Exhibit 10.67
LOAN AGREEMENT
BY AND AMONG
MPT OPERATING PARTNERSHIP, L.P.,
A DELAWARE LIMITED PARTNERSHIP,
MPT OF ODESSA HOSPITAL, L.P.,
A DELAWARE LIMITED PARTNERSHIP,
(COLLECTIVELY, THE "MPT PARTIES")
AND
ALLIANCE HOSPITAL, LTD.,
A TEXAS LIMITED PARTNERSHIP,
AND
SRI-SAI ENTERPRISES, INC.,
A TEXAS CORPORATION
(COLLECTIVELY, THE "BORROWER PARTIES")
DATED AS OF December 23, 2005
Table of Contents
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ARTICLE I DEFINED TERMS...................................................... 1
Section 1.1. Certain Defined Terms...................................... 1
Section 1.2. Interpretation; Terms Generally............................ 15
ARTICLE II THE LOAN.......................................................... 15
Section 2.1. The Loan................................................... 15
Section 2.2. Increased Costs............................................ 16
Section 2.3. The Note................................................... 16
Section 2.4. Security................................................... 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BORROWER PARTIES........... 16
Section 3.1. Organization............................................... 17
Section 3.2. Authorization and Enforceability........................... 17
Section 3.3. Absence of Conflicts....................................... 17
Section 3.4. Consents and Approvals..................................... 18
Section 3.5. Financial Statements....................................... 18
Section 3.6. Accounts Receivable........................................ 18
Section 3.7. No Undisclosed Liabilities................................. 18
Section 3.8. Absence of Changes......................................... 19
Section 3.9. Licenses................................................... 20
Section 3.10. Accreditation; Medicare and Medicaid; Third Party Payors... 20
Section 3.11. HIPAA Compliance........................................... 22
Section 3.12. Healthcare Regulatory Matters.............................. 22
Section 3.13. Taxes...................................................... 23
Section 3.14. Good Title to Collateral................................... 23
Section 3.15. Title and Condition of the Real Property................... 24
Section 3.16. Condition of Personal Property............................. 26
Section 3.17. Compliance with Environmental Laws......................... 26
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Table of Contents
(continued)
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Section 3.18. Insurance.................................................. 27
Section 3.19. Litigation................................................. 28
Section 3.20. Contracts, Obligations and Commitments..................... 28
Section 3.21. Intangible Property........................................ 28
Section 3.22. Employees and Employee Relations........................... 29
Section 3.23. Compliance with Law........................................ 30
Section 3.24. Xxxx-Xxxxxx Obligations.................................... 30
Section 3.25. Medical Staff Matters...................................... 31
Section 3.26. Brokers.................................................... 31
Section 3.27. Records.................................................... 31
Section 3.28. Representations Complete................................... 31
ARTICLE IV REPRESENTATIONS AND WARRANTIES BY THE MPT PARTIES................. 31
Section 4.1. Organization............................................... 32
Section 4.2. Authorization; Enforcement, Absence of Conflicts........... 32
Section 4.3. Binding Agreement.......................................... 32
Section 4.4. Litigation................................................. 32
Section 4.5. Brokers.................................................... 32
Section 4.6. Compliance with Law........................................ 32
ARTICLE V TITLE AND SURVEY................................................... 33
Section 5.1. Survey..................................................... 33
Section 5.2. Title Insurance............................................ 33
ARTICLE VI COVENANTS OF THE BORROWER PARTIES................................. 34
Section 6.1. Affirmative Covenants...................................... 34
Section 6.2. Negative Covenants......................................... 40
Section 6.3. Financial Covenants........................................ 42
Section 6.4. General Collateral Covenants............................... 43
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Table of Contents
(continued)
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Section 6.5. Repairs; Reserves; Restrictions............................ 44
Section 6.6. Insurance Covenants........................................ 47
Section 6.7. Fire and Casualty.......................................... 51
Section 6.8. Condemnation............................................... 53
Section 6.9. Operational Covenants...................................... 54
Section 6.10. Hazardous Materials and Environmental Laws................. 57
Section 6.11. Impositions................................................ 58
Section 6.12. Assignment, Subletting and Sublease Subordination.......... 60
Section 6.13. Special Purpose Entity..................................... 61
Section 6.14. Organizational Documents................................... 61
ARTICLE VII CLOSING CONDITIONS............................................... 62
Section 7.1. Conditions to the Obligations of the Borrower Parties...... 62
Section 7.2. Conditions to the Obligations of the MPT Parties........... 62
ARTICLE VIII CLOSING......................................................... 63
Section 8.1. Closing Date............................................... 63
Section 8.2. Borrower Parties' Closing Date Deliverables................ 63
Section 8.3. MPT Parties' Closing Date Deliverables..................... 65
ARTICLE IX TERMINATION....................................................... 66
Section 9.1. Termination................................................ 66
Section 9.2. Notice and Effect.......................................... 66
ARTICLE X DEFAULT............................................................ 67
Section 10.1. Events of Default.......................................... 67
Section 10.2. Remedies................................................... 70
Section 10.3. Cumulative................................................. 72
Section 10.4. Waiver..................................................... 72
Section 10.5. Cooperation................................................ 72
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Table of Contents
(continued)
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Section 10.6. Application of Funds....................................... 72
Section 10.7. Notices by the MPT Parties................................. 72
ARTICLE XI PERMITTED CONTESTS................................................ 73
ARTICLE XII INDEMNIFICATION.................................................. 73
Section 12.1. Borrower Parties Agreement to Indemnify.................... 73
Section 12.2. Notification and Defense of Claims......................... 74
Section 12.3. Investigations............................................. 75
ARTICLE XIII DISPUTE RESOLUTION.............................................. 75
Section 13.1. Governing Law.............................................. 75
Section 13.2. Jurisdiction and Venue..................................... 76
ARTICLE XIV MISCELLANEOUS.................................................... 76
Section 14.1. Limitation of Liability as to the MPT Parties.............. 76
Section 14.2. Assignment................................................. 77
Section 14.3. Notice..................................................... 77
Section 14.4. Calculation of Time Period................................. 78
Section 14.5. No Waiver.................................................. 78
Section 14.6. Captions................................................... 78
Section 14.7. Entire Agreement; Modification............................. 78
Section 14.8. Schedules and Exhibits..................................... 78
Section 14.9. Further Assurances......................................... 78
Section 14.10. Counterparts............................................... 78
Section 14.11. Expenses................................................... 79
Section 14.12. Securities Offering and Filings............................ 80
Section 14.13. Binding Effect............................................. 80
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made and entered into as of
December 23, 2005 by and among, MPT OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership ("MPT"), MPT OF ODESSA HOSPITAL, L.P., a Delaware limited
partnership ("MPT Odessa")(MPT and MPT Odessa being herein referred to,
collectively, as the "MPT Parties"); and ALLIANCE HOSPITAL, LTD., a Texas
limited partnership ("Alliance"), and SRI-SAI ENTERPRISES, INC., a Texas
corporation (the "General Partner") (Alliance and the General Partner being
herein referred to, collectively, as the "Borrower Parties").
WITNESSETH:
WHEREAS, Alliance is the owner of that certain seventy-eight (78) bed, general
acute care hospital facility, of which twenty-eight (28) beds are licensed to
Alliance's tenant (the "Hospital"), that is located on that certain real
property located in Odessa, Ector County, Texas, which real property is more
particularly described on EXHIBIT A attached hereto and incorporated herein by
reference (the "Land"), and all Improvements located thereon (collectively, the
"Real Property");
WHEREAS, Alliance has requested that MPT Odessa make and extend a loan to
Alliance in the principal amount of Forty Million and No/100 Dollars
($40,000,000.00) (the "Loan"), the proceeds of which shall be used for the
purposes and in the manner set forth herein;
WHEREAS, General Partner is the general partner of Alliance, and as such, will
derive substantial benefits from the transactions contemplated hereby; and
WHEREAS, MPT Odessa is willing to make and extend the Loan to Alliance on the
terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby covenant and
agree as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. CERTAIN DEFINED TERMS. Capitalized terms used herein shall have the
respective meanings ascribed to them in this Section 1.1.
"Additional Charges" has the meaning set forth in Section 6.11(a) hereof.
"Affiliate" means, with respect to any Person, (i) any Person that,
directly or indirectly, controls or is controlled by or is under common control
with such Person, (ii) any other Person that owns, beneficially, directly or
indirectly, 10% or more of the outstanding capital stock, shares or equity
interests of such Person, or (iii) any officer, director, employee, partner,
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member, manager or trustee of such Person or any Person controlling, controlled
by or under common control with such Person (excluding trustees and persons
serving in similar capacities who are not otherwise an Affiliate of such
Person). For the purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, through the ownership of voting securities or
otherwise.
"Agreement" shall have the meaning set forth in the preamble hereof.
"Alliance" shall have the meaning set forth in the preamble hereof.
"Alliance's Notice" shall have the meaning set forth in Section 6.1(m)
hereof.
"Appraisal" means an appraisal of the Real Property prepared by a Person
satisfactory to MPT in its sole discretion and accompanied by a letter executed
by the Person preparing such appraisal authorizing and consenting to MPT's
reliance thereon, each in form and substance satisfactory to MPT in its sole
discretion.
"Appraised Value" means the fair market value of the Real Property as set
forth in any Appraisal.
"Assignment of Leases and Rents" means that certain Assignment of Rents and
Leases dated as of the Closing Date made by Alliance in favor of MPT and
attached hereto as EXHIBIT B.
"Award" means all compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.
"Balance Sheet Date" shall have the meaning set forth in Section 3.5
hereof.
"Balance Sheets" shall have the meaning set forth in Section 3.5 hereof.
"Base Interest" shall, during the Loan Term, mean an amount equal to
monthly debt service under the Loan.
"Borrower Party Instruments" shall mean all documents, agreements and
instruments hereto for or hereafter executed and delivered by any Borrower Party
in connection with the transactions contemplated hereby or in connection with
the Loan or the Collateral and the transactions contemplated thereby, or
necessary to give effect to any of the forgoing, including, without limitation,
this Agreement, the other Loan Documents, the Tenant Leases, the Management
Agreement and each Letter of Credit.
"Borrower Parties" shall have the meaning set forth in the preamble to this
Agreement.
"Borrower Party Plan" shall have the meaning set forth in Section 3.22(f)
hereof.
"Business" means the operation of the Hospital and the engagement in and
pursuit and conduct of any business venture or activity directly related
thereto.
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"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York, New
York are authorized or required by law, regulation or executive order to close.
"Business Employees" shall have the meaning set forth in Section 3.22(a)
hereof.
"Capital Additions" shall mean one or more new buildings or one or more
additional structures annexed to any portion of any of the Improvements, which
are constructed on any parcel or portion of the Land during the Loan Term,
including the construction of a new wing or new story.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by XXXX, and as the same may be hereafter
amended, restated or modified.
"Claim" shall have the meaning set forth in Section 3.19 hereof.
"Closing" shall have meaning set forth in Section 8.1 of this Agreement.
"Closing Date" shall have meaning set forth in Section 8.1 of this
Agreement.
"CMS" means the Centers for Medicare and Medicaid Services.
"Code" means the United States Internal Revenue Code of 1986, as amended
through the date hereof, and all regulations thereunder. Any reference herein to
a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of future law.
"Collateral" shall mean, collectively, the Real Property, the Personal
Property, the Rents and Leases (as such terms are defined in the Assignment of
Leases and Rents), the general partnership interest of the General Partner in
Alliance subject to the Pledge Agreement, and all other properties or assets of
the Borrower Parties that are subject or shall be subject to any lien, security
interest, or other encumbrance pursuant to the Security Documents.
"Collateral Assignment" shall mean a collateral assignment, in form and
substance reasonably acceptable to the MPT Parties, pursuant to which the MPT
Parties shall have the right and privilege, after the occurrence of an Event of
Default, at their option, to assume from the Borrower Parties any lease of real
property or improvements to any of the Borrower Parties by any third party
lessor.
"Commitment Fee" means an amount equal to Two Hundred Thousand and No/100
Dollars ($200,000.00).
"Commitment Letter" means that certain letter dated November 2, 2005 from
MPT to Alliance, accepted by Alliance November 4, 2005.
"Condemnation" means (i) the exercise of any governmental power, whether by
legal proceedings or otherwise, by a Condemnor or (ii) a voluntary sale or
transfer by MPT to any
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Condemnor, either under threat of Condemnation or while legal proceedings for
Condemnation are pending.
"Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
"Confidential Information" with respect to a party means (a) any
confidential, non-public or proprietary information (including, without
limitation, any business records, financial information, business activity,
ownership or investor lists, ownership or investor information, service, data,
documentation, description, know-how, concept, trade secret, copyright or other
intellectual property right) of such party, whether disclosed verbally, in
writing or electronically, or which is otherwise learned by the other party
hereto, and whether disclosed prior to, on or after the date hereof, and (b) all
data, analyses, compilations, studies or other documents prepared by the other
party hereto that contain or reflect any Confidential Information; provided,
however, that the term "Confidential Information" does not include information
which (i) is already in the other party's possession, provided that such
information is not known by the other party to be subject to another
confidentiality Agreement with or other obligation of secrecy to the disclosing
party, or (ii) becomes generally available to the public other than as a result
of a disclosure by the other party in breach hereof, or (iii) becomes available
to the other party on a non-confidential basis from a source other than the
disclosing party or its representatives, provided that such source is not known
by the other party to be bound by a confidentiality agreement with or other
obligation of secrecy to the MPT Parties.
"Consolidated Net Worth" means at any time, the sum of the following for
the Alliance, the General Partner, and their respective consolidated
subsidiaries on a consolidated basis determined in accordance with GAAP:
(a) the amount of capital or stated capital (after deducting the cost of
any treasury shares), plus
(b) the amount of capital surplus and retained earnings (or, in the case of
a capital surplus or retained earnings deficit, minus the amount of such
deficit), minus
(c) the sum of the following (without duplication of deductions in respect
of items already deducted in arriving at surplus and retained earnings):
(i) unamortized debt discount and expense and (ii) any write-up in book
value of assets resulting from a revaluation thereof pursuant to generally
accepted accounting principles subsequent to the most recent Statements of
Cash Flow prior to the date thereof, except any net write-up in value of
foreign currency in accordance with GAAP; any write-up resulting from
reversal of a reserve for bad debts or depreciation; and any write-up
resulting from a change in methods of accounting for inventory.
"Consumer Price Index" or "CPI" shall mean all urban consumers, all items,
U.S. City Average, published by the United States Department of Labor, Bureau of
Labor Statistics, in which 1982-1984 equals one hundred (100). If the Consumer
Price Index is discontinued or revised during the Loan Term, such other
governmental index or computation with which it is
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replaced shall be used in order to obtain substantially the same result as would
be obtained if the Consumer Price Index had not been discontinued or revised.
"Contracts" shall have the meaning set forth in Section 3.20 hereof.
"Credit Enhancements" means all security deposits, security interests,
letters of credit, pledges, guaranties, prepaid rent or other sums, deposits or
interests held by any Borrower Party, if any, with respect to the Collateral,
the Tenant Leases or the tenants or subtenants thereunder.
"Current Manager" means TSR, LLC, a Kansas limited liability company.
"Date of Taking" means the date the Condemnor has the right to possession
of the property being condemned.
"Default Rate" shall have the meaning set forth in the Note.
"DHS" shall mean the Department of State Health Services of the State of
Texas.
"DHHS" shall mean United States Department of Health and Human Services.
"EBITDA" means earnings before the deduction of interest, taxes,
depreciation and amortization, as determined in accordance with GAAP.
"Environmental Claim" means any Claim, action, cause of action,
investigation or notice (written or oral) by any Person alleging actual or
potential liability for investigatory, cleanup or governmental response costs,
or natural resources or property damages, or personal injuries, attorney's fees
or penalties relating to (i) the presence, or release into the environment, of
any Hazardous Materials at any location owned, leased or operated by any
Borrower Party, now or in the past, or (ii) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law.
"Environmental Indemnity Agreement" means that certain Environmental
Indemnity Agreement as of the Closing Date from the Borrower Parties in favor of
the MPT Parties attached hereto as EXHIBIT C.
"Environmental Law" means each federal, state, local and foreign law and
regulation relating to pollution, protection or preservation of human health or
the environment, including ambient air, surface water, ground water, land
surface or subsurface strata, and natural resources, and including each law and
regulation relating to emissions, discharges, releases or threatened releases of
Hazardous Materials, or otherwise relating to the manufacturing, processing,
distribution, use, treatment, generation, storage, containment (whether above
ground or underground), disposal, transport or handling of Hazardous Materials,
or the preservation of the environment or mitigation of adverse effects thereon
and each law and regulation with regard to record keeping, notification,
disclosure and reporting requirements respecting Hazardous Materials, including,
without limitation, RCRA, CERCLA, XXXX, the Hazardous Materials Transportation
Act, the Federal Water Pollution Control Act, the Clean Air Act, the Clean Water
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and all
similar federal,
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state and local environmental statutes, ordinances and the regulations, orders,
or decrees now or hereafter promulgated thereunder, in each case as amended from
time to time.
"Equity Constituents" means, with respect to any Person, as applicable, the
members, general or limited partners, shareholders, stockholders or other
Persons, however designated, who are the owners of the issued and outstanding
equity or ownership interests of such Person.
"Existing Licenses" shall have the meaning ascribed to such term in Section
3.9 hereof.
"Existing Tenant Leases" shall have the meaning ascribed to such term in
Section 6.12(a) hereof.
"Expense Deposit" shall mean the One Hundred Thousand Dollars ($100,000)
expense deposit paid by Alliance or its Affiliates pursuant to Section 4.1 of
the Commitment Letter.
"Expense Reserve" shall have the meaning ascribed to such term in Section
2.1 hereof.
"Extraordinary Repairs" All repairs to the Hospital and other Improvements
of every kind and nature, whether interior or exterior, structural or
non-structural (including, without limitation, all parking decks and parking
lots) which are considered to be extraordinary in nature (as opposed to being
ordinary or normal in nature), as the Borrower Parties and/or the MPT Parties
may determine to be necessary or appropriate from time to time during the Loan
Term.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning set forth in Section 10.1 hereof.
"Financial Statements" shall have the meaning set forth in Section 3.5
hereof.
"Financing Statements" shall mean the financing statements evidencing the
MPT Parties' security interests in the Collateral.
"Fiscal Year" means the twelve (12) calendar month period from January 1 to
December 31.
"Fixtures" means all permanently affixed non-medical equipment, machinery,
fixtures, and other items of real property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and built-in vacuum,
cable transmission, oxygen and similar systems, all of which, to the greatest
extent permitted by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto.
"Full Replacement Cost" shall have the meaning set forth in Section 6.6(a)
hereof.
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"GAAP" means generally accepted accounting principles in the United States,
consistently applied. All accounting terms used herein and not expressly and
otherwise defined herein shall be construed in accordance with, and have the
meanings ascribed or imputed to them under, GAAP.
"General Partner" shall have the meaning set forth in the preamble of this
Agreement.
"Governing Documents" means, with respect to any Person, as applicable,
such Person's charter, articles or certificate of incorporation, formation or
organization, bylaws or other documents or instruments which establish and/or
set forth the rules, procedures and rights with respect to such Person's
governance, including, without limitation, any stockholders, limited liability
company, operating or partnership agreement related to such Person, in each case
as amended, restated, supplemented and/or modified and in effect as of the
relevant date.
"Government Programs" shall have the meaning set forth in Section 3.10
hereof.
"Governmental Entity" means any national, federal, regional, state, local,
quasi-governmental, provincial, municipal, foreign or multinational court or
other governmental or regulatory authority, administrative body or government,
department, board, body, tribunal, instrumentality or commission of competent
jurisdiction.
"Guarantors" shall mean, collectively, X.X. Xxxxx, M.D., X.X. Xxxxxx, M.D.,
Xxxx Xxxxxxxxxxx, M.D., Xxxxxxx X. Xxxxx, M.D., Xxxxxxx Xxxxxxx, M.D.,
Xxxxxxxxxxxxxx Xxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxxx,
M.D., Xxxxxxx X. Xxxx, M.D., Xxxxxxx X. Xxxxxx, M.D., and Xxxxxx X. Xxxxx, M.D.,
and their respective successors and assigns.
"Guaranty" means that certain Guaranty Agreement dated as of the Closing
Date and attached hereto as EXHIBIT D.
"Hazardous Materials" means any substance deemed hazardous under any
Environmental Law, including, without limitation, asbestos or any substance
containing asbestos, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, lead and lead-based paints, radon, pollutants, effluents,
contaminants, emissions or related materials and any items included in the
definition of hazardous or toxic wastes, materials or substances under any
Environmental Law.
"Healthcare Fraud Laws" shall have the meaning set forth in Section 3.12(a)
hereof.
"HIPAA" shall have the meaning set forth in Section 3.11 hereof.
"Hospital" shall have the meaning set forth in the recitals to this
Agreement.
"Impositions" shall mean, collectively, all civil monetary penalties, fines
and overpayments imposed by state and federal regulatory authorities, all taxes
(including, without limitation, all capital stock and franchise taxes of the MPT
Parties, all ad valorem, sales and use, single business, gross receipts,
transaction privilege, rent or similar taxes), assessments (including, without
limitation, all assessments, charges and costs imposed under the Permitted
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Encumbrances, all assessments for public improvements or benefits, whether or
not commenced or completed prior to the Closing Date and whether or not to be
completed within the Loan Term), ground rents, water, sewer or other rents and
charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Real Property
(including all interest and penalties thereon due to any failure in payment by
the Borrower Parties), and all other fees, costs and expenses which at any time
prior to, during or in respect of the Loan Term hereof may be charged, assessed
or imposed on or in respect of or be a lien upon (a) the MPT Parties or the MPT
Parties' interest in the Real Property, (b) the Real Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, sales from, or activity
conducted on, or in connection with, the Real Property or the leasing or use of
the Real Property or any part thereof; provided, however, nothing contained in
this Agreement shall be construed to require the Borrower Parties to pay (1) any
tax based on net income (whether denominated as a franchise or capital stock,
financial institutions or other tax) imposed on the MPT Parties, or (2) any
transfer or net revenue tax of the MPT Parties, or (3) any tax imposed with
respect to the sale, exchange or other disposition by the MPT Parties of any
portion of the Real Property or the proceeds thereof, or (4) except as expressly
provided elsewhere in this Agreement, any principal or interest on any lien,
security interests or other encumbrance on the Real Property granted by the MPT
Parties, except to the extent that any tax, assessment, tax levy or charge which
the Borrower Parties are obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Loan Term is totally or
partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof, in
which case the Borrower Parties, jointly and severally, shall pay.
"Improvements" means all buildings, improvements, structures and Fixtures
now or on the Closing Date located on the Land, including, without limitation,
landscaping, parking lots and structures, roads, drainage and all above ground
and underground utility structures, equipment systems and other so-called
"infrastructure" improvements.
"Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such Person: (i) in
respect of borrowed money (whether secured or unsecured), (ii) under conditional
sale or other title retention agreements relating to property or services
purchased and/or sold by such Person, (iii) evidenced by bonds, notes,
debentures or similar instruments, (iv) for the payment of money relating to a
capitalized lease obligation, (v) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit,
(vi) pursuant to any guarantee, (vii) secured by (or for which the holder of
such obligation has an existing right, contingent or otherwise, to be secured
by) a Lien on the assets or property of such Person, and (b) all liabilities and
obligations of others of the kind described in the preceding clause (a) and
otherwise that (i) such Person is responsible or liable for, directly or
indirectly, as obligor, guarantor, surety or otherwise, or (ii) which are
secured by a Lien on any of the assets or property of such Person or (viii) the
Loan Obligations.
"Indemnified Party" shall have the meaning set forth in Section 12.2
hereof.
"Indemnifying Party" shall have the meaning set forth in Section 12.2
hereof.
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"Insurance Requirements" means all terms of any insurance policy required
by this Agreement (including, without limitation, the requirements in Section
6.6 hereof) and all requirements of the issuer of any such policy, and such
additional insurance which the MPT Parties may reasonably require.
"Intangible Property" shall have the meaning set forth in Section 3.21
hereof.
"JCAHO" shall have the meaning set forth in Section 3.10 hereof.
"Knowledge," "to the knowledge or best knowledge of" or similar words or
phrases means, with respect to any Person, such Person's actual or deemed
knowledge of a particular fact or matter if (i) any of such Person's current or
former officers or directors (or other Persons however denominated, exercising
similar authority with respect to such Person) including, but not limited to, in
the case of any Borrower Party, Xxxxxxx X. Xxxxx, M.D., and Xxxxxx X. Xxxxx,
M.D. (a Person's "Knowledge Group"), has actual knowledge of such fact or
matter; or (ii) any of such Person's Knowledge Group would be expected to
discover or otherwise become aware of such fact or matter after conducting a
reasonably diligent inquiry.
"Labor Proceeding" shall have the meaning set forth in Section 3.22(c)
hereof.
"Land" shall have the meaning set forth in recitals to this Agreement.
"Law" means any federal, state or local statute, rule, regulation,
ordinance, order, code, policy or rule of common law, now or hereafter in
effect, and in each case as amended, and any judicial or administrative
interpretation thereof by a Governmental Entity or otherwise, including, without
limitation, any judicial or administrative order, consent, decree or judgment.
"Legal Requirements" means all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting Alliance's operation of its business on the
Real Property, along with the Collateral or the construction, use or alteration
thereof (including, without limitation, the Americans With Disabilities Act and
Section 504 of the Rehabilitation Act of 1973) whether now or hereafter enacted
and in force, including any which may (a) require repairs, modifications, or
alterations in or to the Collateral, or (b) in any way adversely affect the use
and enjoyment thereof, and all permits, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Alliance, at any time
in force affecting the Collateral.
"Letter of Credit" means an unconditional and irrevocable letter of credit
from a bank acceptable to the MPT Parties in their sole discretion naming the
MPT Parties as the beneficiaries thereunder, in an amount equal to and upon
terms and conditions acceptable to the MPT Parties in its sole discretion,
subject to Section 6.3(c) hereof.
"Licenses" means all Existing Licenses and any New Licenses.
"Lien" means any mortgage, adverse Claim, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, lien (statutory or
otherwise) or preference, security
9
interest or other encumbrance of any kind or nature whatsoever, other than the
Security Documents.
"Limited Partnership Agreement" shall mean that certain First Amended and
Restated Limited Partnership Agreement of Alliance, effective March 8, 2005, by
and among the General Partner and the limited partners of Alliance, as the same
may be amended, restated or modified from time to time.
"Line of Credit" shall mean a line of credit, from a financing source
acceptable of MPT and upon terms reasonably acceptable to MPT, of at least Five
Million Dollars ($5,000,000.00), which shall be available to Alliance during the
Loan Term to fund normal operating and working capital needs.
"Loan" shall have the meaning set forth in the recitals to this Agreement.
"Loan Documents" shall mean, collectively, this Agreement, the Note, the
Security Documents, the Guaranty, the Subordination of Management Agreement, the
Subordination Agreement, the Environmental Indemnity Agreement, and the
Commitment Letter.
"Loan Obligations" shall mean the obligations (including obligations of
performance) and liabilities of any of the Borrower Parties to any of the MPT
Parties of every kind and description whatsoever, direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter incurred,
contracted or arising, or acquired by any of the MPT Parties from any source,
joint or several, liquidated or unliquidated, regardless of how they arise or by
what agreement or instrument they may be evidenced or whether they are evidenced
by any agreement or instrument, and whether incurred as maker, endorser, surety,
guarantor, general partner, drawer, tort-feasor, indemnitor, account party with
respect to a letter of credit or otherwise, and arising out of, incurred
pursuant to and/or in connection with any of the Loan Documents, and any and all
extensions and renewals of any of the same, including but not limited to the
obligation: (a) to pay the principal of and interest on the Note in accordance
with the terms thereof and/or hereof, including any and all extensions,
modifications, and renewals thereof and substitutions therefor; and (b) to pay,
repay or reimburse the MPT Parties for all amounts owing hereunder and/or under
any of the other Loan Documents, including any reimbursement obligations and all
MPT Damages.
"Loan Term" shall mean the period during which any of the Loan Obligations
shall remain outstanding.
"Management Agreement" shall mean any contracts and agreements for the
management of any part of the Real Property, including, without limitation, the
real estate and the Improvements and the operations of the Hospital.
"Management Company" means any person, firm, corporation or other entity or
individual who or which will manage any part of the Hospital and other
Collateral.
"Material Adverse Effect" means any change, event(s), occurrence(s) or
effect(s), whether direct or indirect, that, both before and after giving effect
to the transactions contemplated by this Agreement, could, individually or in
the aggregate, have a material adverse
10
effect on (i) the business, properties, results of operations, assets, revenue,
income or condition (financial or otherwise) of, or the ability to timely
satisfy the obligations or liabilities (whether absolute or contingent) of, any
Borrower Party, (ii) the Business or the Collateral, or (iii) the ability of any
Borrower Party to perform its obligations under, and/or consummate the
transactions contemplated by, this Agreement within the time periods specified
herein.
"Maturity Date" shall have the meaning set forth in the Note.
"Medicaid" shall have the meaning set forth in Section 3.10 hereof.
"Medicare" shall have the meaning set forth in Section 3.10 hereof.
"Mortgage" means that certain Deed of Trust and Fixture Filing, dated as of
the Closing Date, by Alliance for the benefit of MPT attached hereto as EXHIBIT
E.
"MPT" shall have the meaning set forth in the preamble to this Agreement.
"MPT Damages" shall have the meaning set forth in Section 12.1 hereof.
"MPT Indemnified Parties" shall have the meaning set forth in Section 12.1
hereof.
"MPT Odessa" shall have the meaning set forth in the preamble to this
Agreement.
"MPT Parties" shall have the meaning set forth in the preamble to this
Agreement.
"MPT's Notice Address" shall have the meaning set forth in Section 6.6(c)
hereof.
"Net Worth Amount" shall have the meaning set forth in Section 6.3(a)
hereof.
"New Licenses" shall have the meaning set forth in Section 3.9 hereof.
"New Tenant Leases" shall have the meaning ascribed to such term in Section
6.12(b) hereof.
"Noncompete Agreement" means that certain Noncompetition Agreement, dated
as of the Closing Date, attached hereto as EXHIBIT F.
"Note" means that certain Promissory Note, dated as of the Closing Date, in
the original principal amount of Forty Million and No/100 Dollars
($40,000,000.00) made by Alliance and payable to MPT attached hereto as EXHIBIT
G.
"Organizational Documents" shall have the meaning set forth in Section 6.14
hereof.
"Other Agreements" means all agreements of any kind (other than the Loan
Documents), entered into between either of the MPT Parties or any Affiliate of
the MPT Parties, on the one hand, and any Borrower Party or any Affiliate of any
Borrower Party, on the other hand.
"Parties" shall mean, collectively, the Borrower Parties and the MPT
Parties.
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"Partial Taking" shall have the meaning set forth in Section 6.8(c) hereof.
"Permitted Encumbrances" means (i) Liens for or arising from current taxes
not yet due and payable; (ii) easements and other restrictions of record and
approved by the MPT Parties; (iii) matters set forth in the Title Commitment
issued by the Title Company and approved by the MPT Parties; (iv) matters
disclosed on the Survey and approved by the MPT Parties; (v) Liens arising under
the Security Documents and the other Loan Documents; or (vi) other matters,
encumbrances and defects approved by the MPT Parties and set forth in SCHEDULE
6.2 of this Agreement.
"Person" means an individual, a corporation, a limited liability company, a
partnership, an unincorporated association, a joint venture, a Governmental
Entity or another entity or group.
"Personal Property" shall have the meaning set forth in Section 3.16
hereof.
"Personal Property Leases" shall have the meaning set forth in Section 3.16
hereof.
"Physician" means any physician who has rendered or is rendering services
with respect to the operations of the Hospital.
"Pledge Agreement" shall mean that certain Pledge Agreement, dated as of
the Closing Date, pursuant to which the general partnership interest of the
General Partner in Alliance is pledged to the MPT Parties, a copy of which is
attached hereto as EXHIBIT H.
"Primary Intended Use" shall have the meaning set forth in Section 6.4(c)
hereof.
"Public Taking" shall have the meaning set forth in Section 3.15(e) hereof.
"Purchaser" shall have the meaning set forth in Section 10.2(c) hereof.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as the
same may be hereafter amended, restated or modified.
"Real Estate Taxes" shall mean all taxes due and payable as a result of a
Party's interest in the Real Property.
"Real Property" shall have the mean set forth in the recitals to this
Agreement.
"Regularly Scheduled Payment of Base Interest" means any regularly
scheduled payment of Base Interest payable pursuant to the terms of the Note.
"Repairs" shall mean any and all repairs to be made to any of the
Collateral, including, without limitation, the Improvements.
"Reserve" shall have the meaning ascribed to such term in Section 6.5(b)
hereof.
"XXXX" means the Superfund Amendments and Reauthorization Act of 1986, as
the same may be hereafter amended, restated or modified.
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"Schedule" shall have the meaning set forth in Section 6.1(b) hereof.
"Search Reports" means reports of searches made of the uniform commercial
code records of the county in which the Real Property is located, and of the
office of the secretary of state of the State of Texas and in the state in which
the principal office of each Borrower Party is located.
"Security Agreement" shall mean the Security Agreement by and between MPT
of Odessa and Alliance, a copy of which is attached hereto as EXHIBIT I.
"Security Documents" shall collectively mean the Mortgage, the Security
Agreement, the Assignment of Leases and Rents, the Pledge Agreement, the
Collateral Assignment, and all other documents or instruments pursuant to which
any of the MPT Parties has a Lien on any of the assets or properties of the
Borrower Parties or the Guarantors.
"Sentinel Events" shall have the meaning set forth in Section 3.10 hereof.
"Service Provider" means any Person who has rendered or is rendering
services to or on behalf of any of the Borrower Parties with respect to the
operations of the Hospital.
"Special Purpose Entity" means an entity which (i) exists solely for the
purpose of owning and/or leasing all or any portion of the Real Property and
conducting the operation of the Business, (ii) conducts business only in its own
name, (iii) does not engage in any business other than the ownership and/or
leasing all or any portion of the Real Property and the operation of the
Business, (iv) does not hold, directly or indirectly, any ownership interest
(legal or equitable) in any entity or any real or personal property other than
the interest which it owns in the Real Property and the other assets incident to
the operation of the Business, (v) does not have any debt other than as
permitted by the Loan Documents or arising in the ordinary course of the
Business and does not guarantee or otherwise obligate itself with respect to the
debts of any other Person other than as approved by MPT, (vi) has its own
separate books, records, accounts, financial statements and tax returns (with no
commingling of funds or assets), (vii) holds itself out as being a company
separate and apart from any other entity, (viii) maintains all company
formalities independent of any other entity.
"Standards" shall have the meaning set forth in Section 3.11 hereof.
"Subordination of Management Agreement" means that certain Subordination
Agreement (Management Agreement), dated as of the Closing Date by and between
Management Company and MPT Odessa attached hereto as EXHIBIT J.
"Subordination Agreement" means that certain Subordination Agreement, dated
as of the Closing Date, pursuant to which all existing indebtedness owed to the
General Partner by Alliance is subordinated, a copy of which is attached hereto
as EXHIBIT K.
"Survey" means a current "as-built" ALTA survey of the Real Property,
certified to ALTA requirements in effect as of January 1, 2006, and otherwise
sufficient to cause the Title Company to delete (except for shortages in area)
the printed exceptions for discrepancies, conflicts, or shortages in area or
boundary lines, or encroachments, and otherwise meeting the
13
requirements of Section 5.1 hereof, and prepared by an engineer or surveyor
licensed in the state in which the Real Property is located acceptable to MPT in
its sole discretion.
"Taking" shall mean a taking or voluntary conveyance during the Loan Term
of all or part of the Collateral, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of, any Condemnation
or other eminent domain proceeding affecting the Collateral whether or not the
same shall have actually been commenced.
"Tangible Net Worth" means, with respect to any Borrower Party at any given
time, the equity of such Borrower Party determined in accordance with GAAP,
minus the value of all intangible assets used in such calculation.
"Tax Return" means any return, declaration, filing, report, claim for
refund or information return or other statement relating to Taxes (whether filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Entity), including any schedule or attachment thereto, and
including any amendment or extension thereof.
"Tax Structure" shall have the meaning set forth in Section 6.1(k)(iii)
hereof.
"Tax Treatment" shall have the meaning set forth in Section 6.1(k)(iii)
hereof.
"Taxes" means any and all taxes, charges, fees, levies or other
assessments, including, without limitation, any and all income, gross receipts,
excise, real and personal property (including leaseholds and interests in
leaseholds), sales, use, occupation, transfer, license, ad valorem, gains,
profits, gift, minimum estimated, social security, unemployment, disability,
premium, recapture, credit, payroll, withholding, severance, stamp, capital
stock, value added leasing, franchise and other taxes or similar charges of any
kind including any interest and penalties on or additions thereto or
attributable to any failure to comply with any requirement regarding any Tax
Return.
"Tenant" means the lessees, tenants or sublessees under the Tenant Leases,
if any.
"Tenant Leases" means all leases, subleases, commitment letters, letters of
intent and other rental agreements, whether written or oral, now or hereafter in
effect, if any, that grant or will grant a possessory interest in and to any
space in the Real Property (including the Hospital or any other Improvements) or
that otherwise assign or convey rights with regard thereto, and all Credit
Enhancements, if any, held in connection therewith.
"THHSC" means the Texas Health and Human Services Commission.
"Third Party Claim" shall have the meaning set forth in Section 12.2(a)
hereof.
"Title Commitment" means a current commitment issued by the Title Company
to the MPT Parties pursuant to the terms of which the Title Company shall commit
to issue the Title Policy to the MPT Parties in accordance with the provisions
of this Agreement, and reflecting all matters which would be listed as
exceptions to coverage on the Title Policy.
"Title Company" shall have the meaning set forth in Section 5.2 hereof.
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"Title Policy" means a title insurance policy in the amount of Forty
Million and No/100 Dollars ($40,000,000.00) issued by the Title Company in form
and substance satisfactory to MPT in its sole discretion and meeting the
requirements of Section 5.2 hereof.
"Total Taking" shall have the meaning set forth in Section 6.8(b) hereof.
"Unsuitable for Its Use" or "Unsuitable for Its Primary Intended Use" as
used anywhere in this Agreement, the terms "Unsuitable for Its Use" or
"Unsuitable for Its Primary Intended Use" shall mean that, by reason of damage
or destruction, or a partial Taking by Condemnation, the Facility cannot be
operated on a commercially practicable basis for its Primary Intended Use,
taking into account, all relevant factors, and the effect of such damage or
destruction or partial Taking.
SECTION 1.2. INTERPRETATION; TERMS GENERALLY. The definitions set forth in
Section 1.1 and elsewhere in this Agreement shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Unless otherwise indicated, the words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "herein", "hereof" and "hereunder" and words of similar import shall
be deemed to refer to this Agreement (including the Schedules and Exhibits) in
its entirety and not to any part hereof, unless the context shall otherwise
require. All references herein to Articles, Sections, Schedules and Exhibits
shall be deemed to refer to Articles, Sections and Schedules of, and Exhibits
to, this Agreement, unless the context shall otherwise require. Unless the
context shall otherwise require, any references to any agreement or other
instrument or statute or regulation are to it as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any corresponding
provisions of successor statutes or regulations). Any reference in this
Agreement to a "day" or number of "days" that does not refer explicitly to a
"Business Day" or "Business Days" shall be interpreted as a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and such calendar day is not a
Business Day, then such action or notice shall be deferred until, or may be
taken or given on, the next Business Day.
ARTICLE II
THE LOAN
SECTION 2.1. THE LOAN. Based upon the representations, warranties and covenants
of the Borrower Parties as set forth herein, and subject to the terms and
conditions hereinafter set forth, MPT Odessa shall loan and advance to Alliance
the principal amount of Forty Million and NO/100 Dollars ($40,000,000.00) at the
Closing, the proceeds of which Loan shall be used by Alliance for general
business purposes directly related to and necessitated by the Business.
Notwithstanding the foregoing, at the Closing, the Borrower Parties shall
deposit One Hundred Thousand and NO/100 Dollars ($100,000.00) of the Loan
proceeds into a reserve account (the "Expense Reserve") to be held by MPT for a
period of sixty (60) days following the Closing Date. The amounts in the Expense
Reserve, including interest, shall be used by the MPT Parties to pay the costs
and expenses pursuant to Section 14.11 hereof, without the necessity of
obtaining the signature of an officer of the Borrower Parties. The Borrower
Parties hereby grant
15
to the MPT Parties a security interest in all monies deposited into the Expense
Reserve and the Borrower Parties shall, within fifteen (15) days following the
Closing Date, execute all documents necessary for the MPT Parties to perfect
their security interest in the Expense Reserve. So long as no Event of Default
has occurred, and no event has occurred which with the giving of notice or the
passage of time or both would constitute an Event of Default hereunder, any
amounts remaining in the Expense Reserve, after the payment of and the
reimbursement for the costs and expenses payable by the Borrower Parties
pursuant to Section 14.11 hereof, shall be returned to Alliance promptly
following the expiration of such sixty (60) day period.
SECTION 2.2. INCREASED COSTS.
(a) If, after the date of delivery of this Agreement, any change in any law
or regulation or in the interpretation, administration or enforcement thereof by
any court or governmental authority charged with the administration thereof or
any action by any governmental authority (whether or not constituting or
resulting from such change) shall impose, modify or deem applicable any reserve,
assessment, special deposit or similar requirement against the Loan made by MPT
Odessa, and the result of any such event shall be to increase the cost to the
MPT Parties of making or maintaining the Loan (which increase in cost shall be
the result of the MPT Parties' reasonable allocation of the aggregate of such
cost increases resulting from such events and shall be calculated without giving
effect to any participation granted by the MPT Parties in this Agreement or
elsewhere), then, upon demand by the MPT Parties, Alliance shall immediately pay
to the MPT Parties from time to time, as specified by the MPT Parties in
writing, additional amounts which shall be sufficient to compensate the MPT
Parties for such increased costs.
(b) The MPT Parties shall deliver to the Borrower Parties a certificate as
to such increased costs incurred by the MPT Parties as a result of any event
referred to in subsection (a) of this Section, and such certificate shall be
conclusive, absent manifest error, as to the amount thereof. In making the
determination contemplated by such certificate, the MPT Parties may make such
reasonable estimates, assumptions, allocations and the like that the MPT Parties
deem to be appropriate.
SECTION 2.3. THE NOTE. The Loan shall be evidenced by, and shall bear interest,
be repaid and be subject to such other terms and conditions all as set forth in,
the Note.
SECTION 2.4. SECURITY. The Loan Obligations of the Borrower Parties shall be
secured by, among other things, the Security Documents and the other Loan
Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER PARTIES
With the understanding that the MPT Parties shall rely hereon, and as a material
inducement to the MPT Parties to enter into this Agreement and to MPT Odessa
making and extending the Loan, each Borrower Party hereby jointly and severally
represents, warrants and covenants to the MPT Parties as of the date hereof and
as of the Closing Date as follows:
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SECTION 3.1. ORGANIZATION. Each Borrower Party is a corporation, limited
liability company or limited partnership, as applicable, duly incorporated,
organized or formed (as applicable), validly existing and in good standing under
the laws of their respective states of incorporation, organization or formation,
as applicable, and is duly licensed in each jurisdiction in which the nature of
the business conducted, or the assets owned, operated and/or leased, by such
Borrower Party requires or makes such qualification necessary. Alliance is, and
has at all times since its incorporation, organization or formation, as
applicable, been, a Special Purpose Entity. Simultaneously with the execution of
this Agreement, Alliance has provided the MPT Parties evidence that Alliance is
a Special Purpose Entity and is in good standing in the state of its
organization and in the state in which the Collateral is located. SCHEDULE 3.1
sets forth the ownership of each Borrower Party and, except as set forth
therein, no other Person has any equity interest in any Borrower Party or any
option, warrant or other right to acquire same, nor shall any other Party obtain
any such interest, option, warrant or right without the prior written consent of
MPT. The Board of Directors of Alliance consists of seven (7) directors, and no
more than three (3) of such directors are Equity Constituents of the Borrower
Parties.
SECTION 3.2. AUTHORIZATION AND ENFORCEABILITY. Each Borrower Party has the
applicable requisite corporate or limited partnership power and authority to
conduct its business as it is now being conducted and as proposed to be
conducted and to execute, deliver and carry out the terms of this Agreement,
together with all documents and agreements necessary to give effect to the
provisions of this Agreement and the other Borrower Party Instruments, and to
consummate the transactions contemplated hereby and thereby. All applicable
corporate or limited partnership actions required to be taken by each Borrower
Party (including, without limitation, all necessary actions by the board of
directors, general partners, and Equity Constituents of such Borrower Party) to
authorize the execution, delivery and performance of this Agreement as well as
the other Borrower Party Instruments and all transactions contemplated hereby
and thereby, have been duly and properly taken or obtained in accordance and
compliance with, as applicable, such Borrower Party's Governing Documents. Each
Borrower Party has heretofore delivered to the MPT Parties true, correct and
complete copies of such Borrower Party's Governing Documents. No other action on
the part of any Borrower Party or any of its Equity Constituents is necessary to
authorize the execution, delivery and performance of this Agreement or the other
Borrower Party Instruments and all transactions contemplated hereby and thereby.
This Agreement, the Borrower Party Instruments and all agreements to which any
Borrower Party will become a party in connection herewith or therewith are and
will constitute the valid and legally binding obligations of such Borrower
Party, and are and will be enforceable against such Borrower Party in accordance
with the respective terms hereof or thereof, except as enforceability may be
restricted, limited or delayed by applicable bankruptcy, insolvency or other
similar laws affecting creditors' rights generally and except as enforceability
may be subject to and limited by general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
SECTION 3.3. ABSENCE OF CONFLICTS. Each Borrower Party's execution, delivery and
performance of this Agreement and the other Borrower Party Instruments, and the
consummation of the transactions contemplated hereby and thereby, will not, with
or without the giving of any applicable notice and/or the passage of time: (i)
violate or conflict with any provision of such Borrower Party's Governing
Documents; (ii) violate any provision of any Law to which such Borrower Party is
subject; (iii) violate or conflict with any judgment, order, writ or decree of
any court applicable to such Borrower Party; (iv) result in or cause the
creation of a Lien on any of
17
the Collateral other than those in favor of the MPT Parties hereunder or
thereunder; or (v) except as disclosed on SCHEDULE 3.3, result in the breach or
termination of any provision of, or create rights of acceleration or constitute
a default under, the terms of any indenture, mortgage, deed of trust, contract,
agreement or other instrument to which such Borrower Party is a party or by
which such Borrower Party or any of the Collateral is bound.
SECTION 3.4. CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 3.4, no
license, permit, qualification, order, consent, authorization, approval or
waiver of, or registration, declaration or filing with, or notification to, any
Governmental Entity or other Person is required to be made or obtained by or
with respect to any Borrower Party in connection with the execution, delivery
and performance of this Agreement or the Borrower Party Instruments by any
Borrower Party or the consummation of the transactions contemplated hereby or
thereby.
SECTION 3.5. FINANCIAL STATEMENTS. SCHEDULE 3.5 sets forth (i) the audited
balance sheets of Alliance for the fiscal years ended December 31, 2003 and
December 31, 2004, (ii) the unaudited balance sheet of each Borrower Party at
June 30, 2005 (the "Balance Sheet Date") (the balance sheets described in
subsections (i) and (ii) above being herein referred to, collectively, as the
"Balance Sheets"), (iii) the audited statement of income and cash flows of
Alliance for the fiscal years ended December 31, 2003 and December 31, 2004 and
(iv) the unaudited statement of income of Alliance for the six (6) month period
ended June 30, 2005 (the financial statements described in this sentence, being
herein referred to, collectively, as the "Financial Statements"). Except as set
forth on SCHEDULE 3.5, the Financial Statements have been prepared in accordance
with GAAP, are based on the books, records and accounts of the Borrower Parties
and fairly present the financial condition and results of operations, cash flows
and shareholders' equity of the Borrower Parties as of the respective dates
thereof and for the respective periods indicated therein, except (i) that the
unaudited interim statements do not include complete note (including footnote)
disclosure as required by GAAP; and (ii) that the unaudited interim statements
are subject to normal, year-end adjustments which are not, and will not be,
material in amount or effect, either individually or in the aggregate.
SECTION 3.6. ACCOUNTS RECEIVABLE. The accounts receivable of each Borrower Party
include only accounts receivable arising from bona fide transactions in the
conduct of the ordinary course of business of such Borrower Party, are in all
material respects true and genuine, represent legal, valid and binding
obligations of the respective debtors enforceable in accordance with their terms
and are collectible net of reserves. No material payment of said receivables is
contingent upon performance of any obligations or contract, past or future, and,
except as set forth on SCHEDULE 3.6, all such receivables are free of all
security interests and encumbrances created by any Borrower Party. Except as set
forth on SCHEDULE 3.6, no defense, counterclaim, offset or adjustment exists as
to any such account receivable. Except as set forth on SCHEDULE 3.6, the
Borrower Parties have good, clear and indefeasible title to and ownership of all
their respective accounts receivable, free and clear of all Liens and may grant
the MPT Parties at least a second priority security interest in and to such
accounts receivable.
SECTION 3.7. NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 3.7, no
Borrower Party has any material liability or obligation, whether absolute,
accrued, contingent or otherwise, including any potential future liability
arising out of acts or omissions which have already occurred, which is not fully
and accurately reflected or reserved against in the Balance Sheets
18
except for liabilities or obligations that may arise in the ordinary course of
business of the Borrower Parties, consistent with the past practice of the
Borrower Parties since the date of the most recent Financial Statement delivered
to the MPT Parties (none of which results from, arises out of, relates to, is in
the nature of, or is caused by any breach of contract, breach of warranty, tort,
infringement or violation of law). No Borrower Party has Knowledge of any fact,
condition or circumstance which could form the basis of any such liability or
obligation.
SECTION 3.8. ABSENCE OF CHANGES. Except as set forth on SCHEDULE 3.8, each
Borrower Party has, since June 30, 2005:
(a) conducted its business only in the ordinary course of business and
consistently with its past practices;
(b) not suffered any change, event or circumstance which has had, or could
have, a Material Adverse Effect;
(c) preserved its legal existence and retained its business organization
intact;
(d) maintained its relationships with all suppliers, trade creditors and
trade debtors;
(e) paid or satisfied all of its debts, liabilities or obligations as the
same became due;
(f) paid all compensation and other obligations to its employees when the
same became due and payable;
(g) timely made all applicable filings with Governmental Entities;
(h) not mortgaged, pledged, subjected to Lien, charged, encumbered or
granted a security interest in or to any of the Collateral other than the lien
of the Security Documents and the other Loan Documents;
(i) except as otherwise provided in this Agreement, the Security Documents
and the other Loan Documents, not sold or transferred any of its assets except
for sales of inventory in the ordinary course of business and consistently with
its past practices;
(j) not cancelled any debts owing to it or otherwise granted or waived any
right of substantial value;
(k) not terminated or materially modified any contract, lease, agreement or
arrangement with any payor, vendor or supplier;
(l) not made any material capital expenditure or commitment;
(m) not made or received any loans or advances to or from any Person;
(n) not made or suffered any change to its Governing Documents;
(o) maintained its books and records in accordance with GAAP, consistent
with past practices;
19
(p) not incurred, assumed or guaranteed any Indebtedness;
(q) not experienced or caused any defections in its medical staff; or
(r) not agreed or offered, whether in writing or otherwise, to take, and no
Borrower Party (nor any Person or group of Persons possessing and/or exercising
management authority with respect to such Borrower Party) or any Equity
Constituents of any Borrower Party have authorized the taking of, in
contravention any action described in Section 3.8(a) through Section 3.8(p)
above.
SECTION 3.9. LICENSES. The Borrower Parties have all federal, state and local
governmental licenses, permits, approvals, qualifications, variances,
certificates of need, franchises, accreditations, certificates, certifications,
consents, permits and other authorizations and all contracts, including
contracts with Governmental Entities, from all applicable Governmental Entities
necessary or proper in order to operate the Hospital and to conduct the Business
(the "Existing Licenses"). All Existing Licenses issued to and held by the
Borrower Parties as of the date hereof are identified and described on SCHEDULE
3.9. True, correct, and current copies of each such Existing License have been
previously delivered to the MPT Parties by the Borrower Parties. Additionally,
the Borrower Parties shall immediately deliver to MPT Parties all additional
federal, state and local governmental licenses, permits, approvals,
qualifications, variances, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other authorizations, and
all contracts, including contracts with Governmental Entities, that are
necessary or proper to operate the Hospital and to conduct the Business that are
obtained during the Loan Term (the "New Licenses"). Except as set forth on
SCHEDULE 3.9, the Borrower Parties have good, clear and indefeasible title to
and ownership of all the Existing Licenses, free and clear of all Liens, and may
grant the MPT Parties a first priority security interest in and to the Existing
Licenses. Except as set forth on SCHEDULE 3.9, the Borrower Parties previously
have complied, and are currently complying, with their respective obligations
under each of the Existing Licenses and all such Existing Licenses are in full
force and effect. No written notice from any authority with respect to a
threatened, pending or possible revocation, termination, suspension or
limitation of any of the Existing Licenses has been issued or given to any
Borrower Party, and no Borrower Party has any Knowledge of the proposed or
threatened issuance of any such notice or of any grounds or basis therefor. The
Hospital is currently licensed as a general acute-care hospital with fifty (50)
general acute-care beds, and will remain so licensed through the Closing Date in
compliance with, and subject only to, the usual and customary laws and
government regulations pertaining to the operation of an acute-care hospital in
the State of Texas.
SECTION 3.10. ACCREDITATION; MEDICARE AND MEDICAID; THIRD PARTY PAYORS. Alliance
is in the process of obtaining accreditation by the Joint Commission on
Accreditation of Healthcare Organizations ("JCAHO") and, to the extent
available, has previously delivered to the MPT Parties true, correct and
complete copies of the following documents: (i) the most recent JCAHO
accreditation survey reports for the Hospital and deficiency list and plan of
correction, if any, and a list and description of events in the past three (3)
years at the Hospital that constitute "Sentinel Events" (as defined by JCAHO),
if any, and any documentation that was created prepared and/or produced by, or
on behalf of, any Borrower Party to satisfy JCAHO requirements relating to
addressing such Sentinel Events; (ii) any state licensing survey reports
20
with respect to the Hospital for the two (2) year period prior to the date
hereof, as well as any statements of deficiencies and plans of correction in
connection with such reports; (iii) the fire marshal's surveys for the past two
(2) years and list of deficiencies, if any, for the Hospital; and (iv) the
boiler inspection reports for the past two (2) years and list of deficiencies,
if any, for the Hospital. Alliance has taken all reasonable steps to correct all
such deficiencies and a description of any uncorrected deficiency is set forth
on SCHEDULE 3.10. Each Borrower Party participates without restriction under
Title XVIII of the Social Security Act ("Medicare") and Title XIX of the Social
Security Act ("Medicaid"), the Medicare and the Medicaid programs of the State
of Texas, and the TRICARE/CHAMPUS programs (collectively, the "Government
Programs"). Alliance has received Medicare and Medicaid reimbursement with
respect to the Hospital and has taken all actions necessary to be eligible to
receive payment without restriction under Medicare and Medicaid. The Hospital is
in compliance with the conditions of participation for the Government Programs,
maintains all approvals or qualifications necessary for capital reimbursement,
and has taken all actions deemed necessary by CMS to be in compliance with 42
C.F.R. Sections 489.20 and 489.24, such that its Medicare provider agreement
will not be terminated for failure to so comply. Except as set forth on SCHEDULE
3.10, there is no pending, nor, to the best of the Borrower Parties' Knowledge,
threatened, proceeding or investigation under the Government Programs involving
the Hospital or any of the Collateral. Alliance has previously delivered to the
MPT Parties true, correct and complete copies of the most recent Medicare and
Medicaid certification survey reports for the Hospital, including any statements
of deficiencies and plans of correction and the corrective action plans related
thereto. Alliance has taken all reasonable steps to correct all such
deficiencies and a description of any uncorrected deficiency is set forth on
SCHEDULE 3.10. With respect to the operation of the Hospital, except as set
forth on SCHEDULE 3.10, none of the Borrower Parties nor any of their officers,
directors or any of the Business Employees (as hereinafter defined), nor any
Borrower Party (or Equity Constituent thereof) or, to the Borrower Parties'
Knowledge, any Service Provider (i) has been excluded, suspended or debarred
from, or otherwise adjudicated, deemed or determined ineligible for,
participation in any Government Program, including Medicare or Medicaid, (ii)
has been convicted of a criminal offense related to conduct that would trigger
an exclusion from any Government Program, (iii) committed any act or omission
which could result in, or form the basis of, any of the actions described in
clauses (i) or (ii) of this sentence; and (v) no Medicare funds have been used
to make any payment for any items or services furnished by any excluded
individual. Alliance has timely filed, or caused to be timely filed, all cost
reports required by third party payors, including, but not limited to,
Government Programs and other insurance carriers, and, except as disclosed on
SCHEDULE 3.10 all such reports are or will be complete and accurate when filed.
Except as disclosed on SCHEDULE 3.10, Alliance is, and has been, in compliance
with filing requirements with respect to cost reports of the Hospital, including
appropriate allocation of expenses associated with any management or consulting
services provided by the Borrower Parties or any employees of the Borrower
Parties, and such reports do not claim, and the Hospital has not received,
payment or reimbursement in excess of the amount provided or allowed by
applicable law or any applicable agreement, except where excess reimbursement
may be noted on the cost report. True and correct copies of the cost reports to
any and all third parties for the Hospital for the three (3) most recent fiscal
years with respect to which Alliance received such cost reports have been made
available to the MPT Parties. Except as disclosed on SCHEDULE 3.10, no Borrower
Party has received any written notice of any dispute relating to the Hospital
between any Borrower Party and any Governmental
21
Entity, including any fiscal intermediary or carrier, federal, state or local
governmental body or entity, or the Administrator of the Center for Medicare and
Medicaid Services, with respect to any Government Program cost reports or claims
filed with respect to the Hospital, on or before the date of this Agreement.
SECTION 3.11. HIPAA COMPLIANCE. Each Borrower Party is in full compliance with
the Standards for Privacy of Individually Identifiable Health Information and
the Transaction and Code Set Standards (the "Standards") which were promulgated
pursuant to the Health Insurance Portability and Accountability Act of 1996
("HIPAA"). SCHEDULE 3.11 includes any privacy, security or transaction and code
set standards compliance plan of each Borrower Party in place or in development,
and any plans, analyses or budgets relating to information systems, including
but not limited to necessary purchases, upgrades or modifications to effect
HIPAA compliance.
SECTION 3.12. HEALTHCARE REGULATORY MATTERS.
(a) No Borrower Party, or, to the Borrower Parties' Knowledge, any
Physician, Service Provider or other Person rendering services (including
directly or indirectly referring patients) to or at, or in any way affiliated
with, the Hospital (i) is a party to, or has received notice of, the
commencement of any investigation or debarment proceedings or any governmental
investigation or action (including any civil investigative demand or subpoena)
under the False Claims Act (31 U.S.C. Section 3729 et seq.), the Anti-Kickback
Act of 1986 (41 U.S.C. Section 51 et seq.), the Federal Health Care Programs
Anti-Kickback statute (42 U.S.C. Section 1320a-7a(b)), the Ethics in Patient
Referrals Act of 1989, as amended (Xxxxx Law) (42 U.S.C. 1395nn), the Civil
Money Penalties Law (42 U.S.C. Section 1320a-7a), or the Truth in Negotiations
(10 U.S.C. Section 2304 et seq.), Health Care Fraud (18 U.S.C. 1347), Wire Fraud
(18 U.S.C. 1343), Theft or Embezzlement (18 U.S.C. 669), False Statements (18
U.S.C. 1001), False Statements (18 U.S.C. 1035), and Patient Inducement Statute
and equivalent state statutes or any rule or regulation promulgated by a
Governmental Entity with respect to any of the foregoing (collectively, the
"Healthcare Fraud Laws") affecting any Borrower Party, the Hospital, or the
Business (and no grounds for any such proceeding, investigation or action
exist); and (ii) is not in full compliance with all applicable Healthcare Fraud
Laws. The terms and structure of the Tenant Leases currently comply, and shall
comply in all respects, with all Healthcare Fraud Laws.
(b) Except as set forth on SCHEDULE 3.12, no Borrower Party, or, to the
Borrower Parties' Knowledge, any Physician, Service Provider or other Person
rendering services (including directly or indirectly referring patients) to or
at, or in any way affiliated with, the Hospital, has ever been investigated,
charged or implicated in any violation of any state or federal statute or
regulation involving false, fraudulent or abusive practices relating to
participation in state or federally sponsored reimbursement programs, including,
but not limited to, false or fraudulent billing practices. No Borrower Party,
or, to the Borrower Parties' Knowledge, any Physician, Service Provider or other
Person rendering services (including directly or indirectly referring patients)
to or at, or in any way affiliated with, the Hospital, has ever engaged in any
of the following: (i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any applications for any
benefit or payment under Medicare or Medicaid program; (ii) knowingly and
willfully making or causing to be made any false statement or representation of
a material fact for use in determining rights
22
to any benefit or payment under Medicare or Medicaid program; (iii) failing to
disclose knowledge of any event affecting the initial or continued right to any
benefit or payment under Medicare or Medicaid program on its own behalf or on
behalf of another, with intent to secure such payment or benefit fraudulently;
(iv) knowingly and willfully soliciting, paying, or receiving any remuneration
(including kickback, bribe or rebate), directly or indirectly, overtly or
covertly, in cash or in kind, or offering to pay such remuneration (A) in return
for referring an individual to a Person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or (B) in return for purchasing, leasing or
ordering or arranging for or recommending the purchasing, leasing or ordering of
any good, facility, service, or item for which payment may be made in whole or
in part by Medicare or Medicaid; (v) presenting or causing to be presented a
claim for reimbursement for services that is for an item or service that was
known or should have been known to be (A) not provided as claimed or (B) false
or fraudulent; or (vi) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omitting to state a fact required to be stated therein or
necessary to make the statements contained therein not misleading) of a material
fact with respect to (A) a facility in order that the facility may qualify for
Governmental Entity certification or (B) information to be provided under 42 USC
Section 1320a-3.
SECTION 3.13. TAXES. Each Borrower Party has duly filed or caused to be filed
all Tax Returns of such Borrower Party (taking into account valid extensions of
time to file) prior to the applicable due date therefor. Such Tax Returns are
accurate and complete in all material respects, and each Borrower Party has paid
or caused to be paid all Taxes for the periods covered thereby, whether or not
shown to be due on such Tax Returns. There are (i) no outstanding Liens for any
Taxes that have been filed by any Governmental Entity against the Collateral or
any other assets of any Borrower Party used in the Business (other than for ad
valorem taxes not yet due and payable), and (ii) no claims being asserted with
respect to any Taxes relating to any Borrower Party, the Collateral or the
Business for which any MPT Party could be held liable, and there is no basis for
the assertion of any such claim. No Borrower Party has made or agreed or offered
to make, or revoked or agreed or offered to revoke, a Tax election with respect
to or affecting the Collateral at any time during the last two (2) years. Except
as set forth on SCHEDULE 3.13, no Borrower Party is a party to any tax abatement
agreement relating to the Collateral. Except as disclosed with reasonable
specificity on SCHEDULE 3.13, there are no outstanding waivers or agreements
extending the statute of limitations for any period with respect to any Tax to
which the Collateral or any of the MPT Parties may be subject following the date
hereof.
SECTION 3.14. GOOD TITLE TO COLLATERAL. Except as set forth on SCHEDULE 3.14,
each Borrower Party has good, absolute and marketable title to, and unrestricted
possession of, all of the Collateral (other than the Real Property, which is
addressed in Section 3.15 below, Personal Property, which is addressed in
Section 3.16 below, and accounts receivable, which are addressed in Section 3.6
above), free and clear of all Liens (other than Permitted Encumbrances) and any
adverse Claims of third parties, and such Borrower Party may grant the MPT
Parties a first priority security interest in and to all of the Collateral. The
Collateral constitutes all assets and properties necessary for the operation of
the Hospital and the Business as they are currently being operated.
23
SECTION 3.15. TITLE AND CONDITION OF THE REAL PROPERTY.
(a) Except as set forth on SCHEDULE 3.15, Alliance is the sole and
exclusive legal and equitable owner of all right, title and interest in the Real
Property.
(b) The location, construction, occupancy, operation, use and encumbrance
of the Real Property (including the Improvements) do not violate any applicable
law, statute, ordinance, rule, regulation, order or determination of any
Governmental Entity or any restrictive covenant or deed restriction (recorded or
otherwise) affecting the Real Property, including, without limitation, any
applicable zoning or subdivision ordinance or building code, flood disaster law,
or health and environmental law or regulation.
(c) With regard to the Real Property, except as set forth on SCHEDULE
3.15(C), there are no (i) encroachments onto or from adjacent properties; (ii)
violations of set-back, building or side lines; (iii) encroachments onto any
easements or servitudes located on such Real Property; (iv) pending or, to the
Knowledge of any Borrower Party, threatened boundary line disputes; (v) portions
of such Real Property located in a flood plain or in an area defined as a
wetland under applicable state or federal law; (vi) cemeteries or gravesites
located on the Real Property; or (vii) mine shafts under the Real Property or
any other latent defects, such as sinkholes, regarding or affecting the Real
Property.
(d) The existing water, sewer, gas and electricity lines, storm sewer and
other utility systems are adequate to serve the utility needs of the Real
Property. All of said utilities are installed and operating, and all
installation and connection charges have been paid in full.
(e) Except as set forth on SCHEDULE 3.15(E), neither the whole nor any
portion of the Real Property has been condemned, requisitioned or otherwise
taken by any public authority (a "Public Taking"), and no notice of any Public
Taking has been received by any Borrower Party with regard to any of the Real
Property. The Borrower Parties shall immediately deliver any notice thereof to
the MPT Parties. No Borrower Party has any Knowledge of any Public Taking being
threatened or contemplated. No Borrower Party has any Knowledge of any public
improvements which have been ordered to be made and/or which have not heretofore
been assessed, and, to the Knowledge of the Borrower Parties, there are no
special, general or other assessments pending or threatened against or affecting
any of the Real Property.
(f) Except as set forth on SCHEDULE 3.15(F), there are no Claims, actions,
suits, proceedings or investigations pending or, to the Knowledge of any
Borrower Party, threatened, against or affecting all or any portion of the Real
Property.
(g) All Existing Licenses required by all Governmental Entities having
jurisdiction have been issued for the Real Property and are in full force and
effect. The Improvements, as designed and constructed, comply with all statutes,
restrictions, regulations and ordinances applicable thereto, including but not
limited to the Americans with Disabilities Act and Section 504 of the
Rehabilitation Act of 1973. No Borrower Party either has in its possession or
has Knowledge of any studies or reports which specify or suggest the presence of
any defects in the design or construction of any of the Improvements, and if any
such report is obtained, Borrower Party shall deliver any such study or report
to the MPT Parties.
24
(h) No Borrower Party has Knowledge of any fact or condition which would
result in the termination of the current access from the Real Property to any
presently existing public highways and/or roads adjoining or situated on the
Real Property or to sewer or other utility services to serve the Real Property.
(i) SCHEDULE 3.15(I) attached hereto sets forth an accurate and complete
list of all Tenant Leases. SCHEDULE 3.15(I) designates which of the Tenant
Leases described therein are with the referral sources (as determined by any of
the Healthcare Fraud Laws) of any Borrower Party or Guarantor. SCHEDULE 3.15(I)
specifies the rent and security deposit, if any, for each Tenant Lease. The
Borrower Parties shall provide the MPT Parties with complete, correct and
current copies of all Tenant Leases. The Borrower Parties shall provide to the
MPT Parties, prior to the Closing Date, Tenant Lease estoppels in form
satisfactory to the MPT Parties from all Tenants under the applicable Tenant
Leases. Except for the Tenant Leases and any other items listed on SCHEDULE
3.15(I), there are no purchase contracts, leases of space, options, rights of
first refusal or other written or oral agreements of any kind whereby any person
or entity has acquired, or has any basis to assert any right, title or interest
in, or right to the possession, use, enjoyment or proceeds of, any part or all
of the Real Property or the Improvements.
(j) Except as set forth on SCHEDULE 3.15(J), no Borrower Party has accepted
the payment of rent or other sums due under any of the Tenant Leases more than
one (1) month in advance. None of the Tenant Leases and none of the rents or
other charges payable thereunder, if any, have been assigned, pledged or
encumbered. Except as set forth on SCHEDULE 3.15(J), as of the Closing Date, no
brokerage or leasing commissions or other compensations are or will be due or
payable to any Person with respect to, or on account of, any Tenant Lease or any
extensions or renewals thereof, if any, excepting those agreements entered into
or accepted in writing by the MPT Parties.
(k) All tenant improvements, repairs and other work and obligations, if
any, required to be performed by the landlord under each of the Tenant Leases
have been duly performed and paid for in full in accordance with the terms
thereof. A listing of such items is shown on SCHEDULE 3.15(K).
(l) Except as set forth on SCHEDULE 3.15(L): (i) the Tenant Leases are
freely assignable by the Borrower Parties to the MPT Parties, have not been
modified, amended or assigned, are legally valid, binding and enforceable
against the applicable Borrower Parties (and, to the best of the Borrower
Parties' Knowledge, against the other parties to such Tenant Leases) in
accordance with their respective terms, and are in full force and effect; (ii)
there are no monetary defaults and no material nonmonetary defaults by the
applicable Borrower Party or, to the best of the Borrower Parties' Knowledge,
any other party to the Tenant Leases; (iii) no Borrower Party has received
written notice of any default, offset, counterclaim or defense under any of the
Tenant Leases; and (iv) no condition or event has occurred which, with the
passage of time or the giving of notice or both, would constitute a default or
breach by any Borrower Party of the terms of any of the Tenant Leases.
(m) Except as set forth on SCHEDULE 3.15(J), the Real Property constitutes
all the land and improvements used by Alliance in connection with the operation
of the Hospital, and such Real Property is adequate for the present and proposed
conduct of the Business.
25
SECTION 3.16. CONDITION OF PERSONAL PROPERTY. SCHEDULE 3.16 sets forth a list of
all equipment and other items of tangible personal property used by Alliance in
the operation of the Hospital (the "Personal Property"). Except to the extent
set forth on SCHEDULE 3.16, Alliance has and shall maintain good, clear and
indefeasible title to and ownership of all of the Personal Property, free and
clear of all Liens, and may grant the MPT Parties a first priority security
interest in and to the Intangible Property and Licenses and at least a second
priority security interest in and to the other Personal Property as of the date
hereof. SCHEDULE 3.16 sets forth an accurate and complete list of all leases of
personal property used in the operation of the Hospital (the "Personal Property
Leases"). The Borrower Parties have provided the MPT Parties with complete,
correct and current copies of all of the Personal Property Leases. Except as set
forth on SCHEDULE 3.16: (i) Alliance may grant a first priority security
interest in the Personal Property Leases to the MPT Parties, (ii) the Personal
Property Leases have not been modified, amended or assigned, are legal, valid,
binding and enforceable against Alliance (and, to the Borrower Parties'
Knowledge, against the other parties to such Personal Property Leases) in
accordance with their respective terms, and are in full force and effect; (iii)
there are no monetary defaults and no material nonmonetary defaults by Alliance,
to the Borrower Parties' Knowledge, any other party to the Personal Property
Leases; (iv) no Borrower Party has received notice of any default, offset,
counterclaim or defense under any Personal Property Lease and shall immediately
deliver to the MPT Parties any notice thereof received by such Borrower Party;
and (v) no condition or event has occurred which with the passage of time or the
giving of notice or both would constitute a default or breach by Alliance of the
terms of any Personal Property Lease. Except as set forth on SCHEDULE 3.16, all
personal property, whether owned by Alliance or subject to any Personal Property
Lease, is in good operating condition and repair, ordinary wear and tear
excepted, is located on the Real Property, and constitutes all of the personal
property necessary for the operation of the Hospital and the Business as they
are currently being operated.
SECTION 3.17. COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
SCHEDULE 3.17:
(a) with respect to the ownership and operation of the Real Property and
the Hospital, including any operations at or from any real property currently or
formerly owned, used, leased, occupied or managed by any Borrower Party, each
Borrower Party is, and has at all times been, in compliance with all
Environmental Laws;
(b) no Governmental Entity or nongovernmental third party has notified any
Borrower Party of any alleged violation or investigation of any suspected
violation under the Environmental Laws in connection with the ownership,
operation and/or leasing of the Real Property or the Hospital, including any
litigation or cause of action alleging personal injury or property damage caused
by exposure to, or the disposal, release or migration of, any Hazardous
Materials, and any Borrower Party shall immediately deliver any notice thereof
upon receipt to the MPT Parties;
(c) with respect to the ownership, operation and/or leasing of the Real
Property and the Hospital, no Borrower Party has stored, disposed of or arranged
for the disposal of any Hazardous Materials, except in compliance with the
Environmental Laws;
(d) there have been no actions nor, to the Knowledge of Borrower Parties,
any activities, circumstances, conditions, events or incidents, including,
without limitation, the
26
generation, transportation, treatment, storage, release, emission, discharge,
presence or disposal of any Hazardous Materials on or from the Real Property or
the Hospital that could form the basis of any claim under the Environmental Laws
against any Borrower Party or any MPT Party;
(e) no Borrower Party has, whether contractually or by operation of law
(including any Environmental Law), assumed, or succeeded to, any liability of
any direct or indirect predecessors or any other Person related or with respect
to any Environmental Law;
(f) no underground storage tanks are located at, on or under the Real
Property, and the Real Property does not contain any asbestos-containing
building material;
(g) there are no conditions presently existing on, at, or emanating from
the Real Property or the operation of the Hospital or the Business that may
result in any liability, investigation or clean-up cost under any Environmental
Law; and
(h) no Borrower Party, nor to the Borrower Parties' Knowledge any other
Person, has installed, used, generated, manufactured, treated, handled, refined,
produced, processed, stored or disposed of any Hazardous Materials in, on or
under the Real Property, nor has any Borrower Party caused, suffered or
permitted any thereon, except in compliance with the Environmental Laws. No
Borrower Party has undertaken any activity, and the Borrower Parties have no
Knowledge that any other Person has undertaken any activity, on the Real
Property nor has any Borrower Party caused, suffered or permitted any thereon
which would cause (i) the Real Property to become a hazardous waste treatment,
storage or disposal facility within the meaning of, or otherwise bring the Real
Property within the ambit of, any Environmental Law, (ii) a release or
threatened release of Hazardous Material from the Real Property within the
meaning of, or otherwise bring the Real Property within the ambit of, any
Environmental Law, (iii) the discharge of Hazardous Material into any
watercourse, body of water, surface or subsurface water, or wetland which would
required a permit under any Environmental Law, or (iv) the discharge into the
atmosphere of any Hazardous Material which would require a permit under any
Environmental Law. No activity has been undertaken by any Borrower Party with
respect to the Real Property which would cause a violation or support a claim
under any Environmental Law. No investigation, administrative order, litigation
or settlement with respect to any Hazardous Material is in existence or, to the
Borrower Parties' Knowledge, threatened with respect to the Real Property, and
each Borrower Party will immediately notify the MPT Parties of any such matter.
No notice has been served on any Borrower Party from any Governmental Entity
claiming any violation of any Environmental Law, or requiring compliance with
any Environmental Law, or demanding payment or contribution for environmental
damage or injury to natural resources. No Borrower Party has obtained or is
required to obtain, and no Borrower Party has any Knowledge of any reason MPT
will be required to obtain, any permits, licenses, or similar authorizations to
occupy, operate or use the Improvements or any part of the Real Property by
reason of any Environmental Law.
SECTION 3.18. INSURANCE. SCHEDULE 3.18 sets forth a complete and accurate list
and brief description of all insurance policies currently held by any Borrower
Party with respect to the Real Property, the operation of the Hospital, and the
professional liability, negligence, and other acts of the Physicians and the
Service Providers, it being acknowledged by Alliance that such insurance
coverages are, at a minimum, those required by Section 6.6 hereof. All such
insurance
27
policies are in full force and effect and all premiums due thereon
have been paid in full. Each Borrower Party is in compliance with the terms of
such insurance policies.
SECTION 3.19. LITIGATION. Except as set forth on SCHEDULE 3.19, there is no
dispute, suit, action, proceeding, inquiry or investigation (a "Claim") against
or involving any of the Borrower Parties or any of their properties or rights,
pending or, to the Knowledge of the Borrower Parties, threatened (including,
without limitation any suit, action, proceeding or investigation pursuant to
Title 11 of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, the Family and Medical Leave Act of
1993, or any other federal, state or local law regulating employment) nor do the
Borrower Parties know of any facts which might result in any such Claim. There
is no Claim pending, or, to the Borrower Parties' Knowledge, threatened, against
any Physician or Service Provider which could, by operation of law, through
contract or otherwise, result in a Claim against any Borrower Party, and no
Borrower Party has any Knowledge of any facts which could result in such a
Claim. Except as set forth on SCHEDULE 3.19, there is no judgment, decree,
injunction, rule or order of any Governmental Entity or any other Person
(including, without limitation, any arbitral tribunal) outstanding against any
Borrower Party and no Borrower Party is not in violation of any term of any
judgment, decree, injunction or order outstanding against it. Furthermore, there
is no Claim by or before any Governmental Entity or other Person pending or, to
the Knowledge of the Borrower Parties, threatened, which questions or challenges
the validity of this Agreement or any action taken or to be taken by any
Borrower Party pursuant to this Agreement or in connection with the transactions
contemplated hereby, nor is there any basis for any such Claim.
SECTION 3.20. CONTRACTS, OBLIGATIONS AND COMMITMENTS. SCHEDULE 3.20 sets forth a
list of all contractual agreements, whether written or oral, relating to or
affecting the Collateral, the Hospital, and/or the operation of the Business to
which any Borrower Party is a party (such agreements, together with any
hereafter entered into, the "Contracts"). The Borrower Parties have provided to
the MPT Parties and shall promptly provide during the Loan Term complete and
correct copies of all of the Contracts. Except as set forth on SCHEDULE 3.20,
(i) the Contracts are legally valid, binding and enforceable against the
applicable Borrower Party (and, to the Borrower Parties' Knowledge, against the
other parties thereto) in accordance with their respective terms and are in full
force and effect; (ii) there are no defaults by any Borrower Party or, to the
Borrower Parties' Knowledge, any other party to the Contracts; (iii) no Borrower
Party has received notice of any default, offset, counterclaim or defense under
any Contract and, if received, shall promptly deliver any such notice to the MPT
Parties; and (iv) no condition or event has occurred which with the passage of
time or the giving of notice or both would constitute a default or breach by any
Borrower Party of the terms of any Contract, nor shall any Borrower Party cause
any such condition or event.
SECTION 3.21. INTANGIBLE PROPERTY. A true and complete list of the trademarks,
service marks, and other intangible assets of the Borrower Parties used in the
operation of the Business and the Hospital is set forth on SCHEDULE 3.21 (such
items, together with any hereafter obtained, the "Intangible Property"). The
Borrower Parties own or possess adequate, enforceable licenses, or other rights
to use, all of the Intangible Property, and no rights thereto have been granted
to others by any Borrower Party. Except as set forth on SCHEDULE 3.21, all of
the Intangible Property is owned or used by the Borrower Parties and are free
and clear of all assignments, licenses, restrictions, encumbrances, charges or
claims for infringement, and are not subject to
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any outstanding order, decree, judgment, stipulation or charge. Except as set
forth on SCHEDULE 3.21, the Borrower Parties may grant the MPT Parties a first
priority security interest in and to all of the Intangible Property. To the
Borrower Parties' Knowledge, there has been no unauthorized use, disclosure,
infringement or misappropriation of any of the Intangible Property by any third
party. The Borrower Parties' use of the Intangible Property does not infringe
upon or otherwise violate the rights of others. No one has asserted to any
Borrower Party that the use of the Intangible Property by the Borrower Parties
infringes upon the patents, trade secrets, trade names, trademarks, service
marks, copyrights or other intellectual property rights of any other Person, and
no Borrower Party has any Knowledge of any fact or circumstance which could
provide the basis for any such assertion, and, if received, a Borrower Party
shall promptly deliver any such notice to the MPT Parties. The Intangible
Property constitutes all of the intangible properties necessary for the
operation of the Hospital and the Business as they are currently being operated.
SECTION 3.22. EMPLOYEES AND EMPLOYEE RELATIONS.
(a) SCHEDULE 3.22(A) contains a current, correct and complete list of the
names and current hourly wage, monthly salary, and other compensation of all
employees who are providing, or who will provide, services at the Hospital
(collectively, the "Business Employees"), together with a summary (containing
estimates to the extent necessary) of the individuals' existing bonuses,
additional compensation, and other benefits (whether current or deferred), if
any, accrued, paid, or payable to each such individual for services rendered or
to be rendered through the fiscal period ending December 31, 2004. Except to the
extent set forth on SCHEDULE 3.22(A), all of the Business Employees are "at
will" employees. Except to the extent set forth on SCHEDULE 3.22(A), no Borrower
Party is a party to any oral (express or implied) or written (i) employment
agreement or (ii) agreement that contains any severance or termination pay
obligations, with any Business Employee. The Borrower Parties have provided
true, correct and current copies (or, if not written, accurate descriptions of
the parties and terms) of such agreements to the MPT Parties.
(b) Except to the extent set forth on SCHEDULE 3.22(B), no Business
Employee is represented by any labor union, trade association, or other employee
organization, no demand for recognition has been made by any labor union with
respect to the Business Employees, and there is not and has not been any labor
union organizing activity at the Hospital during the periods it has been
operated by any Borrower Party. Except to the extent set forth on SCHEDULE
3.22(B), no Borrower Party is a party to any collective bargaining agreement or
understanding with any labor union, trade association, or other employee
organization with respect to any Business Employee and no such agreements are
currently being proposed and/or negotiated.
(c) Except to the extent set forth on SCHEDULE 3.22(C), there is no labor
dispute, work stoppage, strike, slowdown, walkout, lockout, or any other
interruption or disruption of operations at the Hospital as a result of labor
disputes or disturbances with respect to the Business Employees. Further, there
is no investigation, grievance, arbitration, complaint, claim or other dispute
or controversy (collectively, a "Labor Proceeding") pending or, to the Borrower
Parties' Knowledge, threatened between any Borrower Party and any present or
former Business Employee, nor have any discharges or terminations of any former
Business Employee occurred which would form the basis for any claim of
discrimination against a Borrower Party, and any
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Borrower Party shall promptly notify the MPT Parties upon its receipt of any of
the foregoing. Except to the extent set forth on SCHEDULE 3.22(C), no Borrower
Party has any Knowledge of any facts or any past, current or contemplated event
that could form the basis for any such Labor Proceeding, nor has there been any
such Labor Proceeding within the past twelve (12) months.
(d) Except as set forth on SCHEDULE 3.22(D), no Borrower Party has received
any notice that any vice president, director or director-level employee, or
higher, of any Borrower Party or any group of Business Employees has any plans
to terminate his or her employment or affiliation with any Borrower Party.
(e) Each Borrower Party has complied with, is currently and shall remain in
compliance with, and has received no notice of noncompliance with any and all
applicable laws relating to the employment of labor, including, without
limitation, any provisions relating to wages, hours, equal employment,
occupational safety and health, workers' compensation, unemployment insurance,
collective bargaining, immigration, affirmative action, and the payment and
withholding of social security and other taxes. Each Borrower Party has withheld
and shall withhold all amounts required by law or agreement to be withheld from
the wages or salaries of the Business Employees, and no Borrower Party is liable
for any arrears of any tax or penalties for failure to comply with the
foregoing.
(f) SCHEDULE 3.22(F) sets forth each Employee Pension Benefit Plan (as
defined in Section 3(2) of ERISA) maintained by any Borrower Party (each a
"Borrower Party Plan") and applicable to the Business Employees. The Borrower
Parties are in compliance in all material respects with all applicable laws and
regulations respecting such Borrower Party Plans.
SECTION 3.23. COMPLIANCE WITH LAW. Each Borrower Party (a) is in compliance in
all material respects with every applicable law, rule, regulation, ordinance,
license, permit and other governmental action and authority and every order,
writ, and decree of every Governmental Entity in connection with the ownership,
conduct, operation and maintenance of the Business and its ownership and use of
its assets, and no event has occurred or circumstance exists which (with notice
or lapse of time) would result in any noncompliance with any such law, rule,
regulation, ordinance, license permit, order, writ or decree; and (b) has timely
made or given all filings and notices required to be made by such Borrower Party
with the regulatory agencies of any Governmental Entity.
SECTION 3.24. XXXX-XXXXXX OBLIGATIONS.
(a) Except as set forth on SCHEDULE 3.24, neither any Borrower Party nor,
to the Knowledge of the Borrower Parties, any predecessor in interest of any
Borrower Party has received any loans, grants or loan guarantees pursuant to the
United States Xxxx-Xxxxxx Act (42 U.S.C. 291a, et seq.) program, the Health
Professions Educational Assistance Act, the Nurse Training Act, the National
Health Pharmacy and Resources Development Act, or the Community Mental Health
Centers Act, nor shall any of them obtain therefrom any such loans, grants or
loan guarantees. All of the obligations set forth on SCHEDULE 3.24, if any, have
been fully satisfied. The transactions contemplated hereby will not result in
any obligation of any MPT Party to repay any such loan, grant or loan guarantee
or to provide uncompensated care in consideration thereof.
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(b) None of the Collateral is subject to any liability with respect to
amounts received by any Borrower Party or others for the purchase or improvement
of the Collateral or any part thereof under restricted or conditioned grants or
donations, including monies received under the Public Health Service Act, 42
U.S.C. Section 291, et seq.
SECTION 3.25. MEDICAL STAFF MATTERS. Except as set forth on SCHEDULE 3.25, there
are no pending or, to the Knowledge of the Borrower Parties, threatened
investigations, appeals, challenges, disciplinary or corrective actions, or
disputes involving applicants to the medical staff of the Hospital, current
members of the medical staff of the Hospital, or affiliated health
professionals, and the Borrower Parties shall immediately notify the MPT Parties
if any of the same shall occur. Since the Balance Sheet Date, no member of the
medical staff of the Hospital has resigned or been terminated therefrom and no
Borrower Party has received notice that any Physician or medical staff member
intends to resign from its medical staff, and the Borrower Parties shall
immediately notify the MPT Parties if any of the same shall occur. The Borrower
Parties have previously delivered to the MPT Parties true and correct copies of
the Medical Staff Bylaws of the Hospital, the Hospital's Medical Staff Rules and
Regulations, and the Hospital's Medical Staff Hearing Procedures, all as
presently in effect. Except as consented to, in writing, by the MPT Parties and
set forth on SCHEDULE 3.25, no Physician is a member of more than two (2)
medical staff committees.
SECTION 3.26. BROKERS. No Person is or will be entitled to any brokerage,
finder's, or other fee, commission, or payment in connection with, or as a
result of, the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any Borrower Party.
SECTION 3.27. RECORDS. True, complete and current copies of each Borrower
Party's Governing Documents have been delivered to the MPT Parties prior to the
execution and delivery of this Agreement. The books of account, minute books,
stock record books and other records of each Borrower Party, all of which have
been and shall be made available to the MPT Parties, are complete and correct.
The minute books of each Borrower Party contain records of all meetings and
other corporate actions of the directors and shareholders of such Borrower
Party, have been and shall be delivered to the MPT Parties.
SECTION 3.28. REPRESENTATIONS COMPLETE. The representations, warranties and
covenants made by the Borrower Parties in this Agreement and the statements made
in, or information contained on, any Schedules or certificates furnished by any
Borrower Party pursuant to this Agreement do not contain and will not contain,
as of the date hereof, their respective dates, and for and during the Loan Term,
any untrue statement of a material fact, nor do they omit or will they omit to
state any material fact necessary to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES BY THE MPT PARTIES
The MPT Parties hereby jointly and severally represent and warrant to the
Borrower Parties as of the date hereof and as of the Closing Date as follows:
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SECTION 4.1. ORGANIZATION. MPT and MPT Odessa are each a limited partnership
duly formed, validly existing, and in good standing under the laws of the State
of Delaware. MPT Odessa is qualified to do business in the State of Texas.
SECTION 4.2. AUTHORIZATION; ENFORCEMENT, ABSENCE OF CONFLICTS. Each MPT Party
has the requisite power and authority to execute, deliver and carry out the
terms of this Agreement, to consummate the transactions contemplated hereby, and
to conduct its businesses as now being conducted. All actions required to be
taken by each to authorize the execution, delivery and performance of this
Agreement, all documents executed by the MPT Parties which are necessary to give
effect to this Agreement, and all transactions contemplated hereby and thereby
have been duly and properly taken or obtained. No other action on the part of
either MPT Party is necessary to authorize the execution, delivery, and
performance of this Agreement, all documents necessary to give effect to this
Agreement, and all transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of notice and/or the
passage of time: (i) violate or conflict with any provision of the Governing
Documents of either MPT Party; (ii) violate any provision of law, statute, rule
or regulation to which either MPT Party is subject; (iii) violate or conflict
with any judgment, order, writ or decree of any court applicable to either MPT
Party; (iv) violate or conflict with any law or regulation applicable to either
MPT Party; or (v) result in the breach or termination of any provision of, or
create rights of acceleration or constitute a default under, the terms of any
debt or obligation to which either MPT Party is a party or by which either MPT
Party is bound.
SECTION 4.3. BINDING AGREEMENT. This Agreement and all agreements to which any
MPT Party will become a party hereunder is and will constitute the valid and
legally binding obligations of such MPT Party, and are and will be enforceable
against such MPT Party in accordance with the respective terms hereof or
thereof, except as enforceability may be restricted, limited or delayed by
applicable bankruptcy, insolvency or other laws affecting creditors' rights
generally and except as enforceability may be subject to and limited by general
principles of equity.
SECTION 4.4. LITIGATION. There is no Claim pending or, to the Knowledge of the
MPT Parties, threatened against or affecting any MPT Party that has or would
reasonably be expected to have a material adverse effect on the ability of the
MPT Parties to perform their respective obligations under this Agreement or any
aspect of the transactions contemplated hereby.
SECTION 4.5. BROKERS. No Person is or will be entitled to any brokerage,
finder's or other similar fee, commission or payment in connection with or as a
result of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the MPT Parties.
SECTION 4.6. COMPLIANCE WITH LAW. The MPT Parties, where applicable (a) are in
compliance with every applicable law, rule, regulation, ordinance, license,
permit and other governmental action and authority and every order, writ, and
decree of every Governmental Entity in connection with the ownership, conduct,
operation and maintenance of their businesses, and their ownership and use of
their assets, except where non-compliance would not prevent or impede the MPT
Parties from consummating the transactions contemplated hereby or the ability of
the MPT
32
Parties to perform their respective obligations under this Agreement and, to the
Knowledge of the MPT Parties, no event has occurred or circumstance exists which
(without notice or lapse of time) would result in any noncompliance with any
such law, rule, regulation, ordinance, license permit, order, writ or decree
which would prevent or impede the MPT Parties from consummating the transactions
contemplated hereby; and (b) have timely made or given all filings and notices
required to be made by the MPT Parties with the regulatory agencies of any
Governmental Entity, except where such failure would not prevent or impede the
MPT Parties from consummating the transactions contemplated hereby.
ARTICLE V
TITLE AND SURVEY
SECTION 5.1. SURVEY. MPT shall cause to be prepared, at Borrower Parties'
expense, a current ALTA/ACSM Land Title Survey of the Real Property, prepared by
a land surveyor duly licensed in the State in which the Collateral is located.
The survey shall be currently dated, shall show the location on the Real
Property and actual dimensions of all improvements, fences, evidence of
abandoned fences, ponds, creeks, streams, rivers, easements, roads,
rights-of-way, means of ingress and egress to and from a publicly dedicated
street or road, location of all utilities serving the Real Property, and
encroachments, reflect any area within the Real Property that has been
designated by the Federal Insurance Administration, the Army Corps of Engineers,
or any other Governmental Body as being subject to special flood hazards, and
shall contain a legal description of the boundaries of the Real Property by
metes and bounds and the total number of acres constituting the Real Property,
and shall, in general, comply with the "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys" established and adopted by ALTA to be effective
January 1, 2006. The surveyor shall certify to the MPT Parties and to the Title
Company that the survey is correct and that there are no visible discrepancies,
conflicts, encroachments, overlapping of improvements, fences, evidence of
abandoned fences, ponds, creeks, streams, rivers, easements, roads or
rights-of-way except as are shown on the survey plat. Any and all matters shown
on such survey shall be legibly identified by appropriate volume and page
recording references with dates of recording noted. If MPT shall disapprove such
survey for any reason in MPT's sole discretion, MPT may either (i) treat such
objection as a title objection and request that it be cured, or (ii) terminate
this Agreement and the parties hereto shall have no further liability or
obligations hereunder, expect as otherwise expressly set forth herein. If the
Borrower Parties are unable to cure any objection to the survey within ten (10)
days following delivery of notice to Borrower Parties thereof, then MPT may
terminate this Agreement upon written notice to the Borrower Parties.
SECTION 5.2. TITLE INSURANCE. MPT will cause to be prepared, at Borrower
Parties' expense, a Title Commitment for the issuance of a Texas form Mortgagee
Policy of Title Insurance in form and substance satisfactory to MPT to the
extent permitted by Texas title regulations, issued by the national service
office of a title insurance company acceptable to MPT and qualified to insure
titles in the State of Texas (the "Title Company"), in the amount of the Loan,
covering title to the Real Property at a date not earlier than the date hereof
and showing good and marketable title in Alliance, subject only to the Permitted
Encumbrances, and insuring that the lien created by the Mortgage in favor of MPT
Odessa is a valid, subsisting, first lien on the Real Property. All of the
standard exceptions within the policy to the extent permitted by Texas title
regulations and the exceptions for mechanic's and materialmen's liens and the
survey exception shall be deleted
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at the sole cost and expense of the Borrower Parties. If MPT shall disapprove
any items stated in the Title Commitment or any exception documents, MPT may
either (i) treat such objection as a title objection and request that it be
cured, or (ii) terminate this Agreement and, upon such termination, the parties
hereto shall have no further liability or obligations hereunder, except as
otherwise expressly provided herein. If the Borrower Parties are unable to cure
any exception or objection to title that is not a Permitted Encumbrance within
ten (10) days following delivery of notice to the Borrower Parties thereof, then
MPT may terminate this Agreement upon written notice to Borrower Parties.
ARTICLE VI
COVENANTS OF THE BORROWER PARTIES
From and after the execution and delivery of this Agreement until the
expiration of the Loan Term (or as otherwise provided), the applicable party
shall observe the following covenants:
SECTION 6.1. AFFIRMATIVE COVENANTS.
(a) Payment and Performance. Each of the Borrower Parties will duly and
promptly pay and perform all of such Borrower Party's liabilities and
obligations to the MPT Parties in accordance with the terms and conditions of
this Agreement and the other Loan Documents.
(b) Continuation of Representations and Warranties; Schedule Updates. Each
of the Borrower Parties shall cause all of the representations, warranties, and
covenants made by each of the Borrower Parties in this Agreement (including,
without limitation, those in Article III hereof) and the other Loan Documents
(considered collectively), and each of the representations and warranties of
each Borrower Party in this Agreement and the other Loan Documents (considered
individually), to remain in all respects true and correct after the date hereof
and during the Loan Term as if made on such dates. In the event that any such
representation, warranty or covenant shall become untrue or incorrect in any
material respect after the date hereof, the Borrower Parties shall immediately
notify the MPT Parties and shall take such corrective action as shall be
authorized, approved or directed by the MPT Parties. From the date hereof and
during the Loan Term, the Borrower Parties shall immediately advise the MPT
Parties in writing of any additions or changes to any Schedule to this Agreement
(each, a "Schedule" and, collectively, the "Schedules") to reflect any
deficiencies or inaccuracies in such Schedule relating to the Borrower Parties
or to reflect circumstances or matters which occur after the date of this
Agreement which, if existing prior to such date, would have been required to be
described on such Schedule by the Borrower Parties; provided, however, that no
additions or changes made to any Schedule by any party to correct deficiencies
or inaccuracies on such Schedule shall be deemed to cure any breach or
inaccuracy of a representation or warranty, covenant or agreement or to satisfy
any condition unless otherwise agreed to in writing by the MPT Parties, but
provided further, however, that an addition or change made to any Schedule by
any of the Borrower Parties to reflect circumstances or matters which occur
after the date of this Agreement shall be deemed to cure a breach or inaccuracy
of a representation or warranty, covenant or agreement, but shall not be deemed
to satisfy any condition unless agreed to in writing by the other party.
34
(c) Certification. At any time and from time to time within ten (10) days
following written request by any of the MPT Parties, Alliance will certify to
the MPT Parties, in such form and substance as are reasonably acceptable to the
MPT Parties, that this Agreement and the other Loan Documents are unmodified and
in full force and effect (or that this Agreement and the other Loan Documents
are in full force and effect as modified and setting forth the modifications)
and the dates to which the Loan has been paid. Any such certification furnished
pursuant hereto may be relied upon by the MPT Parties and any prospective
purchaser of or participant in the Loan.
(d) Financial Statements. The Borrower Parties will furnish, or cause to be
furnished, the following statements to the MPT Parties, which must be in such
form and detail as the MPT Parties may from time to time, but not unreasonably,
request:
(i) prior to the Closing Date and within ninety (90) days after the end of
each year, audited financial statements of Alliance and the Hospital,
prepared by a nationally recognized accounting firm or an independent
certified public accounting firm reasonably acceptable to the MPT Parties,
which statements shall include a balance sheet and statement of income and
expenses and changes in cash flow all in accordance with GAAP for the year
then ended (it being agreed that the accounting firm of Xxxxxxx and
Company, LLP is acceptable to the MPT Parties), and
(ii) prior to the Closing Date and within ninety (90) days after the end of
each year, unaudited balance sheets of the General Partner, and
(iii) prior to the Closing Date, current financial statements of each of
the Guarantors, reasonably acceptable to the MPT Parties,
(iv) within forty-five (45) days after the end of each calendar quarter,
current financial statements of the Borrower Parties and the Hospital,
certified to be true and correct by an executive officer of Alliance
(provided, however, that the General Partner shall not be required to
deliver an income statement in connection herewith), and
(v) within thirty (30) days after the end of each month current operating
statements of the Hospital, including, but not limited to operating
statistics, certified to be true and correct by an executive officer of
Alliance, and
(vi) within ten (10) days of receipt, any and all notices (regardless of
form) from any and all licensing and/or certifying agencies that any
license or certification, including, without limitation, the Medicare
and/or Medicaid certification and/or managed care contract of the Hospital
is being downgraded to a substandard category, revoked, or suspended, or
that action is pending or being considered to downgrade to a substandard
category, revoke, or suspend such Hospital's license or certification, and
(vii) with reasonable promptness, such other information respecting the
financial condition and affairs of the Borrower Parties and the Guarantors
as the MPT Parties may reasonably request from time to time.
35
(e) No Event of Default. Upon either of the MPT Parties' request, the
Borrower Parties will furnish to the MPT Parties a certificate in form
reasonably acceptable to MPT certifying that no Event of Default as defined
herein or in any of the Other Agreements or the Loan Documents), then exists and
no event has occurred (that has not been cured) and no condition currently
exists that would, but for the giving of any required notice or expiration of
any applicable cure period, constitute a default.
(f) Third Party Payor Notices. Within two (2) Business Days of receipt, the
Borrower Parties shall furnish to the MPT Parties copies of all notices and
demands from any third party payor, including, without limitation, Medicare
and/or Medicaid, concerning overpayment which will or may result in a repayment
or a refund in excess of Two Hundred Thousand Dollars ($200,000). The Borrower
Parties hereby agree that, in the event of receipt of such notices or demands,
the MPT Parties shall have the right, at the MPT Parties' option, to participate
in the appeal of such notices and demands.
(g) Governmental Investigations. The Borrower Parties shall furnish to the
MPT Parties on a monthly basis ongoing status reports (in form and content
acceptable to the MPT Parties) of any governmental investigations of either of
the Borrower Parties, the Guarantors, or any of their respective Affiliates, or
the Hospital, conducted by the United States Attorney, State Attorney General,
the Office of the Inspector General of the Department of Health and Human
Services, or any other Governmental Entity.
(h) Deficiency Reports. The Borrower Parties shall furnish to the MPT
Parties immediately upon receipt thereof copies of all notices of adverse events
or deficiencies as defined by regulations or standards of the JCAHO or the
equivalent of the accrediting body relied upon by Alliance in the operation of
the Hospital, the Business or any parts thereof; it being acknowledge that
Alliance is in the process of seeking accreditation from JCAHO as of the Closing
Date.
(i) HIPAA. The Borrower Parties shall furnish to the MPT Parties
immediately upon receipt thereof copies of all notices that any of the Borrower
Parties, the Guarantors, and/or the Tenants are not in compliance with the
Standards which were promulgated pursuant to HIPAA.
(j) Other Financial Information. The MPT Parties reserve the right to (A)
require such other financial information from the Borrower Parties, and (B)
require the Borrower Parties to provide such other financial information from
the Tenants to the extent permitted under any Existing Tenant Leases and as
shall be required under any New Tenant Leases, at such other times as the MPT
Parties shall deem reasonably necessary, the Borrower Parties hereby agreeing to
promptly provide such other financial information following any such request by
any of the MPT Parties. All financial statements and information must be in such
form and detail as the MPT Parties shall from time to time, but not
unreasonably, request.
(k) Access; Confidentiality.
(i) After the date hereof until the expiration of the Loan Term, the
Borrower Parties shall (i) afford the MPT Parties and their authorized
representatives full and complete access to the employees, medical staff,
and other agents and representatives of the
36
Borrower Parties relating to the Business and the Hospital and during
normal working hours to all books, records, offices and other facilities of
the Borrower Parties relating to the Business and the Hospital, (ii) permit
the MPT Parties to make such inspections and to make copies of such books
and records as they may reasonably require and (iii) furnish the MPT
Parties with such financial and operating data and other information
related to the Business, the Hospital or the Borrower Parties as the MPT
Parties may from time to time reasonably request following reasonable
notice to the Borrower Parties by the MPT Parties. The MPT Parties and
their authorized representatives shall conduct all such inspections under
the supervision of personnel of the Borrower Parties in a manner that will
minimize disruptions to the business and operations of the Borrower Parties
and in a manner as to maintain the confidentiality of this Agreement.
(ii) The MPT Parties and their authorized representatives (including their
designated engineer, architects, surveyors and/or consultants) may, upon
reasonable notice and at any time enter into and upon all or any portion of
the Real Property in order to investigate and assess, as the MPT Parties
deem necessary or appropriate in their sole and absolute discretion, the
condition (including the structural and environmental condition) of the
Collateral (including, without limitation, the Improvements). The Borrower
Parties shall cooperate with the MPT Parties and their authorized
representatives in conducting such investigation, shall allow, the MPT
Parties and their authorized representatives full access to the Collateral,
together with full permission to conduct such investigation, and shall
provide to the MPT Parties and their authorized representatives all
information maintained by the Borrower Parties and related to the condition
of the Collateral, including the Real Property, and all plans, soil or
surface or ground water tests or reports, any environmental investigation
results, reports or assessments previously or contemporaneously conducted
or prepared by or on behalf of, or in the possession of or reasonably
available to the Borrower Parties or any of their engineers, consultants or
agents and all other information relating to environmental matters in
respect of their properties and businesses.
(iii) As a condition to the parties furnishing one another with their
respective Confidential Information, each party hereto agrees to treat the
other party's Confidential Information (whether prepared by the disclosing
party, its advisors or otherwise) in accordance with the provisions of this
Agreement and to take or abstain from taking certain other actions herein
set forth. The parties hereby agree that, except as otherwise set forth
herein, the other parties' Confidential Information, and the fact that the
parties are parties to this Agreement, will be kept confidential by the
parties and will be used by such party solely for the purpose of fulfilling
the obligations of such parties to the other parties pursuant to the Loan
document; provided, however, that any Confidential Information may be
disclosed to the following: (1) the parties' respective agents or
representatives who need to know the Confidential Information for the
purpose of evaluating or providing services in connection with the
transactions contemplated in the Loan Documents (it being understood (A)
that such agents and representatives shall be informed by such party of the
confidential nature of the other party's Confidential Information, (B) such
agents and representatives shall be directed by such party to treat the
other party's Confidential Information confidentially in accordance with
the terms of this Agreement and (C) such party shall be liable for any
breach of confidentiality
37
committed by such agents or representatives) and (2) the MPT Parties'
prospective investors in relation to or in connection with any private
placement or public offering of the MPT Parties' securities, and (3) any
person or entity in which disclosure is required by federal or state
securities laws.
(iv) Except with the prior written consent of the other parties and except
for the permitted disclosures described in the immediately preceding
paragraph, prior to any public announcement concerning the transaction
contemplated in the Loan Documents and business relationship between the
MPT Parties and the Borrower Parties, neither party will, and will direct
its agents and representatives not to, disclose to any person either the
fact that a business relationship between the MPT Parties and the Borrower
Parties has commenced. If as a result of federal or state securities laws,
any party is required by law, in the reasonable opinion of such party's
legal counsel, to disclose the business relationship between the MPT
Parties and the Borrower Parties or any of the proposed or effective terms
of such business relationship, such party shall, to the extent reasonably
practical, provide prior notice thereto to the other parties, and shall
consult with the other parties concerning the language, form and substance
of any disclosure of the other parties' Confidential Information.
(v) In the event that any party hereto, or such party's representatives or
agents, are requested or required in a judicial, administrative or
governmental proceeding to disclose any other party's Confidential
Information, such party will cooperate with the other party and provide it
with prompt notice of such request(s) so that the other party may seek an
appropriate protective order and/or waive compliance with the provisions of
this Agreement. If, in the absence of a protective order or the receipt of
a waiver hereunder, a party or its representatives or agents are
nonetheless, in the opinion of such party's legal counsel, legally required
to disclose the other party's Confidential Information to any tribunal or
else stand liable for contempt or suffer other censure or penalty, such
party may disclose the other party's Confidential Information to such
tribunal without liability hereunder.
(vi) Each of the parties shall, upon request of any other party, return or
destroy all of such other party's written Confidential Information and all
documents, memoranda, notes and other writings whatsoever prepared by such
party or its representatives or agents based on the other party's
Confidential Information. Neither this letter nor the disclosure of any
party's Confidential Information to the other parties grants or confers
upon the other parties any license, ownership right or other right in or to
such Confidential Information.
(vii) Notwithstanding anything to the contrary contained herein, the
confidentiality obligations as they relate to the transactions contemplated
by this Agreement shall not apply to the purported or claimed Federal
income tax treatment of the transactions (the "Tax Treatment") or to any
fact that may be relevant to understanding the purported or claimed Federal
income tax treatment of the transactions (the "Tax Structure"), and each
party hereto (and any employee, representative, or agent of any party
hereto) may disclose to any and all persons, without limitation of any
kind, the Tax Treatment and Tax Structure of the transactions contemplated
by this Agreement and any materials of
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any kind (including any tax opinions or other tax analyses) that relate to
the Tax Treatment or Tax Structure. In addition, each party hereto
acknowledges that it has no proprietary or exclusive rights to any tax
matter or tax idea related to the transactions contemplated by this
Agreement. The preceding sentence is intended to ensure that the
transactions contemplated by this Agreement shall not be treated as having
been offered under conditions of confidentiality for purposes of the
Confidentiality Regulations and shall be construed in a manner consistent
with such purpose. The information contained herein, in the Schedules
hereto or delivered to the MPT Parties or its authorized representatives
pursuant hereto shall be subject to the confidentiality provisions of this
Agreement until the Closing.
(l) Regulatory and other Authorizations, Notices and Consents.
(i) The Borrower Parties shall use all commercially reasonable efforts
to obtain all authorizations, consents, orders and approvals of all
Governmental Entities and officials that may be or become necessary for its
execution and delivery of, and the performance of their obligations
pursuant to, this Agreement and each such borrower Party will cooperate
fully with the other parties hereto in promptly seeking to obtain all such
authorizations, consents, orders and approvals.
(ii) The Borrower Parties shall give promptly such notices to third
parties and use its commercially reasonable efforts to obtain such third
party consents and estoppel certificates as MPT may in its sole and
absolute discretion deem necessary or desirable in connection with the
transactions contemplated by this Agreement, including, without limitation,
all third party consents that are necessary or desirable in connection with
the transfer of the Assumed Contracts.
(m) Future Financing. The Borrower Parties hereby agree that, if at any
time during the Loan Term, any of the Borrower Parties purchases or contemplates
the purchase of a Hospital, or property to be used, for the operation of a
business for the Primary Intended Use, the Borrower Parties shall notify MPT in
writing ("Alliance's Notice") of such purchase or contemplated purchase, and MPT
or its Affiliates shall have the first opportunity to provide financing for such
purchase, expansion or renovation upon terms mutually agreeable to MPT and the
Borrower Parties. MPT shall notify the Borrower Parties in writing on or before
the expiration of twenty (20) business days after receipt of Alliance's Notice
whether MPT is interested in providing such financing. If MPT agrees to provide
the financing, the terms and conditions of such financing will be contingent
upon, among other things, performance benchmarks acceptable to MPT and MPT's
satisfaction and approval of other due diligence requirements.
(n) Good Faith Efforts. The Borrower Parties shall use their good faith
reasonable efforts to satisfy the conditions to the Closing of the transactions
contemplated hereby. Without limiting the generality of the foregoing, the
Borrower Parties shall execute and/or deliver, or use their respective good
faith reasonable efforts to cause to be executed and/or delivered, the documents
contemplated to be executed and/or delivered by them at Closing.
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(o) Public Announcements. Prior to the Closing Date, the Borrower Parties
agree to consult with the MPT Parties before any of the Borrower Parties or any
of their respective affiliates issues any press release or makes any public
statement with respect to this Agreement or the transactions contemplated hereby
and, except as may be required by applicable law or any listing agreement with
any national securities exchange, will not issue, or permit to be issued, any
such press release or make, or permit to be made, any such public statement
prior to such consultation.
SECTION 6.2. NEGATIVE COVENANTS.
(a) Loan Proceeds and Distributions. None of the proceeds of the Loan or
revenues of Alliance shall be distributed to any of the Equity Constituents of
any of the Borrower Parties, but shall be retained by Alliance for use in the
operation of the Hospital and the Business. Notwithstanding the foregoing,
Alliance may make distributions to its general and limited partners of taxable
net income (1) for the purpose of the payment of applicable income taxes of such
partners, which such distributions shall not exceed thirty-five percent (35%) of
taxable net income or (2) in all other instances, only at such time as Tangible
Net Worth shall exceed Seven Million Five Hundred Thousand and No/100 Dollars
($7,500,000.00), and provided that, after such distribution, such Tangible Net
Worth shall remain in excess of Seven Million Five Hundred Thousand and No/100
Dollars ($7,500,000.00). Additionally, and notwithstanding the foregoing
restrictions, Alliance may use proceeds of the Loan and the revenues of Alliance
to the limited extent necessary (1) to pay the interest payable to the holders
of Class B Units, as such term is defined in, and in accordance with the terms
and conditions of, the Limited Partnership Agreement), and (2) to pay the
principal and interest payable on the certain loan to Alliance from the General
Partner outstanding as of the date hereof, and the General Partner may use such
payment to pay the principal and interests payable on those certain loans to the
General Partner from National Bank of Xxxxxxx and Plains Capital Bank; provided
however, that each such payment shall not exceed the lesser of (i) Eight Hundred
Thirty Five Thousand Dollars ($835,000.00), and (ii) the outstanding balance of
the applicable loan.
(b) Liens. Subject to the provisions of Article XI relating to permitted
contests, the Borrower Parties will not, directly or indirectly, create or allow
to remain and will promptly discharge at their expense any lien, encumbrance,
attachment, title retention agreement or claim upon the Collateral, not
including, however, (i) this Agreement or the other Loan Documents, (ii) the
Permitted Encumbrances set forth in SCHEDULE 6.2 of this Agreement, (iii)
restrictions, liens and other encumbrances which are consented to in writing by
the MPT Parties, or any easements granted pursuant to the provisions of Section
6.5(c) of this Agreement, (iv) liens for Impositions or for sums resulting from
noncompliance with Legal Requirements so long as (1) the same are not yet
payable or are payable without the addition of any fine or penalty or (2) such
liens are in the process of being contested as permitted by Article XI, and (v)
liens of mechanics, laborers, materialmen, suppliers or vendors for sums either
disputed or not yet due, provided that (1) the payment of such sums shall not be
postponed for more than sixty (60) days after the completion of the action
giving rise to such lien and such reserve or other appropriate provisions as
shall be required by law or generally accepted accounting principles shall have
been made therefor or (2) any such liens are in the process of being contested
as permitted by Article XI. Unless otherwise expressly provided herein, Alliance
shall not mortgage or grant any interest or security interest in, or otherwise
assign, any part of Alliance's rights and interests in this Agreement or the
other
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Borrower Party Instruments, the Collateral, or any Licenses or other approvals
required to operate the Collateral during the Loan Term without the prior
written consent of MPT, which may be withheld at MPT's sole discretion.
(c) No Shop. Between the date hereof and the Closing Date, neither any
Borrower Party nor any investment banker, attorney, accountant, representative
or other Person retained by or on behalf of any Borrower Party shall, directly
or indirectly, initiate contact with, respond to, solicit or encourage any
inquiries, proposals or offers by, or participate in any discussions or
negotiations with, enter into any agreement with, disclose any information
concerning any Borrower Party or the Collateral to, afford any access to the
properties, books or records of any Borrower Party to, or otherwise assist,
facilitate or encourage, any Person in connection with any possible proposal
regarding a sale, lease, mortgage, transfer, disposition or other transaction
related to or affecting all or any portion of the Collateral (including all or
any portion of the Real Property). The Borrower Parties shall notify the MPT
Parties immediately if any discussions or negotiations are sought to be
initiated, any inquiry or proposal is made, or any such information is
requested.
(d) Management Agreements. The Borrower Parties shall not engage any
Management Company (provided, however, that the MPT Parties hereby acknowledge
and consent to the Borrower Parties' engagement of the Current Manager) or
permit, allow, approve or suffer any Tenants of the Hospital that are subject to
any New Tenant Lease to engage any Management Company, without the MPT Parties'
prior written consent, which consent shall not be unreasonably withheld;
provided, however, the MPT Parties' rights relating to any Management Company as
set forth in Article X hereof shall be at the MPT Parties' sole and absolute
discretion. The Borrower Parties shall, if required by the MPT Parties, assign
all of the Borrower Parties' rights under the Management Agreements to the MPT
Parties and the MPT Parties shall be entitled to assign same to any third party,
including any lender of any of the MPT Parties. At the request of the MPT
Parties from time to time, the applicable Borrower Parties shall execute and
deliver (and require the Tenants to execute and deliver, if applicable) an
assignment and/or subordination agreement relating to the Management Agreements,
which assignment and/or subordination agreement shall be in such form and
content as reasonably acceptable to the MPT Parties and/or any lender providing
financing to any of the MPT Parties or their Affiliates, shall be delivered to
the MPT Parties within ten (10) days after the MPT Parties' request. The
Borrower Parties agree that all Management Agreements entered into in connection
with the Collateral or the Hospital shall expressly contain provisions
acceptable to the MPT Parties which (i) require an assignment of the Management
Agreements to the MPT Parties upon request by the MPT Parties, (ii) confirm and
warrant that all sums due and payable under the Management Agreements are
subordinate to the Loan Documents, (iii) grant the MPT Parties the right to
terminate the Management Agreement (individually or collectively, if more than
one (1)) following an Event of Default hereunder or upon a default under such
applicable Management Agreement, (iv) require the Management Company to execute
and deliver to the MPT Parties within ten (10) days from the MPT Parties'
request an estoppel certificate, assignment and/or subordination agreement as
required by the MPT Parties and/or any lender providing financing to any of the
MPT Parties, in such form and content as is acceptable to the MPT Parties and/or
such lender, and (v) require that all fees due and payable under any Management
Agreements shall be subordinate to all monetary obligations under the Loan
Documents. At the request of any of the MPT Parties from time to time, the
Borrower Parties
41
shall execute and obtain from all parties subject to such Management Agreements
executed written confirmation of such assignment or subordination, which shall
be delivered to the MPT Parties within ten (10) days from the MPT Parties'
request.
(e) Noncompetion. The Borrower Parties shall not modify, amend or restate
the Limited Partnership Agreement without the prior written consent of the MPT
Parties, which consent shall not be unreasonably withheld. The Borrower Parties
shall not consent to any New Technology Activity (as such term is defined in the
Limited Partnership Agreement) without the prior written consent of the MPT
Parties, which consent shall not be unreasonably withheld. The Borrower Parties
shall not permit any breach, and shall enforce all terms and conditions, of that
certain Non-Competition Agreement, dated as of the date hereof, by and among the
Borrower Parties and the Guarantors and, to the extent allowed by law, upon any
such breach by Guarantors or the Borrower Parties of such Non-competition
Agreement and the written request of the MPT Parties, the Borrower Parties shall
assign such Non-competition Agreement to the MPT Parties or their designee. The
parties hereby acknowledge that, in lieu of such assignment, the MPT Parties may
enforce such Non-competition Agreement against the Borrower Parties and the
Guarantors as a third party beneficiary thereof.
SECTION 6.3. FINANCIAL COVENANTS.
(a) At all times during the Loan Term (other than when the Guaranty is in
full force and effect), the Borrower Parties shall maintain an aggregate
Tangible Net Worth of not less than ten percent (10%) of the original principal
balance of the Loan (the "Net Worth Amount"). Within thirty (30) days after
request by any of the MPT Parties during the Loan Term, the Borrower Parties
shall deliver to MPT Parties unaudited balance sheets of each of the Borrower
Parties confirming that the Net Worth Amount is being maintained. Such balance
sheets shall be dated within thirty (30) days after the date of such request,
and all such unaudited balance sheets shall be certified as true and correct by
the chief financial officer (or other officer acceptable to the MPT Parties) of
each of the Borrower Parties.
(b) On or before the Closing Date, Alliance shall obtain, and shall
maintain during the Loan Term a Line of Credit from a financing source
acceptable to the MPT Parties, and upon terms and conditions acceptable to them
in all respects, of not less than Five Million and 00/100 Dollars
($5,000,000.00), which Line of Credit shall be available to Alliance to fund
normal operating and working capital needs.
(c) On or before the Closing Date, Alliance shall have obtained, and shall
maintain during the Loan Term a Letter of Credit from a financial institution
acceptable to the MPT Parties, and upon terms and conditions acceptable to the
MPT Parties in all respects, of not less than one year's Base Interest; provided
that, at such time as the Hospital's EBITDA shall be equal to or greater than
Two Hundred Fifty Percent (250%) of the amount of the Regularly Scheduled
Payment of Base Interest for each calendar month during a period of three (3)
consecutive years, the Letter of Credit shall be reduced to an amount equal to
six (6) months' Base Interest.
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SECTION 6.4. GENERAL COLLATERAL COVENANTS.
(a) Personal Property. Alliance, at its expense, shall install, affix,
assemble, place and maintain on the Real Property, the Personal Property, which
Personal Property shall be subject to the security interests and liens
contemplated hereby and in the Security Documents. The Borrower Parties shall
not, without the prior written consent of the MPT Parties (which consent may be
withheld in the event any Borrower Party or Guarantor is in default under any
Loan Document) remove any of the Personal Property from the Real Property. The
Borrower Parties shall provide and maintain during the entire Loan Term all such
Personal Property as shall be necessary in order to operate the Hospital in
compliance with all licensure and certification requirements, in compliance with
all applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Primary Intended Use.
The Borrower Parties will, at their own expense, jointly and severally, restore
the Collateral and repair of all damage to the Collateral caused by the removal
of Personal Property, whether effected by any of the Borrower Parties or the MPT
Parties.
(b) Condition of the Collateral. The Borrower Parties shall obtain and
maintain during the entire Loan Term all approvals needed to use and operate the
Collateral and the Hospital for the Primary Intended Use, as defined below,
under applicable local, state and federal law, including but not limited to
licensure approvals and Medicare and/or a Medicaid certifications, provider
numbers, certificates of need, governmental approvals, and full accreditation
from all applicable governmental authorities, if any, that are necessary for the
operation of the Hospital as a fifty (50) bed general acute care hospital
facility.
(c) Primary Intended Use of Collateral. Beginning on the Closing Date and
during the entire Loan Term, the Borrower Parties shall use the Collateral and
the improvements thereon only as a seventy-eight (78) bed general acute care
hospital facility (of which twenty-eight (28) beds are licensed to Alliance's
Tenant) and for such other legal ancillary uses as may be necessary in
connection with or incidental to such uses, subject to any covenants,
restrictions and easements relating to the Hospital (the "Primary Intended
Use"). Alliance shall not use the Collateral or any portion thereof for any
other use, nor change the number or type of beds within the Hospital, nor
reconfigure or rearrange any portion of the Collateral or the Hospital without
the prior written consent of the MPT Parties, which consent the Borrower Parties
agree may be withheld in the MPT Parties' sole discretion. No use shall be made
or permitted to be made of the Collateral and no acts shall be done which will
cause the cancellation of any insurance policy covering the Collateral or any
part thereof, nor shall any of the Borrower Parties sell or otherwise provide to
residents or patients therein, or permit to be kept, used or sold in or about
the Collateral any article which may be prohibited by law or by the standard
form of fire insurance policies, any other insurance policies required to be
carried hereunder, or fire underwriters regulations. Alliance shall, at its sole
cost, comply with all of the requirements, covenants and restrictions pertaining
to the Collateral, including, without limitation, all of the Permitted
Encumbrances, and other requirements of any insurance board, association,
organization or company necessary for the maintenance of the insurance, as
herein provided, covering the Collateral.
43
(d) Waste, Nuisance. The Borrower Parties shall not commit or suffer to be
committed any waste on the Collateral, or in the Hospital, nor shall any of the
Borrower Parties cause or permit any nuisance thereon.
(e) Maintenance of Security Interests. The Borrower Parties' shall neither
suffer nor permit the Collateral or any portion thereof to be used in such a
manner as (i) might reasonably tend to impair their respective title thereto or
to any portion thereof or the lien and security interest of any of the MPT
Parties therein, or (ii) may reasonably make possible a claim or claims of
adverse usage or adverse possession by the public, as such, or of implied
dedication of the Collateral or any portion thereof.
(f) Inspection. The Borrower Parties shall permit the MPT Parties and their
authorized representatives to inspect the Collateral during usual business hours
subject to any security, health, safety or confidentiality requirements of the
Borrower Parties, any governmental agency, any Insurance Requirements relating
to the Collateral, or imposed by law or applicable regulations.
(g) Publicity Signs. The Borrower Parties agree that during the Loan Term,
the MPT Parties and their respective Affiliates shall have the right and option
to erect one or more signs on the Collateral stating that the Collateral is
financed by MPT, or an Affiliate of MPT. Such sign shall be in a size, and shall
be erected in a location, reasonably acceptable to the MPT Parties and approved
by Alliance, which approval shall not be unreasonably withheld, conditioned or
delayed.
SECTION 6.5. REPAIRS; RESERVES; RESTRICTIONS.
(a) Maintenance and Repair.
(i) The Borrower Parties, at their joint and several expense, will
keep the Collateral (including, without limitation, the Real Property, the
Hospital, and all other Improvements) and all private roadways, sidewalks
and curbs appurtenant thereto, and Borrower Parties' Personal Property in
good first class order and repair (whether or not the need for such repairs
occurs as a result of the Borrower Parties' use, any prior use, the
elements, the age of the Collateral or any portion thereof) and, except as
otherwise provided in Section 6.7 and Section 6.8, with reasonable
promptness, will make all necessary and appropriate repairs thereto of
every kind and nature, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen or
arising by reason of a condition existing prior to the commencement of the
Loan Term (concealed or otherwise). All repairs shall, to the extent
reasonably achievable, be at least equivalent in quality to the original
work. The Borrower Parties will not take or omit to take any action the
taking or omission of which might materially impair the value or the
usefulness of the Collateral or any part thereof for the Primary Intended
Use. Notwithstanding anything contained herein to the contrary, the
Borrower Parties shall make additions, modifications and remodeling to the
Collateral from time to time which are necessary for the Primary Intended
Use and which permit the the Borrower Parties to comply fully with its
obligations set forth in this Agreement and the other Loan Documents,
provided that any such action will be undertaken expeditiously, in a
44
workmanlike manner and will not significantly alter the character or
purpose or detract from the value or operating efficiency of the Collateral
and will not significantly impair the revenue producing capability of the
Collateral or adversely affect the ability of the Borrower Parties to
comply with the provisions of this Agreement and the other Loan Documents.
Such additions, modifications and remodeling shall, without payment by any
of the MPT Parties at any time, be included under the terms of this
Agreement and the other Loan Documents and shall be subject to the Security
Documents. The Borrower Parties shall notify the MPT Parties of any and all
Capital Additions, repairs, improvements, additions, modifications, and
remodeling made to the Collateral in excess of Twenty Five Thousand and
00/100 Dollars ($25,000.00) and obtain consent from the MPT Parties prior
to making such repairs, improvements, additions, modifications and
remodeling.
(ii) The Borrower Parties hereby acknowledge that the MPT Parties
shall not under any circumstances be required to build or rebuild any
improvements on the Collateral, or to make any repairs, replacements,
alterations, restorations, or renewals of any nature or description to the
Collateral, whether ordinary or extraordinary, structural or
non-structural, foreseen or unforeseen, or to make any expenditure
whatsoever with respect thereto in connection with this Agreement or any
other Loan Document, or to maintain the Collateral in any way.
(iii) The Borrower Parties hereby acknowledge that nothing contained
in this Agreement or any other Loan Document, and no action or inaction by
any of the MPT Parties, shall be construed as (i) constituting the consent
or request of the MPT Parties, expressed or implied, to any contractor,
subcontractor, laborer, materialman or vendor to or for the performance of
any labor or services or the furnishing of any materials or other property
for the construction, alteration, addition, repair or demolition of or to
the Collateral or any part thereof, or (ii) giving any of the Borrower
Parties any right, power or permission to contract for or permit the
performance of any labor or services or the furnishing of any materials or
other property in such fashion as would permit the making of any claim
against any of the MPT Parties in respect thereof or to make any agreement
that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of any of the
MPT Parties in the Collateral or any portion thereof.
(iv) In the event of any conveyance of the Collateral to the MPT
Parties pursuant to this Agreement or any other Loan Document (including,
without limitation, pursuant to Article X hereof), the Borrower Parties
will vacate and surrender the Collateral to the MPT Parties in the
condition in which the Collateral was originally mortgaged to the MPT
Parties, except as improved, repaired, rebuilt, restored, altered or added
to as permitted or required by the provisions of this Agreement and except
for ordinary wear and tear (subject to the obligation of Borrower Parties
to maintain the Collateral in good order and repair during the entire Loan
Term), damage caused by the gross negligence or willful acts of the MPT
Parties and damage or destruction described in Section 6.7 or resulting
from a Taking described in Section 6.8 which the Borrower Parties are not
required by the terms of this Agreement to repair or restore.
45
(b) Reserves for Extraordinary Repairs. Commencing on the Closing Date, the
Borrower Parties shall make advance quarterly deposits to a reserve account (the
"Reserve") to be held by MPT; provided, however, that the first such deposit
shall be prorated based upon a Three Hundred Sixty (360) day year. Subject to
the immediately preceding sentence, each deposit to be made quarterly thereafter
through and including December 31, 2006, shall be equal to the sum of Two
Thousand Five Hundred and 00/100 Dollars ($2,500.00) per bed per annum. For the
period commencing on the Closing Date and ending on December 31, 2006, the
number of beds shall be assumed to be fifty (50). Beginning on January 1, 2007,
and on each January 1 thereafter, the number of beds shall be determined by the
actual number of beds placed in service or certified to be available for use in
the Hospital, which shall not be reduced without the prior written consent of
the MPT Parties. The account to which such payments are made shall require the
signature of an officer of Alliance and MPT to make withdrawals. Beginning on
January 1, 2007, and on each January 1 thereafter during the entire Loan Term,
such payment into the Reserve shall be increased by three and one-half percent
(3.5%) per annum. Notwithstanding anything contained herein to the contrary, the
Borrower Parties shall pay into the Reserve any amounts needed in excess of such
required payments as provided herein. The amounts in the Reserve, including
interest, shall be used to pay for Extraordinary Repairs on the Hospital, or, in
the event the Borrower Parties fail to make any required non-Extraordinary
Repairs, the MPT Parties may use funds in the Reserve for that purpose as well,
without the necessity of obtaining the signature of an officer of Alliance. The
Borrower Parties shall replenish amounts drawn from the Reserve at the rate of
one-twelfth (1/12th) of the total amount withdrawn per month, until completely
replenished. The Borrower Parties hereby grant to the MPT Parties a security
interest in all monies deposited into the Reserve and the Borrower Parties
shall, within fifteen (15) days from the Closing Date, execute all documents
necessary for the MPT Parties to perfect their security interest in the Reserve.
If either of the MPT Parties, in its reasonable discretion, determines at any
time that the balance then remaining in the Reserve account is insufficient to
pay in full for the present and future anticipated Extraordinary Repairs on the
Hospital, the Borrower Parties will deposit additional sums into the account
from time to time, upon the written request of the MPT Parties, in amounts equal
to the difference between the then balance in the Reserve account and the cost
to complete the present and future Extraordinary Repairs so that at all times
there is an adequate amount in the Reserve account to pay for such items on a
going forward basis. So long as no Event of Default has occurred, and no event
has occurred which with the giving of notice or the passage of time or both
would constitute an Event of Default hereunder, any amounts remaining in the
Reserve, after the payment of and the reimbursement for the Extraordinary
Repairs on the Hospital, at the expiration of the Loan Term shall be returned to
Alliance. The Borrower Parties consent to the MPT Parties' pledge of the Reserve
to any lender to the MPT Parties or their affiliates, subject to MPT Parties'
obligation to return any remaining amounts in the Reserve to Alliance Lessee
pursuant to this Section.
(c) Encroachments; Restrictions. If any of the Improvements shall, at any
time, encroach upon any property, street or right-of-way adjacent to the Land,
or shall violate the agreements or conditions contained in any federal, state or
local law, restrictive covenant or other agreement affecting the Collateral, or
any part thereof, or shall impair the rights of others under any easement or
right-of-way to which the Collateral is subject, then promptly upon the request
of any of MPT, the Borrower Parties shall, at their joint and several expense,
subject to their right to contest the existence of any encroachment, violation
or impairment, (a) obtain valid and effective waivers or settlements of all
claims, liabilities and damages resulting from each such
46
encroachment, violation or impairment or (b) make such changes in the
Improvements, and take such other actions, as MPT in the good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment, or to
end such violation or impairment, including, if necessary, the alteration of any
of the Improvements, and in any event take all such actions as may be necessary
in order to be able to continue the operation of the Hospital without such
violation, encroachment or impairment. Any such alteration shall be made in
conformity with the applicable requirements of this Agreement. The Borrower
Parties' obligations under this Section shall be in addition to and shall in no
way discharge or diminish any obligation of any insurer under any policy of
title or other insurance and Alliance shall be entitled to a credit for any sums
paid by Alliance and recovered by MPT under any such policy of title or other
insurance.
SECTION 6.6. INSURANCE COVENANTS.
(a) General Insurance Requirements. During the Loan Term, the Borrower
Parties shall at all times keep the Collateral and all property located in or on
the Collateral, insured against loss or damage from such causes as are
customarily insured against, by prudent owners of similar facilities. Without
limiting the generality of the foregoing, the Borrower Parties shall obtain and
maintain in effect throughout the Loan Term, the kinds and amounts of insurance
deemed necessary by the MPT Parties and as described below. At the MPT Parties'
option and provided that the costs of such coverages collectively do not exceed
the costs of such insurance obtained by the Borrower Parties, the MPT Parties
may obtain the insurance coverages as required herein and, in such event, the
Borrower Parties, jointly and severally, shall reimburse the MPT Parties for the
costs of such coverages immediately upon request by either of the MPT Parties.
This insurance shall be written by insurance companies (i) acceptable to the MPT
Parties, (ii) that are rated at least an "A, VIII" or better by Best's Insurance
Guide and Key Ratings and a claim payment rating by Standard & Poor's
Corporation of A or better (except as otherwise set forth in SCHEDULE 6.6(A)
hereof), and (iii) authorized, licensed and qualified to do insurance business
in the state in which the Collateral is located. The aggregate amount of
coverage by a single company must not exceed five percent (5%) of the insurance
company's policyholders' surplus. The policies must name the MPT Parties (and
any other entities as MPT may deem necessary) as an additional insured and
losses shall be payable to the MPT Parties and/or Alliance as provided in
Section 6.7. Each insurance policy required hereunder must (i) provide primary
insurance without right of contribution from any other insurance carried by the
MPT Parties, (ii) contain an express waiver by the insurer of any right of
subrogation, setoff or counterclaim against any insured party thereunder
including the MPT Parties, (iii) permit the MPT Parties to pay premiums at the
MPT Parties' discretion, and (iv) as respects any third party liability claim
brought against any one or more of the MPT Parties, obligate the insurer to
defend the MPT Parties as an additional insured thereunder. In addition, the
policies shall name the MPT Parties as an additional insured by way of a
standard form of mortgagee's loss payable endorsement. Any loss adjustment shall
require the written consent of the MPT Parties. Evidence of insurance and/or
Impositions shall be deposited with the MPT Parties. The policies on the
Collateral, including the Improvements, the Fixtures and Personal Property,
shall insure against the following risks:
(i) All Risks or Special Form Property insurance against loss or damage to
the building and improvements, including, but not limited to, perils, fire,
lightning,
47
windstorm, water, hail, aircraft, riot, vehicle collision, explosion,
smoke, vandalism, malicious mischief, flood, earth movement (including
earthquake), theft, collapse, boiler and machinery, plate glass breakage,
and perils typically provided under an Extended Coverage Endorsement and
other forms of broadened risk perils, and insured on a Full Replacement
Cost (as herein defined) value basis to the extent of the full replacement
value of the Collateral, to be determined by MPT. The policy shall include
coverage for subsidence. The deductible amount thereunder shall be borne by
Alliance in the event of a loss and the deductible must not exceed, per
occurrence, an amount equal to three percent (3%) of the value of the
Collateral, to be determined by MPT. Further, in the event of a loss,
Alliance shall abide by all provisions of the insurance contract, including
proper and timely notice of the loss to the insurer, and Alliance further
agrees that it will notify the MPT Parties of any loss in the amount of
Twenty-Five Thousand and 00/100 Dollars ($25,000.00) or greater and that no
claim at or in excess of Twenty-Five Thousand and 00/100 Dollars
($25,000.00) shall be settled without the prior written consent of MPT the
Parties, which consent shall not be unreasonably withheld or delayed.
(ii) Flood and earthquake insurance shall be required at a minimum amount
equal to twenty percent (20%) of the value of the Collateral (as determined
by MPT) up to a Ten Million and 00/100 Dollar ($10,000,000.00) limit unless
the Real Property is located in an earthquake or flood zone, in which event
such insurance shall be required at a minimum amount equal to the Full
Replacement Cost value of the Hospital, subject to no more than a
Twenty-Five Thousand Dollars ($25,000) per occurrence deductible and such
policy shall include coverage for subsidence. The deductible for any
insurance required hereunder must not exceed, per occurrence, an amount
equal to three percent (3%) of the value of the Collateral, as determined
by MPT. Notwithstanding any provision to the contrary in any Loan Document,
the parties hereby acknowledge that the Borrower Parties shall have a
commercially reasonable period of time following the Closing to obtain the
flood insurance required by this subsection.
(iii) Insurance against loss of earnings in an amount sufficient to cover
not less than twelve (12) months' lost earnings and payment of Obligations,
and written on an :actual loss sustained" form, for the same perils and
other events as described in Section 6.6(a)(i) hereof.
(iv) Worker's compensation insurance covering all employees in amounts that
are customary for Alliance's industry.
(v) Commercial General Liability in a primary amount of at least One
Million and 00/100 Dollars ($1,000,000.00) per occurrence, bodily injury
for injury or death of any one person and for Property Damage for damage to
or loss of property of others, subject to a Two Million and 00/100 Dollars
($2,000,000.00) annual aggregate policy limit for all bodily injury and
property damage claims, occurring on or about the Collateral or in any way
related to the Collateral, including but not limited to, any swimming pools
or other rehabilitation and recreational facilities or areas that are
located on the Collateral otherwise related to the Collateral. Such policy
shall include coverages found on the current ISO Commercial General
Liability Policy form.
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(vi) For so long as the Borrower Parties do not own any automobile or other
vehicle, automobile and vehicle liability insurance coverage for all
non-owned, leased or hired automobiles and vehicles in a primary limit
amount of Two Hundred Fifty Thousand and NO/100 Dollars ($250,000.00) per
occurrence for bodily injury and property damage; provided, however, that
if at any time during the Loan Term, either Borrower Party owns an
automobile or other vehicle, the Borrower Parties shall maintain automobile
and vehicle liability insurance coverage for all owned, non-owned, leased
or hired automobiles and vehicles in a primary limit amount of One Million
and 00/100 Dollars ($1,000,000.00) per occurrence for bodily injury and
property damage.
(vii) Umbrella liability insurance in the minimum amount of Ten Million and
00/100 Dollars ($10,000,000.00) for each occurrence and aggregate combined
single limit for all liability. The umbrella liability policy shall
specifically name in its underlying schedule the policies of commercial
general liability, professional liability, garage keepers liability,
automobile/vehicle liability and employer's liability under the workers
compensation policy. Notwithstanding any provision to the contrary in any
Loan Document, the parties hereby acknowledge that the Borrower Parties
shall have a commercially reasonable period of time following the Closing
to obtain the umbrella liability insurance required by this subsection.
(viii) Professional liability insurance for the Borrower Parties and all
employed professionals (including any Physician) of the Borrower Parties in
an amount not less than One Million and 00/100 Dollars ($1,000,000.00) per
individual claim and Three Million and 00/100 Dollars ($3,000,000.00)
annual aggregate. All contractors, agents and other persons (including
Physicians) who perform professional services for the Borrower Parties
shall met the required minimum insurance requirements of One Million and
00/100 Dollars ($1,000,000.00) per individual claim and Three Million and
00/100 Dollars ($3,000,000.00) annual aggregate.
The term "Full Replacement Cost" as used herein, shall mean the actual
replacement cost thereof from time to time, including increased cost of
construction endorsement, less exclusions provided in the normal fire insurance
policy. In the event either the MPT Party or Alliance believes that the Full
Replacement Cost has increased or decreased at any time during the Loan Term, it
shall have the right to have such Full Replacement Cost re-determined by the
fire insurance company which is then providing the largest amount of fire
insurance carried on the Collateral, hereinafter referred to as the "impartial
appraiser". The party desiring to have the Full Replacement Cost so
re-determined shall forthwith, on receipt of such determination by such
impartial appraiser, give written notice thereof to the other party hereto. The
determination of such impartial appraiser shall be final and binding on the
parties hereto, and Alliance shall forthwith increase, or may decrease, the
amount of the insurance carried pursuant to this Article, as the case may be, to
the amount so determined by the impartial appraiser. The Borrower Parties,
jointly and severally, shall pay the fee, if any, of the impartial appraiser.
(b) Waiver of Subrogation. All insurance policies to be obtained by
Alliance as required hereunder, including, without limitation, insurance
policies covering the Collateral, the Fixtures, the Hospital, and/or Personal
Property, including, without limitation, contents, fire and casualty insurance,
shall expressly waive any right of subrogation on the part of the insurer
49
against MPT. Alliance shall obtain insurance policies which will include such a
waiver clause or endorsement regardless of whether same is obtainable without
extra cost, and in the event of such an extra charge Alliance shall pay the
same.
(c) Form of Insurance. All of the policies of insurance referred to in this
Section shall be written in form satisfactory to the MPT Parties and by
insurance companies satisfactory to the MPT Parties. The Borrower Parties,
jointly and severally, shall pay all of the premiums therefor, and shall deliver
such original policies, or, in the case of a blanket policy, a copy of the
original policy certified in writing, by a duly authorized agent for the
insurance company, as a "true and certified" copy of the policy, to the MPT
Parties effective with the Closing Date and furnished annually thereafter (and,
with respect to any renewal policy, at least fifteen (15) days prior to the
expiration of the existing policy) and, in the event of the failure of Alliance
either to obtain such insurance in the names herein called for or to pay the
premiums therefor or to deliver such policies or certified copies of such
policies (if allowed hereunder) to the MPT Parties at the times required, MPT
shall be entitled, but shall have no obligation, to obtain such insurance and
pay the premiums therefor, which premiums shall be repayable to the MPT Parties
upon written demand therefor, and failure to repay the same shall constitute an
Event of Default within the meaning of this Agreement. Each insurer mentioned in
this Section shall agree, by endorsement on the policy or policies issued by it,
or by independent instrument furnished to the MPT Parties, that it will give to
the MPT Parties sixty (60) days' prior written notice (at the MPT Parties'
notice address as specified in this Agreement ("MPT's Notice Address")) before
the policy or policies in question shall be altered, allowed to expire, or
canceled. The parties hereto agree that all insurance policies, endorsements and
certificates which provide that the insurer will "endeavor to" give notice
before same may be altered, allowed to expire or canceled will not be acceptable
to the MPT Parties. Notwithstanding anything contained herein to the contrary,
all policies of insurance required to be obtained by Alliance hereunder shall
provide (i) that such policies will not lapse, terminate, be canceled, or be
amended or modified to reduce limits or coverage terms unless and until the MPT
Parties have received not less than sixty (60) days' prior written notice at
MPT's Notice Address, and (ii) that in the event of cancellation due to
non-payment of premium, the insurer will provide not less than ten (10) days'
prior written notice to the MPT Parties at MPT's Notice Address.
(d) Increase in Limits. In the event that either of the MPT Parties shall
at any time in its reasonable discretion deem the limits of the personal injury,
property damage or general public liability insurance then carried to be
insufficient, the parties shall endeavor to agree on the proper and reasonable
limits for such insurance to be carried and such insurance shall thereafter be
carried with the limits thus agreed on until further change pursuant to the
provisions of this Section. If the parties shall be unable to agree thereon, the
proper and reasonable limits for such insurance to be carried shall be
determined by an impartial third party selected by the parties. Nothing herein
shall be constructed to permit the amount of insurance to be reduced below the
amount or amounts required by any of the Borrower Party Instruments.
(e) Blanket Policy. Notwithstanding anything to the contrary contained in
this Section, Alliance's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Alliance, provided that:
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(i) Any such blanket policy or policies are acceptable to and have been
approved by the MPT Parties;
(ii) Any such blanket policy or policies shall not be changed, altered or
modified without the prior written consent of the MPT Parties; and
(iii) Any such blanket policy or policies shall otherwise satisfy the
insurance requirements of this Section 6.6 (including the requirement of
thirty (30) days' written notice before the expiration or cancellation of
such policies as required by subsection (d) hereof) and shall provide for
deductibles in amounts acceptable to the MPT Parties.
(f) No Separate Insurance. None of the Borrower Parties shall, on its own
initiative or pursuant to the request or requirement of any third party, take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this Article to be furnished by, or which may reasonably
be required to be furnished by, the Borrower Parties, or increase the amounts of
any then existing insurance by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of the insurance, including in all cases the MPT Parties, are included therein
as additional insureds and the loss is payable under said insurance in the same
manner as losses are required to be payable under this Agreement. The Borrower
Parties shall immediately notify the MPT Parties of the taking out of any such
separate insurance or of the increasing of any of the amounts of the then
existing insurance by securing an additional policy or additional policies.
SECTION 6.7. FIRE AND CASUALTY.
(a) Insurance Proceeds. All proceeds payable by reason of any loss or
damage to the Collateral, or any portion thereof, during the Loan Term and
insured under any policy of insurance required by Section 6.6 of this Agreement
shall be paid to MPT and held by MPT in trust (subject to the provisions of
Section 6.7(d) hereof), and shall be applied as follows:
(i) If, within sixty (60) days after the event causing any such loss or
damage to the Collateral, neither the Borrower Parties nor the Guarantors
are in monetary or payment default of any kind, and no event has occurred
which with the giving of notice or the passage of time, or both, would
constitute such a default, under this Agreement or the other Borrower Party
Instruments, and the Borrower Parties advise the MPT Parties in writing
that, in the Borrower Parties' reasonable opinion, the Collateral can be
reconstructed, repaired, restored and/or replaced within one (1) year after
such event to substantially the same operating utility that it had prior to
such event and in a condition suitable for its Primary Intended Use, then
at the Borrower Parties' request and following delivery of invoices or
other appropriate documentation to the MPT Parties, the proceeds shall be
paid out by MPT to the Borrower Parties from time to time to be used, to
the extent necessary, to pay for the costs and expenses of reconstructing,
repairing, restoring and/or replacing any damaged portion of the Collateral
or remedying any loss thereof.
(ii) If, within sixty (60) days after the event causing any such loss or
damage to the Collateral, either the Borrower Parties or the Guarantors are
in monetary or payment default of any kind, any event has occurred which
with the giving of notice or the passage
51
of time, or both, would constitute such a default under this Agreement, or
the other Borrower Party Instruments, or the Borrower Parties fail to
notify the MPT Parties that, in the Borrower Parties' reasonable opinion,
the Collateral can be reconstructed, repaired, restored and/or replaced
within one (1) year after such event to substantially the same operating
utility that it had prior to such event and to a condition suitable for its
Primary Intended Use, then such proceeds, at the MPT Parties' sole
discretion, shall be either (A) retained by the MPT Parties and applied
toward prepayment of the Loan Obligations, in any order, whether or not
then due, in which case an Event of Default shall be deemed to have
occurred and the Borrower Parties, jointly and severally, shall pay to the
MPT Parties on demand the amount of any deductible or uninsured loss
arising in connection therewith and any unpaid Loan Obligations, or (B) to
the Borrower Parties by the MPT Parties from time to time following
delivery of invoices or other appropriate documentation to the MPT Parties,
to be used, to the extent necessary, to pay for the costs and expenses of
reconstructing, repairing, restoring and/or replacing any damaged portion
of the Collateral or remedying any loss thereof, in which case the Borrower
Parties shall use such proceeds to cause the Collateral to reconstructed,
repaired, restored and/or replaced to substantially the same operating
utility that the Collateral had prior to such event and to the reasonable
satisfaction of the MPT Parties.
(iii) Any excess proceeds of insurance remaining after the completion of
the restoration or reconstruction of the Collateral (or in the event
neither the MPT Parties nor the Borrower Parties are required or elect to
reconstruct, repair, restore or replace, all such insurance proceeds) shall
be retained by MPT free and clear upon the earlier of any completion of any
such reconstruction, repair, restoration or replacement or any parties
election not to reconstruct, repair, restore or replace, as applicable,
except as otherwise specifically provided below in this Section, and shall
be applied toward prepayment of the Loan Obligations, in any order, whether
or not then due.
(iv) If the cost and expense of the reconstruction, repair, restoration, or
replacement exceeds the amount of proceeds received by the MPT Parties
pursuant hereto from the insurance required under Section 6.6, and the
Borrower Parties are obligated hereunder to reconstruct, repair, restore or
replace the Collateral, the Borrower Parties shall be obligated, jointly
and severally, to contribute any excess amount needed to reconstruct,
repair, restore or replace the Collateral prior to use of the insurance
proceeds. Such amount shall be paid by the Borrower Parties to MPT to be
held in trust together with any other insurance proceeds for application to
the cost and expense of reconstruction, repair, restoration, or replacement
as herein provided.
(b) Uninsured Event of Damage or Destruction. Except as provided in Section
6.7(d) below, if during the Loan Term, the Collateral is totally or partially
destroyed from a risk not covered by the insurance described in Section 6.6 but
that would have been covered if the Borrower Parties carried the insurance
customarily maintained by, and generally available to, the operators of
reputable health care facilities in the region in which the Collateral is
located, then, whether or not such damage or destruction renders the Collateral
Unsuitable for its Primary Intended Use, the Borrower Parties shall, at their
sole, joint and several cost and expense, reconstruct, repair, restore or
replace the Collateral to substantially the same condition it was in
52
immediately before such damage or destruction and such damage or destruction
shall not terminate this Agreement.
(c) Restoration. If the Borrower Parties are required or elect to restore
the Collateral as provided in Section 6.7(a) or Section 6.7(b), the Borrower
Parties shall also restore all alterations and improvements made by the Borrower
Parties and all Personal Property.
(d) Damage Near End of Loan Term. Notwithstanding any provisions of Section
6.7(a) or Section 6.7(b) to the contrary, if damage to or destruction of the
Collateral occurs during the last twenty-four (24) months of the Loan Term, and
if such damage or destruction cannot be fully repaired and restored within six
(6) months immediately following the date of loss, an Event of Default shall be
deemed to have occurred under this Agreement, and the MPT Parties shall be
entitled to retain the insurance proceeds relating thereto and apply the same
toward prepayment of the Loan Obligations, in any order, whether or not then
due, in which case the Borrower Parties, jointly and severally, shall pay to the
MPT Parties on demand the amount of any deductible or uninsured loss arising in
connection therewith and any unpaid Loan Obligations.
(e) Waiver. The Borrower Parties hereby waive any statutory or common law
rights of termination which may arise by reason of any damage or destruction of
the Collateral.
SECTION 6.8. CONDEMNATION.
(a) Parties' Rights and Obligations. If during the Loan Term there is any
Taking of all or any part of the Collateral or any interest in this Agreement by
Condemnation, the rights and obligations of the parties shall be determined by
this Article.
(b) Total Taking. If there is a Taking of all of the Collateral by
Condemnation (a "Total Taking"), the provisions of Section 6.8(d) hereof shall
apply.
(c) Partial Taking. If there is a Taking of a portion of the Collateral by
Condemnation (a "Partial Taking"), this Agreement shall remain in effect if, in
the MPT Parties' reasonable opinion exercised in good faith, the Collateral is
not thereby rendered Unsuitable for its Primary Intended Use. If, however, the
Collateral is thereby rendered Unsuitable for its Primary Intended Use, so long
as neither of the Borrower Parties nor the Guarantors are in monetary or payment
default of any kind, and no other event has occurred which, with the giving of
notice or the passage of time or both, would constitute such a default under the
terms of this Agreement or the other Borrower Party Instruments, the Borrower
Parties shall have the option to repair, restore, or relocate the Collateral, at
their own expense, to the extent possible, to substantially the same condition
as existed immediately before the partial Taking within one (1) year of the date
of such Partial Taking. In the event that the Borrower Parties do not exercise
such option, this Agreement shall be deemed to terminate on the Date of Taking.
(d) Award. In the event there is any Taking, the Award shall be paid to MPT
and held by MPT in trust, and shall be applied as follows
(i) In the event there is a Total Taking or there is a Partial Taking
and the Borrower Parties do not exercise their option to repair, restore or
relocate the Collateral,
53
the Award shall be paid to the MPT Parties and applied toward prepayment of
the Loan Obligations, in any order, whether or not then due, and any unpaid
Loan Obligations shall be due and payable to the MPT Parties immediately.
(ii) In the event there is a Partial Taking and the Borrower Parties
exercise their option to repair, restore or relocate the Collateral, the
Award shall be paid to the Borrower Parties upon the MPT Parties receipt of
invoices or other appropriate documentation regarding the costs and
expenses for any such repair, restoration or relocation.
(e) Restoration. If there is a partial Taking of the Collateral and this
Agreement remains in full force and effect pursuant to Section 6.8(c), the
Borrower Parties shall accomplish all necessary repair, restoration or
relocation within one (1) year of the date of the Taking.
(f) Temporary Taking. The Taking of the Collateral, or any part thereof, by
military or other public authority shall constitute a Taking by Condemnation
only when the use and occupancy by the Taking authority has continued for longer
than six (6) months. During any such six (6) month period all the provisions of
this Agreement shall remain in full force and effect and the Loan Obligations
shall remain payable as provided in this Agreement and the other Loan Documents.
SECTION 6.9. OPERATIONAL COVENANTS.
(a) Conduct of Business by the Borrower Parties. The Borrower Parties
covenant and agree that, unless the MPT Parties shall otherwise agree in
writing, the Borrower Parties shall conduct their businesses only in, and the
Borrower Parties shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice and in compliance in all
material respects with all applicable laws and regulations, and that the
Borrower Parties shall use reasonable best efforts to preserve substantially
intact the business organization of each Borrower Party, to keep available the
services of their current officers, employees and consultants and to preserve
the present relationships of each Borrower Party with patients, suppliers and
other persons with which each Borrower Parties have significant business
relations. By way of amplification and not limitation, except as contemplated by
this Agreement or set forth on SCHEDULE 6.9(A), no Borrower Party shall, during
the Loan Term, directly or indirectly do, or propose to do, any of the following
without the prior written consent of the MPT Parties:
(i) amend, repeal or otherwise change in any way its Governing
Documents;
(ii) make or revoke any Tax election related to or affecting (whether
currently, prospectively or otherwise) the Collateral;
(iii) fail to perform its obligations in all respects under agreements
relating to or respecting its assets, properties and rights;
(iv) reduce the coverage of, fail to timely renew or pay the premiums
on or cancel any insurance policy;
54
(v) cause to lapse or fail to renew any license and certification
necessary to conduct its business;
(vi) fail to timely make all applicable filings with Governmental
Entities;
(vii) create, assume or, other than those presently in existence,
permit to exist any Lien upon any of the Collateral;
(viii) purchase, sell, assign, lease or otherwise acquire, transfer or
dispose of any material assets, except in the ordinary course of business
and consistent with its past practice;
(ix) enter into or agree to enter into any agreement or arrangements
granting any rights to purchase any of its assets, properties or rights,
except for purchases of inventory in the ordinary course of business and
consistent with its past practice;
(x) engage in any business other than the Business;
(xi) terminate or modify any contract, lease or other agreement to
which it is a party (excluding expiration or satisfaction in accordance
with the terms of such contract or agreement);
(xii) waive any right of substantial value other than in exchange for
reasonable consideration; or
(xiii) take, agree or offer, in writing or otherwise, to take, any of
the actions described in Section 6.9(a)(i) through (xii) above, or any
action which would make any of the representations or warranties of any
Borrower Party contained in this Agreement untrue, incorrect or incomplete
or prevent any Borrower Party from performing or cause any Borrower Party
not to perform its covenants hereunder or in the other Loan Documents.
(b) Cooperation. Subject to compliance with applicable law, (a) the
Borrower Parties shall confer on a regular and frequent basis with one or more
representatives of the MPT Parties to report operational matters that are
material and the general status of ongoing operations and (b) each of the MPT
Parties and the Borrower Parties shall promptly provide the other or their
counsel with copies of all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.
(c) Compliance with Requirements. The Borrower Parties, at their joint and
several expense, will promptly (i) comply with all Legal Requirements and
Insurance Requirements in respect of the operation of the Business and the use,
operation, maintenance, repair and restoration of the Collateral, whether or not
compliance therewith shall require structural change in any of the Improvements
or interfere with the use and enjoyment of the Collateral or operation of the
Hospital, and (ii) procure, maintain and comply with all licenses, certificates
of need, Medicare and Medicaid provider agreements, accreditations and other
authorizations required for the conduct of the Business and any use of the
Collateral then being made, and for the proper erection, installation, operation
and maintenance of the Collateral or any part thereof. Upon
55
MPT's request, the Borrower Parties shall deliver copies of all such licenses,
certificates of need, agreements and other authorizations. The Borrower Parties,
jointly and severally, hereby agree to indemnify and defend, at the Borrower
Parties' sole cost and expense, and hold the MPT Parties, their respective
successors and assigns, harmless from and against, and to reimburse the MPT
Parties and their respective successors and assigns, with respect to any and all
claims, demands, actions, causes of action, losses, damages, liabilities, costs
and expenses (including, without limitation, reasonable attorneys' fees and
court costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by any of the MPT Parties, or their
respective successors and assigns, at any time and from time to time by reason
or arising out of any breach by the Borrower Parties of any of the provisions of
this Section. The Borrower Parties covenant and agree that the Collateral shall
not be used for any unlawful purpose. The Borrower Parties shall use their best
efforts to have tenants acquire and maintain all licenses, certificates,
permits, provider agreements and other authorizations and approvals needed to
operate the Collateral and all equipment and machinery used in or in connection
with the Collateral in its customary manner for the Primary Intended Use and any
other use conducted on the Collateral as may be permitted from time to time
hereunder. The Borrower Parties further covenant and agree that their use of the
Collateral, the use of all equipment and machinery used in connection with the
Collateral, and the maintenance, alteration, and operation of the same, and all
parts thereof, shall at all times conform to all applicable local, state and
federal laws, ordinances, rules and regulations.
(d) Licenses.
(i) The Borrower Parties shall maintain, at all times during the Loan
Term, all Existing Licenses which may be necessary or useful in the
operation of the Hospital or the Business, shall obtain all New Licenses
which may be necessary in the operation of the Hospital or the Business,
and shall qualify and comply with all applicable laws as they may from time
to time exist, including those applicable to certification and
participation as a provider under Medicare and Medicaid legislation and
regulations.
(ii) The Borrower Parties shall not, without the prior written consent
of the MPT Parties, which may be granted or withheld in their sole
discretion, effect or attempt to effect any change in the license category
or status of the Hospital or any part thereof. Under no circumstances shall
the Borrower Parties have the right to transfer any of the Licenses to any
location other than the Hospital or to any other person or entity (except
to the MPT Parties as contemplated herein), whether before, during, or
after the Loan Term. To the extent that any of the Borrower Parties has or
will extend to any third party any right, title, or claim of right
whatsoever in and to the Licenses or the right to operate the Hospital, all
such right, title, or claim of right shall automatically revert to the MPT
Parties or to the MPT Parties' designee upon the occurrence of a Event of
Default, to the extent permitted by law.
(iii) It is an integral condition of this Agreement that the Borrower
Parties covenant and agree not to sell, move, modify, cancel, surrender,
transfer, assign, sell, relocate, pledge, secure, convey or in any other
manner encumber any License or any governmental or regulatory approval,
consent or authorization of any kind to operate the Hospital or the
Business.
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(iv) The Borrower Parties shall immediately (within two (2) Business
Days) notify the MPT Parties in writing of any notice, action, or other
proceeding or inquiry of any governmental agency, bureau, or other
authority, whether federal, state or local, of any kind, nature or
description, which could adversely affect any License or Medicare and/or
Medicaid-certification status, or accreditation status, of the Hospital, or
the ability of Alliance to maintain its status as the licensed and
accredited operator of the Hospital, or which alleges noncompliance with
any law. The Borrower Parties shall immediately (within two (2) Business
Days) upon any of the Borrower Parties' receipt, furnish the MPT Parties
with a copy of any and all such notices and the MPT Parties shall have the
right, but not the obligation, to attend and/or participate, in the MPT
Parties' sole and absolute discretion, in any such actions or proceedings.
The Borrower Parties shall act diligently to correct any deficiency or deal
effectively with any "adverse action" or other proceeding, inquiry, or
other governmental action, so as to maintain the licensure and Medicare
and/or Medicaid-certification status stated herein in good standing at all
times. The Borrower Parties shall not agree to any settlement or other
action with respect to such proceedings or inquiry which affects the use of
the Collateral or any portion thereof as provided herein without the prior
written consent of the MPT Parties, which consent shall not be unreasonably
withheld or delayed.
(e) Compliance with Healthcare Laws. The Borrower Parties hereby covenant
and agree that on and after the date hereof and during the Loan Term: (i)
Alliance shall be validly licensed, Medicare and/or Medicaid certified, and, if
required, accredited to operate the Hospital in accordance with the applicable
rules and regulations of the State of Texas and those of all applicable federal
governmental authorities and accrediting bodies, including, but not limited to,
DHHS, DHS, THHSC and CMS; and/or (ii) Alliance shall be, certified by and the
holder of valid provider agreements with, Medicare or Medicaid, which
certifications and provider agreements shall be issued by THHSC and CMS and
Alliance shall remain so certified and shall remain such a holder in connection
with its Primary Intended Use of the Collateral as a licensed general acute care
hospital; (iii) Alliance shall be in substantial compliance with and shall
remain in substantial compliance with all state and federal laws, rules,
regulations and procedures with regard to the operation of the Hospital,
including, without limitation, compliance under HIPAA; (iv) Alliance shall
operate the Hospital in a manner consistent with high quality acute care
services and sound reimbursement principles under the Medicare and/or Medicaid
programs and as required under state and federal law; and (v) the Borrower
Parties shall not abandon, terminate, vacate, or fail to renew any License which
is required for the lawful and proper operation of the Hospital or in any way
commit any act which will or may cause any such License to be revoked by any
Governmental Entity having jurisdiction thereof. The Borrower Parties agree to
promptly notify the MPT Parties in writing of receipt of any notice of
investigation of any alleged Healthcare Fraud violations.
SECTION 6.10. HAZARDOUS MATERIALS AND ENVIRONMENTAL LAWS.
(a) Hazardous Materials. Except for Hazardous Materials generated in the
normal course of business regarding the Primary Intended Use (which Hazardous
Materials shall be handled and disposed of in compliance with all Environmental
Laws), no Hazardous Materials shall be installed, used, generated, manufactured,
treated, handled, refined, produced, processed, stored or disposed of, or
otherwise present in, on or under the Collateral. No activity shall be
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undertaken on the Collateral which would cause (i) the Collateral to become a
treatment, storage or disposal facility of hazardous waste, infectious waste, or
biomedical or medical waste within the meaning of, or otherwise bring the
Collateral within the ambit of, RCRA or any Environmental Laws, (ii) releases or
threatened releases of Hazardous Materials from the Collateral within the
meaning of, or otherwise bring the Collateral within the ambit of, CERCLA or
XXXX or any Environmental Laws, or (iii) the discharge of Hazardous Materials
into any watercourse, surface or subsurface body of water, or wetland, or the
discharge into the atmosphere of any Hazardous Material which would require a
permit under any Environmental Laws. No activity shall be undertaken with
respect to the Collateral or the operation of the Business which would cause a
violation or support a claim under RCRA, CERCLA, XXXX or any Environmental Laws.
No investigation, administrative order, litigation or settlement with respect to
any Hazardous Material is, to Alliance's Knowledge, threatened or in existence
with respect to the Collateral. No notice has been served on Alliance from any
entity, governmental body or individual claiming any violation of any
Environmental Laws, or requiring compliance with any Environmental Laws, or
demanding payment or contribution for environmental damage or injury to natural
resources. Alliance has not obtained and Alliance has no knowledge of any reason
Alliance will be required to obtain any permits, licenses, or similar
authorizations to occupy, operate or use the Improvements or any part of the
Collateral by reason of any Environmental Laws. Alliance hereby agrees to
indemnify and defend, at its sole cost and expense, and hold MPT, its successors
and assigns, harmless from and against and to reimburse MPT with respect to any
and all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorney's fees and court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by MPT at any time
and from time to time by reason or arising out of any breach or violation of any
Environmental Laws. Alliance shall, at its sole cost, expense, risk and
liability, remove or cause to be removed from the Collateral all Hazardous
Materials generated in connection with the Primary Intended Use and as found in
hospital and healthcare facilities, including, without limitation, all
infectious waste materials, syringes, needles and any materials contaminated
with bodily fluids of any type, character or description of whatsoever nature in
accordance with all Environmental Laws. Alliance shall not dispose of any such
infectious waste and Hazardous Materials in any receptacles used for the
disposal of normal refuse.
(b) Environmental Laws. Alliance agrees to add to all of its third party
agreements relating to the Collateral, including, without limitation, all Tenant
Leases, that in the event it is determined that such Tenant Lease is in
violation of the Environmental Laws, such Tenant Lease shall be renegotiated so
that same are in compliance with all Environmental Laws. Alliance agrees
promptly to notify MPT in writing of receipt of any notice of investigation of
any alleged Environmental Law violations. Alliance hereby agrees to indemnify
and defend, at Alliance's sole cost and expense, and hold the MPT Indemnified
Parties harmless from and against and to reimburse the MPT Indemnified Parties
with respect to any and all claims, demands, actions, causes of action, losses,
damages, liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees and court costs) of any and every kind or character,
known or unknown, fixed or contingent, asserted against or incurred by the MPT
Indemnified Parties, at any time and from time to time by reason or arising out
of any breach by Alliance of any of the provisions set forth in this Section.
SECTION 6.11. IMPOSITIONS.
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(a) Additional Charges. Each of the Borrwer Parties shall also pay and
discharge as and when due and payable (a) all other amounts, liabilities,
obligations and Impositions which such Borrower Party assumes or agrees to pay
under the Loan Documents, and all other amounts, liabilities, obligations and
Impositions related to the ownership, use, possession and operation of the
Collateral or the Business, including, without limitation, all costs of owning
and operating the Hospital, all Real Estate Taxes, insurance premiums,
maintenance and capital improvements, all licensure violations, violations of
and defaults under any of the Permitted Encumbrances, civil monetary penalties
and fines, and (b) in the event of any failure on the part of the Borrower
Parties to pay any of those items referred to in clause (a) above, the Borrower
Parties, jointly and severally, will also promptly pay and reimburse the MPT
Parties for all such amounts paid by the MPT Parties and promptly pay and
discharge every fine, penalty, interest and cost which may be added for
non-payment or late payment of such items (the items referred to in clauses (a)
and (b) above being referred to herein collectively as the "Additional
Charges"), and the MPT Parties shall have all legal, equitable and contractual
rights, powers and remedies provided in the Loan Documents, by statute or
otherwise, in the case of non-payment of the Additional Charges, as in the case
of the other Loan Obligations. If any installment of Additional Charges shall
not be paid within five (5) Business Days after its due date, the Borrower
Parties, jointly and severally, will pay to the MPT Parties on demand, as
Additional Charges, a late charge (to the extent permitted by law) computed at
the Default Rate (or at the maximum rate permitted by law, whichever is less) on
the amount of such installment, from the due date of such installment to the
date of payment thereof. To the extent that the Borrower Parties pay any
Additional Charges to the MPT Parties pursuant to any requirement of the Loan
Documents, the Borrower Parties shall be relieved of their obligation to pay
such Additional Charges to the entity to which they would otherwise be due. At
any time during the Loan Term, the MPT Parties may require the Borrower Parties
to pay to the MPT Parties the MPT Parties' estimates of Real Estate Taxes and
insurance premiums and the Borrower Parties, jointly and severally, shall pay to
the MPT Parties, upon written request from any of the MPT Parties, such amounts
as and when required by the MPT Parties. All sums paid into escrow or deposits
shall not bear interest and may be commingled with the MPT Parties' books,
accounts and funds; however, upon an Event of Default, the escrowed funds or
deposits may be applied by the MPT Parties to all sums owed by the Borrower
Parties or the Guarantors to the MPT Parties.
(b) Payment of Impositions. Subject to Article XI relating to permitted
contests, the Borrower Parties, jointly and severally, will pay, or cause to be
paid, all Impositions before any fine, penalty, interest or cost may be added
for non-payment, such payments to be made directly to the taxing or assessing
authorities unless, in the case of escrows and deposits required to be paid to
the MPT Parties as provided in this Agreement, and the Borrower Parties will
promptly, upon request, furnish to the MPT Parties copies of official receipts
or other satisfactory proof evidencing such payments. The Borrower Parties'
obligation to pay such Impositions shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Collateral or any part thereof. If
any such Imposition may, at the option of the MPT Parties, lawfully be paid in
installments (whether or not interest shall accrue on the unpaid balance of such
Imposition), the Borrower Parties may exercise the option to pay the same (and
any accrued interest on the unpaid balance of such Imposition) in installments
and, in such event, shall pay such installments during the Loan Term (subject to
the Borrower Parties' right of contest pursuant to the provisions of Article XI;
and subject to the requirement to pay the full amount of escrows and deposits as
required under this Agreement) as the same respectively become due and before
any
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fine, penalty, premium, further interest or cost may be added thereto. The
Borrower Parties, at their sole, joint and several expense, shall, to the extent
permitted by applicable laws and regulations, prepare and file all other Tax
Returns and reports in respect of any Imposition as may be required by
Governmental Entities. If any refund shall be due from any taxing authority in
respect of any Imposition paid by the Borrower Parties, the same shall be paid
over to or retained by the Borrower Parties if no Event of Default shall have
occurred hereunder and be continuing. Any such funds retained by the MPT Parties
due to an Event of Default shall be applied as provided in Article X. The MPT
Parties and the Borrower Parties shall, upon request of the other, provide such
data as is maintained by the parties to whom the request is made with respect to
the Collateral as may be necessary to prepare any required returns and reports.
In the event Governmental Entities classify any property covered by this
Agreement as personal property, the Borrower Parties shall file all Tax Returns
relating to such personal property in such jurisdictions where they may legally
so file. The Borrower Parties, to the extent they possess the same, will provide
to the MPT Parties, upon request, with cost and depreciation records necessary
for filing returns for any property so classified as personal property. The
Borrower Parties may, upon giving notice to the MPT Parties, at the Borrower
Parties' option and at the Borrower Parties' sole cost and expense, protest,
appeal, or institute such other proceedings as the Borrower Parties may deem
appropriate to effect a reduction of real estate or personal property
assessments and the MPT Parties, at the Borrower Parties' expense as aforesaid,
shall fully cooperate with the Borrower Parties in such protest, appeal, or
other action.
(c) Utility Charges. Alliance will contract for, in its own name, and will
pay or cause to be paid when due all charges for electricity, power, gas, oil,
water and other utilities used in connection with the Collateral during the Loan
Term, including, without limitation, all impact and tap fees necessary for the
operation of the Hospital.
SECTION 6.12. ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION.
(a) Assignment and Subletting. The Borrower Parties shall not lease any
portion of the Collateral or permit, approve, accept or suffer same, without the
MPT Parties' prior written consent, which consent shall not be unreasonably
withheld, provided that such lease shall comply with the provisions of this
Section, and an original counterpart of each such lease, in form and substance
satisfactory to the MPT Parties, shall be delivered promptly to the MPT Parties.
Notwithstanding anything contained herein to the contrary, the MPT Parties and
the Borrower Parties acknowledge the existence of the Tenant Leases set forth on
SCHEDULE 6.12(a) hereof ("Existing Tenant Leases"). Any modifications,
amendments and restatements of the Existing Tenant Leases must be approved by
MPT in accordance with this Section.
(b) Lease Limitations. In addition to the limitations as set forth in
subsection (a) above, all leases contemplated by this Section shall comply with
the Healthcare Fraud Laws. The Borrower Parties agree that all Tenant Leases
entered into after the date hereof ("New Tenant Leases") and submitted for
approval of the MPT Parties as provided herein must include provisions to the
effect that (i) such New Tenant Lease is subject and subordinate to all of the
terms and provisions of the Security Documents and the other Loan Documents,
(ii) from and after an Event of Default, Tenant will, at MPT's option, attorn to
the MPT Parties and waive any right the Tenant may have to terminate the New
Tenant Lease or to surrender possession thereunder, as a result thereof, (iii)
at MPT's option, the New Tenant Lease may be terminated or
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left in place by the MPT Parties from and after an Event of Default, (iv) the
obligations and performance of the Tenant must be guaranteed by guarantors
acceptable to the MPT Parties, (v) Tenant shall from time to time upon request
of the Borrower Parties or the MPT Parties furnish within ten (10) days from
request an estoppel certificate in form and content acceptable to the MPT
Parties relating to the New Tenant Lease, (vi) in the event the Tenant receives
a written notice from the MPT Parties or their assignees, if any, stating that
an Event of Default has occurred, the Tenant shall thereafter be obligated to
pay all rentals accruing under said New Tenant Lease directly to the party
giving such notice, or as such party may direct and such Tenant shall be
entitled to conclusively rely on such notice, (vii) and that such New Tenant
Lease shall at all times be subject to the obligations and requirements as set
forth in this Section, and (viii) Tenant shall provide to the MPT Parties upon
written request such officer's certificates and financial statements as the MPT
Parties may request from time to time.
(c) Lease Subordination and Non-Disturbance. Within ten (10) days after
request by the MPT Parties, the Borrower Parties shall cause any Tenants to
execute and deliver to the MPT Parties a subordination agreement relating to the
Tenant Leases of such Tenants, which subordination agreements shall be in form
and content acceptable to the MPT Parties whereby each Tenant subordinates its
Tenant Lease and all of its rights and estate thereunder to the Loan Documents
and agrees with the MPT Parties that such Tenant will attorn to and recognize
the MPT Parties or the purchaser at any foreclosure sale or any sale under a
power of sale contained in any such Loan Document, as successor owner of the
Real Property, subject to all of the terms and provisions of the Tenant Lease,
provided that, among other things, such Tenant is not in default in its
obligations under such Tenant Lease beyond any applicable grace period provided
therefor.
SECTION 6.13. SPECIAL PURPOSE ENTITY. Alliance shall remain at all times during
the Loan Term a Special Purpose Entity created and to remain in good standing
for the sole purpose of leasing and operating the Hospital in accordance with
the terms of this Agreement. Promptly following any request by the MPT Parties
during the Loan Term, Alliance shall provide MPT evidence that Alliance is a
Special Purpose Entity and is in good standing in the state of its organization
and in the state in which the Collateral is located.
SECTION 6.14. ORGANIZATIONAL DOCUMENTS. During the Loan Term, the Borrower
Parties shall not permit or suffer, without the prior written consent of the MPT
Parties (i) any material amendment or modification of their respective
Organizational Documents (as defined below), or the organizational documents of
any constituent entity of the Borrower Parties, which changes Alliance's status
as a Special Purpose Entity, (ii) any dissolution or termination of the
existence of either Borrower Party, (iii) the aggregate ownership of the current
partners of Alliance or the current shareholders of the General Partner to be
reduced below fifty-one percent (51%), (iv) any addition, replacement or removal
of any general partner of Alliance, or (v) any change in the state of formation
or incorporation or the name of any of the Borrower Parties. Simultaneously
with the execution of this Agreement, Alliance has delivered to the MPT Parties
true and complete copies of its certificate of limited partnership and limited
partnership agreement creating Alliance, and all other documents creating and
governing Alliance and the General Partner has delivered to the MPT Parties true
and complete copies of its articles of incorporation and bylaws creating the
General Partner, and all other documents creating and governing the General
Partner (collectively, the "Organizational Documents").
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ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1. CONDITIONS TO THE OBLIGATIONS OF THE BORROWER PARTIES. The
obligations of the Borrower Parties to effect the transactions contemplated
hereby shall be further subject to the fulfillment of the following conditions,
any one or more of which may be waived by the Borrower Parties:
(a) All of the representations and warranties of the MPT Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.
(b) The MPT Parties shall have delivered, performed, observed and complied with
all of the items, instruments, documents, covenants, agreements and conditions
required by this Agreement to be delivered, performed, observed and complied
with by them prior to, or as of, the Closing.
(c) The MPT Parties shall have executed, where applicable, and delivered to the
Borrower Parties the documents referenced in Section 8.3 hereof.
SECTION 7.2. CONDITIONS TO THE OBLIGATIONS OF THE MPT PARTIES. The obligations
of the MPT Parties to effect the transactions contemplated hereby shall be
further subject to the fulfillment of the following conditions, any one or more
of which may be waived by the MPT Parties:
(a) All of the representations and warranties of Borrower Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.
(b) The Borrower Parties shall have delivered, performed, observed and complied
with all of the items, instruments, documents, covenants, agreements and
conditions required by this Agreement to be delivered, performed, observed and
complied with by them prior to, or as of, the Closing.
(c) No Borrower Party shall have suffered any change, event or circumstance
which has had, or could have, a Material Adverse Effect.
(d) The MPT Parties shall have satisfactorily completed their due diligence
investigations of the Hospital, the Real Property, the Business and the Borrower
Parties and shall be satisfied with the results of such investigations
(including, without limitation, any MPT directed audit of Medicare and/or
Medicaid cost reports of the Borrower Parties for any period and any other
Medicare, Medicaid and/or DHS survey and/or audit of the Hospital or the
Business, any investigations involving the lawsuit of Xxxxxxx X. Xxxxxxxxxx,
M.D. vs. Alliance Medical Group, Alliance Hospital, Ltd; and SRI-SAI
Enterprises, Inc. filed in the District Court of Ector County, Texas D-117, 769,
and any other medical fraud investigations).
(e) All necessary approvals, consents, estoppel certificates, and the like of
Governmental Entities and third parties to the validity and effectiveness of the
transactions contemplated hereby have been obtained.
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(f) No portion of the Collateral shall have been damaged or destroyed by fire or
casualty.
(g) No condemnation, eminent domain or similar proceedings shall have been
commenced or threatened with respect to any portion of the Collateral.
(h) The MPT Parties shall have received copies of all permits, licenses and
other approvals of Governmental Entities required for the operation of the
Collateral for their intended uses and written evidence satisfactory to the MPT
Parties that the operation and use of the Hospital are in accordance with all
applicable governmental requirements.
(i) The MPT Parties shall have received evidence that the Borrower Parties are
maintaining insurance on the Collateral and that the MPT Parties are named as
additional insureds and, where applicable, loss payees.
(j) The Borrower Parties shall have executed where applicable, and delivered to
the MPT Parties the documents referenced in Section 8.2 hereof.
(k) There shall not have been instituted by any creditor of any of the Borrower
Parties, any Governmental Entity or any other third party, any suit, action or
proceeding which would affect the Collateral or seek to restrain, enjoin or
invalidate the transactions contemplated by this Agreement.
(l) The Appraisal shall have been delivered and shall reflect an Appraised Value
that equals or exceeds the amount of the Loan.
ARTICLE VIII
CLOSING
SECTION 8.1. CLOSING DATE. The closing of the Loan pursuant hereto (the
"Closing") shall be handled through deliveries by mail into escrow on December
21, 2005, or on such other date (the "Closing Date") and such other place as the
parties hereto shall mutually agree.
SECTION 8.2. BORROWER PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date,
the Borrower Parties shall deliver to the MPT Parties the documents,
certificates, fees, and other instruments described below, each of which shall
be executed and delivered, as applicable, by the Borrower Parties, and shall be
reasonably satisfactory to the MPT Parties in form and substance.
(a) The Note;
(b) The Mortgage;
(c) The Security Agreement;
(d) The Financing Statements;
(e) The Pledge Agreement;
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(f) The Guaranty;
(g) The Letter of Credit;
(h) The Environmental Indemnity Agreement;
(i) The Assignment of Leases and Rents;
(j) The Subordination of Management Agreement;
(k) The Subordination Agreement;
(l) The Collateral Assignment;
(m) The Noncompete Agreement;
(n) An Appraisal dated the most recent practical date prior to the date
hereof indicating that the Appraised Value equals or exceeds the amount of the
Loan;
(o) The Commitment Fee;
(p) Certificates dated the Closing Date signed by each of the Borrower
Parties to the effect that all of the representations and warranties of each
Borrower Party contained in the Agreement (considered collectively) and each of
these representations and warranties (considered individually) remain in all
respects true and correct as of the Closing Date as if made on such date and
that such Borrower Party has performed and satisfied all covenants and
conditions required by this Agreement to be performed or satisfied by such
Borrower Party on or prior to Closing;
(q) A certified copy of the resolutions or consents of the governing body
of each Borrower Party dated as of the date hereof and authorizing such Borrower
Party's execution, delivery and performance of this Agreement and all other
documents to be executed in connection herewith;
(r) Certificates of existence and good standing of each Borrower Party from
the secretary of state of such Borrower Party's state of incorporation or
organization, dated the most recent practical date prior to the Closing Date;
(s) Certificates of good standing and foreign qualification of each
Borrower Party from the secretary of state of the State of Texas dated the most
recent practical date prior to the Closing Date;
(t) The Title Policy in form and substance satisfactory to the MPT Parties;
(u) The Survey dated not more than sixty (60) days prior to the Closing
Date hereof in form and substance satisfactory to the MPT Parties;
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(v) A Phase I Environmental Site Assessment Report dated the most recent
practical date prior to the Closing Date in form and substance satisfactory to
the MPT Parties (and a Phase II if recommended by the Phase I Report);
(w) Property condition reports for the Real Property, dated the most recent
practical date prior to the Closing Date and in form and substance satisfactory
to the MPT Parties;
(x) A Zoning Compliance Letter/Certificate dated the most recent practical
date prior to the Closing Date hereof in form and substance satisfactory to the
MPT Parties;
(y) Tenant Estoppel Certificates in form and substance satisfactory to the
MPT Parties;
(z) An owner's affidavit in form and substance satisfactory to the MPT
Parties;
(aa) The Search Reports dated the most recent practical date prior to the
Closing Date in form and substance satisfactory to the MPT Parties;
(bb) The legal opinion of Hollmann, Lyon, Xxxxxxxxx & Xxxxxx, Inc. as
counsel for the Borrower Parties and the Guarantors, substantially in the form
attached hereto as EXHIBIT L;
(cc) Copies of all insurance policies required pursuant to Section 6.6 of
this Agreement;
(dd) All necessary approvals, consents, estoppel certificates and the like
of third parties or Governmental Entities to the validity and effectiveness of
the transactions contemplated hereby; and
Such other instruments and documents as the MPT Parties reasonably deem
necessary to effect the transactions contemplated hereby.
SECTION 8.3. MPT PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date, the
MPT Parties shall take the following actions and deliver to the Borrower Parties
the documents listed below.
(a) Payment of the Loan proceeds to Alliance, subject to deduction for the
Expense Reserve;
(b) A certified copy of the resolutions of the governing body of each Borrower
Party dated as of the date hereof authorizing the execution, delivery and
performance of this Agreement and all other documents to be executed in
connection herewith;
(c) Certificates of existence and good standing of each Borrower Party from the
Delaware Secretary of State of the State of Delaware, dated the most recent
practical date prior to the Closing Date;
(d) Certificates of good standing and foreign qualification of MPT Odessa from
the secretary of state of the State of Texas, dated the most recent practical
date prior to the Closing Date;
(e) The Mortgage;
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(f) The Security Agreement
(g) The Assignment of Leases and Rents;
(h) The Subordination of Management Agreement;
(i) The Subordination Agreement;
(j) The Collateral Assignment;
(k) The Pledge Agreement;
(l) The Noncompete Agreement;
(m) An Opinion of Xxxxx Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, P.C., as
counsel for the MPT Parties substantially in the form attached as EXHIBIT M; and
(n) At the Closing, each MPT Party shall have furnished to the Borrower Parties
a certificate dated the Closing Date signed by such MPT Party to the effect that
all of the representations and warranties of such MPT Party contained in the
Agreement (considered collectively) and each of these representations and
warranties (considered individually) remain in all respects true and correct as
of the Closing Date as if made on such date and that such MPT Party has
performed and satisfied in all material respects all covenants and conditions
required by this Agreement to be performed or satisfied by such MPT Party on or
prior to Closing.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. Notwithstanding anything to the contrary in this
Agreement, the remaining obligations of the parties hereunder may be terminated
and the transactions contemplated hereby abandoned at any time prior to Closing:
(i) by mutual written consent of the parties; (ii) by the Borrower Parties if
the conditions set forth in Section 7.1 shall not have been satisfied on or
before December 31, 2005; or (iii) by the MPT Parties if the conditions set
forth in Section 7.2 shall not have been satisfied on or before December 31,
2005.
SECTION 9.2. NOTICE AND EFFECT. In the event of the termination of this
Agreement pursuant to this Article, the party terminating this Agreement shall
give prompt written notice thereof to the parties, and the transactions
contemplated hereby shall be abandoned, without further action by any party.
Each filing, application and other submission relating to the transactions
contemplated hereby shall, to the extent practicable, be withdrawn from the
person to whom it was made. The confidentiality provisions set forth in Section
6.1(k) of this Agreement and the Confidentiality Agreement shall survive any
termination of this Agreement. Notwithstanding any statement contained in this
Agreement to the contrary, termination of this Agreement shall not relieve any
party from liability for any breach or violation of this Agreement that arose
prior to such termination.
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ARTICLE X
DEFAULT
SECTION 10.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (individually, an "Event of Default") shall constitute Events
of Default or defaults hereunder:
(a) a default or event of default by any of the Borrower Parties or the
Guarantors shall occur under any of the other Loan Documents (including, without
limitation, any of the Security Documents) or Other Agreements that is not cured
within the applicable cure period as provided therein, or
(b) if the Borrower Parties shall fail to make payment of any monetary sum
due and payable by the Borrower Parties under this Agreement, the Note, or any
other Loan Document when the same becomes due and payable, or
(c) if any of the Borrower Parties shall fail to observe or perform any
other term, covenant or condition of this Agreement or any other Loan Document
and such failure is not cured by the Borrower Parties within a period of thirty
(30) days after receipt by the applicable Borrower Party of written notice
thereof from the MPT Parties (provided, however, in no event shall the MPT
Parties be required to give more than one (1) written notice per calendar year
for a non-monetary default), unless such failure cannot with due diligence be
cured within a period of thirty (30) days, in which case such failure shall not
be deemed to continue if the Borrower Parties proceed promptly and with due
diligence to cure the failure and diligently complete the curing thereof within
sixty (60) days after receipt by the applicable Borrower Party of the MPT
Parties' notice of default, or
(d) if any of the Borrower Parties shall:
(i) admit in writing its inability to pay its debts generally as they
become due,
(ii) file a petition in bankruptcy or a petition to take advantage of
any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or arrangement
under the Federal bankruptcy laws or any other applicable law or statute of
the United States of America or any state thereof,
(e) if the Borrower Parties' Licenses or participation or certification in
Medicare, Medicaid or other governmental payor programs is terminated, or
(f) if any Borrower Party admits in writing that it cannot meet its
obligations as they become due; or is declared insolvent according to any law;
or assignment of any of the Borrower
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Parties' properties is made for the benefit of creditors; or a receiver or
trustee is appointed for any of the Borrower Parties' or their respective
properties; or the interest of any of the Borrower Parties under this Agreement
or any other Loan Document is levied on under execution or other legal process;
or any petition is filed by or against any of the Borrower Parties to declare
such Borrower Party bankrupt or to delay, reduce or modify such Borrower Party's
capital structure if such Borrower Party be a corporation or other entity
(provided that no such levy, execution, legal process or petition filed against
such Borrower Party shall constitute a breach of this Agreement if such Borrower
Party shall vigorously contest the same by appropriate proceedings and shall
remove or vacate the same within thirty (30) days from the date of its creation,
service or filing), or
(g) the abandonment or vacation of the Collateral by the Borrower Party
that owns such Collateral as of the date hereof (such Borrower Party's absence
from the Collateral for thirty (30) consecutive days shall constitute
abandonment), or Alliance fails to continuously operate the Hospital in
accordance with the terms of this Agreement, or
(h) if any of the Borrower Parties shall, after a petition in bankruptcy is
filed against it, be adjudicated a bankrupt or if a court of competent
jurisdiction shall enter an order or decree appointing, without the consent of
such Borrower Party, a receiver of such Borrower Party or of the whole or
substantially all of its property, or approving a petition filed against it
seeking reorganization or arrangement of such Borrower Party under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state thereof, and such judgment, order or decree shall not be
vacated or set aside or stayed within ninety (90) days from the date of the
entry thereof, or
(i) if any Borrower Party shall be liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution, or shall, in any manner,
permit the sale or divestiture of substantially all of its assets other than in
connection with a merger or consolidation of such Borrower Party into, or a sale
of substantially all of such Borrower Party's assets to, another corporation,
provided that if the survivor of such merger or the purchaser of such assets
shall assume all of such Borrower Party's obligations under this Agreement by a
written instrument, in form and substance reasonably satisfactory to the MPT
Parties, accompanied by an opinion of counsel, reasonably satisfactory to the
MPT parties and addressed to the MPT Parties stating that such instrument of
assumption is valid, binding and enforceable against the parties thereto in
accordance with its terms (subject to usual bankruptcy and other creditors'
rights exceptions), and provided, further, that if, immediately after giving
effect to any such merger, consolidation or sale, such Borrower Party or such
other corporation (if not a Borrower Party) surviving the same, together with
the other Borrower Parties, shall have a Consolidated Net Worth not less than
the Consolidated Net Worth of the Borrower Parties immediately prior to such
merger, consolidation or sale, all as to be set forth in an certification by an
authorized officer of such Borrower Party delivered to the MPT Parties within
thirty (30) days of such merger, consolidation or sale, an Event of Default
shall not be deemed to have occurred, or
(j) if the estate or interest of any of the Borrower Parties or the
Guarantors in the Collateral or any part thereof shall be levied upon or
attached in any proceeding and the same shall not be vacated or discharged
within the later of ninety (90) days after commencement thereof or thirty (30)
days after receipt by the Borrower Parties of written notice thereof from the
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MPT Parties (unless such Borrower Party or Guarantor shall be contesting such
lien or attachment in good faith in accordance with Article XI hereof), or
(k) if, except as a result of damage, destruction or a partial or complete
Condemnation, any the Borrower Parties voluntarily cease operations on the
Collateral for a period in excess of ninety (90) days, or
(l) if any of the representations or warranties made by any of the Borrower
Parties herein or in the certificates delivered in connection therewith are or
become untrue in any material respect, and which is not cured within ten (10)
days after notice from the MPT Parties, or
(m) a default shall occur under the Guaranty that is not cured within the
applicable cure period as provided therein, or
(n) if Alliance defaults under the Tenant Leases or fails or refuses to
enforce the terms and conditions of the Tenant Leases, any such default by
Alliance or the Tenant is not cured within the applicable cure period as
provided therein, or
(o) if a payment default occurs under any other material debt instrument of
the Borrower Parties or any material nonpayment default occurs any such debt
instrument, including, without limitation, a default under the Line of Credit,
and such default is not cured within the applicable cure periods provided
therefore, or
(p) if the Borrower Parties shall fail to pay any insurance premiums in
accordance with Section 6.6(c) hereof; or
(q) if, beginning on January 1, 2006, the Hospital's EBITDA (based on the
trailing twelve (12) months) shall fall below One Hundred Fifty Percent (150%)
of Base Interest, as determined on a quarterly basis, and, beginning on January
1, 2007, the Hospital's EBITDA (based on the trailing twelve (12) months) shall
fall below One Hundred Seventy-Five Percent (175%) of Base Interest, as
determined on a quarterly basis, or
(r) if the aggregate Tangible Net Worth of the Borrower Parties shall fall
below Ten Percent (10%) of the original principal balance of the Loan (however,
violation of this provision shall not constitute an event of default so long as
the Guaranty shall remain in full force and effect), or
(s) if the Hospital's census shall decline by more than Twenty Percent
(20%), measured cumulatively, for two (2) consecutive quarters, or
(t) if fifty Percent (50%) or more of the Hospital's total revenues shall
be generated by three or fewer Physicians, or
(u) if either the General Partner or any or Physician who represents more
than Ten Percent (10%) of the Hospital's total revenue shall be convicted on a
charge of fraud that is in any way related to medicine or the practice of
medicine.
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SECTION 10.2. REMEDIES. Upon the occurrence of an Event of Default hereunder,
any MPT Party shall be entitled, at the option of such MPT Party and in its sole
and absolute discretion, to pursue any one or more of the following remedies, in
addition to any remedies which may be permitted by law or by other provisions of
this Agreement or the other Loan Documents (including, without limitation, the
Security Documents), without notice or demand, except as hereinafter provided:
(a) In addition to other rights and remedies the MPT Parties may have in
this Agreement and at law and in equity, if an Event of Default occurs under
this Agreement, the MPT Parties may declare all amounts (including, without
limitation, all Loan Obligations), if any not otherwise immediately due under
this Agreement to be, and all such amounts shall thereupon become, due and
payable to the MPT Parties, without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived by the Borrower Parties,
anything in this Agreement or the other Loan Documents notwithstanding.
(b) In addition to other rights and remedies the MPT Parties may have in
this Agreement and at law and in equity, if an Event of Default occurs under
this Agreement and the MPT Parties foreclose on, take possession of, or exercise
voting rights with respect to, any of the Collateral, including, without
limitation, the General Partner's interest in Alliance pursuant to the Pledge
Agreement or any other Loan Document, to the extent permitted by law, the MPT
Parties shall have the sole, complete, unilateral, absolute and unfettered right
to cause all Licenses to be reissued in MPT's name or in the name of MPT's
designee upon application therefor to the appropriate authority, if required,
and to further have the right to have any and all provider and/or third party
payor agreements as a provider in the Medicare and/or Medicaid and other federal
healthcare programs issued in MPT's name or in the name of MPT's designee. For
reasonable periods of time following the MPT Parties notice to the Borrower
Parties after the occurrence of an Event of Default, the Borrower Parties shall
use their best efforts, without additional consideration to the Borrower
Parties, to facilitate an orderly transfer of the operation and occupancy of the
Hospital to the MPT Parties or any new owner, manager, or operator selected by
the MPT Parties, it being understood and agreed that such cooperation shall
include, without limitation, (i) the Borrower Parties' transfer and assignment,
if and to the extent permitted by law, to MPT, MPT's nominee or MPT's new owner,
manager or operator of any and all Licenses, (ii) the Borrower Parties' use of
best efforts to maintain, to the maximum extent allowed by applicable law, the
effectiveness of any and all such Licenses until such time as any new Licenses
necessary for any new owner, manager or operator to operate the Hospital have
been issued, and (iii) the taking of such other actions as are required by
applicable law or as are reasonably requested by the MPT Parties. The Borrower
Parties agree to sign, acknowledge, provide and deliver to the MPT Parties (and
if the Borrower Parties fail to do so upon request of the MPT Parties, the
Borrower Parties hereby irrevocably appoint MPT as agent of the Borrower Parties
for such express purposes) any and all documents, instruments or other writings
which are or may become necessary, proper and/or advisable to cause any and all
hospital licenses required for the Primary Intended Use, Medicare and Medicaid
provider agreements, and/or state or federal Title XVIII and/or Title XIX
provider agreements to be obtained (either in total or individually) in the name
of MPT or the name of MPT's designee in the event that the MPT Parties
reasonably determine in good faith that (irrespective of any claim, dispute, or
other contention or challenge of the Borrower Parties) there is any breach,
default or other lapse in any representation, warranty, covenant, or other
delegation of duty to any of the Borrower Parties
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(beyond any applicable grace or cure period) and the issuing government agency
has threatened or asserted that such license or provider agreement will
terminate or has lapsed or that any of the Borrower Parties' license or
certification or accreditation status, as applicable, is in jeopardy. This power
is coupled with the security interest and lien of MPT in and to the Hospital and
all incidental rights attendant to any and all of the foregoing rights.
(c) In addition to other rights and remedies the MPT Parties may have in
this Agreement and at law and in equity, if an Event of Default occurs under
this Agreement, the MPT Parties may exercise all rights and remedies set forth
in Section 6.11 regarding escrowed or deposited funds.
(d) In addition to the above remedies and to all other legal rights and
remedies, if an Event of Default occurs under this Agreement, the MPT Parties,
at their option, exercise all rights and remedies set forth in Section 6.2(a)
hereof and, upon five (5) days' written notice to the MPT Parties, may require
the Borrower Parties to terminate the engagement of the Management Company then
managing the Hospital and replace such Management Company with manager chosen by
the MPT Parties (or, if there is no Management Company managing the facility at
that time, the MPT Parties may require the Borrower Parties to engage a
Management Company acceptable to the MPT Parties and enter into a contract with
such Management Company upon terms and conditions acceptable to the MPT
Parties), and the MPT Parties may, at their option, proceed with all other
remedies the MPT Parties deem necessary, including, without limitation, pursuing
all other customary remedies available at law and in equity.
(e) In addition to the above remedies and to all other legal rights and
remedies, if an Event of Default occurs under this Agreement, the MPT Parties,
at their option, may cause the Borrower Parties to sell, assign, transfer and
convey any or all of the Collateral (including the Real Property) to the MPT
Parties or any designee of the MPT Parties (the "Purchaser"), without judicial
proceedings of any kind, on or before the sixtieth (60th) day following the date
of the occurrence of such Event of Default. The purchase price for such
Collateral shall be equal to Forty Million and No/100 Dollars ($40,000,000.00).
Upon and after the Borrower Parties receipt of written notice of such
determination by the MPT Parties, the Borrower Parties agree to consent to such
transaction and take all actions necessary to orderly transfer the operations
and occupancy of the Collateral (including the Real Property) to the Purchaser,
including, without limitation, cooperating with respect (i) to the transfer of
the Licenses, provider numbers and Other Agreements to the Purchaser, (ii) the
operation of the Hospital by any such Purchaser or its designee, and (iii) the
continuation of the relationships of any Physicians, Service Providers, or any
other employees, agents or contractors with the Hospital. If the Borrower
Parties fail to take such actions upon request of the MPT Parties, the Borrower
Parties hereby irrevocably appoint MPT, as agent of the Borrower Parties for
such express purposes. In the event of such transaction, the proceeds thereof
shall be applied, first, towards payment of any reasonable costs or expenses of
the MPT Parties incurred in connection with exercising this remedy and, second,
towards the outstanding Loan Obligations under the Note or any of the other Loan
Documents. Promptly following such payment, the MPT Parties shall cancel the
Note and the then unexpired Loan Term shall terminate and become absolutely void
as of such payment, and the Agreement, and well as the right, title, and
interest of the Borrower Parties hereunder shall, except as to the rights and
remedies of the MPT Parties upon termination as provided herein, terminate and
become void in the same manner and with the same force and effect as if the date
of such
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payment were the date originally specified for the expiration of the Loan Term.
The balance of the proceeds from such transaction shall belong to the Borrower
Parties and, unless otherwise agreed by the Borrower Parties and Purchaser,
shall be paid to the Borrower Parties at the closing of the transaction
contemplated herein.
(f) In addition to the above remedies and to all other legal rights and
remedies, in the Event of Default hereunder by any of the Borrower Parties, the
MPT Parties, at their option, may (i) institute and prosecute proceedings in any
court of competent jurisdiction to pursue any remedies available in law or in
equity, including, without limitation, the recovery of damages, the enforcement
of specific performance or to obtain an injunction, or (ii) pursue any and all
rights or remedies available to any MPT Party under any Loan Document. No such
termination and/or subsequent election by any MPT Party hereunder shall in any
way limit, qualify or otherwise affect the obligations of the Borrower Parties
with respect to the Loan Obligations of their indemnification obligations
hereunder.
SECTION 10.3. CUMULATIVE. The remedies of any MPT Party in this Agreement or in
any other Loan Document, or at law or in equity, shall be cumulative and
concurrent with the remedies of such MPT Party and any other MPT Party, and may
be pursued singly, successively or together in such MPT Party's discretion.
Notwithstanding any statement contained in this Agreement to the contrary,
termination of this Agreement shall not relieve any Borrower Party from
liability for any breach or violation of this Agreement that arose prior to such
termination.
SECTION 10.4. WAIVER. If this Agreement is terminated pursuant to this Article,
the Borrower Parties waive, to the extent permitted by applicable law, (a) any
right of redemption, re-entry or repossession, (b) any right to a trial by jury
in the event of summary proceedings to enforce the remedies set forth in this
Article, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.
SECTION 10.5. COOPERATION. In the event there are legal limitations on any of
the remedies set forth in this Article X, the Borrower Parties hereby covenant
and agree that, at the MPT Parties' request, the Borrower Parties will take all
actions necessary to orderly transfer the operations and occupancy of the
Collateral (including the Real Property and the Hospital) to the MPT Parties or
any designee of the MPT Parties, including cooperating with respect to the
transfer of Licenses, provider numbers and other agreements.
SECTION 10.6. APPLICATION OF FUNDS. Any payments otherwise payable to the
Borrower Parties which are received by the MPT Parties under any of the
provisions of this Agreement during the existence or continuance of any Event of
Default shall be applied to the Borrower Parties' obligations in the order which
the MPT Parties may reasonably determine or as may be prescribed by the laws of
the state in which the Hospital is located.
SECTION 10.7. NOTICES BY THE MPT PARTIES. The provisions of this Article
concerning notices shall be liberally construed insofar as the contents of such
notices are concerned, and any such notice shall be sufficient if reasonably
designed to apprise the Borrower Parties of the nature and approximate extent of
any default, it being agreed that the Borrower Parties are in good or better
position than the MPT Parties to ascertain the exact extent of any default by
the Borrower Parties hereunder.
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ARTICLE XI
PERMITTED CONTESTS
Alliance, on its own or on MPT's behalf (or in MPT's name), but at
Alliance's expense, after two (2) Business Days' prior written notice to MPT,
may contest, by appropriate legal proceedings conducted in good faith and with
due diligence, the amount, validity or application, in whole or in part, of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim not otherwise permitted by this Agreement, provided
that (a) in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from the MPT Parties and from
the Collateral, (b) neither the Collateral nor any part thereof or interest
therein would be in any immediate danger of being sold, forfeited, attached or
lost, (c) in the case of a Legal Requirement, the MPT Parties would not be in
any immediate danger of civil or criminal liability for failure to comply
therewith pending the outcome of such proceedings, (d) in the event that any
such contest shall involve a sum of money or potential loss in excess of Fifty
Thousand Dollars ($50,000), then, in any such event, (i) provided the
Consolidated Net Worth of the Borrower Parties is then in excess of Fifty
Million Dollars ($50,000,000), Alliance shall deliver to the MPT Parties a
certification from a duly authorized officer of Alliance to the effect set forth
in clauses (a), (b) and (c), to the extent applicable, or (ii) in the event the
Consolidated Net Worth of the Borrower Parties is not then in excess of Fifty
Million Dollars ($50,000,000), then Alliance shall deliver to MPT and its
counsel an opinion of Alliance's counsel to the effect set forth in clauses (a),
(b) and (c), to the extent applicable, (e) in the case of a Legal Requirement
and/or an Imposition, lien, encumbrance or charge, Alliance shall give such
reasonable security as may be demanded by the MPT Parties to insure ultimate
payment of the same and to prevent any sale or forfeiture of the affected
portion of the Collateral by reason of such non-payment or non-compliance;
provided, however, the provisions of this Article shall not be construed to
permit Alliance to contest the payment of the Loan Obligations, (f) in the case
of an Insurance Requirement, the coverage required by Section 6.6 shall be
maintained, and (g) if such contest be finally resolved against any of the MPT
Parties or the Borrower Parties, Alliance shall, as Additional Charges due
hereunder, promptly pay the amount required to be paid, together with all
interest and penalties accrued thereon, or comply with the applicable Legal
Requirement or Insurance Requirement. MPT, at Alliance's expense, shall execute
and deliver to Alliance such authorizations and other documents as may
reasonably be required in any such contest and, if reasonably requested by
Alliance or if MPT so desires, MPT shall join as a party therein. The Borrower
Parties, jointly and severally, shall indemnify and save MPT harmless against
any liability, cost or expense of any kind that may be imposed upon MPT in
connection with any such contest and any loss resulting therefrom.
ARTICLE XII
INDEMNIFICATION
SECTION 12.1. BORROWER PARTIES AGREEMENT TO INDEMNIFY. Notwithstanding the
existence of any insurance or self insurance required by this Agreement and
without regard to the policy limits of any such insurance or self insurance, and
in addition to any other indemnification obligation set forth herein or in any
other Loan Document, the Borrower Parties jointly and
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severally agree to indemnify, defend and hold harmless the MPT Parties, their
affiliates and their respective officers, directors, members, (general and
limited) partners, shareholders, employees, agents and representatives
(collectively, the "MPT Indemnified Parties") from and against all demands,
claims, actions, losses, damages, liabilities, penalties, Taxes, costs and
expenses (including, without limitation, attorneys' and accountants' fees,
settlement costs, arbitration costs and any reasonable other expenses for
investigating or defending any action or threatened action) asserted against or
incurred by the MPT Indemnified Parties or any of them arising out of or in
connection with or resulting from (a) any breach of, misrepresentation
associated with or failure to perform under any covenant, representation,
warranty or agreement under this Agreement or any other Borrower Party
Instrument by any Borrower Party or any of their respective Affiliates; (b) any
stamp tax, intangible tax, or other tax, fee or charge imposed by any
Governmental Entity arising out of or relating to the Note or this Agreement or
the transactions anticipated herein; (c) any accident, injury to or death of
persons or loss of percentage to property occurring on or about the Real
Property, or adjoining sidewalks, including without limitation any claims of
malpractice, (d) any use, misuse, no use, condition, maintenance or repair by
any of the Borrower Parties of the Collateral, (e) any Impositions (which are
the obligations of the Borrower Parties to pay pursuant to the applicable
provisions of this Agreement), and (f) the non-performance of any of the terms
and provisions of any and all existing and future Tenant Leases to be performed
by the landlord (Alliance) thereunder (collectively, "MPT Damages"). The
foregoing indemnification obligations of the Borrower Parties shall be in
addition to, and shall in no way limit or qualify, any other indemnification or
similar obligations of the Borrower Parties set forth in this Agreement or in
any other Loan Document.
SECTION 12.2. NOTIFICATION AND DEFENSE OF CLAIMS.
(a) A party entitled to be indemnified pursuant to Section 12.1 (the
"Indemnified Party") shall notify the party liable for such indemnification (the
"Indemnifying Party") in writing of any claim or demand which the Indemnified
Party has determined has given or could give rise to a right of indemnification
under this Agreement, as soon as possible after the Indemnified Party becomes
aware of such claim or demand; provided, that the Indemnified Party's failure to
give such notice to the Indemnifying Party in a timely fashion shall not result
in the loss of the Indemnified Party's rights with respect thereto except to the
extent the Indemnified Party is materially prejudiced by the delay.
If the Indemnified Party shall notify the Indemnifying Party of any claim
or demand pursuant to the provisions hereof, and if such claim or demand relates
to a claim or demand asserted by a third party against the Indemnified Party (a
"Third Party Claim"), the Indemnifying Party shall have the obligation either
(i) to pay such claim or demand, or (ii) defend any such Third Party Claim with
counsel reasonably satisfactory to the Indemnified Party. After the Indemnifying
Party has assumed the defense of such Third Party Claim, the Indemnifying Party
shall not be liable to the Indemnified Party under this Section 12.2 for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation, provided that the Indemnified Party shall have the right to
employ counsel, at the Indemnifying Party's expense, to represent it if (A) in
the Indemnified Party's reasonable opinion the Indemnifying Party is not
diligently prosecuting the defense of such Third Party Claim, (B) such Third
Party Claim involves remedies other than monetary damages and such remedies, in
the Indemnified Party's reasonable judgment, could
74
have a material adverse effect on such Indemnified Party, (C) the Indemnified
Party may have available to it one or more defenses or counterclaims that are
inconsistent with one or more defenses or counterclaims that may be alleged by
the Indemnifying Party, or (D) the Indemnified Party believes in its reasonable
discretion that a conflict of interest exists between the Indemnifying Party and
the Indemnified Party with respect to such Third Party Claim or action, and in
any such event the reasonable fees and expenses of such separate counsel for the
Indemnified Party shall be paid by the Indemnifying Party. The Indemnified Party
shall make available to the Indemnifying Party or its agents all records and
other materials in the Indemnified Party's possession reasonably required by it
for its use in contesting any Third Party Claim or demand.
(b) No Indemnified Party may settle or compromise any claim or consent to
the entry of any judgment with respect to which indemnification is being sought
hereunder without the prior written consent of the Indemnifying Party, unless
(i) the Indemnifying Party fails to assume and diligently prosecuting the
defense of such claim or (ii) such settlement, compromise or consent includes an
unconditional release of the Indemnifying Party from all liability arising out
of such claim and does not contain any equitable order, judgment or term which
includes any admission of wrongdoing or could result in any liability (including
regulatory liability) of the Indemnifying Party or which would otherwise in any
manner affect, restrain or interfere with the business of the Indemnifying Party
or any Affiliate of the Indemnifying Party. An Indemnifying Party may not,
without the prior written consent of the Indemnified Party, settle or compromise
any claim or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless such settlement, compromise or
consent includes an unconditional release of the Indemnified Party from all
liability arising out of such claim and does not contain any equitable order,
judgment or term which includes any admission of wrongdoing or could result in
any liability (including regulatory liability) of the Indemnified Party or which
would otherwise in any manner affect, restrain or interfere with the business of
the Indemnified Party or any of the Indemnified Party's Affiliates.
SECTION 12.3. INVESTIGATIONS. The right to indemnification based upon breaches
or inaccuracies of representations, warranties and covenants will not be
affected by any investigation conducted with respect to, or knowledge acquired
(or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement, whether as a result of disclosure by a
party pursuant to this Agreement or otherwise, with respect to the accuracy or
inaccuracy of or compliance with any such representation, warranty or covenant.
The waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant, will not
affect a party's right to indemnification, payment of damages or other remedies
based on such representations, warranties and covenants.
ARTICLE XIII
DISPUTE RESOLUTION
SECTION 13.1. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS
PRINCIPLES.
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NOTWITHSTANDING THE FOREGOING, THE TERMS AND PROVISIONS OF THIS AGREEMENT
PERTAINING TO THE PRIORITY, PERFECTION, ENFORCEMENT, OR REALIZATION BY THE MPT
PARTIES OF THEIR RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR THE MORTGAGE WITH
RESPECT TO THE REAL PROPERTY SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
SECTION 13.2. JURISDICTION AND VENUE. THE PARTIES HEREBY CONSENT TO PERSONAL
JURISDICTION IN DELAWARE. THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING
ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE BROUGHT AND TRIED EXCLUSIVELY
IN THE STATE OR FEDERAL COURTS OF DELAWARE. EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT. THE BORROWER PARTIES EXPRESSLY
ACKNOWLEDGE THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND AGREE NOT TO
SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY THE MPT PARTIES IN SAID COURTS.
FURTHER, THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY CLAIM THAT SUCH
SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY REGISTERED MAIL ADDRESSED TO A PARTY
AT THE ADDRESS DESIGNATED PURSUANT TO SECTION 14.3 SHALL BE EFFECTIVE SERVICE OF
PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE JURISDICTION ANY OF THE
PARTIES IS OR MAY BE SUBJECT.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. LIMITATION OF LIABILITY AS TO THE MPT PARTIES.
(a) No Consequential Damages. IN NO EVENT SHALL THE MPT PARTIES BE LIABLE FOR
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES,
REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR OTHERWISE, AND
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(b) Direct Damages. IN NO EVENT SHALL THE MPT PARTIES' LIABILITY TO THE BORROWER
PARTIES UNDER ANY LOAN DOCUMENT AT ANY TIME EXCEED THE OUTSTANDING PRINCIPAL
BALANCE OF THE LOAN AT SUCH TIME
(c) Anything contained herein to the contrary notwithstanding, the MPT Parties
shall not be liable to the Borrower Parties for any acts, omissions, errors of
judgment, or mistakes of facts or law (except for the MPT Parties' gross
negligence or willful misconduct). Any claim based on or in respect of any
liability of the MPT Parties under any Loan Document shall be enforced only
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against the MPT Parties' rights to receive payments of the Loan Obligations
pursuant to the Loan Documents and not against any other assets, properties or
funds of (i) any of the MPT Parties or their Affiliates, (ii) any director,
officer, general partner, shareholder, limited partner, beneficiary, employee or
agent of the MPT Parties (or any legal representative, heir, estate, successor
or assign of any thereof), (iii) any predecessor or successor partnership or
corporation (or other entity) of any of the MPT Parties or any of its general
partners, shareholders, officers, directors, employees or agents, either
directly or through any of the MPT Parties or their respective general partners,
shareholders, officers, directors, employees or agents or any predecessor or
successor partnership or corporation (or other entity), or (iv) any person
affiliated with any of the foregoing, or any director, officer, employee or
agent of any thereof.
SECTION 14.2. ASSIGNMENT. Neither this Agreement nor any other Loan Document is
assignable by any Borrower Party without the prior written consent of the MPT
Parties. The MPT Parties may at any time during the Loan Term and without the
consent of any Borrower Party assign all of their respective rights and
obligations hereunder in connection with a sale or transfer of the Loan.
SECTION 14.3. NOTICE. All notices, demands, requests and other communications or
documents required or permitted to be provided under this Agreement shall duly
be in writing and shall be given to the applicable party at its address or
facsimile number set forth below or such other address or facsimile number as
the party may later specify for that purpose by notice to the other party:
If to any Borrower Party: c/o Alliance Hospital, Ltd.
000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
With a copy to: Hollmann, Lyon, Xxxxxxxxx & Xxxxxx, Inc.
0000 X. Xxxxxxxxxx Xxxxxxxxx
Xxxxx X-000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to any MPT Party: Medical Properties Trust, Inc.
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
With a copy to: Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx,
PC
000 00xx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Each notice shall, for all purposes, be deemed given and received:
(i) if by hand, when delivered;
77
(ii) if given by nationally recognized and reputable overnight delivery
service, the Business Day on which the notice is actually received by the
party; or
(iii) if given by certified mail, return receipt requested, postage
prepaid, the date shown on the return receipt.
SECTION 14.4. CALCULATION OF TIME PERIOD. When calculating the period of time
before which, within which or following which any act is to be done or step
taken, the date that is the reference date in calculating such period shall be
excluded. If the last day of such period is not a Business Day, the period in
question shall end of the next succeeding Business Day.
SECTION 14.5. NO WAIVER. No failure by the MPT Parties or the Borrower Parties
to insist upon the strict performance of any term hereof or to exercise any
right, power or remedy consequent upon a breach thereof, and no acceptance of
full or partial payment of any sums due the MPT Parties hereunder or under any
other Loan Document during the continuance of any such breach, shall constitute
a waiver of any such breach or any such term. To the extent permitted by law, no
waiver of any breach shall affect or alter this Agreement or the other Loan
Documents, which shall continue in full force and effect with respect to any
other then existing or subsequent breach.
SECTION 14.6. CAPTIONS. The article and section headings or captions appearing
in this Agreement are for convenience only, are not a part of this Agreement,
and are not to be considered in interpreting this Agreement.
SECTION 14.7. ENTIRE AGREEMENT; MODIFICATION. This Agreement, including the
Exhibits and Schedules attached hereto, and other written agreements executed
and delivered as of the date hereof by the parties hereto, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Agreement. This Agreement supersedes any prior oral or written agreements
between the parties with respect to the subject matter of this Agreement. It is
expressly agreed that there are no verbal understandings or agreements which in
any way change the terms, covenants, and conditions set forth in this Agreement,
and that no modification of this Agreement and no waiver of any of its terms and
conditions shall be effective unless it is made in writing and duly executed by
the parties hereto.
SECTION 14.8. SCHEDULES AND EXHIBITS. All Schedules and Exhibits referred to in
this Agreement and attached hereto shall be deemed a part of this Agreement and
are hereby incorporated herein by reference.
SECTION 14.9. FURTHER ASSURANCES. From time to time after the Closing Date, and
without further consideration, the Borrower Parties shall execute and deliver to
MPT all instruments of security, collateral assignment, consent or other
instruments as may be reasonably requested by the MPT Parties in order to vest a
Lien in favor of the MPT Parties in all right, title and interest of the
applicable Borrower Parties in and to the Collateral as of the Closing Date or
as otherwise required to carry out the purpose and intent of this Agreement.
SECTION 14.10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the
78
same instrument. Executed signature pages to this Agreement may be delivered by
facsimile transmission and any such signature page shall be deemed an original.
SECTION 14.11. EXPENSES. The Borrower Parties, jointly and severally, shall pay
all costs and expenses incurred by Borrower Parties and MPT Parties in
connection with the transactions contemplated hereby, including, without
limitation, all document stamps, transfer, excise, recording, gains, sales, bulk
sales, use and similar conveyance Taxes and fees imposed by reason of and
associated with the transactions contemplated hereby and by deficiency, interest
or penalty asserted with respect thereto, as well as the cost of the survey, the
title insurance and all title endorsements required by the MPT Parties and its
lenders, and all attorneys' fees and expenses. In addition to the foregoing, the
Borrower Parties, jointly and severally, shall pay and/or reimburse the MPT
Parties' costs and expenses, including reasonable legal fees, incurred or
resulting from and relating to:
(i) requests by the Borrower Parties for approval or consent under
this Agreement or any other Loan Document;
(ii) any circumstances or developments which give rise to any of the
MPT Parties' right of consent or approval;
(iii) circumstances resulting from any action or inaction by the
Borrower Parties contrary to the provisions hereof or any other Loan
Document,
(iv) a request for changes including, but not limited to, (A) the uses
of the Collateral including the Primary Intended Use, (B) alterations and
improvements to the Improvements, (C) Tenant Leases, and (D) any other
changes in the terms, conditions or provisions of this Agreement or any
other Loan Document,
(v) all expenses incurred by the MPT Parties in repossessing the
Collateral (including among other expenses, any increase in insurance
premiums caused by the vacancy of the Collateral),
(vi) all expenses incurred by MPT in reletting as permitted herein or
by applicable law (including among other expenses, repairs, remodeling,
replacements, advertisements and brokerage fees),
(vii) all concessions granted to a new tenant or tenants upon
reletting (including among other concessions, renewal options),
(viii) all losses incurred by the MPT Parties as a direct or indirect
result of any of the Borrower Parties' default hereunder or under any other
Loan Document (including among other losses any adverse action by
mortgagees), and
(ix) the MPT Parties' administrative efforts, salaries and overhead
attributable directly or indirectly to any of the Borrower Parties' default
and the MPT Parties' pursuing the rights and remedies provided in this
Agreement and under applicable law.
79
Such costs, expenses and fees shall be paid by the Borrower Parties, jointly and
severally, within thirty (30) days after the MPT Parties' submission of a
statement for the same, or such amount(s) shall be part of the Loan Obligations,
with interest payable thereon at the Default Rate if not paid within five (5)
days after demand. Notwithstanding any provision herein to the contrary, the
Expense Deposit shall be credited against any payments due by the Borrower
Parties hereunder.
SECTION 14.12. SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, the Borrower Parties agree to cooperate with
the MPT Parties in connection with any securities offerings and filings, or the
MPT Parties' efforts to procure or maintain any third party participation
financing for or related to the Real Property and Improvements, and in
connection therewith, the Borrower Parties Parties shall furnish the MPT Parties
with such financial and other information as the MPT Parties shall request. The
MPT Parties may disclose that it has entered into this Agreement with the
Borrower Parties and may provide and disclose information regarding this
Agreement, the Borrower Parties, the Real Property and Improvements, and such
additional information which the MPT Parties may reasonably deem necessary, to
its proposed investors in such public offering or private offering of
securities, or any current or prospective lenders with respect to such
financing. Upon reasonable advance notice, the MPT Parties and any lender
providing financing for the Real Property shall have the right to access,
examine and copy all agreements, records, documentation and information relating
to the Borrower Parties, the Real Property and Improvements, and to discuss such
affairs and information with the officers, employees and independent public
accountants of the Borrower Parties as often as may reasonably be desired, but
subject to the terms of a confidentiality agreement, as reasonably approved by
the parties.
SECTION 14.13. BINDING EFFECT. This Agreement shall bind and inure to the
benefit of the parties hereto and their successors and assigns; provided,
however, that this Agreement shall not inure to the benefit of any assignee
pursuant to an assignment which violates the terms of this Agreement.
[Signatures appear on the following page.]
80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers on the date first written above.
BORROWER PARTIES:
ALLIANCE HOSPITAL, LTD.
BY: SRI-SAI ENTERPRISES, INC.
ITS: GENERAL PARTNER
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Co-Chairman
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Co-Chairman
SRI-SAI ENTERPISES, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Co-Chairman
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Co-Chairman
81
MPT PARTIES:
MPT OF ODESSA HOSPITAL, L.P.
By: MPT of ODESSA HOSPITAL, LLC
Its: GENERAL PARTNER
By: MPT Operating Partnership, L.P.
Its: Sole Member
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: President and Chief Executive
Officer
MPT OPERATING PARTNERSHIP, L.P.
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: President and Chief Executive
Officer
82
EXHIBIT A
LEGAL DESCRIPTION
See Attached.
EXHIBIT B
ASSIGNMENT OF LEASES AND RENTS
See Attached.
EXHIBIT C
ENVIRONMENT INDEMNITY AGREEMENT
See Attached.
EXHIBIT D
GUARANTY
See Attached.
EXHIBIT E
MORTGAGE / DEED OF TRUST
See Attached.
EXHIBIT F
NONCOMPETE AGREEMENT
See Attached.
EXHIBIT G
PROMISSORY NOTE
See Attached.
EXHIBIT H
PLEDGE AGREEMENT
See Attached.
EXHIBIT I
SECURITY AGREEMENT
See Attached.
EXHIBIT J
SUBORDINATION OF MANAGEMENT AGREEMENT
See Attached.
EXHIBIT K
SUBORDINATION AGREEMENT (PLEDGOR)
See Attached.
EXHIBIT L
BORROWER PARTIES' COUNSEL'S LEGAL OPINION
See Attached.
EXHIBIT M
BDBCB LEGAL OPINION
See Attached.
