EX-4.2 3 a2073210zex-4_2.txt EXHIBIT 4.2 ======================================================= UNITED SURGICAL PARTNERS HOLDINGS, INC. Issuer 10% Senior Subordinated Notes Due 2011 -------------------- INDENTURE Dated as of December 19, 2001 --------------------- U.S. TRUST COMPANY OF TEXAS, N.A. Trustee ======================================================= 2
CROSS-REFERENCE TABLE TIA Indenture SECTION SECTION 310(a)(1) ............................. 7.10 (a)(2) ............................. 7.10 (a)(3) ............................. N.A. (a)(4) ............................. N.A. (a)(5) ............................. 7.10 (b) ............................. 7.08; 7.10 (c) ............................. N.A. 311(a) ............................. 7.11 (b) ............................. 7.11 (c) ............................. N.A. 312(a) ............................. 2.05 (b) ............................. 13.03 (c) ............................. 13.03 313(a) ............................. 7.06 (b)(1) ............................. N.A. (b)(2) ............................. 7.06 (c) ............................. 13.02 (d) ............................. 7.06 314(a) ............................. 4.13; 4.14; 4.15; 13.02 (b) ............................. N.A. (c)(1) ............................. 13.04 (c)(2) ............................. 13.04 (c)(3) ............................. N.A. (d) ............................. N.A. (e) ............................. 13.05 (f) ............................. N.A. 315(a) ............................. 7.01 (b) ............................. 7.05; 13.02 (c) ............................. 7.01 (d) ............................. 7.01 (e) ............................. 6.11 316(a)(last sentence)........................ 13.06 (a)(1)(A) ............................. 6.05 (a)(1)(B) ............................. 6.04 (a)(2) ............................. N.A. (b) ............................. 6.07 317(a)(1) ............................. 6.08 (a)(2) ............................. 6.09 (b) ............................. 2.04 318(a) ............................. 13.01 N.A. means Not Applicable.
---------------- Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of the Indenture. 3
TABLE OF CONTENTS Article 1 Definitions and Incorporation by Reference SECTION 1.01. DEFINITIONS...................................................................1 SECTION 1.02. OTHER DEFINITIONS............................................................34 SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT............................35 SECTION 1.04. RULES OF CONSTRUCTION........................................................35 Article 2 The Securities SECTION 2.01. FORM AND DATING..............................................................36 SECTION 2.02. EXECUTION AND AUTHENTICATION.................................................37 SECTION 2.03. REGISTRAR AND PAYING AGENT...................................................37 SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST..........................................38 SECTION 2.05. SECURITYHOLDER LISTS.........................................................38 SECTION 2.06. TRANSFER AND EXCHANGE........................................................38 SECTION 2.07. REPLACEMENT SECURITIES.......................................................39 SECTION 2.08. OUTSTANDING SECURITIES.......................................................39 SECTION 2.09. TEMPORARY SECURITIES.........................................................40 SECTION 2.10. CANCELLATION.................................................................40 SECTION 2.11. DEFAULTED INTEREST...........................................................40 SECTION 2.12. CUSIP NUMBERS................................................................40 SECTION 2.13. ISSUANCE OF ADDITIONAL SECURITIES............................................41 Article 3 Redemption SECTION 3.01. NOTICES TO TRUSTEE...........................................................41 SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED.......................................42 SECTION 3.03. NOTICE OF REDEMPTION.........................................................42 SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION...............................................43 SECTION 3.05. DEPOSIT OF REDEMPTION PRICE..................................................43 SECTION 3.06. SECURITIES REDEEMED IN PART..................................................43 Article 4 Covenants SECTION 4.01. PAYMENT OF SECURITIES........................................................43 SECTION 4.02. CHANGE OF CONTROL............................................................44 SECTION 4.03. LIMITATION ON INDEBTEDNESS...................................................47 SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS............................................51 SECTION 4.05. LIMITATION ON LIENS..........................................................55 SECTION 4.06. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES.....55 SECTION 4.07. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK...........................57 4 SECTION 4.08. LIMITATION ON AFFILIATE TRANSACTIONS.........................................62 SECTION 4.09. LIMITATION ON OWNERSHIP OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES..........64 SECTION 4.10. DISTRIBUTIONS BY QUALIFIED RESTRICTED SUBSIDIARIES...........................64 SECTION 4.11. INTERCOMPANY ADVANCES........................................................64 SECTION 4.12. GUARANTORS...................................................................64 SECTION 4.13. SEC REPORTS..................................................................65 SECTION 4.14. COMPLIANCE CERTIFICATE.......................................................66 SECTION 4.15. MAINTENANCE OF OFFICE OR AGENCY..............................................66 SECTION 4.16. TAXES........................................................................67 SECTION 4.17. LIMITATION ON STATUS AS INVESTMENT COMPANY...................................67 SECTION 4.18. PAYMENTS FOR CONSENT.........................................................67 SECTION 4.19. CORPORATE EXISTENCE..........................................................67 SECTION 4.20. FURTHER INSTRUMENTS AND ACTS.................................................68 Article 5 Merger SECTION 5.01. MERGER AND CONSOLIDATION.....................................................68 Article 6 Defaults and Remedies SECTION 6.01. EVENTS OF DEFAULT............................................................70 SECTION 6.02. ACCELERATION.................................................................73 SECTION 6.03. OTHER REMEDIES...............................................................73 SECTION 6.04. WAIVER OF PAST DEFAULTS......................................................74 SECTION 6.05. CONTROL BY MAJORITY..........................................................74 SECTION 6.06. LIMITATION ON SUITS..........................................................74 SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.........................................75 SECTION 6.08. COLLECTION SUIT BY TRUSTEE...................................................75 SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.............................................75 SECTION 6.10. PRIORITIES...................................................................76 SECTION 6.11. UNDERTAKING FOR COSTS........................................................76 SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS.............................................77 Article 7 Trustee SECTION 7.01. DUTIES OF TRUSTEE............................................................77 SECTION 7.02. RIGHTS OF TRUSTEE............................................................78 SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.................................................79 SECTION 7.04. TRUSTEE'S DISCLAIMER.........................................................79 SECTION 7.05. NOTICE OF DEFAULTS...........................................................80 SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS................................................80 SECTION 7.07. COMPENSATION AND INDEMNITY...................................................80 SECTION 7.08. REPLACEMENT OF TRUSTEE.......................................................81 SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER..................................................82 5 SECTION 7.10. ELIGIBILITY; DISQUALIFICATION................................................83 SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY............................83 Article 8 Discharge of Indenture; Defeasance SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE.............................83 SECTION 8.02. CONDITIONS TO DEFEASANCE.....................................................84 SECTION 8.03. APPLICATION OF TRUST MONEY...................................................86 SECTION 8.04. REPAYMENT TO COMPANY.........................................................86 SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS.........................................86 SECTION 8.06. REINSTATEMENT................................................................86 Article 9 Amendments SECTION 9.01. WITHOUT CONSENT OF HOLDERS...................................................87 SECTION 9.02. WITH CONSENT OF HOLDERS......................................................88 SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT..........................................89 SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS................................90 SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES........................................90 SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS...................................................90 Article 10 Subordination SECTION 10.01. AGREEMENT TO SUBORDINATE.....................................................91 SECTION 10.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY.........................................91 SECTION 10.03. DEFAULT ON SENIOR INDEBTEDNESS OF THE COMPANY................................92 SECTION 10.04. ACCELERATION OF PAYMENT OF SECURITIES........................................93 SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER..........................................93 SECTION 10.06. SUBROGATION..................................................................93 SECTION 10.07. RELATIVE RIGHTS..............................................................94 SECTION 10.08. RIGHTS OF TRUSTEE AND PAYING AGENT...........................................94 SECTION 10.09. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.....................................94 SECTION 10.10. ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE.....95 SECTION 10.11. TRUST MONEYS NOT SUBORDINATED................................................95 SECTION 10.12. TRUSTEE ENTITLED TO RELY.....................................................95 SECTION 10.13. TRUSTEE TO EFFECTUATE SUBORDINATION..........................................96 SECTION 10.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF THE COMPANY......96 SECTION 10.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF THE COMPANY ON SUBORDINATION PROVISIONS...................................................................96 6 Article 11 Guaranties SECTION 11.01. GUARANTIES...................................................................96 SECTION 11.02. LIMITATION ON LIABILITY......................................................99 SECTION 11.03. SUCCESSORS AND ASSIGNS.......................................................99 SECTION 11.04. NO WAIVER....................................................................99 SECTION 11.05. MODIFICATION................................................................100 SECTION 11.06. RELEASE OF GUARANTOR........................................................100 Article 12 Subordination of Guaranties SECTION 12.01. AGREEMENT TO SUBORDINATE....................................................100 SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY........................................101 SECTION 12.03. DEFAULT ON SENIOR INDEBTEDNESS OF GUARANTOR.................................101 SECTION 12.04. DEMAND FOR PAYMENT..........................................................103 SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER.........................................103 SECTION 12.06. SUBROGATION.................................................................103 SECTION 12.07. RELATIVE RIGHTS.............................................................103 SECTION 12.08. RIGHTS OF TRUSTEE AND PAYING AGENT..........................................104 SECTION 12.09. DISTRIBUTION OR NOTICE TO REPRESENTATIVE....................................104 SECTION 12.10. ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO DEMAND PAYMENT.....................................................................104 SECTION 12.11. TRUST MONEYS NOT SUBORDINATED...............................................104 SECTION 12.12. TRUSTEE ENTITLED TO RELY....................................................105 SECTION 12.13. TRUSTEE TO EFFECTUATE SUBORDINATION.........................................105 SECTION 12.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF GUARANTOR.......106 SECTION 12.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF THE GUARANTORS ON SUBORDINATION PROVISIONS..................................................................106 Article 13 Miscellaneous SECTION 13.01. TRUST INDENTURE ACT CONTROLS................................................106 SECTION 13.02. NOTICES.....................................................................106 SECTION 13.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.................................107 SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT..........................107 SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION...............................108 SECTION 13.06. WHEN SECURITIES DISREGARDED.................................................108 SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR................................108 SECTION 13.08. LEGAL HOLIDAYS..............................................................108 SECTION 13.09. GOVERNING LAW...............................................................109 7 SECTION 13.10. NO RECOURSE AGAINST OTHERS..................................................109 SECTION 13.11. SUCCESSORS..................................................................109 SECTION 13.12. MULTIPLE ORIGINALS..........................................................109 SECTION 13.13. TABLE OF CONTENTS; HEADINGS.................................................109
APPENDIX A -Provisions Relating to Initial Securities, Private Exchange Securities and Exchange Securities EXHIBIT 1 - Form of Initial Security EXHIBIT A - Form of Exchange Security or Private Exchange Security INDENTURE dated as of December 19, 2001, among UNITED SURGICAL PARTNERS HOLDINGS, INC., a Delaware corporation (the "COMPANY"), the guarantors from time to time parties hereto (the "GUARANTORS") and U.S. TRUST COMPANY OF TEXAS, N.A., as Trustee (the "TRUSTEE"). Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Company's Initial Securities, Exchange Securities and Private Exchange Securities (collectively, the "SECURITIES"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "ADDITIONAL ASSETS" means: (1) any property, plant or equipment used in a Related Business; (2) Capital Stock of a Person that becomes a Qualified Restricted Subsidiary as a result of the acquisition of such Capital Stock by Parent or a Restricted Subsidiary; or (3) Capital Stock of a Qualified Restricted Subsidiary, a Qualified Joint Venture or a QJVGP. "ADDITIONAL SECURITIES" means, subject to the Company's compliance with Section 4.03, 10% Senior Subordinated Notes Due 2011 issued from time to time after the Issue Date under the terms of this Indenture (other than pursuant to Section 2.06, 2.07, 2.09 or 3.06 of this Indenture and other than Exchange Securities or Private Exchange Securities issued pursuant to an exchange offer for other Securities outstanding under this Indenture). "AFFILIATE" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "CONTROL" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings 2 correlative to the foregoing. "Affiliate" shall also mean any beneficial owner of Capital Stock representing 10% or more of the total voting power of the Voting Stock (on a fully diluted basis) of Parent or of rights or warrants to purchase such Capital Stock (whether or not currently exercisable)and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "ASSET DISPOSITION" means any sale, lease, issuance, transfer or other disposition (or series of related sales, leases, issuances, transfers or dispositions) by Parent or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a "DISPOSITION"), of: (1) any shares of Capital Stock of the Company or any other Restricted Subsidiary of Parent (other than directors' qualifying shares or an immaterial number of shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary); (2) all or substantially all the assets of any division or line of business of Parent or any Restricted Subsidiary; (3) any other assets of Parent or any Restricted Subsidiary outside of the ordinary course of business of Parent or such Restricted Subsidiary. Notwithstanding the foregoing, the following shall be deemed not to be Asset Dispositions: (A) a disposition by Parent or a Restricted Subsidiary to the Company or a Guarantor; (B) for purposes of Section 4.07 only, (i) a disposition that constitutes a Restricted Payment permitted by Section 4.04 or a Permitted Investment and (ii) a transaction in accordance with Section 5.01; (C) for purposes of Section 4.07 only, the trade or exchange by Parent or any Restricted Subsidiary of (i) any assets of a kind used or usable in the primary business of Parent and its Restricted Subsidiaries or any Capital Stock of a Restricted Subsidiary, a QJVGP or a Qualified Joint Venture for (ii) any assets of a 3 kind used or usable in the primary business of Parent and its Restricted Subsidiaries or any Capital Stock of a Person that is, or that shall become upon such trade or exchange, a Qualified Restricted Subsidiary, a QJVGP or a Qualified Joint Venture, and any cash or cash equivalents necessary in order to achieve an exchange of equivalent value; PROVIDED, HOWEVER, that (a) the value of the assets received by Parent and its Restricted Subsidiaries in such trade or exchange is at least equal to the fair market value (as determined in good faith by the Board of Directors) of the assets so traded or exchanged and (b) such trade or exchange shall constitute an Asset Disposition to the extent of the amount of any cash, cash equivalents and assets other than assets of the types specified in clause (ii) above received by Parent and its Restricted Subsidiaries as consideration in such trade or exchange; (D) for purposes of Section 4.07 only, the sale of Capital Stock in a Qualified Restricted Subsidiary to a Strategic Investor; PROVIDED, THAT (i) after giving effect to such sale, such Qualified Restricted Subsidiary continues to constitute a Qualified Restricted Subsidiary and (ii) an amount equal to the Net Available Cash from such sale are applied in accordance with Sections 4.07(a)(3) and 4.07(a)(4); (E) the creation of a Lien; (F) for purposes of Section 4.07 only, any commercially reasonable foreclosure of a Lien on assets; PROVIDED, THAT an amount equal to the Net Available Cash, if any, to Parent and its Restricted Subsidiaries from such foreclosure are applied in accordance with Sections 4.07(a)(3) and 4.07(a)(4); and (G) a disposition of assets with a fair market value of less than $2.0 million. "AVERAGE LIFE" means, as of the date of determination, with respect to any Indebtedness, the quotient obtained by dividing: (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of or redemption or similar payment with respect to such 4 Indebtedness multiplied by the amount of such payment, by (2) the sum of all such payments. "BANK INDEBTEDNESS" means all obligations pursuant to the Credit Agreement. "BOARD OF DIRECTORS" means the board of directors of Parent or any committee thereof duly authorized to act on behalf of such board. "BUSINESS DAY" means each day which is not a Legal Holiday. "CAPITAL LEASE OBLIGATION" means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "CAPITAL STOCK" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMON STOCK" of any Person means Capital Stock of such Person that does not rank senior in any respect to, and does not have any preference or priority over, any shares of Capital Stock of any other class of such Person, including with respect to the payment of dividends or the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person. "CONSOLIDATED COVERAGE RATIO" as of any date of determination means the ratio of (x) the aggregate amount of EBITDA of Parent for the period of the most recent four consecutive fiscal quarters for which financial statements are available immediately preceding the date of such 5 determination to (y) Consolidated Interest Expense of Parent for such four fiscal quarters; PROVIDED, HOWEVER, that: (1) if Parent or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, then EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a PRO FORMA basis to such Indebtedness and the application of the proceeds therefrom as if such Indebtedness had been Incurred and such proceeds had been applied on the first day of such period; (2) if Parent or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, then EBITDA and Consolidated Interest Expense for such period shall be calculated on a PRO FORMA basis as if such discharge had occurred on the first day of such period and as if Parent or such Restricted Subsidiary had not earned the interest income actually earned (if any) during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness; (3) if, since the beginning of such period, Parent or any Restricted Subsidiary shall have made any Asset Disposition, then EBITDA for such period shall be reduced by an amount equal to EBITDA (if positive) directly attributable to the assets which were the subject of such Asset Disposition for such period, or increased by an amount equal to EBITDA (if negative), directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of Parent or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to Parent and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable 6 to the Indebtedness of such Restricted Subsidiary to the extent Parent and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); (4) if, since the beginning of such period, Parent or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of assets outside of the ordinary course of business (including any Investment in a QJVGP or a Qualified Joint Venture), then EBITDA and Consolidated Interest Expense for such period shall be calculated after giving PRO FORMA effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition had occurred on the first day of such period; and (5) if, since the beginning of such period, any Person (that subsequently became a Restricted Subsidiary or was merged with or into Parent or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by Parent or a Restricted Subsidiary during such period, then EBITDA and Consolidated Interest Expense for such period shall be calculated after giving PRO FORMA effect thereto as if such Asset Disposition, Investment or acquisition had occurred on the first day of such period. For purposes of this definition, whenever PRO FORMA effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the PRO FORMA calculations shall be determined in good faith by a responsible financial or accounting Officer of Parent. If any Indebtedness bears a floating rate of interest and is being given PRO FORMA effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness, but if the remaining term of such Interest Rate Agreement is less than 12 months, then such Interest Rate Agreement 7 shall only be taken into account for that portion of the period equal to the remaining term thereof). The Consolidated Interest Expense attributable to interest on any Indebtedness under a revolving credit facility the outstanding principal balance of which is required to be computed on a PRO FORMA basis in accordance with the foregoing shall be computed based upon the average daily balance of such Indebtedness during the applicable period, PROVIDED, THAT such average daily balance shall take into account the amount of any repayment of Indebtedness under such revolving credit facility during the applicable period, to the extent such repayment permanently reduced the commitments or amounts available to be borrowed under such facility. "CONSOLIDATED INTEREST EXPENSE" of a Person means, for any period, the total interest expense of such Person and its Restricted Subsidiaries, PLUS, to the extent not included in such total interest expense, and to the extent incurred by such Person or its Restricted Subsidiaries, without duplication: (1) interest expense attributable to Capital Lease Obligations; (2) amortization of debt discount and debt issuance cost; (3) capitalized interest; (4) non-cash interest expense; (5) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; (6) net payments pursuant to Interest Rate Agreements; (7) Disqualified Stock dividends in respect of all Disqualified Stock held by Persons other than such Person or a Wholly Owned Subsidiary of such Person (other than dividends payable solely in Capital Stock (other than Disqualified Stock) of such Person); PROVIDED, HOWEVER, that such dividends will be multiplied by a fraction, the numerator of which is one and the denominator of which is one minus the effective combined tax rate of the issuer of such Disqualified Stock (expressed as a decimal) for such 8 period (as estimated by the chief financial officer of such Person in good faith); (8) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets of) such first Person or any of its Restricted Subsidiaries; and (9) the cash contributions to any ESOP to the extent such contributions are used by such ESOP to pay interest or fees to any Person (other than such first Person) in connection with Indebtedness Incurred by such ESOP. "CONSOLIDATED NET INCOME" of a Person means, for any period, the net income of such Person and its consolidated Subsidiaries; PROVIDED, HOWEVER, that there shall not be included in such Consolidated Net Income: (1) any net income of any Person (other than such first Person) if such other Person is not a Restricted Subsidiary, except that: (A) subject to the exclusion contained in clause (4) below, such first Person's equity in the net income of any such other Person for such period shall be included in such Consolidated Net Income only to the extent of the aggregate amount of cash actually distributed by such other Person during such period to such first Person or any of its Restricted Subsidiaries as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary of such first Person, to the limitations contained in clause (3) below); and (B) such first Person's equity in a net loss of any such other Person for such period shall be included in determining such Consolidated Net Income; (2) any net income (or loss) of any Person acquired by such first Person or a Subsidiary of such first Person in a pooling of interests transaction for any period prior to the date of such acquisition; (3) any net income of any Restricted Subsidiary of such first Person to the extent such Restricted Subsidiary is subject to restrictions, directly or 9 indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to such first Person, except that: (A) subject to the exclusion contained in clause (4) below, the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income to the extent of the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to such first Person or another Restricted Subsidiary of such first Person as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary of such first Person, to the limitation contained in this clause); and (B) the net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income; (4) any gain (but not loss) realized upon the sale or other disposition of any assets of such first Person or its consolidated Subsidiaries (including pursuant to any Sale/Leaseback Transaction) not made in the ordinary course of business and any gain (but not loss) realized upon the sale or other disposition of any Capital Stock of any Person; (5) extraordinary gains or losses; (6) the cumulative effect of a change in accounting principles; (7) any unrealized gain or loss from foreign exchange transactions; and (8) any non-cash compensation expense in connection with the issuance of employee or independent contractor stock options. Notwithstanding the foregoing, for the purposes of Section 4.04 only, there shall be excluded from Consolidated Net Income any repurchases, repayments or redemptions of Investments, proceeds realized on the sale of Investments or return of capital to Parent or a Restricted Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or returns would increase 10 the amount of Restricted Payments permitted under such section pursuant to Section 4.04(a)(3)(D). "CREDIT AGREEMENT" means the Credit Agreement dated as of December 19, 2001, among USP Domestic Holdings, Inc. and USPE Holdings, Ltd. as co-borrowers, the lenders from time to time parties thereto, Credit Suisse First Boston as Administrative Agent, Lehman Commercial Paper Inc. as Syndication Agent, and Societe Generale as Documentation Agent, together with the related documents thereto (including any guarantees and security documents), as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement (and related documents) governing Indebtedness Incurred to Refinance, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such credit agreement or a successor credit agreement, whether by the same or any other lenders or agents or group of lenders or agents. "CREDIT FACILITIES" means, with respect to Parent and its Restricted Subsidiaries, one or more debt facilities (including the Credit Agreement) or commercial paper facilities with banks or other institutional lenders providing revolving credit loans, term loans, production payments, receivables financing (including through the sale of receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "CURRENCY AGREEMENT" means, in respect of a Person, any foreign exchange contract, currency swap agreement or other similar agreement designed to protect such Person against fluctuations in currency values. "DEFAULT" means any event which is, or after notice or passage of time or both would be, an Event of Default. "DESIGNATED SENIOR INDEBTEDNESS" with respect to a Person means: (1) the Bank Indebtedness; and (2) any other Senior Indebtedness of such Person which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are 11 committed to lend up to, at least $25.0 million and is specifically designated by such Person in the instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture. "DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event: (1) matures or is mandatorily redeemable (other than redeemable only for Capital Stock of such Person which is not itself Disqualified Stock) pursuant to a sinking fund obligation or otherwise; (2) is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock; or (3) is mandatorily redeemable or must be purchased upon the occurrence of certain events or otherwise, in whole or in part; in each case on or prior to the first anniversary of the Stated Maturity of the Securities; PROVIDED, HOWEVER, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to purchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the first anniversary of the Stated Maturity of the Securities shall not constitute Disqualified Stock if: (A) the "asset sale" or "change of control" provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the terms applicable to the Securities under Sections 4.02 and 4.07; and (B) any such requirement only becomes operative after compliance with such terms applicable to the Securities, including the purchase of any Securities tendered pursuant thereto. The amount of any Disqualified Stock that does not have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such 12 Disqualified Stock as if such Disqualified Stock were redeemed, repaid or repurchased on any date on which the amount of such Disqualified Stock is to be determined pursuant to this Indenture; PROVIDED, HOWEVER, that if such Disqualified Stock could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be the book value of such Disqualified Stock as reflected in the most recent financial statements of such Person. "DOMESTIC GUARANTOR" means Parent and each Domestic Subsidiary of Parent that executes this Indenture on the Issue Date as a guarantor and each other Domestic Subsidiary of Parent that thereafter Guarantees the Securities pursuant to the terms of this Indenture, in each case unless and until such Domestic Guarantor is released from its obligations under its Guaranty pursuant to the terms of this Indenture. "DOMESTIC SUBSIDIARY" means any Restricted Subsidiary that is not a Foreign Subsidiary, and "DOMESTIC WHOLLY OWNED SUBSIDIARY" means any Domestic Subsidiary that is a Wholly Owned Subsidiary. "EBITDA" of a Person for any period means the sum of Consolidated Net Income, plus the following to the extent deducted in calculating such Consolidated Net Income: (1) all income tax expense of such Person and its Restricted Subsidiaries; (2) Consolidated Interest Expense of such Person; (3) depreciation and amortization expense of such Person and its Restricted Subsidiaries; (4) all other non-cash charges of such Person and its Restricted Subsidiaries (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period); and (5) any loss realized upon the sale or other disposition of any assets of such Person or its Subsidiaries (including pursuant to any Sale/Leaseback Transaction) not made in the ordinary course of business and any loss realized upon the sale or other disposition of any Capital Stock of any Person; 13 in each case for such period. Notwithstanding the foregoing, the provisions above for taxes, depreciation, amortization and non-cash charges of a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion, including by reason of minority interests) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income. "ESOP" means any employee stock ownership plan or a trust established by Parent or any of its Subsidiaries for the benefit of their employees. "EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as amended. "FOREIGN GUARANTOR" means each Foreign Subsidiary of Parent that, after the Issue Date, Guarantees the Securities pursuant to the terms of this Indenture, in each case unless and until such Foreign Subsidiary is released from its obligations under its Guaranty pursuant to the terms of this Indenture. "FOREIGN SUBSIDIARY" means any Subsidiary that (1) is not organized under the laws of the United States, any state thereof or the District of Columbia and (2) conducts substantially all of its business operations outside of the United States. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in: (1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants; (2) statements and pronouncements of the Financial Accounting Standards Board; (3) such other statements by such other entity as approved by a significant segment of the accounting profession; and (4) the rules and regulations of the SEC governing the inclusion of financial statements (including PRO FORMA financial statements) in periodic reports required to be filed pursuant to Section 13 of 14 the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "GUARANTEE" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any Person (including as a general partner of a partnership) and any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or (2) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "GUARANTOR" means each Domestic Guarantor and, if any, each Foreign Guarantor. "GUARANTY" means a Guarantee by a Guarantor of the Company's obligations with respect to the Securities. "HEDGING OBLIGATIONS" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. "HOLDER" or "SECURITYHOLDER" means the Person in whose name a Security is registered on the Registrar's books. "INCUR" means issue, assume, Guarantee, incur or otherwise become liable for; PROVIDED, HOWEVER, that any Indebtedness or Disqualified Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or 15 otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary. The term "INCURRENCE" when used as a noun shall have a correlative meaning. Solely for purposes of determining compliance with Section 4.03, (1) amortization of debt discount or the accretion of principal with respect to a non-interest bearing or other discount security, (2) the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument or the payment of regularly scheduled dividends on Capital Stock in the form of additional Capital Stock of the same class and with the same terms, and (3) unrealized losses or charges in respect of Hedging Obligations (including those resulting from the application of FAS 133), in each case will be deemed not to be Incurrences of Indebtedness. "INDEBTEDNESS" means, with respect to any Person on any date of determination (without duplication): (1) the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable; (2) all Capital Lease Obligations of such Person; (3) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (4) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction; (5) the amount of all obligations of such Person with respect to the payment, purchase, redemption or other acquisition or retirement for value of any Disqualified Stock of such Person or, with respect to any Preferred Stock of any Subsidiary of such Person, the principal amount of such Preferred Stock to be determined in accordance with this Indenture (but excluding, in each case, any accrued dividends); 16 (6) all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; (7) all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any assets of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such assets and the amount of the obligation so secured; and (8) to the extent not otherwise included in this definition, Hedging Obligations of such Person, if and to the extent, in the case of obligations of the types referred to in clauses (1), (2) and (3) above, such obligations would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP. Notwithstanding the foregoing, in connection with the purchase by Parent or any Restricted Subsidiary of any business, the term "Indebtedness" will exclude post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; PROVIDED, HOWEVER, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date; PROVIDED, HOWEVER, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time. "INDENTURE" means this Indenture as amended or supplemented from time to time. "INDEPENDENT QUALIFIED PARTY" means an investment banking firm, accounting firm or appraisal firm of national 17 standing; PROVIDED, HOWEVER, that such firm is not an Affiliate of Parent. "INTEREST" with respect to a Security includes additional interest payable pursuant to the Registration Rights Agreement. "INTEREST RATE AGREEMENT" means in respect of a Person, any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to protect such Person against fluctuations in interest rates. "INVESTMENT" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. Except as otherwise provided for herein, the amount of an Investment shall be its fair value at the time the Investment is made and without giving effect to subsequent changes in value. For purposes of the definition of "Unrestricted Subsidiary," the definition of "Restricted Payment" and Section 4.04: (1) "Investment" shall include the portion (proportionate to Parent's equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary at the time that such Subsidiary is designated an Unrestricted Subsidiary; 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 Board of Directors. "ISSUE DATE" means December 19, 2001. "LIEN" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). 18 "MANAGEMENT AGREEMENTS" means the management, service or similar agreements pursuant to which Parent, any of its Qualified Restricted Subsidiaries or any QJVGP or Qualified Joint Venture manages the assets and businesses of any of its Restricted Subsidiaries or any Qualified Joint Ventures. "MINORITY INTERESTS" means the interests in income of Parent's Restricted Subsidiaries held by Persons other than Parent or a Restricted Subsidiary, as reflected on Parent's consolidated financial statements. "MOODY'S" means Moody's Investors Service, Inc. "NET AVAILABLE CASH" from an Asset Disposition means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, and proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other noncash form), in each case net of: (1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, relocation costs, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Disposition; (2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition; and (3) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Disposition and retained by Parent or any Restricted Subsidiary after such Asset Disposition. 19 "NET CASH PROCEEDS," with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "NON-RECOURSE DEBT" means Indebtedness: (1) as to which neither Parent nor any Restricted Subsidiary (A) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (B) is directly or indirectly liable as a guarantor or otherwise or (C) constitutes the lender; (2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against the issuer of such Indebtedness) would permit (upon notice, lapse of time or both) any holder of any Indebtedness of Parent or any Restricted Subsidiary to declare a default on such Indebtedness of Parent or a Restricted Subsidiary or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (3) as to which the lenders of such Indebtedness have been notified in writing or have agreed in writing (in the agreement relating to the Indebtedness or otherwise) that they will not have any recourse to the assets of Parent or any of its Restricted Subsidiaries, in each case, except for Investments made by Parent or a Restricted Subsidiary in compliance with Section 4.03 and Section 4.04. "OFFERING CIRCULAR" means the Confidential Offering Circular dated December 14, 2001 issued by the Company in relation to $150,000,000 aggregate principal amount of 10% Senior Subordinated Notes Due 2011 to be issued on the Issue Date. "OFFICER" means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company. "OFFICERS' CERTIFICATE" means a certificate signed by two Officers. 20 "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 Company or the Trustee. "PARENT" means United Surgical Partners International, Inc. "PERMITTED ASSET DISPOSITION CONSIDERATION" means, in connection with any Asset Disposition, (1) cash and Temporary Cash Investments, (2) securities, notes and other obligations received by Parent or any Restricted Subsidiary from the transferee that are converted into cash within 90 days of receipt ("CONVERTED OBLIGATIONS"), (3) the assumption by a Person (other than Parent or a Subsidiary of Parent) of Senior Indebtedness of the Company or any Guarantor or Indebtedness of a Restricted Subsidiary of Parent that is not a Guarantor (in each case other than Indebtedness owed to Parent or a Subsidiary of Parent) and the release of Parent and its Restricted Subsidiaries from all liability on such Indebtedness in connection with such Asset Disposition, and (4) any other consideration received by Parent or any Restricted Subsidiary in connection with such Asset Disposition in an aggregate amount that, when taken together with all other amounts outstanding under this clause (4) at the time of receipt of such consideration, does not exceed the greater of (A) $5.0 million and (B) 5% of Total Net Tangible Assets. For purposes of clause (4) of this definition, (i) the "amount" of any item of consideration shall be the fair market value thereof at the time of receipt by Parent or such Restricted Subsidiary, as determined in good faith by the Board of Directors, and (ii) the "amount outstanding" of any item of consideration at any time shall be (a) the amount thereof at the time of receipt by Parent or such Restricted Subsidiary (without giving effect to any subsequent changes in the fair market value thereof) minus (b) the amount of cash, Temporary Cash Investments and converted obligations received by Parent or a Restricted Subsidiary upon the subsequent disposition of such item of consideration to the extent such subsequent disposition was made (and the proceeds thereof have been applied) in accordance with Section 4.07 (regardless of whether such subsequent disposition constituted an Asset Disposition and as if such covenant required 100% of the consideration received to be cash, Temporary Cash Investments and converted obligations), but in no event may the amount outstanding of any item of consideration be less than zero. 21 "PERMITTED HOLDERS" means any of (i) Welsh, Carson, Anderson & Stowe VII, L.P. and any of its affiliates, (ii) Donald E. Steen and any of his affiliates, and (iii) any Person ("NEW PARENT") that acquires all of the Capital Stock of Parent if the holders of securities that represented 100% of the Voting Stock of Parent immediately prior to such acquisition directly own 100% of the Voting Stock of New Parent immediately after such acquisition and in the exact same percentages as they owned Voting Stock of Parent immediately prior to such acquisition. "PERMITTED INVESTMENT" means an Investment by Parent or any Restricted Subsidiary in: (1) the Company, a Domestic Guarantor or a Person that will, upon the making of such Investment, become a Domestic Guarantor; PROVIDED, HOWEVER, that the primary business of such Domestic Guarantor is a Related Business; (2) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Domestic Guarantor; PROVIDED, HOWEVER, that such Person's primary business is a Related Business; (3) a Qualified Restricted Subsidiary, a Person that will, upon the making of such Investment, become a Qualified Restricted Subsidiary, or a Person that transfers or conveys all or substantially all of its assets to a Qualified Restricted Subsidiary; (4) Qualified Joint Ventures and QJVGPs in an aggregate amount that when taken together with all other Investments made pursuant to this clause (4) does not exceed the sum of (A) $25.0 million, (B) if, subsequent to the Issue Date, Parent issues Capital Stock (other than Disqualified Stock) to a Person (other than an issuance to a Subsidiary of Parent or an ESOP) in exchange for the acquisition by Parent or any of its Restricted Subsidiaries of Capital Stock of a Qualified Restricted Subsidiary or a Person that becomes a Qualified Restricted Subsidiary as a result of such transaction or assets of a kind used or usable in the primary business of Parent and its Restricted Subsidiaries, an amount equal to 100% of the aggregate net proceeds of such issuance, based upon the fair market value of the Capital Stock or assets acquired 22 by Parent and its Restricted Subsidiaries, as determined by the Board of Directors in good faith or, if such amount would be in excess of $10.0 million, as determined by an Independent Qualified Party, and (C) in the case of a Qualified Joint Venture that becomes a Qualified Restricted Subsidiary because of additional Investments therein made by Parent and its Subsidiaries, the portion (proportionate to Parent's direct or indirect equity interest in such Qualified Restricted Subsidiary) of the fair market value of the net assets of such Qualified Joint Venture at the time such Qualified Joint Venture becomes a Qualified Restricted Subsidiary; PROVIDED, HOWEVER, that the amount under this clause (C) shall not exceed, in the case of each such Qualified Joint Venture, the amount of Investments previously made by Parent and its Restricted Subsidiaries in such Qualified Joint Venture and any related QJVGP; (5) cash and Temporary Cash Investments; (6) receivables owing to Parent or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; PROVIDED, HOWEVER, that such trade terms may include such concessionary trade terms as Parent or any such Restricted Subsidiary deems reasonable under the circumstances; (7) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (8) loans or advances to employees or independent contractors made in the ordinary course of business consistent with past practices of Parent or such Restricted Subsidiary; (9) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to Parent or any Restricted Subsidiary or in satisfaction of judgments; (10) any Investment made as a result of the receipt of non-cash consideration from a sale of assets that was made pursuant to and in compliance with Section 4.07; 23 (11) any Investments to the extent acquired in exchange for the issuance of Capital Stock (other than Disqualified Stock) of Parent; (12) Investments in securities of trade creditors, wholesalers, suppliers or customers received pursuant to any plan of reorganization or similar arrangement; (13) Hedging Obligations incurred in compliance with Section 4.03; and (14) Phoenix constituting a Guarantee by Parent of Non-Recourse Debt of Phoenix in an amount not to exceed $20.0 million; PROVIDED, THAT such Guarantee is Incurred pursuant to and in compliance with Section 4.03(a)(1). "PERMITTED JUNIOR SECURITIES" of a Person means Capital Stock (other than Disqualified Stock) and Indebtedness of such Person that are contractually subordinated in right of payment to all Senior Indebtedness at least to the same extent as the Securities are subordinated to Senior Indebtedness, and has no scheduled installment of principal due, by redemption, sinking fund payment or otherwise, on or prior to the Stated Maturity of the Securities. "PERMITTED PAYMENT RESTRICTION" means any consensual encumbrance or restriction (each, a "RESTRICTION") on the ability of any Restricted Subsidiary, QJVGP or Qualified Joint Venture to (a) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness owed to Parent or a Restricted Subsidiary, (b) make any loans or advances to Parent or a Restricted Subsidiary or (c) transfer any of its property or assets to Parent or a Restricted Subsidiary, which restriction satisfies all of the following conditions: (i) such restriction becomes effective only upon the occurrence of a default by such Restricted Subsidiary, QJVGP or Qualified Joint Venture in the payment of principal of or interest on Indebtedness that was Incurred by such Restricted Subsidiary, QJVGP or Qualified Joint Venture in compliance with this Indenture, (ii) such restriction was entered into by such Restricted Subsidiary, QJVGP or Qualified Joint Venture in good faith as a condition to the Incurrence by such Restricted Subsidiary, QJVGP or Qualified Joint Venture of such Indebtedness, and (iii) at the time such restriction was Incurred, there did not exist, and Parent 24 and such Restricted Subsidiary, QJVGP or Qualified Joint Venture in good faith did not believe it to be likely that in the reasonably foreseeable future there would exist, a default under such Indebtedness or an event or condition that, with the giving of notice or the passage of time or both, would constitute such a default. "PERSON" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PHOENIX" means an Unrestricted Subsidiary of Parent the primary business of which is to construct and operate a short-stay surgical hospital in the greater Phoenix, Arizona area and a surgery center in Chandler, Arizona. "PREFERRED STOCK," as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. "PRINCIPAL" of a Security means the principal of the Security plus the premium, if any, payable on the Security which is due or overdue or is to become due at the relevant time. "QUALIFIED EQUITY OFFERING" means the issuance after the Issue Date of Common Stock of Parent to any Person or Persons (other than a Subsidiary of Parent, an ESOP or an employee or director of Parent or any of its Subsidiaries) in a transaction resulting in Net Cash Proceeds to Parent of at least $20.0 million. "QUALIFIED JOINT VENTURE" means any Person that is not a Subsidiary and that satisfies all of the following requirements: (1) Parent, a Qualified Restricted Subsidiary, a QJVGP or a Qualified Joint Venture has a Management Agreement to provide day-to-day management services to such Person; (2) except for Permitted Payment Restrictions, there are no restrictions, directly or indirectly, on 25 the ability of such Person to pay dividends or make distributions to the holders of its Capital Stock; (3) the Capital Stock of such Person consists solely of (A) Capital Stock owned by Parent, its Qualified Restricted Subsidiaries and QJVGPs, (B) Common Stock owned by Strategic Investors and (C) directors' qualifying shares; (4) the primary business of such Person is a Related Business; and (5) such Person has no Indebtedness other than Non-Recourse Debt. "QUALIFIED JOINT VENTURE GENERAL PARTNER" or "QJVGP" means any Unrestricted Subsidiary of Parent that satisfies all of the following requirements: (1) the Capital Stock of such QJVGP consists solely of Capital Stock owned by Parent and its Wholly Owned Subsidiaries and Common Stock owned by Strategic Investors; (2) except for Permitted Payment Restrictions, there are no restrictions, directly or indirectly, on the ability of such QJVGP to pay dividends or make distributions to the holders of its Capital Stock; (3) except to the extent restricted pursuant to a Permitted Payment Restriction, such QJVGP customarily declares and pays regular monthly, quarterly or semi-annual dividends or distributions to the holders of its Capital Stock in an amount equal to substantially all of the available cash flow of such QJVGP for such period, as determined in good faith by the board of directors, board of governors or such other individuals performing similar functions, subject to such ordinary and customary reserves and other amounts as, in the good faith judgment of such individuals, may be necessary so that the business of such QJVGP may be properly and advantageously conducted at all times, and Parent intends to cause such QJVGP to continue to declare and pay such regular dividends or distributions in the manner set forth above; (4) all Capital Stock owned by such QJVGP is Capital Stock of a Qualified Joint Venture that is a partnership; 26 (5) such QJVGP conducts no business other than (A) owning general partnership interests in, and making other Investments in, Qualified Joint Ventures that are partnerships and (B) providing day-to-day management services to Qualified Joint Ventures pursuant to Management Agreements; and (6) such QJVGP has no Indebtedness other than Non-Recourse Debt. "QUALIFIED RESTRICTED SUBSIDIARY" means (a) the Company and (b) any other Restricted Subsidiary of Parent, including a Wholly Owned Subsidiary, that satisfies all of the following requirements: (1) except for Permitted Payment Restrictions, there are no restrictions, directly or indirectly, on the ability of such Restricted Subsidiary to pay dividends or make distributions to the holders of its Capital Stock; (2) except to the extent restricted pursuant to a Permitted Payment Restriction, such Restricted Subsidiary customarily declares and pays regular monthly, quarterly or semi-annual dividends or distributions to the holders of its Capital Stock in an amount equal to substantially all of the available cash flow of such Restricted Subsidiary for such period, as determined in good faith by the board of directors, board of governors or such other individuals performing similar functions, subject to such ordinary and customary reserves and other amounts as, in the good faith judgment of such individuals, may be necessary so that the business of such Restricted Subsidiary may be properly and advantageously conducted at all times, and Parent intends to cause such Restricted Subsidiary to continue to declare and pay such regular dividends or distributions in the manner set forth above; (3) the Capital Stock of such Restricted Subsidiary consists solely of (A) Capital Stock owned by Parent and its Qualified Restricted Subsidiaries, (B) Common Stock owned by Strategic Investors and (C) directors' qualifying shares; and (4) the primary business of such Restricted Subsidiary is a Related Business. 27 "REFINANCE" means, in respect of any Indebtedness, to refinance or refund, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. "REFINANCED" and "REFINANCING" shall have correlative meanings. "REFINANCING INDEBTEDNESS" means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with this Indenture, including Indebtedness that Refinances Refinancing Indebtedness; PROVIDED, HOWEVER, that: (1) such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced; (2) such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced; (3) such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding or committed (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced; (4) if the Indebtedness being Refinanced is subordinated in right of payment to the Securities or any Guaranty, such Refinancing Indebtedness is subordinated in right of payment to the Securities or such Guaranty on terms at least as favorable to the Securityholders as those contained in the documentation governing the Indebtedness being Refinanced; and (5) such Refinancing Indebtedness is Incurred only by the Person that is the obligor on the Indebtedness being Refinanced. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement dated December 19, 2001, among the Company, the Guarantors, Credit Suisse First Boston Corporation, Lehman Brothers, Inc. and SG Cowen Securities Corporation. 28 "RELATED BUSINESS" means any business in which Parent was engaged on the Issue Date and any business directly related to the primary business in which Parent was engaged on the Issue Date. "REPRESENTATIVE" means with respect to a Person any trustee, agent or representative (if any) for an issue of Senior Indebtedness of such Person. "RESTRICTED PAYMENT" with respect to any Person means: (1) the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock (other than dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and dividends or distributions payable solely to Parent or a Wholly Owned Subsidiary); (2) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of Parent or any Restricted Subsidiary (other than a Wholly Owned Subsidiary), including the exercise of any option to exchange any Capital Stock (other than into Capital Stock of Parent that is not Disqualified Stock); (3) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations of such Person; or (4) the making of any Investment (other than a Permitted Investment) in any Person. "RESTRICTED SUBSIDIARY" means any Subsidiary that is not an Unrestricted Subsidiary. "RESTRICTED SUBSIDIARY LEVERAGE RATIO" as of any date of determination means the ratio, on a PRO FORMA basis, of (1) the consolidated Indebtedness of Parent's Restricted Subsidiaries (other than the Company and the Domestic Guarantors) as of such date of determination (other than Indebtedness Incurred pursuant to and in 29 compliance with Section 4.03(b)(1)) to (2) EBITDA of such Persons for the period of the most recent four consecutive fiscal quarters for which financial statements are available immediately preceding the date of such determination plus the Minority Interests for such period. "S&P" means Standard and Poor's Ratings Group. "SALE/LEASEBACK TRANSACTION" means an arrangement relating to property owned by Parent or a Restricted Subsidiary on the Issue Date or thereafter acquired by Parent or a Restricted Subsidiary whereby Parent or a Restricted Subsidiary transfers such property to a Person and Parent or a Restricted Subsidiary thereafter leases it from such Person. "SEC" means the Securities and Exchange Commission. "SECURITIES" means the Securities issued under this Indenture. "SECURITIES ACT" means the U.S. Securities Act of 1933, as amended. "SENIOR INDEBTEDNESS" means with respect to the Company or any Guarantor: (1) Indebtedness of such Person, whether outstanding on the Issue Date or thereafter Incurred; and (2) accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; unless, in the case of clauses (1) and (2), in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are subordinate or PARI PASSU in right of payment to the Securities or the Guaranty of such Person, as the case may be; PROVIDED, HOWEVER, that Senior Indebtedness shall not include: 30 (A) any obligation of such Person to any Subsidiary; (B) any liability for Federal, state, local or other taxes owed or owing by such Person; (C) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities); (D) any Indebtedness of such Person (and any accrued and unpaid interest in respect thereof) which is subordinate or junior in right of payment 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 this Indenture. "SENIOR SUBORDINATED INDEBTEDNESS" means, with respect to a Person, the Securities, the Guaranties and any other Indebtedness of such Person that specifically provides that such Indebtedness is to rank PARI PASSU with the Securities or such Guaranty, as the case may be, in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of such Person which is not Senior Indebtedness of such Person. "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a "Significant Subsidiary" of Parent within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. "STATED MATURITY" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred). "STRATEGIC INVESTORS" means physicians, hospitals, health systems, other healthcare providers, other healthcare companies and other similar strategic joint venture partners which joint venture partners are actively involved in the day-to-day operations of providing 31 surgical care and surgery-related services, or, in the case of physicians, that have retired therefrom, individuals who are former owners or employees of surgical care facilities purchased by Parent, any of its Restricted Subsidiaries or any Qualified Joint Venture, and consulting firms that receive Common Stock solely as consideration for consulting services performed. "SUBORDINATED OBLIGATION" means, with respect to a Person, any Indebtedness of such Person (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Securities or a Guaranty of such Person, as the case may be, pursuant to a written agreement to that effect. "SUBSIDIARY" means, with respect to any Person: (A) any corporation, association, partnership, limited liability company or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by: (1) such Person; (2) such Person and one or more Subsidiaries of such Person; or (3) one or more Subsidiaries of such Person; or (B) any corporation, association, partnership, limited liability company or other business entity, the financial statements of which are consolidated with the Parent's financial statements under GAAP as applied by the Parent on the Issue Date. Unless otherwise specified or appropriate in the context, "Subsidiary" means a Subsidiary of Parent, and includes the Company where appropriate in the context. "SUPPLEMENTAL GUARANTY AGREEMENT" means a supplemental indenture, in a form reasonably satisfactory to the Trustee, pursuant to which a Guarantor guarantees the Company's obligations with respect to the Securities on the terms provided for in this Indenture. "TEMPORARY CASH INVESTMENTS" means any of the following: 32 (1) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof; (2) investments in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any State thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $50.0 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor; (3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above; (4) investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of Parent) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P; and (5) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the Issue Date. "TOTAL NET TANGIBLE ASSETS" means the total consolidated net assets, less goodwill and intangibles, of 33 Parent and its Restricted Subsidiaries, as shown on the balance sheet of Parent as of the end of the most recent fiscal quarter for which financial statements are available. "TRUSTEE" means U.S. Trust Company of Texas, N.A. until a successor replaces it and, thereafter, means the successor. "TRUST OFFICER" means any officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "UNIFORM COMMERCIAL CODE" means the New York Uniform Commercial Code as in effect from time to time. "UNRESTRICTED SUBSIDIARY" means: (1) any Subsidiary of Parent that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below; (2) any Subsidiary of an Unrestricted Subsidiary; and (3) Global Healthcare Partners, Ltd., Phoenix, the QJVGPs in existence on the Issue Date and their respective Subsidiaries, if any; in each case unless and until such time as such Subsidiary is designated a Restricted Subsidiary for purposes of this Indenture. The Board of Directors may designate any Subsidiary of Parent (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary if (A) neither such Subsidiary nor any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any property of, Parent or any other Subsidiary of Parent that is not a Subsidiary of the Subsidiary to be so designated, (B) such designation would be permitted under Section 4.04 (the amount of such Restricted Payment being calculated in the manner set forth in the definition of the term "Investment"),(C) such Subsidiary has no Indebtedness other than Non-Recourse Debt and (D)immediately after giving effect to such designation, the Company could Incur $1.00 of additional Indebtedness under Section 4.03(a)(1). 34 The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if, immediately after giving effect to such designation (A) the Company could Incur $1.00 of additional Indebtedness under Section 4.03(a)(1) and (B) no Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option. "VOTING STOCK" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "WHOLLY OWNED SUBSIDIARY" means a Restricted Subsidiary all the Capital Stock of which (other than directors' qualifying shares) is owned by Parent or one or more Wholly Owned Subsidiaries. SECTION 1.02. OTHER DEFINITIONS.
DEFINED IN TERM SECTION ---- ---------- "Affiliate Transaction" .................................... 4.08(a) "Bankruptcy Law" ........................................... 6.01 "Blockage Notice" .......................................... 10.03/12.03 "Change of Control" ........................................ 4.02(a) "Change of Control Offer" .................................. 4.02(b) "covenant defeasance option" ............................... 8.01(b) "Custodian" ................................................ 6.01 "Event of Default" ......................................... 6.01 "legal defeasance option" .................................. 8.01(b) "Legal Holiday" ............................................ 13.08 "Obligations" .............................................. 11.01 35 "Offer" .................................................... 4.07(b) "Offer Amount" ............................................. 4.07(c)(2) "Offer Period" ............................................. 4.07(c)(2) "pay its Guaranty" ......................................... 12.03 "pay the Securities" ....................................... 10.03 "Paying Agent" ............................................. 2.03 "Payment Default" .......................................... 10.03/12.03 "Payment Blockage Period" .................................. 10.03/12.03 "Purchase Date" ............................................ 4.07(c)(1) "Registrar"................................................. 2.03 "Required Filing Dates"..................................... 4.13 "Successor Company" ........................................ 5.01(a)(1)
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC; "indenture securities" means the Securities; "indenture security holder" means a Securityholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Company and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; 36 (4) "including" means including without limitation; (5) words in the singular include the plural and words in the plural include the singular; (6) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; (7) the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; (8) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater; and (9) all references to the date the Securities were originally issued shall refer to the Issue Date. ARTICLE 2 THE SECURITIES SECTION 2.01. FORM AND DATING. Provisions relating to the Initial Securities, the Private Exchange Securities and the Exchange Securities are set forth in the Appendix A attached hereto which is hereby incorporated in and expressly made part of this Indenture. The Initial Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit 1 to Appendix A, which is hereby incorporated in and expressly made a part of this Indenture. The Exchange Securities, the Private Exchange Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The terms of the Securities set forth in 37 Exhibit 1 to Appendix A and Exhibit A are part of the terms of this Indenture. SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Securities for the Company by manual or facsimile signature. The Company's seal may be impressed, affixed, imprinted or reproduced on the Securities and may be in facsimile form. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "REGISTRAR") and an office or agency where Securities may be presented for payment (the "PAYING AGENT"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term "REGISTRAR" includes any appointed co-registrar and the term "PAYING AGENT" includes any additional paying agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall 38 act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any Wholly Owned Subsidiary incorporated or organized within The United States of America may act as Paying Agent, Registrar, co-registrar or transfer agent. The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securities. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to each due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing, at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. SECTION 2.06. TRANSFER AND EXCHANGE. The Securities shall be issued in registered form and shall be transferable only upon the surrender of a Security for registration of transfer. When a Security is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of this Indenture and Section 8-401(a) of the Uniform Commercial Code are met. When Securities are presented to the Registrar or a co-registrar 39 with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. SECTION 2.07. REPLACEMENT SECURITIES. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue, and the Trustee shall authenticate, a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security. Every replacement Security is an additional obligation of the Company. SECTION 2.08. OUTSTANDING SECURITIES. Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security. If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser. If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue. 40 SECTION 2.09. TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and deliver them in exchange for temporary Securities. SECTION 2.10. CANCELLATION. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and destroy (subject to the record retention requirements of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or cancellation and deliver a certificate of such destruction to the Company unless the Company directs the Trustee to deliver canceled Securities to the Company. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancellation. SECTION 2.11. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Securities, the Company shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the persons who are Securityholders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail to each Securityholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. SECTION 2.12. CUSIP NUMBERS. The Company in issuing the Securities may use "CUSIP" numbers and corresponding "ISINs" (if then generally in use) and, if so, the Trustee shall use "CUSIP" numbers and corresponding "ISINs" in notices of redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall 41 not be affected by any defect in or omission of such numbers. SECTION 2.13. ISSUANCE OF ADDITIONAL SECURITIES. The Company shall be entitled, subject to its compliance with Section 4.03, to issue Additional Securities under this Indenture which shall have identical terms as the Initial Securities issued on the Issue Date, other than with respect to the date of issuance and issue price. The Initial Securities issued on the Issue Date and any Additional Securities issued in exchange therefor shall be treated as a single class for all purposes under this Indenture. With respect to any Additional Securities, the Company shall set forth in a resolution of the Board of Directors and an Officers' Certificate, a copy of each of which shall be delivered to the Trustee, the following information: (1) the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture; (2) the issue price, the issue date and the CUSIP number and corresponding ISIN of such Additional Securities; and (3) whether such Additional Securities shall be Transfer Restricted Securities and issued in the form of Initial Securities as set forth in Appendix A or shall be issued in the form of Exchange Securities as set forth in Exhibit A. ARTICLE 3 REDEMPTION SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date, the principal amount of Securities to be redeemed and the paragraph of the Securities pursuant to which the redemption will occur. The Company shall give each notice to the Trustee provided for in this Section at least 60 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' 42 Certificate and an Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions herein. SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If fewer than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed PRO RATA or by lot or by a method that complies with applicable legal and securities exchange requirements, if any, and that the Trustee in its sole discretion shall deem to be fair and appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $1,000. Securities and portions of them the Trustee selects shall be in principal amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed. SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a date for redemption of Securities, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed at such Holder's registered address. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) the name and address of the Paying Agent; (4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; (5) if fewer than all the outstanding Securities are to be redeemed, the identification and principal amounts of the particular Securities to be redeemed; (6) that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the 43 terms of this Indenture, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date; and (7) that no representation is made as to the correctness or accuracy of the CUSIP number or corresponding ISIN, if any, listed in such notice or printed on the Securities. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. In such event, the Company shall provide the Trustee with the information required by this Section. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date). Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which have been delivered by the Company to the Trustee for cancellation. SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Security equal in principal amount to the unredeemed portion of the Security surrendered. ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF SECURITIES. The 44 Company shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Payment shall be made in New York, New York unless the Trustee otherwise specifies. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture. The Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. SECTION 4.02. CHANGE OF CONTROL. (a) Upon the occurrence of any of the following events (each a "CHANGE OF CONTROL"), each Holder shall have the right to require that the Company purchase such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest on the relevant interest payment date), in accordance with the terms contemplated in Section 4.02(b): (1) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (other than a Permitted Holder or Parent or a Wholly Owned Subsidiary of Parent as a stockholder of the Company) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of Parent or the Company; (2) individuals who on the Issue Date constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of Parent was approved by a vote of at least a majority of the directors of Parent then still in office who were either directors on the Issue Date 45 or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; (3) the adoption of a plan relating to the liquidation or dissolution of the Company or Parent; or (4) the merger or consolidation of the Company or Parent with or into another Person (other than a Permitted Holder) or the merger of another Person (other than a Permitted Holder, Parent or the Company) with or into the Company or Parent, or the sale of all or substantially all the assets of Parent and its Restricted Subsidiaries (determined on a consolidated basis) to another Person (other than a Permitted Holder), other than a transaction following which, in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the Company or Parent, as applicable, immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and in substantially the same proportion as before the transaction. In the event that at the time of such Change of Control, the terms of the Credit Agreement prohibit the Company from making a Change of Control Offer or from purchasing the Securities pursuant to this Section 4.02, the Company shall, prior to the mailing of the notice to Holders provided for in Section 4.02(b) below, but in any event within 30 days following any Change of Control: (1) repay in full all Indebtedness outstanding under the Credit Agreement; or (2) obtain the requisite consent under the Credit Agreement to permit the purchase of the Securities as provided for in Section 4.02(b). (b) Within 30 days following any Change of Control, the Company shall mail a notice to each Holder with a copy to the Trustee (the "CHANGE OF CONTROL OFFER") stating: (1) that a Change of Control has occurred and that such Holder has the right to require the Company 46 to purchase such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date); (2) the purchase date (which shall be no earlier than 30 days nor later than 90 days from the date such notice is mailed); and (3) the instructions, as determined by the Company, consistent with this Section, that a Holder must follow in order to have its Securities purchased. (c) Holders electing to have a Security purchased will be required to surrender the Security, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the purchase date. Holders will be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the Holder and a statement that such Holder is withdrawing their election to have such Security purchased. (d) On the purchase date, all Securities purchased by the Company under this Section shall be delivered by the Company to the Trustee for cancellation, and the Company shall pay the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto. (e) Notwithstanding the foregoing provisions of this Section, the Company shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section applicable to a Change of Control Offer made by the Company and purchases all Securities properly tendered and not withdrawn under the Change of Control Offer. (f) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the purchase of Securities pursuant to 47 this Section. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue of its compliance with such securities laws or regulations. SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company and Parent shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; PROVIDED, HOWEVER, that: (1) the Company and the Domestic Guarantors shall be entitled to Incur Indebtedness if, on the date of such Incurrence and after giving effect thereto and to the use of the proceeds therefrom on a pro FORMA basis, no Event of Default has occurred and is continuing and the Consolidated Coverage Ratio exceeds (A) during the period from the Issue Date to December 15, 2003, 2.25 to 1, and (B) from and after December 15, 2003, 2.5 to 1; and (2) Restricted Subsidiaries of Parent (other than the Company and the Domestic Guarantors) shall be entitled to Incur Indebtedness if, on the date of such Incurrence and after giving effect thereto and to the use of the proceeds therefrom on a PRO FORMA basis, (A) such Restricted Subsidiary would constitute a Qualified Restricted Subsidiary, (B) the Company would have been entitled to Incur at least $1.00 of additional Indebtedness pursuant to Section 4.03(a)(1) and (C) the Restricted Subsidiary Leverage Ratio is greater than zero and less than or equal to 1.25 to 1. 48 (b) Notwithstanding the foregoing paragraph (a), Parent and its Restricted Subsidiaries shall be entitled to Incur any or all of the following Indebtedness: (1) (A) Indebtedness of the Company and the Domestic Guarantors Incurred pursuant to Credit Facilities, and Indebtedness constituting Guarantees thereof Incurred by the Company and the Guarantors, and (B) Indebtedness of USPE Holdings, Ltd. Incurred pursuant to Credit Facilities, and Indebtedness constituting Guarantees thereof Incurred by the Company, the Guarantors and Foreign Subsidiaries; PROVIDED, HOWEVER, that after giving effect to any such Incurrence, the aggregate principal amount of all Indebtedness Incurred under this clause (1) and then outstanding does not exceed $100.0 million less the sum of all principal payments with respect to such Indebtedness pursuant to Section 4.07(a)(3)(A); (2) (A) short-term Indebtedness of Parent or any of its Wholly Owned Subsidiaries owed to a Restricted Subsidiary, a Qualified Joint Venture or any other Person in a Related Business that receives day-to-day management services from Parent, a Qualified Restricted Subsidiary, a QJVGP or a Qualified Joint Venture pursuant to a Management Agreement to the extent such Indebtedness is Incurred by Parent or such Wholly Owned Subsidiary solely as a result of cash advanced by such Restricted Subsidiary, Qualified Joint Venture or other Person to Parent or such Wholly Owned Subsidiary in the ordinary course of business for purposes of cash management; PROVIDED, HOWEVER, that any subsequent issuance or transfer of any Capital Stock which results in any such creditor under this subparagraph (A) ceasing to be a Restricted Subsidiary, a Qualified Joint Venture or a Person of the type described above, or any subsequent transfer of such Indebtedness (other than to Parent or a Qualified Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon; and (B) Indebtedness owed to and held by Parent or a Wholly Owned Subsidiary; PROVIDED, HOWEVER, that any subsequent issuance or transfer of any Capital Stock which results in any such Wholly Owned Subsidiary under this subparagraph (B) ceasing to be a Wholly Owned Subsidiary, or any subsequent transfer of such Indebtedness (other than to Parent or a Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the 49 obligor thereon; PROVIDED FURTHER, HOWEVER, in the case of both subparagraphs (A) and (B), if the Company or a Guarantor is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Securities or such Guarantor's Guaranty; (3) the Securities, the Exchange Securities (other than any Additional Securities) and the Guaranties; (4) Indebtedness outstanding on the Issue Date (other than Indebtedness described in clause (1), (2) or (3) of this Section 4.03(b)); (5) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to Section 4.03(a) or pursuant to clause (3) or (4) of this Section 4.03(b) or this clause (5); (6) Hedging Obligations consisting of Interest Rate Agreements directly related to Indebtedness permitted to be Incurred by Parent and its Restricted Subsidiaries pursuant to this Indenture; (7) Hedging Obligations consisting of Currency Agreements entered into for bona fide hedging purposes of Parent and its Restricted Subsidiaries and not for speculative purposes; (8) obligations in respect of letters of credit to support workers compensation obligations, performance, bid and surety bonds and completion guarantees provided by Parent or any Restricted Subsidiary in the ordinary course of business; (9) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that such Indebtedness is extinguished within two Business Days of its Incurrence; (10) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from letters of credit, surety bonds or performance bonds securing any obligations of Parent or any Restricted Subsidiary pursuant to such agreements, in each case incurred in 50 connection with the disposition of any business assets or Restricted Subsidiaries of Parent in a principal amount not to exceed the gross proceeds actually received by Parent and its Restricted Subsidiaries in connection with such disposition; and (11) Indebtedness of the Company, the Domestic Guarantors and Qualified Restricted Subsidiaries in an aggregate principal amount that when taken together with all other Indebtedness outstanding under this clause (11) on the date of such Incurrence does not exceed $10.0 million. (c) Notwithstanding the foregoing, the Company and Parent shall not, and shall not permit any Restricted Subsidiary to, Incur any Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations of the Company or any Guarantor unless such Indebtedness shall be subordinated to the Securities or the applicable Guaranty to at least the same extent as such Subordinated Obligations. (d) For purposes of determining compliance with this Section 4.03, (1) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, the Company, in its sole discretion, shall classify such item of Indebtedness at the time of Incurrence and only be required to include the amount and type of such Indebtedness in one of the above clauses and (2) the Company shall be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described above. (e) Notwithstanding Section 4.03(a) and 4.03(b), the Company and Parent shall not, and shall not permit any Restricted Subsidiary to: (1) in the case of the Company or any Guarantor, Incur any Indebtedness if such Indebtedness is subordinate or junior in right of payment to any Senior Indebtedness of such Person, unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness of such Person and (2) in the case of a Restricted Subsidiary that is not a Guarantor, Incur any Indebtedness that is subordinate or junior in right of payment to any other Indebtedness of such Restricted Subsidiary. 51 SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company and Parent shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to make a Restricted Payment if at the time Parent or such Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and be continuing (or would result therefrom); (2) the Company is not entitled to Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a)(1); or (3) the aggregate amount of such Restricted Payment, all other Restricted Payments since the Issue Date made pursuant to this clause (a)(3) and all Restricted Payments since the Issue Date made pursuant to paragraph (b) of Section 4.04 (other than subparagraphs (b)(3), (b)(4), (b)(5), (b)(6), (b)(8), (b)(9), (b)(10) and (b)(11)) would exceed the sum of (without duplication): (A) 50% of the Consolidated Net Income of Parent accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter immediately following the fiscal quarter during which the Issue Date occurs to the end of the most recent fiscal quarter for which financial statements are available immediately preceding the date of such Restricted Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); PLUS (B) 100% of the aggregate Net Cash Proceeds received by Parent from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of Parent and other than an issuance or sale to an ESOP) and 100% of any cash capital contribution received by Parent from its stockholders subsequent to the Issue Date; PLUS (C) the amount by which Indebtedness of Parent is reduced on Parent's balance sheet upon the conversion or exchange (other than by a Subsidiary of Parent) subsequent to the Issue Date of any Indebtedness of Parent convertible or 52 exchangeable for Capital Stock (other than Disqualified Stock) of Parent (less the amount of any cash, or the fair value of any other property, distributed by Parent upon such conversion or exchange); PLUS (D) an amount equal to the sum of (x) the net reduction in the Investments (other than Permitted Investments) made by Parent or any Restricted Subsidiary in any Person resulting from repurchases, repayments or redemptions of such Investments by such Person, proceeds realized on the sale of such Investment and proceeds representing the return of capital (excluding dividends, distributions and other amounts that contribute to Consolidated Net Income) in each case received by the Company, any Domestic Guarantor or any other Restricted Subsidiary of Parent (but in the case of any such Restricted Subsidiary other than the Company or a Domestic Guarantor, only the portion thereof proportionate to Parent's direct or indirect equity interest in such Restricted Subsidiary), and (y) the portion (proportionate to Parent's direct or indirect equity interest in such Subsidiary) of the fair market value of the net assets of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; PROVIDED, HOWEVER, that the foregoing sum shall not exceed, in the case of any such Person or Unrestricted Subsidiary, the amount of Investments (excluding Permitted Investments) previously made (and treated as a Restricted Payment) by Parent and its Restricted Subsidiaries in such Person or Unrestricted Subsidiary. (b) The provisions of Section 4.04(a) shall not prohibit the following Restricted Payments (but in the case of clause (1) below, only if no Default has occurred and is continuing or would result therefrom): (1) dividends or distributions paid within 60 days after the date of declaration thereof if at such date of declaration such dividend or distribution would have complied with this Section 4.04; (2) any Restricted Payment made out of the Net Cash Proceeds of the substantially concurrent sale of, or made by exchange for, Capital Stock of Parent 53 (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of Parent or an ESOP to the extent that such sale to an ESOP is financed by loans from or guaranteed by Parent or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination) or a substantially concurrent cash capital contribution received by Parent from one or more of its stockholders; (3) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or a Guarantor made by exchange for, or out of the proceeds of the substantially concurrent Incurrence or sale of, Indebtedness of the Company or a Guarantor that (A) is permitted to be Incurred pursuant to Section 4.03 and (B) is Refinancing Indebtedness; (4) the purchase, redemption or other acquisition or retirement for value of shares of Capital Stock of Parent or any of its Subsidiaries from employees, former employees, directors or former directors of Parent or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such Capital Stock; PROVIDED, HOWEVER, that the aggregate amount of such purchases and other acquisitions shall not exceed $2.0 million in any calendar year; (5) the payment of any dividend or distribution to any holder of Capital Stock of a Qualified Restricted Subsidiary of Parent as part of a PRO RATA dividend or distribution to all holders of such Capital Stock; (6) the purchase, redemption or other acquisition or retirement for value of all but not less than all shares of Common Stock of a Qualified Restricted Subsidiary owned by a Strategic Investor if such purchase, redemption or other acquisition or retirement for value is made for consideration not in excess of the fair market value of such Common Stock; 54 (7) cash payments to holders of Parent's Capital Stock in lieu of issuance of fractional shares of its Capital Stock so long as the aggregate amount of payments pursuant to this clause (7) does not exceed $100,000 in any calendar year; (8) repurchases of Capital Stock deemed to occur upon the exercise of stock options or warrants if such Capital Stock represents a portion of the exercise price thereof; (9) repurchases of Capital Stock deemed to occur upon the acceptance of such Capital Stock as the repayment of loans made to employees of Parent or any Restricted Subsidiary; (10) the repayment on the Issue Date of: (A) Indebtedness in an amount not to exceed $41.5 million owed by USP Domestic Holdings, Inc. to Credit Suisse First Boston, Lehman Commercial Paper Inc., Societe Generale and the other lender parties to such credit agreement in connection with the USP Domestic Holdings, Inc. Credit Agreement dated as of June 13, 2001, (B) Indebtedness in an amount not to exceed $33.6 million owed by United Surgical Partners Europe, S.L. to a syndicate of lenders for which Societe Generale is administrative agent in connection with the credit facility of United Surgical Partners Europe, S.L. that was in existence prior to the Issue Date and (C) Indebtedness in an amount not to exceed $36.0 million owed by USP Domestic Holdings, Inc. to WCAS Capital Partners III, L.P. in connection with the 10% senior subordinated notes of USP Domestic Holdings, Inc., in each case PROVIDED THAT the funds used to make such repayments are advanced by the Company to USP Domestic Holdings, Inc. and United Surgical Partners Europe, S.L., as appropriate, pursuant to intercompany advances made in compliance with Section 4.11; (11) the redemption on the Issue Date by Parent of its Series D Redeemable Preferred Stock for an aggregate redemption price not in excess of $21.1 million, PROVIDED THAT the funds used to make such redemption are advanced by the Company directly to Parent pursuant to an intercompany advance made in compliance with Section 4.11; and (12) Restricted Payments in the aggregate amount of $10.0 million. 55 (c) The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the assets proposed to be transferred by Parent or such Restricted Subsidiary, as the case may be, in accordance with the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined in good faith by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. SECTION 4.05. LIMITATION ON LIENS. The Company and Parent shall not, and shall not permit any Guarantor to, directly or indirectly, create, incur, assume or suffer to exist or become effective any Lien securing Indebtedness of any kind (other than Senior Indebtedness), on or with respect to any of its assets, whether owned at the Issue Date or thereafter acquired, unless (a) in the case of any Lien securing Subordinated Obligations, the Securities (or the appropriate Guaranty) are secured by a Lien on such assets that is senior in priority to such Lien and (b) in the case of any other Lien, the Securities (or the appropriate Guaranty) are either secured equally and ratably with such Indebtedness or are secured by a Lien on such assets that is senior in priority to such Lien. SECTION 4.06. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES. The Company and Parent shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) pay dividends or make any other distributions on its Capital Stock to Parent or a Restricted Subsidiary or pay any Indebtedness owed to Parent or a Restricted Subsidiary, (b) make any loans or advances to Parent or a Restricted Subsidiary or (c) transfer any of its property or assets to Parent or a Restricted Subsidiary, except: (1) with respect to clauses (a), (b) and (c): (A) any encumbrance or restriction pursuant to (i) the Credit Agreement as entered into on the Issue Date and (ii) any agreement (other than (x) agreements relating to Indebtedness and (y) charter provisions and other agreements relating to Capital Stock) in effect at or entered into on the Issue Date; 56 (B) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by Parent or any Restricted Subsidiary (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by Parent) and outstanding on such date; (C) any encumbrance or restriction pursuant to an agreement effecting an amendment, modification, restatement, renewal, increase, supplement, replacement or Refinancing of an agreement referred to in Section 4.06(1)(A) or 4.06(1)(B) or this clause (1)(C) or contained in any amendment to an agreement referred to in Section 4.06(1)(A) or 4.06(1)(B) or this clause (1)(C); PROVIDED, HOWEVER, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such refinancing agreement or amendment are no less favorable to the Securityholders than encumbrances and restrictions with respect to such Restricted Subsidiary contained in such predecessor agreements; (D) restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business; (E) restrictions in Management Agreements that require the payment of management fees to Parent or one of its Qualified Restricted Subsidiaries prior to payment of dividends or distributions; (F) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale of such Restricted Subsidiary (whether by stock sale, asset sale, merger, consolidation or otherwise) pending the closing of such sale or disposition; and 57 (G) any Permitted Payment Restriction; (2) with respect to clause (c) only: (A) any such encumbrance or restriction consisting of customary nonassignment provisions in leases and licenses; and (B) restrictions contained in security agreements, mortgages and other similar agreements securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such agreements; and (3) with respect to clauses (b) and (c) only, any encumbrance or restriction with respect to a Qualified Restricted Subsidiary with respect to any agreement or charter provision evidencing Indebtedness or Capital Stock otherwise permitted under this Indenture; PROVIDED, HOWEVER, that the provisions relating to such encumbrance or restriction contained in such agreement or charter provision are not less favorable to the Holders than the encumbrances and restrictions described in Section 4.06(1)(A). SECTION 4.07. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a) The Company and Parent shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Disposition unless: (1) Parent or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair market value (including as to the value of all non-cash consideration), as determined in good faith by the Board of Directors, of the shares or assets subject to such Asset Disposition; (2) at least 75% of the consideration thereof received by Parent or such Restricted Subsidiary is in the form of Permitted Asset Disposition Consideration; (3) with respect to Asset Dispositions by Parent and its Wholly Owned Subsidiaries, an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by Parent or such Wholly Owned Subsidiary, as the case may be: 58 (A) FIRST, to the extent the Company so elects (or is required by the terms of any Indebtedness), to prepay, repay, purchase, repurchase, redeem, defease or otherwise acquire or retire for value Senior Indebtedness of the Company or any Guarantor or Indebtedness of a Wholly Owned Subsidiary of Parent that is not a Guarantor (in each case other than Indebtedness owed to Parent or a Subsidiary of Parent) within one year from the date of such Asset Disposition; (B) SECOND, to the extent of the balance of such Net Available Cash after application in accordance with clause (A), to the extent the Company so elects, to acquire Additional Assets within one year from the date of such Asset Disposition; and (C) THIRD, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to make an offer to Securityholders (and to holders of other Senior Subordinated Indebtedness of the Company designated by the Company) to purchase Securities (and such other Senior Subordinated Indebtedness of the Company) pursuant to and subject to the conditions contained in this Indenture; and (4) with respect to Asset Dispositions by Restricted Subsidiaries that are not Wholly Owned Subsidiaries, an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by such Restricted Subsidiary: (A) FIRST, to the extent the Restricted Subsidiary so elects (or is required by the terms of any Indebtedness), to prepay, repay, purchase, repurchase, redeem, defease or otherwise acquire or retire for value Indebtedness of such Restricted Subsidiary within one year from the date of such Asset Disposition; (B) SECOND, to the extent of the balance of such Net Available Cash after application in accordance with clause (A), to the extent the Restricted Subsidiary so elects, to acquire Additional Assets within one year from the date of such Asset Disposition; and 59 (C) THIRD, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B) of this Section 4.07(a)(4), to distribute such Net Available Cash PRO RATA to holders of Common Stock of such Restricted Subsidiary; PROVIDED, THAT, upon receipt of any Net Available Cash from a Restricted Subsidiary pursuant to subparagraph (a)(4)(A) or (a)(4)(C) of this Section 4.07, a Restricted Subsidiary that is not a Wholly Owned Subsidiary shall apply such Net Available Cash in accordance with Section 4.07(a)(4) above, and Parent or a Wholly Owned Subsidiary shall apply such Net Available Cash in accordance with Section 4.07(a)(3) above; and PROVIDED, HOWEVER, that in connection with any prepayment, repayment, purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness pursuant to subparagraph (a)(3)(A) or (a)(4)(A) of this Section 4.07, Parent or such Restricted Subsidiary shall permanently retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased. To the extent that any Net Available Cash remains after compliance with clauses (a)(3) and (a)(4) of this Section 4.07, Parent or any Wholly Owned Subsidiary, as the case may be, may use such Net Available Cash for any purpose not otherwise prohibited by this Indenture. Notwithstanding the foregoing provisions of this Section 4.07, Parent and its Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section 4.07 except to the extent that the aggregate Net Available Cash from all Asset Dispositions which is not applied in accordance with this Section 4.07 exceeds $10.0 million. Pending application of Net Available Cash pursuant to this Section 4.07, such Net Available Cash shall be invested in Temporary Cash Investments or applied to temporarily reduce revolving credit indebtedness. (b) In the event of an Asset Disposition that requires the purchase of Securities (and other Senior Subordinated Indebtedness of the Company) pursuant to Section 4.07(a)(3)(C), the Company shall make such offer (the "OFFER") to purchase Securities on or before the 366th day after the date of such Asset Disposition, and shall 60 purchase Securities tendered pursuant to an Offer at a purchase price of 100% of their principal amount (or, in the event such other Senior Subordinated Indebtedness of the Company was issued with significant original issue discount, 100% of the accreted value thereof) without premium, plus accrued but unpaid interest (or, in respect of such other Senior Subordinated Indebtedness of the Company, such lesser price, if any, as may be provided for by the terms of such Senior Subordinated Indebtedness of the Company) in accordance with the procedures (including prorating in the event of oversubscription) set forth in this Section 4.07. If the aggregate purchase price of Securities and other Senior Subordinated Indebtedness tendered exceeds the Net Available Cash allotted to their purchase, the Company shall select the Securities and other Senior Subordinated Indebtedness of the Company to be purchased on a PRO RATA basis but in round denominations, which in the case of the Securities shall be denominations of $1,000 principal amount or multiples thereof. The Company shall not be required to make an Offer if the Net Available Cash available therefor is less than $10.0 million (which lesser amount shall be carried forward for purposes of determining whether such an offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). Upon completion of any application of Net Available Cash in accordance with the foregoing provisions of clauses (a)(3) and (a)(4) of this Section 4.07, the amount of Net Available Cash shall be reset at zero. (c) (1) Promptly, and in any event within 10 days after the Company becomes obligated to make an Offer, the Company shall deliver to the Trustee and send, by first-class mail to each Holder, a written notice stating that the Holder may elect to have the Holder's Securities purchased by the Company either in whole or in part (subject to prorating as described in Section 4.07(b) in the event the Offer is oversubscribed) in integral multiples of $1,000 of principal amount, at the applicable purchase price. The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice (the "PURCHASE DATE") and shall contain such information concerning the business of the Company which the Company in good faith believes will enable such Holders to make an informed decision. (2) No later than one Business Day prior to the Purchase Date, the Company shall irrevocably deposit with the Trustee or with a Paying Agent (or, if the 61 Company is acting as its own Paying Agent, segregate and hold in trust) in Temporary Cash Investments, maturing on the last day prior to the Purchase Date or on the Purchase Date if funds are immediately available by open of business, an amount equal to the amount of the Offer (the "OFFER AMOUNT") to be held for payment in accordance with the provisions of this Section. If the Offer includes other Senior Subordinated Indebtedness, the deposit described in the preceding sentence may be made with any other paying agent pursuant to arrangements satisfactory to the Trustee. Upon the expiration of the period for which the Offer remains open (the "OFFER PERIOD"), the Company shall deliver to the Trustee for cancellation the Securities or portions thereof which have been properly tendered to and are to be accepted by the Company. The Trustee shall, on the Purchase Date, mail or deliver payment (or cause the delivery of payment) to each tendering Holder in the amount of the purchase price. In the event that the aggregate purchase price of the Securities delivered by the Company to the Trustee is less than the Offer Amount applicable to the Securities, the Trustee shall deliver the excess to the Company immediately after the expiration of the Offer Period for application in accordance with this Section 4.07. (3) Holders electing to have a Security purchased shall be required to surrender the Security, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the Purchase Date, a telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Security purchased. Holders whose Securities are purchased only in part shall be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered. (d) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section 4.07. To the extent that the provisions of any securities laws or regulations conflict with provisions 62 of this Section 4.07, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue of its compliance with such securities laws or regulations. SECTION 4.08. LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Company and Parent shall not, and shall not permit any Restricted Subsidiary to, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with, or for the benefit of, any Affiliate of Parent (an "AFFILIATE TRANSACTION") unless: (1) the terms of the Affiliate Transaction are no less favorable to the Company, Parent or such Restricted Subsidiary than those that could reasonably be expected to be obtained at the time of the Affiliate Transaction in arm's-length dealings with a Person who is not an Affiliate; (2) if such Affiliate Transaction involves an amount in excess of $5.0 million, the terms of the Affiliate Transaction are set forth in writing and a majority of the non-employee directors of Parent disinterested with respect to such Affiliate Transaction shall have determined in good faith that the criteria set forth in clause (1) are satisfied and shall have approved the relevant Affiliate Transaction as evidenced by a resolution of the Board of Directors; and (3) if such Affiliate Transaction involves an amount in excess of $10.0 million, the Board of Directors shall also have received a written opinion from an Independent Qualified Party to the effect that such Affiliate Transaction is fair, from a financial standpoint, to Parent or is not less favorable to Parent than could reasonably be expected to be obtained at the time in an arm's-length transaction with a Person who was not an Affiliate. (b) The provisions of Section 4.08(a) shall not prohibit: (1) any Restricted Payment permitted to be made pursuant to Section 4.04; 63 (2) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors or senior management of Parent; (3) loans or advances to employees in the ordinary course of business of Parent and its Restricted Subsidiaries, but in any event not to exceed $5.0 million in the aggregate outstanding at any one time; (4) the payment of customary directors' fees, indemnification and similar arrangements and payments thereunder, as well as agreements requiring or permitting such payments or indemnification, by Parent or any of its Restricted Subsidiaries; (5) any transaction between or among Parent, a Restricted Subsidiary or any other Person that would constitute an Affiliate Transaction solely because Parent or a Restricted Subsidiary owns an equity interest in or otherwise controls such Person; (6) the issuance or sale of any Capital Stock (other than Disqualified Stock) of Parent or any contribution to the capital of Parent or any Restricted Subsidiary; and (7) any agreement as in effect as of the Issue Date that is disclosed in the Offering Circular or any amendment of any such agreement (so long as any such amendment is not more disadvantageous to the Holders than the original agreement as in effect on the Issue Date) or any transaction contemplated thereby. 64 SECTION 4.09. LIMITATION ON OWNERSHIP OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES. The Company and Parent shall not, and shall not permit any Restricted Subsidiary to, (1) permit any Restricted Subsidiary of Parent to issue any Capital Stock (including pursuant to any merger, consolidation, recapitalization or similar transaction) other than to Parent or a Wholly Owned Subsidiary or (2) permit any Person other than Parent or a Wholly Owned Subsidiary to own any Capital Stock of a Restricted Subsidiary, except in each case for (A) directors' qualifying shares and (B) Common Stock issued to or owned by Strategic Investors. SECTION 4.10. DISTRIBUTIONS BY QUALIFIED RESTRICTED SUBSIDIARIES. Except to the extent restricted pursuant to any Permitted Payment Restriction, the Company and Parent shall, and shall cause each Restricted Subsidiary to, cause each Qualified Restricted Subsidiary to declare and pay regular monthly, quarterly or semi-annual dividends or distributions to the holders of its Capital Stock in an amount equal to substantially all of the available cash flow of such Restricted Subsidiary for such period as determined in good faith by the board of directors, board of governors or such other individuals performing similar functions, subject to such ordinary and customary reserves and other amounts as, in the good faith judgment of such individuals, may be necessary so that the business of such Restricted Subsidiary may be properly and advantageously conducted at all times. SECTION 4.11. INTERCOMPANY ADVANCES. The Company and Parent shall, and shall cause each Restricted Subsidiary to, evidence all transfers made by the Company, Parent or any Restricted Subsidiary of Parent to Parent or any Wholly Owned Subsidiary of Parent of the direct or indirect proceeds of the issuance and sale of the Securities by executing and delivering an intercompany promissory note. Each such intercompany promissory note will be payable upon or before each payment of principal of the Securities (whether upon Stated Maturity, optional redemption, required purchase, declaration of acceleration or otherwise) and will bear interest at the same or greater rate, payable on the same or earlier dates, as the Securities. SECTION 4.12. GUARANTORS. Parent shall, and Parent and the Company shall cause all present and future Subsidiaries of Parent (other than the Company) that fall within one or more of the categories set forth below to, Guarantee, jointly and severally, payment of the Securities 65 and all other amounts due under this Indenture by executing and delivering to the Trustee a Supplemental Guaranty Agreement: (a) any Domestic Wholly Owned Subsidiary of Parent; (b) any Subsidiary of Parent that Guarantees any Indebtedness of the Company or any Domestic Guarantor (other than the Securities and the Guaranties); (c) any Subsidiary of Parent, the assets of which are subject to a Lien securing any Indebtedness of the Company or any Domestic Guarantor (other than the Securities and the Guaranties); and (d) any Subsidiary of Parent, more than 65% of the Voting Stock of which has been pledged, directly or indirectly, individually or in the aggregate, by Parent and its Subsidiaries, to secure Indebtedness of the Company or any Domestic Guarantor (other than the Securities and the Guaranties). The Guaranty by a Guarantor will be released under certain circumstances as described in Section 11.06. SECTION 4.13. SEC REPORTS. Whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the Company shall file with the SEC the annual reports, quarterly reports and other documents which the Company would have been required to file with the SEC pursuant to such Section 13(a) or 15(d) or any successor provision thereto if the Company were subject thereto, such documents to be filed with the SEC on or prior to the respective dates (the "REQUIRED FILING DATES") by which the Company would have been required to file them; PROVIDED, HOWEVER, if the Company is not subject to Section 13(a) or 15(d) of the Exchange Act, the Company shall not be required to file such reports and documents with the SEC under Section 13(a) or 15(d) of the Exchange Act (or any successor provisions thereto) so long as (i) Parent files the reports and documents with the SEC under Section 13(a) or 15(d) of the Exchange Act that it is required to file and (ii) the Company and Parent are in compliance with the requirements set forth in Rule 3-10 of Regulation S-X under the Exchange Act. The Company shall also (whether or not it is required to file reports with the SEC), within 30 days of 66 each Required Filing Date, (i) transmit by mail to all Securityholders, as their names and addresses appear in the applicable security register, without cost to such Holders, and (ii) file with the Trustee, copies of the annual reports, quarterly reports and other documents (without exhibits) which the Company has filed or would have filed, or which Parent has filed, with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act, any successor provisions thereto or this Section. The Company shall not be required to file any report with the SEC if the SEC does not permit such filing. In addition, the Company shall furnish to the Trustee, to the Securityholders 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 and the exhibits omitted from the information furnished pursuant to the preceding sentence, for so long as the Securities are not freely transferable under the Securities Act. The Company also shall comply with the other provisions of TIA Section 314(a). SECTION 4.14. COMPLIANCE CERTIFICATE. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA Section 314(a)(4). SECTION 4.15. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Securities may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such surrenders, notices and demands may be made or served at an office of the Trustee in the Borough of Manhattan, the City of New York. 67 The Company may also from time to time designate one or more other offices or agencies where Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the office of the Trustee at 30 Broad Street, B Level, New York, New York 10004, as one such office or agency of the Company in accordance with Section 2.03 hereof. SECTION 4.16. TAXES. The Company and Parent shall pay, and shall cause each of their Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders. SECTION 4.17. LIMITATION ON STATUS AS INVESTMENT COMPANY. Neither Parent, the Company nor any of their Subsidiaries shall take any action or suffer to exist any condition that would require any of them to register as an "investment company" (as that term is defined in the Investment Company Act of 1940, as amended), or to otherwise become subject to regulation as an investment company. SECTION 4.18. PAYMENTS FOR CONSENT. Neither Parent, the Company nor any of their Affiliates shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Securities for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid or agreed to be paid to all Holders that so consent, waive or agree to amend within any time period set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.19. CORPORATE EXISTENCE. Subject to Article 5 hereof, each of Parent and the Company shall do or cause to be done all things necessary to preserve and 68 keep in full force and effect its corporate existence, and the corporate, partnership or other existence of each Subsidiary, in accordance with the respective organizational documents (as the same may be amended from time to time) of each Subsidiary and the rights (charter and statutory), licenses and franchises of Parent, the Company and their Subsidiaries; PROVIDED, HOWEVER, that Parent and the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of their Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of Parent and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders. SECTION 4.20. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. ARTICLE 5 MERGER SECTION 5.01. MERGER AND CONSOLIDATION. (a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all of the assets of the Company and its Restricted Subsidiaries, taken as a whole, to, any Person, unless: (1) the resulting, surviving or transferee Person (the "SUCCESSOR COMPANY") shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Securities and this Indenture; (2) immediately after giving PRO FORMA effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of 69 such transaction as having been Incurred by such Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (3) immediately after giving PRO FORMA effect to such transaction, the Successor Company would be able to Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a)(1); (4) (other than Guarantors that were Guarantors prior to such transaction and continue to be Guarantors after such transaction, and upon consummation of such transaction, the Company is the Successor Company), each Person that is required pursuant to the terms of this Indenture to be a Guarantor shall have become a Guarantor pursuant to a Supplemental Guaranty Agreement or shall have confirmed its Guaranty pursuant to a supplemental indenture in form reasonably satisfactory to the Trustee; and (5) the Company and each appropriate Guarantor shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture (if any) comply with this Indenture; PROVIDED, HOWEVER, that clause (3) will not be applicable to (A) Parent or a Restricted Subsidiary consolidating with, merging into, conveying, transferring or leasing all or part of its assets to the Company or (B) the Company merging with an Affiliate of the Company solely for the purpose and with the sole effect of reincorporating the Company in another jurisdiction within the United States of America. The Successor Company (if not the Company) shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Securities. (b) Parent shall not, and the Company and Parent shall not permit any Guarantor to, consolidate with or merge with or into, or convey, transfer or lease, in one 70 transaction or a series of transactions, all or substantially all of its assets to any Person unless: (1) (other than in the case of a Guarantor (other than Parent) that has been disposed of in its entirety to another Person (other than to Parent or a Subsidiary of Parent), whether through a merger, consolidation or sale of Capital Stock or assets, if in connection therewith the Company provides an Officers' Certificate to the Trustee to the effect that the Company will comply with, and does comply with, its obligations under Section 4.07 in respect of such disposition), the resulting, surviving or transferee Person (if not the Company or a Person that was a Guarantor immediately prior to such transaction) shall expressly assume, by a Supplemental Guaranty Agreement, all the obligations of such Guarantor under its Guaranty; (2) immediately after giving effect to such transaction or transactions on a PRO FORMA basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default shall have occurred and be continuing; and (3) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and such Supplemental Guaranty Agreement, if any, complies with this Indenture. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. Each of the following is an "EVENT OF DEFAULT": (1) the Company defaults in any payment of interest on any Security when the same becomes due and payable, whether or not such payment shall be prohibited by Article 10, and such default continues for 30 days; (2) the Company (i) defaults in the payment of the principal of any Security when the same becomes due and payable at its Stated Maturity, upon optional 71 redemption, upon declaration of acceleration or otherwise, whether or not such payment shall be prohibited by Article 10 or (ii) fails to purchase Securities when required pursuant to this Indenture or the Securities, whether or not such redemption or purchase shall be prohibited by Article 10; (3) the Company or any Guarantor fails to comply with Section 5.01; (4) the Company or any Guarantor fails to comply with any of its agreements in the Securities or this Indenture (other than those referred to in clauses (1), (2) and (3) above) and such failure continues for 30 days after the notice specified below; (5) Indebtedness of the Company, any Guarantor or any Significant Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $10.0 million (or its foreign currency equivalent at the time); (6) the Company, any Guarantor or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for any substantial part of its property; or (D) makes a general assignment for the benefit of its creditors; or takes any comparable action relating to insolvency; (7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company, any Guarantor or any Significant Subsidiary in an involuntary case; 72 (B) appoints a Custodian of the Company, any Guarantor or any Significant Subsidiary or for any substantial part of its property; or (C) orders the winding up or liquidation of the Company, any Guarantor or any Significant Subsidiary; or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days; (8) any judgment or decree for the payment of money in excess of $10.0 million (or its foreign currency equivalent at the time) above the coverage under applicable insurance policies as to which the relevant insurer has not disclaimed coverage is entered against the Company, any Guarantor or any Significant Subsidiary, remains outstanding for a period of 60 consecutive days following such judgment and is not discharged, waived or stayed; or (9) a Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Guaranty) or any Guarantor denies or disaffirms its obligations under its Guaranty. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "BANKRUPTCY LAW" means Title 11, UNITED STATES CODE, or any similar Federal or state law for the relief of debtors. The term "CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. A Default under clause (4) of this Section 6.01 is not an Event of Default until the Trustee or the holders of at least 25% in principal amount of the outstanding Securities notify the Company of the default and the Company does not cure such default within the time specified after receipt of such notice. Such notice must specify the default, demand that it be remedied and state that such notice is a "Notice of Default." 73 The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Default or Event of Default, the status of such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) with respect to the Company or any Guarantor) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable by notice in writing to the Company and the Trustee specifying the respective Event of Default and that it is a "notice of acceleration." Upon such a declaration, such principal and interest shall be due and payable immediately. In the event of a declaration of acceleration of the Securities because an Event of Default described in clause (5) of Section 6.01 has occurred and is continuing, the declaration of acceleration of the Securities shall be automatically annulled if (A) the nonpayment or default triggering such Event of Default pursuant to clause (5) of Section 6.01 shall be remedied or cured by Parent or a Restricted Subsidiary or waived by the holders of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto, (B) the annulment of the acceleration of the Securities would not conflict with any judgment or decree of a court of competent jurisdiction and (C) all existing Events of Default, except nonpayment of principal, premium or interest on the Securities that became due solely because of the acceleration of the Securities, have been cured or waived. If an Event of Default specified in Section 6.01(6) or (7) with respect to the Company or any Guarantor occurs and is continuing, the principal of and interest on all the Securities shall IPSO FACTO become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders. The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.03. OTHER REMEDIES. If an Event of 74 Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in principal amount of the Securities by notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the principal of or interest on a Security, (ii) a Default arising from the failure to redeem or purchase any Security when required pursuant to this Indenture or (iii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in principal amount of the outstanding Securities may 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. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 6.06. LIMITATION ON SUITS. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Securityholder may pursue any remedy with respect to this Indenture or the Securities 75 unless: (1) such Holder has previously given the Trustee notice that an Event of Default is continuing; (2) Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee to pursue the remedy; (3) such Holders 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 receipt of the request and the offer of security or indemnity; and (5) Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Securities held by such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any Guarantor for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless 76 prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07. SECTION 6.10. PRIORITIES. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to holders of Senior Indebtedness of the Company and, if such money or property has been collected from a Guarantor, to holders of Senior Indebtedness of such Guarantor, in each case to the extent required by Articles 10 and 12; THIRD: to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and FOURTH: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section. At least 15 days before such record date, the Company shall mail to each Securityholder and the Trustee a notice that states the record date, the payment date and amount to be paid. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable 77 costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities. SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. The Company and each Guarantor (to the extent it may lawfully do so) covenants that it shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company and each Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (b) Except during the continuance of an Event of Default: (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming 78 to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to Sections 7.01 and 7.02. (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. SECTION 7.02. RIGHTS OF TRUSTEE. 79 (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute willful misconduct or negligence. (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication. 80 SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a Default in payment of principal of or interest on any Security (including payments pursuant to the mandatory redemption provisions of such Security, if any), the Trustee may withhold the notice if and so long as a committee of its Trust Officers determines that withholding the notice is not opposed to the interests of Securityholders. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as practicable after each May 15 beginning with the May 15 following the date of this Indenture, and in any event prior to July 15 in each year, the Trustee shall mail to each Securityholder a brief report dated as of May 15 that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be mailed). The Trustee also shall comply with TIA ss. 313(b). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Company shall indemnify the Trustee against any and all loss, liability or expense (including attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder, except as set forth in the last sentence of this paragraph. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim 81 and the Trustee may have separate counsel and the Company shall pay the fees and expenses of such counsel. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee's own willful misconduct, negligence or bad faith. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities. Such lien shall survive the discharge of this Indenture. The Company's payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(6) or (7) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law. SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at any time by so notifying the Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Securities and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and 82 to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have. 83 SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined capital and surplus (together with its holding company and sister companies, if any) of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA ss. 310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA ss. 310(b)(1) are met. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated. ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE. (a) When (1) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancellation or (2) all outstanding Securities have become due and payable, whether at maturity or on a redemption date as a result of the mailing of a notice of redemption pursuant to Article 3 hereof or will become due and payable within one year and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding Securities, including interest thereon to maturity or such redemption date (other than Securities replaced pursuant to Section 2.07), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 8.01(c), be satisfied and discharged and cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company. 84 (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (1) all its and the Guarantors' obligations under the Securities and this Indenture ("LEGAL DEFEASANCE OPTION") or (2) its and the Guarantors' obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13 and the operation of Sections 6.01(5), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of Sections 6.01(6) and (7), with respect only to Significant Subsidiaries), the limitations contained in Sections 5.01(a)(3) and 5.01(a)(4), and all rights and obligations of all Persons under or pursuant to Articles 10, 11 and 12 ("COVENANT DEFEASANCE OPTION"). The Company may exercise its legal defeasance option not withstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Sections 6.01(5), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of Sections 6.01(6) and (7), with respect only to Significant Subsidiaries) or because of the failure of the Company to comply with Sections 5.01(a)(3) or 5.01(a)(4). If the Company exercises its legal defeasance option or its covenant defeasance option, each Guarantor, if any, shall be released from all its obligations with respect to its Guaranty. Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates. (c) Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in this Article 8 shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive. SECTION 8.02. CONDITIONS TO DEFEASANCE. The Company may exercise its legal defeasance option or its covenant defeasance option only if: 85 (1) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of and interest on the Securities to maturity or redemption, as the case may be; (2) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be; (3) 123 days pass after the deposit is made and during the 123-day period no Default specified in Sections 6.01(6) or (7) with respect to the Company occurs which is continuing at the end of the period; (4) the deposit does not constitute a default under any other agreement binding on the Company and is not prohibited by Article 10; (5) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; (6) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (B) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; (7) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the 86 Securityholders will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and (8) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article 8 have been complied with. Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3. SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities. Money and securities so held in trust are not subject to Article 10. SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look to the Company for payment as general creditors. SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations. SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by 87 reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; PROVIDED, HOWEVER, that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENTS SECTION 9.01. WITHOUT CONSENT OF HOLDERS. Notwithstanding Section 9.02, the Company, the Guarantors and the Trustee may amend this Indenture or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, omission, defect or inconsistency; (2) to provide for the assumption by a successor corporation of the obligations of the Company or any Guarantor under this Indenture pursuant to comply with Section 5.01; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; PROVIDED, HOWEVER, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; (4) to add guarantees with respect to the Securities, including any Guaranties, or to secure the Securities; (5) to add to the covenants of the Company or any Guarantor for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or any Guarantor; 88 (6) to make any change that does not adversely affect the rights of any Securityholder in any material respect; (7) to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; or (8) to evidence the release of a Guarantor pursuant to and in accordance with the terms of this Indenture. However, no amendment under this Section may make any change that adversely affects the rights under Article 10 or Article 12 of any holder of Senior Indebtedness of the Company or of a Guarantor then outstanding unless such holder of such Senior Indebtedness (or its Representative) consents to such change. After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.02. WITH CONSENT OF HOLDERS. The Company, the Guarantors and the Trustee may amend this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding (including consents obtained in connection with a tender offer or exchange for the Securities). However, without the consent of each Securityholder affected thereby, an amendment may not: (1) reduce the amount of Securities whose Holders must consent to an amendment; (2) reduce the rate of or extend the time for payment of interest on any Security; (3) reduce the principal amount of or extend the Stated Maturity of any Security; (4) reduce the amount payable upon the redemption of any Security or change the time at which any Security may be redeemed in accordance with Article 3; 89 (5) make any Security payable in money other than that stated in the Security; (6) impair the right of any Securityholder to receive payment of principal of and interest on such Securityholder's Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Securityholder's Securities; (7) make any change in Section 6.04 or 6.07 or the second sentence of this Section; (8) make any changes in the ranking or priority of any Security that would adversely affect the Securityholders; or (9) make any change in any Guaranty that would adversely affect the Securityholders. Notwithstanding the foregoing, the provision under this Indenture relative to the Company's obligation to make a Change of Control Offer or an Offer under Section 4.07 may be waived or modified with the written consent of the Holders of a majority in principal amount of the Securities. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. An amendment under this Section may not make any change that adversely affects the rights under Article 10 or Article 12 of any holder of Senior Indebtedness of the Company or of a Guarantor then outstanding unless such holder of such Senior Indebtedness (or its Representative) consents to such change. After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture or the Securities shall comply with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS 90 AND WAIVERS. A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Securityholder. An amendment or waiver becomes effective upon the execution of such amendment or waiver by the Trustee. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully 91 protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture. ARTICLE 10 SUBORDINATION SECTION 10.01. AGREEMENT TO SUBORDINATE. The Company agrees, and each Securityholder by accepting a Security agrees, that the Indebtedness evidenced by the Securities is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment of all Senior Indebtedness of the Company and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness. The Securities shall in all respects rank PARI PASSU with all other Senior Subordinated Indebtedness of the Company and only Indebtedness of the Company which is Senior Indebtedness of the Company shall rank senior to the Securities in accordance with the provisions set forth herein. All provisions of this Article 10 shall be subject to Section 10.11. SECTION 10.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment or distribution of the assets of the Company to creditors upon a total or partial liquidation or a total or partial dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property: (1) holders of Senior Indebtedness of the Company shall be entitled to receive payment in full in cash of such Senior Indebtedness before Securityholders shall be entitled to receive any payment of principal of or interest on the Securities (except that Securityholders may receive and retain Permitted Junior Securities and payments from the trust described in Article 8); and (2) until such Senior Indebtedness is paid in full in cash, any payment or distribution to which Securityholders would be entitled but for this Article 10 shall be made to holders of such Senior Indebtedness as their interests may appear (except that Securityholders may receive and retain Permitted Junior Securities and payments from the trust described in Article 8). 92 SECTION 10.03. DEFAULT ON SENIOR INDEBTEDNESS OF THE COMPANY. The Company shall not pay the principal of, premium, if any, or interest on the Securities (except in Permitted Junior Securities or from the trust described in Article 8) or make any deposit pursuant to Section 8.01 and may not purchase, redeem or otherwise retire any Securities (except in Permitted Junior Securities or from the trust described in Article 8) (collectively, "PAY THE SECURITIES") if either of the following (a "PAYMENT DEFAULT") occurs: (1) any Designated Senior Indebtedness of the Company is not paid in full in cash when due, or (2) any other default on Designated Senior Indebtedness of the Company occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms; unless, in either case, the Payment Default has been cured or waived and any such acceleration has been rescinded or such Designated Senior Indebtedness has been paid in full in cash; PROVIDED, HOWEVER, that the Company shall be entitled to pay the Securities without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representatives of all Designated Senior Indebtedness with respect to which the Payment Default has occurred and is continuing. During the continuance of any default (other than a Payment Default) with respect to any Designated Senior Indebtedness of the Company pursuant to which the maturity thereof may be accelerated without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Company shall not pay the Securities for a period (a "PAYMENT BLOCKAGE PERIOD") commencing upon the receipt by the Trustee of (with a copy to the Company) a written notice (a "BLOCKAGE NOTICE") of such default from the Representative of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter. The Payment Blockage Period shall end earlier if such Payment Blockage Period is terminated: (1) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice, (2) because the default giving rise to such Blockage Notice is cured, waived or otherwise no longer continuing, or (3) because such Designated Senior Indebtedness has been discharged or repaid in full in cash. Notwithstanding the provisions described in the above paragraph (but subject to the provisions contained in the first sentence of this Section), unless the holders of such Designated Senior Indebtedness or the Representative 93 of such Designated Senior Indebtedness shall have accelerated the maturity of such Designated Senior Indebtedness, the Company shall be entitled to resume payments on the Securities after termination of such Payment Blockage Period. The Securities shall not be subject to more than one Payment Blockage Period in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness of the Company during such period; PROVIDED, HOWEVER, that if any Blockage Notice within such 360-day period is delivered to the Trustee by or on behalf of any holders of Designated Senior Indebtedness of the Company (other than the Bank Indebtedness), the Representative of the Bank Indebtedness shall be entitled to give another Blockage Notice within such period; PROVIDED FURTHER, HOWEVER, that in no event shall the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 360-consecutive-day period, and there must be 181 days during any consecutive 360-day period during which no Payment Blockage Period is in effect. SECTION 10.04. ACCELERATION OF PAYMENT OF SECURITIES. If payment of the Securities is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the holders of Designated Senior Indebtedness of the Company (or their Representatives) of the acceleration. SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution is made to Securityholders that because of this Article 10 should not have been made to them, the Securityholders who receive the distribution shall hold it in trust for holders of Senior Indebtedness of the Company and pay it over to them as their interests may appear. SECTION 10.06. SUBROGATION. After all Senior Indebtedness of the Company is paid in full and until the Securities are paid in full, Securityholders shall be subrogated to the rights of holders of such Senior Indebtedness to receive distributions applicable to such Senior Indebtedness. A distribution made under this Article 10 to holders of such Senior Indebtedness which otherwise would have been made to Securityholders is not, as between the Company and Securityholders, a payment by the Company on such Senior Indebtedness. 94 SECTION 10.07. RELATIVE RIGHTS. This Article 10 defines the relative rights of Securityholders and holders of Senior Indebtedness of the Company. Nothing in this Indenture shall: (1) impair, as between the Company and Securityholders, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Securities in accordance with their terms; or (2) prevent the Trustee or any Securityholder from exercising its available remedies upon a Default, subject to the rights of holders of Senior Indebtedness of the Company to receive distributions otherwise payable to Securityholders. SECTION 10.08. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding Section 10.03, the Trustee or Paying Agent shall continue to make payments on the Securities and shall not be charged with knowledge of the existence of facts that under this Article 10 would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it that such payments are prohibited by this Article 10. The Company, the Registrar or co-registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness of the Company shall be entitled to give the notice; PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness of the Company has a Representative, only the Representative shall be entitled to give the notice. The Trustee in its individual or any other capacity shall be entitled to hold Senior Indebtedness of the Company with the same rights it would have if it were not the Trustee. The Registrar and co-registrar and the Paying Agent shall be entitled to do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 10 with respect to any Senior Indebtedness of the Company which may at any time be held by it, to the same extent as any other holder of such Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07. SECTION 10.09. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever any Person is to make a distribution or give a notice to holders of Senior 95 Indebtedness of the Company, such Person shall be entitled to make such distribution or give such notice to their Representative (if any). SECTION 10.10. ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE. The failure to make a payment pursuant to the Securities by reason of any provision in this Article 10 shall not be construed as preventing the occurrence of a Default. Nothing in this Article 10 shall have any effect on the right of the Securityholders or the Trustee to accelerate the maturity of the Securities. SECTION 10.11. TRUST MONEYS NOT SUBORDINATED. Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article 8 by the Trustee for the payment of principal of and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness of the Company or subject to the restrictions set forth in this Article 10, and none of the Securityholders shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness of the Company or any other creditor of the Company. SECTION 10.12. TRUSTEE ENTITLED TO RELY. Upon any payment or distribution pursuant to this Article 10, the Trustee and the Securityholders shall be entitled to rely (1) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 10.02 are pending, (2) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Securityholders or (3) upon the Representatives of Senior Indebtedness of the Company for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of such Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Company to participate in any payment or distribution pursuant to this Article 10, the Trustee shall be entitled to request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other 96 facts pertinent to the rights of such Person under this Article 10, and, if such evidence is not furnished, the Trustee shall be entitled to defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 10. SECTION 10.13. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Securityholder by accepting a Security authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Securityholders and the holders of Senior Indebtedness of the Company as provided in this Article 10 and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 10.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF THE COMPANY. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Company and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Securityholders or the Company or any other Person, money or assets to which any holders of Senior Indebtedness of the Company shall be entitled by virtue of this Article 10 or otherwise. SECTION 10.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF THE COMPANY ON SUBORDINATION PROVISIONS. Each Securityholder by accepting a Security acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of the Company, whether such Senior Indebtedness was created or acquired before or after the issuance of the Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. ARTICLE 11 GUARANTIES SECTION 11.01. GUARANTIES. Each Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally, to each Holder and to the Trustee and its 97 successors and assigns (a) the full and punctual payment of principal of and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under this Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under this Indenture and the Securities (all the foregoing being hereinafter collectively called the "OBLIGATIONS"). Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under this Article 11 notwithstanding any extension or renewal of any Obligation. Each Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Obligations and also waives notice of acceleration, notice of intent to accelerate and notice of protest for nonpayment. Subject to Section 6.01, each Guarantor waives notice of any default under the Securities or the Obligations. The obligations of each Guarantor hereunder shall not be affected by: (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Obligations or any of them; (e) the failure of any Holder or the Trustee to exercise any right or remedy against any other guarantor of the Obligations; or (f) except as set forth in Section 11.06, any change in the ownership of such Guarantor. Each Guarantor further agrees that its Guaranty herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Obligations. Each Guaranty is, to the extent and in the manner set forth in Article 12, subordinated and subject in right of payment to the prior payment in full of the principal of and premium, if any, and interest on all Senior Indebtedness of the Guarantor giving such Guaranty and each Guaranty is made subject to such provisions of this 98 Indenture. Except as expressly set forth in Sections 8.01(b), 11.02 and 11.06, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity. Each Guarantor further agrees that its Guaranty herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise. In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Obligation, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (1) the unpaid amount of such Obligations, (2) accrued and unpaid interest on such Obligations (but only to the extent not prohibited by law) and (3) all other monetary Obligations of the Company to the Holders and the Trustee. Each Guarantor agrees that it shall not be 99 entitled to any right of subrogation in respect of any Obligations guaranteed hereby until payment in full of all Obligations and all obligations to which the Obligations are subordinated as provided in Article 12. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of such Guarantor's Guaranty herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Obligations as provided in Article 6, such Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section. Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under this Section. SECTION 11.02. LIMITATION ON LIABILITY. Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. SECTION 11.03. SUCCESSORS AND ASSIGNS. This Article 11 shall be binding upon each Guarantor and its successors and assigns and shall enure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture. SECTION 11.04. NO WAIVER. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 11 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein 100 expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 11 at law, in equity, by statute or otherwise. SECTION 11.05. MODIFICATION. No modification, amendment or waiver of any provision of this Article 11, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances. SECTION 11.06. RELEASE OF GUARANTOR. The Guaranty of a Guarantor (other than Parent) will be released: (1) upon the sale or other disposition (including by way of consolidation or merger) of that Guarantor, other than to Parent or a Restricted Subsidiary of Parent and as permitted by this Indenture; (2) upon the sale or other disposition of all or substantially all the assets of that Guarantor, other than to Parent or a Restricted Subsidiary of Parent and as permitted by this Indenture; (3) if the Company designates that Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture; (4) if that Guarantor ceases to be a Wholly Owned Subsidiary and is not required to Guarantee the Securities pursuant to Section 4.12; and (5) in the case of a Foreign Guarantor, if that Foreign Guarantor is not required to Guarantee the Securities pursuant to Section 4.12. ARTICLE 12 SUBORDINATION OF GUARANTIES SECTION 12.01. AGREEMENT TO SUBORDINATE. Each Guarantor agrees, and each Securityholder by accepting a Security agrees, that the Indebtedness evidenced by such 101 Guarantor's Guaranty is subordinated in right of payment, to the extent and in the manner provided in this Article 12, to the prior payment of all Senior Indebtedness of such Guarantor and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness. The Obligations of a Guarantor shall in all respects rank PARI PASSU with all other Senior Subordinated Indebtedness of such Guarantor and only Senior Indebtedness of such Guarantor (including such Guarantor's Guaranty of Senior Indebtedness of the Company) shall rank senior to the Obligations of such Guarantor in accordance with the provisions set forth herein. All provisions of this Article 12 shall be subject to Section 12.11. SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment or distribution of the assets of any Guarantor to creditors upon a total or partial liquidation or a total or partial dissolution of such Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Guarantor or its property: (1) holders of Senior Indebtedness of such Guarantor shall be entitled to receive payment in full in cash of such Senior Indebtedness before Securityholders shall be entitled to receive any payment pursuant to the Guaranty of such Guarantor (except that Securityholders may receive and retain Permitted Junior Securities and payments from the trust described in Article 8); and (2) until the Senior Indebtedness of any Guarantor is paid in full in cash, any payment or distribution to which Securityholders would be entitled but for this Article 12 shall be made to holders of such Senior Indebtedness as their interests may appear (except that Securityholders may receive and retain Permitted Junior Securities and payments from the trust described in Article 8). SECTION 12.03. DEFAULT ON SENIOR INDEBTEDNESS OF GUARANTOR. No Guarantor shall make any payment of principal, premium, if any, or interest pursuant to its Guaranty (except in Permitted Junior Securities or from the trust described in Article 8) or purchase, redeem or otherwise retire or defease any Securities or other Obligations (except in Permitted Junior Securities or from the trust described in Article 8) (collectively, "PAY ITS GUARANTY") if either of the following (a "PAYMENT DEFAULT") occurs: (1) a default in the payment of any principal of, premium, if any, or interest on Designated Senior Indebtedness of such Guarantor occurs; or (2) any other 102 default on Designated Senior Indebtedness of such Guarantor occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms; unless, in either case, the Payment Default has been cured or waived and any such acceleration has been rescinded or such Designated Senior Indebtedness has been paid in full in cash; PROVIDED, HOWEVER, that any Guarantor shall be entitled to pay its Guaranty without regard to the foregoing if such Guarantor and the Trustee receive written notice approving such payment from the Representatives of all Designated Senior Indebtedness with respect to which the Payment Default has occurred and is continuing. During the continuance of any default (other than a Payment Default) with respect to any Designated Senior Indebtedness of such Guarantor pursuant to which the maturity thereof may be accelerated without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, such Guarantor shall not pay its Guaranty for a period (a "PAYMENT BLOCKAGE PERIOD") commencing upon the receipt by the Trustee of (with a copy to such Guarantor) written notice (a "BLOCKAGE NOTICE") of such default from the Representative of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter. The Payment Blockage Period shall end earlier if such Payment Blockage Period is terminated: (1) by written notice to the Trustee and such Guarantor from the Person or Persons who gave such Blockage Notice, (2) because the default giving rise to such Blockage Notice is cured, waived or otherwise no longer continuing, or (3) because such Designated Senior Indebtedness has been discharged or repaid in full in cash. Notwithstanding the provisions described in the above paragraph (but subject to the provisions contained in the first sentence of this Section), unless the holders of such Designated Senior Indebtedness giving such Payment Notice or the Representative of such Designated Senior Indebtedness shall have accelerated the maturity of such Designated Senior Indebtedness, any Guarantor shall be entitled to resume payments pursuant to its Guaranty after termination of such Payment Blockage Period. No Guarantor shall be subject to more than one Blockage Period in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness of such Guarantor during such period; PROVIDED, HOWEVER, that if any Blockage Notice within such 360-day period is delivered to the Trustee by or on behalf of any holders of Designated Senior Indebtedness of such Guarantor (other than the Bank Indebtedness), the Representative of the Bank Indebtedness shall be entitled to 103 give another Blockage Notice within such period; PROVIDED FURTHER, HOWEVER, that in no event shall the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 360-consecutive-day period, and there must be 181 days during any consecutive 360-day period during which no Payment Blockage Period is in effect. SECTION 12.04. DEMAND FOR PAYMENT. If a demand for payment is made on a Guarantor pursuant to Article 11, the Trustee shall promptly notify the holders of the Designated Senior Indebtedness of such Guarantor (or their Representatives) of such demand. SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution is made to Securityholders that because of this Article 12 should not have been made to them, the Securityholders who receive the distribution shall hold it in trust for holders of Senior Indebtedness of the applicable Guarantor and pay it over to them or their Representatives as their interests may appear. SECTION 12.06. SUBROGATION. After all Senior Indebtedness of a Guarantor is paid in full and until the Securities are paid in full, Securityholders shall be subrogated to the rights of holders of such Senior Indebtedness to receive distributions applicable to Senior Indebtedness of such Guarantor. A distribution made under this Article 12 to holders of such Senior Indebtedness which otherwise would have been made to Securityholders is not, as between the relevant Guarantor and Securityholders, a payment by such Guarantor on such Senior Indebtedness. SECTION 12.07. RELATIVE RIGHTS. This Article 12 defines the relative rights of Securityholders and holders of Senior Indebtedness of a Guarantor. Nothing in this Indenture shall: (1) impair, as between a Guarantor and Securityholders, the obligation of such Guarantor, which is absolute and unconditional, to pay its Guaranty to the extent set forth in Article 12; or (2) prevent the Trustee or any Securityholder from exercising its available remedies upon a default by such Guarantor under its Guaranty, subject to the rights of holders of Senior Indebtedness of such Guarantor to receive distributions otherwise payable to Securityholders. 104 SECTION 12.08. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding Section 12.03, the Trustee or Paying Agent shall continue to make payments on any Guaranty and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives written notice satisfactory to it that such payments are prohibited by this Article 12. The Company, the relevant Guarantor, the Registrar or co-registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness of such Guarantor shall be entitled to give the notice; PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness of any Guarantor has a Representative, only the Representative shall be entitled to give the notice. The Trustee in its individual or any other capacity shall be entitled to hold Senior Indebtedness of any Guarantor with the same rights it would have if it were not the Trustee. The Registrar and co-registrar and the Paying Agent shall be entitled to do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 12 with respect to any Senior Indebtedness of any Guarantor which may at any time be held by it, to the same extent as any other holder of such Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 12 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07. SECTION 12.09. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever any Person is to make a distribution or give a notice to holders of Senior Indebtedness of any Guarantor, such Person shall be entitled to make such distribution or give such notice to their Representative (if any). SECTION 12.10. ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO DEMAND PAYMENT. The failure to make a payment pursuant to a Guaranty by reason of any provision in this Article 12 shall not be construed as preventing the occurrence of a Default. Nothing in this Article 12 shall have any effect on the right of the Securityholders or the Trustee to make a demand for payment on any Guarantor pursuant to its Guaranty. SECTION 12.11. TRUST MONEYS NOT SUBORDINATED. Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article 8 by the Trustee 105 for the payment of principal of and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness of any Guarantor or subject to the restrictions set forth in this Article 12, and none of the Securityholders shall be obligated to pay over any such amount to any Guarantor or any holder of Senior Indebtedness of any Guarantor or any other creditor of any Guarantor. SECTION 12.12. TRUSTEE ENTITLED TO RELY. Upon any payment or distribution pursuant to this Article 12, the Trustee and the Securityholders shall be entitled to rely (1) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 12.02 are pending, (2) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Securityholders or (3) upon the Representatives for the holders of Senior Indebtedness of any Guarantor for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of such Senior Indebtedness and other Indebtedness of such Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 12. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of any Guarantor to participate in any payment or distribution pursuant to this Article 12, the Trustee shall be entitled to request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of such Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 12, and, if such evidence is not furnished, the Trustee shall be entitled to defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 12. SECTION 12.13. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Securityholder by accepting a Security authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Securityholders and the holders of Senior Indebtedness of the Guarantors as provided in this Article 12 and appoints 106 the Trustee as attorney-in-fact for any and all such purposes. SECTION 12.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF GUARANTOR. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of any Guarantor and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Securityholders or the Company or any other Person, money or assets to which any holders of such Senior Indebtedness shall be entitled by virtue of this Article 12 or otherwise. SECTION 12.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF THE GUARANTORS ON SUBORDINATION PROVISIONS. Each Securityholder by accepting a Security acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of the Guarantors, whether such Senior Indebtedness was created or acquired before or after the issuance of the Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. ARTICLE 13 MISCELLANEOUS SECTION 13.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 13.02. NOTICES. Any notice, request or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows: if to the Company or any Guarantor: United Surgical Partners Holdings, Inc. 17103 Preston Road Suite 200 North Dallas, Texas 75248 Attention: Chief Financial Officer 107 if to the Trustee: U.S. Trust Company of Texas, N.A. 2001 Ross Avenue, Suite 2700 Dallas, Texas 75201 Attention: Corporate Trust The Company, any Guarantor or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed to the Securityholder at the Securityholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 13.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, any Guarantor, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. 108 SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that the individual making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with. SECTION 13.06. WHEN SECURITIES DISREGARDED. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which a Trust Officer of the Trustee knows are so owned shall be so disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination. SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 13.08. LEGAL HOLIDAYS. A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York or the State of Texas. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day 109 that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. SECTION 13.09. GOVERNING LAW. This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 13.10. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder of the Company or any Guarantor shall have any liability for any obligations of the Company or any Guarantor under the Securities, any Guaranty or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. SECTION 13.11. SUCCESSORS. All agreements of the Company in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 13.12. MULTIPLE ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 13.13. TABLE OF CONTENTS; HEADINGS. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. UNITED SURGICAL PARTNERS HOLDINGS, INC. By: /s/ John J. Wellik ------------------------------------- Name: John J. Wellik ------------------------------------ Title: Secretary ----------------------------------- UNITED SURGICAL PARTNERS INTERNATIONAL, INC. USP CHANDLER, INC. USP WEST COVINA, INC. ORTHOLINK OF COLORADO, INC. MEDCENTER MANAGEMENT SERVICES, INC. MEDICAL DOCUMENTING SYSTEMS, INC. ORTHO EXCEL, INC. ORTHOLINK PHYSICIANS CORPORATION USP DOMESTIC HOLDINGS, INC. USP INTERNATIONAL HOLDINGS, INC. USP LONG ISLAND, INC. USP NORTH TEXAS, INC. USP SARASOTA, INC. USP WINTER PARK, INC. GEORGIA MUSCULOSKELETAL NETWORK, INC. ORTHOLINK/GEORGIA ASC, INC. ORTHOLINK/NEW MEXICO ASC, INC. USP NEW JERSEY, INC. NEUROSURGICAL ASSOCIATES, INC. SOUTHWEST SPINE CENTER, INC. USP LAS CRUCES, INC. USP NEVADA, INC. DAY-OP MANAGEMENT COMPANY, INC. USP MANHATTAN, INC. USP TENNESSEE, INC. HEALTH HORIZONS OF DECATUR, INC. HEALTH HORIZONS OF KANSAS CITY, INC. HEALTH HORIZONS OF MURFREESBORO, INC. HEALTH HORIZONS OF NASHVILLE, INC. ORTHOLINK ASC CORPORATION ORTHOLINK OCCUPATIONAL MEDICINE SERVICES CORPORATION ORTHOLINK SECURITIES CORPORATION ORTHOLINK/TN ASC, INC. S-1 TENNESSEE MUSCULOSKELETAL NETWORK, INC. TEXAS OUTPATIENT SURGICARE CENTER, INC. USP PASADENA, INC. USP SOUTH HOUSTON, INC. USP FREDERICKSBURG, INC. By: /s/ John J. Wellik ------------------------------------- Name: John J. Wellik ------------------------------------ Title: Vice President, Secretary and Treasurer ----------------------------------- DAY-OP SURGERY CONSULTING COMPANY, LLC By: USP Long Island, Inc., its sole member By: /s/ John J. Wellik ------------------------------------- Name: John J. Wellik ------------------------------------ Title: Vice President, Secretary and Treasurer ----------------------------------- NYCAS ADMINISTRATIVE SERVICES, LLC By: USP Manhattan, Inc., its sole member By: /s/ John J. Wellik ------------------------------------- Name: John J. Wellik ------------------------------------ Title: Vice President, Secretary and Treasurer ----------------------------------- USP NEVADA HOLDINGS, LLC By: USP North Texas, Inc., its sole member By: /s/ John J. Wellik ------------------------------------- Name: John J. Wellik ------------------------------------ Title: Vice President, Secretary and Treasurer ----------------------------------- S-2 USP TEXAS, L.P. By: USP North Texas, Inc., its general partner By: /s/ John J. Wellik ------------------------------------- Name: John J. Wellik ------------------------------------ Title: Vice President, Secretary and Treasurer ----------------------------------- U.S. TRUST COMPANY OF TEXAS, N.A. By: /s/ Richard B. Lindley -------------------------------------- Name: Richard B. Lindley ------------------------------------ Title: Vice President ----------------------------------- S-3 USP COAST, INC. By: /s/ John J. Wellik -------------------------------------- Name: John J. Wellik ------------------------------------ Title: Vice President and Secretary ----------------------------------- USP WESTWOOD, INC. By: /s/ John J. Wellik -------------------------------------- Name: John J. Wellik ------------------------------------ Title: Vice President and Secretary ----------------------------------- S-4 APPENDIX A PROVISIONS RELATING TO INITIAL SECURITIES, PRIVATE EXCHANGE SECURITIES AND EXCHANGE SECURITIES 1. DEFINITIONS 1.1 DEFINITIONS For the purposes of this Appendix A the following terms shall have the meanings indicated below: "APPLICABLE PROCEDURES" means, with respect to any transfer or transaction involving a Temporary Regulation S Global Security or beneficial interest therein, the rules and procedures of the Depository, Euroclear and Clearstream for such a Temporary Regulations S Global Security, in each case to the extent applicable to such transaction and as in effect from time to time. "CLEARING AGENCY" means Clearstream Banking, societe anonyme, or any successor securities clearing agency. "DEFINITIVE SECURITY" means a certificated Initial Security or Exchange Security or Private Exchange Security bearing, if required, the restricted securities legend set forth in Section 2.3(e). "DEPOSITORY" means The Depository Trust Company its nominees and their respective successors. "DISTRIBUTION COMPLIANCE PERIOD", with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of (i) the day on which such Securities are first offered to Persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the Issue Date with respect to such Securities. "EUROCLEAR" means Euroclear Bank S.A./N.V., as operator of the Euroclear System or any successor securities clearing agency. "EXCHANGE SECURITIES" means (1) the 10% Senior Subordinated Notes Due 2011 issued pursuant to the Indenture in connection with a Registered Exchange Offer A-2 pursuant to a Registration Rights Agreement and (2) Additional Securities, if any, issued pursuant to a registration statement filed with the SEC under the Securities Act. "INITIAL PURCHASERS" means (1) with respect to the Initial Securities issued on the Issue Date, Credit Suisse First Boston Corporation, Lehman Brothers, Inc. and SG Cowen Securities Corporation, and (2) with respect to each issuance of Additional Securities, the Persons purchasing such Additional Securities under the related Purchase Agreement. "INITIAL SECURITIES" means (1) $150,000,000 aggregate principal amount of 10% Senior Subordinated Notes Due 2011 issued on the Issue Date and (2) Additional Securities, if any, issued in a transaction exempt from the registration requirements of the Securities Act. "PRIVATE EXCHANGE" means the offer by the Company, pursuant to a Registration Rights Agreement, to the Initial Purchasers to issue and deliver to each Initial Purchaser, in exchange for the Initial Securities held by the Initial Purchaser as part of its initial distribution, a like aggregate principal amount of Private Exchange Securities. "PRIVATE EXCHANGE SECURITIES" means any 10% Senior Subordinated Notes Due 2011 issued in connection with a Private Exchange. "PURCHASE AGREEMENT" means (1) with respect to the Initial Securities issued on the Issue Date, the Purchase Agreement dated December 14, 2001, among the Company, the Guarantors and the Initial Purchasers, and (2) with respect to each issuance of Additional Securities, the purchase agreement or underwriting agreement among the Company and the Persons purchasing such Additional Securities. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "REGISTERED EXCHANGE OFFER" means the offer by the Company, pursuant to a Registration Rights Agreement, to certain Holders of Initial Securities, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of Exchange Securities registered under the Securities Act. A-3 "REGISTRATION RIGHTS AGREEMENT" means (1) with respect to the Initial Securities issued on the Issue Date, the Registration Rights Agreement dated December 19, 2001, among the Company, the Guarantors and the Initial Purchasers, and (2) with respect to each issuance of Additional Securities issued in a transaction exempt from the registration requirements of the Securities Act, the registration rights agreement, if any, among the Company and the Persons purchasing such Additional Securities under the related Purchase Agreement. "RULE 144A SECURITIES" means all Initial Securities offered and sold to QIBs in reliance on Rule 144A. "SECURITIES" means the Initial Securities, the Exchange Securities and the Private Exchange Securities, treated as a single class. "SECURITIES ACT" means the Securities Act of 1933. "SECURITIES CUSTODIAN" means the custodian with respect to a Global Security (as appointed by the Depository), or any successor Person thereto and shall initially be the Trustee. "SHELF REGISTRATION STATEMENT" means the registration statement issued by the Company in connection with the offer and sale of Initial Securities or Private Exchange Securities pursuant to a Registration Rights Agreement. "TRANSFER RESTRICTED SECURITIES" means Securities that bear or are required to bear the legend set forth in Section 2.3(e)hereto. 1.2 OTHER DEFINITIONS
Defined in Term Section: ---- ------- "Agent Members" 2.1(b) "Global Securities" 2.1(a) "Permanent Regulation S Global Security" 2.1(a) "Regulation S" 2.1(a) "Rule 144A" 2.1(a) "Rule 144A Global Security" 2.1(a) A-4 "Temporary Regulation S Global Security" 2.1(a)
2. THE SECURITIES. 2.1 FORM AND DATING. (a) The Initial Securities will be offered and sold by the Company, from time to time, pursuant to one or more Purchase Agreements. The Initial Securities will be resold initially only to QIBs in reliance on Rule 144A under the Securities Act ("RULE 144A") and in reliance on Regulation S under the Securities Act ("REGULATION S"). Initial Securities may thereafter be transferred to, among others, QIBs and purchasers in reliance on Regulation S, subject to the restrictions on transfer set forth herein. Initial Securities initially resold pursuant to Rule 144A shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form (collectively, the "RULE 144A GLOBAL SECURITY") and Initial Securities initially resold pursuant to Regulation S shall be issued initially in the form of one or more temporary global securities in definitive, fully registered form (collectively, the "TEMPORARY REGULATION S GLOBAL SECURITY"), in each case without interest coupons and with the global securities legend and restricted securities legend set forth in Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the Initial Securities represented thereby with the Securities Custodian, and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. Beneficial ownership interests in the Temporary Regulation S Global Security will not be exchangeable for interests in the Rule 144A Global Security, a permanent global security (the "PERMANENT REGULATION S GLOBAL SECURITY"), or any other Security without a legend containing restrictions on transfer of such Security prior to the expiration of the Distribution Compliance Period and then only upon certification in form reasonably satisfactory to the Trustee that beneficial ownership interests in such Temporary Regulation S Global Security are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require registration under the Securities Act. The Rule 144A Global Security, the Temporary Regulation S Global Security and the Permanent Regulation S Global Security are collectively referred to herein as "GLOBAL SECURITIES." The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments A-5 made on the records of the Trustee and the Depository or its nominee as hereinafter provided. (b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the Depository. The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depository for such Global Security or Global Securities or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository's instructions or held by the Trustee as custodian for the Depository. Members of, or participants in, the Depository ("AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository or by the Trustee as the custodian of the Depository or under such Global Security, and the Company, the Trustee and any agent of the Company or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Security. (c) CERTIFICATED SECURITIES. Except as provided in this Section 2.1, Section 2.3 or 2.4, owners of beneficial interests in Global Securities shall not be entitled to receive physical delivery of Definitive Securities. 2.2 AUTHENTICATION. The Trustee shall authenticate and deliver: (1) on the Issue Date, an aggregate principal amount of $150,000,000 10% Senior Subordinated Notes Due 2011, (2) any Additional Securities for an original issue in an aggregate principal amount specified in the written order of the Company pursuant to Section 2.02 of the Indenture and (3) Exchange Securities or Private Exchange Securities for issue only in a Registered Exchange Offer or a Private Exchange, respectively, pursuant to a Registration Rights Agreement, A-6 for a like principal amount of Initial Securities, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and, in the case of any issuance of Additional Securities pursuant to Section 2.13 of the Indenture, shall certify that such issuance is in compliance with Section 4.03 of the Indenture. 2.3 TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When Definitive Securities are presented to the Registrar or a co-registrar with a request: (x) to register the transfer of such Definitive Securities; or (y) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations, the Registrar or co-registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; PROVIDED, HOWEVER, that the Definitive Securities surrendered for transfer or exchange: (i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar or co-registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and (ii) if such Definitive Securities are required to bear a restricted securities legend, they are being transferred or exchanged pursuant to an effective registration statement under the Securities Act, pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable: (A) if such Definitive Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; A-7 (B) if such Definitive Securities are being transferred to the Company, a certification to that effect; or (C) if such Definitive Securities are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144A, Regulation S or Rule 144 under the Securities Act; or (y) in reliance upon another exemption from the requirements of the Securities Act: (i) a certification to that effect (in the form set forth on the reverse of the Security) and (ii) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i). (b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be exchanged for a beneficial interest in a Rule 144A Global Security or a Permanent Regulation S Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with: (i) certification, in the form set forth on the reverse of the Security, that such Definitive Security is either (A) being transferred to a QIB in accordance with Rule 144A or (B) is being transferred after expiration of the Distribution Compliance Period by a Person who initially purchased such Security in reliance on Regulation S to a buyer who elects to hold its interest in such Security in the form of a beneficial interest in the Permanent Regulation S Global Security; and (ii) written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an adjustment on its books and records with respect to such Rule 144A Global Security (in the case of a transfer pursuant to clause (b)(i)(A)) or Permanent Regulation S Security (in the case of a transfer pursuant to clause (b)(i)(B)) to reflect an increase in the aggregate principal amount of the Securities represented by the Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, such instructions to contain information A-8 regarding the Depositary account to be credited with such increase; then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Securities Custodian, the aggregate principal amount of Securities represented by the Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, to be increased by the aggregate principal amount of the Definitive Security to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, equal to the principal amount of the Definitive Security so canceled. If no Rule 144A Global Securities or Permanent Regulation S Global Securities, as applicable, are then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, in the appropriate principal amount. (c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. (i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository therefor. A transferor of a beneficial interest in a Global Security shall deliver to the Registrar a written order given in accordance with the Depository's procedures containing information regarding the participant account of the Depository to be credited with a beneficial interest in the Global Security. The Registrar shall, in accordance with such instructions instruct the Depositary to credit to the account of the Person specified in such instructions a beneficial interest in the Global Security and to debit the account of the Person making the transfer the beneficial interest in the Global Security being transferred. (ii) If the proposed transfer is a transfer of a beneficial interest in one Global Security to a beneficial interest in another Global Security, the Registrar shall reflect on its books and records the A-9 date and an increase in the principal amount of the Global Security to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Security from which such interest is being transferred. (iii) Notwithstanding any other provisions of this Appendix A (other than the provisions set forth in Section 2.4), a Global Security may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (iv) In the event that a Global Security is exchanged for Definitive Securities pursuant to Section 2.4 of this Appendix A, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Securities intended to ensure that such transfers comply with Rule 144A or Regulation S, as the case may be) and such other procedures as may from time to time be adopted by the Company. (d) RESTRICTIONS ON TRANSFER OF TEMPORARY REGULATION S GLOBAL SECURITIES. During the Distribution Compliance Period, beneficial ownership interests in Temporary Regulation S Global Securities may only be sold, pledged or transferred through Euroclear or Clearstream in accordance with the Applicable Procedures and only (i) to the Company, (ii) so long as such Security is eligible for resale pursuant to Rule 144A, to a Person whom the selling holder reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, (iii) in an offshore transaction in accordance with Regulation S, (iv) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if applicable) under the Securities Act or (v) pursuant to an effective registration statement under A-10 the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. (e) LEGEND. (i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each Security certificate evidencing the Global Securities and the Definitive Securities (and all Securities issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form: THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. Each Definitive Security will also bear the following additional legend: IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH A-11 CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act, the Registrar shall permit the transferee thereof to exchange such Transfer Restricted Security for a certificated Security that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Security). (iii) After a transfer of any Initial Securities or Private Exchange Securities pursuant to and during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Securities or Private Exchange Securities, as the case may be, all requirements pertaining to legends on such Initial Security or such Private Exchange Security will cease to apply, the requirements requiring any such Initial Security or such Private Exchange Security issued to certain Holders be issued in global form will cease to apply, and a certificated Initial Security or Private Exchange Security or an Initial Security or Private Exchange Security in global form, in each case without restrictive transfer legends, will be available to the transferee of the Holder of such Initial Securities or Private Exchange Securities upon exchange of such transferring Holder's certificated Initial Security or Private Exchange Security or directions to transfer such Holder's interest in the Global Security, as applicable. (iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Securities that do not exchange their Initial Securities, and Exchange Securities in certificated or global form will be available to Holders that exchange such Initial Securities in such Registered Exchange Offer. A-12 (v) Upon the consummation of a Private Exchange with respect to the Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Securities that do not exchange their Initial Securities, and Private Exchange Securities in global form with the global securities legend and the Restricted Securities Legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such Private Exchange. (f) CANCELLATION OR ADJUSTMENT OF GLOBAL SECURITY. At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, redeemed, purchased or canceled, such Global Security shall be returned to the Depository for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for certificated Securities, redeemed, purchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction. (g) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF SECURITIES. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Definitive Securities and Global Securities at the Registrar's or co-registrar's request. (ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06, 4.02 and 9.05 of the Indenture). (iii) The Registrar or co-registrar shall not be required to register the transfer of or exchange of A-13 (a) any Definitive Security selected for redemption in whole or in part pursuant to Article 3 of this Indenture, except the unredeemed portion of any Definitive Security being redeemed in part, or (b) any Security for a period beginning 15 days before the mailing of a notice of an offer to repurchase or redeem Securities or 15 days before an interest payment date. (iv) Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the Person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary. (v) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange. A-14 (h) NO OBLIGATION OF THE TRUSTEE. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. 2.4 DEFINITIVE SECURITIES. (a) A Global Security deposited with the Depository or with the Trustee as Securities Custodian for the Depository pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Securities in an aggregate principal amount equal to the principal amount of such Global Security, in exchange for A-15 such Global Security, only if such transfer complies with Section 2.3 and (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for such Global Security or if at any time such Depository ceases to be a "clearing agency" registered under the Exchange Act and a successor Depositary is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Securities under this Indenture. (b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section shall be surrendered by the Depository to the Trustee located at its principal corporate trust office in the Borough of Manhattan, The City of New York, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations. Any portion of a Global Security transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 principal amount and any integral multiple thereof and registered in such names as the Depository shall direct. Any Definitive Security delivered in exchange for an interest in a Transfer Restricted Security shall, except as otherwise provided by Section 2.3(e), bear the restricted securities legend set forth in Exhibit 1 hereto. (c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Security shall be entitled to grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. (d) In the event of the occurrence of one of the events specified in Section 2.4(a), the Company shall promptly make available to the Trustee a reasonable supply of Definitive Securities in definitive, fully registered form without interest coupons. EXHIBIT 1 to APPENDIX A [FORM OF FACE OF INITIAL SECURITY] [Global Securities Legend] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. [Restricted Securities Legend] THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) 2 OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. [Temporary Regulation S Global Security Legend] BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE RULE 144A GLOBAL SECURITY OR THE PERMANENT REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY REPRESENTING AN INTEREST IN THE SECURITIES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE "40-DAY DISTRIBUTION COMPLIANCE PERIOD" (WITHIN THE MEANING OF RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED THROUGH EUROCLEAR BANK S.A./N.A., AS OPERATOR OF THE EUROCLEAR SYSTEM OR CLEARSTREAM BANKING, SOCIETE ANONYME AND ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE UNITED SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOTIFY ANY PURCHASER OF SUCH RESALE RESTRICTIONS, IF THEN APPLICABLE. [Definitive Securities Legend] 3 IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. No. $ ------------- --------- CUSIP No. --------- ISIN No. _ ---------- 10% Senior Subordinated Notes Due 2011 UNITED SURGICAL PARTNERS HOLDINGS, INC., a Delaware corporation, promises to pay to CEDE & CO., or registered assigns, the principal sum of ________ Dollars on December 15, 2011. Interest Payment Dates: June 15 and December 15, commencing June 15, 2002. Record Dates: June 1 and December 1. Additional provisions of this Security are set forth on the other side of this Security. Dated: __________, 20__ UNITED SURGICAL PARTNERS HOLDINGS, INC. By: --------------------- Name: -------------------- Title: ------------------- By: --------------------- Name: -------------------- Title: ------------------- 4 TRUSTEE'S CERTIFICATE OF AUTHENTICATION U.S. TRUST COMPANY OF TEXAS, N.A. as Trustee, certifies that this is one of the Securities referred to in the Indenture. By: ---------------------------- Authorized Signatory 5 [FORM OF REVERSE SIDE OF INITIAL SECURITY] 10% Senior Subordinated Note Due 2011 1. INTEREST UNITED SURGICAL PARTNERS HOLDINGS, INC., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "COMPANY"), promises to pay interest on the principal amount of this Security at the rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate specified in the Registration Rights Agreement. The Company will pay interest semiannually on June 15 and December 15 of each year, commencing June 15, 2002. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from [INSERT DATE OF ISSUANCE.] Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 1 or December 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire 6 transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. PAYING AGENT AND REGISTRAR Initially, U.S. Trust Company of Texas, N.A. (the "TRUSTEE"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of December 19, 2001 (as such may be amended or supplemented from time to time, "INDENTURE"), among the Company, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "ACT"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general unsecured obligations of the Company. The Company shall be entitled, subject to its compliance with Section 4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in exchange therefor will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the ability of the Company, Parent and their subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; issue or sell capital stock of subsidiaries; engage in transactions with affiliates; create liens on assets; transfer or sell assets; restrict dividends or other payments of subsidiaries; and consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries. These 7 covenants are subject to important exceptions and qualifications. 5. OPTIONAL REDEMPTION Except as set forth below, the Company shall not be entitled to redeem the Securities at its option prior to December 15, 2006. On and after December 15, 2006, the Company shall be entitled at its option to redeem all or a portion of the Securities upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued and unpaid interest thereon, 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 12-month period commencing on December 15 of the years set forth below:
Period Redemption ------ Price ---------- 2006 105.000% 2007 103.333% 2008 101.667% 2009 100.000% 2010 100.000%
In addition, prior to December 15, 2004, the Company shall be entitled at its option on one or more occasions to redeem Securities (which includes Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities (which includes Additional Securities, if any) issued prior to such date at a redemption price (expressed as a percentage of principal amount) of 110.00%, plus accrued and unpaid interest to the redemption date, with the Net Cash Proceeds from one or more Qualified Equity Offerings; PROVIDED, HOWEVER, that (1) at least 65% of such aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding immediately after the occurrence of each such redemption (other than Securities held, directly or indirectly, by the Company or its Affiliates); and (2) each such redemption occurs within 90 days after the date of the related Qualified Equity Offering. 8 Pending the application of the Net Cash Proceeds of any Qualified Equity Offering to redeem Securities in accordance with the provisions of this paragraph, Parent or its Restricted Subsidiaries may temporarily repay Senior Indebtedness of the Company or any Domestic Guarantor with those Net Cash Proceeds. The Company shall be entitled, at its option, at any time as a whole prior to December 15, 2006, to redeem the Securities (which includes the Additional Securities, if any) at a redemption price equal to the sum of: (1) the principal amount thereof, plus (2) accrued and unpaid interest, if any, to the redemption date, plus (3) the Applicable Premium at the redemption date. "APPLICABLE PREMIUM" means, with respect to any Security on any redemption date, the greater of (1) 1.0% of the principal amount of such Security and (2) the excess of (a) the present value at such redemption date of (i) the redemption price of such Security at December 15, 2006 plus (ii) all required interest payments due on such Security through December 15, 2006 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate on such redemption date plus 50 basis points, over (b) the principal amount of such Security. "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 December 15, 2006; PROVIDED, HOWEVER, that if the period from the redemption date to December 15, 2006 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, then the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the redemption date to December 15, 2006 is less than one year, the weekly average yield on 9 actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. 6. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at the Holder's registered address. Securities in denominations of $1,000 principal amount or less may be redeemed in whole and not in part. Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 7. PUT PROVISIONS Upon a Change of Control (as defined in Section 4.02 of the Indenture), each Holder will have the right to require that the Company purchase such Holder's Securities at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture. Under certain circumstances as set forth in the Indenture, the Company will be required to offer to purchase Securities with the Net Available Cash from Asset Dispositions. 8. SUBORDINATION The Securities are subordinated to Senior Indebtedness of the Company, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness of the Company must be paid before the Securities may be paid. The Company agrees, and each Securityholder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose. 10 9. GUARANTY The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior subordinated basis by each of the Guarantors. 10. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before the mailing of a notice of redemption of Securities to be redeemed or 15 days before an interest payment date. 11. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the Security's owner for all purposes. 12. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 13. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 11 14. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture and the Securities may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee shall be entitled to amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, to comply with Article 5 of the Indenture, to provide for uncertificated Securities in addition to or in place of certificated Securities, to add guarantees with respect to the Securities, including Guaranties, to secure the Securities, to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder in any material respect or to evidence the release of a Guarantor. 15. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default in payment of interest on the Securities, continued for 30 days; (ii) default in payment of principal on the Securities at maturity, upon optional redemption pursuant to paragraph 5 of the Securities, upon declaration of acceleration or otherwise, or failure by the Company to redeem or purchase Securities when required; (iii) failure by the Company or any Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company, any Guarantor or any Significant Subsidiary if the amount accelerated (or so unpaid) exceeds $10 million; (v) certain events of bankruptcy or insolvency with respect to the Company, any Guarantor and the Significant Subsidiaries; (vi) certain judgments or decrees for the payment of money in excess of $10 million; and (vii) certain defaults with respect to Guaranties. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and 12 payable by notice in writing to the Company and the Trustee, and upon such declaration the Securities will be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 16. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 17. NO RECOURSE AGAINST OTHERS No director, officer, employee, incorporator or stockholder of the Company or any Guarantor or the Trustee shall have any liability for any obligations of the Company or any Guarantor under the Securities, any Guaranty or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 18. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 13 19. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 20. CUSIP NUMBERS Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers and corresponding ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and corresponding ISINs in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT. Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein. 22. GOVERNING LAW. THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: UNITED SURGICAL PARTNERS HOLDINGS, INC. 17103 PRESTON ROAD SUITE 200 NORTH DALLAS, TEXAS 75248 ATTENTION: INVESTOR RELATIONS 14 -------------------------------------------------------------------------------- ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint _______________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. -------------------------------------------------------------------------------- Date: Your Signature: ---------------- ----------------------------------------- -------------------------------------------------------------------------------- Sign exactly as your name appears on the other side of this Security. In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act of 1933, as amended (the "SECURITIES ACT"), after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) / / to the Company; or (2) / / in the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in 15 each case pursuant to and in compliance with Rule 144A under the Securities Act; or (3) / / outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act; or (4) / / pursuant to the exemption from registration provided by Rule 144 under the Securities Act; or (5) / / pursuant to an effective registration statement under the Securities Act. If such transfer is being made pursuant to an offshore transaction in accordance with Rule 904 under the Securities Act, the undersigned further certifies that: (i) the offer of the Securities was not made to a person in the United States; (ii) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (iii) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903 or Rule 904 of Regulation S, as applicable; (iv) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; (v) we have advised the transferee of the transfer restrictions applicable to the Securities; and (vi) if the circumstances set forth in Rule 904(B) under the Securities Act, are applicable, we have complied with the additional conditions therein, including (if applicable) sending a confirmation or other notice stating that the Securities may be 16 offered and sold during the distribution compliance period specified in Rule 903 of Regulation S; pursuant to registration of the Securities under the Securities Act; or pursuant to an available exemption from the registration requirements under the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; PROVIDED, HOWEVER, that if box (3) or (4) is checked, the Trustee shall be entitled to require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act such as the exemption provided by Rule 144 under such Act. ------------------------ Signature Signature Guarantee: ---------------------------- ------------------------- Signature must be guaranteed Signature Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. -------------------------------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED. 17 The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ----------- ----------------------------- NOTICE: To be executed by an executive officer 18 [TO BE ATTACHED TO GLOBAL SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made:
Date of Amount of decrease Amount of increase in Principal amount of this Signature of authorized Exchange in Principal amount Principal amount of Global Security officer of Trustee or of this Global this Global Security following such decrease Securities Custodian Security or increase
19 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.02 or 4.07 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.02 or 4.07 of the Indenture, state the amount in principal amount: $o Date: Your Signature --------------- ---------------------- (Sign exactly as your name appears on the other side of this Security.) Signature Guarantee: --------------------------------------- (Signature must be guaranteed) Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. EXHIBIT A [FORM OF FACE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY]*/**/ No. $ ------------- --------- CUSIP No. --------- ISIN No. --------- 10% Senior Subordinated Notes Due 2011 UNITED SURGICAL PARTNERS HOLDINGS, INC., a Delaware corporation, promises to pay to __________, or registered assigns, the principal sum of ________ Dollars on December 15, 2011. Interest Payment Dates: June 15 and December 15, commencing June 15, 2001. Record Dates: June 1 and December 1. Additional provisions of this Security are set forth on the other side of this Security. Dated: __________, 20___ UNITED SURGICAL PARTNERS HOLDINGS, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- TRUSTEE'S CERTIFICATE OF AUTHENTICATION U.S. TRUST COMPANY OF TEXAS, N.A., as Trustee, certifies that this is one of the Securities referred to in the Indenture. By: ----------------------------- Authorized Signatory */If the Security is to be issued in global form add the Global Securities Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1 captioned "TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY". **/If the Security is a Private Exchange Security issued in a Private Exchange to an Initial Purchaser holding an unsold portion of its initial allotment, add the Restricted Securities Legend from Exhibit 1 to Appendix A and replace the Assignment Form included in this Exhibit A with the Assignment Form included in such Exhibit 1. [FORM OF REVERSE SIDE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY] 10% Senior Subordinated Note Due 2011 1. INTEREST United Surgical Partners Holdings, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "COMPANY"), promises to pay interest on the principal amount of this Security at the rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate specified in the Registration Rights Agreement. The Company will pay interest semiannually on June 15 and December 15 of each year, commencing June 15, 2002. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from [INSERT LAST INTEREST PAYMENT DATE ON WHICH INTEREST WAS PAID ON THE INITIAL SECURITIES OR, IF NO INTEREST HAS BEEN PAID ON THE INITIAL SECURITIES, INSERT THE DATE OF ORIGINAL ISSUANCE OF THE INITIAL SECURITIES.] Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2 2. METHOD OF PAYMENT The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the June 1 or December 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. PAYING AGENT AND REGISTRAR Initially, U.S. Trust Company of Texas, N.A., (the "TRUSTEE"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture dated as of December 19, 2001 (as such may be amended or supplemented from time to time, "INDENTURE"), among the Company, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect 3 on the date of the Indenture (the "ACT"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general unsecured obligations of the Company. The Company shall be entitled, subject to its compliance with Section 4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in exchange therefor will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the ability of the Company, Parent and their subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; issue or sell capital stock of subsidiaries; engage in transactions with affiliates; create liens on assets; transfer or sell assets; restrict dividends or other payments of subsidiaries; and consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries. These covenants are subject to important exceptions and qualifications. 5. OPTIONAL REDEMPTION Except as set forth below, the Company shall not be entitled to redeem the Securities at its option prior to December 15, 2006. On and after December 15, 2006, the Company shall be entitled at its option to redeem all or a portion of the Securities upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued and unpaid interest thereon, 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 12-month period commencing on December 15 of the years set forth below: 4
PERIOD Redemption ------ PRICE ---------- 2006 105.000% 2007 103.333% 2008 101.667% 2009 100.000% 2010 100.000%
In addition, prior to December 15, 2004, the Company shall be entitled at its option on one or more occasions to redeem Securities (which includes Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities (which includes Additional Securities, if any) issued prior to the redemption date at a redemption price (expressed as a percentage of principal amount) of 110.00%, plus accrued and unpaid interest to the redemption date, with the net cash proceeds from one or more Qualified Equity Offerings; PROVIDED, HOWEVER, that (1) at least 65% of such aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding immediately after the occurrence of each such redemption (other than Securities held, directly or indirectly, by the Company or its Affiliates); and (2) each such redemption occurs within 90 days after the date of the related Qualified Equity Offering. Pending the application of the Net Cash Proceeds of any Qualified Equity Offering to redeem Securities in accordance with the provisions of this paragraph, Parent or its Restricted Subsidiaries may temporarily repay Senior Indebtedness of the Company or any Domestic Guarantor with those Net Cash Proceeds. The Company shall be entitled, at its option, at any time as a whole prior to December 15, 2006, to redeem the Securities (which includes the Additional Securities, if any) at a redemption price equal to the sum of: (1) the principal amount thereof, PLUS (2) accrued and unpaid interest, if any, to the redemption date, PLUS (3) the Applicable Premium at the redemption date. "APPLICABLE PREMIUM" means, with respect to any Security on any redemption date, the greater of (1) 1.0% of 5 the principal amount of such Security and (2) the excess of (a) the present value at such redemption date of (i) the redemption price of such Security at December 15, 2006 plus (ii) all required interest payments due on such Security through December 15, 2006 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate on such redemption date plus 50 basis points, over (b) the principal amount of such Security. "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 December 15, 2006; PROVIDED, HOWEVER, that if the period from the redemption date to December 15, 2006 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, then the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the redemption date to December 15, 2006 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. 6. NOTICE OF REDEMPTION Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at the Holder's registered address. Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 6 7. PUT PROVISIONS Upon a Change of Control (as defined in Section 4.02 of the Indenture), each Holder will have the right to require that the Company purchase such Holder's Securities at a purchase price equal to 101% of the principal amount of the Securities to be purchased plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture. Under certain circumstances as set forth in the Indenture, the Company will be required to offer to purchase Securities with the Net Available Cash from Asset Dispositions. 8. SUBORDINATION The Securities are subordinated to Senior Indebtedness of the Company, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness of the Company must be paid before the Securities may be paid. The Company agrees, and each Securityholder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose. 9. GUARANTY The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior subordinated basis by each of the Guarantors. 10. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before 7 the mailing of a notice of redemption of Securities to be redeemed or 15 days before an interest payment date. 11. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the Security's owner for all purposes. 12. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 13. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 14. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture and the Securities may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee shall be entitled to amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, to comply with Article 5 of the Indenture, to provide for uncertificated Securities in addition to or in place of certificated Securities, to add guarantees with respect to the Securities, including Guaranties, or to secure the Securities, to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any 8 change that does not adversely affect the rights of any Securityholder in any material respect or to evidence the release of a Guarantor. 15. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default in payment of interest on the Securities continued for 30 days; (ii) default in payment of principal on the Securities at maturity, upon optional redemption pursuant to paragraph 5 of the Securities, upon declaration of acceleration or otherwise, or failure by the Company to redeem or purchase Securities when required; (iii) failure by the Company, or any Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company, any Guarantor or any Significant Subsidiary if the amount accelerated (or so unpaid) exceeds $10 million; (v) certain events of bankruptcy or insolvency with respect to the Company, any Guarantor and the Significant Subsidiaries; (vi) certain judgments or decrees for the payment of money in excess of $10 million; and (vii) certain defaults with respect to Guaranties. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable by notice in writing to the Company and the Trustee, and upon such declaration the Securities will be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 9 16. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 17. NO RECOURSE AGAINST OTHERS No director, officer, employee, incorporator or stockholder of the Company or any Guarantor or the Trustee shall have any liability for any obligations of the Company or any Guarantor under the Securities, any Guaranty or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 18. AUTHENTICATION This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 19. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 20. CUSIP NUMBERS Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers and corresponding ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and corresponding ISINs in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any 10 notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 21. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT. Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein. 22. GOVERNING LAW. THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: UNITED SURGICAL PARTNERS HOLDINGS, INC. 17103 PRESTON ROAD SUITE 200 NORTH DALLAS, TEXAS 75248 ATTENTION: INVESTOR RELATIONS 11 -------------------------------------------------------------------------------- ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint _________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. -------------------------------------------------------------------------------- Date: Your Signature: ---------------------------- ------------------------- -------------------------------------------------------------------------------- Sign exactly as your name appears on the other side of this Security. OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.02 or 4.07 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.02 or 4.07 of the Indenture, state the amount in principal amount: $ - Date: Your Signature: --------------- ------------------------------------ (Sign exactly as your name appears on the other side of this Security.) Signature Guarantee: ---------------------------------------------------------- (Signature must be guaranteed) Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.