Registration Rights Agreement - HealthSouth Corp., UBS Warburg LLC, Deutsche Banc Alex. Brown Inc., Chase Securities Inc., First Union Securities Inc. and Scotia Capital (USA) Inc.


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                          REGISTRATION RIGHTS AGREEMENT

                          Dated as of February 1, 2001

                                  By and Among

                            HEALTHSOUTH CORPORATION,
                                   as Issuer,

                                       and

                                UBS WARBURG LLC,
                         DEUTSCHE BANC ALEX. BROWN INC.,
                             CHASE SECURITIES INC.,
                          FIRST UNION SECURITIES, INC.,
                                       and
                            SCOTIA CAPITAL (USA) INC.
                              as Initial Purchasers

                          8 1/2% Senior Notes due 2008





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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

1.       Definitions...........................................................1

2.       Exchange Offer........................................................4

3.       Shelf Registration....................................................7

4.       Additional Interest...................................................8

5.       Registration Procedures..............................................10

6.       Registration Expenses................................................18

7.       Indemnification......................................................18

8.       Rules 144 and 144A...................................................21

9.       Underwritten Registrations...........................................22

10.      Miscellaneous........................................................22

         (a)      No Inconsistent Agreements..................................22
         (b)      Adjustments Affecting Registrable Notes.....................22
         (c)      Amendments and Waivers......................................22
         (d)      Notices.....................................................23
         (e)      Successors and Assigns......................................23
         (f)      Counterparts................................................24
         (g)      Headings................................................... 24
         (H)      GOVERNING LAW...............................................24
         (i)      Severability................................................24
         (j)      Securities Held by the Issuer or Its Affiliates.............24
         (k)      Third Party Beneficiaries...................................24
         (l)      Attorneys' Fees.............................................24
         (m)      Entire Agreement............................................24
  
                                       -i-


                          REGISTRATION RIGHTS AGREEMENT


                  This Registration Rights Agreement (this "Agreement") is dated
as of  February  1,  2001,  by and among  HEALTHSOUTH  Corporation,  a  Delaware
corporation (the "Issuer"),  on the one hand, and UBS WARBURG LLC, DEUTSCHE BANC
ALEX. BROWN INC., CHASE SECURITIES INC., FIRST UNION SECURITIES, INC. and SCOTIA
CAPITAL (USA) INC. (collectively, the "Initial Purchasers"), on the other hand.


                  This Agreement is entered into in connection with the Purchase
Agreement,  dated as of January  25,  2001,  among the  Issuer  and the  Initial
Purchasers (the "Purchase  Agreement"),  relating to the $375,000,000  aggregate
principal  amount of the Issuer's 8 1/2% Senior  Notes due 2008  (the  "Notes").
The  execution  and  delivery of this  Agreement  is a condition  to the Initial
Purchasers' obligation to purchase the Notes under the Purchase Agreement.

                  The parties hereby agree as follows:

         Section 1. Definitions

                  As used in this Agreement,  the following terms shall have the
following meanings:

                  "Additional  Interest"  shall  have the  meaning  set forth in
Section 4(a) hereof.

                  "Advice"  shall  have  the  meaning  set  forth  in the  final
paragraph of Section 5 hereof.

                  "Agreement"   shall  have  the   meaning   set  forth  in  the
introductory paragraph hereto.

                  "Applicable  Period"  shall  have  the  meaning  set  forth in
Section 2(b) hereof.

                  "Business Day" shall mean a day that is not a Legal Holiday.

                  "Commission"   shall   mean  the   Securities   and   Exchange
Commission.

                  "day" means a calendar day.


                  "Effectiveness Period" shall have the meaning set forth in the
second paragraph of Section 3(a) hereof.

                  "Event  Date" shall have the meaning set forth in Section 4(b)
hereof.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as  amended,  and  the  rules  and  regulations  of the  Commission  promulgated
thereunder.

                  "Exchange  Notes"  shall have the meaning set forth in Section
2(a) hereof.

                  "Exchange  Offer"  shall have the meaning set forth in Section
2(a) hereof.



                  "Exchange Offer Registration Statement" shall have the meaning
set forth in Section 2(a) hereof.


                  "Holder"  shall  mean  any  holder  of a  Registrable  Note or
Registrable Notes.

                  "Indemnified  Person"  shall  have the  meaning  set  forth in
Section 7(c) hereof.

                  "Indemnifying  Person"  shall  have the  meaning  set forth in
Section 7(c) hereof.

                  "Indenture" shall mean the Indenture,  dated as of February 1,
2001, by and among the Issuer and The Bank of New York, as trustee,  pursuant to
which the Notes are being issued,  as amended or supplemented  from time to time
in accordance with the terms thereof.

                  "Initial  Purchasers"  shall have the meaning set forth in the
preamble hereof.

                  "Initial Shelf  Registration" shall have the meaning set forth
in Section 3(a) hereof.

                  "Inspectors"  shall have the meaning set forth in Section 5(n)
hereof.

                  "Issue Date" shall mean February 1, 2001, the date of original
issuance of the Notes.

                  "Issuer" shall have the meaning set forth in the  introductory
paragraph  hereto and shall also include the Issuer's  permitted  successors and
assigns.

                  "Legal Holiday" shall mean a Saturday,  a Sunday,  a federally
recognized holiday or a day on which banking institutions are not required to be
open in the State of New York.

                  "NASD"  shall  have the  meaning  set  forth in  Section  5(s)
hereof.

                  "Notes"  shall  have  the  meaning  set  forth  in the  second
introductory paragraph hereto.

                  "Participant" shall have the meaning set forth in Section 7(a)
hereof.

                  "Participating Broker-Dealer" shall have the meaning set forth
in Section 2(b) hereof.

                  "Person"  shall  mean  an  individual,  trustee,  corporation,
partnership,  joint stock company,  trust,  unincorporated  association,  union,
business  association,  firm,  government  or  agency or  political  subdivision
thereof or other legal entity.

                  "Private Exchange" shall have the meaning set forth in Section
2(b) hereof.

                  "Private  Exchange  Notes" shall have the meaning set forth in
Section 2(b) hereof.

                  "Prospectus"  shall  mean  the  prospectus   included  in  any
Registration Statement (including, without limitation, any prospectus subject to
completion and a prospectus  that includes any  information  previously  omitted
from a  prospectus  filed  as part of an  effective  registration  statement  in

                                      -2-


reliance upon Rule 430A  promulgated  under the  Securities  Act), as amended or
supplemented  by  any  prospectus  supplement,  and  all  other  amendments  and
supplements to the  Prospectus,  including  post-effective  amendments,  and all
material  incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

                  "Purchase  Agreement"  shall have the meaning set forth in the
introductory paragraphs hereof.

                  "Records"  shall have the  meaning  set forth in Section  5(n)
hereof.

                  "Registrable  Notes"  shall  mean each Note upon its  original
issuance and at all times  subsequent  thereto,  each  Exchange Note as to which
Section  2(c)(iv) hereof is applicable  upon original  issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance thereof
and at all times subsequent thereto,  until (i) a Registration  Statement (other
than,  with respect to any Exchange Note as to which Section  2(c)(iv) hereof is
applicable,  the Exchange  Offer  Registration  Statement)  covering  such Note,
Exchange  Note or  Private  Exchange  Note has been  declared  effective  by the
Commission  and such Note,  Exchange Note or such Private  Exchange Note, as the
case may be, has been disposed of in accordance with such effective Registration
Statement,  (ii) such Note has been exchanged pursuant to the Exchange Offer for
one or more Exchange  Notes that may be resold without  restriction  under state
and federal securities laws, (iii) such Note,  Exchange Note or Private Exchange
Note, as the case may be, ceases to be outstanding for purposes of the Indenture
or (iv) the date on which any such Note,  Exchange Note or Private Exchange Note
is  distributed  to the public  pursuant to Rule 144 or is saleable  pursuant to
Rule 144(k) under the Securities Act.

                  "Registration  Default"  shall have the  meaning  set forth in
Section 4(a) hereof.

                  "Registration    Statement"   shall   mean   any   appropriate
registration  statement  of the Issuer  covering  any of the  Registrable  Notes
pursuant to the provisions of this Agreement, including, but not limited to, the
Exchange  Offer  Registration  Statement,  filed with the  Commission  under the
Securities  Act, and all  amendments and  supplements  to any such  Registration
Statement,  including  post-effective  amendments,  in each case  including  the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.

                  "Requesting   Participating   Broker-Dealer"  shall  have  the
meaning set forth in Section 2(b) hereof.

                  "Rule  144"  shall  mean  Rule  144   promulgated   under  the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule (other than Rule 144A) or regulation  hereafter  adopted by the  Commission
providing  for  offers  and sales of  securities  made in  compliance  therewith
resulting in offers and sales by subsequent  holders that are not  affiliates of
an issuer of such  securities  being  free of the  registration  and  prospectus
delivery requirements of the Securities Act.

                                      -3-



                  "Rule  144A"  shall  mean  Rule  144A  promulgated  under  the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule (other than Rule 144) or regulation hereafter adopted by the Commission.

                  "Rule  415"  shall  mean  Rule  415   promulgated   under  the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation hereafter adopted by the Commission.

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended, and the rules and regulations of the Commission promulgated thereunder.

                  "Shelf  Filing  Event"  shall  have the  meaning  set forth in
Section 2(c) hereof.

                  "Shelf  Registration"  shall  have the  meaning  set  forth in
Section 3(b) hereof.

                  "Subsequent  Shelf  Registration"  shall have the  meaning set
forth in Section 3(b) hereof.

                  "TIA" shall mean the Trust Indenture Act of 1939, as amended.

                  "Trustee"  shall mean the trustee  under the Indenture and the
trustee (if any) under any indenture  governing  the Exchange  Notes and Private
Exchange Notes.

                  "Underwritten  registration  or  underwritten  offering" shall
mean a registration in which securities of the Issuer are sold to an underwriter
for reoffering to the public.

         Section 2. Exchange Offer

                  (a) The Issuer  shall,  at the Issuer's  cost (as set forth in
Section 6 hereof), (i) file (or confidentially  submit) a Registration Statement
(the "Exchange  Offer  Registration  Statement")  within 60 days after the Issue
Date with the Commission on an appropriate  registration  form with respect to a
registered  offer  (the  "Exchange  Offer")  to  exchange  any  and  all  of the
Registrable Notes for a like aggregate  principal amount of notes (the "Exchange
Notes") that are  identical in all material  respects to the Notes  (except that
the Exchange Notes shall not contain terms with respect to transfer restrictions
or Additional Interest upon a Registration  Default) and (ii) use its reasonable
best efforts to cause the Exchange Offer  Registration  Statement to be declared
effective  under the Securities Act on or prior to 120 days after the Issue Date
and (iii) use its reasonable best efforts to consummate the Exchange Offer on or
prior to 150 days after the Issue Date.  Upon the  Exchange  Offer  Registration
Statement being declared effective by the Commission,  the Issuer will offer the
Exchange Notes in exchange for surrender of the Notes. The Issuer shall keep the
Exchange Offer open for not less than 20 Business Days (or longer if required by
applicable  law)  after  the date  notice  of the  Exchange  Offer is  mailed to
Holders.

                  Each Holder that  participates  in the Exchange  Offer will be
required to  represent  to the Issuer in writing  that (i) such Holder is not an
affiliate  of the Issuer  within the  meaning of the  Securities  Act,  (ii) any
Exchange  Notes to be received by it will be acquired in the ordinary  course of

                                      -4-



its business,  (iii) at the time of the  commencement of the Exchange Offer such
Holder will have no arrangement or understanding  with any Person to participate
in the distribution (as such term is used in the Securities Act) of the Exchange
Notes in violation of the provisions of the Securities  Act, (iv) if such Holder
is not a broker-dealer, that it is not engaged in, and does not intend to engage
in, a distribution  of Exchange Notes and (v) if such Holder is a  broker-dealer
that will receive  Exchange Notes for its own account in exchange for Notes that
were acquired as a result of market-making or other trading activities,  it will
deliver a Prospectus in connection with any resale of such Exchange Notes.

                  Upon  consummation  of the Exchange  Offer in accordance  with
this  Section 2, the  provisions  of this  Agreement  shall  continue  to apply,
mutatis  mutandis,  solely with  respect to  Registrable  Notes that are Private
Exchange  Notes,  Exchange Notes as to which Section  2(c)(iv) is applicable and
Exchange Notes held by Participating Broker-Dealers (as defined), and the Issuer
shall have no further  obligation  to  register  Registrable  Notes  (other than
Private  Exchange  Notes and other than in respect of any  Exchange  Notes as to
which  clause  2(c)(iv)  hereof  applies)  pursuant  to  Section  3  hereof.  No
securities other than the Exchange Notes shall be included in the Exchange Offer
Registration Statement.

                  (b) The Issuer and the Initial Purchasers acknowledge that the
staff of the  Commission  has taken the  position  that any  broker-dealer  that
elects to exchange  Notes that were acquired by such  broker-dealer  for its own
account as a result of  market-making  or other trading  activities for Exchange
Notes in the Exchange Offer (a "Participating  Broker-Dealer")  may be deemed to
be an "underwriter"  within the meaning of the Securities Act and must deliver a
Prospectus meeting the requirements of the Securities Act in connection with any
resale of such  Exchange  Notes  (other  than a resale  of an  unsold  allotment
resulting from the original offering of the Notes).

                  The Issuer and the Initial Purchasers also acknowledge that it
is the staff of the  Commission's  position that if the Prospectus  contained in
the  Exchange  Offer  Registration  Statement  includes  a plan of  distribution
containing a statement to the above effect and the means by which  Participating
Broker-Dealers  may resell the Exchange Notes,  without naming the Participating
Broker-Dealers  or specifying the amount of Exchange  Notes owned by them,  such
Prospectus  may be delivered by  Participating  Broker-Dealers  to satisfy their
prospectus  delivery  obligations  under the Securities  Act in connection  with
resales of  Exchange  Notes for their own  accounts,  so long as the  Prospectus
otherwise meets the requirements of the Securities Act.

                  In light of the  foregoing,  if requested  by a  Participating
Broker-Dealer (a "Requesting Participating Broker-Dealer"), the Issuer agrees to
use  its  reasonable  best  efforts  to keep  the  Exchange  Offer  Registration
Statement  continuously  effective for a period of up to 180 days after the date
on which the Exchange Offer  Registration  Statement is declared  effective,  or
such longer  period if  extended  pursuant  to the last  paragraph  of Section 5
hereof  (such  period,  the  "Applicable  Period"),  or such earlier date as all
Requesting  Participating  Broker-Dealers  shall  have  notified  the  Issuer in
writing  that such  Requesting  Participating  Broker-Dealers  have  resold  all
Exchange Notes acquired in the Exchange  Offer.  The Issuer shall include a plan
of  distribution  in such Exchange Offer  Registration  Statement that meets the
requirements set forth in the preceding paragraph.

                                      -5-


                  If, prior to consummation  of the Exchange  Offer,  any Holder
holds any Notes  acquired by it that have, or that are  reasonably  likely to be
determined  to  have,   the  status  of  an  unsold   allotment  in  an  initial
distribution,  or if any Holder is not entitled to  participate  in the Exchange
Offer, the Issuer upon the request of any such Holder shall, simultaneously with
the delivery of the Exchange Notes in the Exchange  Offer,  issue and deliver to
any such Holder, in exchange (the "Private Exchange") for such Notes held by any
such Holder, a like principal amount of notes (the "Private  Exchange Notes") of
the Issuer that are  identical in all material  respects to the Exchange  Notes.
The Private Exchange Notes shall be issued pursuant to the same indenture as the
Exchange Notes and bear the same CUSIP number as the Exchange Notes.

                  In connection with the Exchange Offer, the Issuer shall:

                  (1)  mail  to  each  Holder  entitled  to  participate  in the
         Exchange  Offer a copy of the  Prospectus  forming part of the Exchange
         Offer  Registration  Statement,  together with an appropriate letter of
         transmittal and related documents;

                  (2) utilize  the  services of a  depositary  for the  Exchange
         Offer  with an address in the  Borough  of  Manhattan,  The City of New
         York;

                  (3) permit  Holders  to  withdraw  tendered  Notes at any time
         prior to the close of business, New York time, on the last Business Day
         on which the Exchange Offer shall remain open; and

                  (4)  otherwise  comply  in  all  material  respects  with  all
         applicable laws, rules and regulations.

                  As soon as  practicable  after the close of the Exchange Offer
and the Private Exchange, if any, the Issuer shall:

                  (1) accept for  exchange  all Notes  validly  tendered and not
         validly  withdrawn  pursuant  to the  Exchange  Offer  and the  Private
         Exchange;

                  (2)  deliver  to the  Trustee  for  cancellation  all Notes so
         accepted for exchange; and

                  (3) cause the Trustee to authenticate  and deliver promptly to
         each Holder of Notes Exchange Notes or Private  Exchange  Notes, as the
         case may be, equal in  principal  amount to the Notes of such Holder so
         accepted for exchange.

                  The  Exchange  Offer  and the  Private  Exchange  shall not be
subject to any  conditions,  other than that (i) the  Exchange  Offer or Private
Exchange,  as the case may be, does not violate applicable law or any applicable
interpretation  of the staff of the  Commission,  (ii) no  action or  proceeding
shall have been  instituted or  threatened  in any court or by any  governmental
agency which might  materially  impair the ability of the Issuer to proceed with
the Exchange Offer or the Private Exchange,  and no material adverse development
shall have  occurred in any existing  action or  proceeding  with respect to the
Issuer and (iii) all  governmental  approvals  shall have been  obtained,

                                      -6-


which approvals the Issuer deems necessary for the  consummation of the Exchange
Offer or Private Exchange.

                  The  Exchange  Notes and the Private  Exchange  Notes shall be
issued under (i) the  Indenture  or (ii) an indenture  identical in all material
respects to the Indenture (in either case, with such changes as are necessary to
comply  with any  requirements  of the  Commission  to  effect or  maintain  the
qualification  thereof  under  the TIA) and  which,  in  either  case,  has been
qualified  under the TIA and shall provide that the Exchange  Notes shall not be
subject to the transfer  restrictions  set forth in the  Indenture or Additional
Interest upon a  Registration  Default.  The Indenture or such  indenture  shall
provide that the Exchange Notes,  the Private Exchange Notes and the Notes shall
vote and  consent  together  on all  matters  as one  class and that none of the
Exchange Notes,  the Private  Exchange Notes or the Notes will have the right to
vote or consent as a separate class on any matter.

                  (c) In the event that (i) any changes in law or the applicable
interpretations  of the staff of the  Commission  do not  permit  the  Issuer to
effect the  Exchange  Offer,  (ii) if for any reason the  Exchange  Offer is not
consummated  within  150 days of the Issue  Date,  (iii) any  Holder of  Private
Exchange Notes so requests;  or (iv) in the case of any Holder that participates
in the Exchange Offer,  such Holder does not receive  Exchange Notes on the date
of the exchange that may be sold without  restriction  under federal  securities
laws (other than due solely to the status of such Holder as an  affiliate of the
Issuer within the meaning of the Securities Act) (each such event referred to in
clauses (i) through (iv) of this  sentence,  a "Shelf Filing  Event"),  then the
Issuer shall file a Shelf Registration pursuant to Section 3 hereof.

         Section 3. Shelf Registration

                  If at any time a Shelf Filing Event shall occur, then:

                  (a)  Shelf  Registration.  The  Issuer  shall  file  with  the
Commission a  Registration  Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the  Registrable  Notes not exchanged
in the Exchange  Offer,  Private  Exchange  Notes and Exchange Notes as to which
Section  2(c)(iv) is applicable (the "Initial Shelf  Registration").  The Issuer
shall use its  reasonable  best efforts to file with the  Commission the Initial
Shelf  Registration  as promptly as  practicable,  but in no event later than 45
days after the Issuer has notice of the Shelf Filing  Event.  The Initial  Shelf
Registration  shall  be on  Form  S-3 or  another  appropriate  form  permitting
registration  of such  Registrable  Notes for resale by Holders in the manner or
manners  designated  by  them  (including,   without  limitation,  one  or  more
underwritten  offerings).  The Issuer shall not permit any securities other than
the  Registrable  Notes to be included in the Initial Shelf  Registration or any
Subsequent Shelf Registration (as defined below).

                  The Issuer shall use its reasonable  best efforts (x) to cause
the Initial Shelf Registration to be declared effective under the Securities Act
on or prior to the later of the 60th day after  the  Shelf  Filing  Event or the
150th day after the Issue Date and (y) to keep the  Initial  Shelf  Registration
continuously  effective  under the  Securities  Act for the period ending on the
date which is two years from the Issue Date,  subject to  extension  pursuant to
the last  paragraph of Section 5 hereof (the  "Effectiveness  Period"),  or such
shorter  period  ending when (i) all  Registrable  Notes  covered by

                                      -7-


the  Initial  Shelf  Registration  have been sold in the manner set forth and as
contemplated  in the  Initial  Shelf  Registration  or (ii) a  Subsequent  Shelf
Registration covering all of the Registrable Notes covered by and not sold under
the Initial Shelf  Registration or an earlier  Subsequent Shelf Registration has
been declared  effective under the Securities Act; provided,  however,  that the
Effectiveness  Period in  respect of the  Initial  Shelf  Registration  shall be
extended to the extent  required to permit dealers to comply with the applicable
prospectus  delivery  requirements  of Rule 174 under the  Securities Act and as
otherwise provided herein;  provided,  further,  that the Issuer may suspend the
effectiveness of a Shelf Registration Statement by written notice to the Holders
for a period not to exceed 30 days in any  calendar  year if (i) an event occurs
and is continuing as a result of which the Shelf  Registration  Statement would,
in the Issuer's good faith judgment,  contain an untrue  statement of a material
fact or omit to state a material fact  necessary in order to make the statements
therein not misleading and (ii) (a) the Issuer determines in good faith that the
disclosure  of such event at such time would have a material  adverse  effect on
the business, operations or prospects of the Issuer and its subsidiaries,  taken
as a whole, or (b) the disclosure otherwise relates to a previously  undisclosed
pending material business transaction,  the disclosure of which would impede the
Issuer's ability to consummate such transaction.

                  (b)  Subsequent  Shelf  Registrations.  If the  Initial  Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the  Effectiveness  Period  (other than because of the
sale of all of the securities registered  thereunder),  the Issuer shall use its
reasonable best efforts to obtain the prompt  withdrawal of any order suspending
the effectiveness  thereof,  and in any event shall as soon as practicable after
such cessation amend the Initial Shelf  Registration  or such  Subsequent  Shelf
Registration,  as the case may be, in a manner to obtain the  withdrawal  of the
order  suspending  the  effectiveness  thereof,  or file an  additional  "shelf"
Registration  Statement  pursuant to Rule 415  covering  all of the  Registrable
Notes  covered  by and not sold under the  Initial  Shelf  Registration  or such
earlier Subsequent Shelf Registration (each, a "Subsequent Shelf Registration").
If a Subsequent Shelf Registration is filed, the Issuer shall use its reasonable
best efforts to cause the Subsequent Shelf Registration to be declared effective
under the Securities  Act as soon as  practicable  after such filing and to keep
such  Registration  Statement  continuously  effective for a period equal to the
number of days in the  Effectiveness  Period less the  aggregate  number of days
during  which  the  Initial  Shelf   Registration   and  any  Subsequent   Shelf
Registration was previously  continuously  effective.  As used herein,  the term
"Shelf  Registration"  means the Initial Shelf  Registration  and any Subsequent
Shelf Registration.

                  (c)  Supplements  and  Amendments.  The Issuer shall  promptly
supplement  and  amend  the  Shelf   Registration  if  required  by  the  rules,
regulations or instructions  applicable to the  registration  form used for such
Shelf  Registration,  if  required  by  the  Securities  Act,  or if  reasonably
requested  by the Holders of a majority  in  aggregate  principal  amount of the
Registrable Notes covered by such  Registration  Statement or by any underwriter
of such Registrable Notes.

         Section 4. Additional Interest

                  (a) The  Issuer  and the  Initial  Purchasers  agree  that the
Holders will suffer damages if the Issuer fails to fulfill its obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, in the event that:

                                      -8-


         (i) the  Issuer  does  not  file (or  confidentially  submit)  with the
         Commission  on or prior to the 60th day  following  the Issue Date,  or
         cause to become  effective on or prior to the 120th day  following  the
         Issue Date, the Exchange Offer Registration Statement,

         (ii) the Issuer is obligated to file the Shelf  Registration  Statement
         and such Shelf Registration  Statement is not filed with the Commission
         on or prior to the 45th day  following the date on which the Issuer has
         notice of the Shelf Filing Event or such Shelf  Registration  Statement
         is not  declared  effective  on or prior  to the  later of the 60th day
         following  the Shelf Filing Event or the 150th day  following the Issue
         Date,

         (iii) the Issuer fails to consummate  the Exchange Offer on or prior to
         the 150th day following the Issue Date or

         (iv)  the  Shelf   Registration   Statement  or  the   Exchange   Offer
         Registration  Statement is declared  effective but thereafter ceases to
         be  declared   effective  or  usable  in  connection  with  resales  of
         Registrable Notes during the periods  specified  herein,  except if the
         Shelf Registration or the Exchange Offer Registration  Statement ceases
         to be effective or usable as specifically permitted herein or solely as
         a result of (x) the filing of a post-effective  amendment to such Shelf
         Registration   Statement  to  incorporate   annual  audited   financial
         information  with  respect  to the  Issuer  where  such  post-effective
         amendment is not yet  effective  and needs to be declared  effective to
         permit  holders to use the  related  Prospectus  or (y) other  material
         events,  with respect to the Issuer, that would need to be described in
         such Shelf Registration Statement or the related Prospectus and, in the
         case of this clause (y), the Issuer is proceeding  promptly and in good
         faith to amend or supplement  the Shelf  Registration  Statement or the
         Exchange  Offer  Registration   Statement  and  related  Prospectus  to
         describe such events

(each such event referred to in clauses (i) through (iv) above, a  "Registration
Default"), then the Issuer shall pay, as liquidated damages, additional interest
("Additional  Interest")  on the  Registrable  Notes  in cash  on each  Interest
Payment Date (as defined in the  Indenture) in an amount equal to one-quarter of
one  percent  (0.25%)  per  annum  of  the  aggregate  principal  amount  of the
Registrable  Notes,  with  respect to the first  90-day  period  following  such
Registration Default. The amount of such Additional Interest will increase by an
additional one-quarter of one percent (0.25%) to a maximum of one percent (1.0%)
per annum of the aggregate  principal  amount of the Registrable  Notes for each
subsequent  90-day period until such  Registration  Default has been cured. Upon
(1) the filing (or confidential  submission) of the Exchange Offer  Registration
Statement  after the  60-day  period  described  in clause  (i)  above,  (2) the
effectiveness  of the Exchange Offer  Registration  Statement  after the 120-day
period   described  in  clause  (i)  above,  (3)  the  filing  (or  confidential
submission)  of  the  Shelf  Registration  Statement  after  the  45-day  period
described in clause (ii) above, (4) the effectiveness of the Shelf  Registration
Statement  after the 60-day  period or the 150-day  period,  as the case may be,
described in clause (ii) above, (5) the consummation of the Exchange Offer after
the 150-day  period  described  in clause  (iii)  above,  or (6) the cure of any
Registration  Default described in clause (iv) above, the interest rate borne by
the Notes from the date of such filing,  effectiveness or  consummation,  as the
case may be,  will be reduced  to the  original  interest  rate if the Issuer is
otherwise in compliance with this paragraph;  provided,  however, that if, after
any such reduction in interest rate, a different

                                      -9-


event specified above occurs,  the interest rate may again be increased pursuant
to the foregoing provisions.

                  (b) The Issuer  shall  notify the Trustee  within one Business
Day after  each and every  date on which an event  occurs  in  respect  of which
Additional  Interest is required  to be paid (an "Event  Date").  Any amounts of
Additional  Interest due pursuant to Section 4(a) hereof will be payable in cash
semi-annually  on the Interest  Payment Dates specified in the Indenture (to the
holders of record as specified in the Indenture), commencing with the first such
Interest Payment Date occurring after any such Additional  Interest commences to
accrue. The amount of Additional  Interest will be determined by multiplying the
applicable  Additional  Interest rate by the principal amount of the Registrable
Notes,  multiplied  by a fraction,  the numerator of which is the number of days
such Additional  Interest rate was applicable during such period  (determined on
the basis of a 360-day year  comprised of twelve  30-day months and, in the case
of a partial month,  the actual number of days elapsed),  and the denominator of
which is 360.

         Section 5. Registration Procedures

                  In connection  with the filing of any  Registration  Statement
pursuant to Section 2 or 3 hereof, the Issuer shall effect such registrations to
permit  the  sale of the  securities  covered  thereby  in  accordance  with the
intended method or methods of disposition  thereof,  and pursuant thereto and in
connection with any  Registration  Statement  filed by the Issuer  hereunder the
Issuer shall:

                  (a)  Prepare  and file  (or  confidentially  submit)  with the
         Commission,  a  Registration  Statement or  Registration  Statements as
         prescribed  by  Section  2 or 3  hereof,  and use its  reasonable  best
         efforts to cause each such  Registration  Statement to become effective
         and remain effective as provided herein;  provided,  however,  that, if
         (1) such filing is pursuant  to Section 3 hereof,  or (2) a  Prospectus
         contained in the Exchange Offer  Registration  Statement filed pursuant
         to Section 2 hereof is required to be  delivered  under the  Securities
         Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
         during  the  Applicable  Period  relating  thereto,  before  filing any
         Registration  Statement or Prospectus or any  amendments or supplements
         thereto,  the Issuer  shall  furnish  to and afford the  Holders of the
         Registrable Notes covered by such  Registration  Statement or each such
         Participating Broker-Dealer,  as the case may be, their counsel and the
         managing  underwriters,  if any,  a  reasonable  opportunity  to review
         copies of all such documents  (including  copies of any documents to be
         incorporated by reference therein and all exhibits thereto) proposed to
         be  filed  (in each  case at least  five  Business  Days  prior to such
         filing).  The  Issuer  shall  not file any  Registration  Statement  or
         Prospectus or any amendments or supplements thereto if the Holders of a
         majority in aggregate principal amount of the Registrable Notes covered
         by   such   Registration   Statement,   or   any   such   Participating
         Broker-Dealer,  as the  case may be,  their  counsel,  or the  managing
         underwriters, if any, shall reasonably object.

                  (b) Prepare and file with the Commission  such  amendments and
         post-effective  amendments  to each  Shelf  Registration  Statement  or
         Exchange Offer  Registration  Statement,  as the case may be, as may be
         necessary to keep such Registration  Statement  continuously  effective
         for the Effectiveness  Period or the Applicable Period, as the case may
         be; cause the

                                      -10-


         related  Prospectus to be  supplemented  by any  Prospectus  supplement
         required by applicable law, and as so supplemented to be filed pursuant
         to Rule 424 (or any similar provisions then in force) promulgated under
         the  Securities  Act; and comply with the  provisions of the Securities
         Act and the Exchange Act applicable to each of them with respect to the
         disposition of all securities covered by such Registration Statement as
         so amended or in such Prospectus as so supplemented and with respect to
         the subsequent  resale of any securities  being sold by a Participating
         Broker-Dealer  covered  by  any  such  Prospectus,  in  each  case,  in
         accordance with the intended  methods of distribution set forth in such
         Registration  Statement or Prospectus,  as so amended. The Issuer shall
         be  deemed  not to have  used its  reasonable  best  efforts  to keep a
         Registration Statement effective during the Effectiveness Period or the
         Applicable  Period,  as the case may be, relating thereto if the Issuer
         voluntarily  takes any action that would  result in selling  Holders of
         the Registrable  Notes covered thereby or Participating  Broker-Dealers
         seeking to sell Exchange Notes not being able to sell such  Registrable
         Notes or such  Exchange  Notes during that period unless such action is
         required by  applicable  law;  provided,  however,  that the Issuer may
         suspend the effectiveness of a Registration Statement by written notice
         to the Holders or the Participating  Broker-Dealers for a period not to
         exceed  30 days in any  calendar  year if (i) an  event  occurs  and is
         continuing as a result of which the  Registration  Statement  would, in
         the  Issuer's  good faith  judgment,  contain an untrue  statement of a
         material  fact or omit to state a material  fact  necessary in order to
         make the  statements  therein  not  misleading  and (ii) (a) the Issuer
         determines in good faith that the disclosure of such event at such time
         would have a material  adverse  effect on the  business,  operations or
         prospects of the Issuer and its subsidiaries,  taken as a whole, or (b)
         the disclosure  otherwise relates to a previously  undisclosed  pending
         material business transaction, the disclosure of which would impede the
         Issuer's ability to consummate such transaction.

                  (c) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof,   or  (2)  a  Prospectus   contained  in  the  Exchange   Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period  relating  thereto,  notify the selling  Holders of  Registrable
         Notes, or each such  Participating  Broker-Dealer,  as the case may be,
         their  counsel and the  managing  underwriters,  if any, as promptly as
         possible,  and, if requested by any such Person, confirm such notice in
         writing,  (i)  when  a  Prospectus  or  any  Prospectus  supplement  or
         post-effective  amendment  has  been  filed,  and,  with  respect  to a
         Registration Statement or any post-effective  amendment,  when the same
         has become effective under the Securities Act (including in such notice
         a written  statement that any Holder may, upon request,  obtain, at the
         sole expense of the Issuer,  one  conformed  copy of such  Registration
         Statement or post-effective  amendment including  financial  statements
         and schedules,  documents  incorporated or deemed to be incorporated by
         reference and exhibits),  (ii) of the issuance by the Commission of any
         stop order suspending the effectiveness of a Registration  Statement or
         of any  order  preventing  or  suspending  the  use of any  preliminary
         prospectus or the initiation of any proceedings for that purpose, (iii)
         if at any time when a Prospectus is required by the  Securities  Act to
         be  delivered  in  connection  with sales of the  Registrable  Notes or
         resales  of  Exchange  Notes  by   Participating   Broker-Dealers   the
         representations and warranties of the Issuer contained in any agreement
         (including any  underwriting  agreement)  contemplated  by Section 5(m)
         hereof cease to be true and correct in 

                                      -11-


         all  material  respects,  (iv)  of the  receipt  by the  Issuer  of any
         notification  with respect to the  suspension of the  qualification  or
         exemption from qualification of a Registration  Statement or any of the
         Registrable Notes or the Exchange Notes to be sold by any Participating
         Broker-Dealer for offer or sale in any jurisdiction,  or the initiation
         or threatening of any proceeding for such purpose, (v) of the happening
         of any  event,  the  existence  of  any  condition  or any  information
         becoming  known to the  Issuer  that makes any  statement  made in such
         Registration   Statement   or  related   Prospectus   or  any  document
         incorporated or deemed to be incorporated  therein by reference  untrue
         in any material  respect or that  requires the making of any changes in
         or amendments or supplements to such Registration Statement, Prospectus
         or documents so that,  in the case of the  Registration  Statement,  it
         will not contain  any untrue  statement  of a material  fact or omit to
         state any material fact  required to be stated  therein or necessary to
         make the statements therein not misleading, and that in the case of the
         Prospectus, it will not contain any untrue statement of a material fact
         or omit to state any material  fact  necessary  to make the  statements
         therein,  in the light of the circumstances under which they were made,
         not  misleading,   and  (vi)  of  the  Issuer's  determination  that  a
         post-effective   amendment  to  a  Registration   Statement   would  be
         appropriate.

                   (d) If (1) a Shelf  Registration is filed pursuant to Section
         3  hereof,  or  (2)  a  Prospectus  contained  in  the  Exchange  Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating thereto, use its reasonable best efforts to prevent the
         issuance of any order  suspending the  effectiveness  of a Registration
         Statement  or of  any  order  preventing  or  suspending  the  use of a
         Prospectus  or  suspending   the   qualification   (or  exemption  from
         qualification) of any of the Registrable Notes or the Exchange Notes to
         be  sold  by  any   Participating   Broker-Dealer,   for  sale  in  any
         jurisdiction,  and, if any such order is issued,  to use its reasonable
         best efforts to obtain the withdrawal of any such order at the earliest
         practicable moment.

                   (e) If (1) a Shelf  Registration is filed pursuant to Section
         3 hereof and if requested by the managing  underwriter or  underwriters
         (if any),  the Holders of a majority in aggregate  principal  amount of
         the  Registrable  Notes being sold in connection  with an  underwritten
         offering,   or  (2)  a  Prospectus  contained  in  the  Exchange  Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period  relating   thereto  and  if  requested  by  any   Participating
         Broker-Dealer,  (i) promptly incorporate in a Prospectus  supplement or
         post-effective  amendment such information as the managing  underwriter
         or   underwriters   (if  any),   such  Holders  or  any   Participating
         Broker-Dealer  (based upon advice of counsel)  determine is  reasonably
         necessary to be included  therein,  (ii) make all  required  filings of
         such Prospectus supplement or such post-effective  amendment as soon as
         practicable  after the Issuer has received  notification of the matters
         to be  incorporated  in such  Prospectus  supplement or  post-effective
         amendment;  provided, however, that the Issuer shall not be required to
         take any action hereunder that would, in the written opinion of counsel
         to the Issuer,  violate  applicable  laws, and (iii) supplement or make
         amendments  to  such  Registration  Statement  (based  upon  advice  of
         counsel).

                                      -12-


                   (f) If (1) a Shelf  Registration is filed pursuant to Section
         3  hereof,  or  (2)  a  Prospectus  contained  in  the  Exchange  Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating thereto,  furnish to each selling Holder of Registrable
         Notes and to each such Participating  Broker-Dealer who so requests and
         to counsel and each managing  underwriter,  if any, at the sole expense
         of the Issuer,  one  conformed  copy of the  Registration  Statement or
         Registration  Statements  and each  post-effective  amendment  thereto,
         including financial  statements and schedules,  and, if requested,  all
         documents   incorporated  or  deemed  to  be  incorporated  therein  by
         reference and all exhibits.

                   (g) If (1) a Shelf  Registration is filed pursuant to Section
         3  hereof,  or  (2)  a  Prospectus  contained  in  the  Exchange  Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating thereto,  deliver to each selling Holder of Registrable
         Notes, or each such  Participating  Broker-Dealer,  as the case may be,
         their respective counsel, and the underwriter or underwriters,  if any,
         at the sole expense of the Issuer,  as many copies of the Prospectus or
         Prospectuses  (including each form of preliminary  prospectus) and each
         amendment  or  supplement  thereto and any  documents  incorporated  by
         reference therein as such Persons may reasonably request;  and, subject
         to the last paragraph of this Section 5, the Issuer hereby  consents to
         the use of such Prospectus and each amendment or supplement  thereto by
         each  of  the  selling  Holders  of  Registrable  Notes  or  each  such
         Participating  Broker-Dealer,  as the case may be, and the underwriters
         or  agents,  if any,  and  dealers  (if any),  in  connection  with the
         offering and sale of the  Registrable  Notes covered by, or the sale by
         Participating  Broker-Dealers  of the Exchange  Notes pursuant to, such
         Prospectus and any amendment or supplement thereto.

                   (h) Prior to any public offering of Registrable  Notes or any
         delivery of a Prospectus  contained in the Exchange Offer  Registration
         Statement by any Participating Broker-Dealer who seeks to sell Exchange
         Notes during the Applicable  Period, use its reasonable best efforts to
         register  or qualify,  and to  cooperate  with the  selling  Holders of
         Registrable Notes or each such Participating Broker-Dealer, as the case
         may be, the managing  underwriter  or  underwriters,  if any, and their
         respective counsel in connection with the registration or qualification
         (or  exemption  from  such  registration  or  qualification)  of,  such
         Registrable  Notes for offer and sale under the  securities or Blue Sky
         laws of such  jurisdictions  within  the United  States as any  selling
         Holder,  Participating  Broker-Dealer,  or the managing  underwriter or
         underwriters reasonably request; provided, however, that where Exchange
         Notes held by  Participating  Broker-Dealers  or Registrable  Notes are
         offered other than through an underwritten  offering, the Issuer agrees
         to cause the Issuer's  counsel to perform Blue Sky  investigations  and
         file registrations and qualifications  required to be filed pursuant to
         this Section 5(h); and keep each such registration or qualification (or
         exemption  therefrom)  effective  during the period  such  Registration
         Statement  is  required to be kept  effective  and do any and all other
         acts  or  things  reasonably  necessary  or  advisable  to  enable  the
         disposition  in  such  jurisdictions  of the  Exchange  Notes  held  by
         Participating  Broker-Dealers  or the Registrable  Notes covered by the
         applicable Registration Statement;  provided,  however, that 

                                      -13-


         the  Issuer  shall  not be  required  to (A)  qualify  generally  to do
         business in any  jurisdiction  where it is not then so  qualified,  (B)
         take any action that would subject it to general  service of process in
         any such  jurisdiction  where it is not then so subject or (C)  subject
         itself to  taxation  in excess of a nominal  dollar  amount in any such
         jurisdiction where it is not then so subject.

                  (i) If a Shelf  Registration  is filed  pursuant  to Section 3
         hereof, cooperate with the selling Holders of Registrable Notes and the
         managing underwriter or underwriters,  if any, to facilitate the timely
         preparation and delivery of certificates representing Registrable Notes
         to be sold, which certificates  shall not bear any restrictive  legends
         and shall be in a form eligible for deposit with The  Depository  Trust
         Company;  and enable such Registrable Notes to be in such denominations
         and   registered  in  such  names  as  the  managing   underwriter   or
         underwriters, if any, or Holders may request at least two Business Days
         prior to any sale of such Registrable Notes.

                  (j) Use its reasonable  best efforts to cause the  Registrable
         Notes covered by the  Registration  Statement to be registered  with or
         approved by such other  governmental  agencies or authorities as may be
         reasonably  necessary  to enable the  seller or sellers  thereof or the
         underwriter or  underwriters,  if any, to consummate the disposition of
         such  Registrable  Notes,  except  as  may  be  required  solely  as  a
         consequence of the nature of such selling Holder's  business,  in which
         case the Issuer will  cooperate  in all  reasonable  respects  with the
         filing  of  such  Registration  Statement  and  the  granting  of  such
         approvals.

                  (k) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof,   or  (2)  a  Prospectus   contained  in  the  Exchange   Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating thereto,  upon the occurrence of any event contemplated
         by paragraph  5(c)(v) or 5(c)(vi)  hereof,  as promptly as  practicable
         prepare and (subject to Section 5(a) hereof) file with the  Commission,
         at the sole  expense of the  Issuer,  a  supplement  or  post-effective
         amendment to the Registration  Statement or a supplement to the related
         Prospectus or any document  incorporated  or deemed to be  incorporated
         therein by reference,  or file any other required  document so that, as
         thereafter  delivered to the purchasers of the Registrable  Notes being
         sold thereunder or to the purchasers of the Exchange Notes to whom such
         Prospectus will be delivered by a Participating Broker-Dealer, any such
         Prospectus  will not contain an untrue  statement of a material fact or
         omit to  state  a  material  fact  required  to be  stated  therein  or
         necessary  to  make  the  statements  therein,  in  the  light  of  the
         circumstances under which they were made, not misleading.

                  (l)  Prior to the  effective  date of the  first  Registration
         Statement  relating to the Registrable  Notes,  (i) provide the Trustee
         with  certificates  for the  Registrable  Notes in a form  eligible for
         deposit  with The  Depository  Trust  Company and (ii)  provide a CUSIP
         number for the Registrable Notes.

                  (m)  In   connection   with  any   underwritten   offering  of
         Registrable  Notes  pursuant  to a Shelf  Registration,  enter  into an
         underwriting  agreement as is customary  in  underwritten  offerings of
         debt securities similar to the Notes and take all such other actions as
         are 

                                      -14-


         reasonably  requested by the managing  underwriter or  underwriters  in
         order to expedite or facilitate the  registration or the disposition of
         such  Registrable  Notes  and,  in  such  connection,   (i)  make  such
         representations and warranties to, and covenants with, the underwriters
         with  respect  to the  business  of the  Issuer  and  its  subsidiaries
         (including any acquired business,  properties or entity, if applicable)
         and the  Registration  Statement,  Prospectus  and  documents,  if any,
         incorporated or deemed to be incorporated by reference therein, in each
         case,  as  are   customarily   made  by  issuers  to   underwriters  in
         underwritten  offerings of debt securities similar to the Notes (but in
         no  event   materially  more  extensive  than  those  in  the  Purchase
         Agreement), and confirm the same in writing if and when requested; (ii)
         use its  reasonable  best  efforts to obtain the  written  opinions  of
         counsel to the Issuer and written  updates  thereof in form,  scope and
         substance  reasonably  satisfactory  to  the  managing  underwriter  or
         underwriters,  addressed  to  the  underwriters  covering  the  matters
         customarily covered in opinions requested in underwritten offerings and
         such  other  matters as may be  reasonably  requested  by the  managing
         underwriter or underwriters  (but in no event materially more extensive
         than  those  required  by  the  Purchase  Agreement);   (iii)  use  its
         reasonable  best efforts to obtain "cold  comfort"  letters and updates
         thereof in form,  scope and substance  reasonably  satisfactory  to the
         managing  underwriter or underwriters  from the  independent  certified
         public  accountants  of  the  Issuer  (and,  if  necessary,  any  other
         independent  certified  public  accountants  of any  subsidiary  of the
         Issuer or of any  business  acquired by the Issuer for which  financial
         statements and financial  data are, or are required to be,  included or
         incorporated by reference in the Registration Statement),  addressed to
         each of the  underwriters,  such  letters to be in  customary  form and
         covering  matters of the type  customarily  covered  in "cold  comfort"
         letters in  connection  with  underwritten  offerings  (but in no event
         materially   more   extensive  than  those  required  by  the  Purchase
         Agreement);  and (iv) if an underwriting agreement is entered into, the
         same shall contain  indemnification  provisions  and procedures no less
         favorable  than  those set forth in  Section  7 hereof  (or such  other
         provisions  and  procedures  acceptable  to Holders  of a  majority  in
         aggregate  principal  amount  of  Registrable  Notes  covered  by  such
         Registration  Statement and the managing underwriter or underwriters or
         agents) with respect to all parties to be indemnified  pursuant to said
         Section.   The  above  shall  be  done  at  each  closing   under  such
         underwriting agreement, or as and to the extent required thereunder.

                  (n) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof,   or  (2)  a  Prospectus   contained  in  the  Exchange   Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating  thereto,  make available for inspection by any selling
         Holder of such Registrable Notes being sold, or each such Participating
         Broker-Dealer, as the case may be, any underwriter participating in any
         such  disposition  of  Registrable  Notes,  if any,  and any  attorney,
         accountant or other agent  retained by any such selling  Holder or each
         such  Participating  Broker-Dealer,  as the case may be, or underwriter
         (collectively,  the "Inspectors"),  at the offices where normally kept,
         during  reasonable  business  hours,  all financial and other  records,
         pertinent  corporate  documents and  instruments  of the Issuer and its
         subsidiaries  (collectively,  the  "Records")  as shall  be  reasonably
         necessary  to enable  them to exercise  any  applicable  due  diligence
         responsibilities,  and cause the  officers,  directors,  employees  and
         agents of the Issuer  and its  subsidiaries  to supply all  information
         reasonably  requested  by any such  Inspector in  connection  with such

                                      -15-


         Registration  Statement and  Prospectus.  Each Inspector shall agree in
         writing  that  it  will  not  disclose  any  records  that  the  Issuer
         determines,  in good faith, to be confidential and that it notifies the
         Inspectors  in writing are  confidential  unless (i) the  disclosure of
         such  Records  is  necessary  to avoid or  correct  a  misstatement  or
         omission in such Registration Statement or Prospectus, (ii) the release
         of such Records is ordered pursuant to a subpoena or other order from a
         court of competent  jurisdiction,  (iii) disclosure of such information
         is necessary or advisable in connection with any action, claim, suit or
         proceeding, directly or indirectly,  involving or potentially involving
         such  Inspector  and  arising  out of,  based  upon,  relating  to,  or
         involving this Agreement or the Purchase Agreement, or any transactions
         contemplated  hereby or thereby or arising hereunder or thereunder,  or
         (iv) the information in such Records has been made generally  available
         to the  public  other than by an act or a failure to act by a Holder or
         an Inspector;  provided,  however,  that such Inspector shall take such
         actions as are reasonably  necessary to protect the  confidentiality of
         such  information  (if  practicable)  to  the  extent  such  action  is
         otherwise not  inconsistent  with, an impairment of or in derogation of
         the rights and interests of the Holder or any Inspector.

                  (o) Provide an indenture  trustee for the Registrable Notes or
         the Exchange  Notes, as the case may be, and cause the Indenture or any
         other  indenture  provided for in Section 2(a) hereof,  as the case may
         be, to be qualified  under the TIA not later than the effective date of
         the first Registration  Statement relating to the Registrable Notes; in
         connection  therewith,  cooperate  with  the  trustee  under  any  such
         indenture  and the  Holders of the  Registrable  Notes,  to effect such
         changes to such  indenture as may be required for such  indenture to be
         so qualified in accordance with the terms of the TIA; and execute,  and
         use its reasonable  best efforts to cause such trustee to execute,  all
         documents  as may be  required to effect  such  changes,  and all other
         forms and documents  required to be filed with the Commission to enable
         such indenture to be so qualified in a timely manner.

                  (p) Comply with all  applicable  rules and  regulations of the
         Commission and make generally available to the Issuer's securityholders
         earnings  statements  satisfying the provisions of Section 11(a) of the
         Securities Act and Rule 158 thereunder (or any similar rule promulgated
         under  the  Securities  Act) (i)  commencing  at the end of any  fiscal
         quarter in which  Registrable  Notes are sold to underwriters in a firm
         commitment or best efforts  underwritten  offering and (ii) if not sold
         to underwriters in such an offering, commencing on the first day of the
         first  fiscal  quarter  of the  Issuer  after the  effective  date of a
         Registration Statement.

                  (q) Upon  consummation  of the  Exchange  Offer  or a  Private
         Exchange,  use its  reasonable  best  efforts  to obtain an  opinion of
         counsel  to  the  Issuer,   in  a  form   customary  for   underwritten
         transactions,  addressed  to the Trustee for the benefit of all Holders
         of Registrable Notes participating in the Exchange Offer or the Private
         Exchange,  as the  case  may be,  that the  Exchange  Notes or  Private
         Exchange  Notes,  as  the  case  may  be,  and  the  related  indenture
         constitute  legal,  valid  and  binding   obligations  of  the  Issuer,
         enforceable against the Issuer in accordance with its respective terms,
         subject to customary exceptions and qualifications.

                  (r) If the  Exchange  Offer  or a  Private  Exchange  is to be
         consummated,  upon delivery of the Registrable  Notes by Holders to the
         Issuer (or to such other  Person as directed

                                      -16-


         by the  Issuer)  in  exchange  for the  Exchange  Notes or the  Private
         Exchange  Notes,  as the case may be, mark,  or cause to be marked,  on
         such Registrable  Notes that such Registrable Notes are being cancelled
         in exchange for the Exchange Notes or the Private  Exchange  Notes,  as
         the case may be; in no event shall such Registrable  Notes be marked as
         paid or otherwise satisfied.

                  (s) Cooperate with each seller of Registrable Notes covered by
         any Registration Statement and each underwriter,  if any, participating
         in the  disposition  of such  Registrable  Notes and  their  respective
         counsel in  connection  with any  filings  required to be made with the
         National Association of Securities Dealers, Inc. (the "NASD").

                  (t) Use its  reasonable  best  efforts to take all other steps
         necessary or advisable to effect the  registration  of the  Registrable
         Notes covered by a Registration Statement contemplated hereby.

                  The Issuer may require each seller of Registrable  Notes as to
which  any  registration  is  being  effected  to  furnish  to the  Issuer  such
information regarding such seller and the distribution of such Registrable Notes
as the Issuer may, from time to time, reasonably request. The Issuer may exclude
from  such  registration  the  Registrable  Notes of any  seller so long as such
seller  fails to  furnish  such  information  within  a  reasonable  time  after
receiving such request.  Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Issuer all information required to be
disclosed in order to make the information previously furnished to the Issuer by
such seller not materially misleading.

                  If any such  Registration  Statement  refers to any  Holder by
name or  otherwise  as the holder of any  securities  of the  Issuer,  then such
Holder shall have the right to require (i) the insertion therein of language, in
form and substance  reasonably  satisfactory to such Holder,  to the effect that
the  holding  by such  Holder of such  securities  is not to be  construed  as a
recommendation  by such  Holder  of the  investment  quality  of the  securities
covered  thereby  and that such  holding  does not imply that such  Holder  will
assist in meeting any future  financial  requirements of the Issuer,  or (ii) in
the event  that  such  reference  to such  Holder  by name or  otherwise  is not
required by the Securities Act or any similar federal statute then in force, the
deletion of the  reference to such Holder in any  amendment or supplement to the
Registration  Statement  filed or  prepared  subsequent  to the time  that  such
reference ceases to be required.

                  Each  Holder  of  Registrable  Notes  and  each  Participating
Broker-Dealer  agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating  Broker-Dealer,  as the case may be, that, upon
actual  receipt of any notice from the Issuer of the  happening  of any event of
the kind described in Section  5(c)(ii),  5(c)(iv),  5(c)(v) or 5(c)(vi) hereof,
such Holder will forthwith  discontinue  disposition of such  Registrable  Notes
covered by such  Registration  Statement or Prospectus  or Exchange  Notes to be
sold by such Holder or  Participating  Broker-Dealer,  as the case may be, until
such  Holder's  or  Participating  Broker-Dealer's  receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised  in  writing  (the  "Advice")  by the  Issuer  that the use of the
applicable  Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event that the Issuer shall give any such notice,
each of the Effectiveness  Period and the Applicable Period shall be extended by
the number of 

                                      -17-


days  during  such  periods  from and  including  the date of the giving of such
notice to and including the date when each seller of  Registrable  Notes covered
by  such   Registration   Statement  or  Exchange  Notes  to  be  sold  by  such
Participating  Broker-Dealer,  as the case may be,  shall have  received (x) the
copies of the  supplemented or amended  Prospectus  contemplated by Section 5(k)
hereof or (y) the Advice.

         Section 6. Registration Expenses

                  All  fees  and  expenses  incident  to the  performance  of or
compliance  with this  Agreement  by the  Issuer  shall be borne by the  Issuer,
whether  or  not  the  Exchange  Offer  Registration   Statement  or  any  Shelf
Registration is filed or becomes effective or the Exchange Offer is consummated,
including,  without limitation, (i) all registration and filing fees (including,
without  limitation,  (A) fees with respect to filings  required to be made with
the NASD in connection with an  underwritten  offering and (B) fees and expenses
of  compliance  with  state  securities  or Blue  Sky laws  (including,  without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky  qualifications of the Registrable Notes or Exchange Notes and determination
of the  eligibility  of the  Registrable  Notes or Exchange Notes for investment
under the laws of such  jurisdictions (x) where the holders of Registrable Notes
are located,  in the case of the Exchange  Notes,  or (y) as provided in Section
5(h) hereof,  in the case of Registrable Notes or Exchange Notes to be sold by a
Participating  Broker-Dealer  during  the  Applicable  Period)),  (ii)  printing
expenses,  including, without limitation,  expenses of printing certificates for
Registrable  Notes or Exchange  Notes in a form  eligible  for deposit  with The
Depository  Trust  Company  and of  printing  Prospectuses  if the  printing  of
Prospectuses is requested by the managing  underwriter or underwriters,  if any,
by the Holders of a majority in aggregate  principal  amount of the  Registrable
Notes included in any Registration  Statement or in respect of Registrable Notes
or  Exchange  Notes to be sold by any  Participating  Broker-Dealer  during  the
Applicable  Period, as the case may be, (iii) messenger,  telephone and delivery
expenses,  (iv) fees and  disbursements of counsel for the Issuer and reasonable
fees  and  disbursements  of one  special  counsel  for  all of the  sellers  of
Registrable  Notes  (exclusive  of any  counsel  retained  pursuant to Section 7
hereof),  (v)  fees  and  disbursements  of  all  independent  certified  public
accountants  referred  to  in  Section  5(m)(iii)  hereof  (including,   without
limitation,  the  expenses  of any  special  audit  and "cold  comfort"  letters
required by or incident to such  performance),  (vi)  Securities  Act  liability
insurance, if the Issuer desires such insurance,  (vii) fees and expenses of all
other Persons  retained by the Issuer,  (viii)  internal  expenses of the Issuer
(including,  without  limitation,  all  salaries  and  expenses of officers  and
employees of the Issuer performing legal or accounting duties), (ix) the expense
of any annual audit,  (x) the fees and expenses  incurred in connection with the
listing of the securities to be registered on any securities  exchange,  and the
obtaining of a rating of the  securities,  in each case if applicable,  and (xi)
the  expenses  relating  to  printing,  word  processing  and  distributing  all
Registration  Statements,  underwriting  agreements,  indentures  and any  other
documents necessary in order to comply with this Agreement.  Notwithstanding the
foregoing or anything to the  contrary,  each Holder shall pay all  underwriting
discounts and  commissions of any  underwriters  with respect to any Registrable
Notes sold by or on behalf of it.

         Section 7. Indemnification

                  (a) The Issuer  agrees to  indemnify  and hold  harmless  each
Holder  of  Registrable  Notes  and  each  Participating  Broker-Dealer  selling
Exchange  Notes during the Applicable  Period 

                                      -18-


relating  thereto,  the officers,  directors,  employees and agents of each such
Person,  and each  Person,  if any,  who  controls  any such  Person  within the
bmeaning  of  either  Section  15 of the  Securities  Act or  Section  20 of the
Exchange  Act (each,  a  "Participant"),  from and  against  any and all losses,
claims, damages and liabilities (including,  without limitation,  the reasonable
legal fees and other  expenses  actually  incurred in connection  with any suit,
action or proceeding or any claim  asserted)  caused by, arising out of or based
upon any  untrue  statement  or alleged  untrue  statement  of a  material  fact
contained in any Registration Statement (or any amendment thereto) or Prospectus
(as amended or supplemented if the Issuer shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by, arising out of
or based upon any omission or alleged  omission to state therein a material fact
required to be stated  therein or necessary to make the statements  therein,  in
the case of the  Prospectus in the light of the  circumstances  under which they
were made, not  misleading,  except insofar as such losses,  claims,  damages or
liabilities  are caused by any untrue  statement  or omission or alleged  untrue
statement or omission made in reliance upon and in conformity  with  information
relating to any  Participant  furnished to the Issuer in writing by or on behalf
of such Participant expressly for use therein.

                  (b) Each  Participant  agrees,  severally and not jointly,  to
indemnify and hold harmless the Issuer, its directors,  officers,  employees and
agents and each Person who controls the Issuer  within the meaning of Section 15
of the  Securities Act or Section 20 of the Exchange Act to the same extent (but
on a several,  and not joint,  basis) as the foregoing indemnity from the Issuer
to each Participant,  in each case to the extent,  but only to the extent,  that
any loss,  claim,  damage or  liability  is caused by any  untrue  statement  or
omission or alleged  untrue  statement or omission  made in reliance upon and in
conformity with information relating to any Participant  furnished to the Issuer
in  writing  by or on  behalf  of  such  Participant  expressly  for  use in any
Registration  Statement (or any amendment  thereto) or Prospectus (as amended or
supplemented  if the Issuer shall have  furnished any  amendments or supplements
thereto) or any preliminary prospectus.

                  (c)  If  any   suit,   action,   proceeding   (including   any
governmental or regulatory  investigation),  claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought pursuant
to  either  of the two  preceding  paragraphs,  such  Person  (the  "Indemnified
Person")  shall promptly  notify the Persons  against whom such indemnity may be
sought (the "Indemnifying  Persons") in writing,  and the Indemnifying  Persons,
upon  request  of  the  Indemnified  Person,  shall  retain  counsel  reasonably
satisfactory to the Indemnified  Person to represent the Indemnified  Person and
any others the Indemnifying  Persons may reasonably designate in such proceeding
and shall pay the fees and expenses actually incurred by such counsel related to
such  proceeding;   provided,  however,  that  the  failure  to  so  notify  the
Indemnifying  Persons  shall  not  relieve  any of  them  of any  obligation  or
liability which any of the Indemnifying Persons may have hereunder or otherwise,
except  to the  extent  such  failure  materially  prejudices  the  Indemnifying
Persons. In any such proceeding,  any Indemnified Person shall have the right to
retain its own counsel,  but the fees and  expenses of such counsel  shall be at
the expense of such Indemnified  Person unless (i) the Indemnifying  Persons and
the  Indemnified  Person shall have mutually  agreed to the  contrary,  (ii) the
Indemnifying  Persons  shall have failed  within a reasonable  period of time to
retain counsel  reasonably  satisfactory to the Indemnified  Person or (iii) the
named parties in any such proceeding  (including any impleaded  parties) include
both any Indemnifying Person and the Indemnified Person or any affiliate thereof
and  representation  of both parties by the same counsel would be  inappropriate
due to actual or

                                      -19-


potential  differing interests between them. It is understood that, unless there
exists a conflict among Indemnified Persons, the Indemnifying Persons shall not,
in connection with any one such proceeding or separate but substantially similar
related  proceeding  in the same  jurisdiction  arising out of the same  general
allegations,  be liable for the fees and expenses of more than one separate firm
(in addition to any local  counsel) for all  Indemnified  Persons,  and that all
such fees and expenses  shall be reimbursed  promptly as they are incurred.  Any
such separate firm for the Participants and such control Persons of Participants
shall be designated in writing by  Participants  who sold a majority in interest
of Registrable  Notes and Exchange Notes sold by all such Participants and shall
be  reasonably  acceptable  to the  Issuer  and any such  separate  firm for the
Issuer, their respective  directors,  their respective officers and such control
Persons of the Issuer shall be  designated in writing by the Issuer and shall be
reasonably  acceptable  to the Holders.  The  Indemnifying  Persons shall not be
liable for any settlement of any proceeding effected without their prior written
consent (which consent shall not be  unreasonably  withheld or delayed),  but if
settled with such consent or if there be a final  judgment for the plaintiff for
which the  Indemnified  Person is entitled to  indemnification  pursuant to this
Agreement,  each of the  Indemnifying  Persons  agrees  to  indemnify  and  hold
harmless  each  Indemnified  Person from and against  any loss or  liability  by
reason of such settlement or judgment. No Indemnifying Person shall, without the
prior written  consent of the  Indemnified  Persons  (which consent shall not be
unreasonably  withheld or delayed),  effect any  settlement or compromise of any
pending or threatened  proceeding in respect of which any Indemnified  Person is
or could have been a party and  indemnity  could have been sought  hereunder  by
such  Indemnified  Person,  unless such settlement (A) includes an unconditional
written release of such  Indemnified  Person,  in form and substance  reasonably
satisfactory to such Indemnified  Person,  from all liability on claims that are
the subject matter of such  proceeding and (B) does not include any statement as
to an admission of fault,  culpability or failure to act by or on behalf of such
Indemnified Person.

                  (d) If the  indemnification  provided  for  in the  first  and
second  paragraphs  of this  Section  7 is for any  reason  unavailable  to,  or
insufficient to hold harmless,  an Indemnified  Person in respect of any losses,
claims,  damages or  liabilities  referred  to therein,  then each  Indemnifying
Person under such paragraphs,  in lieu of indemnifying  such Indemnified  Person
thereunder  and in order to provide for just and equitable  contribution,  shall
contribute to the amount paid or payable by such Indemnified  Person as a result
of  such  losses,  claims,  damages  or  liabilities  in such  proportion  as is
appropriate to reflect the relative fault of the Indemnifying  Person or Persons
on the one hand and the Indemnified Person or Persons on the other in connection
with the  statements  or  omissions  or alleged  statements  or  omissions  that
resulted in such losses,  claims,  damages or liabilities (or actions in respect
thereof) as well as any other relevant  equitable  considerations.  The relative
fault of the parties  shall be  determined  by reference to, among other things,
whether  the  untrue or  alleged  untrue  statement  of a  material  fact or the
omission or alleged  omission to state a material  fact  relates to  information
supplied  by the  Issuer  on the  one  hand or such  Participant  or such  other
Indemnified  Person,  as the case may be, on the other,  the  parties'  relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such statement or omission, and any other equitable  considerations  appropriate
in the circumstances.

                  (e) The parties  agree that it would not be just and equitable
if  contribution  pursuant  to  this  Section  7 were  determined  by  pro  rata
allocation  (even  if the  Participants  were  treated  as one  entity  for such
purpose) or by any other method of allocation  that does not take account of the
equitable

                                      -20-


considerations  referred to in the immediately  preceding paragraph.  The amount
paid or  payable by an  Indemnified  Person as a result of the  losses,  claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal  or  other  expenses  actually  incurred  by such  Indemnified  Person  in
connection   with   investigating   or  defending  any  such  action  or  claim.
Notwithstanding  the  provisions  of  this  Section  7,  in  no  event  shall  a
Participant  be  required  to  contribute  any amount in excess of the amount by
which proceeds  received by such Participant from sales of Registrable  Notes or
Exchange  Notes, as the case may be, exceeds the amount of any damages that such
Participant  has  otherwise  been  required to pay or has paid by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any Person who was
not guilty of such fraudulent misrepresentation.

                  (f) Any losses, claims,  damages,  liabilities or expenses for
which an Indemnified Person is entitled to indemnification or contribution under
this  Section  7 shall be paid by the  Indemnifying  Person  to the  Indemnified
Person as such losses,  claims,  damages,  liabilities or expenses are incurred.
The indemnity and  contribution  agreements  contained in this Section 7 and the
representations  and warranties of the Issuer set forth in this Agreement  shall
remain  operative  and  in  full  force  and  effect,   regardless  of  (i)  any
investigation  made by or on behalf of any Holder or any  person who  controls a
Holder, the Issuer, their respective directors, officers, employees or agents or
any person controlling the Issuer, and (ii) any termination of this Agreement.

                  (g) The indemnity  and  contribution  agreements  contained in
this  Section 7 will be in  addition  to any  liability  which the  Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.

         Section 8. Rules 144 and 144A

                  The Issuer covenants that it will file the reports required to
be filed by it under the  Securities  Act and the Exchange Act and the rules and
regulations  adopted  by  the  Commission  thereunder  in  a  timely  manner  in
accordance with the requirements of the Securities Act and the Exchange Act and,
if at any time the Issuer is not required to file such  reports,  it will,  upon
the  request  of any  Holder or  beneficial  owner of  Registrable  Notes,  make
available such information necessary to permit sales pursuant to Rule 144A under
the Securities Act. The Issuer further  covenants that it will take such further
action as any Holder of  Registrable  Notes may reasonably  request,  all to the
extent  required  from time to time to enable  such  Holder to sell  Registrable
Notes without registration under the Securities Act within the limitation of the
exemptions  provided by (a) Rule 144(k) and Rule 144A under the Securities  Act,
as such  Rules may be  amended  from time to time,  or (b) any  similar  rule or
regulation  hereafter adopted by the Commission.  Notwithstanding the foregoing,
nothing in this  Section 8 shall be deemed to require the Issuer to register any
of its securities pursuant to the Exchange Act.

                                      -21-


         Section 9. Underwritten Registrations

                  If  any  of  the  Registrable   Notes  covered  by  any  Shelf
Registration are to be sold in an underwritten  offering,  the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate  principal  amount of such
Registrable  Notes included in such offering and shall be reasonably  acceptable
to the Issuer.

                  No  Holder  of  Registrable   Notes  may  participate  in  any
underwritten  registration  hereunder unless such Holder (i) agrees to sell such
Holder's   Registrable   Notes  on  the  basis  provided  in  any   underwriting
arrangements  approved  by  the  Persons  entitled  hereunder  to  approve  such
arrangements  and (ii)  completes  and  executes all  questionnaires,  powers of
attorney,  indemnities,  underwriting  agreements and other  documents  required
under the terms of such underwriting arrangements.

         Section 10. Miscellaneous

                  (a) No Inconsistent Agreements.  The Issuer has not, as of the
date hereof,  and the Issuer shall not, after the date of this Agreement,  enter
into any agreement  with respect to any of its securities  that is  inconsistent
with the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise  conflicts  with the  provisions  hereof.  The  rights  granted to the
Holders  hereunder do not conflict  with and are not  inconsistent  with, in any
material respect, the rights granted to the holders of the Issuer's other issued
and outstanding securities under any such agreements. The Issuer has not entered
and will not enter into any  agreement  with  respect  to any of its  securities
which will grant to any Person  piggy-back  registration  rights with respect to
any Registration Statement.

                  (b) Adjustments  Affecting Registrable Notes. The Issuer shall
not,  directly or  indirectly,  take any action with respect to the  Registrable
Notes as a class  that would  adversely  affect  the  ability of the  Holders of
Registrable Notes to include such Registrable Notes in a registration undertaken
pursuant to this Agreement.

                  (c) Amendments  and Waivers.  The provisions of this Agreement
may not be  amended,  modified  or  supplemented,  and  waivers or  consents  to
departures  from the  provisions  hereof may not be given  except  pursuant to a
written  agreement  duly signed and  delivered by (i) the Issuer and (ii)(1) the
Holders of not less than a majority in  aggregate  principal  amount of the then
outstanding  Registrable  Notes and (2) in  circumstances  that would  adversely
affect  the  Participating  Broker-Dealers,   the  Participating  Broker-Dealers
holding not less than a majority in aggregate  principal  amount of the Exchange
Notes held by all Participating Broker-Dealers;  provided, however, that Section
7 and this Section  10(c) may not be amended,  modified or  supplemented  except
pursuant to a written  agreement  duly signed and  delivered  by each Holder and
each  Participating  Broker-Dealer  (including  any  person  who was a Holder or
Participating  Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement) affected by any such
amendment,  modification or supplement.  Notwithstanding the foregoing, a waiver
or consent to depart from the  provisions  hereof with  respect to a matter that
relates  exclusively  to the  rights  of  Holders  of  Registrable  Notes  whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect,  impair,  limit or compromise the rights of other
Holders of

                                      -22-


Registrable  Notes may be given by Holders of at least a majority  in  aggregate
principal  amount  of  the  Registrable   Notes  being  sold  pursuant  to  such
Registration Statement.

                  (d) Notices. All notices and other communications  (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
or certified first-class mail, next-day air courier or telecopier:

         (i)  if to a  Holder  of the  Registrable  Notes  or any  Participating
         Broker-Dealer,   at  the  most  current   address  of  such  Holder  or
         Participating  Broker-Dealer,  as the  case  may be,  set  forth on the
         records of the registrar under the Indenture.

         (ii) if to the Issuer, at the address as follows:

                         HEALTHSOUTH Corporation
                         One HealthSouth Parkway
                         Birmingham, Alabama 35243
                         Telephone: (205) 969-4977
                         Fax number: (205) 969-4730
                         Attention:  William W. Horton

         (iii) if to the Initial Purchasers, at the address as follows:

                         UBS Warburg LLC
                         299 Park Avenue
                         New York, New York 10171
                         Telephone: (203) 719-7166
                         Fax number: (203) 719-8620
                         Attention:  Syndicate Department

                  All such  notices and  communications  shall be deemed to have
been duly given: when delivered by hand, if personally delivered;  five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by the recipient's telecopier machine, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing  overnight
delivery.

                  Copies of all such  notices,  demands or other  communications
shall be concurrently  delivered by the Person giving the same to the Trustee at
the address and in the manner specified in the Indenture.

                  (e) Successors and Assigns.  This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto,  the Holders and the Participating  Broker-Dealers;  provided,  however,
that this  Agreement  shall not inure to the  benefit  of or be  binding  upon a
successor  or assign of a Holder  unless and to the  extent  such  successor  or
assign holds Registrable Notes.

                                      -23-


                  (f) Counterparts. This Agreement may be executed in any number
of  counterparts  and by the parties  hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                  (g)  Headings.   The  headings  in  this   Agreement  are  for
convenience  of  reference  only and  shall not limit or  otherwise  affect  the
meaning hereof.

                  (H)  GOVERNING  LAW. THIS  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,  AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.

                  (i)  Severability.   If  any  term,  provision,   covenant  or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an  alternative  means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

                  (j) Securities Held by the Issuer or Its Affiliates.  Whenever
the  consent or approval of Holders of a  specified  percentage  of  Registrable
Notes is required hereunder,  Registrable Notes held by the Issuer or any of its
affiliates (as such term is defined in Rule 405 under the Securities  Act) shall
not be counted in determining  whether such consent or approval was given by the
Holders of such required percentage.

                  (k) Third Party Beneficiaries.  Holders,  beneficial owners of
Registrable Notes, Participating  Broker-Dealers and the controlling persons and
agents referred to in Section 7 are intended third party  beneficiaries  of this
Agreement,  and this Agreement may be enforced by such Persons.  No other Person
is intended to be, or shall be construed as, a third-party  beneficiary  of this
Agreement.

                  (l) Attorneys' Fees. As between the parties to this Agreement,
in any action or proceeding  brought to enforce any provision of this Agreement,
or where any provision hereof is validly  asserted as a defense,  the successful
party shall be entitled to recover reasonable  attorneys' fees actually incurred
in addition to its costs and expenses and any other available remedy.

                  (m)  Entire  Agreement.  This  Agreement,  together  with  the
Purchase Agreement and the Indenture,  is intended by the parties as a final and
exclusive  statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein and any and all prior
oral  or  written  agreements,   representations,   or  warranties,   contracts,
understandings,  correspondence, conversations and memoranda between the Holders
on the one hand and the  Issuer on the other,  or  between or among any  agents,
representatives,  parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.

                                      -24-



                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
as of the date first written above.


                                        HEALTHSOUTH CORPORATION


                                        By:          /s/ William T. Owens
                                             -----------------------------------
                                             Name:   William T. Owens
                                             Title:  Executive Vice President
                                                     and Chief Financial Officer


                                      -25-



                                        UBS WARBURG LLC
                                        DEUTSCHE BANC ALEX. BROWN INC.
                                        CHASE SECURITIES INC.
                                        FIRST UNION SECURITIES, INC.
                                        SCOTIA CAPITAL (USA) INC.

                                        By:  UBS WARBURG LLC


                                        By:          /s/ Michael Y. Leder
                                             -----------------------------------
                                             Name:   Michael Y. Leder
                                             Title:  Managing Director
                                                     Leveraged Finance


                                        By:          /s/ David W. Barth
                                             -----------------------------------
                                             Name:   David W. Barth
                                             Title:  Director
                                                     Leveraged Finance