Short Term Credit Agreement - HealthSouth Corp. and NationsBank NA


                            AMENDMENT AGREEMENT NO. 1
                         TO SHORT TERM CREDIT AGREEMENT

         THIS  AMENDMENT  AGREEMENT  (this  'Amendment  Agreement')  is made and
entered into as of this 17th day of  February,  1999,  by and among  HEALTHSOUTH
CORPORATION, a Delaware corporation (herein called the 'Borrower'),  NATIONSBANK
N. A. (the 'Agent'), as Agent for the lenders (the 'Lenders') party to the Short
Term Credit Agreement dated September 28, 1998,  among the Lender,  Borrower and
the Agent (the 'Agreement') and the Lender whose name is subscribed hereto.

                              W I T N E S S E T H:

         WHEREAS,  the Borrower,  the Agent and the Lender have entered into the
Agreement  pursuant to which the Lender has agreed to make short term  revolving
loans to the Borrower in the aggregate principal amount of up to $500,000,000 as
evidenced  by the Notes (as defined in the  Agreement)  and to issue  Letters of
Credit for the benefit of the Borrower; and

         WHEREAS,  the Borrower has  requested  that the Agreement be amended by
extending the Stated  Termination  Date and the Agent and the Lender has agreed,
subject to the terms and conditions hereof, to make such amendment,  as provided
herein;

         NOW, THEREFORE,  the Borrower, the Agent and the Lender do hereby agree
as follows:

         1.  Definitions.  The term  'Agreement'  as used herein and in the Loan
Documents (as defined in the Agreement)  shall mean the Agreement as hereinafter
amended and  modified.  Unless the context  otherwise  requires,  all terms used
herein without  definition  shall have the definition  provided  therefor in the
Agreement.

         2. Amendment. Subject to the conditions set forth herein, the Agreement
is hereby amended, effective as of the date hereof, as follows:

                  (a)  The  following   definitions  are  hereby  inserted  into
                       Section 1.1:

                           'Debt   Offering'   means  the   incurrence   of  any
                  Indebtedness  for  Money  Borrowed   permitted   hereunder  in
                  connection with a public offering or private placement of debt
                  securities of the Borrower.

                           'Net  Proceeds'  means cash payments  received by the
                  Borrower from any Debt Offering as and when  received,  net of
                  all  legal,  accounting,  banking  and  underwriting  fees and
                  expenses,  commissions,  discounts and other issuance expenses
                  incurred in connection  therewith and all taxes required to be
                  paid or accrued as a consequence of such Debt Offering.


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                  (b) The  following  definitions  are  hereby  amended in their
         entirety so that as amended they read as follows:

                           'Stated  Termination Date' means the earlier to occur
                  of (i) February 16, 2000 and (ii) the date when cumulative Net
                  Proceeds from Debt  Offerings  over the life of the Short Term
                  Credit Facility equals $500,000,000.

                           'Total   Short  Term  Credit   Commitment'   means  a
                  principal  amount equal to the difference of (a)  $500,000,000
                  less (b) any amount  required  to be paid  pursuant to Section
                  2.3(b) hereof.

                  (c) The letter  '(a)'  shall be inserted in front of the first
         paragraph of Section 2.3 and a new Section 2.3(b) is hereby inserted at
         the end of Section 2.3 to read as follows:

                           '(b) The Borrower  shall make a  prepayment  from the
                  Net  Proceeds of any Debt  Offering in an amount  equal to one
                  hundred  percent  (100%)  of  such  Net  Proceeds.  Each  such
                  prepayment  shall  permanently  reduce  the Total  Short  Term
                  Credit  Commitment  and shall be made within five (5) business
                  days of  receipt of such Net  Proceeds  and upon not less than
                  five (5) business  days written  notice to the Agent and shall
                  include a certificate of an Authorized  Representative setting
                  forth  in  reasonable  detail  the  calculations  utilized  in
                  computing the amount of Net Proceeds.'

         3.  Representations and Warranties.  The Borrower hereby represents and
warrants that:

                  (a) The  representations  and  warranties  made by Borrower in
         Article VI of the Agreement are true on and as of the date hereof;

                  (b)  There  has  been  no  material   adverse  change  in  the
         condition, financial or otherwise, of the Borrower and its Consolidated
         Entities  since the date of the most  recent  financial  reports of the
         Borrower  received by each Lender under  Section 7.1 of the  Agreement,
         other than  changes in the ordinary  course of business,  none of which
         has had a Material Adverse Effect;

                  (c)  The  business  and  properties  of the  Borrower  and its
         Consolidated  Entities are not and have not been adversely  affected in
         any substantial way as the result of any fire,  explosion,  earthquake,
         accident,  strike,  lockout,  combination of workers,  flood,  embargo,
         riot,  activities  of armed  forces,  war or acts of God or the  public
         enemy, or cancellation or loss of any major contracts; and


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                  (d) No event has occurred and no condition exists which,  upon
         the consummation of the transaction contemplated hereby,  constitutes a
         Default or an Event of Default  on the part of the  Borrower  under the
         Agreement,  the Notes or any other Loan Document either  immediately or
         with the lapse of time or the giving of notice, or both.

         5. Conditions. This Amendment Agreement shall become effective upon the
Borrower delivering to the Agent of the following:

                  (a) Four (4)  counterparts  of this  Amendment  Agreement duly
         executed  by the  Borrower  and  receipt  by the  Agent of all fees and
         expenses due in connection with this Amendment Agreement; and

                  (b) Such  other  documents  and  instruments  as the Agent may
         reasonably require.

         6. Entire  Agreement.  This  Amendment  Agreement sets forth the entire
understanding  and  agreement  of the parties  hereto in relation to the subject
matter hereof and supersedes  any prior  negotiations  and agreements  among the
parties relative to such subject matter. No promise, conditions,  representation
or  warranty,  express or  implied,  not  herein set forth  shall bind any party
hereto,  and no  one  of  them  has  relied  on  any  such  promise,  condition,
representation or warranty. Each of the parties hereto acknowledges that, except
as in this Amendment  Agreement  otherwise expressly stated, no representations,
warranties or commitments, express or implied, have been made by any other party
to the other. None of the terms or conditions of this Amendment Agreement may be
changed, modified, waived or canceled orally or otherwise, except by writing, in
the manner  provided in the  Agreement,  specifying  such change,  modification,
waiver or  cancellation  of such terms or  conditions,  or of any  proceeding or
succeeding breach thereof.

         7. Full Force and Effect of  Agreement.  Except as hereby  specifically
amended,  modified  or  supplemented,  the  Agreement  and all of the other Loan
Documents are hereby  confirmed and ratified in all respects and shall remain in
full force and effect according to their respective terms.

                  [Remainder of page intentionally left blank.]


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

                                      BORROWER:

                                      HEALTHSOUTH CORPORATION

                                      By: /s/ Leif Murphy
                                          -----------------------
                                      Name:  Leif Murphy
                                             --------------------
                                      Title: V.P. Finance
                                             ----------------------



                                      NATIONSBANK, N. A.,
                                      as Agent for the Lenders

                                      By: /s/ Philip Durand
                                          -----------------------
                                      Name: Philip S. Durand
                                             --------------------
                                      Title: V.P.
                                             --------------------



                                      NATIONSBANK, N. A.,
                                      as sole Lender

                                      By: /s/ Philip Durand
                                          -----------------------
                                      Name: Philip S. Durand
                                             --------------------
                                      Title: V.P.
                                             --------------------

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