borrowing from
such a Person or from another Receivables Subsidiary that in
turn funds itself by borrowing from such a Person.
“Receivables Fees” means distributions or
payments made directly or by means of discounts with respect to
any accounts receivable or participation interest therein issued
or sold in connection with, and other fees paid to a Person that
is not a Restricted Subsidiary in connection with any
Receivables Facility.
“Receivables Subsidiary” means any Subsidiary
formed for the purpose of facilitating or entering into one or
more Receivables Facilities, and in each case engages only in
activities reasonably related or incidental thereto.
“Redemption Date” has the meaning set
forth under “Optional Redemption.”
“Registration Rights Agreement” means the
Registration Rights Agreement related to the Notes, dated as of
the Issue Date, among the Issuer, the Guarantors and the Initial
Purchasers.
“Related Business Assets” means assets (other
than cash or Cash Equivalents) used or useful in a Similar
Business; provided that any assets received by the Issuer
or a Restricted Subsidiary in exchange for assets transferred by
the Issuer or a Restricted Subsidiary will not be deemed to be
Related Business Assets if they consist of securities of a
Person, unless upon receipt of the securities of such Person,
such Person would become a Restricted Subsidiary.
“Restricted Investment” means an Investment
other than a Permitted Investment.
“Restricted Subsidiary” means, at any time, any
direct or indirect Subsidiary of the Issuer (including any
Foreign Subsidiary) that is not then an Unrestricted Subsidiary;
provided, however, that upon an Unrestricted
Subsidiary’s ceasing to be an Unrestricted Subsidiary, such
Subsidiary shall be included in the definition of
“Restricted Subsidiary.”
“S&P” means Standard &
Poor’s, a division of The McGraw-Hill Companies, Inc., and
any successor to its rating agency business.
“Sale and Lease-Back Transaction” means any
arrangement providing for the leasing by the Issuer or any of
its Restricted Subsidiaries of any real or tangible personal
property, which property has been or is to be sold or
transferred by the Issuer or such Restricted Subsidiary to a
third Person in contemplation of such leasing.
“SEC” means the U.S. Securities and
Exchange Commission.
“Secured Indebtedness” means any Indebtedness
of the Issuer or any of its Restricted Subsidiaries secured by a
Lien.
“Securities Act” means the Securities Act of
1933, as amended, and the rules and regulations of the SEC
promulgated thereunder.
“Security Agreement” means the amended and
restated Security Agreement, dated as of March 2, 2009, by
and among the Issuer, the subsidiary grantors named therein and
the First Lien Collateral Agent, as the same may be further
amended, restated or modified from time to time, to which the
Trustee, as Authorized Representative for the Holders, will be
joined on the Issue Date.
“Security Documents” means, collectively, the
Intercreditor Agreements, the Security Agreement, other security
agreements relating to the Collateral and the mortgages and
instruments filed and recorded in appropriate jurisdictions to
preserve and protect the Liens on the Collateral (including,
without limitation, financing statements under the Uniform
Commercial Code of the relevant states) applicable to the
Collateral, each as in effect on the Issue Date and as amended,
amended and restated, modified, renewed or replaced from time to
time.
“Senior Credit Facilities” means the ABL
Facility and the General Credit Facility.
“Senior Indebtedness” means:
(1) all Indebtedness of the Issuer or any Guarantor
outstanding under the Senior Credit Facilities, the Existing
First Priority Notes, the Existing Second Priority Notes and the
Notes and related Guarantees (including interest accruing on or
after the filing of any petition in bankruptcy or similar
proceeding or for reorganization of the Issuer or any Guarantor
(at the rate provided for in the documentation with respect
thereto, regardless of whether or not a claim for post-filing
interest is allowed in such proceedings)), and any and all other
fees, expense reimbursement obligations, indemnification
amounts, penalties, and other amounts (whether existing on the
Issue Date or thereafter created or incurred) and all
obligations of the Issuer or any Guarantor to reimburse any bank
or other Person in respect of amounts paid under letters of
credit, acceptances or other similar instruments;
(2) all Hedging Obligations (and guarantees thereof) owing
to a Lender (as defined in the Senior Credit Facilities) or any
Affiliate of such Lender (or any Person that was a Lender or an
Affiliate of such Lender at the time the applicable agreement
giving rise to such Hedging Obligation was entered into);
provided that such Hedging Obligations are permitted to
be incurred under the terms of the Indenture;
(3) any other Indebtedness of the Issuer or any Guarantor
permitted to be incurred under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred
expressly provides that it is subordinated in right of payment
to the Notes or any related Guarantee; and
(4) all Obligations with respect to the items listed in the
preceding clauses (1), (2) and (3);
provided, however, that Senior Indebtedness shall
not include:
(a) any obligation of such Person to the Issuer or any of
its Subsidiaries;
(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
(e) that portion of any Indebtedness which at the time of
incurrence is incurred in violation of the Indenture.
“Separate Receivables Collateral” has the
meaning set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantees and Security.”
“Series”means (a) with respect to the
First Lien Secured Parties, each of (i) the General Credit
Facility Secured Parties (in their capacities as such),
(ii) the holders of the Existing First Priority Notes
Obligations and Law Debenture Trust Company of New York, as
authorized representative for such holders (each in their
capacity as such), (iii) the Holders and the Trustee (each
in their capacity as such) and (iv) the Additional First
Lien Secured Parties that become subject to the First Lien
Intercreditor Agreement after the date hereof that are
represented by a common Authorized Representative (in its
capacity as such for such Additional First Lien Secured Parties)
and (b) with respect to any First Lien Obligations, each of
(i) the General Credit Facility Obligations, (ii) the
Existing First Priority Notes Obligations, (iii) the Notes
Obligations and (iv) the Additional First Lien Obligations
incurred pursuant to any applicable agreement, which, pursuant
to any joinder agreement, are to be represented under the First
Lien Intercreditor Agreement by a common Authorized
Representative (in its capacity as such for such Additional
First Lien Obligations).
“Shared Receivables Collateral” has the meaning
set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantees and Security.”
“Significant Subsidiary” means any Restricted
Subsidiary that would be a “significant subsidiary” as
defined in Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such regulation
is in effect on the Issue Date.
“Similar Business” means any business conducted
or proposed to be conducted by the Issuer and its Restricted
Subsidiaries on the Issue Date or any business that is similar,
reasonably related, incidental or ancillary thereto.
“Sponsor Management Agreement” means the
management agreement between certain of the management companies
associated with the Investors, the Frist Entities and the Issuer.
“Subordinated Indebtedness” means, with respect
to the Notes,
(1) any Indebtedness of the Issuer which is by its terms
subordinated in right of payment to the Notes, and
(2) any Indebtedness of any Guarantor which is by its terms
subordinated in right of payment to the Guarantee of such entity
of the Notes.
“Subsidiary” means, with respect to any Person:
(1) any corporation, association, or other business entity
(other than a partnership, joint venture, limited liability
company or similar entity) of which more than 50% of the total
voting power of shares
of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers
or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person or a combination
thereof or is consolidated under GAAP with such Person at such
time; and
(2) any partnership, joint venture, limited liability
company or similar entity of which
(x) more than 50% of the capital accounts, distribution
rights, total equity and voting interests or general or limited
partnership interests, as applicable, are owned or controlled,
directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof
whether in the form of membership, general, special or limited
partnership or otherwise, and
(y) such Person or any Restricted Subsidiary of such Person
is a controlling general partner or otherwise controls such
entity.
“Total Assets” means the total assets of the
Issuer and its Restricted Subsidiaries on a consolidated basis,
as shown on the most recent consolidated balance sheet of the
Issuer or such other Person as may be expressly stated.
“Transaction” means the transactions
contemplated by the Transaction Agreement, the issuance of the
Notes and borrowings under the Senior Credit Facilities as in
effect on November 17, 2006.
“Transaction Agreement” means the Agreement and
Plan of Merger, dated as of July 24, 2006, between Hercules
Holding II, LLC, Hercules Acquisition Corporation and the
Issuer, as the same may be amended prior to the Issue Date.
“Treasury Rate” means, as of any
Redemption Date, the yield to maturity as of such
Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) that has
become publicly available at least two Business Days prior to
the Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source of similar
market data)) most nearly equal to the period from the
Redemption Date to August 15, 2014; provided,
however, that if the period from the Redemption Date
to August 15, 2014 is less than one year, the weekly
average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year will be
used.
“Trust Indenture Act” means the
Trust Indenture Act of 1939, as amended (15 U.S.C.
§§ 77aaa-777bbbb).
“Unrestricted Subsidiary” means:
(1) any Subsidiary of the Issuer which at the time of
determination is an Unrestricted Subsidiary (as designated by
the Issuer, as provided below); and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Issuer may designate any Subsidiary of the Issuer (including
any existing Subsidiary and any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Equity Interests
or Indebtedness of, or owns or holds any Lien on, any property
of, the Issuer or any Subsidiary of the Issuer (other than
solely any Subsidiary of the Subsidiary to be so designated);
provided that
(1) any Unrestricted Subsidiary must be an entity of which
the Equity Interests entitled to cast at least a majority of the
votes that may be cast by all Equity Interests having ordinary
voting power for the election of directors or Persons performing
a similar function are owned, directly or indirectly, by the
Issuer;
(2) such designation complies with the covenants described
under “Certain Covenants — Limitation on
Restricted Payments”; and
has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness
pursuant to which the lender has recourse to any of the assets
of the Issuer or any Restricted Subsidiary.
The Issuer may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that, immediately after
giving effect to such designation, no Default shall have
occurred and be continuing and either:
(1) the Issuer could incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test
described in the first paragraph under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred
Stock”; or
(2) the Fixed Charge Coverage Ratio for the Issuer and its
Restricted Subsidiaries would be greater than such ratio for the
Issuer and its Restricted Subsidiaries immediately prior to such
designation, in each case on a pro forma basis taking into
account such designation.
Any such designation by the Issuer shall be notified by the
Issuer to the Trustee by promptly filing with the Trustee a copy
of the resolution of the board of directors of the Issuer or any
committee thereof giving effect to such designation and an
Officer’s Certificate certifying that such designation
complied with the foregoing provisions.
“Voting Stock” of any Person as of any date
means the Capital Stock of such Person that is at the time
entitled to vote in the election of the board of directors of
such Person.
“Weighted Average Life to Maturity” means, when
applied to any Indebtedness, Disqualified Stock or Preferred
Stock, as the case may be, at any date, the quotient obtained by
dividing:
(1) the sum of the products of the number of years from the
date of determination to the date of each successive scheduled
principal payment of such Indebtedness or redemption or similar
payment with respect to such Disqualified Stock or Preferred
Stock multiplied by the amount of such payment; by
(2) the sum of all such payments.
“Wholly-Owned Subsidiary” of any Person means a
Subsidiary of such Person, 100% of the outstanding Equity
Interests of which (other than directors’ qualifying
shares) shall at the time be owned by such Person or by one or
more Wholly-Owned Subsidiaries of such Person.
Certain terms used in this description are defined under the
subheading “Certain Definitions.” In this description,
the terms “we,”“our,”“us” and “the Company” each
refer to HCA Inc. (the “Issuer”) and its
consolidated Subsidiaries.
The Issuer issued $1,400,000,000 aggregate principal amount of
71/4% senior
secured notes due 2020 (the “Notes”) under an
indenture dated as of the closing date of the offering of the
Notes (the “Indenture”) among the Issuer, the
Guarantors and Law Debenture Trust Company of New York, as
trustee (the “Trustee”), and Deutsche Bank
Trust Company Americas, as Paying Agent, Registrar and
Transfer Agent. The Notes were issued in a private transaction
that is not subject to the registration requirements of the
Securities Act. Except as set forth herein, the terms of the
Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act.
The following description is only a summary of the material
provisions of the Indenture, does not purport to be complete and
is qualified in its entirety by reference to the provisions of
those agreements, including the definitions therein of certain
terms used below. We urge you to read the Indenture because it,
and not this description, defines your rights as Holders of the
Notes.
Brief
Description of Notes
The Notes:
•
are general senior obligations of the Issuer;
•
are secured on a first-priority basis, equally and ratably with
all existing and future obligations of the Issuer and the
Guarantors under any existing and future First Lien Obligations,
by all of the assets of the Issuer and the Guarantors which
secure the General Credit Facility (other than the European
Collateral), subject to the Liens securing the Issuer’s and
the Guarantors’ ABL Obligations and other Permitted Liens;
•
are secured on a second-priority basis, equally and ratably with
all existing and future obligations of the Issuer and the
Guarantors under any existing and future First Lien Obligations,
by all of the assets of the Issuer and the Guarantors securing
the ABL Facility which also secure the General Credit Facility,
subject to the Liens securing the Issuer’s and the
Guarantors’ ABL Obligations and other Permitted Liens;
•
are effectively subordinated to the Issuer’s and the
Guarantors’ obligations under the ABL Facility, to the
extent of the value of the Shared Receivables Collateral;
•
are effectively subordinated to any obligations secured by
Permitted Liens, to the extent of the value of the assets of the
Issuer and the Guarantors subject to those Permitted Liens;
•
are structurally subordinated to any existing and future
indebtedness and liabilities of non-guarantor Subsidiaries,
including the ABL Financing Entities and the Issuer’s
Foreign Subsidiaries and any Unrestricted Subsidiaries and
including indebtedness under the Company’s senior secured
European term loan facility included in the General Credit
Facility;
•
rank equally in right of payment with all existing and future
senior Indebtedness of the Issuer and the Guarantors but, to the
extent of the value of the Collateral, are effectively senior to
all of the Issuer’s and the Guarantors’ unsecured
senior Indebtedness (including the Existing Notes) and Junior
Lien Obligations (including the Existing Second Priority Notes);
•
are senior in right of payment to any future Subordinated
Indebtedness (as defined with respect to the Notes) of the
Issuer;
are initially unconditionally guaranteed on a joint and several
and senior basis by each Restricted Subsidiary that guarantees
the General Credit Facility (other than any Foreign
Subsidiary); and
•
are subject to registration with the SEC pursuant to the
Registration Rights Agreement.
Guarantees
The Guarantors, as primary obligors and not merely as sureties,
jointly and severally fully and unconditionally guarantee, on a
senior basis, the performance and full and punctual payment when
due, whether at maturity, by acceleration or otherwise, of all
obligations of the Issuer under the Indenture and the Notes,
whether for payment of principal of, premium, if any, or
interest or Additional Interest in respect of the Notes,
expenses, indemnification or otherwise, on the terms set forth
in the Indenture by executing the Indenture.
The Restricted Subsidiaries which guarantee the General Credit
Facility guarantee the Notes. Each of the Guarantees of the
Notes is a general senior obligation of each Guarantor and is
secured by a first-priority lien on all of the assets of each
Guarantor which secure the General Credit Facility (other than
the European Collateral) and by a second-priority lien on all of
the assets of each Guarantor which secure the ABL Facility. The
Guarantees rank equally in right of payment with all existing
and future senior Indebtedness of the Guarantor but, to the
extent of the value of the Collateral, are effectively senior to
all of the Guarantor’s unsecured senior Indebtedness and
Junior Lien Obligations and, to the extent of the Shared
Receivables Collateral, are effectively subordinated to the
Guarantor’s Obligations under the ABL Facility and any
future ABL Obligations. The Guarantees are senior in right of
payment to all existing and future Subordinated Indebtedness of
each Guarantor. The Notes are structurally subordinated to
Indebtedness and other liabilities of Subsidiaries of the Issuer
that do not Guarantee the Notes.
Not all of the Issuer’s Subsidiaries Guarantee the Notes.
In the event of a bankruptcy, liquidation or reorganization of
any of these non-guarantor Subsidiaries, the non-guarantor
Subsidiaries will pay the holders of their debt and their trade
creditors before they will be able to distribute any of their
assets to the Issuer. None of our Subsidiaries which are
“Restricted Subsidiaries” for purposes of the Existing
Notes Indenture, Foreign Subsidiaries, ABL Financing Entities,
non-Wholly Owned Subsidiaries or any Receivables Subsidiaries
guarantee the Notes. For the year ended December 31, 2009,
our non-guarantor Subsidiaries accounted for approximately
$12.468 billion, or 41.5%, of our total revenues. As of
December 31, 2009, our non-guarantor Subsidiaries held
approximately $9.672 billion, or 40.1%, of our total assets
and approximately $6.750 billion, or 21.1%, of our total
liabilities. See Note 16 to our consolidated financial
statements included in this prospectus.
The obligations of each Guarantor under its Guarantee are
limited as necessary to prevent the Guarantee from constituting
a fraudulent conveyance under applicable law.
Any entity that makes a payment under its Guarantee is entitled
upon payment in full of all guaranteed obligations under the
Indenture to a contribution from each other Guarantor in an
amount equal to such other Guarantor’s pro rata portion of
such payment based on the respective net assets of all the
Guarantors at the time of such payment determined in accordance
with GAAP.
If a Guarantee were rendered voidable, it could be subordinated
by a court to all other indebtedness (including guarantees and
other contingent liabilities) of the Guarantor, and, depending
on the amount of such indebtedness, a Guarantor’s liability
on its Guarantee could be reduced to zero. See “Risk
Factors — Risks Related to the Notes —
Federal and state fraudulent transfer laws may permit a court to
void the guarantees, and, if that occurs, you may not receive
any payments on the notes.”
Each Guarantee by a Guarantor provides by its terms that it will
be automatically and unconditionally released and discharged
upon:
(1) (a) any sale, exchange or transfer (by merger or
otherwise) of the Capital Stock of such Guarantor (including any
sale, exchange or transfer), after which the applicable
Guarantor is no longer a
Restricted Subsidiary or all or substantially all the assets of
such Guarantor, which sale, exchange or transfer is made in
compliance with the applicable provisions of the Indenture;
(b) the release or discharge of the guarantee by such
Guarantor of the Senior Credit Facilities or such other
guarantee that resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under
such guarantee;
(c) the designation of any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in compliance with the
applicable provisions of the Indenture; or
(d) the exercise by the Issuer of its legal defeasance
option or covenant defeasance option as described under
“Legal Defeasance and Covenant Defeasance” or the
discharge of the Issuer’s obligations under the Indenture
in accordance with the terms of the Indenture; and
(2) such Guarantor delivering to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for in the
Indenture relating to such transaction have been complied with.
Holding
Company Structure
The Issuer is a holding company for its Subsidiaries, with no
material operations of its own and only limited assets.
Accordingly, the Issuer is dependent upon the distribution of
the earnings of its Subsidiaries, whether in the form of
dividends, advances or payments on account of intercompany
obligations, to service its debt obligations.
Security
General
The Notes and the Guarantees, together with all other First Lien
Obligations, are secured by perfected first-priority security
interests in the Non-Receivables Collateral and by perfected
second-priority security interests in the Shared Receivables
Collateral (second in priority to the first-priority Liens on
the Shared Receivables Collateral securing the ABL Obligations),
in each case, subject to Permitted Liens. Notwithstanding the
foregoing, neither the Notes nor the Guarantees are secured by
the European Collateral or the Separate Receivables Collateral.
The ABL Secured Parties have rights and remedies with respect to
the Shared Receivables Collateral that, if exercised, could
adversely affect the value of the Shared Receivables Collateral
or the ability of the respective agents under the Intercreditor
Agreements to realize or foreclose on the Shared Receivables
Collateral on behalf of the First Lien Secured Parties. First
Lien Secured Parties other than the Holders of the Notes have
rights and remedies with respect to the Collateral that, if
exercised, could also adversely affect the value of the
Collateral on behalf of the Holders of the Notes, particularly
the rights described below under “— First Lien
Intercreditor Agreement.” For a description of the Shared
Receivables Collateral and the Non-Receivables Collateral, see
“Description of Other Indebtedness — Senior
Secured Credit Facilities — Guarantee and
Security.”
The Issuer and the Guarantors are and will be able to incur
additional Indebtedness in the future which could share in the
Collateral, including additional First Lien Obligations,
additional ABL Obligations, additional Junior Lien Obligations
and Obligations secured by Permitted Liens. The amount of such
additional Obligations is and will be limited by the covenant
described under “Certain Covenants — Liens”
and the covenant described under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock.”
Under certain circumstances, the amount of any such additional
Obligations could be significant.
After-Acquired
Collateral
From and after the Issue Date and subject to certain limitations
and exceptions, (a) if the Issuer or any Guarantor creates
any additional security interest upon any property or asset that
would constitute Collateral to secure any First Lien Obligations
(other than European Collateral and Separate Receivables
Collateral), it must concurrently grant a first-priority
perfected security interest (subject to Permitted Liens) upon
such property as
security for the Notes and (b) if the Issuer or any
Guarantor creates any additional security interest upon any
property or asset that would constitute Shared Receivables
Collateral to secure any ABL Obligations, it must concurrently
grant a second-priority perfected security interest (subject to
Permitted Liens) upon such property as security for the Notes.
Liens
with Respect to the Collateral
The Issuer, the Guarantors and the First Lien Collateral Agent
entered into Security Documents in connection with the General
Credit Facility and the Existing First Priority Notes with
respect to the Collateral defining the terms of the security
interests that secure the General Credit Facility and the
Existing First Priority Notes with respect to such Collateral
and that defines the terms of the security interests that secure
the Notes and the Guarantees with respect to such Collateral.
These security interests secure the payment and performance when
due of all of the Obligations of the Issuers and the Guarantors
under the Notes, the Indenture, the Guarantees and the Security
Documents, as provided in the Security Documents.
First
Lien Intercreditor Agreement
The First Lien Collateral Agent has entered into, and the
Trustee, as authorized representative for the holders of the
notes, has consented to, a First Lien Intercreditor Agreement
(as the same may be amended from time to time, the
“First Lien Intercreditor Agreement”) with the
Authorized Representative of the General Credit Facility
Obligations with respect to the Collateral, which may be amended
from time to time without the consent of the Holders to add
other parties holding First Lien Obligations permitted to be
incurred under the Indenture, General Credit Facility, the
Existing First Priority Notes Indentures and the First Lien
Intercreditor Agreement. The First Lien Collateral Agent is
initially the collateral agent under the General Credit Facility.
Under the First Lien Intercreditor Agreement, as described
below, the “Applicable Authorized Representative” has
the right to direct foreclosures and take other actions with
respect to the Common Collateral, and the Authorized
Representatives of other Series of First Lien Obligations have
no right to take actions with respect to the Common Collateral.
The Applicable Authorized Representative is the administrative
agent under the General Credit Facility, and the Trustee for the
Holders, as Authorized Representative in respect of the Notes,
will have no rights to take any action under the First Lien
Intercreditor Agreement.
The administrative agent under the General Credit Facility will
remain the Applicable Authorized Representative until the
earlier of (1) the Discharge of General Credit Facility
Obligations and (2) the Non-Controlling Authorized
Representative Enforcement Date (such date, the
“Applicable Authorized Agent Date”). After the
Applicable Authorized Agent Date, the Applicable Authorized
Representative will be the Authorized Representative of the
Series of Additional First Lien Obligations that constitutes the
largest outstanding principal amount of any then outstanding
Series of First Lien Obligations, other than the General Credit
Facility Obligations, with respect to the Common Collateral (the
“Major Non-Controlling Authorized
Representative”).
The “Non-Controlling Authorized Representative
Enforcement Date” is the date that is 90 days
(throughout which
90-day
period the applicable Authorized Representative was the Major
Non-Controlling Authorized Representative) after the occurrence
of both (a) an event of default, as defined in the
Indenture or other applicable indenture for that Series of First
Lien Obligations, and (b) the First Lien Collateral
Agent’s and each other Authorized Representative’s
receipt of written notice from that Authorized Representative
certifying that (i) such Authorized Representative is the
Major Non-Controlling Authorized Representative and that an
event of default, as defined in the Indenture or other
applicable indenture for that Series of First Lien Obligations,
has occurred and is continuing and (ii) the First Lien
Obligations of that Series are currently due and payable in full
(whether as a result of acceleration thereof or otherwise) in
accordance with the Indenture or other applicable indenture for
that Series of First Lien Obligations; provided that the
Non-Controlling Authorized Representative Enforcement Date shall
be stayed and shall not occur and shall be deemed not to have
occurred with respect to any Shared Collateral (1) at any
time the administrative agent under the General Credit Facility
or the First Lien Collateral Agent has commenced and is
diligently pursuing any enforcement
action with respect to such Common Collateral or (2) at any
time the Issuer or the Guarantor that has granted a security
interest in such Common Collateral is then a debtor under or
with respect to (or otherwise subject to) any insolvency or
liquidation proceeding.
The Applicable Authorized Representative shall have the sole
right to instruct the First Lien Collateral Agent to act or
refrain from acting with respect to the Common Collateral,
(b) the First Lien Collateral Agent shall not follow any
instructions with respect to such Common Collateral from any
representative of any Non-Controlling Secured Party or other
First Lien Secured Party (other than the Applicable Authorized
Representative), and (c) no Authorized Representative of
any Non-Controlling Secured Party or other First Lien Secured
Party (other than the Applicable Authorized Representative) will
instruct the First Lien Collateral Agent to commence any
judicial or non-judicial foreclosure proceedings with respect
to, seek to have a trustee, receiver, liquidator or similar
official appointed for or over, attempt any action to take
possession of, exercise any right, remedy or power with respect
to, or otherwise take any action to enforce its interests in or
realize upon, or take any other action available to it in
respect of, the Common Collateral.
Notwithstanding the equal priority of the Liens, the First Lien
Collateral Agent, acting on the instructions of the Applicable
Authorized Representative, may deal with the Common Collateral
as if such Applicable Authorized Representative had a senior
Lien on such Collateral. No representative of any
Non-Controlling Secured Party may contest, protest or object to
any foreclosure proceeding or action brought by the First Lien
Collateral Agent, Applicable Authorized Representative or
Controlling Secured Party. The Trustee and each other Authorized
Representative agrees that it will not accept any Lien on any
Collateral for the benefit of the Holders (other than funds
deposited for the discharge or defeasance of the Notes) other
than pursuant to the First Lien Security Documents. Each of the
New First Lien Secured Parties also agrees that it will not
contest or support any other person in contesting, in any
proceeding (including any insolvency or liquidation proceeding),
the perfection, priority, validity or enforceability of a Lien
held by or on behalf of any of the New First Lien Secured
Parties in all or any part of the Collateral, or the provisions
of the First Lien Intercreditor Agreement.
If a First Lien Event of Default has occurred and is continuing
and the First Lien Collateral Agent is taking action to enforce
rights in respect of any Common Collateral, or any distribution
is made with respect to any Common Collateral in any bankruptcy
case of the Issuer or any Guarantor, the proceeds of any sale,
collection or other liquidation of any such Collateral by the
First Lien Collateral Agent or any other First Lien Secured
Party (or received pursuant to any other intercreditor
agreement), as applicable, and proceeds of any such distribution
(subject, in the case of any such distribution, to the paragraph
immediately following) to which the First Lien Obligations are
entitled under any other intercreditor agreement shall be
applied among the First Lien Obligations to the payment in full
of the First Lien Obligations on a ratable basis, after payment
of all amounts owing to the First Lien Collateral Agent.
Notwithstanding the foregoing, with respect to any Common
Collateral for which a third party (other than a First Lien
Secured Party) has a lien or security interest that is junior in
priority to the security interest of any Series of First Lien
Obligations but senior (as determined by appropriate legal
proceedings in the case of any dispute) to the security interest
of any other Series of First Lien Obligations (such third party,
an “Intervening Creditor”), the value of any
Common Collateral or proceeds which are allocated to such
Intervening Creditor shall be deducted on a ratable basis solely
from the Common Collateral or proceeds to be distributed in
respect of the Series of First Lien Obligations with respect to
which such Impairment exists.
None of the First Lien Secured Parties may institute any suit or
assert in any suit, bankruptcy, insolvency or other proceeding
any claim against the First Lien Collateral Agent or any other
First Lien Secured Party seeking damages from or other relief by
way of specific performance, instructions or otherwise with
respect to any Common Collateral. In addition, none of the First
Lien Secured Parties may seek to have any Common Collateral or
any part thereof marshaled upon any foreclosure or other
disposition of such Collateral. If any First Lien Secured Party
obtains possession of any Common Collateral or realizes any
proceeds or payment in respect thereof, at any time prior to the
discharge of each of the First Lien Obligations, then it must
hold such Common Collateral, proceeds or payment in trust for
the other First Lien Secured Parties and promptly
transfer such Common Collateral, proceeds or payment to the
First Lien Collateral Agent to be distributed in accordance with
the First Lien Intercreditor Agreement.
If the Issuer or any Guarantor becomes subject to any bankruptcy
case, the First Lien Intercreditor Agreement provides that
(1) if the Issuer or any Guarantor shall, as
debtor(s)-in-possession, move for approval of financing (the
“DIP Financing”) to be provided by one or more
lenders (the “DIP Lenders”) under
Section 364 of the Bankruptcy Code or the use of cash
collateral under Section 363 of the Bankruptcy Code, each
First Lien Secured Party will agree not to object to any such
financing or to the Liens on the Common Collateral securing the
same (the “DIP Financing Liens”) or to any use
of cash collateral that constitutes Common Collateral, unless
any Controlling Secured Party, or an Authorized Representative
of any Controlling Secured Party, shall then oppose or object to
such DIP Financing or such DIP Financing Liens or use of cash
collateral (and (i) to the extent that such DIP Financing
Liens are senior to the Liens on any such Common Collateral for
the benefit of the Controlling Secured Parties, each
Non-Controlling Secured Party will subordinate its Liens with
respect to such Common Collateral on the same terms as the Liens
of the Controlling Secured Parties (other than any Liens of any
First Lien Secured Parties constituting DIP Financing Liens) are
subordinated thereto, and (ii) to the extent that such DIP
Financing Liens rank pari passu with the Liens on any
such Common Collateral granted to secure the First Lien
Obligations of the Controlling Secured Parties, each
Non-Controlling Secured Party will confirm the priorities with
respect to such Common Collateral as set forth in the First Lien
Intercreditor Agreement), in each case so long as:
(A) the First Lien Secured Parties of each Series retain
the benefit of their Liens on all such Common Collateral pledged
to the DIP Lenders, including proceeds thereof arising after the
commencement of such proceeding, with the same priority
vis-a-vis
all the other First Lien Secured Parties (other than any Liens
of the First Lien Secured Parties constituting DIP Financing
Liens) as existed prior to the commencement of the bankruptcy
case,
(B) the First Lien Secured Parties of each Series are
granted Liens on any additional collateral pledged to any First
Lien Secured Parties as adequate protection or otherwise in
connection with such DIP Financing or use of cash collateral,
with the same priority
vis-a-vis
the First Lien Secured Parties as set forth in the First Lien
Intercreditor Agreement,
(C) if any amount of such DIP Financing or cash collateral
is applied to repay any of the First Lien Obligations, such
amount is applied pursuant to the First Lien Intercreditor
Agreement, and
(D) if any First Lien Secured Parties are granted adequate
protection, including in the form of periodic payments, in
connection with such DIP Financing or use of cash collateral,
the proceeds of such adequate protection is applied pursuant to
the First Lien Intercreditor Agreement;
provided that the First Lien Secured Parties of each
Series shall have a right to object to the grant of a Lien to
secure the DIP Financing over any Collateral subject to Liens in
favor of the First Lien Secured Parties of such Series or its
representative that shall not constitute Common Collateral; and
provided, further, that the First Lien Secured
Parties receiving adequate protection shall not object to any
other First Lien Secured Party receiving adequate protection
comparable to any adequate protection granted to such First Lien
Secured Parties in connection with a DIP Financing or use of
cash collateral.
The First Lien Secured Parties acknowledge that the First Lien
Obligations of any Series may, subject to the limitations set
forth in the other First Lien Documents, be increased, extended,
renewed, replaced, restated, supplemented, restructured, repaid,
refunded, refinanced or otherwise amended or modified from time
to time, all without affecting the priorities set forth in the
First Lien Intercreditor Agreement defining the relative rights
of the First Lien Secured Parties of any Series.
Additional
General Intercreditor Agreement
The First Lien Collateral Agent is a party to an Additional
General Intercreditor Agreement dated the Issue Date (as the
same may be amended from time to time, the “Additional
General Intercreditor Agreement”), by and among the
First Lien Collateral Agent, the Junior Lien Collateral Agent
and the trustees under the Existing Second Priority Notes
Indentures and the Existing First Priority Notes Indentures, by
which
the Notes are given the same ranking and rights with respect to
the Collateral as provided to the General Credit Facility under
the General Intercreditor Agreement, dated as of
November 17, 2006, by and among the First Lien Collateral
Agent and the Junior Lien Collateral Agent. Pursuant to the
terms of the Additional General Intercreditor Agreement and
subject to the First Lien Intercreditor Agreement, prior to the
Discharge of New First Lien Obligations, the First Lien
Collateral Agent, acting on behalf of the New First Lien
Secured Parties, will determine the time and method by which the
security interests in the Collateral will be enforced and will
have the sole and exclusive right to manage, perform and enforce
the terms of the Security Documents relating to the Collateral
and to exercise and enforce all privileges, rights and remedies
thereunder according to its direction, including to take or
retake control or possession of such Collateral and to hold,
prepare for sale, marshall, process, sell, lease, dispose of or
liquidate such Collateral, including, without limitation,
following the occurrence of a Default or Event of Default under
the Indenture. The Junior Lien Collateral Agent will not be
permitted to enforce the security interests even if any event of
default under an Existing Second Priority Notes Indenture has
occurred and the Existing Second Priority Notes issued
thereunder have been accelerated except (a) in any
insolvency or liquidation proceeding, solely as necessary to
file a proof of claim or statement of interest with respect to
the Junior Lien Obligations or (b) as necessary to take any
action in order to prove, preserve, perfect or protect (but not
enforce) its security interest and rights in, and the perfection
and priority of its Lien on, the Collateral.
The Junior Lien Collateral Agent, for itself and on behalf of
each Junior Lien Secured Party, has agreed pursuant to the
Additional General Intercreditor Agreement that (a) it will
not (and thereby waives any right to) take any action to
challenge, contest or support any other Person in contesting or
challenging, directly or indirectly, in any proceeding
(including any insolvency or liquidation proceeding), the
validity, perfection, priority or enforceability of a Lien
securing any New First Lien Obligations held (or purported to be
held) by or on behalf of the First Lien Collateral Agent or any
of the New First Lien Secured Parties or any agent or trustee
therefor in any Collateral or other collateral securing both the
New First Lien Obligations and any Junior Lien Obligations and
(b) it will not oppose or otherwise contest (or support any
other Person contesting) any request for judicial relief made in
any court by the First Lien Collateral Agent or any New First
Lien Secured Parties relating to the lawful enforcement of any
First Priority Lien on Collateral or other collateral securing
both the New First Lien Obligations and any Junior Lien
Obligations.
In addition, the Security Documents provide that, subject to the
First Lien Intercreditor Agreement, prior to the Discharge of
New First Lien Obligations, the First Lien Collateral Agent may
take actions with respect to the Collateral (including the
release of Collateral and the manner of realization (subject to
the provisions described under “— Release of
Collateral”)) without the consent of the Junior Lien
Collateral Agent or other Junior Lien Secured Parties.
The Collateral or proceeds thereof received in connection with
the sale or other disposition of, or collection on, such
Non-Receivables Collateral upon the exercise of remedies will be
applied to the First Lien Obligations to be distributed in
accordance with the First Lien Intercreditor Agreement prior to
application to any Junior Lien Obligations in such order as
specified in the relevant First Lien Documents until the
Discharge of New First Lien Obligations has occurred.
In addition, so long as the Discharge of New First Lien
Obligations has not occurred, neither the Junior Lien Collateral
Agent nor any Junior Lien Representative shall acquire or hold
any Lien on any assets of the Issuer or any Subsidiary (and
neither the Issuer nor any Subsidiary shall grant such Lien)
securing any Junior Lien Obligations that are not also subject
to the First Priority Lien in respect of the New First Lien
Obligations under the New First Lien Documents.
The Junior Lien Collateral Agent and each other Junior Lien
Secured Party agrees that any Lien purported to be granted on
any collateral as security for New First Lien Obligations shall
be deemed to be and shall be deemed to remain senior in all
respects and prior to all Liens on such collateral securing any
Junior Lien Obligations for all purposes regardless of whether
the Lien purported to be granted is found to be improperly
granted, improperly perfected, preferential, a fraudulent
conveyance or legally or otherwise deficient in any manner.
If any New First Lien Secured Party is required in any
insolvency or liquidation proceeding or otherwise to turn over
or otherwise pay to the estate of the Issuer or any other
Guarantor (or any trustee, receiver or similar person therefor),
because the payment of such amount was declared to be fraudulent
or preferential in any respect or for any other reason, any
amount (a “Recovery”), whether received as
proceeds of security, enforcement of any right of setoff or
otherwise, then as among the parties hereto, the New First Lien
Obligations shall be deemed to be reinstated to the extent of
such Recovery and to be outstanding as if such payment had not
occurred and such New First Lien Secured Party shall be
entitled to a reinstatement of New First Lien Obligations with
respect to all such recovered amounts and shall have all rights
hereunder. If the Additional General Intercreditor Agreement
shall have been terminated prior to such Recovery, the
Additional General Intercreditor Agreement shall be reinstated
in full force and effect, and such prior termination shall not
diminish, release, discharge, impair or otherwise affect the
obligations of the parties thereto.
The Additional General Intercreditor Agreement provides that so
long as the Discharge of New First Lien Obligations has not
occurred, whether or not any insolvency or liquidation
proceeding has been commenced by or against the Issuer or any
Guarantor, (i) neither the Junior Lien Collateral Agent,
any Junior Lien Representative nor any Junior Lien Secured Party
will (x) exercise or seek to exercise any rights or
remedies (including setoff or the right to credit bid debt
(except under limited circumstances)) with respect to any
collateral securing both the New First Lien Obligations and any
Junior Lien Obligations in respect of any applicable Junior Lien
Obligations, or institute any action or proceeding with respect
to such rights or remedies (including any action of
foreclosure), (y) contest, protest or otherwise object to
any foreclosure or enforcement proceeding or action brought with
respect to the Collateral or any other collateral by the First
Lien Collateral Agent or any New First Lien Secured Party in
respect of the New First Lien Obligations, the exercise of any
right by the First Lien Collateral Agent or any New First
Lien Secured Party (or any agent or
sub-agent on
their behalf) in respect of the New First Lien Obligations under
any control agreement, lockbox agreement, landlord waiver or
bailee’s letter or similar agreement or arrangement to
which the Junior Lien Collateral Agent, any Junior Lien
Representative or any Junior Lien Secured Party either is a
party or may have rights as a third-party beneficiary, or any
other exercise by any such party of any rights and remedies as a
secured party relating to such collateral or any other
collateral under the New First Lien Documents or otherwise in
respect of New First Lien Obligations, or (z) object to any
waiver or forbearance by the First Lien Secured Parties from or
in respect of bringing or pursuing any foreclosure proceeding or
action or any other exercise of any rights or remedies relating
to such collateral or any other collateral in respect of New
First Lien Obligations and (ii) except as otherwise
provided in the Additional General Intercreditor Agreement, the
First Lien Collateral Agent and the New First Lien Secured
Parties shall have the sole and exclusive right to enforce
rights, exercise remedies (including setoff and the right to
credit bid their debt), marshal, process and make determinations
regarding the release, disposition or restrictions, or waiver or
forbearance of rights or remedies with respect to such
collateral without any consultation with or the consent of the
Junior Lien Collateral Agent, any Junior Lien Representative or
any Junior Lien Secured Party.
In addition, the Junior Lien Collateral Agent, each Junior Lien
Representative and each other Junior Lien Secured Party have
agreed, among other things, that if the Issuer or any Guarantor
is subject to any insolvency or liquidation proceeding if the
First Lien Collateral Agent, subject to the First Lien
Intercreditor Agreement, desires to permit the use of cash
collateral or to permit the Issuer or any Guarantor to obtain
financing under Section 363 or Section 364 of the
Bankruptcy Code or any similar provision in any Bankruptcy Law
(“DIP Financing”), including if such DIP
Financing is secured by Liens senior in priority to the Liens
securing the Junior Lien Obligations, then the Junior Lien
Collateral Agent and each Junior Lien Representative, on behalf
of itself and each applicable Junior Lien Secured Party, agrees
not to object to such use of cash collateral or DIP Financing
and will not request adequate protection or any other relief in
connection therewith (except to the extent permitted by the
Additional General Intercreditor Agreement) and, to the extent
the Liens securing the new First Lien Obligations are
subordinated or pari passu with such DIP Financing, will
subordinate its Liens in the Collateral and any other collateral
to such DIP Financing (and all Obligations relating thereto) on
the same basis as they are subordinated to the New First Lien
Obligations.
Subject to the terms of the Security Documents, the Issuer and
the Guarantors have the right to remain in possession and retain
exclusive control of the Collateral securing the Notes and the
Notes Obligations (other
than securities, instruments and chattel paper constituting part
of the Collateral and deposited with the First Lien Collateral
Agent in accordance with the provisions of the First Lien
Security Documents and any Shared Receivables Collateral subject
to a control agreement under the circumstances described in the
First Lien Security Documents), to freely operate the Collateral
and to collect, invest and dispose of any income therefrom.
Release
of Collateral
Under the First Lien Intercreditor Agreement, if at any time the
Applicable Authorized Representative forecloses upon or
otherwise exercises remedies against any Common Collateral, then
(whether or not any insolvency or liquidation proceeding is
pending at the time) the Liens in favor of the First Lien
Collateral Agent for the benefit of the Trustee and the Holders
of the Notes and each other Series of First Lien Secured Parties
upon such Common Collateral will automatically be released and
discharged. However, any proceeds of any Common Collateral
realized therefrom will be applied as described under
“— First Lien Intercreditor Agreement.”
Under the Additional Receivables Intercreditor Agreement, if at
any time the Issuer or any Guarantor or any ABL Secured Party
delivers notice that any Shared Receivables Collateral is sold,
transferred or otherwise disposed of by the owner of that
Collateral in a transaction permitted under the ABL Facility,
the General Credit Facility and the Indenture or the ABL Secured
Parties are releasing or have released their Liens on such
Shared Receivables Collateral in connection with a disposition
in connection with an exercise of remedies with respect to such
Collateral, then the Liens on such Shared Receivables Collateral
securing New First Lien Obligations or Junior Lien Obligations
will automatically be released and discharged as and when, but
only to the extent, such Liens on such Shared Receivables
Collateral securing ABL Obligations are released and discharged,
provided that in the case of a disposition in connection with an
exercise of remedies, any proceeds thereof not applied to repay
ABL Obligations shall be subject to the Liens securing the First
Lien Obligations and the Junior Lien Obligations and shall be
applied pursuant to the Additional Receivables Intercreditor
Agreement and the First Lien Intercreditor Agreement.
The Issuer and the Guarantors will be entitled to the release of
property and other assets constituting Collateral from the Liens
securing the Notes and the Notes Obligations under any one or
more of the following circumstances:
(1) to enable us to consummate the sale, transfer or other
disposition of such property or assets to the extent not
prohibited under the covenant described under
“— Repurchase at the Option of
Holders — Asset Sales”;
(2) the release of Excess Proceeds or Collateral Excess
Proceeds that remain unexpended after the conclusion of an Asset
Sale Offer or a Collateral Asset Sale Offer conducted in
accordance with the Indenture;
(3) in the case of a Guarantor that is released from its
Guarantee with respect to the Notes pursuant to the terms of the
Indenture, the release of the property and assets of such
Guarantor;
(4) with the consent of the holders of at least 75% of the
aggregate principal amount of the Notes then outstanding and
affected thereby and a majority of all Junior Lien Obligations
(including the Existing Second Priority Notes) then outstanding
and affected thereby (including, without limitation, consents
obtained in connection with a tender offer or exchange offer
for, or purchase of, Junior Lien Obligations); or
(5) as described under “— Amendment,
Supplement and Waiver” below.
To the extent necessary and for so long as required for such
Subsidiary not to be subject to any requirement pursuant to
Rule 3-16
of
Regulation S-X
under the Securities Act to file separate financial statements
with the SEC (or any other governmental agency), the Capital
Stock of any Subsidiary of the Company (excluding Healthtrust,
Inc. — The Hospital Company, a Delaware corporation
and its successors and assigns) shall not be included in the
Collateral with respect to the Notes (as described under
“— Certain
Limitations on the Collateral”) and shall not be subject to
the Liens securing the Notes and the Notes Obligations.
The Liens on the Collateral securing the Notes and the
Guarantees also will be released upon (i) payment in full
of the principal of, together with accrued and unpaid interest
(including Additional Interest, if any) on, the Notes and all
other Obligations under the Indenture, the Guarantees and the
Security Documents that are due and payable at or prior to the
time such principal, together with accrued and unpaid interest
(including Additional Interest, if any), are paid or (ii) a
legal defeasance or covenant defeasance under the Indenture as
described below under “Legal Defeasance and Covenant
Defeasance” or a discharge of the Indenture as described
under “Satisfaction and Discharge.”
Any certificate or opinion required by Section 314(d) of
the Trust Indenture Act may be made by an Officer of the
Company, except in cases where Section 314(d) requires that
such certificate or opinion be made by an independent engineer,
appraiser or other expert.
Notwithstanding anything to the contrary herein, the Issuer and
its Subsidiaries are not required to comply with all or any
portion of Section 314(d) of the Trust Indenture Act
if they determine, in good faith based on advice of counsel,
that under the terms of that section
and/or any
interpretation or guidance as to the meaning thereof of the SEC
and its staff, including “no action” letters or
exemptive orders, all or any portion of Section 314(d) of
the Trust Indenture Act is inapplicable to the released
Collateral.
Without limiting the generality of the foregoing, certain no
action letters issued by the SEC have permitted an indenture
qualified under the Trust Indenture Act to contain
provisions permitting the release of collateral from Liens under
such indenture in the ordinary course of the issuer’s
business without requiring the issuer to provide certificates
and other documents under Section 314(d) of the
Trust Indenture Act. The Issuer and the Guarantors may,
subject to the provisions of the Indenture, among other things,
without any release or consent by the First Lien Collateral
Agent, conduct ordinary course activities with respect to the
Collateral, including, without limitation:
•
selling or otherwise disposing of, in any transaction or series
of related transactions, any property subject to the Lien of the
Security Documents that has become worn out, defective, obsolete
or not used or useful in the business;
•
abandoning, terminating, canceling, releasing or making
alterations in or substitutions of any leases or contracts
subject to the Lien of the Indenture or any of the Security
Documents;
•
surrendering or modifying any franchise, license or permit
subject to the Lien of the Security Documents that it may own or
under which it may be operating;
•
altering, repairing, replacing, changing the location or
position of and adding to its structures, machinery, systems,
equipment, fixtures and appurtenances;
•
granting a license of any intellectual property;
•
selling, transferring or otherwise disposing of inventory in the
ordinary course of business;
•
collecting accounts receivable in the ordinary course of
business as permitted by the covenant described under
“Repurchase at the Option of Holders — Asset
Sales”;
•
making cash payments (including for the repayment of
Indebtedness or interest) from cash that is at any time part of
the Collateral in the ordinary course of business that are not
otherwise prohibited by the Indenture and the Security
Documents; and
•
abandoning any intellectual property that is no longer used or
useful in the Issuer’s business.
The Issuer must deliver an Officer’s Certificate to the
First Lien Collateral Agent within 30 calendar days following
the end of each six-month period beginning on May 15 and
November 15 of each year, to the effect that all such releases
and withdrawals during the preceding six-month period in the
ordinary course of the Issuer’s or the Guarantors’
business, as described in the preceding paragraph, were not
prohibited by the Indenture.
In addition, the First Lien Collateral Agent is a party to an
Additional Receivables Intercreditor Agreement, dated the Issue
Date (as the same may be amended from time to time, the
“Additional Receivables Intercreditor
Agreement”), by and between the First Lien Collateral
Agent and the collateral agent under the ABL Facility (the
“ABL Collateral Agent”), by which the Notes are
given the same ranking and rights with respect to the Shared
Receivables Collateral as provided to the General Credit
Facility under the Receivables Intercreditor Agreement dated as
of November 17, 2006 by and among the Junior Lien
Collateral Agent, the First Lien Collateral Agent and the ABL
Collateral Agent. The Additional Receivables Intercreditor
Agreement contains provisions with respect to the Shared
Receivables Collateral and the relative rights, privileges and
obligations relating thereto as between (a) the First Lien
Collateral Agent and the New First Lien Secured Parties and
(b) the ABL Collateral Agent and the ABL Secured Parties.
The Additional Receivables Intercreditor Agreement provides for
first-priority Liens in the Shared Receivables Collateral in
favor of the ABL Secured Parties and junior priority Liens in
the Shared Receivables Collateral in favor of the New First Lien
Secured Parties, subject to Permitted Liens. The relative
rights, privileges and obligations with respect to the Shared
Receivables Collateral of the ABL Secured Parties, on the one
hand, and the New First Lien Secured Parties, on the other, are
substantially similar to the relative rights, privileges and
obligations with respect to the Non-Receivables Collateral of
the New First Lien Secured Parties, on the one hand, and the
Junior Lien Secured Parties, on the other, respectively, except
that the Liens of the New First Lien Secured Parties in the
Shared Receivables Collateral are second-priority Liens and the
Liens of the ABL Secured Parties in the Shared Receivables
Collateral are first-priority liens and except to the extent
customary or necessary with respect to collateral of the type
that constitutes Shared Receivables Collateral.
The relative rights, privileges and obligations with respect to
the Shared Receivables Collateral (a) as between the First
Lien Collateral Agent and the New First Lien Secured Parties, on
the one hand, and the Junior Lien Collateral Agent and the
Junior Lien Secured Parties, on the other, are governed by the
Additional General Intercreditor Agreement described above and
(b) as among the First Lien Secured Parties, are governed
by the First Lien Intercreditor Agreement described above.
Certain
Limitations on the Collateral
The Collateral securing the Notes does not include any of the
following assets:
(1) the property or assets owned by any Subsidiary of the
Issuer that is not a Guarantor, including each ABL Financing
Entity;
(2) any rights or interests of the Issuer or any Guarantor
in, to or under any agreement, contract, license, instrument,
document or other general intangible (referred to solely for
purposes of this clause (2) as a
“Contract”), any intellectual property or any
security or other investment property (i) to the extent the
security interest in such Collateral is prohibited by any
applicable contract, agreement or other instrument without the
consent of any other party thereto (other than a party to the
General Credit Facility or the Indenture or, in the case of
investment property, a Wholly-Owned Subsidiary), (ii) to
the extent the security interest in such Contract would give any
other party (other than a party to the General Credit Facility
or the Indenture or, in the case of investment property, a
Wholly-Owned Subsidiary) to such Collateral the right to
terminate its obligations thereunder or (iii) to the extent
all necessary consents to such grant of a security interest have
not been obtained from the other parties thereto (other than to
the extent that any such prohibition referred to in clauses (i),
(ii) and (iii) would be rendered ineffective pursuant
to
Sections 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any
successor provision or provisions) of any relevant jurisdiction
or any other applicable law); provided that this
limitation shall not affect, limit, restrict or impair the grant
by the Issuer or such Guarantor of a security interest in any
account receivable or any money or other amounts due or to
become due under any Contract;
(3) any equipment of the Issuer or any Guarantor that is
subject to, or secured by, a Capitalized Lease Obligation or
Purchase Money Obligations and any equipment that constitutes an
asset of an entity acquired in a transaction permitted by the
Indenture to the extent that such equipment subject to a Lien
permitted by the Indenture and the terms of the Indebtedness
secured by such Lien prohibit assignment of, or granting of a
security interest in, the Issuer’s or such Guarantor’s
rights and interests therein (other than to the extent that any
such prohibition would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial
Code (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law); provided that
immediately upon the repayment of all Indebtedness secured by
such Lien, the Issuer or the Guarantor, as the case may be,
shall be deemed to have granted a security interest in all the
rights and interests with respect to such equipment;
(4) any Voting Stock that is issued by any Foreign
Subsidiary, if and to the extent that the inclusion of such
Voting Stock in the Collateral would cause the Collateral
pledged by the Issuer or the applicable Guarantor, as the case
may be, to include in the aggregate more than 65% of the total
combined voting power of all classes of Voting Stock of such
Foreign Subsidiary;
(5) any Capital Stock that is issued by a Subsidiary that
is not owned directly by the Issuer or a Guarantor;
(6) any Capital Stock and other securities of a Subsidiary
(excluding Healthtrust, Inc. — The Hospital Company, a
Delaware corporation and its successors and assigns) to the
extent that the pledge of such Capital Stock and other
securities results in the Company’s being required to file
separate financial statements of such Subsidiary with the SEC,
but only to the extent necessary to not be subject to such
requirement and only for so long as such requirement is in
existence and only with respect to the relevant Notes affected;
provided that neither the Issuer nor any Subsidiary shall
take any action in the form of a reorganization, merger or other
restructuring a principal purpose of which is to provide for the
release of the Lien on any Capital Stock pursuant to this clause
(6). In addition, in the event that
Rule 3-16
of
Regulation S-X
under the Securities Act is amended, modified or interpreted by
the SEC to require (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted,
which would require) the filing with the SEC (or any other
governmental agency) of separate financial statements of any
Subsidiary of the Company (excluding Healthtrust,
Inc. — The Hospital Company, a Delaware corporation
and its successors and assigns) due to the fact that such
Subsidiary’s Capital Stock secures the Notes affected
thereby, then the Capital Stock of such Subsidiary will
automatically be deemed not to be part of the Collateral
securing the relevant Notes affected thereby but only to the
extent necessary to not be subject to such requirement and only
for so long as required to not be subject to such requirement.
In such event, the Security Documents may be amended or
modified, without the consent of any holder of such Notes, to
the extent necessary to release the security interests in favor
of the First Lien Collateral Agent on the shares of Capital
Stock that are so deemed to no longer constitute part of the
Collateral for the relevant Notes. In the event that
Rule 3-16
of
Regulation S-X
under the Securities Act is amended, modified or interpreted by
the SEC to permit (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted,
which would permit) such Subsidiary’s Capital Stock to
secure the Notes in excess of the amount then pledged without
the filing with the SEC (or any other governmental agency) of
separate financial statements of such Subsidiary, then the
Capital Stock of such Subsidiary will automatically be deemed to
be a part of the Collateral for the relevant Notes;
(7) certain non-Principal Properties that do not constitute
Non-Receivables Collateral;
(8) any deposit accounts, other bank or securities accounts
or cash of the Issuer or any Guarantor;
(9) any leaseholds and motor vehicles of the Issuer or any
Guarantor;
(10) any Capital Stock or securities convertible into or
exchangeable for Capital Stock (i) if, in the reasonable
judgment of the Issuer, the cost or other consequences of
pledging such Collateral shall be excessive in view of the
benefits to be obtained by the First Lien Secured Parties
therefrom or (ii) the pledge of such Collateral would
result in adverse tax consequences to the Issuer or any of its
Subsidiaries as reasonably determined by the Issuer and
identified in writing to the First Lien Collateral Agent;
(11) any collateral to the extent the grant of the security
interest therein would violate any requirement of law; and
(12) proceeds and products from any and all of the
foregoing excluded collateral described in clauses (1)
through (11), unless such proceeds or products would otherwise
constitute Collateral securing the Notes.
Sufficiency
of Collateral
The fair market value of the Collateral is subject to
fluctuations based on factors that include, among others, the
condition of the health care industry, the ability to sell the
Collateral in an orderly sale, general economic conditions, the
availability of buyers and similar factors. The amount to be
received upon a sale of the Collateral would also be dependent
on numerous factors, including, but not limited to, the actual
fair market value of the Collateral at such time and the timing
and the manner of the sale. By their nature, portions of the
Collateral may be illiquid and may have no readily ascertainable
market value. Accordingly, there can be no assurance that the
Collateral can be sold in a short period of time or in an
orderly manner. In addition, in the event of a bankruptcy, the
ability of the holders to realize upon any of the Collateral may
be subject to certain bankruptcy law limitations as described
below.
Certain
Bankruptcy Limitations
The right of the Trustee to repossess and dispose of the
Collateral upon the occurrence of an Event of Default would be
significantly impaired by any Bankruptcy Law in the event that a
bankruptcy case were to be commenced by or against the Company
or any Guarantor prior to the Trustee’s having repossessed
and disposed of the Collateral. Upon the commencement of a case
for relief under the Bankruptcy Code, a secured creditor such as
the Trustee is prohibited from repossessing its security from a
debtor in a bankruptcy case, or from disposing of security
without bankruptcy court approval.
In view of the broad equitable powers of a U.S. bankruptcy
court, it is impossible to predict how long payments under the
Notes could be delayed following commencement of a bankruptcy
case, whether or when the Trustee could repossess or dispose of
the Collateral, the value of the Collateral at any time during a
bankruptcy case or whether or to what extent Holders of the
Notes would be compensated for any delay in payment or loss of
value of the Collateral. The Bankruptcy Code permits only the
payment
and/or
accrual of post-petition interest, costs and attorneys’
fees to a secured creditor during a debtor’s bankruptcy
case to the extent the value of such creditor’s interest in
the Collateral is determined by the bankruptcy court to exceed
the aggregate outstanding principal amount of the obligations
secured by the Collateral.
Furthermore, in the event a domestic or foreign bankruptcy court
determines that the value of the Collateral is not sufficient to
repay all amounts due on the Notes, the Holders of the Notes
would hold secured claims only to the extent of the value of the
Collateral to which the Holders of the Notes are entitled, and
unsecured claims with respect to such shortfall.
Paying
Agent and Registrar for the Notes
The Issuer must maintain one or more paying agents for the Notes
in the Borough of Manhattan, City of New York. The initial
paying agent for the Notes is Deutsche Bank Trust Company
Americas.
The Issuer must also maintain a registrar with offices in the
Borough of Manhattan, City of New York. The initial registrar is
Deutsche Bank Trust Company Americas. The registrar
maintains a register reflecting ownership of the Notes
outstanding from time to time and makes payments on and
facilitates transfer of Notes on behalf of the Issuer.
The Issuer may change the paying agents or the registrars
without prior notice to the Holders. The Issuer or any of its
Subsidiaries may act as a paying agent or registrar.
Transfer
and Exchange
A Holder may transfer or exchange Notes in accordance with the
Indenture. The registrar and the Trustee may require a Holder to
furnish appropriate endorsements and transfer documents in
connection with a transfer of Notes. Holders will be required to
pay all taxes due on transfer. The Issuer is not required to
transfer or
exchange any Note selected for redemption. Also, the Issuer is
not required to transfer or exchange any Note for a period of
15 days before a selection of Notes to be redeemed.
Principal,
Maturity and Interest
The Issuer issued $1,400,000,000 in aggregate principal amount
of Notes in a private transaction that was not subject to the
registration requirements of the Securities Act. The Notes will
mature on September 15, 2020. Subject to compliance with
the covenant described below under the caption “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock,”
the Issuer may issue additional Notes, from time to time under
the Indenture (any such Notes, “Additional
Notes”). Except as described under “Amendment,
Supplement and Waiver,” the Notes offered by the Issuer and
any Additional Notes subsequently issued under the Indenture
will be treated as a single class for all purposes under the
Indenture, including waivers, amendments, redemptions and offers
to purchase. Unless the context requires otherwise, references
to “Notes” for all purposes of the Indenture and this
“Description of the March 2010 Notes” include any
Additional Notes that are actually issued.
Interest on the Notes will accrue at the rate of
71/4%
per annum and will be payable semi-annually in arrears on
March 15 and September 15, commencing
September 15, 2010, to the Holders of record on the
immediately preceding March 1 and September 1.
Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid,
from and including the Issue Date. Interest on the Notes will be
computed on the basis of a
360-day year
comprised of twelve
30-day
months.
Additional
Interest
Additional Interest may accrue on the Notes in certain
circumstances pursuant to the Registration Rights Agreement. All
references in the Indenture, in any context, to any interest or
other amount payable on or with respect to the Notes shall be
deemed to include any Additional Interest pursuant to the
Registration Rights Agreement. Principal of, premium, if any,
and interest on the Notes will be payable at the office or
agency of the Issuer maintained for such purpose within the City
and State of New York or, at the option of the Issuer, payment
of interest may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of
Holders; provided that all payments of principal,
premium, if any, and interest with respect to the Notes
represented by one or more global notes registered in the name
of or held by DTC or its nominee will be made by wire transfer
of immediately available funds to the accounts specified by the
Holder or Holders thereof. Until otherwise designated by the
Issuer, the Issuer’s office or agency in New York is the
office of the Registrar and Paying Agent maintained for such
purpose.
Mandatory
Redemption; Offers to Purchase; Open Market Purchases
The Issuer is not required to make any mandatory redemption or
sinking fund payments with respect to the Notes. However, under
certain circumstances, the Issuer may be required to offer to
purchase Notes as described under the caption “Repurchase
at the Option of Holders.” The Issuer may at any time and
from time to time purchase Notes in the open market or otherwise.
Optional
Redemption
Except as set forth below, the Issuer is not entitled to redeem
Notes at its option prior to March 15, 2015.
At any time prior to March 15, 2015, the Issuer may redeem
all or a part of the Notes, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to
the registered address of each Holder or otherwise in accordance
with the procedures of DTC, at a redemption price equal to 100%
of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and
Additional Interest, if any, to the date of redemption (the
“Redemption Date”), subject to the rights
of Holders of the Notes on the relevant record date to receive
interest due on the relevant interest payment date.
On and after March 15, 2015 the Issuer may redeem the
Notes, in whole or in part, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to
the registered address of each Holder or
otherwise in accordance with the procedures of DTC, at the
redemption prices (expressed as percentages of principal amount
of the Notes to be redeemed) set forth below, plus accrued and
unpaid interest thereon and Additional Interest, if any, to the
applicable 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
twelve-month period beginning on March 15 of each of the
years indicated below:
Year
Percentage
2015
103.625
%
2016
102.417
%
2017
101.208
%
2018 and thereafter
100.000
%
In addition, until March 15, 2013, the Issuer may, at its
option, on one or more occasions redeem up to 35% of the
aggregate principal amount of Notes at a redemption price equal
to 107.250% of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable 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, with
the net cash proceeds of one or more Equity Offerings;
provided that at least 50% of the sum of the original
aggregate principal amount of Notes issued under the Indenture
and the original principal amount of any Additional Notes that
are Notes issued under the Indenture after the Issue Date
remains outstanding immediately after the occurrence of each
such redemption; provided further that each such
redemption occurs within 90 days of the date of closing of
each such Equity Offering.
Any notice of any redemption may be given prior to the
redemption thereof, and any such redemption or notice may, at
the Issuer’s discretion, be subject to one or more
conditions precedent, including, but not limited to, completion
of an Equity Offering or other corporate transaction.
If the Issuer redeems less than all of the outstanding Notes,
the Registrar and Paying Agent shall select the Notes to be
redeemed in the manner described under “Repurchase at the
Option of Holders — Selection and Notice.”
Repurchase
at the Option of Holders
Change
of Control
The Notes provide that if a Change of Control occurs, unless the
Issuer has previously or concurrently mailed a redemption notice
with respect to all the outstanding Notes as described under
“Optional Redemption,” the Issuer will make an offer
to purchase all of the Notes pursuant to the offer described
below (the “Change of Control Offer”) at a
price in cash (the “Change of Control Payment”)
equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Additional Interest, if any, to
the date of purchase, subject to the right of Holders of the
Notes of record on the relevant record date to receive interest
due on the relevant interest payment date. Within 30 days
following any Change of Control, the Issuer will send notice of
such Change of Control Offer by first-class mail, with a copy to
the Trustee and the Registrar, to each Holder of Notes to the
address of such Holder appearing in the security register with a
copy to the Trustee and the Registrar or otherwise in accordance
with the procedures of DTC, with the following information:
(1) that a Change of Control Offer is being made pursuant
to the covenant entitled “Change of Control” and that
all Notes properly tendered pursuant to such Change of Control
Offer will be accepted for payment by the Issuer;
(2) the purchase price and the purchase date, which will be
no earlier than 30 days nor later than 60 days from
the date such notice is mailed (the “Change of Control
Payment Date”);
(3) that any Note not properly tendered will remain
outstanding and continue to accrue interest;
(4) that unless the Issuer defaults in the payment of the
Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer will cease to accrue
interest on the Change of Control Payment Date;
(5) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to
surrender such Notes, with the form entitled “Option of
Holder to Elect Purchase” on the reverse of such Notes
completed, to the paying agent specified in the notice at the
address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their
tendered Notes and their election to require the Issuer to
purchase such Notes; provided that the paying agent
receives, not later than the close of business on the
30th day following the date of the Change of Control
notice, a telegram, facsimile transmission or letter setting
forth the name of the Holder of the Notes, the principal amount
of Notes tendered for purchase, and a statement that such Holder
is withdrawing its tendered Notes and its election to have such
Notes purchased;
(7) that if the Issuer is redeeming less than all of the
Notes, the Holders of the remaining Notes will be issued new
Notes and such new Notes will be equal in principal amount to
the unpurchased portion of the Notes surrendered. The
unpurchased portion of the Notes must be equal to $2,000 or an
integral multiple of $1,000 in excess thereof; and
(8) the other instructions, as determined by us, consistent
with the covenant described hereunder, that a Holder must follow.
The Issuer will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of Notes
pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the provisions of the Indenture, the Issuer will comply with the
applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in the
Indenture by virtue thereof.
On the Change of Control Payment Date, the Issuer will, to the
extent permitted by law,
(1) accept for payment all Notes issued by it or portions
thereof properly tendered pursuant to the Change of Control
Offer;
(2) deposit with the paying agent an amount equal to the
aggregate Change of Control Payment in respect of all Notes or
portions thereof so tendered; and
(3) deliver, or cause to be delivered, to the Trustee for
cancellation the Notes so accepted together with an
Officer’s Certificate to the Trustee stating that such
Notes or portions thereof have been tendered to and purchased by
the Issuer.
The Senior Credit Facilities provide, and future credit
agreements or other agreements relating to Senior Indebtedness
to which the Issuer becomes a party may provide, that certain
change of control events with respect to the Issuer would
constitute a default thereunder (including a Change of Control
under the Indenture). If we experience a change of control that
triggers a default under our Senior Credit Facilities, we could
seek a waiver of such default or seek to refinance our Senior
Credit Facilities. In the event we do not obtain such a waiver
or refinance the Senior Credit Facilities, such default could
result in amounts outstanding under our Senior Credit Facilities
being declared due and payable and could cause a Receivables
Facility to be wound down.
Our ability to pay cash to the Holders of the Notes following
the occurrence of a Change of Control may be limited by our
then-existing financial resources. Therefore, sufficient funds
may not be available when necessary to make any required
repurchases.
The Change of Control purchase feature of the Notes may in
certain circumstances make more difficult or discourage a sale
or takeover of us and, thus, the removal of incumbent
management. The Change of
Control purchase feature is a result of negotiations between the
Initial Purchasers and us. After the Issue Date, we have no
present intention to engage in a transaction involving a Change
of Control, although it is possible that we could decide to do
so in the future. Subject to the limitations discussed below, we
could, in the future, enter into certain transactions, including
acquisitions, refinancings or other recapitalizations, that
would not constitute a Change of Control under the Indenture,
but that could increase the amount of indebtedness outstanding
at such time or otherwise affect our capital structure or credit
ratings. Restrictions on our ability to incur additional
Indebtedness are contained in the covenants described under
“Certain Covenants — Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” and “Certain Covenants — Liens.”
Such restrictions in the Indenture can be waived only with the
consent of the Holders of a majority in principal amount of the
Notes then outstanding. Except for the limitations contained in
such covenants, however, the Indenture will not contain any
covenants or provisions that may afford Holders of the Notes
protection in the event of a highly leveraged transaction.
The Issuer will 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 the
Indenture applicable to a Change of Control Offer made by us and
purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer. Notwithstanding anything to the
contrary herein, a Change of Control Offer may be made in
advance of a Change of Control, conditional upon such Change of
Control, if a definitive agreement is in place for the Change of
Control at the time of making of the Change of Control Offer.
The definition of “Change of Control” includes a
disposition of all or substantially all of the assets of the
Issuer to any Person. Although there is a limited body of case
law interpreting the phrase “substantially all,” there
is no precise established definition of the phrase under
applicable law. Accordingly, in certain circumstances there may
be a degree of uncertainty as to whether a particular
transaction would involve a disposition of “all or
substantially all” of the assets of the Issuer. As a
result, it may be unclear as to whether a Change of Control has
occurred and whether a Holder of Notes may require the Issuer to
make an offer to repurchase the Notes as described above.
The provisions under the Indenture relating to the Issuer’s
obligation to make an offer to repurchase the Notes as a result
of a Change of Control may be waived or modified with the
written consent of the Holders of a majority in principal amount
of the Notes.
Asset
Sales
The Indenture provides that the Issuer will not, and will not
permit any of its Restricted Subsidiaries to consummate,
directly or indirectly, an Asset Sale, unless:
(1) the Issuer or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at
least equal to the fair market value (as determined in good
faith by the Issuer) of the assets sold or otherwise disposed
of; and
(2) except in the case of a Permitted Asset Swap, at least
75% of the consideration therefor received by the Issuer or such
Restricted Subsidiary, as the case may be, is in the form of
cash or Cash Equivalents; provided that the amount of:
(a) any liabilities (as shown on the Issuer’s or such
Restricted Subsidiary’s most recent balance sheet or in the
footnotes thereto) of the Issuer or such Restricted Subsidiary,
other than liabilities that are by their terms subordinated to
the Notes, that are assumed by the transferee of any such assets
and for which the Issuer and all of its Restricted Subsidiaries
have been validly released by all creditors in writing,
(b) any securities received by the Issuer or such
Restricted Subsidiary from such transferee that are converted by
the Issuer or such Restricted Subsidiary into cash (to the
extent of the cash received) within 180 days following the
closing of such Asset Sale, and
(c) any Designated Non-cash Consideration received by the
Issuer or such Restricted Subsidiary in such Asset Sale having
an aggregate fair market value, taken together with all other
Designated Non-cash Consideration received pursuant to this
clause (c) that is at that time outstanding, not to exceed
5% of Total Assets at the time of the receipt of such Designated
Non-cash Consideration, with the fair market value of each item
of Designated Non-cash Consideration being measured at the time
received and without giving effect to subsequent changes in
value,
shall be deemed to be cash for purposes of this provision and
for no other purpose.
Within 450 days after the receipt of any Net Proceeds of
any Asset Sale, the Issuer or such Restricted Subsidiary, at its
option, may apply the Net Proceeds from such Asset Sale,
(1) to permanently reduce:
(a) Obligations constituting First Lien Obligations (and,
if the Indebtedness repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto)
(provided that (x) to the extent that the terms of
First Lien Obligations other than Obligations under the Notes
require that such First Lien Obligations are repaid with the Net
Proceeds of Asset Sales prior to repayment of other
Indebtedness, the Issuer and its Restricted Subsidiaries shall
be entitled to repay such other First Lien Obligations prior to
repaying the Obligations under the Notes and (y) subject to
the foregoing clause (x), if the Issuer or any Guarantor shall
so reduce First Lien Obligations, the Issuer will equally and
ratably reduce Obligations under the Notes through open-market
purchases (provided that such purchases are at or above
100% of the principal amount thereof) or by making an offer (in
accordance with the procedures set forth below for an Asset Sale
Offer) to all holders to purchase at a purchase price equal to
100% of the principal amount thereof, plus accrued and unpaid
interest and additional interest, if any, on the pro rata
principal amount of Notes);
(b) Obligations under the Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
the maturity date of the Notes; provided that, at the
time of, and after giving effect to, such repurchase, redemption
or defeasance, the aggregate amount of Net Proceeds used to
repurchase, redeem or defease Existing Notes pursuant to this
subclause (b) following the Issue Date shall not exceed 5%
of the consolidated total assets of the Issuer and is
subsidiaries at such time; or
(c) Indebtedness of a Restricted Subsidiary that is not a
Guarantor, other than Indebtedness owed to the Issuer or another
Restricted Subsidiary (or any affiliate thereof);
(2) to make (a) an Investment in any one or more
businesses, provided that such Investment in any business
is in the form of the acquisition of Capital Stock and results
in the Issuer or another of its Restricted Subsidiaries, as the
case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary,
(b) capital expenditures or (c) acquisitions of other
assets, in each of (a), (b) and (c), used or useful in a
Similar Business; or
(3) to make an investment in (a) any one or more
businesses, provided that such Investment in any business
is in the form of the acquisition of Capital Stock and results
in the Issuer or another of its Restricted Subsidiaries, as the
case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary,
(b) properties or (c) acquisitions of other assets
that, in each of (a), (b) and (c), replace the businesses,
properties
and/or
assets that are the subject of such Asset Sale;
provided that, in the case of clauses (2) and
(3) above, a binding commitment shall be treated as a
permitted application of the Net Proceeds from the date of such
commitment so long as the Issuer, or such other Restricted
Subsidiary enters into such commitment with the good faith
expectation that such Net Proceeds will be applied to satisfy
such commitment within 180 days of such commitment (an
“Acceptable Commitment”) and, in the event any
Acceptable Commitment is later cancelled or terminated for any
reason before the Net Proceeds are applied in connection
therewith, the Issuer or such Restricted Subsidiary enters into
another Acceptable Commitment (a “Second
Commitment”) within 180 days of such cancellation
or termination;
provided, further, that if any Second Commitment
is later cancelled or terminated for any reason before such Net
Proceeds are applied, then such Net Proceeds shall constitute
Excess Proceeds.
Any Net Proceeds from Asset Sales of Collateral that are not
invested or applied as set forth in the first sentence of the
preceding paragraph will be deemed to constitute
“Collateral Excess Proceeds.” When the
aggregate amount of Collateral Excess Proceeds exceeds
$200.0 million, the Issuer shall make an offer to all
Holders of the Notes and, if required by the terms of any First
Lien Obligations or Obligations secured by a Lien permitted
under the Indenture (which Lien is not subordinate to the Lien
of the Notes with respect to the Collateral), to the holders of
such First Lien Obligations or such other Obligations (a
“Collateral Asset Sale Offer”), to purchase the
maximum aggregate principal amount of the Notes and such First
Lien Obligations or such other Obligations that is a minimum of
$2,000 or an integral multiple of $1,000 in excess thereof that
may be purchased out of the Collateral Excess Proceeds at an
offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest and Additional
Interest, if any, to the date fixed for the closing of such
offer, in accordance with the procedures set forth in the
Indenture. The Issuer will commence a Collateral Asset Sale
Offer with respect to Collateral Excess Proceeds within ten
Business Days after the date that Collateral Excess Proceeds
exceed $200.0 million by mailing the notice required
pursuant to the terms of the Indenture, with a copy to the
Trustee.
Any Net Proceeds from Asset Sales of non-Collateral that are not
invested or applied as provided and within the time period set
forth in the first sentence of the second preceding paragraph
will be deemed to constitute “Excess Proceeds.”
When the aggregate amount of Excess Proceeds exceeds
$200.0 million, the Issuer shall make an offer to all
Holders of the Notes and, if required or permitted by the terms
of any Senior Indebtedness, to the holders of such Senior
Indebtedness (an “Asset Sale Offer”), to
purchase the maximum aggregate principal amount of the Notes and
such Senior Indebtedness that is a minimum of $2,000 or an
integral multiple of $1,000 in excess thereof that may be
purchased out of the Excess Proceeds at an offer price in cash
in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Additional Interest, if any, to
the date fixed for the closing of such offer, in accordance with
the procedures set forth in the Indenture. The Issuer will
commence an Asset Sale Offer with respect to Excess Proceeds
within ten Business Days after the date that Excess Proceeds
exceed $200.0 million by mailing the notice required
pursuant to the terms of the Indenture, with a copy to the
Trustee.
To the extent that the aggregate amount of Notes and such other
First Lien Obligations or Obligations secured by a Lien
permitted by the Indenture (which Lien is not subordinate to the
Lien of the Notes with respect to the Collateral) tendered
pursuant to a Collateral Asset Sale Offer is less than the
Collateral Excess Proceeds, the Issuer may use any remaining
Collateral Excess Proceeds for general corporate purposes,
subject to other covenants contained in the Indenture. To the
extent that the aggregate amount of Notes and such Senior
Indebtedness tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Issuer may use any remaining
Excess Proceeds for general corporate purposes, subject to other
covenants contained in the Indenture. If the aggregate principal
amount of Notes or other First Lien Obligations or such other
Obligations surrendered by such holders thereof exceeds the
amount of Collateral Excess Proceeds, the Trustee shall select
the Notes and such other First Lien Obligations or such other
Obligations to be purchased on a pro rata basis based on the
accreted value or principal amount of the Notes or such other
First Lien Obligations or such other Obligations tendered.
If the aggregate principal amount of Notes or the Senior
Indebtedness surrendered by such holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes
and such Senior Indebtedness to be purchased on a pro rata basis
based on the accreted value or principal amount of the Notes or
such Senior Indebtedness tendered. Upon completion of any such
Collateral Asset Sale Offer or Asset Sale Offer, the amount of
Collateral Excess Proceeds or Excess Proceeds, as the case may
be, shall be reset at zero. Additionally, the Issuer may, at its
option, make a Collateral Asset Sale Offer or an Asset Sale
Offer using proceeds from any Asset Sale at any time after
consummation of such Asset Sale; provided that such
Collateral Asset Sale Offer or Asset Sale Offer shall be in an
aggregate amount of not less than $50.0 million. Upon
consummation of such Collateral Asset Sale Offer or Asset Sale
Offer, any Net Proceeds not required to be used to purchase
Notes shall not be deemed Excess Proceeds.
Pending the final application of any Net Proceeds pursuant to
this covenant, the holder of such Net Proceeds may apply such
Net Proceeds temporarily to reduce Indebtedness outstanding
under a revolving credit facility or otherwise invest such Net
Proceeds in any manner not prohibited by the Indenture.
The Issuer will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of the Notes
pursuant to a Collateral Asset Sale Offer or an Asset Sale
Offer. To the extent that the provisions of any securities laws
or regulations conflict with the provisions of the Indenture,
the Issuer will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.
Selection
and Notice
If the Issuer is redeeming less than all of the Notes issued by
it at any time, the Registrar and Paying Agent will select the
Notes to be redeemed (a) if the Notes are listed on any
national securities exchange, in compliance with the
requirements of the principal national securities exchange on
which the Notes are listed, (b) on a pro rata basis to the
extent practicable or (c) by lot or such other similar
method in accordance with the procedures of DTC.
Notices of purchase or redemption shall be mailed by first-class
mail, postage prepaid, at least 30 but not more than
60 days before the purchase or Redemption Date to each
Holder of Notes at such Holder’s registered address or
otherwise in accordance with the procedures of DTC, except that
redemption notices may be mailed more than 60 days prior to
a Redemption Date if the notice is issued in connection
with a defeasance of the Notes or a satisfaction and discharge
of the Indenture. If any Note is to be purchased or redeemed in
part only, any notice of purchase or redemption that relates to
such Note shall state the portion of the principal amount
thereof that has been or is to be purchased or redeemed.
The Issuer will issue a new Note in a principal amount equal to
the unredeemed portion of the original Note in the name of the
Holder upon cancellation of the original Note. Notes called for
redemption become due on the date fixed for redemption. On and
after the Redemption Date, interest ceases to accrue on
Notes or portions thereof called for redemption.
Certain
Covenants
Set forth below are summaries of certain covenants contained in
the Indenture. If on any date following the Issue Date
(i) the Notes have Investment Grade Ratings from both
Rating Agencies, and (ii) no Default has occurred and is
continuing under the Indenture (the occurrence of the events
described in the foregoing clauses (i) and (ii) being
collectively referred to as a “Covenant Suspension
Event”), the Issuer and the Restricted Subsidiaries
will not be subject to the following covenants (collectively,
the “Suspended Covenants”):
(1) “Repurchase at the Option of Holders”;
(2) “— Limitation on Restricted Payments”;
(3) “— Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
(4) clause (4) of the first paragraph of
“— Merger, Consolidation or Sale of All or
Substantially All Assets”;
(5) “— Transactions with
Affiliates”; and
(6) “— Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.”
In the event that the Issuer and the Restricted Subsidiaries are
not subject to the Suspended Covenants under the Indenture for
any period of time as a result of the foregoing, and on any
subsequent date (the “Reversion Date”) one or
both of the Rating Agencies (a) withdraw their Investment
Grade Rating or downgrade the rating assigned to the Notes below
an Investment Grade Rating
and/or
(b) the Issuer or any of its Affiliates
enters into an agreement to effect a transaction that would
result in a Change of Control and one or more of the Rating
Agencies indicate that if consummated, such transaction (alone
or together with any related recapitalization or refinancing
transactions) would cause such Rating Agency to withdraw its
Investment Grade Rating or downgrade the ratings assigned to the
Notes below an Investment Grade Rating, then the Issuer and the
Restricted Subsidiaries will thereafter again be subject to the
Suspended Covenants under the Indenture with respect to future
events, including, without limitation, a proposed transaction
described in clause (b) above.
The period of time between the Suspension Date and the Reversion
Date is referred to in this description as the
“Suspension Period.” Additionally, upon the
occurrence of a Covenant Suspension Event, the amount of Excess
Proceeds from Net Proceeds shall be reset at zero. In the event
of any such reinstatement, no action taken or omitted to be
taken by the Issuer or any of its Restricted Subsidiaries prior
to such reinstatement will give rise to a Default or Event of
Default under the Indentures with respect to Notes; provided
that (1) with respect to Restricted Payments made after
any such reinstatement, the amount of Restricted Payments made
will be calculated as though the covenant described under the
caption “— Limitation on Restricted
Payments” had been in effect prior to, but not during the
Suspension Period, provided that any Subsidiaries
designated as Unrestricted Subsidiaries during the Suspension
Period shall automatically become Restricted Subsidiaries on the
Reversion Date (subject to the Issuer’s right to
subsequently designate them as Unrestricted Subsidiaries in
compliance with the covenants set out below), and (2) all
Indebtedness incurred, or Disqualified Stock or Preferred Stock
issued, during the Suspension Period will be classified to have
been incurred or issued pursuant to clause (3) of the
second paragraph of “— Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock.”
There can be no assurance that the Notes will ever achieve or
maintain Investment Grade Ratings.
Limitation
on Restricted Payments
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(I) declare or pay any dividend or make any payment or
distribution on account of the Issuer’s, or any of its
Restricted Subsidiaries’ Equity Interests, including any
dividend or distribution payable in connection with any merger
or consolidation other than:
(a) dividends or distributions by the Issuer payable solely
in Equity Interests (other than Disqualified Stock) of the
Issuer; or
(b) dividends or distributions by a Restricted Subsidiary
so long as, in the case of any dividend or distribution payable
on or in respect of any class or series of securities issued by
a Restricted Subsidiary other than a Wholly-Owned Subsidiary,
the Issuer or a Restricted Subsidiary receives at least its pro
rata share of such dividend or distribution in accordance with
its Equity Interests in such class or series of securities;
(II) purchase, redeem, defease or otherwise acquire or
retire for value any Equity Interests of the Issuer or any
direct or indirect parent of the Issuer, including in connection
with any merger or consolidation;
(III) make any principal payment on, or redeem, repurchase,
defease or otherwise acquire or retire for value in each case,
prior to any scheduled repayment, sinking fund payment or
maturity, any Subordinated Indebtedness, other than:
(a) Indebtedness permitted under clauses (7) and
(8) of the covenant described under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”; or
(b) the purchase, repurchase or other acquisition of
Subordinated Indebtedness 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
purchase, repurchase or acquisition; or
(all such payments and other actions set forth in
clauses (I) through (IV) above (other than any
exception thereto) being collectively referred to as
“Restricted Payments”), unless, at the time of
such Restricted Payment:
(1) no Default shall have occurred and be continuing or
would occur as a consequence thereof;
(2) immediately after giving effect to such transaction on
a pro forma basis, the Issuer could incur $1.00 of additional
Indebtedness under the provisions of the first paragraph of the
covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”; and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Issuer and
its Restricted Subsidiaries after November 17, 2006
(including Restricted Payments permitted by clauses (1), (2)
(with respect to the payment of dividends on Refunding Capital
Stock (as defined below) pursuant to clause (b) thereof
only), (6)(c), (9) and (14) of the next succeeding
paragraph, but excluding all other Restricted Payments permitted
by the next succeeding paragraph), is less than the sum of
(without duplication):
(a) 50% of the Consolidated Net Income of the Issuer for
the period (taken as one accounting period) beginning
October 1, 2006, to the end of the Issuer’s most
recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment,
or, in the case such Consolidated Net Income for such period is
a deficit, minus 100% of such deficit; plus
(b) 100% of the aggregate net cash proceeds and the fair
market value, as determined in good faith by the Issuer, of
marketable securities or other property received by the Issuer
since immediately after November 17, 2006 (other than net
cash proceeds to the extent such net cash proceeds have been
used to incur Indebtedness, Disqualified Stock or Preferred
Stock pursuant to clause (12)(a) of the second paragraph of
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”) from
the issue or sale of:
(i) (A) Equity Interests of the Issuer, including
Treasury Capital Stock (as defined below), but excluding cash
proceeds and the fair market value, as determined in good faith
by the Issuer, of marketable securities or other property
received from the sale of:
(x) Equity Interests to members of management, directors or
consultants of the Issuer, any direct or indirect parent company
of the Issuer and the Issuer’s Subsidiaries after
November 17, 2006 to the extent such amounts have been
applied to Restricted Payments made in accordance with
clause (4) of the next succeeding paragraph; and
(y) Designated Preferred Stock; and
(B) to the extent such net cash proceeds are actually
contributed to the Issuer, Equity Interests of the Issuer’s
direct or indirect parent companies (excluding contributions of
the proceeds from the sale of Designated Preferred Stock of such
companies or contributions to the extent such amounts have been
applied to Restricted Payments made in accordance with
clause (4) of the next succeeding paragraph); or
(ii) debt securities of the Issuer that have been converted
into or exchanged for such Equity Interests of the Issuer;
provided, however, that this clause (b) shall
not include the proceeds from (V) Refunding Capital Stock
(as defined below), (W) Equity Interests or convertible
debt securities of the Issuer sold to a Restricted Subsidiary,
as the case may be, (X) Disqualified Stock or debt
securities that have been converted into Disqualified Stock,
(Y) Excluded Contributions or (Z) the Delayed Equity
Amount; plus
(c) 100% of the aggregate amount of cash and the fair
market value, as determined in good faith by the Issuer, of
marketable securities or other property contributed to the
capital of the Issuer following November 17, 2006 (other
than net cash proceeds to the extent such net cash proceeds
(i) have been used to incur Indebtedness, Disqualified
Stock or Preferred Stock pursuant to clause (12)(a) of the
second
paragraph of “— Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock,” (ii) are contributed by a Restricted
Subsidiary, (iii) constitute Excluded Contributions or
(iv) constitute the Delayed Equity Amount); plus
(d) 100% of the aggregate amount received in cash and the
fair market value, as determined in good faith by the Issuer, of
marketable securities or other property received by means of:
(i) the sale or other disposition (other than to the Issuer
or a Restricted Subsidiary) of Restricted Investments made by
the Issuer or its Restricted Subsidiaries and repurchases and
redemptions of such Restricted Investments from the Issuer or
its Restricted Subsidiaries and repayments of loans or advances,
and releases of guarantees, which constitute Restricted
Investments by the Issuer or its Restricted Subsidiaries, in
each case after November 17, 2006; or
(ii) the sale (other than to the Issuer or a Restricted
Subsidiary) of the stock of an Unrestricted Subsidiary or a
distribution from an Unrestricted Subsidiary (other than in each
case to the extent the Investment in such Unrestricted
Subsidiary was made by the Issuer or a Restricted Subsidiary
pursuant to clause (7) of the next succeeding paragraph or
to the extent such Investment constituted a Permitted
Investment) or a dividend from an Unrestricted Subsidiary after
November 17, 2006; plus
(e) in the case of the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary after November 17,2006, the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Issuer in good
faith (or if such fair market value exceeds $250.0 million,
in writing by an Independent Financial Advisor), at the time of
the redesignation of such Unrestricted Subsidiary as a
Restricted Subsidiary other than to the extent the Investment in
such Unrestricted Subsidiary was made by the Issuer or a
Restricted Subsidiary pursuant to clause (7) of the next
succeeding paragraph or to the extent such Investment
constituted a Permitted Investment.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after
the date of declaration thereof, if at the date of declaration
such payment would have complied with the provisions of the
Indenture;
(2) (a) the redemption, repurchase, retirement or
other acquisition of any Equity Interests (“Treasury
Capital Stock”) or Subordinated Indebtedness of the
Issuer or any Equity Interests of any direct or indirect parent
company of the Issuer, in exchange for, or out of the proceeds
of the substantially concurrent sale (other than to a Restricted
Subsidiary) of, Equity Interests of the Issuer or any direct or
indirect parent company of the Issuer to the extent contributed
to the Issuer (in each case, other than any Disqualified Stock)
(“Refunding Capital Stock”) and (b) if
immediately prior to the retirement of Treasury Capital Stock,
the declaration and payment of dividends thereon was permitted
under clause (6) of this paragraph, the declaration and
payment of dividends on the Refunding Capital Stock (other than
Refunding Capital Stock the proceeds of which were used to
redeem, repurchase, retire or otherwise acquire any Equity
Interests of any direct or indirect parent company of the
Issuer) in an aggregate amount per year no greater than the
aggregate amount of dividends per annum that were declarable and
payable on such Treasury Capital Stock immediately prior to such
retirement;
(3) the redemption, repurchase or other acquisition or
retirement of Subordinated Indebtedness of the Issuer or a
Guarantor made in exchange for, or out of the proceeds of the
substantially concurrent sale of, new Indebtedness of the Issuer
or a Guarantor, as the case may be, which is incurred in
compliance with “— Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” so long as:
(a) the principal amount (or accreted value) of such new
Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus any accrued and unpaid
interest on, the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired for value, plus the amount of
any reasonable premium (including reasonable tender premiums),
defeasance costs and
any reasonable fees and expenses incurred in connection with the
issuance of such new Indebtedness;
(b) such new Indebtedness is subordinated to the Notes or
the applicable Guarantee at least to the same extent as such
Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired for value;
(c) such new Indebtedness has a final scheduled maturity
date equal to or later than the final scheduled maturity date of
the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired; and
(d) such new Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the remaining Weighted Average
Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired;
(4) a Restricted Payment to pay for the repurchase,
retirement or other acquisition or retirement for value of
Equity Interests (other than Disqualified Stock) of the Issuer
or any of its direct or indirect parent companies held by any
future, present or former employee, director or consultant of
the Issuer, any of its Subsidiaries or any of its direct or
indirect parent companies pursuant to any management equity plan
or stock option plan or any other management or employee benefit
plan or agreement, including any Equity Interests rolled over by
management of the Company or any of its direct or indirect
parent companies in connection with the Transaction;
provided, however, that the aggregate Restricted
Payments made under this clause (4) do not exceed in any
calendar year $75.0 million (which shall increase to
$150.0 million subsequent to the consummation of an
underwritten public Equity Offering by the Issuer or any direct
or indirect parent entity of the Issuer) (with unused amounts in
any calendar year being carried over to succeeding calendar
years subject to a maximum (without giving effect to the
following proviso) of $225.0 million in any calendar year
(which shall increase to $450.0 million subsequent to the
consummation of an underwritten public Equity Offering by the
Issuer or any direct or indirect parent corporation of the
Issuer)); provided further that such amount in any
calendar year may be increased by an amount not to exceed:
(a) the cash proceeds from the sale of Equity Interests
(other than Disqualified Stock) of the Issuer and, to the extent
contributed to the Issuer, Equity Interests of any of the
Issuer’s direct or indirect parent companies, in each case
to members of management, directors or consultants of the
Issuer, any of its Subsidiaries or any of its direct or indirect
parent companies that occurs after November 17, 2006, to
the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of
Restricted Payments by virtue of clause (3) of the
preceding paragraph; plus
(b) the cash proceeds of key man life insurance policies
received by the Issuer or its Restricted Subsidiaries after
November 17, 2006; less
(c) the amount of any Restricted Payments previously made
with the cash proceeds described in clauses (a) and
(b) of this clause (4);
and provided, further, that cancellation of
Indebtedness owing to the Issuer or any Restricted Subsidiary
from members of management of the Issuer, any of the
Issuer’s direct or indirect parent companies or any of the
Issuer’s Restricted Subsidiaries in connection with a
repurchase of Equity Interests of the Issuer or any of its
direct or indirect parent companies will not be deemed to
constitute a Restricted Payment for purposes of this covenant or
any other provision of the Indenture;
(5) the declaration and payment of dividends to holders of
any class or series of Disqualified Stock of the Issuer or any
of its Restricted Subsidiaries or any class or series of
Preferred Stock of any Restricted Subsidiary issued in
accordance with the covenant described under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock” to the
extent such dividends are included in the definition of
“Fixed Charges”;
(6) (a) the declaration and payment of dividends to
holders of any class or series of Designated Preferred Stock
(other than Disqualified Stock) issued by the Issuer after
November 17, 2006;
(b) the declaration and payment of dividends to a direct or
indirect parent company of the Issuer, the proceeds of which
will be used to fund the payment of dividends to holders of any
class or series of Designated Preferred Stock (other than
Disqualified Stock) of such parent corporation issued after the
Issue Date; provided that the amount of dividends paid
pursuant to this clause (b) shall not exceed the aggregate
amount of cash actually contributed to the Issuer from the sale
of such Designated Preferred Stock; or
(c) the declaration and payment of dividends on Refunding
Capital Stock that is Preferred Stock in excess of the dividends
declarable and payable thereon pursuant to clause (2) of
this paragraph;
provided, however, in the case of each of
(a) and (c) of this clause (6), that for the most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the
date of issuance of such Designated Preferred Stock or the
declaration of such dividends on Refunding Capital Stock that is
Preferred Stock, after giving effect to such issuance or
declaration on a pro forma basis, the Issuer and its Restricted
Subsidiaries on a consolidated basis would have had a Fixed
Charge Coverage Ratio of at least 2.00 to 1.00;
(7) Investments in Unrestricted Subsidiaries having an
aggregate fair market value, taken together with all other
Investments made pursuant to this clause (7) that are at
the time outstanding, without giving effect to the sale of an
Unrestricted Subsidiary to the extent the proceeds of such sale
do not consist of cash or marketable securities, not to exceed
2.5% of Total Assets at the time of such Investment (with the
fair market value of each Investment being measured at the time
made and without giving effect to subsequent changes in value);
(8) repurchases of Equity Interests deemed to occur upon
exercise of stock options or warrants if such Equity Interests
represent a portion of the exercise price of such options or
warrants;
(9) the declaration and payment of dividends on the
Issuer’s common stock (or the payment of dividends to any
direct or indirect parent entity to fund a payment of dividends
on such entity’s common stock), following consummation of
the first public offering of the Issuer’s common stock or
the common stock of any of its direct or indirect parent
companies after November 17, 2006, of up to 6% per annum of
the net cash proceeds received by or contributed to the Issuer
in or from any such public offering, other than public offerings
with respect to the Issuer’s common stock registered on
Form S-8
and other than any public sale constituting an Excluded
Contribution;
(10) Restricted Payments that are made with Excluded
Contributions;
(11) other Restricted Payments in an aggregate amount taken
together with all other Restricted Payments made pursuant to
this clause (11) not to exceed 3.0% of Total Assets at the
time made;
(12) distributions or payments of Receivables Fees;
(13) any Restricted Payment used to fund amounts owed to
Affiliates (including dividends to any direct or indirect parent
of the Issuer to permit payment by such parent of such amount),
in each case to the extent permitted by the covenant described
under “— Transactions with Affiliates”;
(14) the repurchase, redemption or other acquisition or
retirement for value of any Subordinated Indebtedness in
accordance with the provisions similar to those described under
the captions “Repurchase at the Option of
Holders — Change of Control” and “Repurchase
at the Option of Holders — Asset Sales”;
provided that all Notes tendered by Holders in connection
with a Change of Control Offer, Collateral Asset Sale Offer or
Asset Sale Offer, as applicable, have been repurchased, redeemed
or acquired for value;
(15) the declaration and payment of dividends by the Issuer
to, or the making of loans to, any direct or indirect parent in
amounts required for any direct or indirect parent companies to
pay, in each case without duplication,
(a) franchise and excise taxes and other fees, taxes and
expenses required to maintain their corporate existence;
(b) foreign, federal, state and local income taxes, to the
extent such income taxes are attributable to the income of the
Issuer and its Restricted Subsidiaries and, to the extent of the
amount actually received from its Unrestricted Subsidiaries, in
amounts required to pay such taxes to the extent attributable to
the income of such Unrestricted Subsidiaries; provided
that in each case the amount of such payments in any fiscal
year does not exceed the amount that the Issuer and its
Restricted Subsidiaries would be required to pay in respect of
foreign, federal, state and local taxes for such fiscal year
were the Issuer, its Restricted Subsidiaries and its
Unrestricted Subsidiaries (to the extent described above) to pay
such taxes separately from any such parent entity;
(c) for as long as Hercules Holding II, LLC is a parent of
the Issuer, distributions equal to any taxable income of
Hercules Holding II, LLC resulting from the Hedging Arrangements
multiplied by 45%;
(d) customary salary, bonus and other benefits payable to
officers and employees of any direct or indirect parent company
of the Issuer to the extent such salaries, bonuses and other
benefits are attributable to the ownership or operation of the
Issuer and its Restricted Subsidiaries;
(e) general corporate operating and overhead costs and
expenses of any direct or indirect parent company of the Issuer
to the extent such costs and expenses are attributable to the
ownership or operation of the Issuer and its Restricted
Subsidiaries; and
(f) fees and expenses other than to Affiliates of the
Issuer related to any unsuccessful equity or debt offering of
such parent entity; and
(16) the distribution, by dividend or otherwise, of shares
of Capital Stock of, or Indebtedness owed to the Issuer or a
Restricted Subsidiary by, Unrestricted Subsidiaries (other than
Unrestricted Subsidiaries, the primary assets of which are cash
and/or Cash
Equivalents);
provided, however, that at the time of, and after
giving effect to, any Restricted Payment permitted under
clauses (11) and (16), no Default shall have occurred and
be continuing or would occur as a consequence thereof.
As of the Issue Date, all of the Issuer’s Subsidiaries were
Restricted Subsidiaries. The Issuer will not permit any
Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the last sentence of the definition of
“Unrestricted Subsidiary.” For purposes of designating
any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Issuer and its Restricted
Subsidiaries (except to the extent repaid) in the Subsidiary so
designated will be deemed to be Restricted Payments in an amount
determined as set forth in the last sentence of the definition
of “Investment.” Such designation will be permitted
only if a Restricted Payment in such amount would be permitted
at such time, whether pursuant to the first paragraph of this
covenant or under clause (7), (10) or (11) of the
second paragraph of this covenant, or pursuant to the definition
of “Permitted Investments,” and if such Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
Unrestricted Subsidiaries will not be subject to any of the
restrictive covenants set forth in the Indenture.
Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise (collectively,
“incur” and collectively, an
“incurrence”) with respect to any Indebtedness
(including Acquired Indebtedness), and the Issuer will not issue
any shares of Disqualified Stock and will not permit any
Restricted Subsidiary to issue any shares of Disqualified Stock
or Preferred Stock; provided, however, that the
Issuer may
incur Indebtedness (including Acquired Indebtedness) or issue
shares of Disqualified Stock, and any of its Restricted
Subsidiaries may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock and issue
shares of Preferred Stock, if the Fixed Charge Coverage Ratio on
a consolidated basis for the Issuer and its Restricted
Subsidiaries’ most recently ended four fiscal quarters for
which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock or Preferred Stock is issued
would have been at least 2.00 to 1.00, determined on a pro forma
basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred,
or the Disqualified Stock or Preferred Stock had been issued, as
the case may be, and the application of proceeds therefrom had
occurred at the beginning of such four-quarter period;
provided, further, that Restricted Subsidiaries that are
not Guarantors may not incur Indebtedness or Disqualified Stock
or Preferred Stock if, after giving pro forma effect to such
incurrence or issuance (including a pro forma application of the
net proceeds therefrom), more than an aggregate of
$2,000.0 million of Indebtedness or Disqualified Stock or
Preferred Stock of Restricted Subsidiaries that are not
Guarantors would be outstanding pursuant to this paragraph and
clauses (12), (14) and (19) below at such time.
The foregoing limitations will not apply to:
(1) the incurrence of Indebtedness under (x) Credit
Facilities (other than the ABL Facility) by the Issuer or any of
its Restricted Subsidiaries and the issuance and creation of
letters of credit and bankers’ acceptances thereunder (with
letters of credit and bankers’ acceptances being deemed to
have a principal amount equal to the face amount thereof), up to
an aggregate principal amount of $16,500.0 million
(including any Indebtedness incurred and represented by the
Existing First Priority Notes (including the related
guarantees), the Notes (including the Guarantees) or any
Additional First Lien Obligations by the Issuer or any
Guarantor, the proceeds of which Notes or Additional First Lien
Obligations are used to repay such Credit Facilities)
outstanding at any one time and (y) the ABL Facility by the
Issuer or any of its Restricted Subsidiaries and the issuance
and creation of letters of credit and bankers’ acceptances
thereunder (with letters of credit and bankers’ acceptances
being deemed to have a principal amount equal to the face amount
thereof), up to an aggregate principal amount equal to the ABL
Facility Cap;
(2) [reserved];
(3) Indebtedness of the Issuer and its Restricted
Subsidiaries in existence on the Issue Date (other than
Indebtedness described in clause (1)), including the Existing
Second Priority Notes and the Existing Notes;
(4) Indebtedness consisting of Capitalized Lease
Obligations and Purchase Money Obligations; so long as such
Indebtedness exists at the date of such purchase, lease or
improvement, or is created within 270 days thereafter;
(5) Indebtedness incurred by the Issuer or any of its
Restricted Subsidiaries constituting reimbursement obligations
with respect to letters of credit issued in the ordinary course
of business, including letters of credit in respect of
workers’ compensation, medical malpractice or employee
health claims, or other Indebtedness with respect to
reimbursement-type obligations regarding workers’
compensation, medical malpractice or employee health claims;
provided, however, that upon the drawing of such
letters of credit or the incurrence of such Indebtedness, such
obligations are reimbursed within 30 days following such
drawing or incurrence;
(6) Indebtedness arising from agreements of the Issuer or
its Restricted Subsidiaries providing for indemnification,
adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of
any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary for the purpose of
financing such acquisition; provided, however,
that such Indebtedness is not reflected on the balance sheet of
the Issuer, or any of its Restricted Subsidiaries (contingent
obligations referred to in a footnote to financial statements
and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of
this clause (6));
(7) Indebtedness of the Issuer to a Restricted Subsidiary;
provided that any such Indebtedness owing to a Restricted
Subsidiary that is not a Guarantor is expressly subordinated in
right of payment to the Notes; provided, further,
that any subsequent issuance or transfer of any Capital Stock or
any other event which results in any Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such Indebtedness (except to the Issuer or
another Restricted Subsidiary) shall be deemed, in each case, to
be an incurrence of such Indebtedness;
(8) Indebtedness of a Restricted Subsidiary to the Issuer
or another Restricted Subsidiary; provided that if a
Guarantor incurs such Indebtedness to a Restricted Subsidiary
that is not a Guarantor, such Indebtedness is expressly
subordinated in right of payment to the Guarantee of the Notes
of such Guarantor; provided, further, that any
subsequent transfer of any such Indebtedness (except to the
Issuer or another Restricted Subsidiary) shall be deemed, in
each case, to be an incurrence of such Indebtedness not
permitted by this clause (8);
(9) shares of Preferred Stock of a Restricted Subsidiary
issued to the Issuer or another Restricted Subsidiary;
provided that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or
any other subsequent transfer of any such shares of Preferred
Stock (except to the Issuer or another of its Restricted
Subsidiaries) shall be deemed in each case to be an issuance of
such shares of Preferred Stock not permitted by this clause (9);
(10) Hedging Obligations (excluding Hedging Obligations
entered into for speculative purposes) for the purpose of
limiting interest rate risk with respect to any Indebtedness
permitted to be incurred pursuant to
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock,”
exchange rate risk or commodity pricing risk;
(11) obligations in respect of performance, bid, appeal and
surety bonds and completion guarantees provided by the Issuer or
any of its Restricted Subsidiaries in the ordinary course of
business;
(12) (a) Indebtedness or Disqualified Stock of the
Issuer and Indebtedness, Disqualified Stock or Preferred Stock
of the Issuer or any Restricted Subsidiary equal to 200.0% of
the net cash proceeds received by the Issuer since immediately
after November 17, 2006 from the issue or sale of Equity
Interests of the Issuer or cash contributed to the capital of
the Issuer (in each case, other than Excluded Contributions or
proceeds of Disqualified Stock or sales of Equity Interests to
the Issuer or any of its Subsidiaries) as determined in
accordance with clauses (3)(b) and (3)(c) of the first paragraph
of “— Limitation on Restricted Payments” to
the extent such net cash proceeds or cash have not been applied
pursuant to such clauses to make Restricted Payments or to make
other Investments, payments or exchanges pursuant to the second
paragraph of “— Limitation on Restricted
Payments” or to make Permitted Investments (other than
Permitted Investments specified in clauses (1) and
(3) of the definition thereof) and (b) Indebtedness or
Disqualified Stock of Issuer and Indebtedness, Disqualified
Stock or Preferred Stock of the Issuer or any Restricted
Subsidiary not otherwise permitted hereunder in an aggregate
principal amount or liquidation preference, which when
aggregated with the principal amount and liquidation preference
of all other Indebtedness, Disqualified Stock and Preferred
Stock then outstanding and incurred pursuant to this clause
(12)(b), does not at any one time outstanding exceed
$1,500.0 million; provided, however, that on
a pro forma basis, together with any amounts incurred and
outstanding by Restricted Subsidiaries that are not Guarantors
pursuant to the second proviso to the first paragraph of this
covenant and clauses (14) and (19), no more than
$2,000.0 million of Indebtedness, Disqualified Stock or
Preferred Stock at any one time outstanding and incurred
pursuant to this clause (12)(b) shall be incurred by Restricted
Subsidiaries that are not Guarantors (it being understood that
any Indebtedness, Disqualified Stock or Preferred Stock incurred
pursuant to this clause (12)(b) shall cease to be deemed
incurred or outstanding for purposes of this clause (12)(b) but
shall be deemed incurred for the purposes of the first paragraph
of this covenant from and after the first date on which the
Issuer or such Restricted Subsidiary could have incurred such
Indebtedness, Disqualified Stock or Preferred Stock under the
first paragraph of this covenant without reliance on this clause
(12)(b));
(13) the incurrence or issuance by the Issuer or any
Restricted Subsidiary of Indebtedness, Disqualified Stock or
Preferred Stock which serves to refund or refinance any
Indebtedness, Disqualified Stock or Preferred Stock of the
Issuer or any Restricted Subsidiary incurred as permitted under
the first paragraph of this covenant and clauses (3),
(4) and (12)(a) above, this clause (13) and
clause (14) below or any Indebtedness, Disqualified Stock
or Preferred Stock of the Issuer or any Restricted Subsidiary
issued to so refund or refinance such Indebtedness, Disqualified
Stock or Preferred Stock of the Issuer or any Restricted
Subsidiary including additional Indebtedness, Disqualified Stock
or Preferred Stock incurred to pay premiums (including
reasonable tender premiums), defeasance costs and fees in
connection therewith (the “Refinancing
Indebtedness”) prior to its respective maturity;
provided, however, that such Refinancing
Indebtedness:
(a) has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is incurred which is not less than
the remaining Weighted Average Life to Maturity of the
Indebtedness, Disqualified Stock or Preferred Stock being
refunded or refinanced,
(b) to the extent such Refinancing Indebtedness refinances
(i) Indebtedness subordinated or pari passu to the
Notes or any Guarantee thereof, such Refinancing Indebtedness is
subordinated or pari passu to the Notes or the Guarantee
at least to the same extent as the Indebtedness being refinanced
or refunded or (ii) Disqualified Stock or Preferred Stock,
such Refinancing Indebtedness must be Disqualified Stock or
Preferred Stock, respectively, and
(c) shall not include Indebtedness, Disqualified Stock or
Preferred Stock of a Subsidiary of the Issuer that is not a
Guarantor that refinances Indebtedness, Disqualified Stock or
Preferred Stock of the Issuer or a Guarantor;
and, provided, further, that subclause (a) of
this clause (13) will not apply to any refunding or
refinancing of any ABL Obligations and Obligations secured by
Permitted Liens;
(14) Indebtedness, Disqualified Stock or Preferred Stock of
(x) the Issuer or a Restricted Subsidiary incurred to
finance an acquisition or (y) Persons that are acquired by
the Issuer or any Restricted Subsidiary or merged into the
Issuer or a Restricted Subsidiary in accordance with the terms
of the Indenture; provided that after giving effect to
such acquisition or merger, either
(a) the Issuer would be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first sentence of this
covenant, or
(b) the Fixed Charge Coverage Ratio of the Issuer and the
Restricted Subsidiaries is greater than immediately prior to
such acquisition or merger;
provided, however, that on a pro forma basis,
together with amounts incurred and outstanding pursuant to the
second proviso to the first paragraph of this covenant and
clauses (12) and (19), no more than $2,000.0 million
of Indebtedness, Disqualified Stock or Preferred Stock at any
one time outstanding and incurred by Restricted Subsidiaries
that are not Guarantors pursuant to this clause (14) shall
be incurred and outstanding;
(15) 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 that such Indebtedness is
extinguished within two Business Days of its incurrence;
(16) Indebtedness of the Issuer or any of its Restricted
Subsidiaries supported by a letter of credit issued pursuant to
any Credit Facilities, in a principal amount not in excess of
the stated amount of such letter of credit;
(17) (a) any guarantee by the Issuer or a Restricted
Subsidiary of Indebtedness or other obligations of any
Restricted Subsidiary, so long as the incurrence of such
Indebtedness incurred by such Restricted Subsidiary is permitted
under the terms of the Indenture, or (b) any guarantee by a
Restricted Subsidiary of Indebtedness of the Issuer; provided
that such guarantee is incurred in accordance with the
covenant described below under “— Limitation on
Guarantees of Indebtedness by Restricted Subsidiaries”;
(18) Indebtedness of Foreign Subsidiaries of the Issuer in
an amount not to exceed at any one time outstanding and together
with any other Indebtedness incurred under this clause (18)
7.5% of the Total Assets of the Foreign Subsidiaries (it being
understood that any Indebtedness incurred pursuant to this
clause (18) shall cease to be deemed incurred or
outstanding for purposes of this clause (18) but shall be
deemed incurred for the purposes of the first paragraph of this
covenant from and after the first date on which the Issuer or
such Restricted Subsidiaries could have incurred such
Indebtedness under the first paragraph of this covenant without
reliance on this clause (18));
(19) Indebtedness, Disqualified Stock or Preferred Stock of
a Restricted Subsidiary incurred to finance or assumed in
connection with an acquisition in a principal amount not to
exceed $200.0 million in the aggregate at any one time
outstanding together with all other Indebtedness, Disqualified
Stock and/or
Preferred Stock issued under this clause (19) (it being
understood that any Indebtedness, Disqualified Stock or
Preferred Stock incurred pursuant to this clause (19) shall
cease to be deemed incurred or outstanding for purposes of this
clause (19) but shall be deemed incurred for the purposes
of the first paragraph of this covenant from and after the first
date on which such Restricted Subsidiary could have incurred
such Indebtedness, Disqualified Stock or Preferred Stock under
the first paragraph of this covenant without reliance on this
clause (19)); provided, however, that on a pro
forma basis, together with amounts incurred and outstanding by
Restricted Subsidiaries that are not Guarantors pursuant to the
second proviso to the first paragraph of this covenant and
clauses (12) and (14), no more than $2,000.0 million
of Indebtedness would be incurred and outstanding by Restricted
Subsidiaries that are not Guarantors;
(20) Indebtedness of the Issuer or any of its Restricted
Subsidiaries consisting of (i) the financing of insurance
premiums or
(ii) take-or-pay
obligations contained in supply arrangements, in each case,
incurred in the ordinary course of business;
(21) Indebtedness consisting of Indebtedness issued by the
Issuer or any of its Restricted Subsidiaries to current or
former officers, directors and employees thereof, their
respective estates, spouses or former spouses, in each case to
finance the purchase or redemption of Equity Interests of the
Issuer or any direct or indirect parent company of the Issuer to
the extent described in clause (4) of the second paragraph
under the caption “— Limitation on Restricted
Payments”;
(22) Physician Support Obligations incurred by the Issuer
or any Restricted Subsidiary; and
(23) Indebtedness of the Issuer or any of its Restricted
Subsidiaries undertaken in connection with cash management and
related activities with respect to any Subsidiary or joint
venture operating one or more health care facilities, including,
without limitation, hospitals, ambulatory surgery centers,
outpatient diagnostic centers or imaging centers, in each case,
in the ordinary course of business.
For purposes of determining compliance with this covenant:
(1) in the event that an item of Indebtedness, Disqualified
Stock or Preferred Stock (or any portion thereof) meets the
criteria of more than one of the categories of permitted
Indebtedness, Disqualified Stock or Preferred Stock described in
clauses (1) through (23) above or is entitled to be
incurred pursuant to the first paragraph of this covenant, the
Issuer, in its sole discretion, will classify or reclassify such
item of Indebtedness, Disqualified Stock or Preferred Stock (or
any portion thereof) and will only be required to include the
amount and type of such Indebtedness, Disqualified Stock or
Preferred Stock in one of the above clauses; provided
that all Indebtedness outstanding under the Credit
Facilities on November 17, 2006 will be treated as incurred
on November 17, 2006 under clause (1) of the preceding
paragraph; and
(2) at the time of incurrence, the Issuer will be entitled
to divide and classify an item of Indebtedness in more than one
of the types of Indebtedness described in the first and second
paragraphs above.
Accrual of interest, the accretion of accreted value and the
payment of interest in the form of additional Indebtedness,
Disqualified Stock or Preferred Stock will not be deemed to be
an incurrence of Indebtedness, Disqualified Stock or Preferred
Stock for purposes of this covenant.
For purposes of determining compliance with any
U.S. dollar-denominated restriction on the incurrence of
Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was incurred, in the case
of term debt, or first committed, in the case of revolving
credit debt; provided that if such Indebtedness is
incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the
applicable U.S. dollar-denominated restriction to be
exceeded if calculated at the relevant currency exchange rate in
effect on the date of such refinancing, such
U.S. dollar-denominated restriction shall be deemed not to
have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being refinanced.
The principal amount of any Indebtedness incurred to refinance
other Indebtedness, if incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the
currency exchange rate applicable to the currencies in which
such respective Indebtedness is denominated that is in effect on
the date of such refinancing.
The Indenture provides that the Issuer will not, and will not
permit any Guarantor to, directly or indirectly, incur any
Indebtedness (including Acquired Indebtedness) that is
subordinated or junior in right of payment to any Indebtedness
of the Issuer or such Guarantor, as the case may be, unless such
Indebtedness is expressly subordinated in right of payment to
the Notes or such Guarantor’s Guarantee to the extent and
in the same manner as such Indebtedness is subordinated to other
Indebtedness of the Issuer or such Guarantor, as the case may be.
The Indenture does not treat (1) unsecured Indebtedness as
subordinated or junior to Secured Indebtedness merely because it
is unsecured or (2) Senior Indebtedness as subordinated or
junior to any other Senior Indebtedness merely because it has a
junior priority with respect to the same collateral.
Limitation
on Prepayment or Modification of Existing Notes
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly purchase, redeem,
defease or otherwise acquire or retire for value any of the
Existing Notes prior to the final maturity date thereof (as in
effect on the Issue Date); provided that the Issuer may:
(1) purchase, redeem, defease or otherwise acquire or
retire for value any of the Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
December 31, 2011; and
(2) purchase, redeem, defease or otherwise acquire or
retire for value any other Existing Notes which have a final
maturity date (as in effect on the Issue Date) on or prior to
the maturity date of the Notes; provided that, in the
case of any such prepayment funded with the proceeds of the
issuance of Secured Indebtedness, at the time of incurrence and
after giving pro forma effect thereto and to the application of
the proceeds thereof, (x) the Consolidated Secured Debt
Ratio would be no greater than 5.25 to 1.0 and (y) the
Consolidated Leverage Ratio would be no greater than 7.0 to 1.0.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, amend the Existing Notes Indenture, or any
supplemental indenture in respect thereof, in any way to advance
the final maturity date or shorten the Weighted Average Life to
Maturity of any series of the Existing Notes such that any
Existing Notes with a maturity date following the maturity of
the Notes would have a maturity date on or prior to the date one
year following the maturity date of the Notes or which would
prohibit the making of the Guarantees or the creation of Liens
in favor of the Notes and the Guarantees on the Collateral.
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, designate any additional subsidiaries as
“Restricted Subsidiaries” (as defined in the Existing
Notes Indenture) for purposes of the Existing Notes Indenture.
The Issuer will not, and will not permit any Guarantor to,
directly or indirectly, create, incur, assume or suffer to exist
any Lien (except Permitted Liens) that secures obligations under
any Indebtedness or any related guarantee, on any asset or
property of the Issuer or any Guarantor, or any income or
profits therefrom, or assign or convey any right to receive
income therefrom, other than Liens securing Indebtedness that
are junior in priority to the Liens on such property, assets or
proceeds securing the Notes and related Guarantees.
The foregoing shall not apply to (a) Liens securing the
Notes and the related Guarantees, (b) Liens securing
Indebtedness permitted to be incurred under Credit Facilities,
including any letter of credit relating thereto, that was
permitted by the terms of the Indenture to be incurred pursuant
to clause (1) of the second paragraph under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”;
provided that, with respect to Liens securing Obligations
permitted under this subclause (b), the Notes and the related
Guarantees are secured by Liens on the assets subject to such
Liens (except any European Collateral) to the extent, with the
priority and subject to intercreditor arrangements, in each case
no less favorable to the Holders of the Notes than those
described under “Security” above and (c) Liens
which are pari passu in priority to the Liens securing
the Notes and related Guarantees and are incurred to secure
Obligations in respect of any Indebtedness permitted to be
incurred pursuant to the covenant described above under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”;
provided that, with respect to Liens securing Obligations
permitted under this subclause (c), at the time of incurrence
and after giving pro forma effect thereto, the ratio of
(1) the aggregate amount of Indebtedness secured by
property, assets or proceeds that secure the Notes and related
Guarantees that are subject to a Lien that is pari passu
or senior in priority to the Liens securing the Notes and
the related Guarantees incurred pursuant to subclause (b)
above, this subclause (c) and clause (6) of the
definition of “Permitted Liens” (other than Liens
securing Indebtedness incurred pursuant to clauses (4) and
(18) of the covenant described above under
“— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock”) to
(2) the Issuer’s EBITDA for the most recently ended
four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which
such event for which such calculation is being made shall occur,
in each case with such pro forma adjustments to Indebtedness and
EBITDA as are appropriate and consistent with the pro forma
adjustment provisions set forth in the definition of Fixed
Charge Coverage Ratio would be no greater than 4.25 to 1.0;
provided that, with respect to Liens securing Obligations
permitted under this subclause (c), the Notes and the related
Guarantees are secured by Liens on the assets subject to such
Liens (except any European Collateral) to the extent, with the
priority and subject to intercreditor arrangements, in each case
no less favorable to the Holders of the Notes than those
described under “Security” above.
Merger,
Consolidation or Sale of All or Substantially All
Assets
The Issuer may not consolidate or merge with or into or wind up
into (whether or not the Issuer is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or
more related transactions, to any Person unless:
(1) the Issuer is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if
other than the Issuer) or to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been
made is a corporation organized or existing under the laws of
the jurisdiction of organization of the Issuer or the laws of
the United States, any state thereof, the District of Columbia,
or any territory thereof (such Person, as the case may be, being
herein called the “Successor Company”);
(2) the Successor Company, if other than the Issuer,
expressly assumes all the obligations of the Issuer under the
Notes and the Security Documents pursuant to supplemental
indentures or other documents or instruments in form reasonably
satisfactory to the Trustee;
(3) immediately after such transaction, no Default exists;
(4) immediately after giving pro forma effect to such
transaction and any related financing transactions, as if such
transactions had occurred at the beginning of the applicable
four-quarter period,
(a) the Successor Company would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first sentence of
the covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock,” or
(b) the Fixed Charge Coverage Ratio for the Successor
Company, the Issuer and its Restricted Subsidiaries would be
greater than such ratio for the Issuer and its Restricted
Subsidiaries immediately prior to such transaction;
(5) each Guarantor, unless it is the other party to the
transactions described above, in which case clause (b) of
the second succeeding paragraph shall apply, shall have by
supplemental indenture confirmed that its Guarantee shall apply
to such Person’s obligations under the Indenture, the Notes
and the Registration Rights Agreement;
(6) the Collateral owned by the Successor Company will
(a) continue to constitute Collateral under the Indenture
and the Security Documents, (b) be subject to a Lien in
favor of the Junior Lien Collateral Agent for the benefit of the
Trustee and the Holders of the Notes and (c) not be subject
to any other Lien, other than Permitted Liens and other Liens
permitted under the covenant described under
“— Liens”;
(7) to the extent any assets of the Person which is merged
or consolidated with or into the Successor Company are assets of
the type which would constitute Collateral under the Security
Documents, the Successor Company will take such action as may be
reasonably necessary to cause such property and assets to be
made subject to the Lien of the Security Documents in the manner
and to the extent required in the Indenture or any of the
Security Documents and shall take all reasonably necessary
action so that such Lien is perfected to the extent required by
the Security Documents; and
(8) the Issuer shall have delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with the Indenture and,
if a supplemental indenture or any supplement to any Security
Document is required in connection with such transaction, such
supplement shall comply with the applicable provisions of the
Indenture.
The Successor Company will succeed to, and be substituted for
the Issuer, as the case may be, under the Indenture, the
Guarantees and the Notes, as applicable. Notwithstanding the
foregoing clauses (3) and (4),
(1) any Restricted Subsidiary may consolidate with or merge
into or transfer all or part of its properties and assets to the
Issuer, and
(2) the Issuer may merge with an Affiliate of the Issuer,
as the case may be, solely for the purpose of reincorporating
the Issuer in a State of the United States or any state thereof,
the District of Columbia or any territory thereof so long as the
amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby.
Subject to certain limitations described in the Indenture
governing release of a Guarantee upon the sale, disposition or
transfer of a Guarantor, no Guarantor will, and the Issuer will
not permit any Guarantor to, consolidate or merge with or into
or wind up into (whether or not the Issuer or Guarantor is the
surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to
any Person unless:
(1) (a) such Guarantor is the surviving corporation or
the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) or to which such sale,
assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation, partnership, limited
partnership, limited liability corporation or trust organized or
existing under the laws of the jurisdiction of organization of
such Guarantor, as the case may be, or the laws of the United
States, any state thereof, the District
of Columbia, or any territory thereof (such Guarantor or such
Person, as the case may be, being herein called the
“Successor Person”);
(b) the Successor Person, if other than such Guarantor,
expressly assumes all the obligations of such Guarantor under
the Indenture and such Guarantor’s related Guarantee
pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;
(c) immediately after such transaction, no Default
exists; and
(d) the Issuer shall have delivered to the Trustee an
Officer’s Certificate, each stating that such
consolidation, merger or transfer and such supplemental
indentures, if any, comply with the Indenture; or
(2) the transaction is made in compliance with the covenant
described under “Repurchase at the Option of
Holders — Asset Sales.”
Subject to certain limitations described in the Indenture, the
Successor Person will succeed to, and be substituted for, such
Guarantor under the Indenture and such Guarantor’s
Guarantee. Notwithstanding the foregoing, any Guarantor may
(i) merge into or transfer all or part of its properties
and assets to another Guarantor or the Issuer, (ii) merge
with an Affiliate of the Company solely for the purpose of
reincorporating the Guarantor in the United States, any state
thereof, the District of Columbia or any territory thereof or
(iii) convert into a corporation, partnership, limited
partnership, limited liability corporation or trust organized or
existing under the laws of the jurisdiction of organization of
such Guarantor.
Transactions
with Affiliates
The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate
of the Issuer (each of the foregoing, an “Affiliate
Transaction”) involving aggregate payments or
consideration in excess of $40.0 million, unless:
(1) such Affiliate Transaction is on terms that are not
materially less favorable to the Issuer or its relevant
Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Issuer or such Restricted
Subsidiary with an unrelated Person on an arm’s-length
basis; and
(2) the Issuer delivers to the Trustee with respect to any
Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in
excess of $80.0 million, a resolution adopted by the
majority of the board of directors of the Issuer approving such
Affiliate Transaction and set forth in an Officer’s
Certificate certifying that such Affiliate Transaction complies
with clause (1) above.
The foregoing provisions will not apply to the following:
(1) transactions between or among the Issuer or any of its
Restricted Subsidiaries;
(2) Restricted Payments permitted by the provisions of the
Indenture described above under the covenant
“— Limitation on Restricted Payments” and
the definition of “Permitted Investments”;
(3) the payment of management, consulting, monitoring and
advisory fees and related expenses to the Investors and the
Frist Entities pursuant to the Sponsor Management Agreement
(plus any unpaid management, consulting, monitoring and advisory
fees and related expenses accrued in any prior year) and the
termination fees pursuant to the Sponsor Management Agreement,
in each case as in effect on the Issue Date, or any amendment
thereto (so long as any such amendment is not disadvantageous in
the good faith judgment of the board of directors of the Issuer
to the Holders when taken as a whole as compared to the Sponsor
Management Agreement in effect on the Issue Date);
(4) the payment of reasonable and customary fees paid to,
and indemnities provided for the benefit of, officers,
directors, employees or consultants of Issuer, any of its direct
or indirect parent companies or any of its Restricted
Subsidiaries;
(5) transactions in which the Issuer or any of its
Restricted Subsidiaries, as the case may be, delivers to the
Trustee a letter from an Independent Financial Advisor stating
that such transaction is fair to the Issuer or such Restricted
Subsidiary from a financial point of view or stating that the
terms are not materially less favorable to the Issuer or its
relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Issuer or such
Restricted Subsidiary with an unrelated Person on an
arm’s-length basis;
(6) any agreement as in effect as of the Issue Date, or any
amendment thereto (so long as any such amendment is not
disadvantageous to the Holders when taken as a whole as compared
to the applicable agreement as in effect on the Issue Date);
(7) the existence of, or the performance by the Issuer or
any of its Restricted Subsidiaries of its obligations under the
terms of, any stockholders agreement (including any registration
rights agreement or purchase agreement related thereto) to which
it is a party as of the Issue Date and any similar agreements
which it may enter into thereafter; provided,
however, that the existence of, or the performance by the
Issuer or any of its Restricted Subsidiaries of obligations
under any future amendment to any such existing agreement or
under any similar agreement entered into after the Issue Date
shall only be permitted by this clause (7) to the extent
that the terms of any such amendment or new agreement are not
otherwise disadvantageous to the Holders when taken as a whole;
(8) [reserved];
(9) transactions with customers, clients, suppliers, or
purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the
terms of the Indenture which are fair to the Issuer and its
Restricted Subsidiaries, in the reasonable determination of the
board of directors of the Issuer or the senior management
thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated
party;
(10) the issuance of Equity Interests (other than
Disqualified Stock) of the Issuer to any Permitted Holder or to
any director, officer, employee or consultant;
(11) sales of accounts receivable, or participations
therein, in connection with the ABL Facility and any Receivables
Facility;
(12) payments by the Issuer or any of its Restricted
Subsidiaries to any of the Investors made for any financial
advisory, financing, underwriting or placement services or in
respect of other investment banking activities, including,
without limitation, in connection with acquisitions or
divestitures, which payments are approved by a majority of the
board of directors of the Issuer in good faith;
(13) payments or loans (or cancellation of loans) to
employees or consultants of the Issuer, any of its direct or
indirect parent companies or any of its Restricted Subsidiaries
and employment agreements, stock option plans and other similar
arrangements with such employees or consultants which, in each
case, are approved by the Issuer in good faith;
(14) investments by the Investors or the Frist Entities in
securities of the Issuer or any of its Restricted Subsidiaries
so long as (i) the investment is being offered generally to
other investors on the same or more favorable terms and
(ii) the investment constitutes less than 5% of the
proposed or outstanding issue amount of such class of securities;
(15) payments to or from, and transactions with, any joint
venture owning or operating one or more health care facilities,
including, without limitation, hospitals, ambulatory surgery
centers, outpatient diagnostic centers or imaging centers, in
each case in the ordinary course of business (including, without
limitation, any cash management activities related
thereto); and
(16) payments by the Issuer (and any direct or indirect
parent thereof) and its Subsidiaries pursuant to tax sharing
agreements among the Issuer (and any such parent) and its
Subsidiaries on customary terms to the extent attributable to
the ownership or operation of the Issuer and its Subsidiaries;
provided that in each case the amount of such payments in
any fiscal year does not exceed the amount that the Issuer, its
Restricted Subsidiaries and its Unrestricted Subsidiaries (to
the extent of amounts received from Unrestricted Subsidiaries)
would be required to pay in respect of foreign, federal, state
and local taxes for such fiscal year were the Issuer and its
Restricted Subsidiaries (to the extent described above) to pay
such taxes separately from any such parent entity.
Dividend
and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Issuer will not, and will not permit any of its Restricted
Subsidiaries that are not Guarantors to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or consensual restriction on the
ability of any such Restricted Subsidiary to:
(1) (a) pay dividends or make any other distributions
to the Issuer or any of its Restricted Subsidiaries on its
Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or
(b) pay any Indebtedness owed to
the Issuer or any of its Restricted Subsidiaries;
(2) make loans or advances to the Issuer or any of its
Restricted Subsidiaries; or
(3) sell, lease or transfer any of its properties or assets
to the Issuer or any of its Restricted Subsidiaries,
except (in each case) for such encumbrances or restrictions
existing under or by reason of:
(a) contractual encumbrances or restrictions in effect on
the Issue Date, including pursuant to the Senior Credit
Facilities and the related documentation, the Existing Notes
Indenture and the related documentation, the Existing Second
Priority Notes Indentures and the related documentation and the
Existing First Priority Notes Indentures and the related
documentation;
(b) the Indenture and the Notes;
(c) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the
nature discussed in clause (3) above on the property so
acquired;
(d) applicable law or any applicable rule, regulation or
order;
(e) any agreement or other instrument of a Person acquired
by the Issuer or any Restricted Subsidiary in existence at the
time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other
than the Person and its Subsidiaries, or the property or assets
of the Person and its Subsidiaries, so acquired;
(f) contracts for the sale of assets, including customary
restrictions with respect to a Subsidiary of the Issuer pursuant
to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary;
(g) Secured Indebtedness that limits the right of the
debtor to dispose of the assets securing such Indebtedness that
is otherwise permitted to be incurred pursuant to the covenants
described under “— Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” and “— Liens”;
(h) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the
ordinary course of business;
(i) other Indebtedness, Disqualified Stock or Preferred
Stock of Foreign Subsidiaries permitted to be incurred
subsequent to the Issue Date pursuant to the provisions of the
covenant described under “— Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”;
(j) customary provisions in joint venture agreements and
other agreements or arrangements relating solely to such joint
venture;
(k) customary provisions contained in leases or licenses of
intellectual property and other agreements, in each case entered
into in the ordinary course of business;
(l) any encumbrances or restrictions of the type referred
to in clauses (1), (2) and (3) above imposed by any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the
contracts, instruments or obligations referred to in
clauses (a) through (k) above; provided that
such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
are, in the good faith judgment of the Issuer, no more
restrictive with respect to such encumbrance and other
restrictions taken as a whole than those prior to such
amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing; and
(m) restrictions created in connection with any Receivables
Facility that, in the good faith determination of the Issuer,
are necessary or advisable to effect the transactions
contemplated under such Receivables Facility.
Limitation
on Guarantees of Indebtedness by Restricted
Subsidiaries
The Issuer will not permit any of its Wholly-Owned Subsidiaries
that are Restricted Subsidiaries (and non-Wholly-Owned
Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee
other capital markets debt securities of the Issuer or any
Guarantor), other than a Guarantor, a Foreign Subsidiary or a
Receivables Subsidiary, to guarantee the payment of any
Indebtedness of the Issuer or any other Guarantor unless:
(1) such Restricted Subsidiary within 30 days executes
and delivers a supplemental indenture to the Indenture providing
for a Guarantee by such Restricted Subsidiary, except that with
respect to a guarantee of Indebtedness of the Issuer or any
Guarantor:
(a) if the Notes or such Guarantor’s Guarantee is
subordinated in right of payment to such Indebtedness, the
Guarantee under the supplemental indenture shall be subordinated
to such Restricted Subsidiary’s guarantee with respect to
such Indebtedness substantially to the same extent as the Notes
are subordinated to such Indebtedness; and
(b) if such Indebtedness is by its express terms
subordinated in right of payment to the Notes or such
Guarantor’s Guarantee, any such guarantee by such
Restricted Subsidiary with respect to such Indebtedness shall be
subordinated in right of payment to such Guarantee substantially
to the same extent as such Indebtedness is subordinated to the
Notes; and
(2) such Restricted Subsidiary waives, and will not in any
manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other
rights against the Issuer or any other Restricted Subsidiary as
a result of any payment by such Restricted Subsidiary under its
Guarantee;
provided that this covenant shall not be applicable to
(i) any guarantee of any Restricted Subsidiary that existed
at the time such Person became a Restricted Subsidiary and was
not incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary and (ii) guarantees
of the ABL Facility by the ABL Financing Entities or of any
Receivables Facility by any Receivables Subsidiary.
Reports
and Other Information
Notwithstanding that the Issuer may not be subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act or otherwise report on an annual and quarterly
basis on forms provided for such annual
and quarterly reporting pursuant to rules and regulations
promulgated by the SEC, the Indenture requires the Issuer to
file with the SEC (and make available to the Trustee and Holders
of the Notes (without exhibits), without cost to any Holder,
within 15 days after it files them with the SEC) from and
after the Issue Date,
(1) within 90 days (or any other time period then in
effect under the rules and regulations of the Exchange Act with
respect to the filing of a
Form 10-K
by a non-accelerated filer) after the end of each fiscal year,
annual reports on
Form 10-K,
or any successor or comparable form, containing the information
required to be contained therein, or required in such successor
or comparable form;
(2) within 45 days after the end of each of the first
three fiscal quarters of each fiscal year, reports on
Form 10-Q
containing all quarterly information that would be required to
be contained in Form
10-Q, or any
successor or comparable form;
(3) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on
Form 8-K,
or any successor or comparable form; and
(4) any other information, documents and other reports
which the Issuer would be required to file with the SEC if it
were subject to Section 13 or 15(d) of the Exchange Act;
in each case in a manner that complies in all material respects
with the requirements specified in such form; provided
that the Issuer shall not be so obligated to file such
reports with the SEC if the SEC does not permit such filing, in
which event the Issuer will make available such information to
prospective purchasers of Notes, in addition to providing such
information to the Trustee and the Holders of the Notes, in each
case within 15 days after the time the Issuer would be
required to file such information with the SEC if it were
subject to Section 13 or 15(d) of the Exchange Act. In
addition, to the extent not satisfied by the foregoing, the
Issuer will agree that, for so long as any Notes are
outstanding, it will furnish to Holders and to securities
analysts and prospective investors, upon their request, the
information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
In the event that any direct or indirect parent company of the
Issuer becomes a Guarantor of the Notes, the Indenture permits
the Issuer to satisfy its obligations in this covenant with
respect to financial information relating to the Issuer by
furnishing financial information relating to such parent;
provided that the same is accompanied by consolidating
information that explains in reasonable detail the differences
between the information relating to such parent, on the one
hand, and the information relating to the Issuer and its
Restricted Subsidiaries on a standalone basis, on the other hand.
Notwithstanding the foregoing, such requirements shall be deemed
satisfied prior to the commencement of the exchange offer or the
effectiveness of the shelf registration statement described in
the Registration Rights Agreement (1) by the filing with
the SEC of the exchange offer registration statement or shelf
registration statement (or any other similar registration
statement), and any amendments thereto, with such financial
information that satisfies
Regulation S-X,
subject to exceptions consistent with the presentation of
financial information incorporated by reference in the Offering
Memorandum, to the extent filed within the times specified
above, or (2) by posting reports that would be required to
be filed substantially in the form required by the SEC on the
Company’s website (or that of any of its parent companies)
or providing such reports to the Trustee within 15 days
after the time the Issuer would be required to file such
information with the SEC if it were subject to Section 13
or 15(d) of the Exchange Act, the financial information
(including a “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” section)
that would be required to be included in such reports, subject
to exceptions consistent with the presentation of financial
information incorporated by reference in the Offering
Memorandum, to the extent filed within the times specified above.
Events of
Default and Remedies
The Indenture provides that each of the following is an
“Event of Default”:
(1) default in payment when due and payable, upon
redemption, acceleration or otherwise, of principal of, or
premium, if any, on the Notes;
(2) default for 30 days or more in the payment when
due of interest or Additional Interest on or with respect to the
Notes;
(3) failure by the Issuer or any Guarantor for 60 days
after receipt of written notice given by the Trustee or the
Holders of not less than 30% in principal amount of the Notes to
comply with any of its obligations, covenants or agreements
(other than a default referred to in clauses (1) and
(2) above) contained in the Indenture or the Notes;
(4) default under any mortgage, indenture or instrument
under which there is issued or by which there is secured or
evidenced any Indebtedness for money borrowed by the Issuer or
any of its Restricted Subsidiaries or the payment of which is
guaranteed by the Issuer or any of its Restricted Subsidiaries,
other than Indebtedness owed to the Issuer or a Restricted
Subsidiary, whether such Indebtedness or guarantee now exists or
is created after the issuance of the Notes, if both:
(a) such default either results from the failure to pay any
principal of such Indebtedness at its stated final maturity
(after giving effect to any applicable grace periods) or relates
to an obligation other than the obligation to pay principal of
any such Indebtedness at its stated final maturity and results
in the holder or holders of such Indebtedness causing such
Indebtedness to become due prior to its stated maturity; and
(b) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in
default for failure to pay principal at stated final maturity
(after giving effect to any applicable grace periods), or the
maturity of which has been so accelerated, aggregate
$200.0 million or more at any one time outstanding;
(5) failure by the Issuer or any Significant Subsidiary to
pay final judgments aggregating in excess of
$200.0 million, which final judgments remain unpaid,
undischarged and unstayed for a period of more than 60 days
after such judgment becomes final, and in the event such
judgment is covered by insurance, an enforcement proceeding has
been commenced by any creditor upon such judgment or decree
which is not promptly stayed;
(6) certain events of bankruptcy or insolvency with respect
to the Issuer or any Significant Subsidiary;
(7) the Guarantee of any Significant Subsidiary shall for
any reason cease to be in full force and effect or be declared
null and void or any responsible officer of any Guarantor that
is a Significant Subsidiary, as the case may be, denies that it
has any further liability under its Guarantee or gives notice to
such effect, other than by reason of the termination of the
Indenture or the release of any such Guarantee in accordance
with the Indenture; or
(8) with respect to any Collateral having a fair market
value in excess of $200 million, individually or in the
aggregate, (a) the security interest under the Security
Documents, at any time, ceases to be in full force and effect
for any reason other than in accordance with the terms of the
Indenture, the Security Documents and the Intercreditor
Agreements, (b) any security interest created thereunder or
under the Indenture is declared invalid or unenforceable by a
court of competent jurisdiction or (c) the Issuer or any
Guarantor asserts, in any pleading in any court of competent
jurisdiction, that any such security interest is invalid or
unenforceable.
If any Event of Default (other than of a type specified in
clause (6) above) occurs and is continuing under the
Indenture, the Trustee or the Holders of at least 30% in
principal amount of the then total outstanding Notes may declare
the principal, premium, if any, interest and any other monetary
obligations on all the then outstanding Notes to be due and
payable immediately.
Upon the effectiveness of such declaration, such principal and
interest will be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising under
clause (6) of the first paragraph of this section, all
outstanding Notes will become due and payable without further
action or notice. The Indenture will provide that the Trustee
may withhold from the Holders notice of any continuing Default,
except a Default relating to the payment of principal, premium,
if any, or interest, if it determines that
withholding notice is in their interest. In addition, the
Trustee shall have no obligation to accelerate the Notes if in
the best judgment of the Trustee acceleration is not in the best
interest of the Holders of the Notes.
The Indenture provides that the Holders of a majority in
aggregate principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default and its consequences under the
Indenture except a continuing Default in the payment of interest
on, premium, if any, or the principal of any Note held by a
non-consenting Holder. In the event of any Event of Default
specified in clause (4) above, such Event of Default and
all consequences thereof (excluding any resulting payment
default, other than as a result of acceleration of the Notes)
shall be annulled, waived and rescinded, automatically and
without any action by the Trustee or the Holders, if within
20 days after such Event of Default arose:
(1) the Indebtedness or guarantee that is the basis for
such Event of Default has been discharged; or
(2) holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise
to such Event of Default; or
(3) the default that is the basis for such Event of Default
has been cured.
Subject to the provisions of the Indenture relating to the
duties of the Trustee thereunder, in case an Event of Default
occurs and is continuing, the Trustee will be under no
obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders of
the Notes unless the Holders have offered to the Trustee
indemnity or security reasonably satisfactory to it against any
loss, liability or expense. Except to enforce the right to
receive payment of principal, premium, if any, or interest when
due, no Holder of a Note may pursue any remedy with respect to
the Indenture or the Notes unless:
(1) such Holder has previously given the Trustee notice
that an Event of Default is continuing;
(2) Holders of at least 30% in principal amount of the
total outstanding Notes have requested the Trustee to pursue the
remedy;
(3) Holders of the Notes have offered the Trustee
reasonable security or indemnity against any loss, liability or
expense;
(4) the Trustee has not complied with such request within
60 days after the receipt thereof and the offer of security
or indemnity; and
(5) Holders of a majority in principal amount of the total
outstanding Notes have not given the Trustee a direction
inconsistent with such request within such
60-day
period.
Subject to certain restrictions, under the Indenture the Holders
of a majority in principal amount of the total outstanding Notes
are given the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the
Trustee determines is unduly prejudicial to the rights of any
other Holder of a Note or that would involve the Trustee in
personal liability.
The Indenture provides that the Issuer is required to deliver to
the Trustee annually a statement regarding compliance with the
Indenture, and the Issuer is required, within five Business
Days, upon becoming aware of any Default, to deliver to the
Trustee a statement specifying such Default.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of
the Issuer or any Guarantor or any of their parent companies
(other than the Issuer and the Guarantors) shall have any
liability for any obligations of the Issuer or the Guarantors
under the Notes, the Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of such obligations
or their creation. Each Holder by accepting the Notes waives and
releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes. Such waiver
may not be effective to waive liabilities under the federal
securities laws, and it is the view of the SEC that such a
waiver is against public policy.
Legal
Defeasance and Covenant Defeasance
The obligations of the Issuer and the Guarantors under the
Indenture will terminate (other than certain obligations) and
will be released upon payment in full of all of the Notes. The
Issuer may, at its option and at any time, elect to have all of
its obligations discharged with respect to the Notes and have
the Issuer’s and each Guarantor’s obligation
discharged with respect to its Guarantee (“Legal
Defeasance”) and cure all then existing Events of
Default except for:
(1) the rights of Holders of the Notes to receive payments
in respect of the principal of, premium, if any, and interest on
the Notes when such payments are due solely out of the trust
created pursuant to the Indenture;
(2) the Issuer’s obligations with respect to Notes
concerning issuing temporary Notes, registration of such Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance
of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of
the Trustee, and the Issuer’s obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Issuer may, at its option and at any time,
elect to have its obligations and those of each Guarantor
released with respect to certain covenants that are described in
the Indenture (“Covenant Defeasance”) and
thereafter any omission to comply with such obligations shall
not constitute a Default with respect to the Notes. In the event
Covenant Defeasance occurs, certain events (not including
bankruptcy, receivership, rehabilitation and insolvency events
pertaining to the Issuer) described under “Events of
Default and Remedies” will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant
Defeasance with respect to the Notes:
(1) the Issuer must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders of the Notes, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and
interest due on the Notes on the stated maturity date or on the
redemption date, as the case may be, of such principal, premium,
if any, or interest on such Notes, and the Issuer must specify
whether such Notes are being defeased to maturity or to a
particular redemption date;
(2) in the case of Legal Defeasance, the Issuer shall have
delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions,
(a) the Issuer has received from, or there has been
published by, the United States Internal Revenue Service a
ruling, or
(b) since the issuance of the Notes, there has been a
change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, subject to customary
assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax
purposes, as applicable, as a result of such Legal Defeasance
and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Issuer shall
have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that, subject to customary
assumptions and
exclusions, the Holders of the Notes will not recognize income,
gain or loss for U.S. federal income tax purposes as a
result of such Covenant Defeasance and will be subject to such
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;
(4) no Default (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith) shall have
occurred and be continuing on the date of such deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under the Senior Credit Facilities or any other material
agreement or instrument (other than the Indenture) to which the
Issuer or any Guarantor is a party or by which the Issuer or any
Guarantor is bound (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith);
(6) the Issuer shall have delivered to the Trustee an
Opinion of Counsel to the effect that, as of the date of such
opinion and subject to customary assumptions and exclusions
following the deposit, the trust funds will not be subject to
the effect of Section 547 of Title 11 of the United
States Code;
(7) the Issuer shall have delivered to the Trustee an
Officer’s Certificate stating that the deposit was not made
by the Issuer with the intent of defeating, hindering, delaying
or defrauding any creditors of the Issuer or any Guarantor or
others; and
(8) the Issuer shall have delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel (which
Opinion of Counsel may be subject to customary assumptions and
exclusions) each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with.
Satisfaction
and Discharge
The Indenture will be discharged and will cease to be of further
effect as to all Notes, when either:
(1) all Notes theretofore authenticated and delivered,
except lost, stolen or destroyed Notes which have been replaced
or paid and Notes for whose payment money has theretofore been
deposited in trust, have been delivered to the Trustee for
cancellation; or
(2) (a) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable by reason
of the making of a notice of redemption or otherwise, will
become due and payable within one year or may be called for
redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Issuer, and the
Issuer or any Guarantor has irrevocably deposited or caused to
be deposited with the Trustee as trust funds in trust solely for
the benefit of the Holders of the Notes, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest to pay and
discharge the entire indebtedness on the Notes not theretofore
delivered to the Trustee for cancellation for principal,
premium, if any, and accrued interest to the date of maturity or
redemption;
(b) no Default (other than that resulting from borrowing
funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each
case, the granting of Liens in connection therewith) with
respect to the Indenture or the Notes shall have occurred and be
continuing on the date of such deposit or shall occur as a
result of such deposit, and such deposit will not result in a
breach or violation of, or constitute a default under, the
Senior Credit Facilities or any other material agreement or
instrument (other than the Indenture) to which the Issuer or any
Guarantor is a party or by which the Issuer or any Guarantor is
bound (other than that resulting from borrowing funds to be
applied to make such deposit and any similar and simultaneous
deposit relating to other Indebtedness and, in each case, the
granting of Liens in connection therewith);
(c) the Issuer has paid or caused to be paid all sums
payable by it under the Indenture; and
(d) the Issuer has delivered irrevocable instructions to
the Trustee to apply the deposited money toward the payment of
the Notes at maturity or the redemption date, as the case may be.
In addition, the Issuer must deliver an Officer’s
Certificate and an Opinion of Counsel to the Trustee stating
that all conditions precedent to satisfaction and discharge have
been satisfied.
Amendment,
Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the
Indenture, any Guarantee, any Security Document and the Notes
may be amended or supplemented with the consent of the Holders
of at least a majority in principal amount of the Notes then
outstanding, including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes, and
any existing Default or compliance with any provision of the
Indenture, the Notes issued thereunder, any Guarantee or the
Security Documents may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Notes,
other than Notes beneficially owned by the Issuer or its
Affiliates (including consents obtained in connection with a
purchase of or tender offer or exchange offer for the Notes).
The Indenture provides that, without the consent of each
affected Holder of Notes, an amendment or waiver may not, with
respect to any Notes held by a non-consenting Holder:
(1) reduce the principal amount of such Notes whose Holders
must consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed final
maturity of any such Note or alter or waive the provisions with
respect to the redemption of such Notes (other than provisions
relating to the covenants described above under the caption
“Repurchase at the Option of Holders”);
(3) reduce the rate of or change the time for payment of
interest on any Note;
(4) waive a Default in the payment of principal of or
premium, if any, or interest on the Notes, except a rescission
of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver
of the payment default that resulted from such acceleration, or
in respect of a covenant or provision contained in the Indenture
or any Guarantee which cannot be amended or modified without the
consent of all Holders;
(5) make any Note payable in money other than that stated
therein;
(6) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of or premium, if any, or interest
on the Notes;
(7) make any change in these amendment and waiver
provisions;
(8) impair the right of any Holder to receive payment of
principal of, or interest on such Holder’s Notes 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 Notes;
(9) make any change to or modify the ranking of the Notes
or the subordination of the Liens with respect to the Notes that
would adversely affect the Holders; or
(10) except as expressly permitted by the Indenture, modify
the Guarantees of any Significant Subsidiary in any manner
adverse to the Holders of the Notes.
In addition, without the consent of at least 75% in aggregate
principal amount of Notes then outstanding, an amendment,
supplement or waiver may not:
(1) modify any Security Document or the provisions of the
Indenture dealing with the Security Documents or application of
trust moneys, or otherwise release any Collateral, in any manner
materially adverse to the Holders other than in accordance with
the Indenture, the Security Documents and the Intercreditor
Agreements; or
(2) modify any Intercreditor Agreement in any manner
materially adverse to the Holders other than in accordance with
the Indenture, the Security Documents and the Intercreditor
Agreements.
Notwithstanding the foregoing, the Issuer, any Guarantor (with
respect to a Guarantee or the Indenture to which it is a party)
and the Trustee may amend or supplement the Indenture, any
Security Document and any Guarantee or Notes without the consent
of any Holder;
(1) to cure any ambiguity, omission, mistake, defect or
inconsistency;
(2) to provide for uncertificated Notes of such series in
addition to or in place of certificated Notes;
(3) to comply with the covenant relating to mergers,
consolidations and sales of assets;
(4) to provide for the assumption of the Issuer’s or
any Guarantor’s obligations to the Holders;
(5) to make any change that would provide any additional
rights or benefits to the Holders or that does not adversely
affect the legal rights under the Indenture of any such Holder;
(6) to add covenants for the benefit of the Holders or to
surrender any right or power conferred upon the Issuer or any
Guarantor;
(7) to comply with requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the
Trust Indenture Act;
(8) to evidence and provide for the acceptance and
appointment under the Indenture of a successor Trustee
thereunder pursuant to the requirements thereof;
(9) to provide for the issuance of Exchange Notes or
private exchange notes, which are identical to Exchange Notes
except that they are not freely transferable;
(10) to add a Guarantor under the Indenture;
(11) to conform the text of the Indenture, Security
Documents, Guarantees or the Notes to any provision of the
“Description of Notes” of the Offering Memorandum to
the extent that such provision in such “Description of
Notes” section was intended to be a verbatim recitation of
a provision of the Indenture, Security Documents, Guarantee or
Notes;
(12) to make any amendment to the provisions of the
Indenture relating to the transfer and legending of Notes as
permitted by the Indenture, including, without limitation to
facilitate the issuance and administration of the Notes;
provided, however, that (i) compliance with
the Indenture as so amended would not result in Notes being
transferred in violation of the Securities Act or any applicable
securities law and (ii) such amendment does not materially
and adversely affect the rights of Holders to transfer Notes;
(13) to mortgage, pledge, hypothecate or grant any other
Lien in favor of the Trustee for the benefit of the Holders of
the Notes, as additional security for the payment and
performance of all or any portion of the Obligations, in any
property or assets, including any which are required to be
mortgaged, pledged or hypothecated, or in which a Lien is
required to be granted to or for the benefit of the Trustee or
the Collateral Agent pursuant to the Indenture, any of the
Security Documents or otherwise;
(14) to release Collateral from the Lien of the Indenture
and the Security Documents when permitted or required by the
Security Documents or the Indenture; or
(15) to add Additional First Lien Secured Parties or
additional ABL Secured Parties, to any Security Documents.
The consent of the Holders is not necessary under the Indenture
to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the
proposed amendment.
Notices
Notices given by publication will be deemed given on the first
date on which publication is made and notices given by
first-class mail, postage prepaid, will be deemed given five
calendar days after mailing.
The Indenture contains certain limitations on the rights of the
Trustee thereunder, should it become a creditor of the Issuer,
to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in
other transactions; however, if it acquires any conflicting
interest it must eliminate such conflict within 90 days,
apply to the SEC for permission to continue or resign.
The Indenture provides that the Holders of a majority in
principal amount of the outstanding Notes have the right to
direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event
of Default shall occur (which shall not be cured), the Trustee
will be required, in the exercise of its power, to use the
degree of care of a prudent person in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under
no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of the Notes, unless such
Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
Governing
Law
The Indenture, the Notes and any Guarantee are governed by and
construed in accordance with the laws of the State of New York.
Certain
Definitions
Set forth below are certain defined terms used in the Indenture.
For purposes of the Indenture, unless otherwise specifically
indicated, the term “consolidated” with respect
to any Person refers to such Person on a consolidated basis in
accordance with GAAP, but excluding from such consolidation any
Unrestricted Subsidiary as if such Unrestricted Subsidiary were
not an Affiliate of such Person.
“2006 Second Priority Notes”means the
$1,000,000,000 aggregate principal amount of
91/8% Senior
Secured Notes due 2014, the $3,200,000,000 aggregate principal
amount of
91/4% Senior
Secured Notes due 2016 and the $1,500,000,000
95/8%/103/8% Senior
Secured Toggle Notes due 2016, each issued by the Issuer under
the 2006 Second Priority Notes Indenture.
“2006 Second Priority Notes Indenture” means
that certain Indenture, dated as of November 17, 2006,
among the Issuer, the guarantors named on Schedule I
thereto and The Bank of New York Mellon, as trustee.
“2009 Second Priority Notes”means the
$310,000,000 aggregate principal amount of
97/8% Senior
Secured Notes due 2017, issued by the Issuer under the 2009
Second Priority Notes Indenture.
“2009 Second Priority Notes Indenture” means
that certain Indenture, dated as of February 19, 2009,
among the Issuer, the guarantors named on Schedule I
thereto, The Bank of New York Mellon Trust Company, N.A.,
as trustee, and The Bank of New York Mellon, as collateral agent.
“ABL Facility” means the Amended and Restated
Asset-Based Revolving Credit Agreement, dated as of
June 20, 2007, by and among the Issuer, the lenders party
thereto in their capacities as lenders thereunder and Bank of
America, N.A., as Administrative Agent, as amended as of
March 2, 2009, including any guarantees, collateral
documents, instruments and agreements executed in connection
therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements, refundings or refinancings
thereof and any indentures or credit facilities or commercial
paper facilities with banks or other institutional lenders or
investors that replace, refund or refinance any part of the
loans, notes, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing
facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof (provided that
such increase in borrowings is permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”
above).
“ABL Facility Cap” means an amount equal to the
greater of (x) $2,000.0 million and (y) 75% of
the consolidated accounts receivable of the Issuer and its
subsidiaries determined in accordance with GAAP.
“ABL Financing Entity” means the Issuer and
certain of its subsidiaries from time to time named as borrowers
or guarantors under the ABL Facility.
“ABL Obligations” means Obligations under the
ABL Facility.
“ABL Secured Parties” means each of
(i) the ABL Collateral Agent on behalf of itself and the
lenders under the ABL Facility and lenders or their affiliates
counterparty to related Hedging Obligations and (ii) each
other holder of ABL Obligations.
“Acquired Indebtedness” means, with respect to
any specified Person,
(1) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Restricted
Subsidiary of such specified Person, including Indebtedness
incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Restricted Subsidiary
of such specified Person, and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
“Additional First Lien Obligations” shall have
the meaning given such term by the Security Agreement and shall
include the Notes Obligations.
“Additional First Lien Secured Party” means the
holders of any Additional First Lien Obligations, including the
Holders, and any Authorized Representative with respect thereto,
including the Trustee.
“Additional General Intercreditor Agreement”
has the meaning set forth under “Security —
Additional General Intercreditor Agreement.”
“Additional Interest” means all additional
interest then owing pursuant to the Registration Rights
Agreement.
“Additional Receivables Intercreditor
Agreement” has the meaning set forth under
“Security — Additional Receivables Intercreditor
Agreement.”
“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 purposes of this definition, “control”
(including, with correlative meanings, the terms
“controlling,”“controlled by” and
“under common control with”), as used with respect to
any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise.
“Applicable Authorized Representative”means,
with respect to any Common Collateral, (i) until the
earlier of (x) the Discharge of General Credit Facility
Obligations and (y) the Non-Controlling Authorized
Representative Enforcement Date, the administrative agent under
the General Credit Facility and (ii) from and after the
earlier of (x) the Discharge of General Credit Facility
Obligations and (y) the Non-Controlling Authorized
Representative Enforcement Date, the Major Non-Controlling
Authorized Representative.
“Applicable Premium” means, with respect to any
Note on any Redemption Date, the greater of:
(1) 1.0% of the principal amount of such Note; and
(2) the excess, if any, of (a) the present value at
such Redemption Date of (i) the redemption price of such
Note at March 15, 2015 (such redemption price being set
forth in the tables appearing above under the caption
“Optional Redemption”), plus (ii) all required
interest payments due on such Note through March 15, 2015
(excluding accrued but unpaid interest to the
Redemption Date), computed using a discount rate equal to
the Treasury Rate as of such Redemption Date plus
50 basis points; over (b) the principal amount of such
Note.
(1) the sale, conveyance, transfer or other disposition,
whether in a single transaction or a series of related
transactions, of property or assets (including by way of a Sale
and Lease-Back Transaction) of the Issuer or any of its
Restricted Subsidiaries (each referred to in this definition as
a “disposition”); or
(2) the issuance or sale of Equity Interests of any
Restricted Subsidiary, whether in a single transaction or a
series of related transactions (other than Preferred Stock of
Restricted Subsidiaries issued in compliance with the covenant
described under “Certain Covenants — Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”);
in each case, other than:
(a) any disposition of Cash Equivalents or Investment Grade
Securities or obsolete or worn out equipment in the ordinary
course of business or any disposition of inventory or goods (or
other assets) held for sale in the ordinary course of business;
(b) the disposition of all or substantially all of the
assets of the Issuer in a manner permitted pursuant to the
provisions described above under “Certain
Covenants — Merger, Consolidation or Sale of All or
Substantially All Assets” or any disposition that
constitutes a Change of Control pursuant to the Indenture;
(c) the making of any Restricted Payment or Permitted
Investment that is permitted to be made, and is made, under the
covenant described above under “Certain
Covenants — Limitation on Restricted Payments”;
(d) any disposition of assets or issuance or sale of Equity
Interests of any Restricted Subsidiary in any transaction or
series of related transactions with an aggregate fair market
value of less than $100.0 million;
(e) any disposition of property or assets or issuance of
securities by a Restricted Subsidiary of the Issuer to the
Issuer or by the Issuer or a Restricted Subsidiary of the Issuer
to another Restricted Subsidiary of the Issuer;
(f) to the extent allowable under Section 1031 of the
Code or any comparable or successor provision, any exchange of
like property (excluding any boot thereon) for use in a Similar
Business;
(g) the lease, assignment or sub-lease of any real or
personal property in the ordinary course of business;
(h) any issuance or sale of Equity Interests in, or
Indebtedness or other securities of, an Unrestricted Subsidiary;
(i) foreclosures on assets;
(j) sales of accounts receivable, or participations
therein, in connection with the ABL Facility or any Receivables
Facility;
(k) any financing transaction with respect to property
built or acquired by the Issuer or any Restricted Subsidiary
after November 17, 2006, including Sale and Lease-Back
Transactions and asset securitizations permitted by the
Indenture;
(l) dispositions in the ordinary course of business by any
Restricted Subsidiary (including, without limitation, HCI)
engaged in the insurance business in order to provide insurance
to the Issuer and its Subsidiaries;
(m) sales, transfers and other dispositions of Investments
in joint ventures to the extent required by, or made pursuant
to, customary buy/sell arrangements between the joint venture
parties set forth in joint venture arrangements and similar
binding arrangements;
(n) any issuance or sale of Equity Interests or
dispositions in connection with ordinary course syndications of
Subsidiaries or joint ventures owning or operating one or more
health care facilities, including, without limitation,
hospitals, ambulatory surgery centers, outpatient diagnostic
centers or imaging centers in any transaction or series of
related transactions with an aggregate fair market value of less
than $100.0 million; and
(o) any issuance or sale of Equity Interests of any
Restricted Subsidiary (including, without limitation,
HealthTrust Purchasing Group, L.P.) to any Person operating in a
Similar Business for which such Restricted Subsidiary provides
shared purchasing, billing, collection or similar services in
the ordinary course of business.
“Asset Sale Offer” has the meaning set forth in
the fourth paragraph under “Repurchase at the Option of
Holders — Asset Sales.”
“Authorized Representative” means (i) in
the case of any General Credit Facility Obligations or the
General Credit Facility Secured Parties, the administrative
agent under the General Credit Facility, (ii) in the case
of the Existing First Priority Notes Obligations or the Existing
First Priority Notes, Law Debenture Trust Company of New York,
as trustee for the holders of the Existing First Priority Notes,
(iii) in the case of the Notes Obligations or the Holders,
the Trustee and (iv) in the case of any Series of
Additional First Lien Obligations or Additional First Lien
Secured Parties that become subject to the First Lien
Intercreditor Agreement, the Authorized Representative named for
such Series in the applicable joinder agreement.
“Bankruptcy Code” means Title 11 of the
United States Code, as amended.
“Bankruptcy Law” means the Bankruptcy Code and
any similar federal, state or foreign law for the relief of
debtors.
“Business Day” means each day which is not a
Legal Holiday.
“Capital Stock” means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
“Capitalized Lease Obligation” means, at the
time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time
be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance
with GAAP.
“Capitalized Software Expenditures” means, for
any period, the aggregate of all expenditures (whether paid in
cash or accrued as liabilities) by a Person and its Restricted
Subsidiaries during such period in respect of purchased software
or internally developed software and software enhancements that,
in conformity with GAAP, are or are required to be reflected as
capitalized costs on the consolidated balance sheet of a Person
and its Restricted Subsidiaries.
“Cash Equivalents” means:
(1) United States dollars;
(2) euros or any national currency of any participating
member state of the EMU or such local currencies held by the
Company and its Restricted Subsidiaries from time to time in the
ordinary course of business;
(3) securities issued or directly and fully and
unconditionally guaranteed or insured by the
U.S. government (or any agency or instrumentality thereof
the securities of which are unconditionally guaranteed as a full
faith and credit obligation of the U.S. government) with
maturities of 24 months or less from the date of
acquisition;
(4) certificates of deposit, time deposits and eurodollar
time deposits with maturities of one year or less from the date
of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case
with any commercial bank having capital and surplus of not less
than $500.0 million in the case of U.S. banks and
$100.0 million (or the U.S. dollar equivalent as of
the date of determination) in the case of
non-U.S. banks;
(5) repurchase obligations for underlying securities of the
types described in clauses (3) and (4) entered into
with any financial institution meeting the qualifications
specified in clause (4) above;
(6) commercial paper rated at least
P-1 by
Moody’s or at least
A-1 by
S&P and in each case maturing within 24 months after
the date of creation thereof;
(7) marketable short-term money market and similar
securities having a rating of at least
P-2 or
A-2 from
either Moody’s or S&P, respectively (or, if at any
time neither Moody’s nor S&P shall be rating such
obligations, an equivalent rating from another Rating Agency)
and in each case maturing within 24 months after the date
of creation thereof;
(8) investment funds investing 95% of their assets in
securities of the types described in clauses (1) through
(7) above;
(9) readily marketable direct obligations issued by any
state, commonwealth or territory of the United States or any
political subdivision or taxing authority thereof having an
Investment Grade Rating from either Moody’s or S&P
with maturities of 24 months or less from the date of
acquisition;
(10) Indebtedness or Preferred Stock issued by Persons with
a rating of A or higher from S&P or A2 or higher from
Moody’s with maturities of 24 months or less from the
date of acquisition; and
(11) Investments with average maturities of 24 months
or less from the date of acquisition in money market funds rated
AAA- (or the equivalent thereof) or better by S&P or Aaa3
(or the equivalent thereof) or better by Moody’s.
Notwithstanding the foregoing, Cash Equivalents shall include
amounts denominated in currencies other than those set forth in
clauses (1) and (2) above; provided that such
amounts are converted into any currency listed in
clauses (1) and (2) as promptly as practicable and in
any event within ten Business Days following the receipt of such
amounts.
“Change of Control” means the occurrence of any
of the following:
(1) the sale, lease or transfer, in one or a series of
related transactions, of all or substantially all of the assets
of the Issuer and its Subsidiaries, taken as a whole, to any
Person other than a Permitted Holder; or
(2) the Issuer becomes aware (by way of a report or any
other filing pursuant to Section 13(d) of the Exchange Act,
proxy, vote, written notice or otherwise) of the acquisition by
any Person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the
meaning of
Rule 13d-5(b)(1)
under the Exchange Act), other than the Permitted Holders, in a
single transaction or in a related series of transactions, by
way of merger, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of
Rule 13d-3
under the Exchange Act, or any successor provision) of 50% or
more of the total voting power of the Voting Stock of the Issuer
or any of its direct or indirect parent companies holding
directly or indirectly 100% of the total voting power of the
Voting Stock of the Issuer.
“Code” means the Internal Revenue Code of 1986,
as amended, or any successor thereto.
“Collateral” means, collectively, the Shared
Receivables Collateral and Non-Receivables Collateral.
“Collateral Asset Sale Offer” has the meaning
set forth in the third paragraph under “Repurchase at the
Option of Holders — Asset Sales.”
“Collateral Excess Proceeds” has the meaning
set forth in the third paragraph under “Repurchase at the
Option of Holders — Asset Sales.”
“Common Collateral”means, at any time,
Collateral in which the holders of two or more Series of First
Lien Obligations (or their respective Authorized
Representatives) hold a valid and perfected security interest at
such time. If more than two Series of First Lien Obligations are
outstanding at any time and the holders of less than all Series
of First Lien Obligations hold a valid and perfected security
interest in any Collateral at such time then such Collateral
shall constitute Common Collateral for those Series of First
Lien Obligations that hold a valid security interest in such
Collateral at such time and shall not constitute Common
Collateral for any Series which does not have a valid and
perfected security interest in such Collateral at such time.
“Consolidated Depreciation and Amortization
Expense” means with respect to any Person for any
period, the total amount of depreciation and amortization
expense, including the amortization of deferred financing fees,
debt issuance costs, commissions, fees and expenses and
Capitalized Software Expenditures, of such Person and its
Restricted Subsidiaries for such period on a consolidated basis
and otherwise determined in accordance with GAAP.
“Consolidated Interest Expense” means, with
respect to any Person for any period, without duplication, the
sum of:
(1) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, to the extent such
expense was deducted (and not added back) in computing
Consolidated Net Income (including (a) amortization of
original issue discount resulting from the issuance of
Indebtedness at less than par, (b) all commissions,
discounts and other fees and charges owed with respect to
letters of credit or bankers’ acceptances,
(c) non-cash interest payments (but excluding any non-cash
interest expense attributable to the movement in the mark to
market valuation of Hedging Obligations or other derivative
instruments pursuant to GAAP), (d) the interest component
of Capitalized Lease Obligations, and (e) net payments, if
any, pursuant to interest rate Hedging Obligations with respect
to Indebtedness, and excluding (u) accretion or accrual of
discounted liabilities not constituting Indebtedness,
(v) any expense resulting from the discounting of the
Existing Notes or other Indebtedness in connection with the
application of recapitalization accounting or, if applicable,
purchase accounting, (w) any Additional Interest and any
comparable “additional interest” with respect to other
securities, (x) amortization of deferred financing fees,
debt issuance costs, commissions, fees and expenses,
(y) any expensing of bridge, commitment and other financing
fees and (z) commissions, discounts, yield and other fees
and charges (including any interest expense) related to any
Receivables Facility); plus
(2) consolidated capitalized interest of such Person and
its Restricted Subsidiaries for such period, whether paid or
accrued; less
(3) interest income for such period.
For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with
GAAP.
“Consolidated Leverage Ratio”, with respect to
any Person as of any date of determination, means the ratio of
(x) Consolidated Total Indebtedness of such Person as of
the end of the most recent fiscal quarter for which internal
financial statements are available immediately preceding the
date on which such event for which such calculation is being
made shall occur to (y) the aggregate amount of EBITDA of
such Person for the period of the most recently ended four full
consecutive fiscal quarters for which internal financial
statements are available immediately preceding the date on which
such event for which such calculation is being made shall occur,
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 “Fixed
Charge Coverage Ratio.”
“Consolidated Net Income” means, with respect
to any Person for any period, the aggregate of the Net Income of
such Person for such period, on a consolidated basis, and
otherwise determined in accordance with GAAP; provided,
however, that, without duplication,
(1) any after-tax effect of extraordinary, non-recurring or
unusual gains or losses (less all fees and expenses relating
thereto) or expenses, severance, relocation costs, consolidation
and closing costs, integration and facilities opening costs,
business optimization costs, transition costs, restructuring
costs, signing, retention or completion bonuses, and
curtailments or modifications to pension and post-retirement
employee benefit plans shall be excluded,
(2) the cumulative effect of a change in accounting
principles during such period shall be excluded,
(3) any after-tax effect of income (loss) from disposed,
abandoned or discontinued operations and any net after-tax gains
or losses on disposal of disposed, abandoned, transferred,
closed or discontinued operations shall be excluded,
(4) any after-tax effect of gains or losses (less all fees
and expenses relating thereto) attributable to asset
dispositions or abandonments other than in the ordinary course
of business, as determined in good faith by the Issuer, shall be
excluded,
(5) the Net Income for such period of any Person that is an
Unrestricted Subsidiary shall be excluded, and, solely for the
purpose of determining the amount available for Restricted
Payments under clause 3(a) of the first paragraph of
“Certain Covenants — Limitation on Restricted
Payments,” the Net Income for such period of any Person
that is not a Subsidiary or that is accounted for by the equity
method of accounting shall be excluded; provided that
Consolidated Net Income of the Issuer shall be increased by the
amount of dividends or distributions or other payments that are
actually paid in cash (or to the extent converted into cash) to
the referent Person or a Restricted Subsidiary thereof in
respect of such period,
(6) solely for the purpose of determining the amount
available for Restricted Payments under clause (3)(a) of the
first paragraph of “Certain Covenants —
Limitation on Restricted Payments,” the Net Income for such
period of any Restricted Subsidiary (other than any Guarantor)
shall be excluded to the extent that the declaration or payment
of dividends or similar distributions by that Restricted
Subsidiary of its Net Income is not at the date of determination
wholly permitted without any prior governmental approval (which
has not been obtained) or, directly or indirectly, by the
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, or
governmental regulation applicable to that Restricted Subsidiary
or its stockholders, unless such restriction with respect to the
payment of dividends or similar distributions has been legally
waived; provided that Consolidated Net Income of the
Issuer will be increased by the amount of dividends or other
distributions or other payments actually paid in cash (or to the
extent converted into cash) or Cash Equivalents to the Issuer or
a Restricted Subsidiary thereof in respect of such period, to
the extent not already included therein,
(7) effects of adjustments (including the effects of such
adjustments pushed down to the Issuer and its Restricted
Subsidiaries) in the property, equipment, inventory, software
and other intangible assets, deferred revenues and debt line
items in such Person’s consolidated financial statements
pursuant to GAAP resulting from the application of
recapitalization accounting or, if applicable, purchase
accounting in relation to the Transactions or any consummated
acquisition or the amortization or write-off of any amounts
thereof, net of taxes, shall be excluded,
(8) any after-tax effect of income (loss) from the early
extinguishment of Indebtedness or Hedging Obligations or other
derivative instruments shall be excluded,
(9) any impairment charge or asset write-off, including,
without limitation, impairment charges or asset write-offs
related to intangible assets, long-lived assets or investments
in debt and equity securities,
in each case, pursuant to GAAP and the amortization of
intangibles arising pursuant to GAAP shall be excluded,
(10) any non-cash compensation expense recorded from grants
of stock appreciation or similar rights, stock options,
restricted stock or other rights, and any cash charges
associated with the rollover, acceleration or payout of Equity
Interests by management of the Company or any of its direct or
indirect parent companies in connection with the Transaction,
shall be excluded,
(11) any fees and expenses incurred during such period, or
any amortization thereof for such period, in connection with any
acquisition, Investment, Asset Sale, issuance or repayment of
Indebtedness, issuance of Equity Interests, refinancing
transaction or amendment or modification of any debt instrument
(in each case, including any such transaction consummated prior
to the Issue Date and any such transaction undertaken but not
completed) and any charges or non-recurring merger costs
incurred during such period as a result of any such transaction
shall be excluded,
(12) accruals and reserves that are established or adjusted
within twelve months after November 17, 2006 that are so
required to be established as a result of the Transaction in
accordance with GAAP, or changes as a result of adoption or
modification of accounting policies, shall be excluded, and
(13) to the extent covered by insurance and actually
reimbursed, or, so long as the Issuer has made a determination
that there exists reasonable evidence that such amount will in
fact be reimbursed by the insurer and only to the extent that
such amount is (a) not denied by the applicable carrier in
writing within 180 days and (b) in fact reimbursed
within 365 days of the date of such evidence (with a
deduction for any amount so added back to the extent not so
reimbursed within 365 days), expenses with respect to
liability or casualty events or business interruption shall be
excluded.
Notwithstanding the foregoing, for the purpose of the covenant
described under “Certain Covenants — Limitation
on Restricted Payments” only (other than clause (3)(d)
thereof), there shall be excluded from Consolidated Net Income
any income arising from any sale or other disposition of
Restricted Investments made by the Issuer and its Restricted
Subsidiaries, any repurchases and redemptions of Restricted
Investments from the Issuer and its Restricted Subsidiaries, any
repayments of loans and advances which constitute Restricted
Investments by the Issuer or any of its Restricted Subsidiaries,
any sale of the stock of an Unrestricted Subsidiary or any
distribution or dividend from an Unrestricted Subsidiary, in
each case only to the extent such amounts increase the amount of
Restricted Payments permitted under such covenant pursuant to
clause (3)(d) thereof.
“Consolidated Net Tangible Assets”means the
total amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom
(a) all current liabilities as disclosed on the
consolidated balance sheet of the Issuer (excluding any thereof
which are by their terms extendible or renewable at the option
of the obligor thereon to a time more than 12 months after
the time as of which the amount thereof is being computed and
further excluding any deferred income taxes that are included in
current liabilities) and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and
other like intangible assets, all as set forth on the most
recent consolidated balance sheet of the Issuer and computed in
accordance with generally accepted accounting principles.
“Consolidated Secured Debt Ratio” as of any
date of determination, means the ratio of (1) Consolidated
Total Indebtedness of the Issuer and its Restricted Subsidiaries
that is secured by Liens as of the end of the most recent fiscal
period for which internal financial statements are available
immediately preceding the date on which such event for which
such calculation is being made shall occur to (2) the
Issuer’s EBITDA for the most recently ended four full
fiscal quarters for which internal financial statements are
available immediately preceding the date on which such event for
which such calculation is being made shall occur, 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 “Fixed Charge Coverage Ratio.”
“Consolidated Total Indebtedness” means, as at
any date of determination, an amount equal to the sum of
(1) the aggregate amount of all outstanding Indebtedness of
the Issuer and its Restricted Subsidiaries on a
consolidated basis consisting of Indebtedness for borrowed
money, Obligations in respect of Capitalized Lease Obligations
and debt obligations evidenced by promissory notes and similar
instruments (and excluding, for the avoidance of doubt, all
obligations relating to Receivables Facilities) and (2) the
aggregate amount of all outstanding Disqualified Stock of the
Issuer and all Preferred Stock of its Restricted Subsidiaries on
a consolidated basis, with the amount of such Disqualified Stock
and Preferred Stock equal to the greater of their respective
voluntary or involuntary liquidation preferences and maximum
fixed repurchase prices, in each case determined on a
consolidated basis in accordance with GAAP. For purposes hereof,
the “maximum fixed repurchase price” of any
Disqualified Stock or Preferred Stock that does not have a fixed
repurchase price shall be calculated in accordance with the
terms of such Disqualified Stock or Preferred Stock as if such
Disqualified Stock or Preferred Stock were purchased on any date
on which Consolidated Total Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified
Stock or Preferred Stock, such fair market value shall be
determined reasonably and in good faith by the Issuer.
“Contingent Obligations” means, with respect to
any Person, any obligation of such Person guaranteeing any
leases, dividends or other obligations that do not constitute
Indebtedness (“primary obligations”) of any
other Person (the “primary obligor”) in any
manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not
contingent,
(1) to purchase any such primary obligation or any property
constituting direct or indirect security therefor,
(2) to advance or supply funds
(a) for the purchase or payment of any such primary
obligation, or
(b) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, or
(3) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment
of such primary obligation against loss in respect thereof.
“Controlling Secured Parties” means, with
respect to any Common Collateral, the Series of First Lien
Secured Parties whose Authorized Representative is the
Applicable Authorized Representative for such Common Collateral.
“Credit Facilities” means, with respect to the
Issuer or any of its Restricted Subsidiaries, one or more debt
facilities, including the Senior Credit Facilities, or other
financing arrangements (including, without limitation,
commercial paper facilities or indentures) providing for
revolving credit loans, term loans, letters of credit or other
long-term indebtedness, including any notes, mortgages,
guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments,
supplements, modifications, extensions, renewals, restatements
or refundings thereof and any indentures or credit facilities or
commercial paper facilities that replace, refund or refinance
any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement,
refunding or refinancing facility or indenture that increases
the amount permitted to be borrowed thereunder or alters the
maturity thereof (provided that such increase in
borrowings is permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”) or
adds Restricted Subsidiaries as additional borrowers or
guarantors thereunder and whether by the same or any other
agent, lender or group of lenders.
“Default” means any event that is, or with the
passage of time or the giving of notice or both would be, an
Event of Default.
“Delayed Equity Amount” means any equity
contribution of the Investors, the Frist Entities or certain
other management investors relating to the 2006 Second Priority
Notes described in the offering memorandum relating to the 2006
Second Priority Notes on or before March 31, 2007, the
proceeds of which are used to repay borrowings under the senior
secured revolving credit facility included in the General Credit
Facility or the ABL Facility in the manner described in the
offering memorandum relating to the 2006 Second Priority Notes.
“Designated Non-cash Consideration” means the
fair market value of non-cash consideration received by the
Issuer or a Restricted Subsidiary in connection with an Asset
Sale that is so designated as Designated Non-cash Consideration
pursuant to an Officer’s Certificate, setting forth the
basis of such valuation, executed by the principal financial
officer of the Issuer, less the amount of cash or Cash
Equivalents received in connection with a subsequent sale of or
collection on such Designated Non-cash Consideration.
“Designated Preferred Stock” means Preferred
Stock of the Issuer or any parent corporation thereof (in each
case other than Disqualified Stock) that is issued for cash
(other than to a Restricted Subsidiary or an employee stock
ownership plan or trust established by the Issuer or any of its
Subsidiaries) and is so designated as Designated Preferred
Stock, pursuant to an Officer’s Certificate executed by the
principal financial officer of the Issuer or the applicable
parent corporation thereof, as the case may be, on the issuance
date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause (3) of the first paragraph
under “Certain Covenants — Limitation on
Restricted Payments.”
“Discharge of New First Lien Obligations”
means, except to the extent any such New First Lien Obligations
are reinstated pursuant to the Additional General Intercreditor
Agreement, the discharge or legal defeasance or covenant
defeasance of the Indenture in accordance with its terms;
provided that the Discharge of New First Lien Obligations
shall not be deemed to have occurred if such payments are made
with proceeds of other New First Lien Obligations that
constitute and exchange or replacement for or a refinancing, in
whole or in part, of such New First Lien Obligations. In the
event the New First Lien Obligations are modified and such
Obligations are paid over time or otherwise modified pursuant to
Section 1129 of the Bankruptcy Code, the New First Lien
Obligations shall be deemed to be discharged when the final
payment is made, in cash, in respect of such indebtedness and
any obligations pursuant to such new indebtedness shall have
been satisfied.
“Discharge of General Credit Facility
Obligations” means, with respect to any Common
Collateral, the date on which the General Credit Facility
Obligations are no longer secured by such Common Collateral;
provided that the Discharge of General Credit Facility
Obligations shall not be deemed to have occurred in connection
with a refinancing of such General Credit Facility Obligations
with additional First Lien Obligations secured by such Common
Collateral under an agreement relating to Additional First Lien
Obligations which has been designated in writing by the
administrative agent under the General Credit Facility so
refinanced to the First Lien Collateral Agent and each other
Authorized Representative as the General Credit Facility for
purposes of the First Lien Intercreditor Agreement.
“Disqualified Stock” means, with respect to any
Person, any Capital Stock of such Person which, by its terms, or
by the terms of any security into which it is convertible or for
which it is putable or exchangeable, or upon the happening of
any event, matures or is mandatorily redeemable (other than
solely as a result of a change of control or asset sale)
pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof (other than
solely as a result of a change of control or asset sale), in
whole or in part, in each case prior to the date 91 days
after the earlier of the maturity date of the Notes or the date
the Notes are no longer outstanding; provided,
however, that if such Capital Stock is issued to any plan
for the benefit of employees of the Issuer or its Subsidiaries
or by any such plan to such employees, such Capital Stock shall
not constitute Disqualified Stock solely because it may be
required to be repurchased by the Issuer or its Subsidiaries in
order to satisfy applicable statutory or regulatory obligations.
“EBITDA” means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such
period
(1) increased (without duplication) by:
(a) provision for taxes based on income or profits or
capital gains, including, without limitation, foreign, federal,
state, franchise and similar taxes (such as the Pennsylvania
capital tax) and foreign withholding taxes (including penalties
and interest related to such taxes or arising from tax
examinations) of such Person paid or accrued during such period
deducted (and not added back) in computing Consolidated Net
Income; plus
(b) Fixed Charges of such Person for such period (including
(x) net losses on Hedging Obligations or other derivative
instruments entered into for the purpose of hedging interest
rate risk and (y) costs of
surety bonds in connection with financing activities, in each
case, to the extent included in Fixed Charges), together with
items excluded from the definition of “Consolidated
Interest Expense” pursuant to clauses (1)(u), (v), (w),
(x), (y) and (z) of the definition thereof, and, in
each such case, to the extent the same were deducted (and not
added back) in calculating such Consolidated Net Income;
plus
(c) Consolidated Depreciation and Amortization Expense of
such Person for such period to the extent the same was deducted
(and not added back) in computing Consolidated Net Income;
plus
(d) any expenses or charges (other than depreciation or
amortization expense) related to any Equity Offering, Permitted
Investment, acquisition, disposition, recapitalization or the
incurrence of Indebtedness permitted to be incurred by the
Indenture (including a refinancing thereof) (whether or not
successful), including (i) such fees, expenses or charges
related to the offering of the Notes and any Credit Facilities
and (ii) any amendment or other modification of the Notes,
and, in each case, deducted (and not added back) in computing
Consolidated Net Income; plus
(e) the amount of any restructuring charge or reserve
deducted (and not added back) in such period in computing
Consolidated Net Income, including any one-time costs incurred
in connection with acquisitions after November 17, 2006 and
costs related to the closure
and/or
consolidation of facilities; plus
(f) any other non-cash charges, including any write-offs or
write-downs, reducing Consolidated Net Income for such period
(provided that if any such non-cash charges represent an
accrual or reserve for potential cash items in any future
period, the cash payment in respect thereof in such future
period shall be subtracted from EBITDA to such extent, and
excluding amortization of a prepaid cash item that was paid in a
prior period); plus
(g) the amount of any minority interest expense consisting
of income attributable to minority equity interests of third
parties deducted (and not added back) in such period in
calculating Consolidated Net Income; plus
(h) the amount of management, monitoring, consulting and
advisory fees and related expenses paid in such period to the
Investors and the Frist Entities to the extent otherwise
permitted under “Certain Covenants — Transactions
with Affiliates”; plus
(i) the amount of net cost savings projected by the Issuer
in good faith to be realized as a result of specified actions
taken or to be taken (calculated on a pro forma basis as though
such cost savings had been realized on the first day of such
period), net of the amount of actual benefits realized during
such period from such actions; provided that
(w) such cost savings are reasonably identifiable and
factually supportable, (x) such actions have been taken or
are to be taken within 15 months after the date of
determination to take such action, (y) no cost savings
shall be added pursuant to this clause (i) to the extent
duplicative of any expenses or charges relating to such cost
savings that are included in clause (e) above with respect
to such period and (z) the aggregate amount of cost savings
added pursuant to this clause (i) shall not exceed
$150.0 million for any four consecutive quarter period
(which adjustments may be incremental to pro forma adjustments
made pursuant to the second paragraph of the definition of
“Fixed Charge Coverage Ratio”); plus
(j) the amount of loss on sales of receivables and related
assets to the Receivables Subsidiary in connection with a
Receivables Facility; plus
(k) any costs or expense incurred by the Issuer or a
Restricted Subsidiary pursuant to any management equity plan or
stock option plan or any other management or employee benefit
plan or agreement or any stock subscription or shareholder
agreement, to the extent that such cost or expenses are funded
with cash proceeds contributed to the capital of the Issuer or
net cash proceeds of an issuance of Equity Interests of the
Issuer (other than Disqualified Stock) solely to the extent that
such net cash proceeds are excluded from the calculation set
forth in clause (3) of the first paragraph under
“Certain Covenants — Limitation on Restricted
Payments”;
(2) decreased by (without duplication) non-cash gains
increasing Consolidated Net Income of such Person for such
period, excluding any non-cash gains to the extent they
represent the reversal of an accrual or reserve for a potential
cash item that reduced EBITDA in any prior period; and
(3) increased or decreased by (without duplication):
(a) any net gain or loss resulting in such period from
Hedging Obligations and the application of Statement of
Financial Accounting Standards No. 133; plus or
minus, as applicable, and
(b) any net gain or loss resulting in such period from
currency translation gains or losses related to currency
remeasurements of Indebtedness (including any net loss or gain
resulting from Hedging Obligations for currency exchange risk).
“EMU” means the economic and monetary union as
contemplated in the Treaty on European Union.
“Equity Interests” means Capital Stock and all
warrants, options or other rights to acquire Capital Stock, but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock.
“Equity Offering” means any public or private
sale of common stock or Preferred Stock of the Issuer or any of
its direct or indirect parent companies (excluding Disqualified
Stock), other than:
(1) public offerings with respect to the Issuer’s or
any direct or indirect parent company’s common stock
registered on
Form S-8;
(2) issuances to any Subsidiary of the Issuer; and
(3) any such public or private sale that constitutes an
Excluded Contribution.
“euro” means the single currency of
participating member states of the EMU.
“European Collateral” has the meaning set forth
under “Description of Other Indebtedness — Senior
Secured Credit Facilities — Guarantee and
Security.”
“Event of Default” has the meaning set forth
under “Events of Default and Remedies.”
“Excess Proceeds” has the meaning set forth in
the fourth paragraph under “Repurchase at the Option of
Holders — Asset Sales.”
“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the
SEC promulgated thereunder.
“Exchange Notes” means any notes issued in
exchange for the Notes pursuant to the Registration Rights
Agreement or similar agreement.
“Excluded Contribution” means net cash
proceeds, marketable securities or Qualified Proceeds received
by the Issuer after November 17, 2006 from
(1) contributions to its common equity capital, and
(2) the sale (other than to a Subsidiary of the Issuer or
to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement of the Issuer)
of Capital Stock (other than Disqualified Stock and Designated
Preferred Stock) of the Issuer,
in each case designated as Excluded Contributions pursuant to an
Officer’s Certificate executed by the principal financial
officer of the Issuer on the date such capital contributions are
made or the date such Equity Interests are sold, as the case may
be, which are excluded from the calculation set forth in
clause (3) of the first paragraph under “Certain
Covenants — Limitation on Restricted Payments.”
“Existing
77/8%
First Priority Notes” means the $1,250,000,000
aggregate principal amount of
77/8% Senior
Secured Notes due 2020, issued by the Issuer under the Existing
77/8%
First Priority Notes Indenture.
“Existing
77/8%
First Priority Notes Indenture” means that certain
Indenture, dated as of August 11, 2009, among the Issuer,
the guarantors named on Schedule I thereto, Law Debenture
Trust Company of New York, as trustee, and Deutsche Bank
Trust Company Americas, as paying agent, registrar and
transfer agent.
“Existing
81/2%
First Priority Notes” means the $1,500,000,000
aggregate principal amount of
81/2% Senior
Secured Notes due 2019, issued by the Issuer under the Existing
81/2%
First Priority Notes Indenture.
“Existing
81/2%
First Priority Notes Indenture” means that certain
Indenture, dated as of April 22, 2009, among the Issuer,
the guarantors named on Schedule I thereto, Law Debenture
Trust Company of New York, as trustee, and Deutsche Bank
Trust Company Americas, as paying agent, registrar and
transfer agent.
“Existing First Priority Notes” means the
Existing
77/8%
First Priority Notes and the Existing
81/2%
First Priority Notes.
“Existing First Priority Notes Indentures”
means the Existing
77/8%
First Priority Notes Indenture and the Existing
81/2%
First Priority Notes Indenture.
“Existing First Priority Notes Obligations”
means Obligations in respect of the Existing First Priority
Notes, the Existing First Priority Notes Indentures or the other
First Lien Documents as they relate to the Existing First
Priority Notes, including, for the avoidance of doubt,
obligations in respect of exchange notes and guarantees thereof.
“Existing Notes” means the $691.2 million
aggregate principal amount of 8.750% notes due 2010,
£150.0 million aggregate principal amount of
8.750% notes due 2010, $475.8 million aggregate
principal amount of 7.875% notes due 2011,
$500.0 million aggregate principal amount of
6.950% notes due 2012, $500.0 million aggregate
principal amount of 6.300% notes due 2012,
$500.0 million aggregate principal amount of
6.250% notes due 2013, $500.0 million aggregate
principal amount of 6.750% notes due 2013,
$500.0 million aggregate principal amount of
5.750% notes due 2014, $121.1 million aggregate
principal amount of 9.000% medium term notes due 2014,
$750.0 million aggregate principal amount of
6.375% notes due 2015, $150.0 million aggregate
principal amount of 7.190% debentures due 2015,
$1,000.0 million aggregate principal amount of
6.500% notes due 2016, $135.6 million aggregate
principal amount of 7.500% debentures due 2023,
$150.0 million aggregate principal amount of
8.360% debentures due 2024, $291.4 million aggregate
principal amount of 7.690% notes due 2025,
$125.0 million aggregate principal amount of 7.580%
medium-term notes due 2025, $150.0 million aggregate
principal amount of 7.050% debentures due 2027,
$250.0 million aggregate principal amount of
7.500% notes due 2033, $100.0 million aggregate
principal amount of 7.750% debentures due 2036 and
$200.0 million aggregate principal amount of
7.500% debentures due 2095, each issued by the Issuer and
outstanding on November 17, 2006.
“Existing Notes Indenture” means that certain
Indenture, dated as of December 16, 1993, between Columbia
Healthcare Corporation and The First National Bank of Chicago,
as Trustee, as amended by the First Supplemental Indenture,
dated as of May 25, 2000, between the Issuer and Bank One
Trust Company, N.A., as Trustee, the Second Supplemental
Indenture, dated as of July 1, 2001, between the Issuer and
Bank One Trust Company, N.A., as Trustee, and the Third
Supplemental Indenture, dated as of December 5, 2001,
between the Issuer and The Bank of New York Mellon, as Trustee.
“Existing Second Priority Notes”means the 2006
Second Priority Notes and the 2009 Second Priority Notes and any
refinancings thereof permitted pursuant to the terms of the
Indenture.
“Existing Second Priority Notes Indentures”
means the 2006 Second Priority Notes Indenture and the 2009
Second Priority Notes Indenture.
“First Lien Collateral Agent” shall mean Bank
of America, N.A., in its capacity as administrative agent and
collateral agent for the lenders and other secured parties under
the General Credit Facility, the Existing First Priority Notes
Indentures and the other First Lien Documents and in its
capacity as collateral agent for the New First Lien Secured
Parties, together with its successors and permitted assigns
under the General Credit Facility, the Existing First Priority
Notes Indentures, the Indenture and the First Lien Documents
exercising substantially the same rights and powers; and in each
case provided that if such First Lien Collateral
Agent is not Bank of America, N.A., such First Lien Collateral
Agent shall have become a party to the Additional General
Intercreditor Agreement, the General Intercreditor Agreement,
dated as of November 17, 2006, among the First Lien
Collateral Agent and the Junior Lien Collateral Agent, and the
other applicable First Lien Security Documents.
“First Lien Documents” means the credit,
guarantee and security documents governing the First Lien
Obligations, including, without limitation, the Indenture and
the First Lien Security Documents.
“First Lien Event of Default” means an
“Event of Default” under and as defined in the General
Credit Facility, the Existing First Priority Notes Indentures,
the Indenture or any other First Lien Documents governing First
Lien Obligations.
“First Lien Obligations” means, collectively,
(a) all General Credit Facility Obligations, (b) the
Existing First Priority Notes Obligations, (c) the Notes
Obligations and (d) any Series of Additional First Lien
Obligations. For the avoidance of doubt, Obligations with
respect to the ABL Facility will not constitute First Lien
Obligations.
“First Lien Secured Parties” means (a) the
“Secured Parties,” as defined in the General Credit
Facility, (b) the holders of the Existing First Priority
Notes Obligations and Law Debenture Trust Company of
New York, as authorized representative for such holders,
(c) the New First Lien Secured Parties and (d) any
Additional First Lien Secured Parties.
“First Lien Security Documents” means the
Security Documents (as defined in the Indenture) and any other
agreement, document or instrument pursuant to which a Lien is
granted or purported to be granted securing New First Lien
Obligations or under which rights or remedies with respect to
such Liens are governed, in each case to the extent relating to
the collateral securing both the New First Lien Obligations and
any Junior Lien Obligations.
“First Priority Liens” means the first priority
Liens securing the New First Lien Obligations.
“Fixed Charge Coverage Ratio” means, with
respect to any Person for any period, the ratio of EBITDA of
such Person for such period to the Fixed Charges of such Person
for such period. In the event that the Issuer or any Restricted
Subsidiary incurs, assumes, guarantees, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred
under any revolving credit facility unless such Indebtedness has
been permanently repaid and has not been replaced) or issues or
redeems Disqualified Stock or Preferred Stock subsequent to the
commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to or simultaneously with
the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the “Fixed Charge Coverage Ratio
Calculation Date”), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, redemption, retirement or
extinguishment of Indebtedness, or such issuance or redemption
of Disqualified Stock or Preferred Stock, as if the same had
occurred at the beginning of the applicable four-quarter period.
For purposes of making the computation referred to above,
Investments, acquisitions, dispositions, mergers, consolidations
and disposed operations (as determined in accordance with GAAP)
that have been made by the Issuer or any of its Restricted
Subsidiaries during the four-quarter reference period or
subsequent to such reference period and on or prior to or
simultaneously with the Fixed Charge Coverage Ratio Calculation
Date shall be calculated on a pro forma basis assuming that all
such Investments, acquisitions, dispositions, mergers,
consolidations and disposed operations (and the change in any
associated fixed charge obligations and the change in EBITDA
resulting therefrom) had occurred on the first day of the
four-quarter reference period. If, since the beginning of such
period, any Person that subsequently became a Restricted
Subsidiary or was merged with or into the Issuer or any of its
Restricted Subsidiaries since the beginning of such period shall
have made any Investment, acquisition, disposition, merger,
consolidation or disposed operation that would have required
adjustment pursuant to this definition, then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition,
disposition, merger, consolidation or disposed operation had
occurred at the beginning of the applicable four-quarter period.
For purposes of this definition, whenever pro forma effect is to
be given to a transaction, the pro forma calculations shall be
made in good faith by a responsible financial or accounting
officer of the Issuer. 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 Fixed Charge Coverage Ratio Calculation Date had been the
applicable rate for the entire period (taking into account any
Hedging Obligations applicable to such Indebtedness). Interest
on a Capitalized Lease Obligation shall be deemed to accrue at
an interest rate reasonably determined by a responsible
financial or accounting officer of the Issuer to be the rate of
interest implicit in such Capitalized Lease Obligation in
accordance with GAAP. For purposes of making the computation
referred to above, interest on any Indebtedness under a
revolving credit facility computed on a pro forma basis shall be
computed based upon the average daily balance of such
Indebtedness during the applicable period except as set forth in
the first paragraph of this definition. Interest on Indebtedness
that may optionally be determined at an interest rate based upon
a factor of a prime or similar rate, a eurocurrency interbank
offered rate or other rate shall be deemed to have been based
upon the rate actually chosen, or, if none, then based upon such
optional rate chosen as the Issuer may designate.
“Fixed Charges” means, with respect to any
Person for any period, the sum of:
(1) Consolidated Interest Expense of such Person for such
period;
(2) all cash dividends or other distributions paid
(excluding items eliminated in consolidation) on any series of
Preferred Stock during such period; and
(3) all cash dividends or other distributions paid
(excluding items eliminated in consolidation) on any series of
Disqualified Stock during such period.
“Foreign Subsidiary” means, with respect to any
Person, any Restricted Subsidiary of such Person that is not
organized or existing under the laws of the United States, any
state thereof or the District of Columbia and any Restricted
Subsidiary of such Foreign Subsidiary.
“Frist Entities” means Dr. Thomas F.
Frist, Jr., any Person controlled by Dr. Frist and any
charitable organization selected by Dr. Frist that holds
Equity Interests of the Issuer on November 17, 2006.
“GAAP” means generally accepted accounting
principles in the United States which were in effect on
November 17, 2006.
“General Credit Facility” means the credit
agreement entered into as of November 17, 2006 by and among
the Issuer, the European subsidiary borrowers party thereto, the
lenders party thereto in their capacities as lenders thereunder
and Bank of America, N.A., as U.S. Administrative Agent and
as European Administrative Agent, as amended as of
February 16, 2007, as further amended as of March 2,2009 and as further amended as of June 18, 2009, including
any guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments,
supplements, modifications, extensions, renewals, restatements,
refundings or refinancings thereof and any indentures or credit
facilities or commercial paper facilities with banks or other
institutional lenders or investors that replace, refund or
refinance any part of the loans, notes, other credit facilities
or commitments thereunder, including any such replacement,
refunding or refinancing facility or indenture that increases
the amount borrowable thereunder or alters the maturity thereof
(provided that such increase in borrowings is permitted
under “Certain Covenants — Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock” above).
“General Credit Facility Obligations” means
“Obligations” as defined in the General Credit
Facility.
“Government Securities” means securities that
are:
(1) direct obligations of the United States of America for
the timely payment of which its full faith and credit is
pledged; or
(2) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United
States of America,
which, in either case, are not callable or redeemable at the
option of the issuers thereof, and shall also include a
depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act), as custodian with
respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities
held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by
law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the
Government Securities or the specific payment of principal of or
interest on the Government Securities evidenced by such
depository receipt.
“guarantee” means a guarantee (other than by
endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner
(including letters of credit and reimbursement agreements in
respect thereof), of all or any part of any Indebtedness or
other obligations.
“Guarantee” means the guarantee by any
Guarantor of the Issuer’s Obligations under the Indenture.
“Guarantor” means each Restricted Subsidiary
that Guarantees the Notes in accordance with the terms of the
Indenture.
“HCI” means Health Care Indemnity, Inc., an
insurance company formed under the laws of the State of Colorado
and a Wholly-Owned Subsidiary of the Issuer.
“Hedging Arrangements” means the fixed-pay
interest rate swap agreements, entered into by Hercules Holding
on or about September 13, 2006 and with respect to which
the Issuer was the counterparty in connection with the
Recapitalization, relating to $8,000 million of the
outstanding principal amount under the First Lien Obligations
and the ABL Obligations.
“Hedging Obligations” means, with respect to
any Person, the obligations of such Person under any interest
rate swap agreement, interest rate cap agreement, interest rate
collar agreement, commodity swap agreement, commodity cap
agreement, commodity collar agreement, foreign exchange
contract, currency swap agreement or similar agreement providing
for the transfer or mitigation of interest rate or currency
risks either generally or under specific contingencies.
“Holder” means the Person in whose name a Note
is registered on the registrar’s books.
“Impairment” means, with respect to any Series
of First Lien Obligations, (i) any determination by a court
of competent jurisdiction that (x) any of the First Lien
Obligations of such Series are unenforceable under applicable
law or are subordinated to any other obligations (other than
another Series of First Lien Obligations), (y) any of the
First Lien Obligations of such Series do not have an enforceable
security interest in any of the Collateral securing any other
Series of First Lien Obligations
and/or
(z) any intervening security interest exists securing any
other obligations (other than another Series of First Lien
Obligations) on a basis ranking prior to the security interest
of such Series of First Lien Obligations but junior to the
security interest of any other Series of First Lien Obligations
or (ii) the existence of any Collateral for any other
Series of First Lien Obligations that is not Common Collateral.
“Indebtedness” means, with respect to any
Person, without duplication:
(1) any indebtedness (including principal and premium) of
such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers’ acceptances
(or, without duplication, reimbursement agreements in respect
thereof);
(c) representing the balance deferred and unpaid of the
purchase price of any property (including Capitalized Lease
Obligations), except (i) any such balance that constitutes
a trade payable or similar obligation to a trade creditor, in
each case accrued in the ordinary course of business and
(ii) any earn-out obligations until such obligation becomes
a liability on the balance sheet of such Person in accordance
with GAAP; or
if and to the extent that any of the foregoing Indebtedness
(other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with
GAAP;
(2) to the extent not otherwise included, any obligation by
such Person to be liable for, or to pay, as obligor, guarantor
or otherwise on, the obligations of the type referred to in
clause (1) of a third Person (whether or not such items
would appear upon the balance sheet of the such obligor or
guarantor), other than by endorsement of negotiable instruments
for collection in the ordinary course of business; and
(3) to the extent not otherwise included, the obligations
of the type referred to in clause (1) of a third Person
secured by a Lien on any asset owned by such first Person,
whether or not such Indebtedness is assumed by such first Person;
provided, however, that notwithstanding the
foregoing, Indebtedness shall be deemed not to include
(a) Contingent Obligations incurred in the ordinary course
of business or (b) obligations under or in respect of
Receivables Facilities.
“Independent Financial Advisor” means an
accounting, appraisal, investment banking firm or consultant to
Persons engaged in Similar Businesses of nationally recognized
standing that is, in the good faith judgment of the Issuer,
qualified to perform the task for which it has been engaged.
“Initial Purchasers” means Banc of America
Securities LLC, J.P. Morgan Securities Inc., Citigroup Global
Markets Inc., Goldman, Sachs & Co., Wells Fargo
Securities, LLC, Barclays Capital Inc., Deutsche Bank Securities
Inc. and the other initial purchasers party to the purchase
agreement related to the Notes.
“insolvency or liquidation proceeding” means:
(1) any case commenced by or against the Issuer or any
Guarantor under any Bankruptcy Law for the relief of debtors,
any other proceeding for the reorganization, recapitalization or
adjustment or marshalling of the assets or liabilities of the
Issuer or any Guarantor, any receivership or assignment for the
benefit of creditors relating to the Issuer or any Guarantor or
any similar case or proceeding relative to the Issuer or any
Guarantor or its creditors, as such, in each case whether or not
voluntary;
(2) any liquidation, dissolution, marshalling of assets or
liabilities or other winding up of or relating to the Issuer or
any Guarantor, in each case whether or not voluntary and whether
or not involving bankruptcy or insolvency; or
(3) any other proceeding of any type or nature in which
substantially all claims of creditors of the Issuer or any
Guarantor are determined and any payment or distribution is or
may be made on account of such claims.
“Intercreditor Agreements” means, collectively,
the First Lien Intercreditor Agreement, the Additional
Receivables Intercreditor Agreement and the Additional General
Intercreditor Agreement.
“Investment Grade Rating” means a rating equal
to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P, or an equivalent rating by
any other Rating Agency.
“Investment Grade Securities” means:
(1) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents);
(2) debt securities or debt instruments with an Investment
Grade Rating, but excluding any debt securities or instruments
constituting loans or advances among the Issuer and its
Subsidiaries;
(3) investments in any fund that invests exclusively in
investments of the type described in clauses (1) and
(2) which fund may also hold immaterial amounts of cash
pending investment or distribution; and
(4) corresponding instruments in countries other than the
United States customarily utilized for high quality investments.
“Investments” means, with respect to any
Person, all investments by such Person in other Persons
(including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding
accounts receivable, trade credit, advances to customers,
commissions, travel and similar advances to officers and
employees, in each case made in the ordinary course of
business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities issued by any
other Person and investments that are required by GAAP to be
classified on the balance sheet (excluding the footnotes) of the
Issuer in the same manner as the other investments included in
this definition to the extent such transactions involve the
transfer of cash or other property. For purposes of the
definition of “Unrestricted Subsidiary” and the
covenant described under “Certain Covenants —
Limitation on Restricted Payments”:
(1) “Investments” shall include the portion
(proportionate to the Issuer’s equity interest in such
Subsidiary) of the fair market value of the net assets of a
Subsidiary of the Issuer 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 Issuer shall be deemed to continue
to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to:
(a) the Issuer’s “Investment” in such
Subsidiary at the time of such redesignation; less
(b) the portion (proportionate to the Issuer 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, in each case as determined in good faith by
the Issuer.
“Investors” means Bain Capital Partners, LLC,
Kohlberg Kravis Roberts & Co. L.P., Merrill Lynch
Global Private Equity, Inc. (formerly known as Merrill Lynch
Global Partners, Inc.) and each of their respective Affiliates
but not including, however, any portfolio companies of any of
the foregoing.
“Issuer” has the meaning set forth in the first
paragraph under “General”; provided that when
used in the context of determining the fair market value of an
asset or liability under the Indenture, “Issuer” shall
be deemed to mean the board of directors of the Issuer when the
fair market value is equal to or in excess of
$500.0 million (unless otherwise expressly stated).
“Junior Lien Collateral Agent” shall mean
(i) so long as the 2006 Second Priority Notes are
outstanding, the trustee under the 2006 Second Priority Notes
Indenture, in its capacity as trustee and collateral agent for
the holders of 2006 Second Priority Notes and other secured
parties under the 2006 Second Priority Notes Indenture and the
related security documents (including the holders of the 2009
Second Priority Notes), and (ii) at any time thereafter,
such agent or trustee as is designated “Junior Lien
Collateral Agent” by Junior Lien Secured Parties holding a
majority in principal amount of the Junior Lien Obligations then
outstanding or pursuant to such other arrangements as agreed to
among the holders of the Junior Lien Obligations, it being
understood that as of the Issue Date, the trustee under the 2006
Second Priority Notes Indenture shall be the Junior Lien
Collateral Agent.
“Junior Lien Documents” means the credit and
security documents governing the Junior Lien Obligations,
including, without limitation, the Existing Second Priority
Notes Indentures, the related security documents and
intercreditor agreements.
“Junior Lien Obligations” means the Existing
Second Priority Notes and Obligations with respect to other
Indebtedness permitted to be incurred under the Existing Second
Priority Notes Indentures and the Indenture which is by its
terms intended to be secured equally and ratably with the
Existing Second Priority Notes or on a basis junior to the Liens
securing the Existing Second Priority Notes; provided
such Lien is permitted to be incurred under the Existing
Second Priority Notes Indentures and the Indenture; provided,
further, that the holders of such Indebtedness or their
Junior Lien Representative is a party to the applicable security
documents in accordance with the terms thereof and has appointed
the Junior Lien Collateral Agent as collateral agent for such
holders of Junior Lien Obligations with respect to all or a
portion of the Collateral.
“Junior Lien Representative” means any duly
authorized representative of any holders of Junior Lien
Obligations, which representative is party to the applicable
security documents.
“Junior Lien Secured Parties” means
(i) holders of Existing Second Priority Notes (including
the holders of any Additional Notes (as defined in the Existing
Second Priority Notes Indentures) subsequently issued under and
in compliance with the terms of the Existing Second Priority
Notes Indentures), (ii) the Junior Lien Collateral Agent
and (iii) the holders from time to time of any other Junior
Lien Obligations and each Junior Lien Representative.
“Legal Holiday” means a Saturday, a Sunday or a
day on which commercial banking institutions are not required to
be open in the State of New York.
“Lien” means, with respect to any asset, any
mortgage, lien (statutory or otherwise), pledge, hypothecation,
charge, security interest, preference, priority or encumbrance
of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction;
provided that in no event shall an operating lease be
deemed to constitute a Lien.
“Major Non-Controlling Authorized
Representative” has the meaning set forth under
“Security — First Lien Intercreditor
Agreement.”
“Moody’s” means Moody’s Investors
Service, Inc. and any successor to its rating agency business.
“Net Income” means, with respect to any Person,
the net income (loss) of such Person, determined in accordance
with GAAP and before any reduction in respect of Preferred Stock
dividends.
“Net Proceeds” means the aggregate cash
proceeds received by the Issuer or any of its Restricted
Subsidiaries in respect of any Asset Sale, including any cash
received upon the sale or other disposition of any Designated
Non-cash Consideration received in any Asset Sale, net of the
direct costs relating to such Asset Sale and the sale or
disposition of such Designated Non-cash Consideration, including
legal, accounting and investment banking fees, and brokerage and
sales commissions, any relocation expenses incurred as a result
thereof, taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax
sharing arrangements), amounts required to be applied to the
repayment of principal, premium, if any, and interest on Senior
Indebtedness required (other than required by clause (1) of
the second paragraph of “Repurchase at the Option of
Holders — Asset Sales”) to be paid as a result of
such transaction and any deduction of appropriate amounts to be
provided by the Issuer or any of its Restricted Subsidiaries as
a reserve in accordance with GAAP against any liabilities
associated with the asset disposed of in such transaction and
retained by the Issuer or any of its Restricted Subsidiaries
after such sale or other disposition thereof, including pension
and other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification
obligations associated with such transaction.
“New First Lien Documents” means the First Lien
Documents relating to the New First Lien Obligations.
“New First Lien Obligations” means all advances
to, and debts, liabilities, obligations, covenants and duties
of, the Issuer or any Guarantor arising under the Indenture and
any other New First Lien Documents, whether or not direct or
indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter
arising and including interest and fees that accrue after the
commencement by or against the Issuer, any Guarantor or any
Affiliate thereof of any proceeding in bankruptcy or insolvency
law naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims
in such proceeding.
“New First Lien Secured Parties” means, at any
relevant time, the holders of New First Lien Obligations at such
time, including without limitation the Trustee, the Registrar,
Paying Agent and Transfer Agent, and the Holders (including the
Holders of any Additional Notes subsequently issued under and in
compliance with the terms of the Indenture).
“Non-Conforming Plan of Reorganization” means
any Plan of Reorganization that grants the Junior Lien
Collateral Agent or any Junior Lien Secured Party any right or
benefit, directly or indirectly, which right or benefit is
prohibited at such time by the provisions of the Additional
General Intercreditor Agreement.
“Non-Controlling Authorized Representative Enforcement
Date” has the meaning set forth under
“Security — First Lien Intercreditor
Agreement.”
“Non-Controlling Secured Parties” means, with
respect to any Common Collateral, the First Lien Secured Parties
which are not Controlling Secured Parties with respect to such
Common Collateral.
“Non-Receivables Collateral” has the meaning
set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantee and Security,” subject to
the provisions of the second sentence of the first paragraph
under “— Security — General.”
“Notes Documents” means the credit and security
documents governing the Notes Obligations, including, without
limitation, the Indenture, the related Security Documents and
the Intercreditor Agreements.
“Notes Obligations” means Obligations in
respect of the Notes, the Indenture or the Security Documents,
including, for the avoidance of doubt, obligations in respect of
exchange notes and guarantees thereof.
“Obligations” means any principal, interest
(including any interest accruing subsequent to the filing of a
petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under
applicable state, federal or foreign law), premium, penalties,
fees, indemnifications, reimbursements (including reimbursement
obligations with respect to letters of credit and bankers’
acceptances), damages and other liabilities, and guarantees of
payment of such principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities,
payable under the documentation governing any Indebtedness.
“Offering Memorandum” means the offering
memorandum, dated March 2, 2010, relating to the initial
private offering of the Notes.
“Officer” means the Chairman of the Board, the
Chief Executive Officer, the President, any Executive Vice
President, Senior Vice President or Vice President, the
Treasurer or the Secretary of the Issuer or a Guarantor, as
applicable.
“Officer’s Certificate” means a
certificate signed on behalf of the Issuer by an Officer of the
Issuer or on behalf of a Guarantor by an Officer of such
Guarantor, who must be the principal executive officer, the
principal financial officer, the treasurer or the principal
accounting officer of the Issuer or Guarantor, as applicable,
that meets the requirements set forth in the Indenture.
“Opinion of Counsel” means a written opinion
from legal counsel who is acceptable to the Trustee. The counsel
may be an employee of or counsel to the Issuer or the Trustee.
“Permitted Asset Swap” means the concurrent
purchase and sale or exchange of Related Business Assets or a
combination of Related Business Assets and cash or Cash
Equivalents between the Issuer or any of its Restricted
Subsidiaries and another Person; provided, that any cash
or Cash Equivalents received must be applied in accordance with
the covenant described under “Repurchase at the Option of
Holders — Asset Sales.”
“Permitted Holders” means each of the
Investors, the Frist Entities, members of management of the
Issuer (or its direct or indirect parent), Citigroup Inc. and
Banc of America Securities LLC (which institutions were
assignees of certain equity commitments of the Investors as of
November 17, 2006) that are holders of Equity Interests of
the Issuer (or any of its direct or indirect parent companies)
and any group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act or any successor
provision) of which any of the foregoing are members;
provided that, in the case of such group and without
giving effect to the existence of such group or any other group,
such Investors, Frist Entities, members of management and
assignees of the equity commitments of the Investors,
collectively, have beneficial ownership of more than 50% of the
total voting power of the Voting Stock of the Issuer or any of
its direct or indirect parent companies.
(1) any Investment in the Issuer or any of its Restricted
Subsidiaries;
(2) any Investment in cash and Cash Equivalents or
Investment Grade Securities;
(3) any Investment by the Issuer or any of its Restricted
Subsidiaries in a Person that is engaged in a Similar Business
if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary; or
(b) such Person, in one transaction or a series of related
transactions, is merged or consolidated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Issuer or a Restricted Subsidiary,
and, in each case, any Investment held by such Person;
provided that such Investment was not acquired by such
Person in contemplation of such acquisition, merger,
consolidation or transfer;
(4) any Investment in securities or other assets not
constituting cash, Cash Equivalents or Investment Grade
Securities and received in connection with an Asset Sale made
pursuant to the provisions described under “Repurchase at
the Option of Holders — Asset Sales” or any other
disposition of assets not constituting an Asset Sale;
(5) any Investment existing on the Issue Date;
(6) any Investment acquired by the Issuer or any of its
Restricted Subsidiaries:
(a) in exchange for any other Investment or accounts
receivable held by the Issuer 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 Issuer or any of
its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any
secured Investment in default;
(7) Hedging Obligations permitted under clause (10) of
the second paragraph of the covenant described in “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
(8) any Investment in a Similar Business having an
aggregate fair market value, taken together with all other
Investments made pursuant to this clause (8) that are at
that time outstanding, not to exceed 5% of Total Assets at the
time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving
effect to subsequent changes in value);
(9) Investments the payment for which consists of Equity
Interests (exclusive of Disqualified Stock) of the Issuer or any
of its direct or indirect parent companies; provided,
however, that such Equity Interests will not increase the
amount available for Restricted Payments under clause (3)
of the first paragraph under the covenant described in
“Certain Covenants — Limitations on Restricted
Payments”;
(10) guarantees of Indebtedness permitted under the
covenant described in “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
(11) any transaction to the extent it constitutes an
Investment that is permitted and made in accordance with the
provisions of the second paragraph of the covenant described
under “Certain Covenants — Transactions with
Affiliates” (except transactions described in clauses (2),
(5) and (9) of such paragraph);
(12) Investments consisting of purchases and acquisitions
of inventory, supplies, material or equipment;
(13) additional Investments having an aggregate fair market
value, taken together with all other Investments made pursuant
to this clause (13) that are at that time outstanding
(without giving effect to the sale of an Unrestricted Subsidiary
to the extent the proceeds of such sale do not consist of cash
or
marketable securities), not to exceed 5% of Total Assets at the
time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving
effect to subsequent changes in value);
(14) Investments relating to an ABL Financing Entity or a
Receivables Subsidiary that, in the good faith determination of
the Issuer, are necessary or advisable to effect the ABL
Facility or any Receivables Facility, as the case may be;
(15) advances to, or guarantees of Indebtedness of,
employees not in excess of $50.0 million outstanding at any
one time, in the aggregate;
(16) loans and advances to officers, directors and
employees for business-related travel expenses, moving expenses
and other similar expenses, in each case incurred in the
ordinary course of business or consistent with past practices or
to fund such Person’s purchase of Equity Interests of the
Issuer or any direct or indirect parent company thereof;
(17) Physician Support Obligations made by the Issuer or
any Restricted Subsidiary;
(18) any Investment in any joint venture existing on the
Issue Date that owns or operates one or more health care
facilities, including, without limitation, hospitals, ambulatory
surgery centers, outpatient diagnostic centers or imaging
centers to the extent contemplated by the organizational
documents of such joint venture as in existence on the Issue
Date;
(19) any Investment in the ordinary course of business or
as may be required by applicable law by any Restricted
Subsidiary (including, without limitation, HCI) engaged in the
insurance business in order to provide insurance to the Issuer
and its Subsidiaries;
(20) any Investment pursuant to any customary buy/sell
arrangement in favor of investors or joint venture parties in
connection with syndications of health care facilities,
including, without limitation, hospitals, ambulatory surgery
centers, outpatient diagnostic centers or imaging
centers; and
(21) any Investment in any Subsidiary or any joint venture
in connection with intercompany cash management arrangements or
related activities arising in the ordinary course of business.
“Permitted Liens” means, with respect to any
Person:
(1) pledges or deposits by such Person under workmen’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 U.S. government bonds to secure surety or appeal
bonds to which such Person is a party, 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 overdue for a period of more than 30 days 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 if
adequate reserves with respect thereto are maintained on the
books of such Person in accordance with GAAP;
(3) Liens for taxes, assessments or other governmental
charges not yet overdue for a period of more than 30 days
or payable or subject to penalties for nonpayment or which are
being contested in good faith by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto
are maintained on the books of such Person in accordance with
GAAP;
(4) Liens in favor of issuers of performance and surety
bonds or bid bonds or with respect to other regulatory
requirements or letters of credit issued pursuant to the request
of and for the account of such Person in the ordinary course of
its business;
(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
properties 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 permitted to be incurred
pursuant to clause (4), (12), (13), (18) or (19) of
the second paragraph under “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”; provided
that (a) Liens securing Indebtedness, Disqualified
Stock or Preferred Stock permitted to be incurred pursuant to
clause (13) relate only to Refinancing Indebtedness that
serves to refund or refinance Indebtedness, Disqualified Stock
or Preferred Stock incurred under clause (4) or
(12) of the second paragraph under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock,”
(b) Liens securing Indebtedness permitted to be incurred
pursuant to clause (18) extend only to the assets of
Foreign Subsidiaries, (c) Liens securing Indebtedness
permitted to be incurred pursuant to clause (19) are solely
on acquired property or the assets of the acquired entity, as
the case may be and (d) Liens securing Indebtedness,
Disqualified Stock or Preferred Stock permitted to be incurred
pursuant to clause (4) of the second paragraph under
“Certain Covenants — Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred
Stock” extend only to the assets so financed, purchased,
constructed or improved;
(7) Liens existing on the Issue Date (other than Liens in
favor of (i) the lenders under the Senior Credit
Facilities, (ii) the holders of the Existing First Priority
Notes and (iii) the holders of the Existing Second Priority
Notes);
(8) Liens on property or shares of stock of a Person at the
time such Person becomes a Subsidiary; provided,
however, such Liens are not created or incurred in
connection with, or in contemplation of, such other Person
becoming such a Subsidiary; provided, further,
however, that such Liens may not extend to any other
property owned by the Issuer or any of its Restricted
Subsidiaries;
(9) Liens on property at the time the Issuer or a
Restricted Subsidiary acquired the property, including any
acquisition by means of a merger or consolidation with or into
the Issuer or any of its Restricted Subsidiaries;
provided, however, that such Liens are not created
or incurred in connection with, or in contemplation of, such
acquisition; provided, further, however,
that the Liens may not extend to any other property owned by the
Issuer or any of its Restricted Subsidiaries;
(10) Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Issuer or another Restricted
Subsidiary permitted to be incurred in accordance with the
covenant described under “Certain Covenants —
Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
(11) Liens securing Hedging Obligations so long as the
related Indebtedness is, and is permitted to be under the
Indenture, secured by a Lien on the same property securing such
Hedging Obligations;
(12) Liens on specific items of inventory or other goods
and proceeds of any Person securing such Person’s
obligations in respect of bankers’ acceptances issued or
created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(13) leases, subleases, licenses or sublicenses granted to
others in the ordinary course of business which do not
materially interfere with the ordinary conduct of the business
of the Issuer or any of its Restricted Subsidiaries and do not
secure any Indebtedness;
(14) Liens arising from Uniform Commercial Code financing
statement filings regarding operating leases entered into by the
Issuer and its Restricted Subsidiaries in the ordinary course of
business;
(15) Liens in favor of the Issuer or any Guarantor;
(16) Liens on equipment of the Issuer or any of its
Restricted Subsidiaries granted in the ordinary course of
business;
(17) Liens on accounts receivable and related assets
incurred in connection with a Receivables Facility;
(18) Liens to secure any refinancing, refunding, extension,
renewal or replacement (or successive refinancing, refunding,
extensions, renewals or replacements) as a whole, or in part, of
any Indebtedness secured by any Lien referred to in the
foregoing clauses (6), (7), (8) and (9); provided,
however, that (a) such new Lien shall be limited to
all or part of the same property that secured the original Lien
(plus improvements on such property), 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 clauses (6), (7), (8) and
(9) at the time the original Lien became a Permitted Lien
under the Indenture, and (ii) an amount necessary to pay
any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement;
(19) deposits made in the ordinary course of business to
secure liability to insurance carriers;
(20) other Liens securing obligations incurred in the
ordinary course of business which obligations do not exceed
$100.0 million at any one time outstanding;
(21) Liens securing judgments for the payment of money not
constituting an Event of Default under clause (5) under the
caption “Events of Default and Remedies” so long as
such Liens are adequately bonded and any appropriate legal
proceedings that may have been duly initiated for the review of
such judgment have not been finally terminated or the period
within which such proceedings may be initiated has not expired;
(22) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
in connection with the importation of goods in the ordinary
course of business;
(23) Liens (i) of a collection bank arising under
Section 4-210
of the Uniform Commercial Code, or any comparable or successor
provision, on items in the course of collection,
(ii) attaching to commodity trading accounts or other
commodity brokerage accounts incurred in the ordinary course of
business, and (iii) in favor of banking institutions
arising as a matter of law encumbering deposits (including the
right of set-off) and which are within the general parameters
customary in the banking industry;
(24) Liens deemed to exist in connection with Investments
in repurchase agreements permitted under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock”;
provided that such Liens do not extend to any assets
other than those that are the subject of such repurchase
agreements;
(25) Liens encumbering reasonable customary initial
deposits and margin deposits and similar Liens attaching to
commodity trading accounts or other brokerage accounts incurred
in the ordinary course of business and not for speculative
purposes;
(26) Liens that are contractual rights of set-off
(i) relating to the establishment of depository relations
with banks not given in connection with the issuance of
Indebtedness, (ii) relating to pooled deposit or sweep
accounts of the Issuer or any of its Restricted Subsidiaries to
permit satisfaction of overdraft or similar obligations incurred
in the ordinary course of business of the Issuer and its
Restricted Subsidiaries or (iii) relating to purchase
orders and other agreements entered into with customers of the
Issuer or any of its Restricted Subsidiaries in the ordinary
course of business;
(27) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale or
purchase of goods entered into by the Issuer or any Restricted
Subsidiary in the ordinary course of business; and
(28) Liens that rank junior to the Liens securing the Notes
securing the Junior Lien Obligations.
For purposes of this definition, the term
“Indebtedness” shall be deemed to include interest on
such Indebtedness.
“Person” means any individual, corporation,
limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
“Physician Support Obligation” means (1) a
loan to or on behalf of, or a guarantee of Indebtedness or
income of, a physician or health care professional providing
service to patients in the service area of a health care
facility operated by the Issuer, any of its Restricted
Subsidiaries or any affiliated joint venture otherwise permitted
by the Indenture made or given by the Issuer or any Restricted
Subsidiary of the Issuer in the ordinary course of business and
pursuant to a written agreement having a period not to exceed
five years or (2) guarantees by the Issuer or any
Restricted Subsidiary of the Issuer of leases and loans to
acquire property (real or personal) for or on behalf of a
physician or health care professional providing service to
patients in the service area of a health care facility operated
by the Issuer, any of its Restricted Subsidiaries or any
affiliated joint venture otherwise permitted by the Indenture.
“Plan of Reorganization” means any plan of
reorganization, plan of liquidation, agreement for composition,
or other type of plan of arrangement proposed in or in
connection with any insolvency or liquidation proceeding.
“Preferred Stock” means any Equity Interest
with preferential rights of payment of dividends or upon
liquidation, dissolution or winding up.
“Principal Property” means each acute care
hospital providing general medical and surgical services
(excluding equipment, personal property and hospitals that
primarily provide specialty medical services, such as
psychiatric and obstetrical and gynecological services) owned
solely by the Issuer
and/or one
or more of its Subsidiaries (used in this definition as defined
in the Existing Notes Indenture) and located in the United
States of America.
“Purchase Money Obligations” means any
Indebtedness incurred to finance or refinance the acquisition,
leasing, construction or improvement of property (real or
personal) or assets (other than Capital Stock), and whether
acquired through the direct acquisition of such property or
assets, or otherwise.
“Qualified Proceeds” means assets that are used
or useful in, or Capital Stock of any Person engaged in, a
Similar Business; provided that the fair market value of
any such assets or Capital Stock shall be determined by the
Issuer in good faith.
“Rating Agencies” means Moody’s and
S&P or if Moody’s or S&P or both shall not make a
rating on the Notes publicly available, a nationally recognized
statistical rating agency or agencies, as the case may be,
selected by the Issuer which shall be substituted for
Moody’s or S&P or both, as the case may be.
“Receivables Facility” means any of one or more
receivables financing facilities as amended, supplemented,
modified, extended, renewed, restated or refunded from time to
time, the Obligations of which are non-recourse (except for
customary representations, warranties, covenants and indemnities
made in connection with such facilities) to the Issuer or any of
its Restricted Subsidiaries (other than a Receivables
Subsidiary) pursuant to which the Issuer or any of its
Restricted Subsidiaries purports to sell its accounts receivable
to either (a) a Person that is not a Restricted Subsidiary
or (b) a Receivables Subsidiary that in turn funds such
purchase by purporting to sell its accounts receivable to a
Person that is not a Restricted Subsidiary or by borrowing from
such a Person or from another Receivables Subsidiary that in
turn funds itself by borrowing from such a Person.
“Receivables Fees” means distributions or
payments made directly or by means of discounts with respect to
any accounts receivable or participation interest therein issued
or sold in connection with, and other fees paid to a Person that
is not a Restricted Subsidiary in connection with any
Receivables Facility.
“Receivables Subsidiary” means any Subsidiary
formed for the purpose of facilitating or entering into one or
more Receivables Facilities, and in each case engages only in
activities reasonably related or incidental thereto.
“Redemption Date” has the meaning set
forth under “Optional Redemption.”
“Registration Rights Agreement” means the
Registration Rights Agreement related to the Notes, dated as of
the Issue Date, among the Issuer, the Guarantors and the Initial
Purchasers.
“Related Business Assets” means assets (other
than cash or Cash Equivalents) used or useful in a Similar
Business; provided that any assets received by the Issuer
or a Restricted Subsidiary in exchange for assets transferred by
the Issuer or a Restricted Subsidiary will not be deemed to be
Related Business Assets if they consist of securities of a
Person, unless upon receipt of the securities of such Person,
such Person would become a Restricted Subsidiary.
“Restricted Investment” means an Investment
other than a Permitted Investment.
“Restricted Subsidiary” means, at any time, any
direct or indirect Subsidiary of the Issuer (including any
Foreign Subsidiary) that is not then an Unrestricted Subsidiary;
provided, however, that upon an Unrestricted
Subsidiary’s ceasing to be an Unrestricted Subsidiary, such
Subsidiary shall be included in the definition of
“Restricted Subsidiary.”
“S&P” means Standard &
Poor’s, a division of The McGraw-Hill Companies, Inc., and
any successor to its rating agency business.
“Sale and Lease-Back Transaction” means any
arrangement providing for the leasing by the Issuer or any of
its Restricted Subsidiaries of any real or tangible personal
property, which property has been or is to be sold or
transferred by the Issuer or such Restricted Subsidiary to a
third Person in contemplation of such leasing.
“SEC” means the U.S. Securities and
Exchange Commission.
“Secured Indebtedness” means any Indebtedness
of the Issuer or any of its Restricted Subsidiaries secured by a
Lien.
“Securities Act” means the Securities Act of
1933, as amended, and the rules and regulations of the SEC
promulgated thereunder.
“Security Agreement” means the amended and
restated Security Agreement, dated as of March 2, 2009, by
and among the Issuer, the subsidiary grantors named therein and
the First Lien Collateral Agent, as the same may be further
amended, restated or modified from time to time, to which the
Trustee, as Authorized Representative for the Holders, will be
joined on the Issue Date.
“Security Documents” means, collectively, the
Intercreditor Agreements, the Security Agreement, other security
agreements relating to the Collateral and the mortgages and
instruments filed and recorded in appropriate jurisdictions to
preserve and protect the Liens on the Collateral (including,
without limitation, financing statements under the Uniform
Commercial Code of the relevant states) applicable to the
Collateral, each as in effect on the Issue Date and as amended,
amended and restated, modified, renewed or replaced from time to
time.
“Senior Credit Facilities” means the ABL
Facility and the General Credit Facility.
“Senior Indebtedness” means:
(1) all Indebtedness of the Issuer or any Guarantor
outstanding under the Senior Credit Facilities, the Existing
First Priority Notes, the Existing Second Priority Notes and the
Notes and related Guarantees (including interest accruing on or
after the filing of any petition in bankruptcy or similar
proceeding or for reorganization of the Issuer or any Guarantor
(at the rate provided for in the documentation with respect
thereto, regardless of whether or not a claim for post-filing
interest is allowed in such proceedings)), and any and all other
fees, expense reimbursement obligations, indemnification
amounts, penalties, and other amounts (whether existing on the
Issue Date or thereafter created or incurred) and all
obligations of the Issuer or any Guarantor to reimburse any bank
or other Person in respect of amounts paid under letters of
credit, acceptances or other similar instruments;
(2) all Hedging Obligations (and guarantees thereof) owing
to a Lender (as defined in the Senior Credit Facilities) or any
Affiliate of such Lender (or any Person that was a Lender or an
Affiliate of such
Lender at the time the applicable agreement giving rise to such
Hedging Obligation was entered into); provided that such
Hedging Obligations are permitted to be incurred under the terms
of the Indenture;
(3) any other Indebtedness of the Issuer or any Guarantor
permitted to be incurred under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred
expressly provides that it is subordinated in right of payment
to the Notes or any related Guarantee; and
(4) all Obligations with respect to the items listed in the
preceding clauses (1), (2) and (3);
provided, however, that Senior Indebtedness shall
not include:
(a) any obligation of such Person to the Issuer or any of
its Subsidiaries;
(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
(e) that portion of any Indebtedness which at the time of
incurrence is incurred in violation of the Indenture.
“Separate Receivables Collateral” has the
meaning set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantee and Security.”
“Series”means (a) with respect to the
First Lien Secured Parties, each of (i) the General Credit
Facility Secured Parties (in their capacities as such),
(ii) the holders of the Existing First Priority Notes
Obligations and Law Debenture Trust Company of New York, as
authorized representative for such holders (each in their
capacity as such), (iii) the Holders and the Trustee (each
in their capacity as such) and (iv) the Additional First
Lien Secured Parties that become subject to the First Lien
Intercreditor Agreement after the date hereof that are
represented by a common Authorized Representative (in its
capacity as such for such Additional First Lien Secured Parties)
and (b) with respect to any First Lien Obligations, each of
(i) the General Credit Facility Obligations, (ii) the
Existing First Priority Notes Obligations, (iii) the Notes
Obligations and (iv) the Additional First Lien Obligations
incurred pursuant to any applicable agreement, which, pursuant
to any joinder agreement, are to be represented under the First
Lien Intercreditor Agreement by a common Authorized
Representative (in its capacity as such for such Additional
First Lien Obligations).
“Shared Receivables Collateral” has the meaning
set forth under “Description of Other
Indebtedness — Senior Secured Credit
Facilities — Guarantee and Security.”
“Significant Subsidiary” means any Restricted
Subsidiary that would be a “significant subsidiary” as
defined in Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such regulation
is in effect on the Issue Date.
“Similar Business” means any business conducted
or proposed to be conducted by the Issuer and its Restricted
Subsidiaries on the Issue Date or any business that is similar,
reasonably related, incidental or ancillary thereto.
“Sponsor Management Agreement” means the
management agreement between certain of the management companies
associated with the Investors, the Frist Entities and the Issuer.
“Subordinated Indebtedness” means, with respect
to the Notes,
(1) any Indebtedness of the Issuer which is by its terms
subordinated in right of payment to the Notes, and
(2) any Indebtedness of any Guarantor which is by its terms
subordinated in right of payment to the Guarantee of such entity
of the Notes.
(1) any corporation, association, or other business entity
(other than a partnership, joint venture, limited liability
company or similar entity) of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of
determination owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that
Person or a combination thereof or is consolidated under GAAP
with such Person at such time; and
(2) any partnership, joint venture, limited liability
company or similar entity of which
(x) more than 50% of the capital accounts, distribution
rights, total equity and voting interests or general or limited
partnership interests, as applicable, are owned or controlled,
directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof
whether in the form of membership, general, special or limited
partnership or otherwise, and
(y) such Person or any Restricted Subsidiary of such Person
is a controlling general partner or otherwise controls such
entity.
“Total Assets” means the total assets of the
Issuer and its Restricted Subsidiaries on a consolidated basis,
as shown on the most recent consolidated balance sheet of the
Issuer or such other Person as may be expressly stated.
“Transaction” means the transactions
contemplated by the Transaction Agreement, the issuance of the
Notes and borrowings under the Senior Credit Facilities as in
effect on November 17, 2006.
“Transaction Agreement” means the Agreement and
Plan of Merger, dated as of July 24, 2006, between Hercules
Holding II, LLC, Hercules Acquisition Corporation and the
Issuer, as the same may be amended prior to the Issue Date.
“Treasury Rate” means, as of any
Redemption Date, the yield to maturity as of such
Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) that has
become publicly available at least two Business Days prior to
the Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source of similar
market data)) most nearly equal to the period from the
Redemption Date to March 15, 2015; provided,
however, that if the period from the Redemption Date
to March 15, 2015 is less than one year, the weekly average
yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year will be used.
“Trust Indenture Act” means the
Trust Indenture Act of 1939, as amended (15 U.S.C.
§§ 77aaa-777bbbb).
“Unrestricted Subsidiary” means:
(1) any Subsidiary of the Issuer which at the time of
determination is an Unrestricted Subsidiary (as designated by
the Issuer, as provided below); and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Issuer may designate any Subsidiary of the Issuer (including
any existing Subsidiary and any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Equity Interests
or Indebtedness of, or owns or holds any Lien on, any property
of, the Issuer or any Subsidiary of the Issuer (other than
solely any Subsidiary of the Subsidiary to be so designated);
provided that
(1) any Unrestricted Subsidiary must be an entity of which
the Equity Interests entitled to cast at least a majority of the
votes that may be cast by all Equity Interests having ordinary
voting power for the election of directors or Persons performing
a similar function are owned, directly or indirectly, by the
Issuer;
(2) such designation complies with the covenants described
under “Certain Covenants — Limitation on
Restricted Payments”; and
(3) each of:
(a) the Subsidiary to be so designated; and
(b) its Subsidiaries
has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness
pursuant to which the lender has recourse to any of the assets
of the Issuer or any Restricted Subsidiary.
The Issuer may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that, immediately after
giving effect to such designation, no Default shall have
occurred and be continuing and either:
(1) the Issuer could incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test
described in the first paragraph under “Certain
Covenants — Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred
Stock”; or
(2) the Fixed Charge Coverage Ratio for the Issuer and its
Restricted Subsidiaries would be greater than such ratio for the
Issuer and its Restricted Subsidiaries immediately prior to such
designation, in each case on a pro forma basis taking into
account such designation.
Any such designation by the Issuer shall be notified by the
Issuer to the Trustee by promptly filing with the Trustee a copy
of the resolution of the board of directors of the Issuer or any
committee thereof giving effect to such designation and an
Officer’s Certificate certifying that such designation
complied with the foregoing provisions.
“Voting Stock” of any Person as of any date
means the Capital Stock of such Person that is at the time
entitled to vote in the election of the board of directors of
such Person.
“Weighted Average Life to Maturity” means, when
applied to any Indebtedness, Disqualified Stock or Preferred
Stock, as the case may be, at any date, the quotient obtained by
dividing:
(1) the sum of the products of the number of years from the
date of determination to the date of each successive scheduled
principal payment of such Indebtedness or redemption or similar
payment with respect to such Disqualified Stock or Preferred
Stock multiplied by the amount of such payment; by
(2) the sum of all such payments.
“Wholly-Owned Subsidiary” of any Person means a
Subsidiary of such Person, 100% of the outstanding Equity
Interests of which (other than directors’ qualifying
shares) shall at the time be owned by such Person or by one or
more Wholly-Owned Subsidiaries of such Person.
The exchange of outstanding notes for exchange notes in the
exchange offers will not constitute a taxable event to holders
for United States federal income tax purposes. Consequently, you
will not recognize gain or loss upon receipt of an exchange
note, the holding period of the exchange note will include the
holding period of the outstanding note exchanged therefor and
the basis of the exchange note will be the same as the basis of
the outstanding note immediately before the exchange.
In any event, persons considering the exchange of outstanding
notes for exchange notes should consult their own tax advisors
concerning the United States federal income tax consequences in
light of their particular situations as well as any consequences
arising under the laws of any other taxing jurisdiction.
Ownership
of the Notes
The following is a summary of certain United States federal
income and, in the case of
non-U.S. holders
(as defined below), estate tax consequences of the purchase,
ownership and disposition of the notes as of the date of this
prospectus.
As used herein, a “U.S. holder” means a
beneficial owner of the notes that is for United States federal
income tax purposes any of the following:
•
an individual citizen or resident of the United States;
•
a corporation (or any other entity treated as a corporation for
United States federal income tax purposes) created or organized
in or under the laws of the United States, any state thereof or
the District of Columbia;
•
an estate the income of which is subject to United States
federal income taxation regardless of its source; or
•
a trust if it (1) is subject to the primary supervision of
a court within the United States and one or more United States
persons have the authority to control all substantial decisions
of the trust or (2) has a valid election in effect under
applicable United States Treasury regulations to be treated as a
United States person.
The term
“non-U.S. holder”
means a beneficial owner of the notes (other than a partnership
or any other entity treated as a partnership for United States
federal income tax purposes) that is not a U.S. holder.
This summary deals only with notes that are held as capital
assets, and does not represent a detailed description of the
United States federal income tax consequences applicable to you
if you are a person subject to special tax treatment under the
United States federal income tax laws, including, without
limitation:
•
a dealer in securities or currencies;
•
a financial institution;
•
a regulated investment company;
•
a real estate investment trust;
•
a tax-exempt organization;
•
an insurance company;
•
a person holding the notes as part of a hedging, integrated,
conversion or constructive sale transaction or a straddle;
•
a trader in securities that has elected the
mark-to-market
method of accounting for your securities;
a partnership or other pass-through entity for United States
federal income tax purposes;
•
a U.S. holder whose “functional currency” is not
the U.S. dollar;
•
a “controlled foreign corporation;”
•
a “passive foreign investment company;” or
•
a United States expatriate.
This summary is based on the Internal Revenue Code of 1986, as
amended (the “Code”), United States Treasury
regulations, administrative rulings and judicial decisions as of
the date hereof. Those authorities may be changed, possibly on a
retroactive basis, so as to result in United States federal
income and estate tax consequences different from those
summarized below. We have not and will not seek any rulings from
the Internal Revenue Service (“IRS”) regarding the
matters discussed below. There can be no assurance that the IRS
will not take positions concerning the tax consequences of the
purchase, ownership or disposition of the notes that are
different from those discussed below.
If a partnership (including any entity classified as a
partnership for United States federal income tax purposes) holds
notes, the tax treatment of a partner will generally depend upon
the status of the partner and the activities of the partnership.
If you are a partnership or a partner in a partnership holding
notes, you should consult your own tax advisors.
This summary does not represent a detailed description of the
United States federal income and estate tax consequences to you
in light of your particular circumstances and does not address
the effects of any state, local or
non-United
States tax laws. It is not intended to be, and should not be
construed to be, legal or tax advice to any particular purchaser
of notes. You should consult your own tax advisors concerning
the particular United States federal income and estate tax
consequences to you of the ownership of the notes, as well as
the consequences to you arising under the laws of any other
taxing jurisdiction.
Certain
Tax Consequences to U.S. Holders
The following is a summary of certain United States federal
income tax consequences that will apply to U.S. holders of
the notes.
Stated Interest. Interest on a note will
generally be taxable to you as ordinary income at the time it is
paid or accrued in accordance with your method of accounting for
United States federal income tax purposes.
Original Issue Discount. The outstanding 2017
notes (together with the exchange 2017 notes, the “2017
notes”) and the outstanding 2019 notes (together with the
exchange 2019 notes, the “2019 notes”) were issued
with original issue discount (“OID”) in an amount
equal to the difference between their principal amount and their
“issue price.” You should be aware that you generally
must include OID in gross income in advance of the receipt of
cash attributable to that income.
The “issue price” of a note will be the first price at
which a substantial amount of that particular offering is sold
to the investors (excluding sales to bond houses, brokers or
similar persons or organizations acting in the capacity of
underwriter, placement agent or wholesaler). The term
“qualified stated interest” means stated interest that
is unconditionally payable in cash or in property, other than
debt instruments of the issuer, and meets all of the following
conditions:
•
it is payable at least once per year;
•
it is payable over the entire term of the note; and
•
it is payable at a single fixed rate or, subject to certain
conditions, based on one or more interest indices.
The stated interest payments on the notes are qualified stated
interest, and are treated as described above under
“— Stated Interest.”
You generally must include OID in income in advance of the
receipt of some or all of the related cash payments using the
“constant yield method” described in the following
paragraphs.
The amount of OID that you must include in income is the sum of
the “daily portions” of OID with respect to the note
for each day during the taxable year or portion of the taxable
year in which you held that note (“accrued OID”). The
daily portion is determined by allocating to each day in any
“accrual period” a pro rata portion of the OID
allocable to that accrual period. The “accrual period”
for a note may be of any length and may vary in length over the
term of the note, provided that each accrual period is no longer
than one year and each scheduled payment of principal or
interest occurs on the first day or the final day of an accrual
period. The amount of OID allocable to any accrual period other
than the final accrual period is an amount equal to the excess,
if any, of:
•
the note’s “adjusted issue price” at the
beginning of the accrual period multiplied by its yield to
maturity, determined on the basis of compounding at the close of
each accrual period and properly adjusted for the length of the
accrual period, over
•
the aggregate of all qualified stated interest allocable to the
accrual period.
OID allocable to a final accrual period is the difference
between the amount payable at maturity, other than a payment of
qualified stated interest, and the adjusted issue price at the
beginning of the final accrual period. Special rules will apply
for calculating OID for an initial short accrual period. The
“adjusted issue price” of a note at the beginning of
any accrual period is equal to its issue price increased by the
accrued OID for each prior accrual period. Under these rules,
you will have to include in income increasingly greater amounts
of OID in successive accrual periods.
You may elect to treat all interest on any note as OID and
calculate the amount includible in gross income under the
constant yield method described above. The election is to be
made for the taxable year in which you acquired the note and may
not be revoked without the consent of the IRS. You should
consult with your own tax advisors about this election.
Market Discount. If you purchase a note for an
amount that is less than its principal amount or, in the case of
the 2017 notes or the 2019 notes, its adjusted issue price, the
amount of the difference will be treated as “market
discount” for United States federal income tax purposes,
unless that difference is less than a specified de minimis
amount. Under the market discount rules, you will be required to
treat any principal payment on, or any gain on the sale,
exchange, retirement or other disposition of, a note as ordinary
income to the extent of the market discount that you have not
previously included in income and are treated as having accrued
on the note at the time of its payment or disposition.
In addition, you may be required to defer, until the maturity of
the note or its earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any
indebtedness attributable to the note. You may elect, on a
note-by-note
basis, to deduct the deferred interest expense in a tax year
prior to the year of disposition. You should consult your own
tax advisors before making this election.
Any market discount will be considered to accrue ratably during
the period from the date of acquisition to the maturity date of
the note, unless you elect to accrue on a constant interest
method. You may elect to include market discount in income
currently as it accrues, on either a ratable or constant
interest method, in which case the rule described above
regarding deferral of interest deductions will not apply.
Acquisition Premium, Amortizable Bond
Premium. If you purchase a 2017 note or a 2019
note for an amount that is greater than its adjusted issue price
but equal to or less than its principal amount, you will be
considered to have purchased that note at an “acquisition
premium.” Under the acquisition premium rules, the amount
of OID that you must include in gross income with respect to a
2017 note or 2019 note for any taxable year will be reduced by
the portion of the acquisition premium properly allocable to
that year.
If you purchase a note for an amount in excess of its principal
amount, you will be considered to have purchased the note at a
“premium” and, in the case of the 2017 notes and 2019
notes, you will not be required to include any OID in income.
You generally may elect to amortize the premium over the
remaining term of the note on a constant yield method as an
offset to interest when includible in income under your regular
accounting method. If you do not elect to amortize bond premium,
that premium will decrease the gain or increase the loss you
would otherwise recognize on disposition of the note.
Sale, Exchange, Retirement, or Other Disposition of
Notes. Upon the sale, exchange, retirement, or
other taxable disposition of a note, you generally will
recognize gain or loss equal to the difference between the
amount realized upon the sale, exchange, retirement or other
disposition (less an amount equal to any accrued and unpaid
interest, which will be taxable as interest income as discussed
above) and the adjusted tax basis of the note. Your adjusted tax
basis in a note will, in general, be your cost for that note
increased by OID or market discount previously included in
income and reduced by any amortized premium. Subject to the
market discount rules discussed above, any gain or loss will be
capital gain or loss. Capital gains of individuals derived in
respect of capital assets held for more than one year are
eligible for reduced rates of taxation. The deductibility of
capital losses is subject to limitations.
Certain
Tax Consequences to
Non-U.S.
Holders
The following is a summary of certain United States federal
income and estate tax consequences that will apply to
non-U.S. holders
of the notes.
United States Federal Withholding Tax. The 30%
United States federal withholding tax will not apply to any
payment of interest (which for purposes of this discussion
includes OID) on the notes under the “portfolio interest
rule,” provided that:
•
interest paid on the notes (including OID) is not effectively
connected with your conduct of a trade or business in the United
States;
•
you do not actually (or constructively) own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Code and applicable United States
Treasury regulations;
•
you are not a controlled foreign corporation that is related to
us actually or constructively through stock ownership;
•
you are not a bank whose receipt of interest on the notes is
described in Section 881(c)(3)(A) of the Code; and
•
either (a) you provide your name and address on an IRS
Form W-8BEN
(or other applicable form), and certify, under penalties of
perjury, that you are not a United States person as defined
under the Code or (b) you hold your notes through certain
foreign intermediaries and satisfy the certification
requirements of applicable United States Treasury regulations.
Special certification rules apply to
non-U.S. holders
that are pass-through entities rather than corporations or
individuals.
If you cannot satisfy the requirements described above, payments
of interest (including OID) made to you will be subject to the
30% United States federal withholding tax, unless you provide us
with a properly executed:
•
IRS
Form W-8BEN
(or other applicable form) certifying an exemption from or
reduction in withholding under the benefit of an applicable
income tax treaty; or
•
IRS
Form W-8ECI
(or other applicable form) certifying interest paid on the notes
is not subject to withholding tax because it is effectively
connected with your conduct of a trade or business in the United
States (as discussed below under “— United States
Federal Income Tax”).
The 30% United States federal withholding tax generally will not
apply to any payment of principal or gain that you realize on
the sale, exchange, retirement or other disposition of a note.
United States Federal Income Tax. If you are
engaged in a trade or business in the United States and interest
(including OID) on the notes is effectively connected with the
conduct of that trade or business (and, if required by an
applicable income tax treaty, is attributable to a United States
permanent establishment), then you will be subject to United
States federal income tax on that interest (including OID) on a
net income basis
in generally the same manner as if you were a United States
person as defined under the Code. In addition, if you are a
foreign corporation, you may be subject to a branch profits tax
equal to 30% (or lower applicable income tax treaty rate) of
such interest (including OID), subject to adjustments. If
interest received with respect to the notes is effectively
connected income (whether or not a treaty applies), the 30%
withholding tax described above will not apply, provided the
certification requirements discussed above in
“— United States Federal Withholding Tax”
are satisfied.
Subject to the discussion of backup withholding below, any gain
realized on the disposition of a note generally will not be
subject to United States federal income tax unless:
•
the gain is effectively connected with your conduct of a trade
or business in the United States (and, if required by an
applicable income tax treaty, is attributable to a United States
permanent establishment); or
•
you are an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met.
United States Federal Estate Tax. Your estate
will not be subject to United States federal estate tax on notes
beneficially owned by you at the time of your death, provided
that any payment to you on the notes would be eligible for
exemption from the 30% United States federal withholding tax
under the “portfolio interest rule” described above
under “— United States Federal Withholding
Tax” without regard to the statement requirement described
in the fifth bullet point of that section.
Information
Reporting and Backup Withholding
U.S.
Holders
In general, information reporting requirements will apply to
certain payments of principal and interest (including OID) paid
on the notes and to the proceeds of the sale or other
disposition of a note paid to you (unless you are an exempt
recipient such as a corporation). Backup withholding may apply
to such payments if you fail to provide a taxpayer
identification number or a certification that you are not
subject to backup withholding or if you fail to report in full
dividend and interest income.
Backup withholding is not an additional tax and any amounts
withheld under the backup withholding rules may be allowed as a
refund or a credit against your United States federal income tax
liability provided the required information is timely furnished
to the IRS.
Non-U.S.
Holders
Generally, we must report to the IRS and to you the amount of
interest (including OID) paid to you and the amount of tax, if
any, withheld with respect to those payments. Copies of the
information returns reporting such interest payments and any
withholding may also be made available to the tax authorities in
the country in which you reside under the provisions of an
applicable income tax treaty.
In general, you will not be subject to backup withholding with
respect to payments of interest (including OID) on the notes
that we make to you provided that we do not have actual
knowledge or reason to know that you are a United States person
as defined under the Code, and we have received from you the
required certification that you are a
non-U.S. holder
described above in the fifth bullet point under
“— Certain Tax Consequences to
Non-U.S. Holders —
United States Federal Withholding Tax.”
Information reporting and, depending on the circumstances,
backup withholding will apply to the proceeds of a sale or other
disposition (including a redemption) of notes within the United
States or conducted through certain United States-related
financial intermediaries, unless you certify to the payer under
penalties of perjury that you are a
non-U.S. holder
(and the payer does not have actual knowledge or reason to know
that you are a United States person as defined under the Code),
or you otherwise establish an exemption.
Backup withholding is not an additional tax and any amounts
withheld under the backup withholding rules may be allowed as a
refund or a credit against your United States federal income tax
liability provided the required information is timely furnished
to the IRS.
The following is a summary of certain considerations associated
with the purchase of the exchange notes by employee benefit
plans that are subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”), plans, individual retirement accounts and
other arrangements that are subject to Section 4975 of the
Code or provisions under any federal, state, local,
non-U.S. or
other laws, rules or regulations that are similar to such
provisions of ERISA or the Code (collectively, “Similar
Laws”), and entities whose underlying assets are considered
to include “plan assets” (within the meaning of ERISA)
of such plans, accounts and arrangements (each, a
“Plan”).
General
Fiduciary Matters
ERISA and the Code impose certain duties on persons who are
fiduciaries of a Plan subject to Title I of ERISA or
Section 4975 of the Code (an “ERISA Plan”) and
prohibit certain transactions involving the assets of an ERISA
Plan and its fiduciaries or other interested parties. Under
ERISA and the Code, any person who exercises any discretionary
authority or control over the administration of such an ERISA
Plan or the management or disposition of the assets of such an
ERISA Plan, or who renders investment advice for a fee or other
compensation to such an ERISA Plan, is generally considered to
be a fiduciary of the ERISA Plan.
In considering an investment in the exchange notes of a portion
of the assets of any Plan, a fiduciary should determine whether
the investment is in accordance with the documents and
instruments governing the Plan and the applicable provisions of
ERISA, the Code or any Similar Law relating to a
fiduciary’s duties to the Plan including, without
limitation, the prudence, diversification, delegation of control
and prohibited transaction provisions of ERISA, the Code and any
other applicable Similar Laws.
Prohibited
Transaction Issues
Section 406 of ERISA and Section 4975 of the Code
prohibit ERISA Plans from engaging in specified transactions
involving “plan assets” with persons or entities who
are “parties in interest,” within the meaning of
ERISA, or “disqualified persons,” within the meaning
of Section 4975 of the Code, unless an exemption is
available. A party in interest or disqualified person who
engages in a non-exempt prohibited transaction may be subject to
excise taxes and other penalties and liabilities under ERISA and
the Code. In addition, the fiduciary of the ERISA Plan that
engages in such a non-exempt prohibited transaction may be
subject to penalties and liabilities under ERISA and the Code.
The acquisition
and/or
holding of exchange notes by an ERISA Plan with respect to which
we or the initial purchasers of the outstanding notes are
considered a party in interest or disqualified person may
constitute or result in a direct or indirect prohibited
transaction under Section 406 of ERISA
and/or
Section 4975 of the Code, unless the investment is acquired
and is held in accordance with an applicable statutory, class or
individual prohibited transaction exemption. In this regard, the
United States Department of Labor has issued prohibited
transaction class exemptions (“PTCEs”) that may apply
to the acquisition and holding of the exchange notes. These
class exemptions include, without limitation,
PTCE 84-14,
respecting transactions determined by independent qualified
professional asset managers,
PTCE 90-1,
respecting insurance company pooled separate accounts,
PTCE 91-38,
respecting bank collective investment funds,
PTCE 95-60,
respecting life insurance company general accounts and
PTCE 96-23,
respecting transactions determined by in-house asset managers,
although there can be no assurance that all the conditions of
any such exemption will be satisfied.
Because of the foregoing, the exchange notes should not be
purchased or held by any person investing “plan
assets” of any Plan, unless such purchase and holding (and
the exchange of outstanding notes for exchange notes) will not
constitute a non-exempt prohibited transaction under ERISA and
the Code or similar violation of any applicable Similar Laws.
Accordingly, by acceptance of an exchange note, each purchaser
and subsequent transferee will be deemed to have represented and
warranted that either (i) no portion of the assets used by
such purchaser or transferee to acquire and hold the exchange
notes constitutes assets of any Plan or (ii) the purchase
and holding of the outstanding notes or the exchange notes (and
the exchange of outstanding notes for exchange notes) by such
purchaser or transferee will not constitute a non-exempt
prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code or any similar violation under any
applicable Similar Laws.
The foregoing discussion is general in nature and is not
intended to be all-inclusive. Due to the complexity of these
rules and the penalties that may be imposed upon persons
involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries or other persons
considering purchasing the outstanding notes or the exchange
notes (and holding or disposing the outstanding notes or the
exchange notes) on behalf of, or with the assets of, any Plan,
consult with their counsel regarding the potential applicability
of ERISA, Section 4975 of the Code and any Similar Laws to
such transactions and whether an exemption would be applicable
to the purchase and holding and disposition of the outstanding
notes or the exchange notes (and the exchange of outstanding
notes for exchange notes).
Each broker-dealer that receives exchange notes for its own
account pursuant to an exchange offer must acknowledge that it
will deliver a prospectus in connection with any resale of such
exchange notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer
in connection with resales of exchange notes received in
exchange for outstanding notes where such outstanding notes were
acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of
180 days after the consummation of the exchange offers, we
will make this prospectus, as amended or supplemented, available
to any broker-dealer for use in connection with any such resale.
In addition, all dealers effecting transactions in the exchange
notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange notes
by broker-dealers. Exchange notes received by broker-dealers for
their own account pursuant to an exchange offer may be sold from
time to time in one or more transactions in the
over-the-counter
market, in negotiated transactions, through the writing of
options on the exchange notes or a combination of such methods
of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or
through brokers or dealers who may receive compensation in the
form of commissions or concessions from any such broker-dealer
and/or the
purchasers of any such exchange notes. Any broker-dealer that
resells exchange notes that were received by it for its own
account pursuant to an exchange offer and any broker or dealer
that participates in a distribution of such exchange notes may
be deemed to be an “underwriter” within the meaning of
the Securities Act, and any profit of any such resale of
exchange notes and any commission or concessions received by any
such persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an “underwriter” within the meaning of the
Securities Act.
For a period of 180 days after the consummation of the
exchange offers, we will promptly send additional copies of this
prospectus and any amendments or supplements to this prospectus
to any broker-dealer that requests such documents in the letter
of transmittal. We have agreed to pay all expenses incident to
the exchange offers (including the expenses of one counsel for
the holders of the outstanding notes) other than commissions or
concessions of any broker-dealers and will indemnify you
(including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
The validity and enforceability of the exchange notes and the
related guarantees will be passed upon for us by Simpson
Thacher & Bartlett LLP, New York, New York. An
investment vehicle comprised of several partners of Simpson
Thacher & Bartlett LLP, members of their families,
related persons and others owns interests representing less than
1% of the capital commitments of the KKR Millennium Fund, L.P.
and KKR 2006 Fund L.P.
The consolidated financial statements of HCA Inc. as of
December 31, 2009 and 2008 and for each of the three years
in the period ended December 31, 2009 appearing in this
prospectus, and the effectiveness of internal control over
financial reporting of HCA Inc. as of December 31,2009, have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in
its reports thereon appearing elsewhere herein. Such
consolidated financial statements and HCA Inc. management’s
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2009 are included in
reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
We file certain reports with the Securities and Exchange
Commission (“the SEC”), including annual reports on
Form 10-K,
quarterly reports on
Form 10-Q
and current reports on
Form 8-K.
The public may read and copy any materials we file with the SEC
at the SEC’s Public Reference Room at
100 F Street, N.E., Washington, DC 20549. The public
may obtain information on the operation of the Public Reference
Room by calling the SEC at
1-800-SEC-0330.
We are an electronic filer, and the SEC maintains an Internet
site at
http://www.sec.gov
that contains the reports, proxy and information statements and
other information we file electronically with the SEC. Our
website address is www.hcahealthcare.com. Please note that our
website address is provided as an inactive textual reference
only. We make available free of charge, through our website, our
annual report on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and all amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act, as soon as
reasonably practicable after such material is electronically
filed with or furnished to the SEC. The information provided on
our website is not part of this prospectus, and is therefore not
incorporated by reference unless such information is
specifically referenced elsewhere in this prospectus.
Our Code of Conduct is available free of charge upon request to
our Corporate Secretary, HCA Inc., One Park Plaza, Nashville,
Tennessee37203.
Our management is responsible for establishing and maintaining
effective internal control over financial reporting, as such
term is defined in Exchange Act
Rule 13a-15(f).
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial
statement preparation and presentation.
Under the supervision and with the participation of our
management, including our principal executive officer and
principal financial officer, we conducted an assessment of the
effectiveness of our internal control over financial reporting
based on the framework in Internal Control —
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our
assessment under the framework in Internal Control —
Integrated Framework, our management concluded that our internal
control over financial reporting was effective as of
December 31, 2009.
Ernst & Young, LLP, the independent registered public
accounting firm that audited our consolidated financial
statements, has issued a report on our internal control over
financial reporting, which is included herein.
We have audited HCA Inc.’s internal control over financial
reporting as of December 31, 2009, based on criteria
established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). HCA Inc.’s
management is responsible for maintaining effective internal
control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting
included in the accompanying Management’s Report on
Internal Control Over Financial Reporting. Our responsibility is
to express an opinion on the company’s internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, HCA Inc. maintained, in all material respects,
effective internal control over financial reporting as of
December 31, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of HCA Inc. as of December 31,2009 and 2008, and the related consolidated statements of
income, stockholders’ deficit, and cash flows for each of
the three years in the period ended December 31, 2009 and
our report dated March 1, 2010 expressed an unqualified
opinion thereon.
We have audited the accompanying consolidated balance sheets of
HCA Inc. as of December 31, 2009 and 2008, and the related
consolidated statements of income, stockholders’ deficit,
and cash flows for each of the three years in the period ended
December 31, 2009. These financial statements are the
responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of HCA Inc. at December 31, 2009 and
2008, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended
December 31, 2009, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), HCA
Inc.’s internal control over financial reporting as of
December 31, 2009, based on criteria established in
Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
and our report dated March 1, 2010 expressed an unqualified
opinion thereon.
On November 17, 2006, HCA Inc. completed its merger (the
“Merger”) with Hercules Acquisition Corporation,
pursuant to which the Company was acquired by Hercules Holding
II, LLC (“Hercules Holding”), a Delaware limited
liability company owned by a private investor group comprised of
affiliates of Bain Capital Partners, Kohlberg Kravis
Roberts & Co., Merrill Lynch Global Private Equity
(each a “Sponsor”), affiliates of Citigroup Inc. and
Bank of America Corporation (the “Sponsor Assignees”)
and affiliates of HCA founder, Dr. Thomas F. Frist Jr.,
(the “Frist Entities,” and together with the Sponsors
and the Sponsor Assignees, the “Investors”), and by
members of management and certain other investors. The Merger,
the financing transactions related to the Merger and other
related transactions are collectively referred to in this
prospectus as the “Recapitalization.” The Merger was
accounted for as a recapitalization in our financial statements,
with no adjustments to the historical basis of our assets and
liabilities. As a result of the Recapitalization, our
outstanding capital stock is owned by the Investors, certain
members of management and key employees. On April 29, 2008,
we registered our common stock pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended, thus subjecting
us to the reporting requirements of Section 13(a) of the
Securities Exchange Act of 1934, as amended. Our common stock is
not traded on a national securities exchange.
HCA Inc. is a holding company whose affiliates own and operate
hospitals and related health care entities. The term
“affiliates” includes direct and indirect subsidiaries
of HCA Inc. and partnerships and joint ventures in which such
subsidiaries are partners. At December 31, 2009, these
affiliates owned and operated 155 hospitals, 97 freestanding
surgery centers and provided extensive outpatient and ancillary
services. Affiliates of HCA are also partners in joint ventures
that own and operate eight hospitals and eight freestanding
surgery centers, which are accounted for using the equity
method. The Company’s facilities are located in
20 states and England. The terms “HCA,”“Company,”“we,”“our” or
“us,” as used in these notes to consolidated financial
statements, refer to HCA Inc. and its affiliates unless
otherwise stated or indicated by context.
Basis
of Presentation
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates.
The consolidated financial statements include all subsidiaries
and entities controlled by HCA. We generally define
“control” as ownership of a majority of the voting
interest of an entity. The consolidated financial statements
include entities in which we absorb a majority of the
entity’s expected losses, receive a majority of the
entity’s expected residual returns, or both, as a result of
ownership, contractual or other financial interests in the
entity. Significant intercompany transactions have been
eliminated. Investments in entities we do not control, but in
which we have a substantial ownership interest and can exercise
significant influence, are accounted for using the equity method.
We have completed various acquisitions and joint venture
transactions. The accounts of these entities have been included
in our consolidated financial statements for periods subsequent
to our acquisition of controlling interests. The majority of our
expenses are “cost of revenue” items. Costs that could
be classified as general and administrative include our
corporate office costs, which were $164 million,
$174 million and $169 million for the years ended
December 31, 2009, 2008 and 2007, respectively.
Revenues
Revenues consist primarily of net patient service revenues that
are recorded based upon established billing rates less
allowances for contractual adjustments. Revenues are recorded
during the period the health care services are provided, based
upon the estimated amounts due from the patients and third-party
payers. Third-
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 1 —
ACCOUNTING
POLICIES (Continued)
party payers include federal and state agencies (under the
Medicare and Medicaid programs), managed care health plans,
commercial insurance companies and employers. Estimates of
contractual allowances under managed care health plans are based
upon the payment terms specified in the related contractual
agreements. Contractual payment terms in managed care agreements
are generally based upon predetermined rates per diagnosis, per
diem rates or discounted
fee-for-service
rates.
Laws and regulations governing the Medicare and Medicaid
programs are complex and subject to interpretation. As a result,
there is at least a reasonable possibility recorded estimates
will change by a material amount. Estimated reimbursement
amounts are adjusted in subsequent periods as cost reports are
prepared and filed and as final settlements are determined (in
relation to certain government programs, primarily Medicare,
this is generally referred to as the “cost report”
filing and settlement process). The adjustments to estimated
Medicare and Medicaid reimbursement amounts and
disproportionate-share funds, which resulted in net increases to
revenues, related primarily to cost reports filed during the
respective year were $40 million, $32 million and
$47 million in 2009, 2008 and 2007, respectively. The
adjustments to estimated reimbursement amounts, which resulted
in net increases to revenues, related primarily to cost reports
filed during previous years were $60 million,
$35 million and $83 million in 2009, 2008 and 2007,
respectively.
The Emergency Medical Treatment and Active Labor Act
(“EMTALA”) requires any hospital participating in the
Medicare program to conduct an appropriate medical screening
examination of every person who presents to the hospital’s
emergency room for treatment and, if the individual is suffering
from an emergency medical condition, to either stabilize the
condition or make an appropriate transfer of the individual to a
facility able to handle the condition. The obligation to screen
and stabilize emergency medical conditions exists regardless of
an individual’s ability to pay for treatment. Federal and
state laws and regulations, including but not limited to EMTALA,
require, and our commitment to providing quality patient care
encourages, us to provide services to patients who are
financially unable to pay for the health care services they
receive. Because we do not pursue collection of amounts
determined to qualify as charity care, they are not reported in
revenues. Patients treated at hospitals for nonelective care,
who have income at or below 200% of the federal poverty level,
are eligible for charity care. Charity care (amounts are based
on our gross charges) totaled $2.151 billion,
$1.747 billion and $1.530 billion in 2009, 2008 and
2007, respectively. The federal poverty level is established by
the federal government and is based on income and family size.
We provide discounts to uninsured patients who do not qualify
for Medicaid or charity care. These discounts are similar to
those provided to many local managed care plans and totaled
$2.935 billion, $1.853 billion and $1.474 billion
in 2009, 2008 and 2007, respectively. In implementing the
discount policy, we first attempt to qualify uninsured patients
for Medicaid, other federal or state assistance or charity care.
If an uninsured patient does not qualify for these programs, the
uninsured discount is applied.
Cash
and Cash Equivalents
Cash and cash equivalents include highly liquid investments with
a maturity of three months or less when purchased. Our insurance
subsidiary’s cash equivalent investments in excess of the
amounts required to pay estimated professional liability claims
during the next twelve months are not included in cash and cash
equivalents as these funds are not available for general
corporate purposes. Carrying values of cash and cash equivalents
approximate fair value due to the short-term nature of these
instruments.
Our cash management system provides for daily investment of
available balances and the funding of outstanding checks when
presented for payment. Outstanding, but unpresented, checks
totaling $392 million and $382 million at
December 31, 2009 and 2008, respectively, have been
included in “accounts payable” in the consolidated
balance sheets. Upon presentation for payment, these checks are
funded through available cash balances or our credit facility.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 1 —
ACCOUNTING
POLICIES (Continued)
Accounts
Receivable
We receive payments for services rendered from federal and state
agencies (under the Medicare and Medicaid programs), managed
care health plans, commercial insurance companies, employers and
patients. During the years ended December 31, 2009, 2008
and 2007, 23%, 23% and 24%, respectively, of our revenues
related to patients participating in the
fee-for-service
Medicare program and 7%, 6% and 5%, respectively, of our
revenues related to patients participating in managed Medicare
programs. We recognize that revenues and receivables from
government agencies are significant to our operations, but do
not believe there are significant credit risks associated with
these government agencies. We do not believe there are any other
significant concentrations of revenues from any particular payer
that would subject us to any significant credit risks in the
collection of our accounts receivable.
Additions to the allowance for doubtful accounts are made by
means of the provision for doubtful accounts. Accounts written
off as uncollectible are deducted from the allowance for
doubtful accounts and subsequent recoveries are added. The
amount of the provision for doubtful accounts is based upon
management’s assessment of historical and expected net
collections, business and economic conditions, trends in
federal, state and private employer health care coverage and
other collection indicators. The provision for doubtful accounts
and the allowance for doubtful accounts relate primarily to
“uninsured” amounts (including copayment and
deductible amounts from patients who have health care coverage)
due directly from patients. Accounts are written off when all
reasonable internal and external collection efforts have been
performed. We consider the return of an account from the
secondary external collection agency to be the culmination of
our reasonable collection efforts and the timing basis for
writing off the account balance. Writeoffs are based upon
specific identification and the writeoff process requires a
writeoff adjustment entry to the patient accounting system.
Management relies on the results of detailed reviews of
historical writeoffs and recoveries at facilities that represent
a majority of our revenues and accounts receivable (the
“hindsight analysis”) as a primary source of
information to utilize in estimating the collectibility of our
accounts receivable. We perform the hindsight analysis
quarterly, utilizing rolling twelve-months accounts receivable
collection and writeoff data. At December 31, 2009 and
2008, the allowance for doubtful accounts represented
approximately 94% and 92%, respectively, of the
$5.176 billion and $5.148 billion, respectively,
patient due accounts receivable balance. The patient due
accounts receivable balance represents the estimated uninsured
portion of our accounts receivable. The estimated uninsured
portion of Medicaid pending and uninsured discount pending
accounts is included in our patient due accounts receivable
balance. Days revenues in accounts receivable were 45 days,
49 days and 53 days at December 31, 2009, 2008
and 2007, respectively. Adverse changes in general economic
conditions, patient accounting service center operations, payer
mix or trends in federal or state governmental health care
coverage could affect our collection of accounts receivable,
cash flows and results of operations.
Inventories
Inventories are stated at the lower of cost
(first-in,
first-out) or market.
Property
and Equipment and Amortizable Intangibles
Depreciation expense, computed using the straight-line method,
was $1.419 billion in 2009, $1.412 billion in 2008 and
$1.421 billion in 2007. Buildings and improvements are
depreciated over estimated useful lives ranging generally from
10 to 40 years. Estimated useful lives of equipment vary
generally from four to 10 years.
Debt issuance costs are amortized based upon the terms of the
respective debt obligations. The gross carrying amount of
deferred loan costs at December 31, 2009 and 2008 was
$689 million and $650 million,
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 1 —
ACCOUNTING
POLICIES (Continued)
respectively, and accumulated amortization was $271 million
and $192 million, respectively. Amortization of deferred
loan costs is included in interest expense and was
$80 million, $79 million and $78 million for
2009, 2008 and 2007, respectively.
When events, circumstances or operating results indicate the
carrying values of certain long-lived assets and related
identifiable intangible assets (excluding goodwill) expected to
be held and used, might be impaired, we prepare projections of
the undiscounted future cash flows expected to result from the
use of the assets and their eventual disposition. If the
projections indicate the recorded amounts are not expected to be
recoverable, such amounts are reduced to estimated fair value.
Fair value may be estimated based upon internal evaluations that
include quantitative analyses of revenues and cash flows,
reviews of recent sales of similar facilities and independent
appraisals.
Long-lived assets to be disposed of are reported at the lower of
their carrying amounts or fair value less costs to sell or
close. The estimates of fair value are usually based upon recent
sales of similar assets and market responses based upon
discussions with and offers received from potential buyers.
Investments
of Insurance Subsidiary
At December 31, 2009 and 2008, the investments of our
wholly-owned insurance subsidiary were classified as
“available-for-sale”
as defined in Accounting Standards Codification No. 320,
Investments — Debt and Equity Securities and
are recorded at fair value. The investment securities are held
for the purpose of providing the funding source to pay
professional liability claims covered by the insurance
subsidiary. We perform a quarterly assessment of individual
investment securities to determine whether declines in market
value are temporary or
other-than-temporary.
Our investment securities evaluation process involves multiple
subjective judgments, often involves estimating the outcome of
future events, and requires a significant level of professional
judgment in determining whether an impairment has occurred. We
evaluate, among other things, the financial position and near
term prospects of the issuer, conditions in the issuer’s
industry, liquidity of the investment, changes in the amount or
timing of expected future cash flows from the investment, and
recent downgrades of the issuer by a rating agency, to determine
if, and when, a decline in the fair value of an investment below
amortized cost is considered
other-than-temporary.
The length of time and extent to which the fair value of the
investment is less than amortized cost and our ability and
intent to retain the investment, to allow for any anticipated
recovery of the investment’s fair value, are important
components of our investment securities evaluation process.
Goodwill
Goodwill is not amortized, but is subject to annual impairment
tests. In addition to the annual impairment review, impairment
reviews are performed whenever circumstances indicate a possible
impairment may exist. Impairment testing for goodwill is done at
the reporting unit level. Reporting units are one level below
the business segment level, and our impairment testing is
performed at the operating division or market level. We compare
the fair value of the reporting unit assets to the carrying
amount, on at least an annual basis, to determine if there is
potential impairment. If the fair value of the reporting unit
assets is less than their carrying value, we compare the fair
value of the goodwill to its carrying value. If the fair value
of the goodwill is less than its carrying value, an impairment
loss is recognized. Fair value of goodwill is estimated based
upon internal evaluations of the related long-lived assets for
each reporting unit that include quantitative analyses of
revenues and cash flows and reviews of recent sales of similar
facilities. We recognized goodwill impairments of
$19 million and $48 million during 2009 and 2008,
respectively. No goodwill impairments were recognized during
2007.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 1 —
ACCOUNTING
POLICIES (Continued)
During 2009, goodwill increased by $5 million related to
acquisitions, decreased by $19 million related to
impairments and increased by $11 million related to foreign
currency translation and other adjustments. During 2008,
goodwill increased by $43 million related to acquisitions,
decreased by $14 million related to facility sales,
decreased by $48 million related to impairments and
decreased by $30 million related to foreign currency
translation and other adjustments.
Since January 1, 2000, we have recognized total goodwill
impairments of $88 million in the aggregate. None of the
goodwill impairments related to evaluations of goodwill at the
reporting unit level, as all recognized goodwill impairments
during this period related to goodwill allocated to asset
disposal groups.
Physician
Recruiting Agreements
In order to recruit physicians to meet the needs of our
hospitals and the communities they serve, we enter into minimum
revenue guarantee arrangements to assist the recruited
physicians during the period they are relocating and
establishing their practices. A guarantor is required to
recognize, at the inception of a guarantee, a liability for the
fair value of the stand-ready obligation undertaken in issuing
the guarantee. We expense the total estimated guarantee
liability amount at the time the physician recruiting agreement
becomes effective as we are not able to justify recording a
contract-based asset based upon our analysis of the related
control, regulatory and legal considerations.
The physician recruiting liability amounts of $24 million
and $27 million at December 31, 2009 and 2008,
respectively, represent the amount of expense recognized in
excess of payments made through December 31, 2009 and 2008,
respectively. At December 31, 2009 the maximum amount we
could have to pay under all effective minimum revenue guarantees
was $64 million.
Professional
Liability Claims
Reserves for professional liability risks were
$1.322 billion and $1.387 billion at December 31,2009 and 2008, respectively. The current portion of the
reserves, $265 million and $279 million at
December 31, 2009 and 2008, respectively, is included in
“other accrued expenses” in the consolidated balance
sheets. Provisions for losses related to professional liability
risks were $211 million, $175 million and
$163 million for 2009, 2008 and 2007, respectively, and are
included in “other operating expenses” in our
consolidated income statements. Provisions for losses related to
professional liability risks are based upon actuarially
determined estimates. Loss and loss expense reserves represent
the estimated ultimate net cost of all reported and unreported
losses incurred through the respective consolidated balance
sheet dates. The reserves for unpaid losses and loss expenses
are estimated using individual case-basis valuations and
actuarial analyses. Those estimates are subject to the effects
of trends in loss severity and frequency. The estimates are
continually reviewed and adjustments are recorded as experience
develops or new information becomes known. Adjustments to the
estimated reserve amounts are included in current operating
results. The reserves for professional liability risks cover
approximately 2,600 and 2,800 individual claims at
December 31, 2009 and 2008, respectively, and estimates for
unreported potential claims. The time period required to resolve
these claims can vary depending upon the jurisdiction and
whether the claim is settled or litigated. During 2009 and 2008,
$272 million and $314 million, respectively, of net
payments were made for professional and general liability
claims. The estimation of the timing of payments beyond a year
can vary significantly. Although considerable variability is
inherent in professional liability reserve estimates, we believe
the reserves for losses and loss expenses are adequate; however,
there can be no assurance the ultimate liability will not exceed
our estimates.
A portion of our professional liability risks is insured through
a wholly-owned insurance subsidiary. Subject to a
$5 million per occurrence self-insured retention, our
facilities are insured by our wholly-owned insurance subsidiary
for losses up to $50 million per occurrence. The insurance
subsidiary has obtained
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 1 —
ACCOUNTING
POLICIES (Continued)
reinsurance for professional liability risks generally above a
retention level of $15 million per occurrence. We also
maintain professional liability insurance with unrelated
commercial carriers for losses in excess of amounts insured by
our insurance subsidiary.
The obligations covered by reinsurance contracts are included in
the reserves for professional liability risks, as the insurance
subsidiary remains liable to the extent the reinsurers do not
meet their obligations under the reinsurance contracts. The
amounts receivable under the reinsurance contracts include
$28 million at December 31, 2009 and 2008 recorded in
“other assets” and $25 million and
$29 million at December 31, 2009 and 2008,
respectively, recorded in “other current assets”.
Financial
Instruments
Derivative financial instruments are employed to manage risks,
including interest rate and foreign currency exposures, and are
not used for trading or speculative purposes. We recognize
derivative instruments, such as interest rate swap agreements
and foreign exchange contracts, in the consolidated balance
sheets at fair value. Changes in the fair value of derivatives
are recognized periodically either in earnings or in
stockholders’ equity, as a component of other comprehensive
income (loss), depending on whether the derivative financial
instrument qualifies for hedge accounting, and if so, whether it
qualifies as a fair value hedge or a cash flow hedge. Generally,
changes in fair values of derivatives accounted for as fair
value hedges are recorded in earnings, along with the changes in
the fair value of the hedged items related to the hedged risk.
Gains and losses on derivatives designated as cash flow hedges,
to the extent they are effective, are recorded in other
comprehensive income (loss), and subsequently reclassified to
earnings to offset the impact of the forecasted transactions
when they occur. In the event the forecasted transaction to
which a cash flow hedge relates is no longer likely, the amount
in other comprehensive income (loss) is recognized in earnings
and generally the derivative is terminated. Changes in the fair
value of derivatives not qualifying as hedges, and for any
portion of a hedge that is ineffective, are reported in earnings.
The net interest paid or received on interest rate swaps is
recognized as interest expense. Gains and losses resulting from
the early termination of interest rate swap agreements are
deferred and amortized as adjustments to interest expense over
the remaining term of the debt originally covered by the
terminated swap.
Noncontrolling
Interests in Consolidated Entities
The consolidated financial statements include all assets,
liabilities, revenues and expenses of less than 100% owned
entities that we control. Accordingly, we have recorded
noncontrolling interests in the earnings and equity of such
entities.
Related
Party Transactions — Management
Agreement
Affiliates of the Investors entered into a management agreement
with us pursuant to which such affiliates will provide us with
management services. Under the management agreement, the
affiliates of the Investors are entitled to receive an aggregate
annual management fee of $15 million, which amount
increases annually, beginning in 2008, at a rate equal to the
percentage increase in Adjusted EBITDA (as defined in the
Management Agreement) in the applicable year compared to the
preceding year, and reimbursement of
out-of-pocket
expenses incurred in connection with the provision of services
pursuant to the agreement. The annual management fee was
$15 million for each of 2009, 2008 and 2007. The management
agreement has an initial term expiring on December 31,2016, provided that the term will be extended annually for one
additional year unless we or the Investors provide notice to the
other of their desire not to automatically extend the term. In
addition, the management agreement provides that the affiliates
of the Investors are entitled to receive a fee equal to 1% of
the gross transaction value in connection with certain
financing, acquisition,
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 1 —
ACCOUNTING
POLICIES (Continued)
disposition, and change of control transactions, as well as a
termination fee based on the net present value of future payment
obligations under the management agreement in the event of an
initial public offering or under certain other circumstances.
The agreement also contains customary exculpation and
indemnification provisions in favor of the Investors and their
affiliates.
Reclassifications
Certain prior year amounts have been reclassified to conform to
the 2009 presentation.
NOTE 2 —
SHARE-BASED
COMPENSATION
Certain management holders of outstanding HCA stock options
retained certain of their stock options (the “Rollover
Options”) in lieu of receiving the Merger consideration.
The Rollover Options remain outstanding in accordance with the
terms of the governing stock incentive plans and grant
agreements pursuant to which the holder originally received the
stock option grants, except the exercise price and number of
shares subject to the rollover option agreement were adjusted so
that the aggregate intrinsic value for each applicable option
holder was maintained and the exercise price for substantially
all the options was adjusted to $12.75 per option. Pursuant to
the rollover option agreement, 10,967,500 prerecapitalization
HCA stock options were converted into 2,285,200 Rollover
Options, of which 1,349,800 are outstanding and exercisable at
December 31, 2009.
2006
Stock Incentive Plan
The 2006 Stock Incentive Plan for Key Employees of HCA Inc. and
its Affiliates (the “2006 Plan”) is designed to
promote the long term financial interests and growth of the
Company and its subsidiaries by attracting and retaining
management and other personnel and key service providers and to
motivate management personnel by means of incentives to achieve
long range goals and further the alignment of interests of
participants with those of our stockholders through
opportunities for increased stock, or stock-based, ownership in
the Company. A portion of the options under the 2006 Plan vests
solely based upon continued employment over a specific period of
time, and a portion of the options vests based both upon
continued employment over a specific period of time and upon the
achievement of predetermined financial and Investor return
targets over time. We granted 1,785,900 and 357,500 options
under the 2006 Plan during 2009 and 2008, respectively. As of
December 31, 2009, 3,010,000 options granted under the 2006
Plan have vested, and there were 392,400 shares available
for future grants under the 2006 Plan.
Stock
Option Activity
The fair value of each stock option award is estimated on the
grant date, using option valuation models and the weighted
average assumptions indicated in the following table. Awards
under the 2006 Plan generally vest based on continued employment
and based upon achievement of certain financial and Investor
return targets. Each grant is valued as a single award with an
expected term equal to the average expected term of the
component vesting tranches. We use historical option exercise
behavior data and other factors to estimate the expected term of
the options. The expected term of the option is limited by the
contractual term, and employee post-vesting termination behavior
is incorporated in the historical option exercise behavior data.
Compensation cost is recognized on the straight-line attribution
method. The straight-line attribution method requires that total
compensation expense recognized must at least equal the vested
portion of the grant-date fair value. The expected volatility is
derived using historical stock price information of certain peer
group companies for a period of time equal to the expected
option term. The risk-free interest rate is the approximate
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 2 —
SHARE-BASED
COMPENSATION (Continued)
yield on United States Treasury Strips having a life equal to
the expected option life on the date of grant. The expected life
is an estimate of the number of years an option will be held
before it is exercised.
2009
2008
2007
Risk-free interest rate
1.45
%
2.50
%
4.86
%
Expected volatility
35
%
30
%
30
%
Expected life, in years
5
4
5
Expected dividend yield
—
—
—
Information regarding stock option activity during 2009, 2008
and 2007 is summarized below (share amounts in thousands):
The weighted average fair values of stock options granted during
2009, 2008 and 2007 were $15.96, $14.01 and $16.01 per share,
respectively. The total intrinsic value of stock options
exercised in the year ended December 31, 2009 was
$26 million.
NOTE 3 —
ACQUISITIONS
AND DISPOSITIONS
During 2009, we paid $61 million to acquire nonhospital
health care entities. During 2008, we paid $18 million to
acquire one hospital and $67 million to acquire other
health care entities. During 2007, we paid $32 million to
acquire nonhospital health care entities. Purchase price amounts
have been allocated to the related assets acquired and
liabilities assumed based upon their respective fair values. The
purchase price paid in excess of the fair value of identifiable
net assets of acquired entities aggregated $5 million,
$43 million and $44 million in 2009, 2008 and 2007,
respectively. The consolidated financial statements include the
accounts and operations of the acquired entities subsequent to
the respective acquisition dates. The pro forma effects of the
acquired entities on our results of operations for periods prior
to the respective acquisition dates were not significant.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 3 —
ACQUISITIONS
AND DISPOSITIONS (Continued)
During 2009, we received proceeds of $3 million and
recognized a net pretax loss of $8 million ($5 million
after tax) on the sales of three hospitals. We also received
proceeds of $38 million and recognized a net pretax loss of
$7 million ($4 million after tax) from sales of other
health care entities and real estate investments. During 2008,
we received proceeds of $143 million and recognized a net
pretax gain of $81 million ($48 million after tax)
from the sales of two hospitals. We also received proceeds of
$50 million and recognized a net pretax gain of
$16 million ($10 million after tax) from sales of
other health care entities and real estate investments. During
2007, we received proceeds of $661 million and recognized a
net pretax gain of $443 million ($272 million after
tax) from sales of three hospitals. We also received proceeds of
$106 million and recognized a net pretax gain of
$28 million ($18 million after tax) from sales of real
estate investments.
NOTE 4 —
IMPAIRMENTS
OF LONG-LIVED ASSETS
During 2009, we recorded pretax charges of $43 million to
reduce the carrying value of identified assets to estimated fair
value. The $43 million asset impairment includes
$15 million related to certain hospital facilities and
other health care entity investments in our Central Group,
$14 million related to other health care entity investments
in our Eastern Group and $14 million related to certain
hospital facilities in our Western Group. During 2008, we
recorded pretax charges of $64 million to reduce the
carrying value of identified assets to estimated fair value. The
$64 million asset impairment includes $55 million
related to other health care entity investments in our Eastern
Group and $9 million related to certain hospital facilities
in our Central Group. During 2007, we recorded a pretax charge
of $24 million to adjust the value of a building in our
Central Group to estimated fair value.
The asset impairment charges did not have a significant impact
on our operations or cash flows and are not expected to
significantly impact cash flows for future periods. The
impairment charges affected our property and equipment asset
category by $24 million, $16 million and
$24 million in 2009, 2008 and 2007, respectively.
NOTE 5 —
INCOME
TAXES
The provision for income taxes consists of the following
(dollars in millions):
2009
2008
2007
Current:
Federal
$
809
$
699
$
566
State
75
56
37
Foreign
21
25
32
Deferred:
Federal
(274
)
(505
)
(391
)
State
(37
)
(29
)
(62
)
Foreign
33
22
134
$
627
$
268
$
316
The provision for income taxes reflects $18 million and
$20 million ($12 million net of tax for each)
reductions in interest related to taxing authority examinations
for the years ended December 31, 2009 and 2008,
respectively, and interest expense of $17 million
($11 million net of tax) for the year ended
December 31, 2007.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 5 —
INCOME
TAXES (Continued)
A reconciliation of the federal statutory rate to the effective
income tax rate follows:
2009
2008
2007
Federal statutory rate
35.0
%
35.0
%
35.0
%
State income taxes, net of federal tax benefit
3.2
3.7
0.2
Change in liability for uncertain tax positions
(0.2
)
(7.4
)
(7.2
)
Nondeductible intangible assets
0.4
0.4
—
Tax exempt interest income
(0.8
)
(2.5
)
(2.1
)
Income attributable to noncontrolling interests from
consolidated partnerships
(6.0
)
(5.6
)
(4.0
)
Other items, net
(0.3
)
(0.7
)
0.7
Effective income tax rate
31.3
%
22.9
%
22.6
%
As a result of a settlement reached with the Appeals Division of
the Internal Revenue Service (the “IRS”) and the
revision of a proposed IRS adjustment related to prior taxable
years, we reduced our provision for income taxes by
$69 million in 2008. Our 2007 provision for income taxes
was reduced by $85 million, principally based on new
information received related to tax positions taken in a prior
taxable year, and by an additional $39 million to adjust
2006 state tax accruals to the amounts reported on
completed tax returns and based upon an analysis of the
Recapitalization costs.
A summary of the items comprising the deferred tax assets and
liabilities at December 31 follows (dollars in millions):
2009
2008
Assets
Liabilities
Assets
Liabilities
Depreciation and fixed asset basis differences
$
—
$
258
$
—
$
324
Allowances for professional liability and other risks
288
—
244
—
Accounts receivable
1,453
—
1,263
—
Compensation
190
—
201
—
Other
740
336
786
287
$
2,671
$
594
$
2,494
$
611
At December 31, 2009, state net operating loss
carryforwards (expiring in years 2010 through
2029) available to offset future taxable income
approximated $116 million. Utilization of net operating
loss carryforwards in any one year may be limited and, in
certain cases, result in an adjustment to intangible assets. Net
deferred tax assets related to such carryforwards are not
significant.
At December 31, 2009, we are contesting before the Appeals
Division of the IRS certain claimed deficiencies and adjustments
proposed by the IRS in connection with its examination of the
2003 and 2004 federal income tax returns for HCA and eight
affiliates that are treated as partnerships for federal income
tax purposes (“affiliated partnerships”). The disputed
items include the timing of recognition of certain patient
service revenues and our method for calculating the tax
allowance for doubtful accounts.
Six taxable periods of HCA and its predecessors ended in 1997
through 2002 and the 2002 taxable year of four affiliated
partnerships, for which the primary remaining issue is the
computation of the tax allowance for doubtful accounts, were
pending before the IRS Examination Division as of
December 31, 2009.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 5 —
INCOME
TAXES (Continued)
The IRS began an audit of the 2005 and 2006 federal income tax
returns for HCA and seven affiliated partnerships during 2008.
We anticipate the IRS Examination Division will conclude its
audit in 2010. During 2009, the seven affiliated partnership
audits were resolved with no material impact on our operations
or financial position. We anticipate the IRS will begin an audit
of the 2007 and 2008 federal income tax returns for HCA during
2010.
The following table summarizes the activity related to our
unrecognized tax benefits (dollars in millions):
2009
2008
Balance at January 1
$
482
$
622
Additions based on tax positions related to the current year
44
32
Additions for tax positions of prior years
11
55
Reductions for tax positions of prior years
(33
)
(57
)
Settlements
(8
)
(162
)
Lapse of applicable statutes of limitations
(11
)
(8
)
Balance at December 31
$
485
$
482
During 2008, we reached a settlement with the IRS Appeals
Division relating to the deductibility of the 2001 government
settlement payment, the timing of recognition of certain patient
service revenues for 2001 and 2002, and the amount of insurance
expense deducted in 2001 and 2002. As a result of the
settlement, $111 million of the $215 million
refundable deposit made in 2006 has been applied to tax and
interest due for the 2001 and 2002 taxable years.
Our liability for unrecognized tax benefits was
$628 million, including accrued interest of
$156 million and excluding $13 million that was
recorded as reductions of the related deferred tax assets, as of
December 31, 2009 ($625 million, $156 million and
$13 million, respectively, as of December 31, 2008).
Unrecognized tax benefits of $236 million
($264 million as of December 31, 2008) would
affect the effective rate, if recognized. The liability for
unrecognized tax benefits does not reflect deferred tax assets
of $77 million ($81 million as of December 31,2008) related to deductible interest and state income taxes
or a refundable deposit of $104 million, which is recorded
in noncurrent assets.
Depending on the resolution of the IRS disputes, the completion
of examinations by federal, state or international taxing
authorities, or the expiration of statutes of limitation for
specific taxing jurisdictions, we believe it is reasonably
possible that our liability for unrecognized tax benefits may
significantly increase or decrease within the next
12 months. However, we are currently unable to estimate the
range of any possible change.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 6 —
INVESTMENTS
OF INSURANCE SUBSIDIARY
A summary of the insurance subsidiary’s investments at
December 31 follows (dollars in millions):
2009
Unrealized
Amortized
Amounts
Fair
Cost
Gains
Losses
Value
Debt securities:
States and municipalities
$
668
$
30
$
(3
)
$
695
Auction rate securities
401
—
(5
)
396
Asset-backed securities
43
—
(1
)
42
Money market funds
176
—
—
176
1,288
30
(9
)
1,309
Equity securities:
Preferred stocks
6
—
(2
)
4
Common stocks
2
1
—
3
8
1
(2
)
7
$
1,296
$
31
$
(11
)
1,316
Amounts classified as current assets
(150
)
Investment carrying value
$
1,166
2008
Unrealized
Amortized
Amounts
Fair
Cost
Gains
Losses
Value
Debt securities:
States and municipalities
$
808
$
20
$
(23
)
$
805
Auction rate securities
576
—
(40
)
536
Asset-backed securities
51
1
(5
)
47
Money market funds
226
—
—
226
1,661
21
(68
)
1,614
Equity securities:
Preferred stocks
6
—
(1
)
5
Common stocks
3
—
—
3
9
—
(1
)
8
$
1,670
$
21
$
(69
)
1,622
Amounts classified as current assets
(200
)
Investment carrying value
$
1,422
At December 31, 2009 and 2008 the investments of our
insurance subsidiary were classified as
“available-for-sale.”
Changes in temporary unrealized gains and losses are recorded as
adjustments to other comprehensive income (loss). At
December 31, 2009 and 2008, $100 million and
$119 million, respectively,
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 6 —
INVESTMENTS
OF INSURANCE SUBSIDIARY (Continued)
of our investments were subject to the restrictions included in
insurance bond collateralization and assumed reinsurance
contracts.
Scheduled maturities of investments in debt securities at
December 31, 2009 were as follows (dollars in millions):
Amortized
Fair
Cost
Value
Due in one year or less
$
216
$
216
Due after one year through five years
310
325
Due after five years through ten years
193
204
Due after ten years
125
126
844
871
Auction rate securities
401
396
Asset-backed securities
43
42
$
1,288
$
1,309
The average expected maturity of the investments in debt
securities at December 31, 2009 was 3.5 years,
compared to the average scheduled maturity of 12.3 years.
Expected and scheduled maturities may differ because the issuers
of certain securities have the right to call, prepay or
otherwise redeem such obligations prior to their scheduled
maturity date. The average expected maturities for our auction
rate and asset-backed securities were derived from valuation
models of expected cash flows and involved management’s
judgment. The average expected maturities for our auction rate
and asset-backed securities at December 31, 2009 were
4.7 years and 6.3 years, respectively, compared to
average scheduled maturities of 25.4 years and
26.0 years, respectively.
The cost of securities sold is based on the specific
identification method. Sales of securities for the years ended
December 31 are summarized below (dollars in millions):
2009
2008
2007
Debt securities:
Cash proceeds
$
141
$
23
$
272
Gross realized gains
—
—
8
Gross realized losses
1
—
1
Equity securities:
Cash proceeds
$
3
$
4
$
87
Gross realized gains
1
2
1
Gross realized losses
—
2
—
NOTE 7 —
FINANCIAL
INSTRUMENTS
Interest
Rate Swap Agreements
We have entered into interest rate swap agreements to manage our
exposure to fluctuations in interest rates. These swap
agreements involve the exchange of fixed and variable rate
interest payments between two parties based on common notional
principal amounts and maturity dates. Pay-fixed interest rate
swaps effectively convert LIBOR indexed variable rate
instruments to fixed interest rate obligations. The net interest
payments, based on the notional amounts in these agreements,
generally match the timing of the related
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 7 —
FINANCIAL
INSTRUMENTS (Continued)
liabilities. The notional amounts of the swap agreements
represent amounts used to calculate the exchange of cash flows
and are not our assets or liabilities. Our credit risk related
to these agreements is considered low because the swap
agreements are with creditworthy financial institutions. The
interest payments under these agreements are settled on a net
basis.
The following table sets forth our interest rate swap
agreements, which have been designated as cash flow hedges, at
December 31, 2009 (dollars in millions):
Notional
Fair
Amount
Termination Date
Value
Pay-fixed interest rate swap
$
500
March 2011
$
(13
)
Pay-fixed interest rate swaps
8,000
November 2011
(523
)
Pay-fixed interest rate swaps (starting November 2011)
2,000
December 2016
8
During the next 12 months, we estimate $364 million
will be reclassified from other comprehensive income
(“OCI”) to interest expense.
Cross
Currency Swaps
The Company and certain subsidiaries have incurred obligations
and entered into various intercompany transactions where such
obligations are denominated in currencies other than the
functional currencies of the parties executing the trade. In
order to better match the cash flows of our obligations and
intercompany transactions with cash flows from operations, we
entered into various cross currency swaps. Our credit risk
related to these agreements is considered low because the swap
agreements are with creditworthy financial institutions.
Certain of our cross currency swaps were not designated as
hedges, and changes in fair value are recognized in results of
operations. The following table sets forth our cross currency
swap agreement, which has not been designated as a hedge, at
December 31, 2009 (amounts in millions):
Notional
Fair
Amount
Termination Date
Value
Euro — United States Dollar Currency Swap
411 Euro
December 2011
$
79
The following table sets forth our cross currency swap
agreements, which have been designated as cash flow hedges, at
December 31, 2009 (amounts in millions):
Notional
Fair
Amount
Termination Date
Value
GBP — United States Dollar Currency Swaps
100 GBP
November 2010
$
(13
)
Derivatives— Results
of Operations
The following tables present the effect of our interest rate and
cross currency swaps on our results of operations for the year
ended December 31, 2009 (dollars in millions):
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 7 —
FINANCIAL
INSTRUMENTS (Continued)
Location of Loss
Amount of Loss
Recognized in
Recognized in
Operations on
Operations on
Derivatives Not Designated as Hedging Instruments
Derivatives
Derivatives
Cross currency swaps
Other operating expense
$
5
Credit-risk-related
Contingent Features
We have agreements with each of our derivative counterparties
that contain a provision where we could be declared in default
on our derivative obligations if repayment of the underlying
indebtedness is accelerated by the lender due to our default on
the indebtedness. As of December 31, 2009, we have not been
required to post any collateral related to these agreements. If
we had breached these provisions at December 31, 2009, we
would have been required to settle our obligations under the
agreements at their aggregate, estimated termination value of
$488 million.
NOTE 8 —
ASSETS
AND LIABILITIES MEASURED AT FAIR VALUE
ASC 820, Fair Value Measurements and Disclosures
(“ASC 820”) defines fair value, establishes a
framework for measuring fair value, and expands disclosures
about fair value measurements. ASC 820 applies to reported
balances that are required or permitted to be measured at fair
value under existing accounting pronouncements.
ASC 820 emphasizes fair value is a market-based measurement, not
an entity-specific measurement. Therefore, a fair value
measurement should be determined based on the assumptions market
participants would use in pricing the asset or liability. As a
basis for considering market participant assumptions in fair
value measurements, ASC 820 establishes a fair value hierarchy
that distinguishes between market participant assumptions based
on market data obtained from sources independent of the
reporting entity (observable inputs classified within
Levels 1 and 2 of the hierarchy) and the reporting
entity’s own assumptions about market participant
assumptions (unobservable inputs classified within Level 3
of the hierarchy).
Level 1 inputs utilize quoted prices (unadjusted) in active
markets for identical assets or liabilities. Level 2 inputs
are inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or
indirectly. Level 2 inputs may include quoted prices for
similar assets and liabilities in active markets, as well as
inputs observable for the asset or liability (other than quoted
prices), such as interest rates, foreign exchange rates, and
yield curves observable at commonly quoted intervals.
Level 3 inputs are unobservable inputs for the asset or
liability, which are typically based on an entity’s own
assumptions, as there is little, if any, related market
activity. In instances where the determination of the fair value
measurement is based on inputs from different levels of the fair
value hierarchy, the level in the fair value hierarchy within
which the entire fair value measurement falls is based on the
lowest level input significant to the fair value measurement in
its entirety. Our assessment of the significance of a particular
input to the fair value measurement in its entirety requires
judgment, and considers factors specific to the asset or
liability.
Cash
Traded Investments
Our cash traded investments are generally classified within
Level 1 or Level 2 of the fair value hierarchy because
they are valued using quoted market prices, broker or dealer
quotations, or alternative pricing sources with reasonable
levels of price transparency. Certain types of cash traded
instruments are classified within Level 3 of the fair value
hierarchy because they trade infrequently and therefore have
little or no price transparency. Such instruments include
auction rate securities (“ARS”) and limited
partnership investments. The transaction price is initially used
as the best estimate of fair value.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 8 —
ASSETS
AND LIABILITIES MEASURED AT FAIR VALUE (Continued)
Our wholly-owned insurance subsidiary had investments in
municipal, tax-exempt ARS, that are backed by student loans
substantially guaranteed by the federal government, of
$396 million ($401 million par value) at
December 31, 2009. We do not currently intend to attempt to
sell the ARS as the liquidity needs of our insurance subsidiary
are expected to be met by other investments in its investment
portfolio. These securities continue to accrue and pay interest
semi-annually based on the failed auction maximum rate formulas
stated in their respective Official Statements. During 2009 and
2008, certain issuers and their broker/dealers redeemed or
repurchased $172 million and $93 million,
respectively, of our ARS at par value. The valuation of these
securities involved management’s judgment, after
consideration of market factors and the absence of market
transparency, market liquidity and observable inputs. Our
valuation models derived a fair market value compared to
tax-equivalent yields of other student loan backed variable rate
securities of similar credit worthiness.
Derivative
Financial Instruments
We have entered into interest rate and cross currency swap
agreements to manage our exposure to fluctuations in interest
rates and foreign currency risks. The valuation of these
instruments is determined using widely accepted valuation
techniques, including discounted cash flow analysis on the
expected cash flows of each derivative. This analysis reflects
the contractual terms of the derivatives, including the period
to maturity, and uses observable market-based inputs, including
interest rate curves, foreign exchange rates and implied
volatilities. To comply with the provisions of ASC 820, we
incorporate credit valuation adjustments to reflect both our own
nonperformance risk and the respective counterparty’s
nonperformance risk in the fair value measurements.
Although we determined the majority of the inputs used to value
our derivatives fall within Level 2 of the fair value
hierarchy, the credit valuation adjustments associated with our
derivatives utilize Level 3 inputs, such as estimates of
current credit spreads to evaluate the likelihood of default by
us and our counterparties. We assessed the significance of the
impact of the credit valuation adjustments on the overall
valuation of our derivative positions and at December 31,2008, we determined the credit valuation adjustments were
significant to the overall valuation of our derivatives;
however, we determined the credit valuation adjustments were not
significant to the overall valuation of our derivatives at
December 31, 2009. As a result, we have reclassified our
derivative valuations in their entirety from Level 3 to
Level 2 of the fair value hierarchy at December 31,2009.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 8 —
ASSETS
AND LIABILITIES MEASURED AT FAIR VALUE (Continued)
The following table summarizes our assets and liabilities
measured at fair value on a recurring basis as of
December 31, 2009, aggregated by the level in the fair
value hierarchy within which those measurements fall (dollars in
millions):
Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Significant
and Liabilities
Observable Inputs
Unobservable Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
Assets:
Investments of insurance subsidiary
$
1,316
$
178
$
741
$
397
Less amounts classified as current assets
(150
)
(150
)
—
—
1,166
28
741
397
Cross currency swap (Other assets)
79
—
79
—
Liabilities:
Interest rate swaps (Income taxes and other liabilities)
528
—
528
—
Cross currency swaps (Income taxes and other liabilities)
13
—
13
—
The following table summarizes the activity related to the
investments of our insurance subsidiary and our cross currency
and interest rate swaps which have fair value measurements based
on significant unobservable inputs (Level 3) during
the year ended December 31, 2009 (dollars in millions):
The estimated fair value of our long-term debt was
$25.659 billion and $20.225 billion at
December 31, 2009 and 2008, respectively, compared to
carrying amounts aggregating $25.670 billion and
$26.989 billion, respectively. The estimates of fair value
are generally based upon the quoted market prices or quoted
market prices for similar issues of long-term debt with the same
maturities.
Senior secured term loan facilities (effective interest rate of
6.5%)
8,987
12,002
Senior secured first lien notes (effective interest rate of 8.9%)
2,682
—
Other senior secured debt (effective interest rate of 6.8%)
362
406
First lien debt
12,746
14,458
Senior secured cash-pay notes (effective interest rate of 9.7%)
4,500
4,200
Senior secured toggle notes (effective interest rate of 10.0%)
1,578
1,500
Second lien debt
6,078
5,700
Senior unsecured notes (effective interest rate of 7.2%)
6,846
6,831
Total debt (average life of six years, rates averaging 7.6%)
25,670
26,989
Less amounts due within one year
846
404
$
24,824
$
26,585
Senior
Secured Credit Facilities And Other First Lien
Debt
In connection with the Recapitalization, we entered into
(i) a $2.000 billion senior secured asset-based
revolving credit facility with a borrowing base of 85% of
eligible accounts receivable, subject to customary reserves and
eligibility criteria ($1.280 billion available at
December 31, 2009) (the “ABL credit facility”)
and (ii) a senior secured credit agreement (the “cash
flow credit facility” and, together with the ABL credit
facility, the “senior secured credit facilities”),
consisting of a $2.000 billion revolving credit facility
($1.901 billion available at December 31, 2009 after
giving effect to certain outstanding letters of credit), a
$2.750 billion term loan A ($1.908 billion outstanding
at December 31, 2009), a $8.800 billion term loan B
($6.515 billion outstanding at December 31,2009) and a €1.000 billion European term loan
(€394 million, or $564 million, outstanding at
December 31, 2009) under which one of our European
subsidiaries is the borrower.
Borrowings under the senior secured credit facilities bear
interest at a rate equal to, as determined by the type of
borrowing, either an applicable margin plus, at our option,
either (a) a base rate determined by reference to the
higher of (1) the federal funds rate plus 0.50% or
(2) the prime rate of Bank of America or (b) a LIBOR
rate for the currency of such borrowing for the relevant
interest period, plus, in each case, an applicable margin. The
applicable margin for borrowings under the senior secured credit
facilities, with the exception of term loan B where the margin
is static, may be reduced subject to attaining certain leverage
ratios.
The ABL credit facility and the $2.000 billion revolving
credit facility portion of the cash flow credit facility expire
November 2012. The term loan facilities require quarterly
installment payments. The final payment under term loan A is in
November 2012. The final payments under term loan B and the
European term loan are in November 2013. The senior secured
credit facilities contain a number of covenants that restrict,
subject to certain exceptions, our (and some or all of our
subsidiaries’) ability to incur additional indebtedness,
repay subordinated indebtedness, create liens on assets, sell
assets, make investments, loans or advances, engage in certain
transactions with affiliates, pay dividends and distributions,
and enter into sale and
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 9 —
LONG-TERM DEBT (Continued)
leaseback transactions. In addition, we are required to satisfy
and maintain a maximum total leverage ratio covenant under the
cash flow credit facility and, in certain situations under the
ABL credit facility, a minimum interest coverage ratio covenant.
During April 2009, we issued $1.500 billion aggregate
principal amount of
81/2% senior
secured first lien notes due 2019 at a price of 96.755% of their
face value, resulting in $1.451 billion of gross proceeds.
During August 2009, we issued $1.250 billion aggregate
principal amount of
77/8% senior
secured first lien notes due 2020 at a price of 98.254% of their
face value, resulting in $1.228 billion of gross proceeds.
After the payment of related fees and expenses, we used the
proceeds from these debt issuances to repay outstanding
indebtedness under our senior secured term loan facilities.
We use interest rate swap agreements to manage the variable rate
exposure of our debt portfolio. At December 31, 2009, we
had entered into effective interest rate swap agreements, in a
total notional amount of $8.5 billion, in order to hedge a
portion of our exposure to variable rate interest payments
associated with the senior secured credit facility. The effect
of the interest rate swaps is reflected in the effective
interest rates for the senior secured credit facilities.
Senior
Secured Notes And Other Second Lien Debt
In November 2006, we issued $4.200 billion of senior
secured notes (comprised of $1.000 billion of
91/8% notes
due 2014 and $3.200 billion of
91/4% notes
due 2016), and $1.500 billion of
95/8%
cash/103/8%
in-kind senior secured toggle notes (which allow us, at our
option, to pay interest in-kind during the first five years) due
2016, which are subject to certain standard covenants. We made
the interest payment for the interest period ended in May 2009
by paying in-kind ($78 million) instead of paying interest
in cash.
During February 2009, we issued $310 million aggregate
principal amount of
97/8% senior
secured second lien notes due 2017 at a price of 96.673% of
their face value, resulting in $300 million of gross
proceeds. After the payment of related fees and expenses, we
used the proceeds to repay outstanding indebtedness under our
senior secured term loan facilities.
General
Debt Information
The senior secured credit facilities and senior secured notes
are fully and unconditionally guaranteed by substantially all
existing and future, direct and indirect, wholly-owned material
domestic subsidiaries that are “Unrestricted
Subsidiaries” under our Indenture (the “1993
Indenture”) dated December 16, 1993 (except for
certain special purpose subsidiaries that only guarantee and
pledge their assets under our ABL credit facility). In addition,
borrowings under the European term loan are guaranteed by all
material, wholly-owned European subsidiaries.
All obligations under the ABL credit facility, and the
guarantees of those obligations, are secured, subject to
permitted liens and other exceptions, by a first-priority lien
on substantially all of the receivables of the borrowers and
each guarantor under such ABL credit facility (the
“Receivables Collateral”).
All obligations under the cash flow credit facility and the
guarantees of such obligations are secured, subject to permitted
liens and other exceptions, by:
•
a first-priority lien on the capital stock owned by HCA Inc., or
by any U.S. guarantor, in each of their respective
first-tier subsidiaries;
•
a first-priority lien on substantially all present and future
assets of HCA Inc. and of each U.S. guarantor other than
(i) “Principal Properties” (as defined in the
1993 Indenture), (ii) certain other real properties
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 9 —
LONG-TERM DEBT (Continued)
and (iii) deposit accounts, other bank or securities
accounts, cash, leaseholds, motor-vehicles and certain other
exceptions; and
•
a second-priority lien on certain of the Receivables Collateral.
Our senior secured first lien notes and the related guarantees
are secured by first-priority liens, subject to permitted liens,
on our and our subsidiary guarantors’ assets, subject to
certain exceptions, that secure our cash flow credit facility on
a first-priority basis and are secured by second priority liens,
subject to permitted liens, on our and our subsidiary
guarantors’ assets that secure our ABL credit facility on a
first priority basis and our other cash flow credit facility on
a second-priority basis.
Our second lien debt and the related guarantees are secured by
second-priority liens, subject to permitted liens, on our and
our subsidiary guarantors’ assets, subject to certain
exceptions, that secure our cash flow credit facility on a
first-priority basis and are secured by third-priority liens,
subject to permitted liens, on our and our subsidiary
guarantors’ assets that secure our asset-based revolving
credit facility on a first priority basis and our other cash
flow credit facility on a second-priority basis.
Maturities of long-term debt in years 2011 through 2014 are
$629 million, $3.273 billion, $8.108 billion and
$1.646 billion, respectively.
NOTE 10 —
CONTINGENCIES
We operate in a highly regulated and litigious industry. As a
result, various lawsuits, claims and legal and regulatory
proceedings have been and can be expected to be instituted or
asserted against us. The resolution of any such lawsuits, claims
or legal and regulatory proceedings could have a material,
adverse effect on our results of operations or financial
position in a given period.
We are subject to claims and suits arising in the ordinary
course of business, including claims for personal injuries or
wrongful restriction of, or interference with, physicians’
staff privileges. In certain of these actions the claimants may
seek punitive damages against us which may not be covered by
insurance. It is management’s opinion that the ultimate
resolution of these pending claims and legal proceedings will
not have a material, adverse effect on our results of operations
or financial position.
NOTE 11 —
CAPITAL STOCK
The Company’s certificate of incorporation and by-laws were
amended and restated, effective March 27, 2008 and
March 26, 2008, respectively. The amended and restated
certificate of incorporation authorizes the Company to issue up
to 125,000,000 shares of common stock, and the amended and
restated by-laws set the number of directors constituting the
board of directors of the Company at not less than one nor more
than 15.
Stockholder
Agreements and Equity Securities with Contingent
Redemption Rights
The stockholder agreements, among other things, contain
agreements among the parties with respect to restrictions on the
transfer of shares, including tag along rights and drag along
rights, registration rights (including customary indemnification
provisions) and other rights. Pursuant to the management
stockholder agreements, the applicable employees can elect to
have the Company redeem their common stock and vested stock
options in the events of death or permanent disability, prior to
the consummation of the initial public offering of common stock
by the Company. At December 31, 2009, 1,968,400 common
shares and 4,207,800 vested stock options were subject to these
contingent redemption terms.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 12 —
EMPLOYEE BENEFIT PLANS
We maintain contributory, defined contribution benefit plans
that are available to employees who meet certain minimum
requirements. Certain of the plans require that we match
specified percentages of participant contributions up to certain
maximum levels (generally, 100% of the first 3% to 9%, depending
upon years of vesting service, of compensation deferred by
participants for periods subsequent to March 31, 2008, and
50% of the first 3% of compensation deferred by participants for
periods prior to April 1, 2008). The cost of these plans
totaled $283 million for 2009, $233 million for 2008
and $86 million for 2007. Our contributions are funded
periodically during each year.
We maintained a noncontributory, defined contribution retirement
plan which covered substantially all employees. Benefits were
determined as a percentage of a participant’s salary and
vest over specified periods of employee service. Benefits
expense was $46 million for 2008 and $203 million for
2007. There was no expense for 2009 as the noncontributory plan
and the related participant account balances were merged into
the contributory HCA 401(k) Plan effective April 1, 2008.
We maintain the noncontributory, nonqualified Restoration Plan
to provide certain retirement benefits for eligible employees.
Eligibility for the Restoration Plan is based upon earning
eligible compensation in excess of the Social Security Wage Base
and attaining 1,000 or more hours of service during the plan
year. Company credits to participants’ account balances
(the Restoration Plan is not funded) depend upon
participants’ compensation, years of vesting service and
certain IRS limitations related to the HCA 401(k) plan. Benefits
expense under this plan was $26 million for 2009,
$2 million for 2008 and $20 million for 2007. Accrued
benefits liabilities under this plan totaled $73 million at
December 31, 2009 and $48 million at December 31,2008.
We maintain a Supplemental Executive Retirement Plan
(“SERP”) for certain executives. The plan is designed
to ensure that upon retirement the participant receives the
value of a prescribed life annuity from the combination of the
SERP and our other benefit plans. Benefits expense under the
plan was $24 million for 2009, $20 million for 2008
and $20 million for 2007. Accrued benefits liabilities
under this plan totaled $152 million at December 31,2009 and $133 million at December 31, 2008.
We maintain defined benefit pension plans which resulted from
certain hospital acquisitions in prior years. Benefits expense
under these plans was $39 million for 2009,
$24 million for 2008, and $27 million for 2007.
Accrued benefits liabilities under these plans totaled
$115 million at December 31, 2009 and
$142 million at December 31, 2008.
NOTE 13 —
SEGMENT AND GEOGRAPHIC INFORMATION
We operate in one line of business, which is operating hospitals
and related health care entities. During the years ended
December 31, 2009, 2008 and 2007, approximately 23%, 23%
and 24%, respectively, of our revenues related to patients
participating in the
fee-for-service
Medicare program.
Our operations are structured into three geographically
organized groups: the Eastern Group includes 48 consolidating
hospitals located in the Eastern United States, the Central
Group includes 46 consolidating hospitals located in the Central
United States and the Western Group includes 55 consolidating
hospitals located in the Western United States. We also operate
six consolidating hospitals in England, and these facilities are
included in the Corporate and other group.
Adjusted segment EBITDA is defined as income before depreciation
and amortization, interest expense, losses (gains) on sales of
facilities, impairment of long-lived assets, income taxes and
net income attributable to noncontrolling interests. We use
adjusted segment EBITDA as an analytical indicator for purposes
of allocating resources to geographic areas and assessing
performance. Adjusted segment EBITDA is commonly used as an
analytical indicator within the health care industry, and also
serves as a measure of leverage
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 13 —
SEGMENT AND GEOGRAPHIC INFORMATION (Continued)
capacity and debt service ability. Adjusted segment EBITDA
should not be considered as a measure of financial performance
under generally accepted accounting principles, and the items
excluded from adjusted segment EBITDA are significant components
in understanding and assessing financial performance. Because
adjusted segment EBITDA is not a measurement determined in
accordance with generally accepted accounting principles and is
thus susceptible to varying calculations, adjusted segment
EBITDA, as presented, may not be comparable to other similarly
titled measures of other companies.
The geographic distributions of our revenues, equity in earnings
of affiliates, adjusted segment EBITDA, depreciation and
amortization, assets and goodwill are summarized in the
following table (dollars in millions):
During 2009, we refined our allowance for doubtful accounts
estimation process to include separate estimates of pending
charity and pending uninsured discount amounts. These amounts
were previously included in the allowance for doubtful accounts,
but at December 31, 2009, we recorded these estimated
amounts as reductions to accounts receivable. This
reclassification has no effect on net accounts receivable and
the prior year amounts have been reclassified to conform with
the 2009 presentation. The incremental, annual amounts
reclassified were $135 million, $116 million and
$39 million for the years ended December 31, 2009,
2008 and 2007, respectively.
NOTE 16 —
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION
The senior secured credit facilities and senior secured notes
described in Note 9 are fully and unconditionally
guaranteed by substantially all existing and future, direct and
indirect, wholly-owned material domestic subsidiaries that are
“Unrestricted Subsidiaries” under our Indenture dated
December 16, 1993 (except for certain special purpose
subsidiaries that only guarantee and pledge their assets under
our ABL credit facility).
Our condensed consolidating balance sheets at December 31,2009 and 2008 and condensed consolidating statements of income
and cash flows for each of the three years in the period ended
December 31, 2009, segregating the parent company issuer,
the subsidiary guarantors, the subsidiary non-guarantors and
eliminations, follow.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 16 —
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
Healthtrust, Inc. — The Hospital Company
(“Healthtrust”) is the first-tier subsidiary of HCA
Inc. The common stock of Healthtrust has been pledged as
collateral for the senior secured credit facilities and senior
secured notes described in Note 9. Rule 3-16 of
Regulation S-X
under the Securities Act requires the filing of separate
financial statements for any affiliate of the registrant whose
securities constitute a substantial portion of the collateral
for any class of securities registered or being registered. We
believe the separate financial statements requirement applies to
Healthtrust due to the pledge of its common stock as collateral
for the senior secured notes. Due to the corporate structure
relationship of HCA and Healthtrust, HCA’s operating
subsidiaries are also the operating subsidiaries of Healthtrust.
The corporate structure relationship, combined with the
application of push-down accounting in Healthtrust’s
consolidated financial statements related to HCA’s debt and
financial instruments, results in the consolidated financial
statements of Healthtrust being substantially identical to the
consolidated financial statements of HCA. The consolidated
financial statements of HCA and Healthtrust present the
identical amounts for revenues, expenses, net income, assets,
liabilities, total stockholders’ deficit, net cash provided
by operating activities, net cash used in investing activities
and net cash used in financing activities. Certain individual
line items in the HCA consolidated statements of
stockholders’ deficit and cash flows are combined into one
line item in the Healthtrust consolidated statements of
stockholder’s deficit and cash flows.
Reconciliations of the HCA Inc. Consolidated Statements of
Stockholders’ Deficit and Consolidated Statements of Cash
Flows presentations to the Healthtrust, Inc. — The
Hospital Company Consolidated Statements of Stockholder’s
Deficit and Consolidated Statements of Cash Flows presentations
for the years ended December 31, 2009, 2008 and 2007 are as
follows (dollars in millions):
2009
2008
2007
Presentation in HCA Inc. Consolidated Statements of
Stockholders’ Deficit:
Equity contributions
$
—
$
—
$
60
Share-based benefit plans
47
40
24
Other
14
2
28
Presentation in Healthtrust, Inc. — The Hospital
Company Consolidated Statements of Stockholder’s Deficit:
Distributions from HCA Inc., net of contributions to HCA
Inc.
$
61
$
42
$
112
Presentation in HCA Inc. Consolidated Statements of Cash Flows
(cash flows from financing activities):
Issuances of common stock
$
—
$
—
$
100
Other
—
(9
)
(2
)
Presentation in Healthtrust Inc. — The Hospital
Company Consolidated Statements of Cash Flows (cash flows from
financing activities):
Net cash distributions (to) from HCA Inc.
$
—
$
(9
)
$
98
Due to the consolidated financial statements of Healthtrust
being substantially identical to the consolidated financial
statements of HCA, except for the items presented in the tables
above, the separate consolidated financial statements of
Healthtrust are not presented.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
NOTE 17 —
SUBSEQUENT EVENT
On January 27, 2010, our Board of Directors declared a
distribution to the Company’s stockholders and holders of
vested stock options. The distribution was $17.50 per share and
vested stock option, or approximately $1.750 billion in the
aggregate. The distribution was paid on February 5, 2010 to
holders of record on February 1, 2010. The distribution was
funded using funds available under our existing senior secured
credit facilities and approximately $100 million of cash on
hand. Pursuant to the terms of our stock option plans, the
holders of nonvested stock options received a $17.50 per share
reduction to the exercise price of their share-based awards.
First quarter results include $3 million of losses on sales
of facilities (See NOTE 3 of the notes to consolidated
financial statements) and $6 million of costs related to
the impairment of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
(b)
Second quarter results include $2 million of losses on
sales of facilities (See NOTE 3 of the notes to
consolidated financial statements) and $2 million of costs
related to the impairment of long-lived assets (See NOTE 4
of the notes to consolidated financial statements).
(c)
Third quarter results include $2 million of costs related
to the impairment of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
(d)
Fourth quarter results include $4 million of losses on
sales of facilities (See NOTE 3 of the notes to
consolidated financial statements) and $24 million of costs
related to the impairment of long-lived assets (See NOTE 4
of the notes to consolidated financial statements).
(e)
First quarter results include $30 million of gains on sales
of facilities (See NOTE 3 of the notes to consolidated
financial statements).
(f)
Second quarter results include $6 million of losses on
sales of facilities (See NOTE 3 of the notes to
consolidated financial statements) and $6 million of costs
related to the impairment of long-lived assets (See NOTE 4
of the notes to consolidated financial statements).
(g)
Third quarter results include $29 million of gains on sales
of facilities (See NOTE 3 of the notes to consolidated
financial statements) and $28 million of costs related to
the impairment of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
(h)
Fourth quarter results include $5 million of gains on sales
of facilities (See NOTE 3 of the notes to consolidated
financial statements) and $6 million of costs related to
the impairment of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
$310,000,000 aggregate principal amount of its
97/8% Senior
Secured Notes due 2017, $1,500,000,000 aggregate principal
amount of its
81/2%
Senior Secured Notes due 2019, $1,250,000,000 aggregate
principal amount of its
77/8%
Senior Secured Notes due 2020 and $1,400,000,000 aggregate
principal amount of its
71/4%
Senior Secured Notes due 2020, each of which have been
registered under the Securities Act of 1933, as amended, for any
and all of its outstanding
97/8% Senior
Secured Notes due 2017,
81/2%
Senior Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020 and
71/4%
Senior Secured Notes due 2020, respectively.
Until the date that is 90 days from the date of this
prospectus, all dealers that effect transactions in these
securities, whether or not participating in this offering, may
be required to deliver a prospectus. This is in addition to the
dealers’ obligation to deliver a prospectus when acting as
underwriters with respect to their unsold allotments or
subscriptions or otherwise.
(a) Columbia ASC Management, L.P. and Riverside
Healthcare System, L.P. are registered under the laws of
California.
The partnership agreements of Columbia ASC Management, L.P. and
Riverside Healthcare System, L.P. provide that the limited
partner shall indemnify and hold harmless the general partner;
its partners, managers, employees, agents and representatives;
and the officers, directors, employees, agents and
representatives of its partners to the fullest extent permitted
by the California Limited Partnership Act and the California
Revised Partnership Act. Neither of these acts, however,
addresses indemnification.
Section 15904.06 (Operative January 1, 2008) of
the 2008 California Revised Limited Partnership Act addresses
the rights of a general partner with respect to its management
and conduct of partnership activities. The 2008 California
Revised Limited Partnership Act provides that a limited
partnership shall reimburse a general partner for payments made,
and indemnify a general partner for liabilities incurred by, the
general partner in the ordinary course of the activities of the
partnership or for the preservation of its activities or
property.
(b) Columbia Riverside, Inc., Encino Hospital
Corporation, Inc., Los Robles Regional Medical Center and MCA
Investment Company are incorporated under the laws of
California.
Section 317 of the California General Corporation Law sets
forth the provisions pertaining to the indemnification of
corporate “agents.” For purposes of this law, an agent
is any person who is or was a director, officer, employee or
other agent of a corporation, or is or was serving at the
request of the corporation in such capacity with respect to any
other corporation, partnership, join venture, trust or other
enterprise. Indemnification for expenses, including amounts paid
on settling or otherwise disposing of a threatened or pending
action or defending against the same, can be made in certain
circumstances by action of the company through:
•
a majority vote of a quorum of the corporation’s Board of
Directors consisting of directors who are not party to the
proceedings;
•
approval of the shareholders, with the shares owned by the
person to be indemnified not being entitled to vote
thereon; or
•
such court in which the proceeding is or was pending upon
application by designated parties.
Under certain circumstances, an agent can be indemnified, even
when found liable. Indemnification is mandatory where the
agent’s defense is successful on the merits. The law allows
a corporation to make advances of expenses for certain actions
upon the receipt of an undertaking that the agent will reimburse
the corporation if the agent is found liable. The
indemnification provided by Section 317 for acts while
serving as a director or officer of the corporation, but not
involving breach of duty to the corporation and its
shareholders, shall not be deemed exclusive of any other rights
to which those seeking indemnification may be entitled under any
bylaw to the extent authorized by the corporation’s
articles of the corporation.
The bylaws of each of the California Registrants in this
section (b) provide, in relevant part, that each of the
Registrants will indemnify its respective officers and
directors, under the circumstances and to the extent provided
for therein, for expenses, damages, judgments, fines and
settlements such officers and directors may be required to pay
in any action, suit or proceeding which they are or may be made
a party by reason of their position as a director, officer or
other agent of such Registrant, and otherwise to the full extent
permitted under California law and our bylaws for any action
taken on behalf of the corporation that does not involve gross
negligence or willful misconduct.
(c) Surgicare of Riverside, LLC is registered under the
laws of California.
Under Section 17155 of the California Limited Liability
Company Act, except for a breach of duty, the articles of
organization or written operating agreement of a limited
liability company may provide for indemnification of any person,
including, without limitation, any manager, member, officer,
employee or agent of the limited liability company, against
judgments, settlements, penalties, fines or expenses of any kind
incurred as a result of acting in that capacity. A limited
liability company shall have the power to purchase and maintain
insurance on behalf of any manager, member, officer, employee or
agent of the limited liability company against any liability
asserted against or incurred by the person in that capacity or
arising out of the person’s status as a manager, member,
officer, employee or agent of the limited liability company.
The limited liability company agreement of Surgicare of
Riverside, LLC states that the company shall indemnify its
officers and managers against all reasonable expense incurred by
them in defending claims or suits, irrespective of the time of
the occurrence of the claims or causes of action in such suits,
made or brought against them as officers or managers of the
company, and against all liability in such suits, except in such
cases as involve gross negligence or willful misconduct in the
performance of their duties. Such indemnification extends to the
payment of judgments against such officers and managers and to
reimbursement of amounts paid in settlement of such claims or
actions and may apply to judgments in favor of the company or
amounts paid in settlement to the company. Such indemnification
also extends to the payment of counsel fees and expenses of such
officers and managers in suits against them where successfully
defended by them or where unsuccessfully defended, if there is
no finding or judgment that the claim or action arose from the
gross negligence or willful misconduct of such officers or
directors. Such right of indemnification is not exclusive of any
right to which such officer or director may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and directors.
Colorado
Registrants
(a) Colorado Health Systems, Inc., Columbine Psychiatric
Center, Inc. and New Rose Holding Company, Inc. are incorporated
under the laws of Colorado.
Sections 7-109-102
through 7-109-110 of the Colorado Business Corporation Act (the
“Act”) grant the registrants’ broad powers to
indemnify any person in connection with legal proceedings
brought against him by reason of his present or past status as
an officer or director of the registrant, provided with respect
to conduct in an official capacity with the registrant, the
person acted in good faith and in a manner he reasonably
believed to be in the best interests of the registrant, with
respect to all other conduct, the person believed the conduct to
be at least not opposed to the best interests of the registrant,
and with respect to any criminal action or proceeding, the
person had no reasonable cause to believe his conduct was
unlawful. Indemnification is limited to reasonable expenses
incurred in connection with the proceeding. No indemnification
may be made (i) in connection with a proceeding by or in
the right of the registrant in which the person was adjudged
liable to the registrant; or (ii) in connection with any
other proceedings charging that the person derived an improper
personal benefit, whether or not involving action in an official
capacity, in which proceeding the person was judged liable on
the basis that he derived an improper personal benefit, unless
and only to the extent the court in which such action was
brought or another court of competent jurisdiction determines
upon application that, despite such adjudication, but in view of
all relevant circumstances, the person is fairly and reasonably
entitled to indemnity for reasonable expenses as the court deems
proper. In addition, to the extent that any such person is
successful in the defense of any such legal proceeding, the
registrant is required by the Act to indemnify him against
reasonable expenses.
The bylaws of these Colorado registrants state that the
corporation shall indemnify its officers and directors against
all reasonable expense incurred by them in defending claims or
suits, irrespective of the time of the occurrence of the claims
or causes of action in such suits, made or brought against them
as officers or directors of the corporation, and against all
liability in such suits, except in such cases as involve gross
negligence or willful misconduct in the performance of their
duties. Such indemnification extends to the payment of judgments
against such officers and directors and to reimbursement of
amounts paid in settlement of such claims or actions and may
apply to judgments in favor of the corporation or amounts paid
in
settlement to the corporation. Such indemnification also extends
to the payment of counsel fees and expenses of such officers and
directors in suits against them where successfully defended by
them or where unsuccessfully defended, if there is no finding or
judgment that the claim or action arose from the gross
negligence or willful misconduct of such officers or directors.
Such right of indemnification is not exclusive of any right to
which such officer or director may be entitled as a matter of
law and shall extend and apply to the estates of deceased
officers and directors.
Delaware
Registrants
(a) HCA Inc., American Medicorp Development Co.,
GPCH-GP, Inc., HCA — IT&S Field Operations, Inc.,
HCA — IT&S Inventory Management, Inc., Management
Services Holdings, Inc., Midwest Holdings, Inc., Hospital
Development Properties, Inc., Riverside Hospital, Inc., Terre
Haute Hospital GP, Inc. and Terre Haute Hospital Holdings, Inc.
are incorporated under the laws of Delaware.
Section 145 of the Delaware General Corporation Law (the
“DGCL”) grants each corporation organized thereunder
the power to indemnify any person who is or was a director,
officer, employee or agent of a corporation or enterprise,
against expenses, including attorneys’ fees, judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, other than an action by or in
the right of the corporation, by reason of being or having been
in any such capacity, if he acted in good faith in a manner
reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Section 102(b)(7) of the DGCL enables a corporation in its
certificate of incorporation or an amendment thereto to
eliminate or limit the personal liability of a director to the
corporation or its stockholders of monetary damages for
violations of the directors’ fiduciary duty of care, except
(i) for any breach of the directors’ duty of loyalty
to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock
purchases or redemptions) or (iv) for any transaction from
which a director derived an improper personal benefit.
HCA Inc.’s bylaws indemnify the directors and officers to
the full extent of the DGCL and also allow the Board of
Directors to indemnify all other employees. The bylaws of the
remainder of the Delaware corporate registrants indemnify their
officers and directors against all reasonable expense incurred
by them in defending claims or suits, irrespective of the time
of the occurrence of the claims or causes of action in such
suits, made or brought against them as officers or directors of
the corporation, and against all liability in such suits, except
in such cases as involve gross negligence or willful misconduct
in the performance of their duties. Such indemnification extends
to the payment of judgments against such officers and directors
and to reimbursement of amounts paid in settlement of such
claims or actions and may apply to judgments in favor of the
corporation or amounts paid in settlement to the corporation.
Such indemnification also extends to the payment of counsel fees
and expenses of such officers and directors in suits against
them where successfully defended by them or where unsuccessfully
defended, if there is no finding or judgment that the claim or
action arose from the gross negligence or willful misconduct of
such officers or directors. Such right of indemnification is not
exclusive of any right to which such officer or director may be
entitled as a matter of law and shall extend and apply to the
estates of deceased officers and directors.
(b) Nashville Shared Services General Partnership is a
general partnership under the laws of Delaware and Integrated
Regional Laboratories, LLP is registered under the laws of
Delaware.
Section 15-110
of the Delaware Revised Uniform Partnership Act provides that
subject to such standards and restrictions, if any, as are set
forth in its partnership agreement, a partnership may, and shall
have the power to, indemnify and hold harmless any partner or
other person from and against any and all claims and demands
whatsoever.
The Nashville Shared Services General Partnership partnership
agreement states that indemnification is controlled by the
Delaware Revised Uniform Partnership Act. The partnership
agreement of Integrated
Regional Laboratories, LLP indemnifies its officers and
directors against all reasonable expense incurred by them in
defending claims or suits, irrespective of the time of the
occurrence of the claims or causes of action in such suits, made
or brought against them as officers or directors of the company,
and against all liability in such suits, except in such cases as
involve gross negligence or willful misconduct in the
performance of their duties. Such indemnification extends to the
payment of judgments against such officers and directors and to
reimbursement of amounts paid in settlement of such claims or
actions and may apply to judgments in favor of the company or
amounts paid in settlement to the company. Such indemnification
also extends to the payment of counsel fees and expenses of such
officers and directors in suits against them where successfully
defended by them or where unsuccessfully defended, if there is
no finding or judgment that the claim or action arose from the
gross negligence or willful misconduct of such officers or
directors. Such right of indemnification is not exclusive of any
right to which such officer or director may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and directors.
(c) Centerpoint Medical Center of Independence, LLC, CMS
GP, LLC, Dallas/Ft. Worth Physician, LLC, EP Health, LLC,
Fairview Park GP, LLC, Goppert-Trinity Family Care, LLC, Grand
Strand Regional Medical Center, LLC, Healthtrust MOB, LLC, HSS
Holdco, LLC, HSS Systems VA, LLC, HSS Systems, LLC, Lakeland
Medical Center, LLC, Lakeview Medical Center, LLC, Lewis-Gale
Medical Center, LLC, Medical Centers of Oklahoma, LLC, Medical
Office Buildings of Kansas, LLC, Midwest Division —
ACH, LLC, Midwest Division — LRHC, LLC, Midwest
Division — LSH, LLC, Midwest Division — MCI,
LLC, Midwest Division — MMC, LLC, Midwest
Division — OPRMC, LLC, Midwest Division —
PFC, LLC, Midwest Division — RMC, LLC, Midwest
Division — RPC, LLC, Notami Hospitals, LLC, Outpatient
Cardiovascular Center of Central Florida, LLC, Reston Hospital
Center, LLC, Samaritan, LLC, San Jose Medical Center, LLC,
San Jose, LLC, SJMC, LLC, Trident Medical Center, LLC, Utah
Medco, LLC and Wesley Medical Center, LLC are registered under
the laws of Delaware.
Section 18-108
of the Delaware Limited Liability Company Act empowers a
Delaware limited liability company to indemnify and hold
harmless any member or manager of the limited liability company
from and against any and all claims and demands whatsoever.
The operating agreement of Healthtrust MOB, LLC indemnifies the
directors and officers to the full extent of the law. The
operating agreements of the remainder of the Delaware limited
liability company registrants indemnify their officers and
directors against all reasonable expense incurred by them in
defending claims or suits, irrespective of the time of the
occurrence of the claims or causes of action in such suits, made
or brought against them as officers or directors of the company,
and against all liability in such suits, except in such cases as
involve gross negligence or willful misconduct in the
performance of their duties. Such indemnification extends to the
payment of judgments against such officers and directors and to
reimbursement of amounts paid in settlement of such claims or
actions and may apply to judgments in favor of the company or
amounts paid in settlement to the company. Such indemnification
also extends to the payment of counsel fees and expenses of such
officers and directors in suits against them where successfully
defended by them or where unsuccessfully defended, if there is
no finding or judgment that the claim or action arose from the
gross negligence or willful misconduct of such officers or
directors. Such right of indemnification is not exclusive of any
right to which such officer or director may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and directors.
(d) CHCA Bayshore, L.P., CHCA Conroe, L.P., CHCA
Mainland, L.P., CHCA West Houston, L.P., CHCA Woman’s
Hospital, L.P., Columbia Valley Healthcare System, L.P.,
Columbia Rio Grande Healthcare, L.P., HCA Management Services,
L.P., Good Samaritan Hospital, L.P., JFK Medical Center Limited
Partnership, Palms West Hospital Limited Partnership, Plantation
General Hospital, L.P., San Jose Healthcare System, LP,
Terre Haute Regional Hospital, L.P. and San Jose Hospital,
L.P. are registered under the laws of Delaware.
Section 17-108
of the Delaware Revised Uniform Limited Partnership Act
(“DRULPA”) permits a limited partnership to indemnify
and hold harmless any partner or other person from and against
any and all claims and demands whatsoever.
The Columbia Valley Healthcare System, L.P. partnership
agreement allows the partnership to indemnify the general
partners for everything but willful misconduct or gross
negligence. The other Delaware limited partnership registrants
allow for indemnification to the fullest extent under the DRULPA.
Florida
Registrants
(a) Bay Hospital, Inc., Central Florida Regional
Hospital, Inc., Columbia Jacksonville Healthcare System, Inc.,
Edward White Hospital, Inc., HCA Health Services of Florida,
Inc., HD&S Corp. Successor, Inc., Largo Medical Center,
Inc., Lawnwood Medical Center, Inc., Marion Community Hospital,
Inc., Memorial Healthcare Group, Inc., New Port Richey Hospital,
Inc., North Florida Immediate Care Center, Inc., North Florida
Regional Medical Center, Inc., Okaloosa Hospital, Inc.,
Okeechobee Hospital, Inc., Sarasota Doctors Hospital, Inc., Sun
City Hospital, Inc., Surgicare of Brandon, Inc., Surgicare of
Florida, Inc., Surgicare of Manatee, Inc., Surgicare of New Port
Richey, Inc., Tallahassee Medical Center, Inc. and West Florida
Regional Medical Center, Inc. are incorporated under the laws of
Florida.
Section 607.0831 of the Florida Business Corporation Act
provides, among other things, that a director is not personally
liable for monetary damages to a company or any other person for
any statement, vote, decision, or failure to act, by the
director, regarding corporate management or policy, unless the
director breached or failed to perform his or her duties as a
director and such breach or failure constitutes (a) a
violation of criminal law, unless the director had reasonable
cause to believe his or her conduct was lawful or had no
reasonable cause to believe his or her conduct was unlawful;
(b) a transaction from which the director derived an
improper personal benefit; (c) a circumstance under which
the liability provisions of Section 607.0834 of the Florida
Business Corporation Act (relating to the liability of the
directors for improper distributions) are applicable;
(d) willful misconduct or a conscious disregard for the
best interest of the company in the case of a proceeding by or
in the right of the company to procure a judgment in its favor
or by or in the right of a stockholders; or
(e) recklessness or an act or omission in bad faith or with
malicious purpose of with wanton and willful disregard of human
rights, safety or property, in a proceeding by or in the right
of someone other than such company or a stockholder.
Section 607.0850 of the Florida Business Corporation Act
authorizes, among other things, a company to indemnify any
person who was or is a party to any proceeding (other than an
action by or in the right of the company) by reason of the fact
that he is or was a director, officer, employee or agent of the
company (or is or was serving at the request of the company in
such a position for any entity) against liability incurred in
connection with such proceedings, if he or she acted in good
faith and in a manner reasonably believed to be in the best
interests of the company and, with respect to criminal
proceedings, had no reasonable cause to believe his or her
conduct was unlawful.
The Florida Business Corporation Act requires that a director,
officer or employee be indemnified for actual and reasonable
expenses (including attorneys’ fees) to the extent that he
or she has been successful on the merits or otherwise in the
defense of any proceeding. Florida law also allows expenses of
defending a proceeding to be advanced by a company before the
final disposition of the proceedings, provided that the officer,
director or employee undertakes to repay such advance if it is
ultimately determined that indemnification is not permitted.
The Florida Business Corporation Act states that the
indemnification and advancement of expenses provided pursuant to
Section 607.0850 is not exclusive and that indemnification
may be provided by a company pursuant to other means, including
agreements or bylaw provisions. Florida law prohibits
indemnification or advancement of expenses, however, if a
judgment or other final adjudication establishes that the
actions of a director, officer or employee constitute (i) a
violation of criminal law, unless he or she had reasonable cause
to believe his or her conduct was lawful or had no reasonable
cause to believe his or her conduct was unlawful; (ii) a
transaction from which such person derived an improper personal
benefit; (iii) willful misconduct or conscious disregard
for the best interests of the company in the case of a
derivative action or a proceeding by or in the right of a
stockholder, or (iv) in the case of a director, a
circumstance
under which the liability provisions of Section 607.0834 of
the Florida Business Corporation Act (relating to the liability
of directors for improper distributions) are applicable.
The bylaws of all the Florida corporate registrants indemnify
their officers and directors against all reasonable expense
incurred by them in defending claims or suits, irrespective of
the time of the occurrence of the claims or causes of action in
such suits, made or brought against them as officers or
directors of the corporation, and against all liability in such
suits, except in such cases as involve gross negligence or
willful misconduct in the performance of their duties. Such
indemnification extends to the payment of judgments against such
officers and directors and to reimbursement of amounts paid in
settlement of such claims or actions and may apply to judgments
in favor of the corporation or amounts paid in settlement to the
corporation. Such indemnification also extends to the payment of
counsel fees and expenses of such officers and directors in
suits against them where successfully defended by them or where
unsuccessfully defended, if there is no finding or judgment that
the claim or action arose from the gross negligence or willful
misconduct of such officers or directors. Such right of
indemnification is not exclusive of any right to which such
officer or director may be entitled as a matter of law and shall
extend and apply to the estates of deceased officers and
directors.
(b) Integrated Regional Lab, LLC and Surgicare of Palms
West, LLC are registered under the laws of Florida.
Section 608.4229 of the Florida Limited Liability Company
Act indemnifies members, managers, managing members, officers,
employees, and agents subject to such standards and
restrictions, if any, as are set forth in its articles of
organization or operating agreement. A limited liability company
may, and has the power to, but is not be required to, indemnify
and hold harmless any member or manager or other person from and
against any and all claims and demands whatsoever.
Notwithstanding the foregoing, indemnification or advancement of
expenses should not be made to or on behalf of any member,
manager, managing member, officer, employee, or agent if a
judgment or other final adjudication establishes that the
actions, or omissions to act, of such member, manager, managing
member, officer, employee, or agent were material to the cause
of action so adjudicated and constitute any of the following:
(i) a violation of criminal law, unless the member,
manager, managing member, officer, employee, or agent had no
reasonable cause to believe such conduct was unlawful;
(ii) a transaction from which the member, manager, managing
member, officer, employee, or agent derived an improper personal
benefit; (iii) in the case of a manager or managing member,
a circumstance under which the liability provisions of
section 608.426 are applicable; or (iv) willful
misconduct or a conscious disregard for the best interests of
the limited liability company in a proceeding by or in the right
of the limited liability company to procure a judgment in its
favor or in a proceeding by or in the right of a member.
The operating agreements of both of the Florida limited
liability company registrants indemnify their officers and
managers against all reasonable expense incurred by them in
defending claims or suits, irrespective of the time of the
occurrence of the claims or causes of action in such suits, made
or brought against them as officers or managers of the company,
and against all liability in such suits, except in such cases as
involve gross negligence or willful misconduct in the
performance of their duties. Such indemnification extends to the
payment of judgments against such officers and managers and to
reimbursement of amounts paid in settlement of such claims or
actions and may apply to judgments in favor of the company or
amounts paid in settlement to the company. Such indemnification
also extends to the payment of counsel fees and expenses of such
officers and managers in suits against them where successfully
defended by them or where unsuccessfully defended, if there is
no finding or judgment that the claim or action arose from the
gross negligence or willful misconduct of such officers or
managers. Such right of indemnification is not exclusive of any
right to which such officer or manager may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and managers.
(a) Columbia Polk General Hospital, Inc., Columbus
Cardiology, Inc., Marietta Surgical Center, Inc., Palmyra Park
Hospital, Inc. and Redmond Physician Practice Company are
incorporated under the laws of Georgia.
Section 14-2-202(b)(4)
of the Georgia Business Corporation Code provides that a
corporation’s articles of incorporation may include a
provision that eliminates or limits the liability of directors
for monetary damages to a corporation or its shareholders for
any action taken, or failure to take any action, as a director.
The section does not, however, authorize a corporation to
eliminate or limit the liability of a director for
appropriating, in violation of his or her duties, any business
opportunity of the corporation, for acts or omissions which
involve intentional misconduct or a knowing violation of law,
for any transaction from which the director received an improper
personal benefit, or authorizing a dividend, stock repurchase or
redemption, distribution of assets or other distribution in
violation of
Section 14-2-640
of the Georgia Business Corporation Code if it is established
that the director did not perform his or her duties in
compliance with
Section 14-2-832
of the Georgia Business Corporation Code, which sets forth
general standards for directors.
Section 14-2-202(b)(4)
also does not eliminate or limit the right of a corporation or
any shareholder to seek an injunction, a rescission or any other
equitable (non-monetary) relief for any action taken or not
taken by a director. In addition,
Section 14-2-202(b)(4)
applies only to claims against a director arising out of his or
her role as a director and does not relieve a director from
liability arising from his or her role as an officer or in any
other capacity.
Sections 14-2-852
and 14-2-857
of the Georgia Business Corporation Code provide that any
director or officer who is wholly successful in the defense of
any proceeding to which he or she was a party because he or she
was an officer or a director of the corporation is entitled to
indemnification against reasonable expenses as of right. On the
other hand, if the charges made in any action are sustained, the
determination of whether the required standard of conduct has
been met will be made, in accordance with the provisions of
Georgia Business Corporation Code
Section 14-2-855,
by either the board of directors or a committee thereof, acting
by disinterested members, by special legal counsel or by the
shareholders, but shares owned by or voted under the control of
directors seeking indemnification may not be voted.
The bylaws of each of the Georgia corporate registrants
indemnify their officers and directors against all reasonable
expense incurred by them in defending claims or suits,
irrespective of the time of the occurrence of the claims or
causes of action in such suits, made or brought against them as
officers or directors of the corporation, and against all
liability in such suits, except in such cases as involve gross
negligence or willful misconduct in the performance of their
duties. Such indemnification extends to the payment of judgments
against such officers and directors and to reimbursement of
amounts paid in settlement of such claims or actions and may
apply to judgments in favor of the corporation or amounts paid
in settlement to the corporation. Such indemnification also
extends to the payment of counsel fees and expenses of such
officers and directors in suits against them where successfully
defended by them or where unsuccessfully defended, if there is
no finding or judgment that the claim or action arose from the
gross negligence or willful misconduct of such officers or
directors. Such right of indemnification is not exclusive of any
right to which such officer or director may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and directors.
(b) Dublin Community Hospital, LLC, Northlake Medical
Center, LLC and Redmond Park Hospital, LLC are registered under
the laws of Georgia.
Georgia law provides that a limited liability company may
indemnify a member, manager or other person against liability
incurred in connection with the limited liability company
subject to any standards or restrictions set forth in the
articles of organization or operating agreement. Unless the
member or manager is aware of information which would cause any
reliance to be unwarranted, he or she is entitled to rely upon
information prepared or presented by other members, managers,
committees and employees of the limited liability company and
legal counsel, public accountants or other professionals or
experts.
However, Georgia law does not permit indemnification if the
member or manager has engaged in any intentional misconduct or a
knowing violation of law or was involved in any transaction in
which the member
or manager received a personal benefit as a result of his or her
breach of any provision in the operating agreement.
The operating agreements of each of the Georgia limited
liability companies indemnify their officers and managers
against all reasonable expense incurred by them in defending
claims or suits, irrespective of the time of the occurrence of
the claims or causes of action in such suits, made or brought
against them as officers or managers of the limited liability
company, and against all liability in such suits, except in such
cases as involve gross negligence or willful misconduct in the
performance of their duties. Such indemnification extends to the
payment of judgments against such officers and managers and to
reimbursement of amounts paid in settlement of such claims or
actions and may apply to judgments in favor of the company or
amounts paid in settlement to the company. Such indemnification
also extends to the payment of counsel fees and expenses of such
officers and directors in suits against them where successfully
defended by them or where unsuccessfully defended, if there is
no finding or judgment that the claim or action arose from the
gross negligence or willful misconduct of such officers or
managers. Such right of indemnification is not exclusive of any
right to which such officer or manager may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and managers.
(b) Fairview Park, Limited Partnership is registered
under the laws of Georgia.
Section 14-9-108
of the Georgia Revised Uniform Limited Partnership Act provides
that:
(a) Subject to any limitations expressly set forth in the
partnership agreement, a limited partnership may, and shall have
the power to, indemnify and hold harmless any partner or other
person from and against any and all claims and demands
whatsoever, provided that the partnership shall not indemnify
any person:
(1) For intentional misconduct or a knowing violation of
law; or
(2) For any transaction for which the person received a
personal benefit in violation or breach of any provision of the
partnership agreement.
(b) To the extent that, at law or in equity, a partner has
duties including but not limited to fiduciary duties and
liabilities relating thereto to a limited partnership or another
partner:
(1) The partner’s duties and liabilities may be
expanded, restricted, or eliminated by provisions in the
partnership agreement; provided, however, that no such provision
shall eliminate or limit the liability of a partner for
intentional misconduct or a knowing violation of law or for any
transaction for which the partner received a personal benefit in
violation or breach of any provision of the partnership
agreement; and
(2) The partner shall have no liability to the limited
partnership or to any other partner for his or her good faith
reliance on the provisions of the partnership agreement,
including, without limitation, provisions thereof that relate to
the scope of duties including but not limited to fiduciary
duties of partners.
Fairview Park Limited Partnership’s Partnership Agreement
allows the limited partnership to indemnify its general partner,
directors and officers to the full extent of the Georgia Revised
Uniform Limited Partnership Act.
(a) Eastern Idaho Health Services, Inc. and West Valley
Medical Center, Inc. are incorporated under the laws of
Idaho.
Under Title 30,
Section 30-1-851
of the Idaho Code, a registrant’s directors and officers
may be indemnified against certain liabilities which they may
incur in their capacities as such. The material terms of the
indemnification provisions are indemnification:
•
with respect to civil, criminal, administrative or investigative
proceedings brought because the defendant is or was serving as
an officer, director, employee or agent of the company;
•
for judgments, fines and amounts paid in settlement reasonably
incurred;
•
if the defendant acted in good faith and reasonably believed in
the case of conduct in his official capacity that his conduct
was in the best interests of the company, and in all other cases
that his conduct was at least not opposed to the best interests
of the company; and
•
if, with respect to a criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful.
Attorneys’ fees are included in such indemnification to the
extent the indemnified party is successful on the merits in
defense of the proceeding. If the foregoing criteria are met,
indemnification also applies to a suit threatened or pending by
the company against the officer, director, employee or agent
with respect to attorneys’ fees unless there is negligence
on the part of the indemnified party. Indemnification is made
only upon a determination by the company that it is proper under
the circumstances because the applicable standard is met.
Generally, expenses for defense may be paid in advance of final
disposition of the proceeding if the indemnified party provides
a written affirmation of his good faith belief that he has met
the relevant standard of conduct under the Idaho Code and
further provides a written undertaking to repay such amounts if
it is determined that the applicable standard has not been met.
The bylaws of both of the Idaho corporate registrants indemnify
their officers and directors against all reasonable expense
incurred by them in defending claims or suits, irrespective of
the time of the occurrence of the claims or causes of action in
such suits, made or brought against them as officers or
directors of the corporation, and against all liability in such
suits, except in such cases as involve gross negligence or
willful misconduct in the performance of their duties. Such
indemnification extends to the payment of judgments against such
officers and directors and to reimbursement of amounts paid in
settlement of such claims or actions and may apply to judgments
in favor of the corporation or amounts paid in settlement to the
corporation. Such indemnification also extends to the payment of
counsel fees and expenses of such officers and directors in
suits against them where successfully defended by them or where
unsuccessfully defended, if there is no finding or judgment that
the claim or action arose from the gross negligence or willful
misconduct of such officers or directors. Such right of
indemnification is not exclusive of any right to which such
officer or director may be entitled as a matter of law and shall
extend and apply to the estates of deceased officers and
directors.
Illinois
Registrant
(a) Columbia LaGrange Hospital, Inc. is incorporated
under the laws of Illinois.
Section 8.75 of the Illinois Business Corporation Act of
1983, as amended (the “IBCA”), provides for a
limitation of director liability. Under Section 8.75 of the
IBCA, directors and officers may be indemnified by the
registrant against all expenses incurred in connection with
actions (including, under certain circumstances, derivative
actions) brought against such director or officer by reason of
his or her status as our representative, or by reason of the
fact that such director or officer serves or served as a
representative of another entity at our request, so long as the
director or officer acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, our best
interests.
The bylaws of Columbia La Grange Hospital, Inc. indemnify
its officers and directors against all reasonable expense
incurred by them in defending claims or suits, irrespective of
the time of the occurrence of the claims or causes of action in
such suits, made or brought against them as officers or
directors of the corporation, and against all liability in such
suits, except in such cases as involve gross negligence or
willful misconduct in the performance of their duties. Such
indemnification extends to the payment of judgments against such
officers and directors and to reimbursement of amounts paid in
settlement of such claims or actions and may apply to judgments
in favor of the corporation or amounts paid in settlement to the
corporation. Such indemnification also extends to the payment of
counsel fees and expenses of such officers and directors in
suits against them where successfully defended by them or where
unsuccessfully defended, if there is no finding or judgment that
the claim or action arose from the gross negligence or willful
misconduct of such officers or directors. Such right of
indemnification is not exclusive of any right to which such
officer or director may be entitled as a matter of law and shall
extend and apply to the estates of deceased officers and
directors.
Indiana
Registrant
(a) Terre Haute MOB, L.P. is registered under the laws
of Indiana.
Title 23, Article 16, Chapter 2 of the Indiana
Code provides that a domestic or foreign limited partnership may
indemnify a person made a party to an action because the person
is or was a partner or officer of the partnership against
liability incurred in the action if:
(1) the person’s conduct was in good faith; and
(2) the person reasonably believed:
(A) in the case of conduct in the person’s capacity as
a partner, that the person’s conduct was in the best
interests of the partnership; and
(B) in all other cases that the person’s conduct was
at least not opposed to the best interests of the limited
partnership or foreign limited partnership; and
(3) in the case of any criminal action, the person either:
(A) had reasonable cause to believe the person’s
conduct was lawful; or
(B) had no reasonable cause to believe the person’s
conduct was unlawful.
The indemnification provided for above does not exclude any
other rights to indemnification that a partner or officer of the
limited partnership may have under the partnership agreement or
with the written consent of all partners.
The general partners of Terre Haute MOB, L.P. are indemnified by
the partnership pursuant to the partnership agreement for all
actions relating to their performance or nonperformance on
behalf of the partnership.
Kentucky
Registrants
(a) Frankfort Hospital, Inc. and Greenview Hospital,
Inc. are incorporated under the laws of Kentucky.
Sections 271B.8-500
to 271B.8-580 of the Kentucky Business Corporation Act provides
that, subject to restrictions contained in the statute, a
corporation may indemnify any person made or threatened to be
made a party to any threatened, pending or completed action,
suit or proceeding by reason of the fact that he is or was a
director or officer of the corporation. A person who has been
successful on the merits or otherwise in any suit or matter
covered by the indemnification statute shall be indemnified
against expenses (including attorneys’ fees) reasonably
incurred by him in connection therewith. Indemnification is
authorized upon a determination that the person to be
indemnified has met the applicable standard of conduct required.
Expenses incurred in defense may be paid in advance upon receipt
by the corporation of a written affirmation by the
director of his good faith belief that he has met the applicable
standard of conduct required, a written undertaking by or on
behalf of the director to repay such advance if it is ultimately
determined that he did not meet the standard of conduct, and a
determination that the facts then known to those making the
determination would not preclude indemnification under the
statute. The indemnification provided by statute shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement,
vote of shareholders or disinterested directors, or otherwise,
which shall inure to the benefit of the heirs, executors and
administrators of such a person. Insurance may be purchased on
behalf of any person entitled to indemnification by the
corporation against any liability incurred in an official
capacity regardless of whether the person could be indemnified
under the statute.
The bylaws of Frankfort Hospital, Inc. and Greenview Hospital,
Inc. indemnify their officers and directors against all
reasonable expense incurred by them in defending claims or
suits, irrespective of the time of the occurrence of the claims
or causes of action in such suits, made or brought against them
as officers or directors of the corporation, and against all
liability in such suits, except in such cases as involve gross
negligence or willful misconduct in the performance of their
duties. Such indemnification extends to the payment of judgments
against such officers and directors and to reimbursement of
amounts paid in settlement of such claims or actions and may
apply to judgments in favor of the corporation or amounts paid
in settlement to the corporation. Such indemnification also
extends to the payment of counsel fees and expenses of such
officers and directors in suits against them where successfully
defended by them or where unsuccessfully defended, if there is
no finding or judgment that the claim or action arose from the
gross negligence or willful misconduct of such officers or
directors. Such right of indemnification is not exclusive of any
right to which such officer or director may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and directors.
Louisiana
Registrants
(a) Dauterive Hospital Corporation, HCA Health Services
of Louisiana, Inc. and Notami Hospitals of Louisiana, Inc. are
incorporated under the laws of Louisiana.
Section 83 of the Louisiana Business Corporation Law
provides that a corporation may indemnify any person who was or
is a party or is threatened to be made a party to any action,
suit or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director
or officer of the corporation. The indemnity may include
expenses, including attorneys’ fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit, or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 83 further provides that a Louisiana corporation
may indemnify officers and directors in an action by or in the
right of the corporation under the same conditions except that
no indemnification is permitted without judicial approval if the
director or officer shall have been adjudged to be liable for
willful or intentional misconduct in the performance of his duty
to the corporation. Where an officer or director is successful
on the merits or otherwise in any defense of any action referred
to above or any claim therein, the corporation must indemnify
him against such expenses that such officer or director actually
incurred. Section 83 permits a corporation to pay expenses
incurred by the officer or director in defending an action, suit
or proceeding in advance of the final disposition thereof if
approved by the board of directors.
The bylaws of each of the Louisiana corporations indemnify their
officers and directors against all reasonable expense incurred
by them in defending claims or suits, irrespective of the time
of the occurrence of the claims or causes of action in such
suits, made or brought against them as officers or directors of
the corporation, and against all liability in such suits, except
in such cases as involve gross negligence or willful misconduct
in the performance of their duties. Such indemnification extends
to the payment of judgments against such officers and directors
and to reimbursement of amounts paid in settlement of such
claims or actions and may apply to judgments in favor of the
corporation or amounts paid in settlement to the corporation.
Such indemnification also extends to the payment of counsel fees
and expenses of such officers and directors in suits against
them where successfully defended by them or where unsuccessfully
defended, if
there is no finding or judgment that the claim or action arose
from the gross negligence or willful misconduct of such officers
or directors. Such right of indemnification is not exclusive of
any right to which such officer or director may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and directors.
(b) The Regional Health System of Acadiana, LLC is
registered under the laws of Louisiana.
Section 315 of the Louisiana Limited Liability Company Act
permits a limited liability company, in its articles of
organization or in a written operating agreement, to eliminate
or limit the personal liability of a member or members, if
management is reserved to the members, or a manager or managers,
if management is vested in one or more managers, for monetary
damages for breach of any duty of diligence, care, judgment or
skill. Notwithstanding the foregoing, the liability of a member
or manager shall not be limited or eliminated for the amount of
a financial benefit received by a member or manager to which he
is not entitled or for an intentional violation of a criminal
law.
The operating agreement of The Regional Health System of
Acadiana, LLC indemnifies the officers and managers against all
reasonable expenses incurred by them in defending claims or
suits, irrespective of the time of occurrence of the claims or
causes of action in such suits, made or brought against them as
officers or managers of the company, and against all liability
in such suits, except in such cases as involve gross negligence
or willful misconduct in the performance of their duties. Such
indemnification extends to the payment of judgments against such
officers and managers and to reimbursement of amounts paid in
settlement of such claims or actions and may apply to judgments
in favor of the company or amounts paid in settlement to the
company. Such indemnification shall also extend to the payment
of counsel fees and expenses of such officers and managers in
suits against them where successfully defended by them or where
unsuccessfully defended, if there is no finding or judgment that
the claim or action arose from the gross negligence or willful
misconduct of such officers or managers. Such right of
indemnification shall not be exclusive of any right to which
such officer or manager may be entitled as a matter of law and
shall extend and apply to the estates of deceased officers or
managers.
Mississippi
Registrant
(a) Brookwood Medical Center of Gulfport, Inc. is
incorporated under the laws of Mississippi.
Article 8, Subarticle E of the Mississippi Business
Corporation Act (“MBCA”) permits Mississippi
corporations to indemnify officers and directors. MBCA
Section 79-4-2.02(b)(5)
permits the corporation to include an obligatory indemnification
for directors in its Articles of Incorporation for all acts
other than:
(i) distributions made in excess of standards established
by Mississippi law or in the corporation’s articles of
incorporation, for which
Section 79-4-8.33
imposes personal liability on directors to the
corporation; and
(ii) circumstances where, in his performance as a director,
a director has received a financial benefit to which he is not
entitled, he intentionally inflicts harm on the corporation or
its stockholders or he intentionally violates any criminal law.
The law further permits us to advance all expenses for defense
of a director in any lawsuit brought against a director in his
capacity as a director. The MBCA specifically provides in
Section
79-4-8.53
that such advances are allowed by Mississippi law. Such advances
may be made under the MBCA only after a determination that the
director met all relevant standards of conduct.
Section 79-4-8.56
of the MBCA permits a Mississippi corporation to indemnify any
officer to the same extent as to a director. Indemnification of
officers and directors against reasonable expenses is mandatory
under
Section 79-4-8.52
of the MBCA to the extent the officer or director is successful
on the merits or otherwise in the defense of any action or suit
against him giving rise to a claim of indemnification.
The bylaws of Brookwood Medical Center of Gulfport, Inc.
indemnify its officers and directors against all reasonable
expense incurred by them in defending claims or suits,
irrespective of the time of the occurrence of the claims or
causes of action in such suits, made or brought against them as
officers or directors of the corporation, and against all
liability in such suits, except in such cases as involve gross
negligence or willful
misconduct in the performance of their duties. Such
indemnification extends to the payment of judgments against such
officers and directors and to reimbursement of amounts paid in
settlement of such claims or actions and may apply to judgments
in favor of the corporation or amounts paid in settlement to the
corporation. Such indemnification also extends to the payment of
counsel fees and expenses of such officers and directors in
suits against them where successfully defended by them or where
unsuccessfully defended, if there is no finding or judgment that
the claim or action arose from the gross negligence or willful
misconduct of such officers or directors. Such right of
indemnification is not exclusive of any right to which such
officer or director may be entitled as a matter of law and shall
extend and apply to the estates of deceased officers and
directors.
Missouri
Registrants
(a) Health Midwest Office Facilities Corporation and
Health Midwest Ventures Group, Inc. are incorporated under the
laws of Missouri.
Section 351.355(1) of the Revised Statutes of Missouri
provides that a corporation may indemnify a director or officer
of the corporation in any action, suit or proceeding other than
an action by or in the right of the corporation, against
expenses (including attorneys’ fees), judgments, fines and
settlement amounts actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and, with
respect to any criminal action, had no reasonable cause to
believe his conduct was unlawful.
Section 351.355(2) provides that the corporation may
indemnify any such person in any action or suit by or in the
right of the corporation against expenses (including
attorneys’ fees) and settlement amounts actually and
reasonably incurred by him in connection with the defense or
settlement of the action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, except that he may not be
indemnified in respect of any matter in which he has been
adjudged liable for negligence or misconduct in the performance
of his duty to the corporation, unless authorized by the court.
Section 351.355(3) provides that a corporation shall
indemnify any such person against expenses (including
attorneys’ fees) actually and reasonably incurred by him in
connection with the action, suit or proceeding if he has been
successful in defense of such action, suit or proceeding and if
such action, suit or proceeding is one for which the corporation
may indemnify him under Section 351.355(1) or (2).
Section 351.355(7) provides that a corporation shall have
the power to give any further indemnity to any such person, in
addition to the indemnity otherwise authorized under
Section 351.355, provided such further indemnity is either
(i) authorized, directed or provided for in the articles of
incorporation of the corporation or any duly adopted amendment
thereof or (ii) is authorized, directed or provided for in
any bylaw or agreement of the corporation which has been adopted
by a vote of the shareholders of the corporation, provided that
no such indemnity shall indemnify any person from or on account
of such person’s conduct which was finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful
misconduct.
The bylaws of both Health Midwest Office Facilities Corporation
and Health Midwest Ventures Group, Inc indemnify their officers
and directors against all reasonable expense incurred by them in
defending claims or suits, irrespective of the time of the
occurrence of the claims or causes of action in such suits, made
or brought against them as officers or directors of the
corporation, and against all liability in such suits, except in
such cases as involve gross negligence or willful misconduct in
the performance of their duties. Such indemnification extends to
the payment of judgments against such officers and directors and
to reimbursement of amounts paid in settlement of such claims or
actions and may apply to judgments in favor of the corporation
or amounts paid in settlement to the corporation. Such
indemnification also extends to the payment of counsel fees and
expenses of such officers and directors in suits against them
where successfully defended by them or where unsuccessfully
defended, if there is no finding or judgment that the claim or
action arose from the gross negligence or willful misconduct of
such officers or directors. Such right of indemnification is not
exclusive of any right to which such officer or director may be
entitled as a matter of law and shall extend and apply to the
estates of deceased officers and directors.
(b) Midwest Division — RBH, LLC is registered
under the laws of Missouri.
The operating agreement of Midwest Division — RBH, LLC
indemnifies its officers and managers against all reasonable
expense incurred by them in defending claims or suits,
irrespective of the time of the occurrence of the claims or
causes of action in such suits, made or brought against them as
officers or directors of the company, and against all liability
in such suits, except in such cases as involve gross negligence
or willful misconduct in the performance of their duties. Such
indemnification extends to the payment of judgments against such
officers and directors and to reimbursement of amounts paid in
settlement of such claims or actions and may apply to judgments
in favor of the company or amounts paid in settlement to the
company. Such indemnification also extends to the payment of
counsel fees and expenses of such officers and managers in suits
against them where successfully defended by them or where
unsuccessfully defended, if there is no finding or judgment that
the claim or action arose from the gross negligence or willful
misconduct of such officers or managers. Such right of
indemnification is not exclusive of any right to which such
officer or manager may be entitled as a matter of law and shall
extend and apply to the estates of deceased officers and
managers.
The Missouri Limited Liability Company Act is silent with
respect to the limits of a limited liability company’s
ability to provide for the indemnification of its officers and
managers in its operating agreement. However,
Section 347.081(2) states that it is the policy of the
Missouri Limited Liability Company Act to give the maximum
effect to the principle of freedom of contract and to the
enforceability of operating agreements.
Nevada
Registrants
(a) Las Vegas Surgicare, Inc., Sunrise Mountainview
Hospital, Inc., VH Holdco, Inc., VH Holdings, Inc. and Western
Plains Capital, Inc. are incorporated under the laws of
Nevada.
Chapter 78 of the Nevada Revised Statutes (“NRS”)
allows directors and officers to be indemnified against
liabilities they may incur while serving in such capacities.
Under the applicable statutory provisions, the registrant may
indemnify its directors or officers who were or are a party or
are threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that
they are or were directors or officers of the corporation, or
are or were serving at the request of the corporation as
directors or officers of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses, including
attorneys’ fees, judgments, fines, and amounts paid in
settlement, actually and reasonably incurred by them in
connection with the action, suit, or proceeding, unless it is
ultimately determined by a court of competent jurisdiction that
they breached their fiduciary duties by intentional misconduct,
fraud, or a knowing violation of law or did not act in good
faith and in a manner which they reasonably believed to be in or
not opposed to the best interests of the registrant, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe their conduct was unlawful. In addition, the
applicable statutory provisions mandate that the registrant
indemnify its directors and officers who have been successful on
the merits or otherwise in defense of any action, suit, or
proceeding against expenses, including attorneys’ fees,
actually and reasonably incurred by them in connection with the
defense. The registrant will advance expenses incurred by
directors or officers in defending any such action, suit, or
proceeding upon receipt of written confirmation from such
officers or directors that they have met certain standards of
conduct and an undertaking by or on behalf of such officers or
directors to repay such advances if it is ultimately determined
that they are not entitled to indemnification by the registrant.
The bylaws of all the Nevada corporate registrants indemnify
their officers and directors against all reasonable expense
incurred by them in defending claims or suits, irrespective of
the time of the occurrence of the claims or causes of action in
such suits, made or brought against them as officers or
directors of the corporation, and against all liability in such
suits, except in such cases as involve gross negligence or
willful misconduct in the performance of their duties. Such
indemnification extends to the payment of judgments against such
officers and directors and to reimbursement of amounts paid in
settlement of such claims or actions and may apply to judgments
in favor of the corporation or amounts paid in settlement to the
corporation. Such indemnification also extends to the payment of
counsel fees and expenses of such officers and directors in
suits against them where successfully defended by them or where
unsuccessfully defended, if
there is no finding or judgment that the claim or action arose
from the gross negligence or willful misconduct of such officers
or directors. Such right of indemnification is not exclusive of
any right to which such officer or director may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and directors.
(b) Southern Hills Medical Center, LLC is registered
under the laws of Nevada.
Section 86.411 of the NRS permits a limited liability
company to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (except an action by or in
the right of the limited liability company), by reason of being
or having been a manager or member of the limited liability
company. As with corporations, indemnification may include
attorneys’ fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person to be
indemnified. Section 86.421 of the NRS permits a limited
liability company to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the limited
liability company to procure a judgment in its favor by reason
of being or having been a manager or member of the limited
liability company except that indemnification may not be made
for any claim, issue or matter as to which such a person has
been finally adjudged by a court of competent jurisdiction to be
liable to the limited liability company or for amounts paid in
settlement to the limited liability company, unless and only to
the extent that the court in which the action or suit was
brought or other court of competent jurisdiction determines upon
application that, in view of all the circumstances, the person
is fairly and reasonably entitled to indemnity for such expenses
as the court deems proper. In either case, however, to be
entitled to indemnification, the person to be indemnified must
have acted in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best
interests of the limited liability company and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful.
Section 86.431 of the NRS also provides that to the extent
a manager or member of a limited liability company has been
successful on the merits or otherwise in defense of any such
action, he or she must be indemnified by the limited liability
company against expenses, including attorneys’ fees
actually and reasonably incurred in connection with the defense.
Section 86.441 of the NRS permits a limited liability
company, in its articles of organization, operating agreement or
other agreement, to provide for the payment of expenses incurred
by members or managers in defending any civil or criminal
action, suit or proceeding as they are incurred and in advance
of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking to repay the amount if it is
ultimately determined by a court of competent jurisdiction that
the person is not entitled to indemnification.
Section 86.461 of the NRS permits a limited liability
company to purchase and maintain insurance or make other
financial arrangements on behalf of the limited liability
company’s managers or members for any liability and
expenses incurred by them in their capacities as managers or
members or arising out of their status as such, whether or not
the limited liability company has the authority to indemnify
him, her or them against such liability and expenses.
The operating agreement of Southern Hills Medical Center, LLC
indemnifies its officers and managers against all reasonable
expense incurred by them in defending claims or suits,
irrespective of the time of the occurrence of the claims or
causes of action in such suits, made or brought against them as
officers or managers of the company, and against all liability
in such suits, except in such cases as involve gross negligence
or willful misconduct in the performance of their duties. Such
indemnification extends to the payment of judgments against such
officers and managers and to reimbursement of amounts paid in
settlement of such claims or actions and may apply to judgments
in favor of the company or amounts paid in settlement to the
company. Such indemnification also extends to the payment of
counsel fees and expenses of such officers and managers in suits
against them where successfully defended by them or where
unsuccessfully defended, if there is no finding or judgment that
the claim or action arose from the gross negligence or willful
misconduct of such officers or managers. Such right of
indemnification is not exclusive of any right to which such
officer or manager may be entitled as a matter of law and shall
extend and apply to the estates of deceased officers and
managers.
(a) HCA Health Services of Oklahoma, Inc. is
incorporated under the laws of Oklahoma.
Section 1031 of the Oklahoma General Corporation Act
provides that an Oklahoma corporation may indemnify any persons,
including officers and directors, who are, or are threatened to
be made, parties to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of such corporation), by reason of the fact that such
person was an officer or director of such corporation, or is or
was serving at the request of such corporation as a director,
officer, employee or agent of another corporation or enterprise.
The indemnity may include expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with such
action, suit or proceeding, provided such officer or director
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the corporation’s best interests and,
for criminal proceedings, had no reasonable cause to believe
that his conduct was illegal. An Oklahoma corporation may
indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such
officer or director actually and reasonably incurred.
The bylaws of HCA Health Services of Oklahoma indemnify its
officers and directors against all reasonable expense incurred
by them in defending claims or suits, irrespective of the time
of the occurrence of the claims or causes of action in such
suits, made or brought against them as officers or directors of
the corporation, and against all liability in such suits, except
in such cases as involve gross negligence or willful misconduct
in the performance of their duties. Such indemnification extends
to the payment of judgments against such officers and directors
and to reimbursement of amounts paid in settlement of such
claims or actions and may apply to judgments in favor of the
corporation or amounts paid in settlement to the corporation.
Such indemnification also extends to the payment of counsel fees
and expenses of such officers and directors in suits against
them where successfully defended by them or where unsuccessfully
defended, if there is no finding or judgment that the claim or
action arose from the gross negligence or willful misconduct of
such officers or directors. Such right of indemnification is not
exclusive of any right to which such officer or director may be
entitled as a matter of law and shall extend and apply to the
estates of deceased officers and directors.
South
Carolina Registrant
(a) Walterboro Community Hospital, Inc. is incorporated
under the laws of South Carolina.
Under Section 33 of the South Carolina Code of Laws, a
corporation may indemnify an individual made a party to a
proceeding because he is or was a director or officer against
liability incurred in the proceeding if: (1) he conducted
himself in good faith; and (2) he reasonably believed:
(i) in the case of conduct in his official capacity with
the corporation, that his conduct was in its best interest; and
(ii) in all other cases, that his conduct was at least not
opposed to its best interest; and (3) in the case of any
criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful.
The bylaws of Walterboro Community Hospital, Inc indemnify its
officers and directors against all reasonable expense incurred
by them in defending claims or suits, irrespective of the time
of the occurrence of the claims or causes of action in such
suits, made or brought against them as officers or directors of
the corporation, and against all liability in such suits, except
in such cases as involve gross negligence or willful misconduct
in the performance of their duties. Such indemnification extends
to the payment of judgments against such officers and directors
and to reimbursement of amounts paid in settlement of such
claims or actions and may apply to judgments in favor of the
corporation or amounts paid in settlement to the corporation.
Such indemnification also extends to the payment of counsel fees
and expenses of such officers and directors in suits against
them where successfully defended by them or where unsuccessfully
defended, if there is no finding or judgment that the claim or
action arose from the gross negligence or willful misconduct of
such officers or directors. Such right of indemnification is not
exclusive of any right to which such officer
or director may be entitled as a matter of law and shall extend
and apply to the estates of deceased officers and directors.
Tennessee
Registrants
(a) Central Tennessee Hospital Corporation, HCA Central
Group, Inc., HCA Health Services of Tennessee, Inc., HCA Realty,
Inc., Hendersonville Hospital Corporation, Hospital Corporation
of Tennessee, HTI Memorial Hospital Corporation, Spring Hill
Hospital, Inc. and TCMC
Madison-Portland,
Inc. are incorporated under the laws of Tennessee.
The Tennessee Business Corporation Act (“TBCA”) sets
forth in
Sections 48-18-502
through
48-18-508
the circumstances governing the indemnification of directors and
officers of a corporation against liability incurred in the
course of their official capacities.
Section 48-18-502
of the TBCA provides that a corporation may indemnify any
director against liability incurred in connection with a
proceeding if (i) the director acted in good faith,
(ii) the director reasonably believed, in the case of
conduct in his or her official capacity with the corporation,
that such conduct was in the corporation’s best interest,
or, in all other cases, that his or her conduct was not opposed
to the best interests of the corporation and (iii) in
connection with any criminal proceeding, the director had no
reasonable cause to believe that his or her conduct was
unlawful. In actions brought by or in the right of the
corporation, however, the TBCA provides that no indemnification
may be made if the director or officer is adjudged to be liable
to the corporation. Similarly, the TBCA prohibits
indemnification in connection with any proceeding charging
improper personal benefit to a director, if such director is
adjudged liable on the basis that a personal benefit was
improperly received. In cases where the director is wholly
successful, on the merits or otherwise, in the defense of any
proceeding instigated because of his or her status as a director
of a corporation,
Section 48-18-503
of the TBCA mandates that the corporation indemnify the director
against reasonable expenses incurred in the proceeding.
Notwithstanding the foregoing,
Section 48-18-505
of the TBCA provides that a court of competent jurisdiction,
upon application, may order that a director or officer be
indemnified for reasonable expense if, in consideration of all
relevant circumstances, the court determines that such
individual is fairly and reasonably entitled to indemnification,
whether or not the standard of conduct set forth above was met.
Officers who are not directors are entitled, through the
provisions of
Section 48-18-507
of the TBCA, to the same indemnification afforded to directors
under
Sections 48-18-503
and
48-18-505.
The bylaws of each of the Tennessee corporations indemnify its
officers and directors against all reasonable expense incurred
by them in defending claims or suits, irrespective of the time
of the occurrence of the claims or causes of action in such
suits, made or brought against them as officers or directors of
the corporation, and against all liability in such suits, except
in such cases as involve gross negligence or willful misconduct
in the performance of their duties. Such indemnification extends
to the payment of judgments against such officers and directors
and to reimbursement of amounts paid in settlement of such
claims or actions and may apply to judgments in favor of the
corporation or amounts paid in settlement to the corporation.
Such indemnification also extends to the payment of counsel fees
and expenses of such officers and directors in suits against
them where successfully defended by them or where unsuccessfully
defended, if there is no finding or judgment that the claim or
action arose from the gross negligence or willful misconduct of
such officers or directors. Such right of indemnification is not
exclusive of any right to which such officer or director may be
entitled as a matter of law and shall extend and apply to the
estates of deceased officers and directors.
(a) Columbia Medical Center of Las Colinas, Inc., Conroe
Hospital Corporation, El Paso Surgicenter, Inc.,
KPH-Consolidation, Inc., National Patient Account Services,
Inc., Pasadena Bayshore Hospital, Inc., Rio Grande Regional
Hospital, Inc., Spring Branch Medical Center, Inc., Surgicare of
Houston Women’s, Inc., W & C Hospital, Inc.,
WHMC, Inc. and Woman’s Hospital of Texas, Incorporated are
incorporated under the laws of Texas.
Under
Article 2.02-1
of the Texas Business Corporation Act (“TBCA”), a
company may indemnify any person who was, is or is threatened to
be made a named defendant or respondent in a proceeding because
the person is or was a director or officer against judgment,
penalties (including excise and similar taxes), fines,
settlements, and reasonable expenses (including court costs and
attorneys’ fees) actually incurred by the person in
connection with the proceeding if it is determined that the
person seeking indemnification acted in good faith, reasonably
believed that his or her conduct was in or at least not opposed
to our best interests and, in the case of a criminal proceeding,
has no reasonable cause to believe his or her conduct was
unlawful.
A company is required by
Article 2.02-1
of the TBCA to indemnify a director or officer against
reasonable expenses (including court costs and attorneys’
fees) incurred by the director or officer in connection with a
proceeding in which the director or officer is a named defendant
or respondent because the director or officer is or was in that
position if the director or officer has been wholly successful,
on the merits or otherwise, in the defense of the proceeding.
The TBCA prohibits a company from indemnifying a director or
officer in respect of a proceeding in which the person is found
liable to the company or on the basis that a personal benefit
was improperly received by him or her, other than for reasonable
expenses (including court costs and attorneys’ fees)
actually incurred by him or her in connection with the
proceeding; provided, that the TBCA further prohibits a company
from indemnifying a director or officer in respect of any such
proceeding in which the person is found liable for willful or
intentional misconduct in the performance of his or her duties.
Under
Article 2.02-1(J)
of the TBCA, a court of competent jurisdiction may order a
company to indemnify a director or officer if the court
determines that the director or officer is fairly and reasonably
entitled to indemnification in view of all the relevant
circumstances; however, if the director or officer is found
liable to the company or is found liable on the basis that a
personal benefit was improperly received by him or her, the
indemnification will be limited to reasonable expenses
(including court costs and attorneys’ fees) actually
incurred by him or her in connection with the proceeding.
The bylaws of each of the Texas corporations indemnify its
officers and directors against all reasonable expense incurred
by them in defending claims or suits, irrespective of the time
of the occurrence of the claims or causes of action in such
suits, made or brought against them as officers or directors of
the corporation, and against all liability in such suits, except
in such cases as involve gross negligence or willful misconduct
in the performance of their duties. Such indemnification extends
to the payment of judgments against such officers and directors
and to reimbursement of amounts paid in settlement of such
claims or actions and may apply to judgments in favor of the
corporation or amounts paid in settlement to the corporation.
Such indemnification also extends to the payment of counsel fees
and expenses of such officers and directors in suits against
them where successfully defended by them or where unsuccessfully
defended, if there is no finding or judgment that the claim or
action arose from the gross negligence or willful misconduct of
such officers or directors. Such right of indemnification is not
exclusive of any right to which such officer or director may be
entitled as a matter of law and shall extend and apply to the
estates of deceased officers and directors.
(b) Columbia Medical Center of Arlington Subsidiary,
L.P., Columbia Medical Center of Denton Subsidiary, L.P.,
Columbia Medical Center of Lewisville Subsidiary, L.P., Columbia
Medical Center of McKinney Subsidiary, L.P., Columbia Medical
Center of Plano Subsidiary, L.P., Columbia North Hills Hospital
Subsidiary, L.P., Columbia Plaza Medical Center of
Fort Worth Subsidiary, L.P. and Green Oaks Hospital
Subsidiary, L.P. are registered under the laws of Texas.
Article 11 of the Texas Revised Limited Partnership Act
(“TRLPA”) provides for the indemnification of a
general partner or limited partner by the limited partnership
under certain circumstances against expenses and
liabilities incurred in legal proceedings involving such persons
because of their being or having been a general partner or
limited partner. Under the TRLPA, a limited partnership may
purchase insurance on behalf of a general partner or limited
partner against any liability incurred regardless of whether the
person could be indemnified under the TLRPA.
The partnership agreement of each Texas limited partnership
indemnifies the general partners to the fullest extent permitted
under the TRLPA.
Utah
Registrants
(a) Brigham City Community Hospital, Inc., Columbia
Ogden Medical Center, Inc., Hospital Corporation of Utah,
Mountain View Hospital, Inc., Northern Utah Healthcare
Corporation, St. Mark’s Lone Peak Hospital, Inc. and
Timpanogos Regional Medical Services, Inc. are incorporated
under the laws of Utah.
Section 16-10a-902
of the Utah Revised Business Corporation Act (the “Revised
Act”) provides that a corporation may indemnify any
individual who was, is, or is threatened to be made a named
defendant or respondent (a “Party”) in any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether formal or
informal (a “Proceeding”), because he or she is or was
a director of the corporation against any obligation incurred
with respect to a Proceeding, including any judgment,
settlement, penalty, fine or reasonable expenses (including
attorneys’ fees), incurred in the Proceeding if his or her
conduct was in good faith, he or she reasonably believed that
his or her conduct was in, or not opposed to, the best interests
of the corporation, and, in the case of any criminal Proceeding,
had no reasonable cause to believe such conduct was unlawful;
provided, however, that (i) pursuant to Subsection 902(5),
indemnification under Section 902 in connection with a
Proceeding by or in the right of the corporation is limited to
payment of reasonable expenses (including attorneys’ fees)
incurred in connection with the Proceeding and
(ii) pursuant to 902(4), the corporation may not indemnify
an Indemnifiable Director in connection with a Proceeding by or
in the right of the corporation in which the Indemnifiable
Director was adjudged liable to the corporation, or in
connection with any other Proceeding charging that the
Indemnifiable Director derived an improper personal benefit,
whether or not involving action in his or her official capacity,
in which Proceeding he or she was adjudged liable on the basis
that he or she derived an improper personal benefit.
Section 16-10a-907
of the Revised Act permits corporations to indemnify officers
and advance expenses to the same extent as a director and in
some cases to a greater extent than a director.
The bylaws of each of the Utah corporate registrants indemnify
its officers and directors against all reasonable expense
incurred by them in defending claims or suits, irrespective of
the time of the occurrence of the claims or causes of action in
such suits, made or brought against them as officers or
directors of the corporation, and against all liability in such
suits, except in such cases as involve gross negligence or
willful misconduct in the performance of their duties. Such
indemnification extends to the payment of judgments against such
officers and directors and to reimbursement of amounts paid in
settlement of such claims or actions and may apply to judgments
in favor of the corporation or amounts paid in settlement to the
corporation. Such indemnification also extends to the payment of
counsel fees and expenses of such officers and directors in
suits against them where successfully defended by them or where
unsuccessfully defended, if there is no finding or judgment that
the claim or action arose from the gross negligence or willful
misconduct of such officers or directors. Such right of
indemnification is not exclusive of any right to which such
officer or director may be entitled as a matter of law and shall
extend and apply to the estates of deceased officers and
directors.
(a) Capital Division, Inc., Chippenham &
Johnston-Willis Hospitals, Inc., Columbia/Alleghany Regional
Hospital, Incorporated, Columbia/HCA John Randolph, Inc., HCA
Health Services of Virginia, Inc., Lewis-Gale Hospital,
Incorporated, Montgomery Regional Hospital, Inc., Pulaski
Community Hospital, Inc., Spotsylvania Medical Center, Inc and
Virginia Psychiatric Company, Inc. are incorporated under the
laws of Virginia.
Under
Sections 13.1-697
and 13.1-702 of the Virginia Stock Corporation Act, a Virginia
corporation generally is authorized to indemnify its directors
and officers in civil and criminal actions if they acted in good
faith and believed their conduct to be in the best interests of
the corporation and, in the case of criminal actions, had no
reasonable cause to believe that the conduct was unlawful. In
addition, the Virginia Stock Corporation Act eliminates the
liability for monetary damages of a director or officer in a
shareholder or derivative proceeding. This elimination of
liability will not apply in the event of willful misconduct or a
knowing violation of criminal law or any federal or state
securities law.
Sections 13.1-692.1
and 13.1-696 through 704 of the Virginia Stock Corporation Act
are incorporated into this paragraph by reference.
The bylaws of each of the Virginia corporate registrants
indemnify its officers and directors against all reasonable
expense incurred by them in defending claims or suits,
irrespective of the time of the occurrence of the claims or
causes of action in such suits, made or brought against them as
officers or directors of the corporation, and against all
liability in such suits, except in such cases as involve gross
negligence or willful misconduct in the performance of their
duties. Such indemnification extends to the payment of judgments
against such officers and directors and to reimbursement of
amounts paid in settlement of such claims or actions and may
apply to judgments in favor of the corporation or amounts paid
in settlement to the corporation. Such indemnification also
extends to the payment of counsel fees and expenses of such
officers and directors in suits against them where successfully
defended by them or where unsuccessfully defended, if there is
no finding or judgment that the claim or action arose from the
gross negligence or willful misconduct of such officers or
directors. Such right of indemnification is not exclusive of any
right to which such officer or director may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and directors.
(b) Central Shared Services, LLC, Galen Property, LLC,
Lewis-Gale Physicians, LLC, Northern Virginia Community
Hospital, LLC and Retreat Hospital, LLC are registered under the
laws of Virginia.
Section 13.1-1009(16)
of the Virginia Limited Liability Company Act permits a limited
liability company to indemnify and hold harmless any member or
manager or other person from and against any and all claims and
demands whatsoever, and to pay for or reimburse any member or
manager or other person for reasonable expenses incurred by such
a person who is a party to a proceeding in advance of final
disposition of the proceeding.
The operating agreements of each of the Virginia limited
liability companies indemnify their officers and managers
against all reasonable expense incurred by them in defending
claims or suits, irrespective of the time of the occurrence of
the claims or causes of action in such suits, made or brought
against them as officers or managers of the company, and against
all liability in such suits, except in such cases as involve
gross negligence or willful misconduct in the performance of
their duties. Such indemnification extends to the payment of
judgments against such officers and managers and to
reimbursement of amounts paid in settlement of such claims or
actions and may apply to judgments in favor of the company or
amounts paid in settlement to the company. Such indemnification
also extends to the payment of counsel fees and expenses of such
officers and managers in suits against them where successfully
defended by them or where unsuccessfully defended, if there is
no finding or judgment that the claim or action arose from the
gross negligence or willful misconduct of such officers or
managers. Such right of indemnification is not exclusive of any
right to which such officer or manager may be entitled as a
matter of law and shall extend and apply to the estates of
deceased officers and managers.
(c) HSS Virginia, L.P. is registered under the laws of
Virginia
HSS Virginia, L.P. is governed by the Virginia Revised Uniform
Limited Partnership Act. However, neither the partnership
agreement nor the Virginia Revised Uniform Partnership Act
specify the extent to which a limited partnership may indemnify
its general partners.
West
Virginia Registrant
(a) Columbia Parkersburg Healthcare System, LLC is
registered under the laws of West Virginia.
Section 31B-4-403
of the West Virginia Uniform Limited Liability Company Act
discusses members’ and managers’ rights to payments
and reimbursement. A limited liability company shall reimburse a
member or manager for payments made and indemnify a member or
manager for liabilities incurred by the member or manager in the
ordinary course of the business of the company or for the
preservation of its business or property. A limited liability
company shall reimburse a member for an advance to the company
beyond the amount of contribution the member agreed to make. A
payment or advance made by a member which gives rise to an
obligation of a limited liability company under the West
Virginia statute constitutes a loan to the company upon which
interest accrues from the date of the payment or advance. A
member is not entitled to remuneration for services performed
for a limited liability company, except for reasonable
compensation for services rendered in winding up the business of
the company.
The organizational documents of Columbia Parkersburg Healthcare
System, LLC indemnify its managers and officers to the fullest
extent of the West Virginia Uniform Limited Liability Company
Act.
Certain
Other Arrangements
HCA Inc. maintains a directors’ and officers’
liability insurance policy that covers the directors and
officers of each of the registrants in amounts that HCA Inc.
believes are customary in its industry, including for
liabilities in connection with the registration, offering and
sale of the notes.
In addition, pursuant to the Management Agreement entered into
with the Sponsors and their affiliates and the Frists, the
Company has agreed to customary exculpation and indemnification
provisions for the benefit of the Sponsors, the Frists, their
affiliates, directors, officers and certain other persons. See
“Certain Relationships and Related Transactions.”
Item 21.
Exhibits
and Financial Statement Schedules.
(a) Exhibits
2
.1
Agreement and Plan of Merger, dated July 24, 2006, by and
among HCA Inc., Hercules Holding II, LLC and Hercules
Acquisition Corporation (filed as Exhibit 2.1 to the
Company’s Current Report on
Form 8-K
filed July 25, 2006, and incorporated herein by reference).
3
.1
Amended and Restated Certificate of Incorporation of the Company
(filed as Exhibit 3.1 to the Company’s Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2007, and
incorporated herein by reference).
American Medicorp Development Co. Articles of Incorporation
(filed as Exhibit 3.3 to the Company’s Registration
Statement on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.4
American Medicorp Development Co. By-Laws (filed as
Exhibit 3.4 to the Company’s Registration Statement on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.5
Bay Hospital, Inc. Articles of Incorporation (filed as
Exhibit 3.5 to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Brigham City Community Hospital, Inc. Articles of Incorporation
(filed as Exhibit 3.7 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.8
Brigham City Community Hospital, Inc. By-Laws (filed as
Exhibit 3.8 to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.9
Brookwood Medical Center of Gulfport, Inc. Certificate of
Incorporation (filed as Exhibit 3.9 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.10
Brookwood Medical Center of Gulfport, Inc. By-Laws (filed as
Exhibit 3.10 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.11
Capital Division, Inc. Articles of Incorporation (filed as
Exhibit 3.11 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Centerpoint Medical Center of Independence, LLC Certificate of
Formation.
3
.14
Centerpoint Medical Center of Independence, LLC Second Amended
and Restated Limited Liability Company Agreement (filed as
Exhibit 3.14 to the Company’s Registration Statement on
Form S-4 (File No. 333-145054), and incorporated herein by
reference).
3
.15
Central Florida Regional Hospital, Inc. Articles of
Incorporation (filed as Exhibit 3.15 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.16
Central Florida Regional Hospital, Inc. By-Laws (filed as
Exhibit 3.16 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.17
Central Shared Services, LLC Articles of Organization (filed as
Exhibit 3.16 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.18
Central Shared Services, LLC Limited Liability Company Agreement
(filed as Exhibit 3.18 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.19
Central Tennessee Hospital Corporation Charter (filed as
Exhibit 3.19 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.20
Central Tennessee Hospital Corporation By-Laws (filed as
Exhibit 3.20 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.21
CHCA Bayshore, L.P. Certificate of Limited Partnership (filed as
Exhibit 3.21 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.22
CHCA Bayshore, L.P. Agreement of Limited Partnership (filed as
Exhibit 3.22 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.23
CHCA Conroe, L.P. Certificate of Limited Partnership (filed as
Exhibit 3.23 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.24
CHCA Conroe, L.P. Agreement of Limited Partnership (filed as
Exhibit 3.24 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.25
CHCA Mainland, L.P. Certificate of Limited Partnership (filed as
Exhibit 3.27 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.26
CHCA Mainland, L.P. Agreement of Limited Partnership (filed as
Exhibit 3.28 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.27
CHCA West Houston, L.P. Certificate of Limited Partnership
(filed as Exhibit 3.29 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.28
CHCA West Houston, L.P. Agreement of Limited Partnership (filed
as Exhibit 3.30 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
CHCA Woman’s Hospital, L.P. Certificate of Limited
Partnership (filed as Exhibit 3.31 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.30
CHCA Woman’s Hospital, L.P. Agreement of Limited
Partnership (filed as Exhibit 3.32 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.31
Chippenham & Johnston-Willis Hospitals, Inc. Articles
of Incorporation (filed as Exhibit 3.33 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.32
Chippenham & Johnston-Willis Hospitals, Inc. By-Laws
(filed as Exhibit 3.34 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
CMS GP, LLC Second Amended and Restated Limited Liability
Company Agreement (filed as Exhibit 3.36 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.35*
Colorado Health Systems, Inc. Articles of Incorporation.
3
.36
Colorado Health Systems, Inc. By-Laws (filed as
Exhibit 3.38 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.37*
Columbia ASC Management, L.P. Certificate of Limited Partnership.
3
.38
Columbia ASC Management, L.P. Amended and Restated Agreement of
Limited Partnership (filed as Exhibit 3.40 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.39
Columbia Jacksonville Healthcare System, Inc. Articles of
Incorporation (filed as Exhibit 3.41 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.40
Columbia Jacksonville Healthcare System, Inc. By-Laws (filed as
Exhibit 3.42 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.41
Columbia LaGrange Hospital, Inc. Articles of Incorporation
(filed as Exhibit 3.43 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.42
Columbia LaGrange Hospital, Inc. By-Laws (filed as
Exhibit 3.44 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.43
Columbia Medical Center of Arlington Subsidiary, L.P.
Certificate of Limited Partnership (filed as Exhibit 3.45
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.44
Columbia Medical Center of Arlington Subsidiary, L.P. Amended
and Restated Agreement of Limited Partnership (filed as
Exhibit 3.46 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.45
Columbia Medical Center of Denton Subsidiary, L.P. Certificate
of Limited Partnership (filed as Exhibit 3.47 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.46
Columbia Medical Center of Denton Subsidiary, L.P. Amended and
Restated Agreement of Limited Partnership (filed as
Exhibit 3.48 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.47
Columbia Medical Center of Las Colinas, Inc. Articles of
Incorporation (filed as Exhibit 3.49 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.48
Columbia Medical Center of Las Colinas, Inc. By-Laws (filed as
Exhibit 3.50 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.49
Columbia Medical Center of Lewisville Subsidiary, L.P.
Certificate of Limited Partnership (filed as Exhibit 3.51
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Columbia Medical Center of Lewisville Subsidiary, L.P. Amended
and Restated Agreement of Limited Partnership (filed as
Exhibit 3.52 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.51
Columbia Medical Center of McKinney Subsidiary, L.P. Certificate
of Limited Partnership (filed as Exhibit 3.53 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.52
Columbia Medical Center of McKinney Subsidiary, L.P. Amended and
Restated Agreement of Limited Partnership (filed as
Exhibit 3.54 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.53
Columbia Medical Center of Plano Subsidiary, L.P. Certificate of
Limited Partnership (filed as Exhibit 3.55 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.54
Columbia Medical Center of Plano Subsidiary, L.P. Amended and
Restated Agreement of Limited Partnership (filed as
Exhibit 3.56 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.55
Columbia North Hills Hospital Subsidiary, L.P. Certificate of
Limited Partnership (filed as Exhibit 3.57 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.56
Columbia North Hills Hospital Subsidiary, L.P. Amended and
Restated Agreement of Limited Partnership (filed as
Exhibit 3.58 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.57*
Columbia Ogden Medical Center, Inc. Articles of Incorporation.
3
.58
Columbia Ogden Medical Center, Inc. By-Laws (filed as
Exhibit 3.60 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.59
Columbia Parkersburg Healthcare System, LLC Articles of
Incorporation (filed as Exhibit 3.61 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.60
Columbia Parkersburg Healthcare System, LLC, Articles of
Organization of Limited Liability Company (filed as
Exhibit 3.60 to the Company’s Registration Statement
on
Form S-1
(File No. 333-159511),
and incorporated herein by reference).
3
.61
Columbia Parkersburg Healthcare System, LLC Operating Agreement
(filed as Exhibit 3.62 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.62
Columbia Plaza Medical Center of Fort Worth Subsidiary,
L.P. Certificate of Limited Partnership (filed as
Exhibit 3.63 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.63
Columbia Plaza Medical Center of Fort Worth Subsidiary,
L.P. Amended and Restated Agreement of Limited Partnership
(filed as Exhibit 3.64 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.64
Columbia Polk General Hospital, Inc. Articles of Incorporation
(filed as Exhibit 3.65 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.65
Columbia Polk General Hospital, Inc. By-Laws (filed as
Exhibit 3.66 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.66
Columbia Rio Grande Healthcare, L.P. Certificate of Limited
Partnership (filed as Exhibit 3.67 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.67
Columbia Rio Grande Healthcare, L.P. Amended and Restated
Limited Partnership Agreement (filed as Exhibit 3.68 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.68
Columbia Riverside, Inc. Articles of Incorporation (filed as
Exhibit 3.69 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Columbia Riverside, Inc. By-Laws (filed as Exhibit 3.70 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.70
Columbia Valley Healthcare System, L.P. Certificate of Limited
Partnership (filed as Exhibit 3.71 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.71
Columbia Valley Healthcare System, L.P. Amended and Restated
Limited Partnership Agreement (filed as Exhibit 3.72 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.72
Columbia/Alleghany Regional Hospital, Incorporated Articles of
Incorporation (filed as Exhibit 3.73 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.73
Columbia/Alleghany Regional Hospital, Incorporated By-Laws
(filed as Exhibit 3.74 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.74
Columbia/HCA John Randolph, Inc. Articles of Incorporation
(filed as Exhibit 3.75 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.75
Columbia/HCA John Randolph, Inc. By-Laws (filed as
Exhibit 3.76 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.76
Columbine Psychiatric Center, Inc. Articles of Incorporation
(filed as Exhibit 3.77 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.77
Columbine Psychiatric Center, Inc. By-Laws (filed as
Exhibit 3.78 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.78
Columbus Cardiology, Inc. Certificate of Incorporation (filed as
Exhibit 3.79 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Conroe Hospital Corporation Articles of Incorporation.
3
.81
Conroe Hospital Corporation By-Laws (filed as Exhibit 3.82
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.82
Dallas/Ft. Worth Physician, LLC Certificate of Formation
(filed as Exhibit 3.83 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.83
Dallas/Ft. Worth Physician, LLC Amended and Restated
Limited Liability Company Agreement (filed as Exhibit 3.84
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.84
Dauterive Hospital Corporation Articles of Incorporation (filed
as Exhibit 3.85 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.85
Dauterive Hospital Corporation By-Laws (filed as
Exhibit 3.86 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.86
Dublin Community Hospital, LLC Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.87 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.87
Dublin Community Hospital, LLC Articles of Organization (filed
as Exhibit 3.88 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.88
Eastern Idaho Health Services, Inc. Articles of Incorporation
(filed as Exhibit 3.89 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.89
Eastern Idaho Health Services, Inc. By-Laws (filed as
Exhibit 3.90 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.90
Edward White Hospital, Inc. Articles of Incorporation (filed as
Exhibit 3.95 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Edward White Hospital, Inc. By-Laws (filed as Exhibit 3.96
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.92
El Paso Surgicenter, Inc. Articles of Incorporation (filed
as Exhibit 3.93 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.93
El Paso Surgicenter, Inc. By-Laws (filed as
Exhibit 3.94 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.94
Encino Hospital Corporation, Inc. Articles of Incorporation
(filed as Exhibit 3.97 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
EP Health, LLC Certificate of Formation (filed as
Exhibit 3.99 to the Company’s Registration Statement
on
Form S-4/A
(File
No. 333-145054),
and incorporated herein by reference).
3
.97
EP Health, LLC Amended and Restated Limited Liability Company
Agreement (filed as Exhibit 3.100 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.98*
Fairview Park GP, LLC Certificate of Formation.
3
.99
Fairview Park GP, LLC Amended and Restated Limited Liability
Company Agreement (filed as Exhibit 3.102 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.100
Fairview Park, Limited Partnership Certificate of Limited
Partnership (filed as Exhibit 3.103 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.101
Fairview Park, Limited Partnership Agreement of Limited
Partnership (filed as Exhibit 3.104 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.102
Frankfort Hospital, Inc. Articles of Incorporation (filed as
Exhibit 3.105 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.103
Frankfort Hospital, Inc. By-Laws (filed as Exhibit 3.106 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.104
Galen Property, LLC Articles of Organization (filed as
Exhibit 3.107 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Good Samaritan Hospital, L.P. Certificate of Limited Partnership
(filed as Exhibit 3.111 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.107
Good Samaritan Hospital, L.P. Agreement of Limited Partnership
(filed as Exhibit 3.112 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.108*
Goppert-Trinity Family Care, LLC Certificate of Formation.
3
.109*
Goppert-Trinity Family Care, LLC Limited Liability Company
Agreement.
3
.110
GPCH-GP, Inc. Certificate of Incorporation (filed as
Exhibit 3.115 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Grand Strand Regional Medical Center, LLC Certificate of
Formation (filed as Exhibit 3.117 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.113
Grand Strand Regional Medical Center, LLC Amended and Restated
Limited Liability Company Agreement (filed as Exhibit 3.118
to the Company’s Registration Statement on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
Green Oaks Hospital Subsidiary, L.P. Certificate of Limited
Partnership (filed as Exhibit 3.119 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.115
Green Oaks Hospital Subsidiary, L.P. Agreement of Limited
Partnership (filed as Exhibit 3.120 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.116
Greenview Hospital, Inc. Articles of Incorporation (filed as
Exhibit 3.121 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.117
Greenview Hospital, Inc. By-Laws (filed as Exhibit 3.122 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.118
HCA — IT&S Field Operations, Inc. Articles of
Incorporation (filed as Exhibit 3.124 to the Company’s
Registration Statement on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.119
HCA — IT&S Field Operations, Inc. By-Laws (filed
as Exhibit 3.125 to the Company’s Registration
Statement on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.120
HCA — IT&S Inventory Management, Inc. Certificate
of Incorporation (filed as Exhibit 3.126 to the
Company’s Registration Statement on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.121
HCA — IT&S Inventory Management, Inc. By-Laws
(filed as Exhibit 3.127 to the Company’s Registration
Statement on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.122
HCA Central Group, Inc. Charter (filed as Exhibit 3.125 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.123
HCA Central Group, Inc. By-Laws (filed as Exhibit 3.126 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.124
HCA Health Services of Florida, Inc. Articles of Incorporation
(filed as Exhibit 3.127 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
HCA Health Services of Louisiana, Inc. Articles of Incorporation
(filed as Exhibit 3.129 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.127
HCA Health Services of Louisiana, Inc. By-Laws (filed as
Exhibit 3.130 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.128*
HCA Health Services of Oklahoma, Inc. Articles of Incorporation.
3
.129
HCA Health Services of Oklahoma, Inc. By-Laws (filed as
Exhibit 3.132 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.130
HCA Health Services of Tennessee, Inc. Charter (filed as
Exhibit 3.133 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.131
HCA Health Services of Tennessee, Inc. By-Laws (filed as
Exhibit 3.134 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.132
HCA Health Services of Virginia, Inc. Certificate of
Incorporation (filed as Exhibit 3.135 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.133
HCA Health Services of Virginia, Inc. By-Laws (filed as
Exhibit 3.136 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.134
HCA Management Services, L.P. Certificate of Limited Partnership
(filed as Exhibit 3.137 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.135
HCA Management Services, L.P. Agreement of Limited Partnership
(filed as Exhibit 3.138 to the Company’s Registration
Statement on
Form S-4
(File No.
333-145054),
and incorporated herein by reference).
HD&S Corp. Successor, Inc. Articles of Incorporation (filed
as Exhibit 3.139 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Health Midwest Ventures Group, Inc. Articles of Incorporation.
3
.143
Health Midwest Ventures Group, Inc. By-Laws (filed as
Exhibit 3.144 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.144
Healthtrust MOB, LLC Certificate of Formation (filed as
Exhibit 3.145 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.145
Healthtrust MOB, LLC Second Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.146 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.146
Hendersonville Hospital Corporation Charter (filed as
Exhibit 3.147 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.147
Hendersonville Hospital Corporation By-Laws (filed as
Exhibit 3.148 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.148
Hospital Corporation of Tennessee Charter (filed as
Exhibit 3.151 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.149
Hospital Corporation of Tennessee By-Laws (filed as
Exhibit 3.152 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.150
Hospital Corporation of Utah Articles of Incorporation (filed as
Exhibit 3.153 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.151
Hospital Corporation of Utah By-Laws (filed as
Exhibit 3.154 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.152
Hospital Development Properties, Inc. Certificate of
Incorporation (filed as Exhibit 3.155 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.153
Hospital Development Properties, Inc. By-Laws (filed as
Exhibit 3.156 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.154
HSS Holdco, LLC Certificate of Formation (filed as
Exhibit 3.157 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.155
HSS Holdco, LLC Amended and Restated Limited Liability Company
Agreement (filed as Exhibit 3.158 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.156
HSS Systems VA, LLC Certificate of Formation (filed as
Exhibit 3.159 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.157
HSS Systems VA, LLC Amended and Restated Limited Liability
Company Agreement (filed as Exhibit 3.160 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.158
HSS Systems, LLC Certificate of Formation (filed as
Exhibit 3.161 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.159
HSS Systems, LLC Amended and Restated Limited Liability Company
Agreement (filed as Exhibit 3.162 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
HSS Virginia, L.P. Certificate of Limited Partnership (filed as
Exhibit 3.163 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.161
HSS Virginia, L.P. Agreement of Limited Partnership (filed as
Exhibit 3.164 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.162
HTI Memorial Hospital Corporation Articles of Incorporation
(filed as Exhibit 3.165 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.163
HTI Memorial Hospital Corporation By-Laws (filed as
Exhibit 3.166 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.164
Integrated Regional Lab, LLC Articles of Organization (filed as
Exhibit 3.167 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Integrated Regional Laboratories, LLP Statement of Qualification
of Limited Liability Partnership (filed as Exhibit 3.169 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.167
Integrated Regional Laboratories, LLP Partnership Agreement
(filed as Exhibit 3.170 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.168*
JFK Medical Center Limited Partnership Certificate of Limited
Partnership.
3
.169
JFK Medical Center Limited Partnership Agreement of Limited
Partnership (filed as Exhibit 3.172 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.170
KPH-Consolidation, Inc. Articles of Incorporation (filed as
Exhibit 3.173 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.171
KPH-Consolidation, Inc. By-Laws (filed as Exhibit 3.174 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.172
Lakeland Medical Center, LLC Certificate of Formation (filed as
Exhibit 3.175 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.173
Lakeland Medical Center, LLC Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.176 to the
Company’s Registration Statement on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.174
Lakeview Medical Center, LLC Certificate of Formation (filed as
Exhibit 3.177 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.175
Lakeview Medical Center, LLC Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.178 to the
Company’s Registration Statement on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.176
Largo Medical Center, Inc. Articles of Incorporation (filed as
Exhibit 3.179 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.177
Largo Medical Center, Inc. By-Laws (filed as Exhibit 3.180
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.178
Las Vegas Surgicare, Inc. Articles of Incorporation (filed as
Exhibit 3.181 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.179
Las Vegas Surgicare, Inc. By-Laws (filed as Exhibit 3.182
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.180
Lawnwood Medical Center, Inc. Articles of Incorporation (filed
as Exhibit 3.183 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.181
Lawnwood Medical Center, Inc. By-Laws (filed as
Exhibit 3.184 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.182
Lewis-Gale Hospital, Incorporated Articles of Incorporation
(filed as Exhibit 3.185 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Lewis-Gale Hospital, Incorporated By-Laws (filed as
Exhibit 3.186 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.184
Lewis-Gale Medical Center, LLC Certificate of Formation (filed
as Exhibit 3.187 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.185
Lewis-Gale Medical Center, LLC Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.188 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.186
Lewis-Gale Physicians, LLC Articles of Organization (filed as
Exhibit 3.189 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.187
Lewis-Gale Physicians, LLC Operating Agreement (filed as
Exhibit 3.190 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.188*
Los Robles Regional Medical Center Articles of Incorporation.
3
.189
Los Robles Regional Medical Center By-Laws (filed as
Exhibit 3.192 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.190
Management Services Holdings, Inc. Certificate of Incorporation
(filed as Exhibit 3.193 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Marietta Surgical Center, Inc. Articles of Incorporation (filed
as Exhibit 3.195 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.193
Marietta Surgical Center, Inc. By-Laws (filed as
Exhibit 3.196 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.194*
Marion Community Hospital, Inc. Articles of Incorporation.
3
.195
Marion Community Hospital, Inc. By-Laws (filed as
Exhibit 3.198 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.196
MCA Investment Company Articles of Incorporation (filed as
Exhibit 3.199 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.197
MCA Investment Company By-Laws (filed as Exhibit 3.200 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.198
Medical Centers of Oklahoma, LLC Certificate of Formation (filed
as Exhibit 3.201 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.199
Medical Centers of Oklahoma, LLC Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.202 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.200
Medical Office Buildings of Kansas, LLC Certificate of Formation
(filed as Exhibit 3.203 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.201
Medical Office Buildings of Kansas, LLC Amended and Restated
Operating Agreement (filed as Exhibit 3.204 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.202
Memorial Healthcare Group, Inc. Articles of Incorporation (filed
as Exhibit 3.205 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.203
Memorial Healthcare Group, Inc. By-Laws (filed as
Exhibit 3.206 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.204
Midwest Division — ACH, LLC Certificate of Formation
(filed as Exhibit 3.207 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.205
Midwest Division — ACH, LLC Second Amended and
Restated Limited Liability Company Agreement (filed as
Exhibit 3.208 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
Midwest Division — LRHC, LLC Certificate of Formation
(filed as Exhibit 3.209 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.207
Midwest Division — LRHC, LLC Second Amended and
Restated Limited Liability Company Agreement (filed as
Exhibit 3.210 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.208
Midwest Division — LSH, LLC Certificate of Formation
(filed as Exhibit 3.211 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.209
Midwest Division — LSH, LLC Second Amended and
Restated Limited Liability Company Agreement (filed as
Exhibit 3.212 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.210
Midwest Division — MCI, LLC Certificate of Formation
(filed as Exhibit 3.213 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.211
Midwest Division — MCI, LLC Second Amended and
Restated Limited Liability Company Agreement (filed as
Exhibit 3.214 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.212
Midwest Division — MMC, LLC Certificate of Formation
(filed as Exhibit 3.215 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.213
Midwest Division — MMC, LLC Second Amended and
Restated Limited Liability Company Agreement (filed as
Exhibit 3.216 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.214
Midwest Division — OPRMC, LLC Certificate of Formation
(filed as Exhibit 3.217 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.215
Midwest Division — OPRMC, LLC Second Amended and
Restated Limited Liability Company Agreement (filed as
Exhibit 3.218 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.216
Midwest Division — PFC, LLC Certificate of Formation
(filed as Exhibit 3.219 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.217
Midwest Division — PFC, LLC Amended and Restated
Limited Liability Company Agreement (filed as Exhibit 3.220
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.218
Midwest Division — RBH, LLC Articles of
Organization — (filed as Exhibit 3.221 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.219
Midwest Division — RBH, LLC Limited Liability Company
Agreement (filed as Exhibit 3.222 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.220*
Midwest Division — RMC, LLC Certificate of Formation.
3
.221
Midwest Division — RMC, LLC Second Amended and
Restated Limited Liability Company Agreement (filed as
Exhibit 3.224 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.222
Midwest Division — RPC, LLC Certificate of Formation
(filed as Exhibit 3.225 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.223
Midwest Division — RPC, LLC Second Amended and
Restated Limited Liability Company Agreement (filed as
Exhibit 3.226 to the Company’s Registration Statement
on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.224
Midwest Holdings, Inc. Certificate of Incorporation (filed as
Exhibit 3.227 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.225
Midwest Holdings, Inc. By-Laws (filed as Exhibit 3.228 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Montgomery Regional Hospital, Inc. Articles of Incorporation
(filed as Exhibit 3.229 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.227
Montgomery Regional Hospital, Inc. By-Laws (filed as
Exhibit 3.230 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Mountain View Hospital, Inc. By-Laws (filed as
Exhibit 3.232 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.230
Nashville Shared Services General Partnership Amended and
Restated General Partnership Agreement (filed as
Exhibit 3.233 to the Company’s Registration Statement
on
Form S-4/A
(File No. 333-145054),
and incorporated herein by reference).
3
.231*
National Patient Account Services, Inc. Articles of
Incorporation.
3
.232
National Patient Account Services, Inc. By-Laws (filed as
Exhibit 3.236 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.233
New Port Richey Hospital, Inc. Articles of Incorporation (filed
as Exhibit 3.237 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.234
New Port Richey Hospital, Inc. By-Laws (filed as
Exhibit 3.238 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.235*
New Rose Holding Company, Inc. Articles of Incorporation.
3
.236
New Rose Holding Company, Inc. By-Laws (filed as
Exhibit 3.240 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.237
North Florida Immediate Care Center, Inc. Articles of
Incorporation (filed as Exhibit 3.241 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.238
North Florida Immediate Care Center, Inc. By-Laws (filed as
Exhibit 3.242 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.239
North Florida Regional Medical Center, Inc. Articles of
Incorporation (filed as Exhibit 3.243 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.240
North Florida Regional Medical Center, Inc. By-Laws (filed as
Exhibit 3.244 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Northern Utah Healthcare Corporation By-Laws (filed as
Exhibit 3.246 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.243
Northern Virginia Community Hospital, LLC Articles of
Organization (filed as Exhibit 3.247 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.244
Northern Virginia Community Hospital, LLC Amended and Restated
Limited Liability Company Agreement (filed as Exhibit 3.248
to the Company’s Registration Statement on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.245*
Northlake Medical Center, LLC Certificate of Organization.
3
.246
Northlake Medical Center, LLC Second Amended and Restated
Limited Liability Company Agreement (filed as Exhibit 3.250
to the Company’s Registration Statement on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.247
Notami Hospitals of Louisiana, Inc. Articles of Incorporation
(filed as Exhibit 3.251 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Notami Hospitals of Louisiana, Inc. By-Laws (filed as
Exhibit 3.252 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.249
Notami Hospitals, LLC Certificate of Formation (filed as
Exhibit 3.253 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.250
Notami Hospitals, LLC Amended and Restated Limited Liability
Company Agreement (filed as Exhibit 3.254 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.251
Okaloosa Hospital, Inc. Articles of Incorporation (filed as
Exhibit 3.255 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.252
Okaloosa Hospital, Inc. By-Laws (filed as Exhibit 3.256 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Okeechobee Hospital, Inc. By-Laws (filed as Exhibit 3.258
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.255
Outpatient Cardiovascular Center of Central Florida, LLC
Certificate of Formation (filed as Exhibit 3.259 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.256
Outpatient Cardiovascular Center of Central Florida, LLC
Operating Agreement (filed as Exhibit 3.260 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.257*
Palms West Hospital Limited Partnership Agreement of Limited
Partnership.
3
.258
Palms West Hospital Limited Partnership Certificate of Limited
Partnership (filed as Exhibit 3.262 to the Company’s
Registration Statement on Form
S-4 (file
No. 333-145054),
and incorporated herein by reference).
3
.259
Palmyra Park Hospital, Inc. Articles of Incorporation (filed as
Exhibit 3.263 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.260
Palmyra Park Hospital, Inc. By-Laws (filed as Exhibit 3.264
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.261
Pasadena Bayshore Hospital, Inc. Articles of Incorporation
(filed as Exhibit 3.267 to the Company’s Registration
Statement on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.262
Pasadena Bayshore Hospital Inc. By-Laws (filed as
Exhibit 3.268 to the Company’s Registration Statement
on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.263
Plantation General Hospital, L.P. Second Amended and Restated
Agreement of Limited Partnership (filed as Exhibit 3.265 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.264
Plantation General Hospital, L.P. Certificate of Limited
Partnership (filed as Exhibit 3.266 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.265
Pulaski Community Hospital, Inc. Articles of Incorporation
(filed as Exhibit 3.267 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.266
Pulaski Community Hospital, Inc. By-Laws (filed as
Exhibit 3.268 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.267
Redmond Park Hospital, LLC Articles of Organization (filed as
Exhibit 3.269 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.268
Redmond Park Hospital, LLC Limited Liability Company Agreement
(filed as Exhibit 3.270 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.269
Redmond Physician Practice Company Articles of Incorporation
(filed as Exhibit 3.271 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Redmond Physician Practice Company By-Laws (filed as
Exhibit 3.272 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.271
Reston Hospital Center, LLC Certificate of Formation (filed as
Exhibit 3.273 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.272
Reston Hospital Center, LLC Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.274 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.273
Retreat Hospital, LLC Articles of Organization (filed as
Exhibit 3.279 to the Company’s Registration Statement
on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.274
Retreat Hospital, LLC Operating Agreement (filed as
Exhibit 3.280 to the Company’s Registration Statement
on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
3
.275
Rio Grande Regional Hospital, Inc. Articles of Incorporation
(filed as Exhibit 3.277 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.276
Rio Grande Regional Hospital, Inc. By-Laws (filed as
Exhibit 3.278 to the Company’s Registration Statement
on
Form S-4/A
(File
No. 333-145054),
and incorporated herein by reference).
3
.277
Riverside Healthcare System, L.P. Certificate of Limited
Partnership (filed as Exhibit 3.279 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.278
Riverside Healthcare System, L.P. Limited Partnership Agreement
(filed as Exhibit 3.280 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.279
Riverside Hospital, Inc. Certificate of Incorporation (filed as
Exhibit 3.281 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.280
Riverside Hospital, Inc. By-Laws (filed as Exhibit 3.282 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.281
Samaritan, LLC Certificate of Formation (filed as
Exhibit 3.283 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.282
Samaritan, LLC Amended and Restated Limited Liability Company
Agreement (filed as Exhibit 3.284 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.283
San Jose Healthcare System, LP Certificate of Limited
Partnership (filed as Exhibit 3.286 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.284
San Jose Healthcare System, LP Limited Partnership
Agreement (filed as Exhibit 3.285 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.285
San Jose Hospital, L.P. Agreement of Limited Partnership
(filed as Exhibit 3.287 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.286
San Jose Hospital, L.P. Certificate of Limited Partnership
(filed as Exhibit 3.288 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
San Jose Medical Center, L8C Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.290 to the
Company’s Registration Statement on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
3
.289*
San Jose, LLC Certificate of Formation.
3
.290
San Jose, LLC Third Amended and Restated Limited Liability
Company Agreement (filed as Exhibit 3.292 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.291
Sarasota Doctors Hospital, Inc. Articles of Incorporation (filed
as Exhibit 3.293 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Sarasota Doctors Hospital, Inc. By-Laws (filed as
Exhibit 3.294 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.293
SJMC, LLC Certificate of Formation (filed as Exhibit 3.295
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.294
SJMC, LLC Amended and Restated Limited Liability Company
Agreement (filed as Exhibit 3.296 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.295
Southern Hills Medical Center, LLC Articles of Organization
(filed as Exhibit 3.297 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.396
Southern Hills Medical Center, LLC Second Amended and Restated
Limited Liability Company Agreement (filed as Exhibit 3.298
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.297
Spotsylvania Medical Center, Inc. Articles of Incorporation
(filed as Exhibit 3.299 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.298
Spotsylvania Medical Center, Inc By-Laws (filed as
Exhibit 3.300 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.299
Spring Branch Medical Center, Inc. Articles of Incorporation
(filed as Exhibit 3.301 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.300
Spring Branch Medical Center, Inc. By-Laws (filed as
Exhibit 3.302 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.301
Spring Hill Hospital, Inc. Charter (filed as Exhibit 3.303
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.302
Spring Hill Hospital, Inc. By-Laws (filed as Exhibit 3.304
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.303
St. Mark’s Lone Peak Hospital, Inc. Articles of
Incorporation (filed as Exhibit 3.305 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.304
St. Mark’s Lone Peak Hospital, Inc. By-Laws (filed as
Exhibit 3.306 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.305
Sun City Hospital, Inc. Articles of Incorporation (filed as
Exhibit 3.307 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.306
Sun City Hospital, Inc. By-Laws (filed as Exhibit 3.308 to
the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Sunrise Mountainview Hospital, Inc. By-Laws (filed as
Exhibit 3.312 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.309
Surgicare of Brandon, Inc. Articles of Incorporation (filed as
Exhibit 3.313 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.310
Surgicare of Brandon, Inc. By-Laws (filed as Exhibit 3.314
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.311*
Surgicare of Florida, Inc. Articles of Incorporation.
3
.312
Surgicare of Florida, Inc. By-Laws (filed as Exhibit 3.316
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.313
Surgicare of Houston Women’s, Inc. Articles of
Incorporation (filed as Exhibit 3.317 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Surgicare of Houston Women’s, Inc. By-Laws (filed as
Exhibit 3.318 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.315
Surgicare of Manatee, Inc. Articles of Incorporation (filed as
Exhibit 3.319 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.316
Surgicare of Manatee, Inc. By-Laws (filed as Exhibit 3.320
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Surgicare of New Port Richey, Inc. By-Laws (filed as
Exhibit 3.322 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.319
Surgicare of Palms West, LLC Articles of Organization (filed as
Exhibit 3.323 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.320
Surgicare of Palms West, LLC Limited Liability Company Agreement
(filed as Exhibit 3.324 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.321*
Surgicare of Riverside, LLC Articles of Organization.
3
.322
Surgicare of Riverside, LLC Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.326 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.323
Tallahassee Medical Center, Inc. Articles of Incorporation
(filed as Exhibit 3.327 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.324
Tallahassee Medical Center, Inc. By-Laws (filed as
Exhibit 3.328 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.325
TCMC Madison-Portland, Inc. Charter (filed as Exhibit 3.329
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.326
TCMC Madison-Portland, Inc. By-Laws (filed as Exhibit 3.330
to the Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.327
Terre Haute Hospital GP, Inc. Certificate of Incorporation
(filed as Exhibit 3.331 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.328
Terre Haute Hospital GP, Inc. By-Laws (filed as
Exhibit 3.332 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Terre Haute Hospital Holdings, Inc. By-Laws (filed as
Exhibit 3.334 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Terre Haute Regional Hospital, L.P. Certificate of Limited
Partnership.
3
.334
Terre Haute Regional Hospital, L.P. Limited Partnership
Agreement (filed as Exhibit 3.338 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.335*
The Regional Health System of Acadiana, LLC Certificate of
Merger.
3
.336*
The Regional Health System of Acadiana, LLC Operating Agreement.
3
.337
Timpanogos Regional Medical Services, Inc. Articles of
Incorporation (filed as Exhibit 3.339 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Timpanogos Regional Medical Services, Inc. By-Laws (filed as
Exhibit 3.340 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.339
Trident Medical Center, LLC Certificate of Formation (filed as
Exhibit 3.341 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.340
Trident Medical Center, LLC Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.342 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.341
Utah Medco, LLC Certificate of Formation (filed as
Exhibit 3.343 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.342
Utah Medco, LLC Amended and Restated Limited Liability Company
Agreement (filed as Exhibit 3.344 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.343
VH Holdco, Inc. Articles of Incorporation (filed as
Exhibit 3.345 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
VH Holdings, Inc. Articles of Incorporation (filed as
Exhibit 3.347 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Virginia Psychiatric Company, Inc. Articles of Incorporation
(filed as Exhibit 3.349 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.348
Virginia Psychiatric Company, Inc. By-Laws (filed as
Exhibit 3.350 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.349
W & C Hospital, Inc. Articles of Incorporation (filed
as Exhibit 3.351 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Walterboro Community Hospital, Inc. Articles of Incorporation
(filed as Exhibit 3.353 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.352
Walterboro Community Hospital, Inc. By-Laws (filed as
Exhibit 3.354 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Wesley Medical Center, LLC Amended and Restated Limited
Liability Company Agreement (filed as Exhibit 3.356 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.355*
West Florida Regional Medical Center, Inc. Articles of
Incorporation.
3
.356
West Florida Regional Medical Center, Inc. By-Laws (filed as
Exhibit 3.358 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.357
West Valley Medical Center, Inc. Articles of Incorporation
(filed as Exhibit 3.359 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.358
West Valley Medical Center, Inc. By-Laws (filed as
Exhibit 3.360 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.359
Western Plains Capital, Inc. Articles of Incorporation (filed as
Exhibit 3.361 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.360
Western Plains Capital, Inc. By-Laws (filed as
Exhibit 3.362 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
WHMC, Inc. Articles of Incorporation (filed as
Exhibit 3.363 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Woman’s Hospital of Texas, Incorporated Certificate of
Incorporation (filed as Exhibit 3.365 to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
3
.364
Woman’s Hospital of Texas, Incorporated By-Laws (filed as
Exhibit 3.366 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.1
Specimen Certificate for shares of Common Stock, par value $0.01
per share, of the Company (filed as Exhibit 3 to the
Company’s
Form 8-A,
Amendment No. 2, filed March 11, 2004 (File
No. 001-11239),
and incorporated herein by reference).
4
.2
Indenture, dated November 17, 2006, among HCA Inc., the
guarantors party thereto and The Bank of New York, as trustee
(filed as Exhibit 4.1 to the Company’s Current Report
on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.3
Security Agreement, dated as of November 17, 2006, among
HCA Inc., the subsidiary grantors party thereto and The Bank of
New York, as collateral agent (filed as Exhibit 4.2 to the
Company’s Current Report on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.4
Pledge Agreement, dated as of November 17, 2006, among HCA
Inc., the subsidiary pledgors party thereto and The Bank of New
York, as collateral agent (filed as Exhibit 4.3 to the
Company’s Current Report of
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.5(a)
Form of
91/8% Senior
Secured Notes due 2014 (included in Exhibit 4.2).
4
.5(b)
Form of
91/4% Senior
Secured Notes due 2016 (included in Exhibit 4.2).
4
.5(c)
Form of
95/8%/103/8% Senior
Secured Toggle Notes due 2016 (included in Exhibit 4.2).
4
.6
Indenture, dated February 19, 2009, among HCA Inc, the
guarantors party thereto, The Bank of New York Mellon, as
collateral agent and The Bank of New York Mellon
Trust Company, N.A., as trustee (filed as Exhibit 4.1
to the Company’s Current Report on
Form 8-K
filed February 25, 2009, and incorporated herein by
reference).
4
.7
Form of
97/8% Senior
Secured Notes due 2017 (included in Exhibit 4.6).
4
.8(a)
$13,550,000,000 — €1,000,000,000 Credit
Agreement, dated as of November 17, 2006, among HCA Inc.,
HCA UK Capital Limited, the lending institutions from time to
time parties thereto, Banc of America Securities LLC,
J.P. Morgan Securities Inc., Citigroup Global Markets Inc.
and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint lead arrangers and joint bookrunners,
Bank of America, N.A., as administrative agent, JPMorgan Chase
Bank, N.A. and Citicorp North America, Inc., as co-syndication
agents and Merrill Lynch Capital Corporation, as documentation
agent (filed as Exhibit 4.8 to the Company’s Current
Report on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.8(b)
Amendment No. 1 to the Credit Agreement, dated as of
February 16, 2007, among HCA Inc., HCA UK Capital Limited,
the lending institutions from time to time parties thereto, Bank
of America, N.A., as administrative agent, JPMorgan Chase Bank,
N.A., and Citicorp North America, Inc., as Co-Syndication
Agents, Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as joint
lead arrangers and bookrunners, Deutsche Bank Securities and
Wachovia Capital Markets LLC, as joint bookrunners and Merrill
Lynch Capital Corporation, as documentation agent (filed as
Exhibit 4.7(b) to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
Amendment No. 2 to the Credit Agreement, dated as of
March 2, 2009, among HCA Inc., HCA UK Capital Limited, the
lending institutions from time to time parties thereto, Bank of
America, N.A., as administrative agent, JPMorgan Chase Bank,
N.A., and Citicorp North America, Inc., as Co-Syndication
Agents, Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as joint
lead arrangers and bookrunners, Deutsche Bank Securities and
Wachovia Capital Markets LLC, as joint bookrunners and Merrill
Lynch Capital Corporation, as documentation agent (filed as
exhibit 4.8(c) to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
4
.8(d)
Amendment No. 3 to the Credit Agreement, dated as of
June 18, 2009, among HCA Inc., HCA UK Capital Limited, the
lending institutions from time to time parties thereto, Bank of
America, N.A., as administrative agent, JPMorgan Chase Bank,
N.A., and Citicorp North America, Inc., as Co-Syndication
Agents, Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as joint
lead arrangers and bookrunners, Deutsche Bank Securities and
Wachovia Capital Markets LLC, as joint bookrunners and Merrill
Lynch Capital Corporation, as documentation agent (filed as
Exhibit 4.1 to the Company’s Current Report on
Form 8-K
filed June 22, 2009, and incorporated herein by reference).
4
.8(e)†
Extension Amendment No. 1 to the Credit Agreement, dated as
of April 6, 2010, among HCA Inc., HCA UK Capital Limited,
the lending institutions from time to time parties thereto, Bank
of America, N.A., as administrative agent and collateral agent.
4
.9
U.S. Guarantee, dated November 17, 2006, among HCA Inc.,
the subsidiary guarantors party thereto and Bank of America,
N.A., as administrative agent (filed as Exhibit 4.9 to the
Company’s Current Report on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.10
Indenture, dated as of April 22, 2009, among HCA Inc., the
guarantors party thereto, Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent, and Law
Debenture Trust Company of New York, as trustee (filed as
Exhibit 4.1 to the Company’s Current Report on
Form 8-K
filed April 28, 2009, and incorporated herein by reference).
4
.11
Security Agreement, dated as November 17, 2006, and amended
and restated as of March 2, 2009, among the Company, the
Subsidiary Grantors named therein and Bank of America, N.A., as
Collateral Agent (filed as exhibit 4.10 to the
Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
4
.12
Pledge Agreement, dated as of November 17, 2006, and
amended and restated as of March 2, 2009, among the
Company, the Subsidiary Pledgors named therein and Bank of
America, N.A., as Collateral Agent (filed as exhibit 4.11
to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
4
.13
Form of
81/2% Senior
Secured Notes due 2019 (included in Exhibit 4.10).
4
.14
Indenture, dated as of August 11, 2009, among HCA Inc., the
guarantors party thereto, Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent, and Law
Debenture Trust Company of New York, as trustee (filed as
Exhibit 4.1 to the Company’s Current Report on
Form 8-K
filed August 17, 2009, and incorporated herein by
reference).
4
.15
Form of
77/8% Senior
Secured Notes due 2020 (included in Exhibit 4.14).
4
.16
Indenture, dated as of March 10, 2010, among HCA Inc., the
guarantors party thereto, Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent, and Law
Debenture Trust Company of New York, as trustee (filed as
Exhibit 4.1 to the Company’s Current Report on
Form 8-K
filed March 12, 2010, and incorporated herein by
reference).
Form of
71/4% Senior
Secured Notes due 2020 (included in Exhibit 4.16).
4
.18(a)
$2,000,000,000 Amended and Restated Credit Agreement, dated as
of June 20, 2007, among HCA Inc., the subsidiary borrowers
parties thereto, the lending institutions from time to time
parties thereto, Banc of America Securities LLC,
J.P. Morgan Securities Inc., Citigroup Global Markets Inc.
and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint lead arrangers and joint bookrunners,
Bank of America, N.A., as administrative agent, JPMorgan Chase
Bank, N.A. and Citicorp North America, Inc., as co-syndication
agents, and Merrill Lynch Capital Corporation, as documentation
agent (filed as Exhibit 4.1 to the Company’s Current
Report on
Form 8-K
filed June 26, 2007, and incorporated herein by reference).
4
.18(b)
Amendment No. 1 to the $2,000,000,000 Amended and Restated
Credit Agreement, dated as of March 2, 2009, among HCA
Inc., the subsidiary borrowers parties thereto, the lending
institutions from time to time parties thereto, Banc of America
Securities LLC, J.P. Morgan Securities Inc., Citigroup
Global Markets Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as joint lead arrangers
and joint bookrunners, Bank of America, N.A., as administrative
agent, JPMorgan Chase Bank, N.A. and Citicorp North America,
Inc., as co-syndication agents, and Merrill Lynch Capital
Corporation, as documentation agent (filed as
exhibit 4.12(b) to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
4
.19
Security Agreement, dated as of November 17, 2006, among
HCA Inc., the subsidiary borrowers party thereto and Bank of
America, N.A., as collateral agent (filed as Exhibit 4.13
to the Company’s Current Report on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.20(a)
General Intercreditor Agreement, dated as of November 17,2006, between Bank of America, N.A., as First Lien Collateral
Agent, and The Bank of New York, as Junior Lien Collateral Agent
(filed as Exhibit 4.13(a) to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.20(b)
Additional General Intercreditor Agreement, dated as of
April 22, 2009, by and among Bank of America, N.A., in its
capacity as First Lien Collateral Agent, The Bank of New York
Mellon, in its capacity as Junior Lien Collateral Agent and in
its capacity as 2006 Second Lien Trustee and The Bank of New
York Mellon Trust Company, N.A., in its capacity as 2009
Second Lien Trustee (filed as Exhibit 4.6 to the
Company’s Current Report on
Form 8-K
filed April 28, 2009, and incorporated herein by reference).
4
.20(c)
Additional General Intercreditor Agreement, dated as of
August 11, 2009, by and among Bank of America, N.A., in its
capacity as First Lien Collateral Agent, The Bank of New York
Mellon, in its capacity as Junior Lien Collateral Agent and in
its capacity as trustee for the Second Lien Notes issued on
November 17, 2006, and The Bank of New York Mellon
Trust Company, N.A., in its capacity as trustee for the
Second Lien Notes issued on February 19, 2009 (filed as
Exhibit 4.6 to the Company’s Current Report on
Form 8-K
filed August 17, 2009, and incorporated herein by
reference).
4
.20(d)
Receivables Intercreditor Agreement, dated as of
November 17, 2006, among Bank of America, N.A., as ABL
Collateral Agent, Bank of America, N.A., as CF Collateral Agent
and The Bank of New York, as Bonds Collateral Agent (filed as
Exhibit 4.13(b) to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.20(e)
Additional Receivables Intercreditor Agreement, dated as of
April 22, 2009, by and between Bank of America, N.A. as ABL
Collateral Agent, and Bank of America, N.A. as New First Lien
Collateral Agent (filed as Exhibit 4.7 to the
Company’s Current Report on
Form 8-K
filed April 28, 2009, and incorporated herein by reference).
4
.20(f)
Additional Receivables Intercreditor Agreement, dated as of
August 11, 2009, by and between Bank of America, N.A., as
ABL Collateral Agent, and Bank of America, N.A., as New First
Lien Collateral Agent (filed as Exhibit 4.7 to the
Company’s Current Report on
Form 8-K
filed August 17, 2009, and incorporated herein by
reference).
First Lien Intercreditor Agreement, dated as of April 22,2009, among Bank of America, N.A. as Collateral Agent, Bank of
America, N.A. as Authorized Representative under the Credit
Agreement and Law Debenture Trust Company of New York as
the Initial Additional Authorized Representative (filed as
Exhibit 4.5 to the Company’s Current Report on
Form 8-K
filed April 28, 2009, and incorporated herein by reference).
4
.21
Registration Rights Agreement, dated as of November 17,2006, among HCA Inc., Hercules Holding II, LLC and certain other
parties thereto (filed as Exhibit 4.4 to the Company’s
Current Report on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.22
Registration Rights Agreement, dated as of March 16, 1989,
by and among HCA-Hospital Corporation of America and the persons
listed on the signature pages thereto (filed as
Exhibit 4.14 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.23
Assignment and Assumption Agreement, dated as of
February 10, 1994, between HCA-Hospital Corporation of
America and the Company relating to the Registration Rights
Agreement, as amended (filed as Exhibit 4.15 to the
Company’s Registration Statement on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
4
.24(a)
Indenture, dated as of December 16, 1993 between the
Company and The First National Bank of Chicago, as Trustee
(filed as Exhibit 4.16(a) to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.24(b)
First Supplemental Indenture, dated as of May 25, 2000
between the Company and Bank One Trust Company, N.A., as
Trustee (filed as Exhibit 4.16(b) to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.24(c)
Second Supplemental Indenture, dated as of July 1, 2001
between the Company and Bank One Trust Company, N.A., as
Trustee (filed as Exhibit 4.16(c) to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.24(d)
Third Supplemental Indenture, dated as of December 5, 2001
between the Company and The Bank of New York, as Trustee (filed
as Exhibit 4.16(d) to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.24(e)
Fourth Supplemental Indenture, dated as of November 14,2006, between the Company and The Bank of New York, as Trustee
(filed as Exhibit 4.1 to the Company’s Current Report
on
Form 8-K
filed November 16, 2006, and incorporated herein by
reference).
4
.25
Form of 7.5% Debentures due 2023 (filed as
Exhibit 4.17 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.26
Form of 8.36% Debenture due 2024 (filed as
Exhibit 4.18 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.27
Form of Fixed Rate Global Medium-Term Note (filed as
Exhibit 4.19 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.28
Form of Floating Rate Global Medium-Term Note (filed as
Exhibit 4.20 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
Form of 7.19% Debenture due 2015 (filed as
Exhibit 4.22 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.31
Form of 7.50% Debenture due 2095 (filed as
Exhibit 4.23 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.32
Form of 7.05% Debenture due 2027 (filed as
Exhibit 4.24 to the Company’s Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.33(a)
8.750% Note in the principal amount of $400,000,000 due
2010 (filed as Exhibit 4.26(a) to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
8.750% Note in the principal amount of $350,000,000 due
2010 (filed as Exhibit 4.26(b) to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.34
8.75% Note due 2010 in the principal amount of
£150,000,000 (filed as Exhibit 4.27 to the
Company’s Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
6.95% Note due 2012 in the principal amount of $400,000,000
(filed as Exhibit 4.29(a) to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.36(b)
6.95% Note due 2012 in the principal amount of $100,000,000
(filed as Exhibit 4.29(b) to the Company’s
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
6.500% Note due 2016 in the principal amount of
$500,000,000 (filed as Exhibit 4.1 to the Company’s
Current Report on
Form 8-K
filed on February 8, 2006, and incorporated herein by
reference).
6.500% Note due 2016 in the principal amount of
$500,000,000 (filed as Exhibit 4.2 to the Company’s
Current Report on
Form 8-K
filed on February 8, 2006, and incorporated herein by
reference).
5
.1*
Opinion of Simpson Thacher & Bartlett LLP.
10
.1(a)
Amended and Restated Columbia/HCA Healthcare Corporation 1992
Stock and Incentive Plan (filed as Exhibit 10.7(b) to the
Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 1998 (File
No. 001-11239),
and incorporated herein by reference).
10
.1(b)
First Amendment to Amended and Restated Columbia/HCA Healthcare
Corporation 1992 Stock and Incentive Plan (filed as
Exhibit 10.2 to the Company’s Quarterly Report on
Form 10-Q
for the quarter ended September 30, 1999 (File
No. 001-11239),
and incorporated herein by reference).
10
.2
HCA-Hospital Corporation of America Nonqualified Initial Option
Plan (filed as Exhibit 4.6 to the Company’s
Registration Statement on
Form S-3
(File
No. 33-52379),
and incorporated herein by reference).
10
.3
Form of Indemnity Agreement with certain officers and directors
(filed as Exhibit 10.3 to the Company’s Registration
Statement on
Form S-4
(File
No. 333-145054)
and incorporated herein by reference).
10
.4
Form of Galen Health Care, Inc. 1993 Adjustment Plan (filed as
Exhibit 4.15 to the Company’s Registration Statement
on
Form S-8
(File
No. 33-50147)
and incorporated herein by reference).
10
.5
Form of HCA-Hospital Corporation of America 1992 Stock
Compensation Plan (filed as Exhibit 4.2 to the
Company’s Registration Statement on
Form S-8
(File
No. 33-52253),
and incorporated herein by reference).
10
.6
Columbia/HCA Healthcare Corporation 2000 Equity Incentive Plan
(filed as Exhibit A to the Company’s Proxy Statement
for the Annual Meeting of Stockholders on May 25, 2000, and
incorporated herein by reference), and incorporated herein by
reference).
HCA 2005 Equity Incentive Plan (filed as Exhibit B to the
Company’s Proxy Statement for the Annual Meeting of
Shareholders on May 26, 2005, and incorporated herein by
reference).
10
.9
Form of 2005 Non-Qualified Stock Option Agreement (Officers)
(filed as Exhibit 99.2 to the Company’s Current Report
on
Form 8-K
dated October 6, 2005, and incorporated herein by
reference).
10
.10
Form of 2006 Non-Qualified Stock Option Award Agreement
(Officers) (filed as Exhibit 10.2 to the Company’s
Current Report on
Form 8-K
dated February 1, 2006, and incorporated herein by
reference).
10
.11
2006 Stock Incentive Plan for Key Employees of HCA Inc. and its
Affiliates (filed as Exhibit 10.11 to the Company’s
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
Management Agreement, dated November 17, 2006, among HCA
Inc., Bain Capital Partners, LLC, Kohlberg Kravis
Roberts & Co. L.P., Dr. Thomas F. Frist Jr.,
Patricia F. Elcan, William R. Frist and Thomas F.
Frist, III, and Merrill Lynch Global Partners, Inc. (filed
as Exhibit 10.20 to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
Amended and Restated HCA Supplemental Executive Retirement Plan,
effective January 1, 2007, except as provided therein
(filed as Exhibit 10.24 to the Company’s Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
HCA Inc. 2007 Senior Officer Performance Excellence Program
(filed as Exhibit 10.26 to the Company’s Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.29(a)
HCA Inc.
2008-2009
Senior Officer Performance Excellence Program (filed as
Exhibit 10.27 to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, and
incorporated herein by reference).
10
.29(b)
HCA Inc. Amendment No. 1 to the
2008-2009
Senior Officer Performance Excellence Program (filed as
Exhibit 10.28(b) to the Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
Administrative Settlement Agreement dated June 25, 2003 by
and between the United States Department of Health and Human
Services, acting through the Centers for Medicare and Medicaid
Services, and the Company (filed as Exhibit 10.1 to the
Company’s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2003 (File
No. 001-11239),
and incorporated herein by reference).
10
.32
Civil Settlement Agreement by and among the United States of
America, acting through the United States Department of
Justice and on behalf of the Office of Inspector General of the
Department of Health and Human Services, the TRICARE Management
Activity (filed as Exhibit 10.2 to the Company’s
Quarterly Report of
Form 10-Q
for the quarter ended June 30, 2003 (File
No. 001-11239),
and incorporated herein by reference).
10
.33
Form of Amended and Restated Limited Liability Company Agreement
of Hercules Holding II, LLC dated as of November 17, 2006,
among Hercules Holding II, LLC and certain other parties thereto
(filed as Exhibit 10.3 to the Company’s Registration
Statement on
Form 8-A,
filed April 29, 2008 (File
No. 000-18406)
and incorporated herein by reference).
10
.34
Indemnification Priority and Information Sharing Agreement,
dated as of November 1, 2009, between HCA Inc. and certain
other parties thereto (filed as Exhibit 10.35 to the
Company’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 (File
No. 001-11239),
and incorporated herein by reference).
10
.35
HCA Inc. 2010 Senior Officer Performance Excellence Program
(filed as Exhibit 10.1 to the Company’s Current Report
on
Form 8-K
dated April 6, 2010, and incorporated herein by reference).
Form T-1
Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York Mellon Trust Company, N.A. as
trustee under the Indenture, dated as of February 19, 2009,
among HCA Inc., the guarantors party thereto, The Bank of New
York Mellon, as collateral agent and The Bank of New York Mellon
Trust Company, N.A., as Trustee (filed as Exhibit 25.3
to the Company’s Registration Statement on
Form S-1
(File
No. 333-159511),
and incorporated herein by reference).
25
.2*
Form T-1
Statement of Eligibility under the Trust Indenture Act of
1939 of Law Debenture Trust Company of New York, as trustee
under the Indentures, dated as of April 22, 2009,
August 11, 2009 and March 10, 2010, among HCA Inc.,
the guarantors party thereto, Deutsche Bank Trust Company
Americas as paying agent, registrar and transfer agent and Law
Debenture Trust Company of New York, as Trustee.
99
.1*
Form of Letter of Transmittal.
99
.2*
Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
All schedules are omitted because the required information is
either not present, not present in material amounts or presented
within the consolidated financial statements included in the
prospectus and are incorporated herein by reference.
Item 22.
Undertakings.
(a) Each of the undersigned registrants hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
“Calculation of Registration Fee” table in the
effective registration statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) that, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) to remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering;
(4) that, for the purpose of determining liability under
the Securities Act of 1933 to any purchaser, if the registrants
are subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to
an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in
the registration statement as of the date it is first used after
effectiveness; provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in
the registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such date of first use; and
(5) that, for the purpose of determining liability of the
registrant under the Securities Act to any purchaser in the
initial distribution of the securities, the undersigned
registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
(iii) the portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
(b) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
(c) Each of the undersigned registrants hereby undertakes
to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11
or 13 of
Form S-4
within one business day of receipt of such request and to send
the incorporated documents by first class mail or equally prompt
means. This includes information contained in documents filed
subsequent to the effective date of the registration statement
through the date of responding to the request.
(d) Each of the undersigned registrants hereby hereby
undertakes to supply by means of a post-effective amendment all
information concerning a transaction that was not the subject of
and included in the registration statement when it became
effective.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
HCA INC.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Executive Vice President and Chief
Financial Officer
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes Richard M.
Bracken, R. Milton Johnson, David G. Anderson and John M. Franck
II, or any of them, as his or her attorney in fact and agent,
with full power of substitution and resubstitution, to execute,
in his name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Richard
M. Bracken
Richard
M. Bracken
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule I of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ A.
Bruce Moore, Jr.
A.
Bruce Moore, Jr.
President and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule II of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ A.
Bruce Moore, Jr.
A.
Bruce Moore, Jr.
President and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule III of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ A.
Bruce Moore, Jr.
A.
Bruce Moore, Jr.
President and Manager
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in city the of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule IV of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ A.
Bruce Moore, Jr.
A.
Bruce Moore, Jr.
President and Manager
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule V of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule VI of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule VII of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule VIII of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Gregary
W. Beasley
Gregary
W. Beasley
President and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule IX of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Gregary
W. Beasley
Gregary
W. Beasley
President and Manager
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule X of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Noel
B. Williams
Noel
B. Williams
President and Chief Information Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached Schedule XI of
Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached
Schedule XII of Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached
Schedule XIII of Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached
Schedule XIV of Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
REGISTRANTS (as listed on the attached
Schedule XV of Subsidiary Registrants)
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of the general partner
Columbia North Texas Subsidiary GP, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of
the general partner Columbia North Texas
Subsidiary GP, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
CHCA Bayshore, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director of the general partner,
Pasadena Bayshore Hospital, Inc.
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President
(Principal Executive Officer) of the
general partner, Pasadena Bayshore
Hospital, Inc.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
CHCA Conroe, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director of the general partner,
Conroe Hospital Corporation
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of the general partner,
Conroe Hospital Corporation
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
CHCA Mainland, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director of the general partner,
Danforth Hospital, Inc.
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of the general partner,
Danforth Hospital, Inc.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
CHCA West Houston, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director of general partner, WHMC,
Inc.
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of the general partner,
WHMC, Inc.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
CHCA Woman’s Hospital, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President of general partner, Woman’s
Hospital of Texas, Incorporated
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of the general partner,
Woman’s Hospital of Texas, Incorporated
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
CMS GP, LLC
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
President and Manager
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ R.
Milton Johnson
R.
Milton Johnson
President and Manager
(Principal Executive Officer and Principal
Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Columbia ASC Management, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of general partner, Medical
Care America, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Gregary
W. Beasley
Gregary
W. Beasley
President and Manager (Principal
Executive Officer) of the general
partner, Medical Care America, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Columbia Rio Grande Healthcare, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director of the general partner,
Rio Grande Regional Hospital, Inc.
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of the general partner,
Rio Grande Regional Hospital, Inc.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Columbia Valley Healthcare System, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director of the general partner,
Brownsville-Valley Regional Medical Center, Inc.
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of
the general partner, Brownsville-Valley
Regional Medical Center, Inc.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Fairview Park, Limited Partnership
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of general partner,
Fairview Park GP, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Charles
J. Hall
Charles
J. Hall
President (Principal Executive Officer)
of the general partner, Fairview
Park GP, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Good Samaritan Hospital, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of general partner,
Samaritan, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of the general partner,
Samaritan, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
HCA Management Services, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
President and Manager of general partner, CMS GP, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ R.
Milton Johnson
R.
Milton Johnson
President and Manager (Principal Executive Officer and Principal
Accounting Officer) of the general partner, CMS GP, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the city of Nashville, State of Tennessee, on
April 7, 2010.
Healthtrust MOB, LLC
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director of managing member,
Healthtrust, Inc. — The Hospital Company
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ A.
Bruce Moore, Jr.
A.
Bruce Moore, Jr.
President and Director
(Principal Executive Officer)
of the managing member, Healthtrust, Inc. — The
Hospital Company
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
HSS Virginia, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of the general partner, HSS
Holdco, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or any
of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ A.
Bruce Moore, Jr.
A.
Bruce Moore, Jr.
President and Manager
(Principal Executive Officer)
of the general partner, HSS Holdco, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Integrated Regional Laboratories, LLP
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of the managing partner,
Integrated Regional Lab, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated
.Signature
Title
Date
/s/ Charles
J. Hall
Charles
J. Hall
President (Principal Executive Officer) of the managing partner,
Integrated Regional Lab, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
JFK Medical Center Limited Partnership
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of the general partner,
Columbia Palm Beach GP, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
.
Signature
Title
Date
/s/ Charles
J. Hall
Charles
J. Hall
President (Principal Executive Officer) of the general partner,
Columbia Palm Beach GP, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
MCA Investment Company
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Nashville Shared Services General Partnership
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of the managing partner,
HSS Systems, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Beverly
B. Wallace
Beverly
B. Wallace
President (Principal Executive Officer)
of the managing partner, HSS Systems, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
National Patient Account Services, Inc.
By:
/s/ Eric
Ward
Name: Eric Ward
Title:
President and Treasurer
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Eric
Ward
Eric
Ward
President and Treasurer and Director
(Principal Executive Officer and Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Palms West Hospital Limited Partnership
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of the general partner,
Columbia Palm Beach GP, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Charles
J. Hall
Charles
J. Hall
President (Principal Executive Officer) of the general partner,
Columbia Palm Beach GP, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Plantation General Hospital, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director of the general partner,
HD&S Corp. Successor, Inc.
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
.
Signature
Title
Date
/s/ Charles
J. Hall
Charles
J. Hall
President (Principal Executive Officer) of the general partner,
HD&S Corp. Successor, Inc.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Riverside Healthcare System, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Director of the general partner,
Columbia Riverside, Inc.
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of the general partner,
Columbia Riverside, Inc.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
San Jose Healthcare System, LP
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of the general partner,
San Jose, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of the general partner,
San Jose, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
San Jose Hospital, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of the general partner,
San Jose Medical Center, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Samuel
N. Hazen
Samuel
N. Hazen
President (Principal Executive Officer) of the general partner,
San Jose Medical Center, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Terre Haute MOB, L.P.
By:
/s/ R.
Milton Johnson
Name: R. Milton Johnson
Title:
Senior Vice President and Manager of the managing general
partner, HSS Holdco, LLC
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and
R. Milton Johnson, or any of them, as his or her attorney
in fact and agent, with full power of substitution and
resubstitution, to execute, in his name and on his behalf, in
any and all capacities, a Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ A.
Bruce Moore, Jr.
A.
Bruce Moore, Jr.
President and Manager
(Principal Executive Officer)
of the managing general partner, HSS Holdco, LLC
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Terre Haute Regional Hospital, L.P.
By:
/s/ R.
Milton Johnson
Name: R.
Milton Johnson
Title: Senior Vice President and Director of the general
partner, Terre Haute Hospital GP, Inc.
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Paul
Rutledge
Paul
Rutledge
President (Principal Executive Officer) of the general partner,
Terre Haute Hospital GP, Inc.
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, State of Tennessee, on
April 7, 2010.
Western Plains Capital, Inc.
By:
/s/ R.
Milton Johnson
Name: R.
Milton Johnson
Title:
Senior Vice President and Director
SIGNATURES
AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes John M.
Franck II, David G. Anderson and R. Milton Johnson, or
any of them, as his or her attorney in fact and agent, with full
power of substitution and resubstitution, to execute, in his
name and on his behalf, in any and all capacities, a
Registration Statement on
Form S-4
and any amendments, including post-effective amendments thereto
(and any additional registration statement related thereto
permitted by Rule 462(b) promulgated under the Securities
Act of 1933 (and all further amendments including post-effective
amendments thereto)), relating to an offer to exchange
97/8% Senior
Secured Notes due 2017,
81/2% Senior
Secured Notes due 2019,
77/8% Senior
Secured Notes due 2020
and/or
71/4% Senior
Secured Notes due 2020 (collectively, the “Notes”) of
HCA Inc., and any Market-Maker Registration Statement on
Form S-1
and any amendments including post-effective amendments thereto
related to the Notes and any other notes described therein, as
contemplated under the Registration Rights Agreements, dated
February 19, 2009, April 22, 2009, August 11,2009 and/or
March 10, 2010 among HCA Inc., the subsidiary guarantors
party thereto and the initial purchasers of the Notes, and to
file the same, with all the exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, necessary or advisable to enable the
registrant to comply with the Securities Act of 1933, and any
rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the
registration of the Notes pursuant to such Registration
Statement on
Form S-4
and such Market-Maker Registration Statement, as the case may
be, which amendments may make such changes in such Registration
Statement on
Form S-4
or Market Maker Registration Statement, as the case may be, as
such attorney may deem appropriate, and with full power and
authority to perform and do any and all acts and things,
whatsoever which any such attorney or substitute may deem
necessary or advisable to be performed or done in connection
with any or all of the above-described matters, as fully as each
of the undersigned could do if personally present and acting,
hereby ratifying and approving all acts of any such attorney or
substitute.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
Title
Date
/s/ David
G. Anderson
David
G. Anderson
President, Treasurer and Director
(Principal Executive Officer and Principal
Financial Officer)
