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LOAN AGREEMENT
Dated As of August 7, 1997,
by and among
LENDERS PARTY TO THIS AGREEMENT,
NATIONSBANK, N.A.,
As Agent for Lenders,
ARIZONA HEART HOSPITAL, LLC,
As Borrower
and
MEDCATH INCORPORATED, a North Carolina Corporation,
and the Subsidiary Guarantors,
As Guarantors
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS........................................................1
1.1 Definitions.........................................................1
1.2 General............................................................15
1.3 Other Definitions and Provisions...................................16
ARTICLE II - THE CONSTRUCTION LOAN............................................16
2.1 General Information and Purpose....................................16
2.2 Commitment to Lend.................................................16
2.3 Disbursement of Construction Loans.................................16
2.4 Construction Loan Notes............................................17
2.5 Budget and Amendments..............................................17
2.6 Equity Account.....................................................17
2.7 Project Deposit....................................................18
2.8 Principal Payments.................................................18
2.9 Option to Extend...................................................19
2.10 Optional Prepayments...............................................19
ARTICLE III - WORKING CAPITAL FACILITY........................................19
3.1 Working Capital Loans..............................................19
3.2 Procedure for Advances of Working Capital Loans....................20
3.3 Working Capital Notes..............................................20
3.4 Repayment of Working Capital Loans.................................20
3.5 Termination of Working Capital Facility............................21
3.6 Use of Proceeds....................................................21
3.7 Security...........................................................22
ARTICLE IV - GENERAL LOAN PROVISIONS..........................................22
4.1 Interest...........................................................22
4.2 Notice and Manner of Conversion or Continuation of Loans...........22
4.3 Fees...............................................................23
4.4 Manner of Payment..................................................23
4.5 Right of Set-off; Adjustments......................................23
4.6 Adjustments........................................................24
4.7 Nature of Obligations of Lenders Regarding Loans; Assumption
by Agent.........................................................24
4.8 Indemnity..........................................................25
4.9 Increased Cost and Reduced Return..................................25
4.10 Limitation on Types of Loans.......................................27
4.11 Illegality.........................................................27
4.12 Treatment of Affected Loans........................................28
4.13 Compensation.......................................................28
4.14 Taxes..............................................................29
4.15 Replacement of Lenders.............................................30
ARTICLE V - FINANCIAL INFORMATION AND REPORTS.................................31
5.1 Financial Statements and Projections...............................31
5.2 Officer's Compliance Certificate...................................32
5.3 Other Reports......................................................33
5.4 Accuracy of Information............................................33
ARTICLE VI - COVENANTS AND AGREEMENTS.........................................34
6.1 Plans..............................................................34
6.2 Contracts..........................................................34
6.3 Construction of the Improvements...................................34
6.4 Changes............................................................35
6.5 Storage of Materials...............................................35
6.6 Inspection.........................................................35
6.7 Notice to Lender...................................................35
6.8 Assignment of Contracts and Plans..................................36
6.9 Advertising by Lenders.............................................36
6.10 Annual Appraisal...................................................36
6.11 Construction Consultant............................................37
6.12 Reports and Vouchers...............................................37
6.13 Representations and Warranties.....................................37
6.14 Ownership of Borrower..............................................38
6.15 Equipment Financing................................................38
ARTICLE VII - FINANCIAL COVENANTS OF GUARANTORS...............................38
7.1 Fixed Charge ratio.................................................38
7.2 Debt to Capitalization Ratio.......................................39
7.3 Leverage Ratio.....................................................39
7.4 Consolidated Net Worth.............................................39
7.5 Liquid Assets......................................................39
ARTICLE VIII - NEGATIVE COVENANTS.............................................39
8.1 Debt Service Coverage Ratio........................................39
8.2 Limitations on Debt................................................40
8.3 Limitations on Contingent Obligations..............................40
8.4 Limitations on Liens...............................................40
8.5 Limitations on Loans, Advances, Investments and Acquisitions.......41
8.6 Limitations on Liquidation.........................................41
8.7 Limitations on Sale of Assets......................................41
8.8 Limitations on Distributions.......................................41
8.9 Amendments; Payments and Prepayments of Subordinated Debt..........43
8.10 Prohibited Transactions............................................43
8.11 Restrictive Agreements.............................................44
ARTICLE IX - DEFAULT AND REMEDIES.............................................44
9.1 Events of Default..................................................44
9.2 Remedies...........................................................46
ARTICLE X - AGENT.............................................................47
10.1 Appointment........................................................47
10.2 Delegation of Duties...............................................47
10.3 Exculpatory Provisions.............................................47
10.4 Reliance by Agent..................................................48
10.5 Notice of Default..................................................48
10.6 Non-Reliance on Agent and Other Lenders............................48
10.7 Indemnification....................................................49
10.8 Agent in Its Individual Capacity...................................49
10.9 Resignation of Agent...............................................49
ARTICLE XI - GUARANTY.........................................................50
11.1 Guaranty of Payment................................................50
11.2 Guaranty of Performance............................................50
11.3 Nature of Guaranty.................................................51
11.4 Demand by Agent....................................................52
11.5 Waivers............................................................52
11.6 Benefits of Guaranty...............................................52
11.7 Modification of Loan Documents, etc................................53
11.8 Reinstatement......................................................53
11.9 No Subrogation.....................................................54
11.10 Remedies...........................................................54
11.11 Limit of Liability.................................................54
ARTICLE XII - GENERAL TERMS AND CONDITIONS....................................54
12.1 Usury Laws.........................................................54
12.2 Lenders' Consent...................................................55
12.3 Miscellaneous......................................................56
12.4 Notices............................................................56
12.5 Termination........................................................58
12.6 Capital Requirements and Yield Maintenance.........................58
12.7 Costs and Expenses.................................................58
12.8 Further Assurances.................................................59
12.9 No Assignment......................................................59
12.10 Inducement to Lenders..............................................59
12.11 Forum..............................................................60
12.12 Interpretation.....................................................60
12.13 No Partnership, etc................................................60
12.14 Records............................................................60
12.15 Exhibits...........................................................61
12.16 Mandatory Arbitration..............................................61
12.17 Set-off............................................................62
12.18 Successors and Assigns; Participations.............................62
12.19 Amendments; Waivers and Consents...................................65
12.20 All Powers Coupled with Interest...................................66
12.21 Survival of Indemnities............................................66
12.22 Term of Agreement..................................................66
12.23 Entire Agreement...................................................66
SCHEDULES
Schedule 1 - Lenders and Commitments
Schedule 2 - Subsidiary Guarantors
Schedule 8.10 - Transactions with Affiliates
EXHIBITS
Exhibit A - Land
Exhibit B - Reserved
Exhibit C - Conditions Precedent to Closing and First Advance
Exhibit D - Budget
Exhibit E - Plans
Exhibit F - Advances of Construction Loans
Exhibit F-1 - Draw Request
Exhibit G - Reserved
Exhibit H - Officer's Compliance Certificate
Exhibit I - Assignment and Acceptance
Exhibit J - Notice of Working Capital Borrowing
Exhibit K - Notice of Working Capital Loan Prepayment
Exhibit L - Notice of Conversion/Continuation
Exhibit M - Notice of Construction Loan Prepayment
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made this 7th day of August, 1997 by
the Lenders who are or may become a party to this Agreement (collectively,
"Lenders"), NATIONSBANK, N.A. as Agent for Lenders, ARIZONA HEART HOSPITAL, LLC,
a limited liability company organized under the laws of Arizona ("Borrower"),
and MEDCATH INCORPORATED, a North Carolina corporation ("MedCath") and the
wholly-owned Subsidiaries of MedCath set forth on Schedule 2 hereto
(collectively, with MedCath, the "Guarantors"), who agree as follows:
STATEMENT OF PURPOSE
Guarantors and Borrower have requested, and the Lenders have agreed, to
extend certain credit facilities to Borrower on the terms and conditions of this
Agreement. Borrower is a Subsidiary of MedCath. All extensions of credit to
Borrower will inure to the benefit of Guarantors, directly or indirectly.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:
ARTICLE I - DEFINITIONS
1.1 Definitions. The following terms when used in this Agreement shall have
the meanings assigned to them below:
"Adjusted Debt Service" means, with respect to Borrower for any quarterly
period, the sum of (i) all Interest Expense plus (ii) $907,000.
"Adjusted EBITDA" means, with respect to each quarter, (i) EBITDA less (ii)
a capital expenditure reserve in the amount of $200,000 less (iii) a management
fee reserve in an amount equal to (x) two percent (2%) of the Net Revenues of
Borrower for such period less (y) the management fees paid by Borrower to AHH
Management, Inc. during such period.
"Adjusted Eurodollar Rate" means, for any Interest Period, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
Agent to be equal to the quotient obtained by dividing (a) the Eurodollar Rate
for such Interest Period by (b) 1 minus the Reserve Requirement for such
Interest Period.
"Advance Termination Date" means the date which is twenty (20) months after
the Closing Date.
"Affiliate" means, with respect to any Person, any other Person (other than
a Subsidiary) which directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is
under common control with, such first Person or any of its Subsidiaries. The
term "control" means (a) the power to vote fifty percent (50%) or more of the
securities or other equity interests of a Person having ordinary voting power,
or (b) the possession, directly or indirectly, of any other power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise, exclusive in all
events of medical practices or health care facilities managed by Parent or its
wholly-owned Subsidiaries.
"Agent" means NationsBank, N.A. in its capacity as Agent hereunder, and any
successor thereto appointed pursuant to Section 10.9.
"Agent's Office" means the office of Agent specified on the signature pages
to this Agreement.
"Aggregate Project Cost" is defined in Section 2.5.
"Agreement" means this Credit Agreement, as amended, restated, supplemented
or otherwise modified from time to time.
"Amortization Date" means the second anniversary of the Closing Date.
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, treaties, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"Applicable Lending Office" means, for each Lender, the "Lending Office" of
such Lender (or of an affiliate of such Lender) designated on the signature
pages hereof or such other office of such Lender (or an affiliate of such
Lender) as such Lender may from time to time specify to Agent and Borrower by
written notice in accordance with the terms hereof as the office by which its
Loans are to be made and maintained.
"Applicable Margin" shall be (i) 3.25% until the Initial Adjustment Date
and (ii) 2.75% at all times on or after the Initial Adjustment Date; provided
that if Borrower elects to extend the Construction Loan Facility pursuant to the
provisions hereof, the Applicable Margin shall be increased by .20% during the
period from the original Construction Loan Maturity Date through and including
the Extension Maturity Date.
"Appraised Value" means $36,730,000.
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 12.18.
"Base Rate" means, at any time, the higher of (a) the rate per annum equal
to the rate announced by NationsBank as its "prime rate" or (b) the Federal
Funds Rate plus 0.5% for such day. Any change in the Base Rate due to a change
in the prime rate shall be effective on the effective date of such change in the
prime rate.
"Base Rate Loan" means any Loan that bears interest at the Base Rate.
"Borrower" means Arizona Heart Hospital, LLC, an Arizona limited liability
company, in its capacity as borrower hereunder.
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"Budget" means the budget and cost itemization for the Project attached as
Exhibit D.
"Business Day" means (a) for all purposes other than as set forth in clause
(b) below, any day other than a Saturday, Sunday or legal holiday on which banks
in Charlotte, North Carolina and New York, New York, are open for the conduct of
their commercial banking business, and (b) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
any Loan, any day that is a Business Day described in clause (a) and that is
also a day for trading by and between banks in Dollar deposits in the London
interbank market.
"Capital Expenditures" means, with respect to Borrower for any period, the
aggregate cost of all capital assets, as classified in accordance with GAAP,
acquired by Borrower during such period.
"Capital Lease" means, with respect to Borrower, any lease of any property
that should, in accordance with GAAP, be classified and accounted for as a
capital lease on a balance sheet of Borrower.
"Cash Flow Available For Distribution" means, with respect to Borrower for
any period, (i) EBITDA of Borrower for such period less (ii) all principal and
interest payments required to be paid by Borrower with respect to Senior Debt
during such period less (iii) unfinanced Capital Expenditures.
"Change in Control" means the consummation of any sale, issuance or other
disposition of ownership or other equity interests in Borrower as a result of
which MedCath Incorporated beneficially owns less than fifty-one percent (51%)
of the equity interest in Borrower.
"Closing Date" means the date of this Agreement.
"Collateral Assignment of Life Insurance Policy" means the Collateral
Assignment of Life Insurance Policy and the related life insurance questionnaire
executed by Xxxxxx X. Xxxxxxxxx and Borrower on the Closing Date in favor of
Agent for the benefit of Agent and Lenders, as amended, restated, supplemented
or otherwise modified from time to time.
"Commitment" means, as to any Lender, the sum of (a) the Construction Loan
Commitment of such Lender and (b) the Working Capital Commitment of such Lender.
"Commitment Percentage" means, as to any Lender at any time, the ratio of
(a) the amount of the Commitment of such Lender to (b) all such Commitments of
all of Lenders.
"Completion Date" means the date upon which Borrower has received the final
certificate of occupancy for the Improvements and Medicare Certification with
respect to the heart hospital facility which is part of the Improvements, which
date shall be not later than the Advance Termination Date.
"Consolidated" means, when used with reference to financial statements or
financial statement items of the Parent and its Subsidiaries, such statements or
items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
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"Consolidated Senior Funded Debt" means, as of any date, all Senior Debt of
the Parent and its Subsidiaries, determined on a consolidated basis, which would
as of such date, in accordance with GAAP, be classified as "funded indebtedness"
or "long-term indebtedness."
"Consolidated Tangible Net Worth" means, as of any date of determination,
the amount of assets shown on the consolidated balance sheet of the Parent (but
excluding from such assets, debt discount and expense, goodwill, patents,
trademarks, copyrights, franchises, licenses, amounts due from officers,
directors, stockholders and Affiliates, and any other items which would be
treated as intangibles under GAAP), less all liabilities of the Parent and its
Subsidiaries, all computed in accordance with GAAP applied on a consistent
basis. For purposes of this definition, assets shall include sums due from (i)
physicians or medical practices managed by the Parent or any of its
Subsidiaries, (ii) health care facilities owned or managed by the Parent or any
of its Subsidiaries, and (iii) physicians with whom Borrower is affiliated,
including, without limitation, the Arizona Heart Institute, to the extent that
(x) the repayment of such sums constitutes valid and enforceable obligations of
such Persons and (y) such Persons have not defaulted in the repayment of such
sums.
"Construction Consultant" means the construction consultant, if any,
engaged by Lender with respect to the Project.
"Construction Contract" means the contract for construction dated
[___________], 1997 between Borrower and the General Contractor for the
construction of the Improvements.
"Construction Loan Commitment" means (a) as to any Lender, the obligation
of such Lender to make Construction Loans to Borrower hereunder in an aggregate
principal or face amount at any time outstanding not to exceed the amount set
forth opposite such Lender's name on Schedule 1 hereto, as the same may be
reduced or modified at any time or from time to time pursuant to the terms
hereof and (b) as to all Lenders, the aggregate commitment of all Lenders to
make Construction Loans. On the Closing Date, the Construction Loan Commitment
of all Lenders shall be Twenty-Seven Million Five Hundred Forty-Five Thousand
and No/00 Dollars ($27,545,000); provided, however, in the event the Appraised
Value of the Property as shown by the appraisal of the Property delivered by
Borrower to Agent is less than $36,730,000, the Construction Loan Commitment
shall be reduced to an amount equal to seventy-five percent (75%) of the
appraised value as shown by such appraisal, provided Borrower shall have placed
in the Project Deposit an amount equal to the difference between seventy-five
percent (75%) of the appraised value as shown by such appraisal and an amount
equal to eighty percent (80%) of the Total Project Cost.
"Construction Loan Facility" means the construction loan facility
established pursuant to Article II hereof.
"Construction Loan Maturity Date" shall have the meaning assigned to such
term in Section 2.8.
"Construction Loan Notes" means the separate Construction Loan Notes made
by Borrower payable to the order of each Lender, evidencing the Construction
Loan Facility, and any amendments and modifications thereto, any substitutes
therefor, and any replacements, restatements, renewals or extension thereof, in
whole or in part; "Construction Loan Note" means any of such Construction Loan
Notes.
4
"Construction Loans" means the advances under the Construction Loan
Facility pursuant to Section 2.2.
"Contingent Obligation" means, with respect to Borrower, without
duplication, any obligation, contingent or otherwise, of Borrower pursuant to
which Borrower has directly or indirectly guaranteed any Debt or other
obligation of any other Person, provided, the term Contingent Obligation shall
not include endorsements for collection or deposit in the ordinary course of
business.
"Convert," "Conversion" and "Converted" shall refer to a conversion
pursuant to the terms of this Agreement of one Type of Loan into another Type of
Loan.
"Cost Savings" means either (i) the completion of any line item in the
Budget without the expenditure of all amounts allocated to such line item in the
Budget or (ii) demonstration by Borrower to Agent's reasonable satisfaction that
a Cost Savings has been realized with respect to any uncompleted line item in
the Budget.
"Credit Facilities" means the collective reference to the Construction Loan
Facility and the Working Capital Facility.
"Credit Parties" means the collective reference to Borrower and each
Guarantor.
"Debt" means, with respect to any Person at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness for borrowed money including but
not limited to obligations evidenced by bonds, debentures, notes or other
similar instruments of any such Person, (b) all obligations to pay the deferred
purchase price of property or services of any such Person, except trade payables
arising in the ordinary course of business not more than ninety (90) days past
due, (c) all obligations of any such Person as lessee under Capital Leases, (d)
all obligations, contingent or otherwise, of any such Person relative to the
face amount of letters of credit, whether or not drawn, and banker's acceptances
issued for the account of any such Person and (e) all obligations incurred by
any such Person pursuant to Hedging Agreements.
"Default" is defined in Section 9.1.
"Defaulting Lender" shall have the meaning assigned thereto in Section 4.7.
"Draw Request" means a written request for any disbursement of Construction
Loan proceeds, which shall be submitted for each requested disbursement in
accordance with the terms of this Agreement.
"EBITDA" means, with respect to Borrower for any period, Net Income of
Borrower for such period plus the sum of the following deducted in determining
Net Income: (a) Interest Expense, (b) income taxes and (c) amortization,
depreciation and other non-cash charges, in each case determined in accordance
with GAAP for such period.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender;
(iii) a financial institution or other entity that is an "accredited investor"
(as defined in Rule 501 under the
5
Securities Act of 1933, as amended) having (A) total assets of at least
$10,000,000,000 (B) a long-term unsecured debt rating of at least BBB by S&P (or
an equivalent rating by another nationally recognized statistical ratings
organization) and (C) an office in the United States; and (iv) any other
insurance company or financial institution which in the ordinary course of
business extends credit of the type extended hereunder and which is approved by
Agent and, unless an Event of Default has occurred and is continuing at the time
any assignment is effected in accordance with Section 12.18, Borrower, such
approval not to be unreasonably withheld or delayed by Borrower and such
approval to be deemed given by Borrower if no objection is received by the
assigning Lender and Agent from Borrower within five (5) Business Days after
written notice of such proposed assignment has been provided by the assigning
Lender to Borrower; provided, however, that neither Borrower nor an Affiliate of
Borrower shall qualify as an Eligible Assignee.
"Equipment Lender" shall have the meaning assigned to such term in Section
6.15.
"Equipment Lender Agreement" means a written agreement from each Equipment
Lender pursuant to which such Equipment Lender must (i) notify Agent of any
default under any Loan made by such Equipment Lender to Borrower and (ii) give
Agent and Lenders the right to cure such default within thirty (30) days.
"Equity Account" shall have the meaning given to such term in Section 2.6.
"Eurodollar Loan" means any Loan that bears interest at a rate based on the
Adjusted Eurodollar Rate.
"Eurodollar Rate" means for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term of thirty (30)
days. If for any reason such rate is not available, the term "Eurodollar Rate"
shall mean, for any Interest Period, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term of thirty (30) days; provided, however, if more than one rate
is specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest
1/100 of 1%).
"Excusable Delays" means unusually adverse weather conditions which have
not been taken into account in the construction schedule, fire, earthquake or
other acts of God, strike, lockout, acts of public enemy, any Governmental
Authority having jurisdiction over the operation of the hospital which is part
of the Project ceases to operate in the ordinary course, riot or insurrection or
any unforeseen circumstances or events (except financial circumstances or events
or matters which may be resolved by the payment of money) beyond the control of
Borrower, not to exceed a total of thirty (30) days, provided Borrower shall
notify Agent in writing within ten (10) days after such occurrence, but no
Excusable Delay shall extend the Completion Date or suspend or xxxxx any
obligation of Borrower or any Guarantor or any other Person to pay any money.
"Extension Maturity Date" means the first anniversary after the
Construction Loan Maturity Date.
6
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds as quoted by Agent and confirmed in Federal Reserve Board
Statistical Release H.15 (519) or any successor or substitute publication
selected by Agent. If, for any reason, such rate is not available, then "Federal
Funds Rate" shall mean a daily rate which is determined, in the opinion of
Agent, to be the rate at which federal funds are being offered for sale in the
national federal funds market at 9:00 a.m. (Charlotte time). Rates for weekends
or holidays shall be the same as the rate for the most immediate preceding
Business Day.
"Financing Statements" means the UCC financing statements filed in order to
perfect the Lien of Agent and Lenders on certain personal property and fixtures
as more particularly described therein.
"Fiscal Year" means the fiscal year of Borrower ending on September 30.
"Force Majeure" means strikes, lock-outs, riots or other labor troubles,
unavailability of materials, a national emergency, any rule, order or regulation
of Governmental Authorities, tornados, floods, hurricanes or other natural
disasters, or other similar causes not within Borrower's control.
"GAAP" means generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
Borrower throughout the period indicated and consistent with the prior financial
practice of Borrower.
"General Contractor" means Xxxxxx Construction Company, Inc.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantors" means the collective reference to the Parent and the
Subsidiary Guarantors.
"HCFA" means the Health Care Finance Administration or any successor
agency.
"Hedging Agreement" means any agreement with respect to an interest rate
swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of Borrower under this Agreement, and any
confirming letter executed pursuant to such hedging agreement, all as amended,
restated or otherwise modified.
"Hospital Loans" shall have the meaning given to such term in Section 7.1.
7
"Improvements" means all on-site and off-site improvements to the Land for
a heart hospital, to be constructed on the Land, together with all fixtures,
tenant improvements, and appurtenances now or later to be located on the Land
and/or in such improvements.
"Indebtedness" means any and all indebtedness to Lenders evidenced,
governed or secured by, or arising under, any of the Loan Documents, including
the Loans.
"Initial Adjustment Date" means the fifth Business Day after the end of the
previous two calendar quarters (which calendar quarters shall be after the
Completion Date) during which the ratio of (A) the Adjusted EBITDA to (B)
Adjusted Debt Service is greater than 1.0 to 1.0; provided that (i) Borrower has
delivered to Agent written evidence, in form and substance satisfactory to
Agent, that Borrower has satisfied the requirements with respect to the minimum
ratio of Adjusted EBITDA to Adjusted Debt Service and (ii) no Default has
occurred and is continuing as of such date.
"Interest Expense" means, for any period, total interest expense of
Borrower with respect to the Project (including without limitation, interest
expense attributable to the Loans, Capital Leases and all equipment financing),
whether paid or accrued, and, to the extent not included therein, fees and other
charges payable with respect to all Debt of Borrower determined for such period
in accordance with GAAP.
"Interest Period" means each period of thirty (30) days, hereunder, with
respect to which the Eurodollar Rate shall be determined; provided that:
(a) each Interest Period shall commence on the date of advance of or
Conversion to any Eurodollar Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall commence
on the date on which the next preceding Interest Period expires;
(b) if any Interest Period would otherwise expire on a day that is not
a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, that if any Interest Period would otherwise expire
on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(c) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of the relevant calendar month at the end of such
Interest Period;
(d) no Interest Period with respect to the Construction Loan shall be
permitted to extend beyond the Construction Loan Maturity Date and no
Interest Period with respect to the Working Capital Loans shall be
permitted to extend beyond the Working Capital Termination Date; and
(e) there shall be no more than five (5) Interest Periods outstanding
at any time.
8
"Land" means the real property located in Maricopa County, Arizona and
described in Exhibit A hereto, owned or to be acquired by Borrower and to be
encumbered by the Mortgage.
"Lender" means each Person executing this Agreement as a Lender set forth
on the signature pages hereto and each Person that hereafter becomes a party to
this Agreement as a Lender pursuant to Section 12.18.
"Lease Expense" means all obligations of Borrower for payments under leases
of real or personal property, whether such leases presently exist or are
hereafter entered into by Borrower.
"Leverage Ratio" means the ratio of (x) Consolidated Senior Funded Debt
less Debt incurred to construct a new hospital (herein, "New Hospital Debt"),
such New Hospital Debt to be excluded for the period commencing with the
incurrence of such New Hospital Debt and ending one year after the issuance of a
certificate of occupancy for such new hospital to (y) EBITDA for the four
previous fiscal quarters.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Liquid Assets" means cash or near-cash instruments that are unencumbered
and readily marketable, including, without limitation, securities listed and
traded on the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market System.
"Loan" means any Construction Loan and any Working Capital Loan made to
Borrower pursuant to Articles II and III, and all such Loans collectively as the
context requires.
"Loan Documents" means this Agreement (including all exhibits), the
Security Documents, the Notes, the Budget, each Draw Request, and such other
documents evidencing, securing or pertaining to the Loans as shall, from time to
time, be executed and/or delivered by Borrower, Guarantors, or any other party
to Agent for the benefit of Lenders pursuant to this Agreement.
"Material Adverse Effect" means, with respect to Borrower and its
Subsidiaries, a material adverse effect on the properties, business, operations
or condition (financial or otherwise) of such Persons on a Consolidated basis
taken as a whole or the ability of any such Person to perform the payment or
other material obligations under the Loan Documents to which it is a party or
which would materially impair the enforceability of any of the Loan Documents
against any Person party thereto, other than Agent or any of the Lenders or
their Affiliates.
"Material Contract" means (a) any contract or other agreement, written or
oral, of Borrower or any Guarantor involving monetary liability of or to
Borrower or such Guarantor in an amount in excess of $375,000 with respect to
Borrower and any Guarantor, other than Parent, and $1,000,000 with respect to
Parent, and which by its terms may not be cancelled within ninety (90) days, or
(b) any other contract or agreement, written or oral, of Borrower or any
Guarantor the failure to comply with which could reasonably be expected to have
a Material Adverse Effect on Borrower or such Guarantor.
9
"Medicare Certification" means certification by the HCFA or a Governmental
Authority under contract with the HCFA that a health care operation is entitled
to reimbursement under the Medicare Regulations.
"Medicare Regulations" means, collectively, all federal statutes (whether
set forth in Title XVIII of the Social Security Act or elsewhere) affecting the
health insurance program for the aged and disabled established by Title XVIII of
the Social Security Act (42 U.S.C. xx.xx. 1395 et seq.) and any statutes
succeeding thereto; together with all applicable provisions of all rules,
regulations, manuals and orders and administrative, reimbursement and other
guidelines having the force of law of all Governmental Authorities (including
without limitation, Health and Human Services ("HHS"), Health Care Finance
Administration, the Office of the Inspector General for HHS, or any Person
succeeding to the functions of any of the foregoing) promulgated pursuant to or
in connection with any of the foregoing having the force of law, as each may be
amended or supplemented.
"Modified Consolidated Senior Funded Debt" means Consolidated Senior Funded
Debt calculated by including only the greater of (x) percentage ownership of a
Wholly-Owned Subsidiary in any Person which owns a hospital facility (herein, a
"Hospital Subsidiary") times the Debt of such Hospital Subsidiary or (y) the
portion of the Debt of each such Hospital Subsidiary guaranteed by Parent.
"Mortgage" means the Deed of Trust, Assignment, Security Agreement and
Financing Statement of even date executed by Borrower in favor of Agent for the
benefit of Agent and Lenders securing the Land, the Improvements and the other
property and fixtures described therein, as amended, restated, supplemented or
otherwise modified from time to time.
"NationsBank" means NationsBank, N.A., a national banking association, and
its successors.
"Net Income" means, for any period, the Consolidated net income (or loss)
of the Parent and its Subsidiaries for such period determined in accordance with
GAAP; provided, that there shall be excluded from Consolidated net income (or
loss): (a) the income (or loss) of any Person accrued prior to the date it
became a Subsidiary of the Parent or was merged into or consolidated with the
Parent and (b) extraordinary items.
"Net Revenues" means net operating revenues of Borrower determined in
accordance with GAAP.
"Notes" means the Construction Loan Notes or the Working Capital Notes, or
any combination thereof, made by Borrower payable to the order of each of the
Lenders, and any amendments and modifications thereto, any substitutes therefor,
and any replacements, restatements, renewals or extension thereof, in whole or
in part; "Note" means any of such Notes.
"Notice of Working Capital Borrowing" shall have the meaning assigned
thereto in Section 3.2.
"Obligations" means, in each case, whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing after
the filing of any bankruptcy or similar
10
petition) the Loans, (b) all payment and other obligations owing by Borrower to
any Lender or Agent under any Hedging Agreement to which a Lender is a party and
(c) all other fees and commissions (including attorney's fees), charges,
indebtedness, loans, liabilities, financial accommodations, obligations,
covenants and duties owing by Borrower to Lenders or Agent, of every kind,
nature and description, direct or indirect, absolute or contingent, due or to
become due, contractual or tortious, liquidated or unliquidated, and whether or
not evidenced by any note, and whether or not for the payment of money under or
in respect of this Agreement, any Note or any of the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned thereto
in Section 5.2.
"Other Taxes" shall have the meaning assigned thereto in Section 4.14(b).
"Parent" means MedCath Incorporated, a North Carolina corporation.
"Permitted Changes" means changes to the Plans or Improvements and related
changes to the Construction Contract (including those resulting from the final
agreement with the General Contractor on the contract sum), provided the cost of
any single change or extra does not exceed $100,000 and the aggregate amount of
all such changes and extras (whether positive or negative) does not exceed
$1,000,000.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"Plans" means the detailed plans and specifications for the construction of
the Improvements currently being prepared by the Architect and to be approved by
Agent, and including such amendments thereto as may from time to time be made by
Borrower pursuant to the terms of the Agreement, which plans and specifications
are listed on Exhibit E attached hereto, provided that Agent shall approve such
plans and specifications as long as they are consistent with the plans shown to
Agent prior to the date hereof.
"Pledge Agreement" means the Pledge Agreement executed by the Parent on the
Closing Date in favor of Agent for the benefit of Agent and Lenders, as amended,
restated, supplemented or otherwise modified from time to time.
"Pre-Opening Operating Expenses" means any operating expenses incurred by
Borrower , determined in accordance with GAAP.
"Project" means construction, development and operation of Improvements
which shall consist of a three-story Medicare-certified hospital specializing in
cardiovascular procedures, of at least 138,000 square feet and at least 59
licensed beds, located on approximately 7.6 acres located at the intersection of
Xxxxxx Road and Squaw Peak Parkway, Phoenix, Arizona.
"Project Deposit" shall have the meaning given to such term in Section 2.7.
"Project Equity" means the $6,886,000 equity investment or subordinated
loan made or to be made in or to Borrower to partially fund the cost of the
Project.
11
"Property" means the Land, the Improvements, the Tangible Personalty and
all other property constituting the "Mortgaged Property," as described in the
Mortgage, or subject to a right, lien or security interest to secure the Loan
pursuant to any other Loan Document.
"Register" shall have the meaning assigned thereto in Section 12.18.
"Replacement Capital Expenditures" means, with respect to Borrower, all
Capital Expenditures to replace existing fixed assets.
"Required Lenders" means, at any date, any combination of holders of at
least sixty-six and two-thirds percent (66-2/3%) of the aggregate unpaid
principal amount of the Notes, exclusive of Notes held by Defaulting Lenders, or
if no amounts are outstanding under the Notes, any combination of Lenders, other
than Defaulting Lenders, whose Commitment Percentages would aggregate at least
sixty-six and two-thirds percent (66-2/3%) if the Commitments of each Defaulting
Lender were excluded from the Aggregate Commitment.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any category
of liabilities which includes deposits by reference to which the Adjusted
Eurodollar Rate is to be determined, or (ii) any category of extensions of
credit or other assets which include Eurodollar Loans. The Adjusted Eurodollar
Rate shall be adjusted automatically on and as of the effective date of any
change in the Reserve Requirement.
"Security Agreement" means the Security Agreement of even date executed by
Borrower, as debtor, in favor of Agent for the benefit of Agent and Lenders, as
amended, restated, supplemented or otherwise modified from time to time.
"Security Documents" means the collective reference to the Mortgage, the
Security Agreement, the Financing Statements, the Pledge Agreement, the Parent
Guaranty Agreement, the Subsidiary Guaranty Agreement, the Collateral Assignment
of Architect's Contract, the Collateral Assignment of Construction Contract, the
Collateral Assignment of Life Insurance Policy and each other agreement or
writing pursuant to which Borrower or any other Person party thereto pledges or
grants a security interest in any property or assets securing the Obligations or
any such Person guaranties the payment and/or performance of the Obligations.
"Senior Debt" means, at any date of determination, all Debt other than
Subordinated Debt, both determined on a consolidated basis.
"Solvent" means, as to Borrower on a particular date, that any such Person
(a) has capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage and is able to pay its
debts as they mature, (b) owns property having a value, both at fair valuation
and at present fair saleable value, greater than the amount required to pay its
12
probable liabilities (including contingencies), and (c) does not believe that it
will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature.
"Subordinated Debt" means the Debt of Borrower which (i) is, with respect
to principal, subordinated to the Obligations with respect to right and time of
payment, remedies and covenants, (ii) has a scheduled maturity date more than
one (1) year after the Extension Maturity Date, (iii) has a coupon rate not to
exceed thirteen percent (13%), (iv) is not subject to any scheduled amortization
or mandatory redemption feature of any kind, (v) is assigned to Agent and
Lenders, (vi) is unsecured (except that the loan to Borrower by Parent in the
original principal amount of $6,500,000, the proceeds of which shall be used to
fund Borrower's working capital, may be secured by a second priority security
interest in Borrower's accounts receivable) and (vii) is otherwise subordinated
to the reasonable satisfaction of the Required Lenders.
"Subsidiary" means as to any Person, any corporation, partnership or other
entity of which more than fifty percent (50%) of the outstanding capital stock
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity is at the time, directly or indirectly, owned by or the management
is otherwise controlled by such Person (irrespective of whether, at the time,
capital stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency). Unless
otherwise qualified references to "Subsidiary" or "Subsidiaries" herein shall
refer to those of Borrower. For purposes of financial statement preparation or
determining compliance with the financial covenants in this Agreement,
"Subsidiary" shall have the meaning given to such term under GAAP.
"Subsidiary Guarantors" means the Subsidiaries of Borrower set forth on
Schedule 2 hereto.
"Tangible Personalty" means all fixtures, equipment, furnishings and other
articles of personal property now or hereafter owned by Borrower and attached to
or contained in and used in connection with the Land and Improvements and all
renewals or replacements thereof or articles in substitution thereof, whether or
not the same are or shall be attached to the Land and Improvements in any
manner.
"Taxes" shall have the meaning assigned thereto in Section 4.14(a).
"Title Insurance" means the title insurance described in Exhibit C.
"Title Insurer" means Lawyers Title Insurance Corporation.
"Title Policy" means the mortgagee title policy meeting the requirements of
this Agreement and the Mortgage.
"Total Capitalization" means Modified Consolidated Senior Funded Debt plus
the Consolidated equity of the Parent and its Subsidiaries.
"Total Project Cost" shall have the meaning given such term in Exhibit D.
"Type" means either type of Loan (i.e., a Base Rate Loan or Eurodollar
Loan).
13
"UCC" means the Uniform Commercial Code as in effect in the State of North
Carolina.
"Uniform Customs" the Uniform Customs and Practice for Documentary Credits
(1994 Revision), International Chamber of Commerce Publication No. 500.
"United States" means the United States of America.
"Working Capital Commitment" means (a) as to any Lender, the obligation of
such Lender to make Working Capital Loans to Borrower hereunder in an aggregate
principal or face amount at any time outstanding not to exceed the amount set
forth opposite such Lender's name on Schedule 1 to this Agreement, as the same
may be reduced or modified at any time or from time to time pursuant to the
terms hereof and (b) as to all Lenders, the aggregate commitment of all Lenders
to make Working Capital Loans. On the Closing Date, the Working Capital Loan
Commitment of all Lenders shall be Two Million Five Hundred Thousand and No/00
Dollars ($2,500,000).
"Working Capital Facility" means the working capital facility established
pursuant to Article III hereof.
"Working Capital Loans" means the working capital loans to be made to
Borrower pursuant to Section 3.1.
"Working Capital Notes" means the separate Working Capital Notes made by
Borrower payable to the order of each Lender, evidencing the Working Capital
Facility, and any amendments and modifications thereto, any substitutes
therefor, and any replacements, restatements, renewals or extension thereof, in
whole or in part; "Working Capital Note" means any of such Working Capital
Notes.
"Working Capital Termination Date" means the earliest of the dates referred
to in Section 3.5.
1.2 General. Unless otherwise specified, a reference in this Agreement to a
particular section, subsection, Schedule or Exhibit is a reference to that
section, subsection, Schedule or Exhibit of this Agreement. Wherever from the
context it appears appropriate, each term stated in either the singular or
plural shall include the singular and plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, the feminine
and the neuter. Any reference herein to "Charlotte time" shall refer to the
applicable time of day in Charlotte, North Carolina.
1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
1.4 Miscellaneous. The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
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ARTICLE II - THE CONSTRUCTION LOAN
2.1 General Information and Purpose. The Exhibits, which are made a part of
this Agreement and incorporated herein by reference, contain terms, provisions,
and conditions applicable to the Construction Loan. The proceeds of the
Construction Loan shall be used by Borrower to pay the cost of the construction
of the Improvements on the Land, and other costs regarding the Property if and
to the extent that such costs are specifically provided for in the Loan
Allocation column in the Budget, including repayment of an interim land loan by
AHH Management, Inc. The Loan Documents, which must be in form, detail and
substance satisfactory to Agent, evidence the agreements of Borrower, Guarantors
and Lenders with respect to the Loans. Borrower and Guarantors shall comply with
all Loan Documents to which they are party.
2.2 Commitment to Lend. Each Lender severally agrees to make the
Construction Loan to Borrower in advances subject to and in accordance with
Exhibit F and the other terms and conditions of this Agreement. Lenders'
commitment to lend shall expire and terminate (a) automatically on the Advance
Termination Date; (b) automatically if the Construction Loan is prepaid in full;
and (c) at the option of the Required Lenders in the event of a Default. The
Construction Loan is not revolving. An amount repaid may not be reborrowed. The
principal amount of outstanding advances from any Lender shall not exceed such
Lender's Construction Loan Commitment. Each Construction Loan by a Lender shall
be in a principal amount equal to such Lender's Commitment Percentage of the
aggregate principal amount of the Construction Loan to be made on such occasion.
2.3 Disbursement of Construction Loans. Not later than 2:00 p.m. (Charlotte
time) on each proposed Construction Loan borrowing date, each Lender will make
available to Agent, for the account of Borrower, at the office of Agent in funds
immediately available to Agent, such Lender's Commitment Percentage of the
Construction Loans to be made on such borrowing date. Borrower hereby
irrevocably authorizes Agent to disburse the proceeds of each Draw Request in
immediately available funds by crediting such proceeds to a deposit account of
Borrower maintained with Agent or as otherwise provided herein or as may be
agreed upon by Borrower and Agent from time to time. Unless Agent shall have
received notice from a Lender that such Lender will not make available to Agent
such Lender's Commitment Percentage of the requested Construction Loan, Agent
shall disburse such Lender's Commitment Percentage of such Construction Loan.
2.4 Construction Loan Notes. Each Lender's Construction Loans and the
obligation of Borrower to repay such Construction Loans shall be evidenced by a
Construction Loan Note executed by Borrower payable to the order of such Lender
representing Borrower's obligation to pay such Lender's Construction Loan
Commitment or, if less, the aggregate unpaid principal amount of all
Construction Loans made and to be made by such Lender to Borrower hereunder,
plus interest and all other fees, charges and other amounts due thereon. Each
Construction Loan Note shall be dated the date hereof and shall bear interest on
the unpaid principal amount thereof at the applicable interest rate per annum
specified in the Draw Request.
2.5 Budget and Amendments. The Construction Loan funds are allocated for
the costs of the Project shown in the Loan Allocation column in the Budget
attached as Exhibit D. The
15
Budget has been prepared by Borrower and Borrower represents to Lenders that it
includes all costs and expenses (the "Aggregate Project Cost") incident to the
Construction Loan and the Project, through the Construction Loan Maturity Date,
after taking into account the requirements of this Agreement. Lenders shall not
be required to (a) make any advance for any cost not set forth in the Budget,
other than costs in connection with Permitted Changes, (b) make any advance for
any line item in the Budget that, when added to all prior advances for that line
item, would exceed the lesser of (i) the actual cost incurred by Borrower for
such line item or (ii) the sum allocated in the Loan Allocation column in the
Budget for that line item (which shall include any Cost Savings that have been
allocated to that line item pursuant to this Section 2.5), (c) make any advance
for any contingency line item except for Permitted Changes or unless Agent
consents to such advance, which consent shall not be unreasonably withheld or
(d) make any advance for interest on the Construction Loan after commencement of
operations in the Improvements if and to the extent that there is sufficient net
operating income from the Property to cover any such advances. Lenders may make
advances allocated to line items in the Budget for other purposes or in
different proportions as Agent in its sole discretion deems reasonably necessary
or advisable. Borrower may reallocate Cost Savings from one line item to another
line item in the Budget as long as the amount of such reallocation does not
exceed the lesser of (i) the amount of the applicable line item; and (ii)
$100,000 per line item increased or $500,000 in the aggregate. Borrower shall
(i) not, except as provided in the immediately preceding sentence, reallocate
Construction Loan funds from one Budget line item to another or otherwise amend
the Budget without the prior written consent of Agent, not to be unreasonably
withheld, other than changes resulting from Permitted Changes; and (ii) notify
Lender promptly whenever Borrower becomes aware that the Budget is, or might be,
inaccurate in any material respect, and submit to Agent a new Budget setting
forth the original Budget and all amendments.
2.6 Equity Account. $6,886,000 of the Project Equity, to be contributed or
loaned to Borrower less all sums previously invested by Borrower in the Project
(which investments shall be documented to Agent's reasonable satisfaction),
shall be deposited in an interest-bearing account to be maintained by Borrower
with Agent (the "Equity Account"). Interest earned on the Equity Account shall
be part of the Equity Account and shall be paid currently from time to time to
Parent. The Equity Account is hereby pledged as additional collateral for the
Construction Loan, and Parent and Borrower hereby grant and convey to Agent for
the benefit of the Lenders a security interest in all funds in the Equity
Account as additional collateral for the Construction Loan. Eighty percent (80%)
of each advance by Agent shall consist of Construction Loan proceeds and twenty
percent (20%) of funds from the Equity Account (other than unexpended sums
allocated for Pre-Opening Operating Costs). Upon a Default, Agent may (but shall
have no obligation to) apply all or any part of the Equity Account (other than
unexpended sums allocated for the payment of the Pre-Opening Operating Costs)
against the unpaid Indebtedness in such order as the Required Lenders determine.
Any funds remaining in the Equity Account upon the issuance of the certificate
of occupancy (other than sums allocated for Pre-Opening Operating Costs to be
paid after the issuance of the Medicare Certification) shall be used to prepay
the Construction Loan to the extent necessary to ensure that the outstanding
principal amount of the Construction Loan shall at no time exceed an amount
equal to the lesser (x) eighty percent (80%) of the Total Project Cost or (y)
seventy-five percent (75%) of the Appraised Value. The balance, if any, shall be
returned to Parent.
2.7 Project Deposit. If at any time Agent determines that the sum of (i)
the unadvanced portion of the Construction Loan to which Borrower is entitled,
plus (ii) the amounts of the Aggregate Project Cost which are scheduled to be
paid by Borrower from other funds which
16
are available, set aside and committed, to Agent's reasonable satisfaction, is
or will be insufficient to pay the unpaid actual Aggregate Project Cost, Parent
shall, within seven (7) days after written notice from Agent, deposit with Agent
for the benefit of Lenders the amount of the deficiency (the "Project Deposit")
in an interest-bearing account with interest earned thereon to be part of the
Project Deposit. The Project Deposit is hereby pledged as additional collateral
for the Construction Loan, and Parent and Borrower hereby grant and convey to
Agent for the benefit of Lenders a security interest in all funds so deposited
with Agent, as additional collateral for the Construction Loan. Upon a Default,
Agent may (but shall have no obligation to) apply all or any part of the Project
Deposit (other than unexpended sums allocated for the payment of the Pre-Opening
Operating Costs) against the unpaid Indebtedness in such order as the Required
Lenders determine. All funds remaining in the Project Deposit upon the issuance
of the certificate of occupancy (other than sums allocated for Pre-Opening
Operating Costs to be paid after the issuance of the Medicare Certification)
shall be used to prepay the Construction Loan to the extent necessary to ensure
that the outstanding principal amount of the Construction Loan shall at no time
exceed an amount equal to the lesser (x) eighty percent (80%) of the Total
Project Cost or (y) seventy-five percent (75%) of the Appraised Value. The
balance, if any, shall be returned to Parent.
2.8 Principal Payments. The principal amount of the Construction Loan
outstanding on the Completion Date shall be paid in consecutive monthly
installments commencing on September 10, 1999 and continuing on the same day of
each month thereafter. Each monthly payment shall be in an amount to fully
amortize the principal balance of the Construction Loan outstanding on the
Completion Date over a supposed 240-month term; provided that the outstanding
unpaid principal balance of the Construction Loan shall be due and payable in
full on the tenth (10th) day of the thirty-seventh (37th) month following the
Closing Date (as such date may be extended pursuant to Section 2.9) (the
"Construction Loan Maturity Date").
2.9 Option to Extend. Not earlier than the one hundred twentieth (120th)
day and not later than the ninetieth (90th) day prior to the Construction Loan
Maturity Date, Borrower may, by written notice (the "Construction Loan Extension
Notice") given to Agent, extend the Construction Loan Maturity Date for one (1)
year, provided the following conditions are met:
(a) No Default shall have occurred and be continuing;
(b) The principal balance of the Construction Loan shall be
$22,000,000 or less; and
(c) Borrower shall pay to Agent, for the account of Lenders, the
extension fee provided for in Section 4.3(b).
Agent shall promptly advise each Lender of its receipt of the Construction Loan
Extension Notice and furnish each Lender with a copy thereof. Borrower shall
continue to make monthly installment payments of principal, plus accrued
interest, during the one (1) year extension period, each monthly principal
installment to be in the same amount as prior to the Construction Loan Maturity
Date.
2.10 Optional Prepayments. Borrower may at any time and from time to time
repay (without cost except for payment of any compensation due under Section
4.13) the Construction
17
Loan, in whole or in part, by giving Agent irrevocable notice in the form
attached hereto as Exhibit M (a "Notice of Construction Loan Prepayment") not
later than 11:00 a.m. (Charlotte time) at least three (3) Business Days before
each prepayment of a Construction Loan specifying the date and amount of
repayment; provided, however, that Borrower may not repay any Eurodollar Loan on
any day other than the last day of the Interest Period applicable thereto unless
such payment is accompanied by any amount required to be paid pursuant to
Section 4.13 hereof. Upon receipt of such notice, Agent shall promptly notify
each Lender. If any such notice is given, the amount specified in such notice
shall be due and payable on the date set forth in such notice. Partial
repayments shall be in an aggregate amount of $100,000 or a whole multiple of
$10,000 in excess thereof and shall be applied against the installments due on
the Construction Loan in the inverse order of their maturity.
ARTICLE III - WORKING CAPITAL FACILITY
3.1 Working Capital Loans. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Working Capital Loans to
Borrower from time to time from the Completion Date through the Working Capital
Termination Date as requested by Borrower in accordance with the terms of
Section 3.2; provided, that (a) the aggregate principal amount of all
outstanding Working Capital Loans (after giving effect to any amount requested)
shall not exceed the total Working Capital Commitment and (b) the principal
amount of outstanding Working Capital Loans from any Lender to Borrower shall
not at any time exceed such Lender's Working Capital Commitment. Each Working
Capital Loan by a Lender shall be in a principal amount equal to such Lender's
Commitment Percentage of the aggregate principal amount of Working Capital Loans
requested on such occasion. Subject to the terms and conditions hereof, Borrower
may borrow, repay and reborrow hereunder until the Working Capital Termination
Date.
3.2 Procedure for Advances of Working Capital Loans.
(a) Requests for Borrowing. Borrower shall give Agent irrevocable prior
written notice in the form attached hereto as Exhibit J (a "Notice of Working
Capital Borrowing") not later than 11:00 a.m. (Charlotte time) (i) on the same
Business Day as each Base Rate Loan and (ii) at least three (3) Business Days
before each Eurodollar Loan of its intention to borrow, specifying (i) the date
of such borrowing, which shall be a Business Day , (ii) the amount of such
borrowing, which shall be in an aggregate principal amount of $100,000 or a
whole multiple of $10,000 in excess thereof and (iii) whether such Working
Capital Loan is to be a Eurodollar Loan or a Base Rate Loan. Notices received
after 11:00 a.m. (Charlotte time) shall be deemed received on the next Business
Day. Agent shall promptly notify Lenders of each Notice of Working Capital
Borrowing.
(b) Disbursement of Working Capital Loans. Not later than 2:00 p.m.
(Charlotte time) on the proposed borrowing date, each Lender will make available
to Agent, for the account of Borrower, at the office of Agent in funds
immediately available to Agent, such Lender's Commitment Percentage of the
Working Capital Loans to be made on such borrowing date. Borrower hereby
irrevocably authorizes Agent to disburse the proceeds of each borrowing
requested pursuant to this Section 3.2 in immediately available funds by
crediting such proceeds
18
to a deposit account of Borrower maintained with Agent or by wire transfer to
such account as may be agreed upon by Borrower and Agent from time to time.
Unless Agent shall have received notice from a Lender that such Lender will not
make available to Agent such Lender's Commitment Percentage of the requested
Working Capital Loan, Agent shall disburse such Lender's Commitment Percentage
of such Working Capital Loan.
3.3 Working Capital Notes. Each Lender's Working Capital Loans and the
obligation of Borrower to repay such Working Capital Loans shall be evidenced by
a Working Capital Note executed by Borrower payable to the order of such Lender
representing Borrower's obligation to pay such Lender's Working Capital Loan
Commitment or, if less, the aggregate unpaid principal amount of all Working
Capital Loans made and to be made by such Lender to Borrower hereunder, plus
interest and all other fees, charges and other amounts due thereon. Each Working
Capital Note shall be dated the date hereof and shall bear interest on the
unpaid principal amount thereof at the applicable interest rate per annum
specified in Section 3.2(a).
3.4 Repayment of Working Capital Loans.
(a) Repayment on Working Capital Termination Date. Borrower shall repay the
outstanding principal amount of all Working Capital Loans in full, together with
all accrued but unpaid interest thereon, on the Working Capital Termination
Date.
(b) Mandatory Repayment of Working Capital Loans. If at any time the
outstanding principal amount of all Working Capital Loans exceeds the total
Working Capital Commitment, Borrower shall repay immediately upon notice from
Agent, by payment to Agent for the account of Lenders, the Working Capital Loans
in an amount equal to such excess.
(c) Optional Prepayments. Borrower may at any time and from time to time
repay (without cost except for payment of any compensation due under Section
4.13) the Working Capital Loans, in whole or in part, by giving Agent
irrevocable notice in the form attached hereto as Exhibit K (a "Notice of
Working Capital Loan Prepayment") not later than 11:00 a.m. (Charlotte time) at
least three (3) Business Days before each prepayment of a Working Capital Loan
specifying the date and amount of repayment; provided, however, that Borrower
may not repay any Eurodollar Loan on any day other than the last day of the
Interest Period applicable thereto unless such payment is accompanied by any
amount required to be paid pursuant to Section 4.13 hereof. Upon receipt of such
notice, Agent shall promptly notify each Lender. If any such notice is given,
the amount specified in such notice shall be due and payable on the date set
forth in such notice. Partial repayments shall be in an aggregate amount of
$100,000 or a whole multiple of $10,000 in excess thereof. Each such repayment
shall be accompanied by any amount required to be paid pursuant to Section 4.13
hereof.
3.5 Termination of Working Capital Facility. The Working Capital Facility
shall terminate on the earliest of (a) the date which is twenty-five (25) months
following the Closing Date and (b) the date of termination by Agent on behalf of
Lenders pursuant to Section 9.2; provided, that not earlier than the one hundred
and twentieth (120th) day and not later than the ninetieth (90th) day prior to
the date set forth in clause (a) above (the "Working Capital Extension Date"),
Borrower may, by written notice (a "Working Capital Extension Request") given to
Agent, request that the date set forth in clause (a) above be extended for one
(1) year. Agent shall promptly advise each Lender of its receipt of any Working
Capital Extension Request and furnish each Lender with a copy thereof. Each
Lender may, in its sole discretion, consent to the requested
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extension by giving written notice thereof to Agent not later than the Business
Day (the "Working Capital Extension Confirmation Date") immediately preceding
the date which is thirty (30) days after receipt of the Working Capital
Extension Request. No Lender shall be under any obligation or commitment to
extend such date and no such obligation or commitment on the part of any Lender
shall be inferred from the provisions of this Section 3.5. Failure on the part
of any Lender to respond to a Working Capital Extension Request by the
applicable Working Capital Extension Confirmation Date shall be deemed to be a
denial of such request by such Lender. The requested extension shall not be
granted unless one hundred percent (100%) of Lenders shall have consented in
writing to such extension. In the event that Agent determines, in its sole and
absolute discretion, to approve the requested extension, Agent shall use its
best efforts to assist Borrower in obtaining the approval of one hundred percent
(100%) of Lenders; provided, that Agent shall incur no liability whatsoever for
the failure of any Lender to approve such extension.
3.6 Use of Proceeds. Borrower shall use the proceeds of the Working Capital
Loan to provide working capital and to finance other expenditures incurred in
the ordinary course of business.
3.7 Security. The Obligations of Borrower under the Working Capital Loan
Facility shall be secured as provided in the Security Documents.
ARTICLE IV - GENERAL LOAN PROVISIONS
4.1 Interest.
(a) Interest Rate Options. The outstanding principal balance of the Loans
shall bear interest from the Closing Date until the Initial Adjustment Date at a
rate of interest per annum equal to (A) the Adjusted Eurodollar Rate plus the
Applicable Margin or (B) the Base Rate. Borrower shall select the type of
interest rate applicable to any Loan at the time a Draw Request is submitted for
a Construction Loan advance or a Notice of Borrowing is given pursuant to
Section 3.2(a) for a Working Capital Loan or at the time a Notice of
Conversion/Continuation is given pursuant to Section 4.2. Any Loan as to which
Borrower has not duly specified an interest rate as provided herein shall be
deemed to bear interest at the Base Rate. Interest on the Loans shall be payable
in arrears on the tenth day of each month and upon payment in full of the Notes.
All interest payable hereunder shall be computed on the basis of a 360-day year.
(b) Interest Payments. Whenever any payment hereunder, including, without
limitation, principal or interest, shall be due on a day which is not a Business
Day, the date for payment thereof shall be extended to the next Business Day and
interest shall continue to accrue on any principal amount for which the payment
date is so extended. Provided no Default shall have occurred and be continuing,
interest prior to the Advance Termination Date shall be paid from the proceeds
of the Construction Loan up to the maximum amount provided therefor in the
Budget.
(c) Default Rate. Upon the occurrence and during the continuance of a
Default, (i) Borrower shall no longer have the option to request or Convert to
Eurodollar Loans, (ii) all outstanding Eurodollar Loans may at the option of
Agent and shall at the direction of the Required Lenders, bear interest at a
rate per annum which shall be two percent (2%) in excess of the rate
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then applicable to Eurodollar Loans, until the end of the applicable Interest
Period and thereafter at a rate equal to two percent (2%) in excess of the rate
then applicable to Base Rate Loans, and (iii) all outstanding Base Rate Loans
shall bear interest at a rate per annum equal to two percent (2%) in excess of
the rate then applicable to Base Rate Loans (the "Default Rate"). To the extent
permitted by law, interest shall continue to accrue on the Notes after the
filing by or against Borrower of any petition seeking any relief in bankruptcy
or under any act or law pertaining to insolvency or debtor relief, whether
state, federal or foreign.
4.2 Notice and Manner of Conversion or Continuation of Loans. Provided that
no Default has occurred and is then continuing, Borrower shall have the option
to (a) Convert at any time all or any portion of its outstanding Base Rate Loans
in a principal amount equal to $500,000 or any whole multiple of $100,000 in
excess thereof into one or more Eurodollar Loans, and (b) upon the expiration of
any Interest Period, (i) Convert all or any part of its outstanding Eurodollar
Loans in a principal amount equal to $500,000 or a whole multiple of $100,000 in
excess thereof into Base Rate Loans or (ii) continue such Eurodollar Loans as
Eurodollar Loans. Whenever Borrower desires to Convert or continue Loans as
provided above, Borrower shall give Agent irrevocable prior written notice in
the form attached as Exhibit L (a "Notice of Conversion/Continuation") not later
than 11:00 a.m. (Charlotte time) three (3) Business Days before the day on which
a proposed Conversion or continuation of such Loan is to be effective specifying
(A) the Loans to be Converted or continued, and, in the case of any Eurodollar
Loan to be Converted or continued, the last day of the Interest Period therefor,
(B) the effective date of such Conversion or continuation (which shall be a
Business Day) and (C) the principal amount of such Loans to be Converted or
continued. Agent shall promptly notify Lenders of such Notice of
Conversion/Continuation.
4.3 Fees.
(a) Underwriting Fee. Borrower agrees to pay to Agent, for its account, the
fees set forth in the separate fee letter agreement executed by Borrower and
Agent dated August 6, 1997.
(b) Extension Fee. In order to compensate Agent and Lenders for extending
the Construction Loan Maturity Date, if applicable, Borrower shall pay to Agent,
for the account of Lenders, an extension fee equal to .35% of the outstanding
principal balance of the Construction Loans as of the original Construction Loan
Maturity Date. The extension fee shall be payable on the original Construction
Loan Maturity Date and shall be distributed pro rata in accordance with Lenders'
respective Commitment Percentages.
4.4 Manner of Payment. Each payment by Borrower on account of the principal
of or interest on the Loans or of any fee, commission or other amounts payable
to Lenders under this Agreement or any Note shall be made not later than 2:00
p.m. (Charlotte time) on the date specified for payment under this Agreement to
Agent at Agent's Office for the account of Lenders (other than as set forth
below) pro rata in accordance with their respective Commitment Percentages, in
Dollars, in immediately available funds and shall be made without any set-off,
counterclaim or deduction whatsoever. Any payment received after such time shall
be deemed to have been made on the next succeeding Business Day. Upon receipt by
Agent of each such payment, Agent shall distribute to each Lender at its address
for notices set forth herein its pro rata share of such payment in accordance
with such Lender's Commitment Percentage and shall wire advice of the amount of
such credit to each Lender. Each payment to Agent of Agent's fees or expenses
shall be made for the account of Agent.
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4.5 Right of Set-off; Adjustments.
(a) Upon the occurrence and during the continuance of any Event of Default,
and upon the exercise by Agent of the remedy provided for in Section 9.2, each
Lender (and each of its Affiliates) is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender (or any of
its Affiliates) to or for the credit or the account of Borrower against any and
all of the obligations of Borrower now or hereafter existing under this
Agreement and the Note held by such Lender, irrespective of whether such Lender
shall have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Lender agrees promptly to notify Borrower
after any such set-off and application made by such Lender; provided, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
(b) In the event that Borrower shall fail to pay any of the Obligations
when due and the Obligations have been accelerated pursuant to Section 9.2, all
payments received by Lenders upon the Notes and the other Obligations and all
net proceeds from the enforcement of the Obligations shall be applied first to
all expenses then due and payable by Borrower hereunder, then to all indemnity
obligations then due and payable by Borrower hereunder, then to all of Agent's
fees then due and payable, then to all commitment and other fees and commissions
then due and payable, then to accrued and unpaid interest on the Notes and any
termination payments due in respect of a Hedging Agreement with any Lender (pro
rata in accordance with all such amounts due), then to the principal amount of
the Notes, in such order as Required Lenders shall elect.
4.6 Adjustments. If any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Loans, or interest thereon, or if any
Lender shall at any time receive any collateral in respect to its Loans (whether
voluntarily or involuntarily, by set-off or otherwise) in a greater proportion
than any such payment to and collateral received by any other Lender, if any, in
respect of such other Lender's Loans, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders such portion of each such
other Lender's Loans, or shall provide such other Lenders with the benefits of
any such collateral, or the proceeds thereof, as shall be necessary to cause
such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of Lenders; provided, that if all or
any portion of such excess payment or benefits is thereafter recovered from such
Benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned to the extent of such recovery, but without interest. Borrower
agrees that each Lender so purchasing a portion of another Lender's Loans may
exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
4.7 Nature of Obligations of Lenders Regarding Loans; Assumption by Agent.
The obligations of Lenders under this Agreement to make the Loans are several
and are not joint or joint and several. Unless Agent shall have received notice
from a Lender prior to a proposed borrowing date that such Lender will not make
available to Agent such Lender's ratable portion of the amount to be borrowed on
such date (which notice shall not release such Lender of its obligations
hereunder), Agent may assume that such Lender has made such portion available to
Agent on the proposed borrowing date in accordance with the terms hereof, as
applicable, and
22
Agent may, in reliance upon such assumption, make available to Borrower on such
date a corresponding amount. If such amount is made available to Agent on a date
after such borrowing date, such Lender shall pay to Agent on demand an amount,
until paid, equal to the product of (a) the amount of such Lender's Commitment
Percentage of such borrowing, times (b) the daily average Federal Funds Rate
during such period as determined by Agent, times (c) a fraction the numerator of
which is the number of days that elapse from and including such borrowing date
to the date on which such Lender's Commitment Percentage of such borrowing shall
have become immediately available to Agent and the denominator of which is 360.
A certificate of Agent with respect to any amounts owing under this Section 4.7
shall be conclusive, absent manifest error. If such Lender's Commitment
Percentage of such borrowing is not made available to Agent by such Lender
within three (3) Business Days of such borrowing date, Agent shall be entitled
to recover such amount made available by Agent with interest thereon at the rate
per annum applicable to Base Rate Loans hereunder, on demand, from Borrower. The
failure of any Lender (herein, a "Defaulting Lender") to make its Commitment
Percentage of any Loan available shall not relieve it or any other Lender of its
obligation, if any, hereunder to make its Commitment Percentage of such Loan
available on such borrowing date, but no Lender shall be responsible for the
failure of any other Lender to make its Commitment Percentage of such Loan
available on the borrowing date.
4.8 Indemnity. Borrower hereby indemnifies each of the Lenders against any
loss or expense which may arise or be attributable to each Lender's obtaining,
liquidating or employing deposits or other funds acquired to effect, fund or
maintain any Loan (a) as a consequence of any failure by Borrower to make any
payment when due of any amount due hereunder in connection with a Loan, (b) due
to any failure of Borrower to borrow on a date specified therefor in a Notice of
Borrowing or (c) due to any payment or prepayment of any Loan on a date other
than the date specified for such payment in the applicable Notice of Prepayment.
The amount of such loss or expense shall be determined, in the applicable
Lender's sole discretion, based upon the assumption that such Lender funded its
Commitment Percentage of the Loans in the London interbank market and using any
reasonable attribution or averaging methods which such Lender deems appropriate
and practical. A certificate of such Lender setting forth the basis for
determining such amount or amounts necessary to compensate such Lender shall be
forwarded to Borrower through Agent and shall be conclusively presumed to be
correct save for manifest error. (Amounts payable under this Section 4.8 shall
be without duplication of amounts payable under Section 4.9 or 4.13.)
4.9 Increased Cost and Reduced Return. Borrower hereby indemnifies each
Lender against any loss or expense which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain any Loan (a) as a consequence of any failure by
Borrower to make any payment when due of any amount due hereunder in connection
with a Eurodollar Loan, (b) due to any failure of Borrower to borrow on a date
specified therefor in a Notice of Borrowing or Notice of Continuation/Conversion
or (c) due to any payment, prepayment or conversion of any Eurodollar Loan on a
date other than the last day of the Interest Period therefor. The amount of such
loss or expense shall be determined, in the applicable Lender's sole discretion,
based upon the assumption that such Lender funded its Commitment Percentage of
the Eurodollar Loans in the London interbank market and using any reasonable
attribution or averaging methods which such Lender deems appropriate and
practical. A certificate of such Lender setting forth the basis for determining
such amount or amounts necessary to compensate such Lender shall be forwarded to
Borrower through Agent and shall be conclusively presumed to be correct save for
manifest error.
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(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof
by any governmental authority, central bank, or comparable agency charged
with the interpretation or administration thereof, or compliance by any
Lender (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such governmental
authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending Office)
to any tax, duty, or other charge with respect to any Eurodollar
Loans, its Note, or its obligation to make Eurodollar Loans, or change
the basis of taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Agreement or its Note in respect
of any Eurodollar Loans (other than taxes imposed on the overall net
income of such Lender by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment or similar requirement (other than the
Reserve Requirement utilized in the determination of the Adjusted
Eurodollar Rate) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the United States market for certificates of deposit or
the London interbank market any other condition affecting this
Agreement or its Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending Office) of making, Converting into,
Continuing, or maintaining any Eurodollar Loans or to reduce any sum
received or receivable by such Lender (or its Applicable Lending Office)
under this Agreement or its Note with respect to any Eurodollar Loans, then
Borrower shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction. If any Lender
requests compensation by Borrower under this Section 4.9, Borrower may, by
notice to such Lender (with a copy to Agent), suspend the obligation of
such Lender to make or Continue Eurodollar Loans or to Convert Base Rate
Loans into Eurodollar Loans until the event or condition giving rise to
such request ceases to be in effect (in which case the provisions of
Section 4.12 shall be applicable); provided, that such suspension shall not
affect the right of such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have reasonably
determined that the adoption of any applicable law, rule, or regulation
regarding capital adequacy or any change therein or in the interpretation
or administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or
not having the force of law) of any such governmental authority, central
bank, or comparable agency, has or would have the effect of reducing the
rate of return on the
24
capital of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such
adoption, change, request, or directive (taking into consideration its
policies with respect to capital adequacy), then from time to time upon
demand Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender for such reduction.
(c) Each Lender shall promptly notify Borrower and Agent of any event
of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will
not, in the judgment of such Lender, be otherwise disadvantageous to it.
Any Lender claiming compensation under this Section shall furnish to
Borrower and Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the absence
of manifest error. In determining such amount, such Lender may use any
reasonable averaging and attribution methods.
(d) Amounts payable under this Section 4.9 shall be without
duplication of the amounts payable under 4.8 or 4.13.
4.10 Limitation on Types of Loans. If on or prior to the first day of any
Interest Period for any Eurodollar Loan:
(a) Agent reasonably determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify Agent that the Adjusted Eurodollar Rate will not
adequately and fairly reflect the cost to Lenders of funding Eurodollar
Loans for such Interest Period;
then Agent shall give Borrower prompt notice thereof specifying the relevant
Eurodollar Loans and the relevant amounts or periods, and so long as such
condition remains in effect, Lenders shall be under no obligation to make
additional Eurodollar Loans, Continue Eurodollar Loans or to Convert Base Rate
Loans into Eurodollar Loans and Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Eurodollar Loans either prepay
such Loans or Convert such Loans into Base Rate Loans in accordance with the
terms of this Agreement.
4.11 Illegality. Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Loans hereunder, then such Lender
shall promptly notify Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 4.12 shall be
applicable).
4.12 Treatment of Affected Loans. If the obligation of any Lender to make
Eurodollar Loans or to Continue, or to Convert Base Rate Loans into, Eurodollar
Loans shall be suspended
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pursuant to Section 4.10 or 4.11 hereof, unless and until such Lender gives
notice as provided below that the circumstances specified in Section 4.10 or
4.11 hereof no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted into Base Rate Loans, all payments and prepayments of principal
that would otherwise be applied to the Eurodollar Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Lender
as Eurodollar Loans shall be made or Continued instead as Base Rate Loans,
and all Loans of such Lender that would otherwise be Converted into
Eurodollar Loans shall instead remain as Base Rate Loans.
If such Lender gives notice to Borrower (with a copy to Agent) that the
circumstances specified in Section 4.10 or 4.11 hereof no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist),
such Lender's Base Rate Loans may be Converted to Eurodollar Loans.
4.13 Compensation. Upon the request of any Lender, Borrower shall pay to
such Lender such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 9.2) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article IV
to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan
on the date for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant Notice of Borrowing, prepayment, Continuation, or
Conversion under this Agreement.
Amounts payable under this Section 4.13 shall be without duplication of amounts
payable under Section 4.8 or 4.9.
4.14 Taxes.
(a) Any and all payments by Borrower to or for the account of any Lender or
Agent hereunder or under any other Loan Document shall be made free and clear of
and without deduction for any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender (or its Applicable Lending Office) or Agent (as the case may
be) is organized or any political subdivision thereof (all such non-excluded
taxes, duties, levies, imposts, deductions, charges, withholdings, and
liabilities being hereinafter referred to as "Taxes"). If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable under
this Agreement or any other Loan Document to any Lender or Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 4.14) such Lender or Agent receives an
26
amount equal to the sum it would have received had no such deductions been made,
(ii) Borrower shall make such deductions, (iii) Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) Borrower shall furnish to Agent, at its
address referred to in Section 12.4, the original or a certified copy of a
receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or future stamp
or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) Borrower agrees to indemnify each Lender and Agent for the full amount
of Taxes and Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this
Section 4.14) paid by such Lender or Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by Borrower or
Agent (but only so long as such Lender remains lawfully able to do so), shall
provide Borrower and Agent with (i) Internal Revenue Service Form 1001 or 4224,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an income tax
treaty to which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States, (ii) Internal Revenue Service Form W-8 or W-9,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Lender is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to provide
Borrower and Agent with the appropriate form pursuant to Section 4.14(d) (unless
such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under Section 4.14(a) or
4.14(b) with respect to Taxes imposed by the United States; provided, that
should a Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to Taxes because of its failure to deliver a
form required hereunder, Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.
(f) If Borrower is required to pay additional amounts to or for the account
of any Lender pursuant to this Section 4.14, then such Lender will agree to use
reasonable efforts to change the jurisdiction of its Applicable Lending Office
so as to eliminate or reduce any such additional payment which may thereafter
accrue if such change, in the judgment of such Lender, is not otherwise
disadvantageous to such Lender.
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(g) Within thirty (30) days after the date of any payment of Taxes,
Borrower shall furnish to Agent the original or a certified copy of a receipt
evidencing such payment.
(h) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section
4.14 shall survive the termination of the Commitments and the payment in full of
the Notes.
4.15 Replacement of Lenders. If deposits in eurodollars shall not be
available to any Lender, or it shall be unlawful or impossible for any Lender to
make or maintain any Eurodollar Loan or the cost to any Lender of making or
maintaining Eurodollar Loans is increased by reason of any circumstance
specified in Section 4.9(a) or (b) or if any Lender asserts the right to
indemnity under Section 4.14 or Borrower is required to pay additional amounts
to or for the account of any Lender pursuant to Section 4.14, or with respect to
any Defaulting Lender, Borrower shall have the right, if no Default exists or
will exist immediately after giving effect to the respective replacement, to
replace such affected Lender or Defaulting Lender (the "Replaced Lender"), upon
ten (10) days' written notice to Agent, with one or more other Eligible Assignee
or Assignees (collectively, the "Replacement Lender"); provided, that no
assignment shall be required if the consummation of such assignment conflicts
with any Applicable Law. Neither Agent nor any Lender shall be obligated to
assist Borrower in identifying any Eligible Assignees that are willing to become
a Replacement Lender. At the time of any replacement pursuant to this Section
4.15, the Replacement Lender shall enter into an Assignment and Acceptance (with
all fees payable pursuant to Section 12.18 to be paid by the Replacement Lender)
pursuant to which the Replacement Lender shall acquire all of the Commitment and
outstanding Extensions of Credit of the Replaced Lender and in connection
therewith, shall pay on the effective date of the corresponding Assignment and
Acceptance to the Replaced Lender an amount equal to the sum of (i) the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Lender and (ii) all accrued but unpaid fees owing to the Replaced Lender
pursuant to Section 4.3 and (iii) all other obligations of Borrower owing to the
Replaced Lender. Upon the execution of such Assignment and Acceptance, the
payment of amounts referred to in clauses (i), (ii) and (iii) above and delivery
to the Replacement Lender of a new Note executed by Borrower, the Replacement
Lender shall become a Lender hereunder and the Replaced Lender shall cease to
constitute a Lender hereunder, except with respect to the indemnification
provisions under this Agreement, which shall survive as to such Replaced Lender
and in the case of a replacement of a Replaced Lender with an existing Lender,
the Commitment Percentage of such Lender shall be automatically adjusted at such
time to give effect to such replacement.
ARTICLE V - FINANCIAL INFORMATION AND REPORTS
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, the Credit Parties will
furnish or cause to be furnished to Agent at Agent's Office at the address set
forth on the signature page of this Agreement and to Lenders at their respective
addresses as set forth on the signature page to this Agreement or such other
office as may be designated by Agent and Lenders from time to time:
5.1 Financial Statements and Projections.
(a) Monthly or Quarterly Financial Statements.
28
(i) Monthly Financial Statements. Commencing with the first full month
after the Completion Date and continuing for the first twelve months after
the Completion Date, as soon as practicable and in any event within thirty
(30) days after the end of each month, an unaudited balance sheet of
Borrower as of the close of such month and unaudited statements of income
and expenses and cash flow for the month then ended and that portion of the
Fiscal Year then ended, all in reasonable detail and prepared by Borrower
in accordance with GAAP (without footnotes) and certified by an executive
officer of Borrower to present fairly in all material respects the
financial condition of Borrower as of their respective dates and the
results of operations of Borrower for the respective periods then ended,
subject to normal year end adjustments.
(ii) Quarterly Financial Statements. With respect to each quarter
ending after the date which is twelve months after the Completion Date, as
soon as practicable and in any event within forty-five (45) days after the
end of each quarter, an unaudited consolidated balance sheet of the Parent
and its Subsidiaries as of the close of such quarter and unaudited
consolidated statements of income and expenses and cash flow for the
quarter then ended and that portion of the Fiscal Year then ended, all in
reasonable detail and prepared by the Parent and its Subsidiaries in
accordance with GAAP (without footnotes) and certified by an executive
officer of Parent to present fairly in all material respects the financial
condition of the Parent and its Subsidiaries as of their respective dates
and the results of operations of the Parent and its Subsidiaries for the
respective periods then ended, subject to normal year end adjustments.
(Delivery to each Lender of the Parent's quarterly report on Form 10Q with
respect to any fiscal quarter within forty-five (45) days after the end of
such fiscal quarter shall be deemed to be compliance with this Section
5.1(a)(ii).)
(b) Annual Financial Statements. As soon as practicable and in any event
within one hundred twenty (120) days after the end of each Fiscal Year,
commencing with Fiscal Year ending September 30, 1997, an audited consolidated
balance sheet of the Parent and its Subsidiaries as of the close of such Fiscal
Year and audited consolidated statements of income and expenses, retained
earnings and cash flows for the Fiscal Year then ended, including the notes
thereto, all in reasonable detail and prepared in accordance with GAAP and
accompanied by a report thereon prepared by Ernst & Young LLP, or another
independent certified public accounting firm reasonably acceptable to Agent,
that such financial statements are not qualified with respect to scope
limitations imposed by the Parent and its Subsidiaries or with respect to
accounting principles followed by the Parent and its Subsidiaries not in
accordance with GAAP. (Delivery to each Lender of the Parent's annual report on
Form 10K with respect to any Fiscal Year within one hundred twenty (120) days
after the end of such Fiscal Year shall be deemed to be compliance with this
Section 5.1(b).)
(c) Clinical Procedures Report. At each time financial statements are
delivered pursuant to Sections 5.1(a) or (b) and at such other times as Agent
shall reasonably request, a certificate of an executive officer of Borrower
setting forth the types of clinical procedures performed during such period, the
number of the clinical procedures performed during such period, the patient days
related to the clinical procedures performed during such period and any other
operating statistics reasonably requested by Agent, in a form prepared by
Borrower in the ordinary course of its business.
29
(d) SEC Reports. Promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed
with the Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with any
national securities exchange.
(e) Other Information. Such other information regarding the operations,
business affairs and financial condition of Borrower as Agent may reasonably
request. The form of monthly, quarterly and annual financial statements
previously furnished by Parent to Agent are acceptable to Agent.
5.2 Officer's Compliance Certificate. At each time financial statements are
delivered pursuant to Sections 5.1(a)(ii) or (b) and at such other times as
Agent shall reasonably request, a certificate of the chief financial officer or
the treasurer of Parent in the form of Exhibit H attached hereto (an "Officer's
Compliance Certificate"):
(a) stating that such officer has reviewed such financial statements
and, to the best of his knowledge, such financial statements fairly present
the financial condition of the Parent and its Subsidiaries as of the dates
indicated and the results of its operations and cash flows for the periods
indicated;
(b) stating that to such officer's knowledge, based on a reasonable
examination, no Default exists, or, if such is not the case, specifying
such Default and its nature, when it occurred, whether it is continuing and
the steps being taken by Borrower and the Guarantors with respect to such
Default;
(c) stating that Parent, Borrower and each of the Guarantors was in
compliance with the covenants and restrictions set forth in Articles VI,
VII and VIII of this Agreement applicable to Parent, Borrower or the
Guarantors; and
(d) setting forth any other information reasonably required by Agent
to ensure compliance with this Agreement.
5.3 Other Reports.
(a) Permitted Payment Certificate. Within forty-five (45) days after the
end of each quarter with respect to which Borrower desires to make any permitted
distribution pursuant to Section 8.8 or (B) any permitted payment pursuant to
Section 8.9, a certificate of the chief financial officer or the treasurer of
Borrower:
(i) stating that such officer has reviewed the most recent financial
statements of Borrower and such financial statements fairly present the
financial condition of Borrower as of the dates indicated and the results
of its operations and cash flows for the periods indicated;
(ii) setting forth as at the end of such quarter or Fiscal Year, as
the case may be, the calculations required to establish whether or not
Borrower was in compliance with the requirements set forth in such Sections
8.8 and 8.9, as of the end of such period; and
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(iii) setting forth any other information reasonably required by Agent
to ensure compliance with this Agreement.
(b) Other Reports. Such other information regarding the operations,
business affairs and financial condition of Borrower as Agent or any Lender may
reasonably request.
5.4 Accuracy of Information. All written information, reports, statements
and other papers and data furnished by or on behalf of Borrower to Agent or any
Lender pursuant to this Agreement, or any of the Security Documents, shall be,
at the time the same is so furnished, complete and correct in all material
respects to the extent necessary to give Agent or any Lender complete, true and
accurate knowledge of the subject matter based on Borrower's knowledge thereof.
ARTICLE VI - COVENANTS AND AGREEMENTS
6.1 Plans. Borrower assumes full responsibility for the compliance of the
Plans and the Property with all laws, governmental requirements and sound
building and engineering practices. No construction shall be undertaken on the
Land except as shown in the Plans, as revised to reflect Permitted Changes. No
plans or specifications, or any changes thereto, shall be included as part of
the Plans until consented to by Agent in its discretion reasonably exercised,
and reasonably approved by Construction Consultant, all applicable governmental
authorities, and all parties required under the Loan Documents.
6.2 Contracts. Without Agent's prior written reasonable approval as to
parties, terms and all other matters, Borrower shall not (a) enter into any
Material Contract for the performance of any work or the supplying of any labor,
materials, or services for the design or construction of the Improvements other
than the contract with Xxxxxx Construction Company, Inc. or the contract for
architectural services with Xxxxxxxxxx, Durham & Xxxxxxxxxx, Inc., (b) enter
into any management or leasing contract pertaining to the Property not described
in clause (a) preceding that is not unconditionally terminable by Borrower or
any successor owner without penalty or payment on not more than thirty (30) days
notice to the other party thereunder, or (c) materially modify, amend, or
terminate any such contracts except for Permitted Changes. All such contracts
shall provide that all liens of the applicable contractor, architect, supplier,
surveyor or other party and any right to remove removable Improvements are or
will be subordinate to rights of Agent and Lenders, and shall provide that no
change order shall be effective without the prior written reasonable consent of
Agent except for Permitted Changes. Borrower shall not default under any
Material Contract, Borrower shall not permit any Material Contract to terminate
by reason of any failure of Borrower to perform thereunder, and Borrower shall
promptly notify Agent of any material default thereunder. Borrower will deliver
to Agent, upon request of Agent, the names of all persons or entities with whom
each contractor has contracted or intends to contract for the construction of
the Improvements or for the furnishing of labor or materials therefor.
6.3 Construction of the Improvements. Borrower shall prosecute the
construction of the Improvements with diligence and continuity, in a good and
workmanlike manner, and in accordance with sound building and engineering
practices, all applicable laws and governmental
31
requirements, the Loan Documents, and the Plans. Borrower shall not permit
cessation of work for a period in excess of twenty (20) days (whether or not
consecutive), except for Excusable Delays. Borrower shall complete construction
of the Improvements, and shall obtain a permanent unconditional certificate of
occupancy and all other permits, licenses, and approvals for the occupancy, use
and operation of the Improvements from all applicable governmental authorities
on or before the Completion Date, free and clear of all Liens except (i) as
granted under the Loan Documents and (ii) other Liens for an aggregate amount of
not more than $250,000 and which are dismissed, discharged, stayed, bonded off
or quashed within thirty (30) days of issuance. Borrower shall correct promptly
(a) any material defect in the Improvements, (b) any material departure from the
Plans,except with respect to Permitted Changes, or governmental requirements, or
(c) any encroachment by any Improvements or structure on any building setback
line, easement, property line or restricted area. All increases in the cost of
constructing the Improvements which result from Permitted Changes shall be
applied against the $1,000,000 building contingency in the Budget and, to the
extent such increases exceed $1,000,000, shall be paid by Borrower from its own
funds.
6.4 Changes. Without Agent's prior written consent, not to be unreasonably
withheld, Borrower shall not change or modify the Plans, agree to any change
order, or allow any extras to any contractor or any subcontractor, except with
respect to Permitted Changes. Agent shall not be obligated to review a proposed
change which requires Agent's consent unless it has received all documents
necessary to review such change, such as the change order, cost estimates, plans
and specifications, and evidence that all approvals by all applicable parties
have been obtained.
6.5 Storage of Materials. Except as provided in Exhibit F, Borrower shall
cause all materials supplied for, or intended to be utilized in the construction
of the Improvements, but not yet affixed to or incorporated into the
Improvements on the Land, to be stored on the Land with adequate safeguards as
required by Agent to prevent loss, theft, damage or commingling with other
materials or projects.
6.6 Inspection. Agent may enter upon the Property to inspect the Property
and any materials at any reasonable time and provided no uncured Default exists,
upon reasonable notice to Borrower. Borrower will furnish to Agent at any time
for inspection and copying all Plans, shop drawings, specifications, books and
records, and other documents and information required by Lenders. Agent will use
its best efforts not to unreasonably interfere with the construction of the
Improvements. Borrower and Construction Consultant will cooperate with the
General Contractor in the performance of such inspections in order to use their
best efforts to keep construction on schedule.
6.7 Notice to Lender. Borrower shall promptly notify Lenders in writing of
any of the following events, specifying in each case the action Borrower has
taken or will take with respect thereto: (a) any violation of any law or
governmental requirement, the violation of which could reasonably be expected to
have a Material Adverse Effect; (b) any litigation, arbitration or governmental
investigation or proceeding instituted or threatened in writing against Borrower
or any Guarantor or the Property or any material development therein which if
adversely determined could reasonably be expected to have a Material Adverse
Effect; (c) any actual or threatened condemnation of any portion of the
Property, any negotiations with respect to any such taking, or any loss of or
substantial damage to the Property; (d) any labor controversy pending or
threatened against Borrower or any contractor or any material development in any
labor controversy which if adversely determined could reasonably be expected to
have a Material Adverse Effect; (e) any
32
notice received by Borrower with respect to the cancellation, alteration or
non-renewal of any insurance coverage maintained with respect to the Property;
or (f) any failure by Borrower or any contractor to perform any material
obligation under any construction contract, any event or condition which would
permit termination of a construction contract or suspension of work thereunder,
or any notice given by Borrower or any contractor with respect to any of the
foregoing.
6.8 Assignment of Contracts and Plans. As additional security for the
payment of the Loan, Borrower hereby transfers and assigns to Agent for the
benefit of Lenders all of Borrower's rights and interest, but not its liability,
in, under, and to all construction, architectural and design contracts, and the
Plans, and agrees that all of the same are covered by the security agreement
provisions of the Mortgage. Borrower represents and warrants that the copy of
any contract furnished or to be furnished to Lenders is and shall be a true and
complete copy thereof, that the copies of the Plans delivered to Lenders are and
shall be true and complete copies of the Plans, that there have been no
modifications thereof which are not fully set forth in the copies delivered, and
that, to Borrower's knowledge, Borrower's interest therein is not subject to any
claim, setoff, or encumbrance. Neither this assignment nor any action by Agent
or Lenders shall constitute an assumption by Agent or Lenders of any obligation
under any contract or with respect to the Plans (unless expressly done so
pursuant to the Collateral Assignment of Construction Contract and the Consent
of Contractor to Collateral Assignment of Construction Contract attached thereto
as Exhibit B or the Collateral Assignment of Architect's Contract and the
Consent of Architect to Collateral Assignment of Architect's Contract attached
thereto as Exhibit B), and Borrower shall continue to be liable for all
obligations of Borrower with respect thereto, Borrower hereby agreeing to
perform all of its obligations under any contract when and if due. Agent, on
behalf of Lenders shall have the right at any time (but shall have no
obligation) to take in its name or in the name of Borrower such action Lender
may determine necessary to cure any default under any contract or with respect
to the Plans or to protect the rights of Borrower or Lenders with respect
thereto. Neither Agent nor Lenders shall incur any liability if any action so
taken by Agent or on its behalf shall prove to be inadequate or invalid.
Borrower indemnifies and holds Agent and Lenders harmless against and from any
loss, cost, liability or expense (including, but not limited to, attorneys' fees
and expenses) incurred in connection with Borrower's failure to perform such
contracts or any action taken by Agent absent gross negligence or willful
misconduct. Lender may use the Plans for any purpose relating to the
Improvements, subject to the terms of this Agreement, Collateral Assignment of
Construction Contract and the Consent of Contractor to Collateral Assignment of
Construction Contract attached thereto and Collateral Assignment of Architect's
Contract and Consent of Architect to Collateral Assignment of Architect's
Contract attached thereto. Borrower irrevocably constitutes and appoints Lender
as Borrower's attorney-in-fact, which power of attorney shall be irrevocable and
coupled with an interest, in Borrower's name or in Lender's name to enforce,
during the period any uncured Default, all rights of Borrower under any contract
or with respect to the Plans.
6.9 Advertising by Lenders. At Lenders' request and expense, Borrower shall
erect and maintain on the Property one or more advertising signs approved by
Agent and Borrower indicating that the construction financing for the Property
has been provided by Lenders.
6.10 Annual Appraisal. During the period of any uncured Default and at any
other time required by any Governmental Authority having jurisdiction over Agent
or any Lender, Agent may obtain at Borrower's expense once in each calendar year
an appraisal of any part of the Property prepared in accordance with written
instructions from Agent by a third-party appraiser
33
engaged directly by Agent. Each such appraiser and appraisal shall be
satisfactory to Agent (including satisfaction of applicable regulatory
requirements). The cost of each such appraisal shall be due and payable by
Borrower on demand and shall be secured by the Loan Documents.
6.11 Construction Consultant. Borrower shall cooperate with Construction
Consultant and will furnish Construction Consultant whatever Construction
Consultant considers necessary or useful to perform its duties. The duties of
Construction Consultant run solely to Agent and Lenders, and Construction
Consultant shall have no obligations or responsibilities whatsoever to Borrower,
Borrower's architect, engineer, General Contractor or to any of their agents or
employees. Construction Consultant may, among other duties, perform construction
cost analyses, review the Plans, all proposed changes in them, observe work in
place, and review Draw Requests. Unless prohibited by applicable law, the fees,
costs, and expenses of Construction Consultant shall be paid by Borrower,
subject to the limitations of Section 12.7. Agent shall use its best efforts to
ensure that the Construction Consultant acts promptly in the discharge of his
duties in order to facilitate construction as scheduled.
6.12 Reports and Vouchers. Borrower shall (a) promptly deliver to Agent
copies of all reports, studies, inspections and tests made on the Land, the
Improvements or the materials to be incorporated into the Improvements; (b) make
additional tests Agent reasonably requires; and (c) deliver to Agent, on demand,
any contracts, bills of sale, statements, receipted vouchers or agreements under
which Borrower claims title to any materials, fixtures or articles incorporated
or to be incorporated in the Improvements or otherwise subject to a lien or
security interest in favor of Agent for the benefit of Lenders. Borrower shall
immediately notify Agent of such report, study, inspection or test that
indicates any material adverse condition in the Land or the Improvements.
6.13 Representations and Warranties. To induce Lenders to make the Loans,
Borrower hereby represents and warrants to Lenders that (a) the Mortgage, and
the rights of Agent and Lenders thereunder will have priority over all other
Liens on the Land or Improvements, including, without limitation, any mechanic's
or materialman's lien or similar lien; (b) to the extent required by applicable
law, Borrower and Guarantors have filed all necessary tax returns and reports
and have paid all taxes and governmental charges thereby shown to be owing; (c)
the Plans are being finalized and when completed will contain all detail
necessary and are adequate for the construction of the Improvements, and will
comply with the Loan Documents, all applicable laws, restrictive covenants, and
governmental requirements, rules, and regulations; (d) the Land is not part of a
larger tract of land owned by Borrower or its affiliates or any Guarantor and is
not otherwise included under any unity of title or similar covenant with other
lands not encumbered by the Mortgage, and Borrower has obtained a separate tax
lot or lots with a separate tax assessment or assessments for the Land and
Improvements, independent of any other lands or improvements; (e) the Land and
Improvements comply with all laws and governmental requirements, including all
subdivision and platting requirements, without reliance on any adjoining or
neighboring property, the violation of which could reasonably be expected to
have a Material Adverse Effect; (f) the Plans do and the Improvements when
constructed will comply with all legal requirements regarding access and
facilities for handicapped or disabled persons; (g) Borrower has not directly or
indirectly conveyed, assigned or otherwise disposed of or transferred (or agreed
to do so) any development rights, air rights or other similar rights, privileges
or attributes with respect to the Property, including those arising under any
zoning or land use ordinance or other law or governmental requirement; (h) the
construction schedule for the Project is realistic and the Completion Date is a
reasonable estimate of the time required to complete the
34
Project; and (i) the Financial Statements delivered to Agent are true and
correct, and there has been no material change of Borrower's financial condition
from the financial condition of Borrower indicated in such Financial Statements.
6.14 Ownership of Borrower. AHH Management, Inc., a wholly-owned Subsidiary
of Parent, shall own fifty-one percent (51%) of Borrower and shall act as the
general, managing member of Borrower, Arizona Heart Institute, an Arizona
professional association, wholly-owned by Xxxxxx X. Xxxxxxxxx, M.D., shall own
not less than twenty-five percent (25%) of Borrower and shall be a limited
member of Borrower and other individuals, principally physicians associated with
or employed by the Arizona Heart Institute, shall, directly or indirectly, own
the remaining equity interest in Borrower and shall be limited members of
Borrower.
6.15 Equipment Financing. Borrower shall secure a binding commitment from a
third party lender (an "Equipment Lender") to finance the purchase or lease by
Borrower of the equipment to be included within the Project, such commitment to:
(a) Be secured by Borrower in writing within nine (9) months following
the Closing Date;
(b) Provide for an interest rate not to exceed the Five Year US
Treasury Yield plus 6%;
(c) Provide for financing for a term of not less than thirty-six (36)
months or more than one hundred twenty (120) months; and
(d) Provide for financing in an amount equal to not less than eighty
percent (80%) or more than one hundred percent (100%) of the cost of the
equipment.
ARTICLE VII - FINANCIAL COVENANTS OF GUARANTORS
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, the Guarantors will not:
7.1 Fixed Charge Ratio. As of the end of any quarter, permit the ratio of
(a) EBITDA plus Lease Expense for the period of four consecutive quarters ending
on such quarter-end date to (b) the sum of (x) for such four-quarter period (A)
Interest Expense, (B) Lease Expense and (C) Replacement Capital Expenditures
plus (y) as of such quarter end, current maturities of long-term Debt (excluding
all balloon payments with respect to any loan to any Subsidiary of the Parent,
the proceeds of which are or have been used to construct a hospital facility
(collectively, the "Hospital Loans") and the current portion due under Capital
Leases to be less than 1.35 to 1.0. (Compliance with this covenant shall be
determined on a consolidated basis for the Parent and its Consolidated
Subsidiaries).
7.2 Debt to Capitalization Ratio. As of the end of any quarter, permit the
ratio of (a) Modified Consolidated Senior Funded Debt to (b) Total
Capitalization to exceed .65 to 1.0.
35
7.3 Leverage Ratio. As of the end of any quarter, permit the Leverage Ratio
to exceed 3.50 to 1.0.
7.4 Consolidated Net Worth. As of the end of any quarter, permit
Consolidated Tangible Net Worth to be less than the sum of (a) $50,000,000 plus
(b) fifty percent (50%) of cumulative Consolidated Net Income (if positive)
after the Closing Date.
7.5 Liquid Assets. As of any quarter end, permit their Liquid Assets to be
less than $20,000,000 prior to the issuance of a final certificate of occupancy
with respect to the Improvements or less than $15,000,000 thereafter.
ARTICLE VIII - NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, Borrower will not:
8.1 Debt Service Coverage Ratio. As of the end of each quarter, commencing
on the first full quarter following the Completion Date, permit the ratio of
Borrower's (a) Adjusted EBITDA for such fiscal quarter to (b) Adjusted Debt
Service for such fiscal quarter to be less than the corresponding ratio set
forth below:
Period Ratio
------ -----
First Full Quarter following 0.20 to 1.00
the Completion Date
Second Full Quarter following 0.65 to 1.00
the Completion Date
Third Full Quarter following 1.00 to 1.00
the Completion Date
Fourth Full Quarter following 1.30 to 1.00
the Completion Date and
Thereafter
8.2 Limitations on Debt. Create, incur, assume or suffer to exist any Debt
except:
(a) the Obligations;
(b) Debt to the Equipment Lenders in an aggregate principal amount not
to exceed $20,000,000; provided that if requested, Borrower shall deliver
to Agent an Equipment Lender Agreement in form and substance acceptable to
Agent.
36
(c) Debt incurred in connection with a Hedging Agreement with a
counterparty and upon terms and conditions reasonably satisfactory to
Agent;
(d) Subordinated Debt to the Parent evidencing the loan by the Parent
to Borrower of the Project Equity in an aggregate principal amount of not
less than $6,886,000; and
(e) Subordinated Debt to the Parent incurred for short-term working
capital purposes in an aggregate principal amount not to exceed $6,500,000
less outstanding Working Capital Loans.
8.3 Limitations on Contingent Obligations. Create, incur, assume or
suffer to exist any Contingent Obligations except Contingent Obligations in
favor of Agent for the benefit of Agent and Lenders.
8.4 Limitations on Liens. Create, incur, assume or suffer to exist,
any Lien on or with respect to any of Borrower's assets or properties, real or
personal, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of
Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired;
(b) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation;
(c) Liens in favor of Agent for the benefit of Agent and Lenders;
(d) encumbrances on and exceptions to title contained in the Title
Policy;
(e) Liens securing Debt permitted under Section 8.2(b);
(f) Liens in favor of Parent securing Subordinated Debt owed to Parent
to the extent permitted hereunder; and
(g) other Liens which are being contested by Borrower in good faith
and which are dismissed, discharged, stayed, bonded off or quashed within
thirty (30) days of issuance.
8.5 Limitations on Loans, Advances, Investments and Acquisitions. Purchase,
own, invest in or otherwise acquire, directly or indirectly, any capital stock,
interests in any partnership, limited liability company or joint venture,
evidence of Debt or other obligation or security, substantially all or a portion
of the business or assets of any other Person or any other investment or
interest whatsoever in any other Person, or make or permit to exist, directly or
indirectly, any loans, advances or extensions of credit to, or any investment in
cash or by delivery of property in, any Person, or enter into, directly or
indirectly, any commitment or option in respect of the foregoing except
investments in (i) marketable direct obligations issued or unconditionally
37
guaranteed by the United States of America or any agency thereof maturing within
120 days from the date of acquisition thereof, (ii) commercial paper maturing no
more than 120 days from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc. or Xxxxx'x Investors Service, Inc.,
(iii) certificates of deposit maturing no more than 120 days from the date of
creation thereof issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $500,000,000 and having a rating of "A" or better by a
nationally recognized rating agency; provided, that the aggregate amount
invested in such certificates of deposit shall not at any time exceed $5,000,000
for any one such certificate of deposit and $10,000,000 for any one such bank,
or (iv) time deposits maturing no more than 30 days from the date of creation
thereof with commercial banks or savings banks or savings and loan associations
each having membership either in the FDIC or the deposits of which are insured
by the FDIC and in amounts not exceeding the maximum amounts of insurance
thereunder.
8.6 Limitations on Liquidation. Consolidate or enter into any similar
combination with any other Person or liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution).
8.7 Limitations on Sale of Assets. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, the sale of any receivables and leasehold interests and any
sale-leaseback or similar transaction), whether now owned or hereafter acquired
except (i) the sale of obsolete assets no longer used or usable in the business
of Borrower and (ii) assets which are replaced in the ordinary course of
business and other assets the fair market value of which shall not exceed
$500,000 with respect to any transaction and $2,000,000 in the aggregate for all
such transactions during the term of this Agreement.
8.8 Limitations on Distributions. Purchase, redeem, retire or otherwise
acquire, directly or indirectly, any of its ownership or equity interests, or
make any distribution of cash, property or assets among the holders of its
ownership or equity interests or make any payment of principal on any
Subordinated Debt; provided that:
(a) So long as no Default shall have occurred and be continuing,
Borrower may make distributions to its equityholders, not otherwise
permitted hereunder, in an aggregate amount not to exceed $200,000 during
the term of this Agreement and provided such distributions are documented
to Agent;
(b) so long as no Default shall have occurred and be continuing,
Borrower may make quarterly distributions to its equityholders who are
required to pay taxes on their pro rata share of the income of Borrower in
an aggregate amount to an equityholder not to exceed in any year the amount
of the income tax liability incurred by such equityholder as a result of
the reporting of Borrower's income, deductions, gains or losses on such
equityholder's federal or state income tax return and based on the highest
combined federal and state tax rate, such distributions to be documented to
Agent; and
(c) Borrower may declare or make distributions to its equityholders to
the extent not otherwise permitted hereunder or redeem the membership
interests of its equityholders to the extent provided for in the Operating
Agreement of Borrower, as in
38
effect on the date of this Agreement or as subsequently amended with the
prior written consent of the Required Lenders, not to be unreasonably
withheld, upon satisfaction of the following conditions:
(i) no such distributions or payments shall be permitted prior to
the date which is nine (9) months following the Completion Date;
(ii) no Default shall have occurred and be continuing;
(iii) Borrower shall have a cash balance of at least $2,000,000
as of the end of the Business Day on which any such distribution is
made (herein, the "Permitted Distribution Date") (such cash balance to
exist after the disbursement of (i) all operating expenses due and
payable as of the Permitted Distribution Date, (ii) principal and
interest on any Senior Debt due and payable as of the Permitted
Distribution Date, (iii) principal and interest on any Subordinated
Debt due and payable as of the Permitted Distribution Date and (iv)
any other permitted distributions due and payable as of such date);
(iv) the aggregate amount of distributions made or declared
pursuant to this Section 8.8 and the payments distributed pursuant to
Section 8.9 during any quarter of Borrower shall not exceed the Cash
Flow Available for Distribution less (i) the amount by which Cash Flow
Available for Distribution was negative and (ii) all prior
distributions; and
(v) Borrower shall deliver to Agent, as required by Section
5.3(a), a certificate in form and substance satisfactory to Agent
demonstrating compliance by Borrower with the requirements set forth
in this Section 8.8.
8.9 Amendments; Payments and Prepayments of Subordinated Debt. Amend or
modify (or permit the modification or amendment of) any of the terms or
provisions of any Subordinated Debt if less favorable to Borrower, or cancel or
forgive, make any voluntary or optional payment or prepayment on, or redeem or
acquire for value (including without limitation by way of depositing with any
trustee with respect thereto money or securities before due for the purpose of
paying when due) any Subordinated Debt except that Borrower may make scheduled
interest payments on Subordinated Debt provided no Default shall have occurred
and be continuing and may, upon satisfaction of the following conditions, make
other payments on Subordinated Debt:
(a) no such payments shall be permitted prior to date which is nine
(9) months following the Completion Date;
(b) no Default shall have occurred and be continuing;
(c) Borrower shall have a cash balance of at least $2,000,000 as of
the end of the Business Day on which any such payment is made (herein, the
"Permitted Payment Date") (such cash balance to exist after the
disbursement of (i) all operating expenses due and payable as of the
Permitted Payment Date, (ii) principal and interest on any Senior Debt due
and payable as of the date of such payment, (iii) principal and interest on
any Subordinated Debt due and payable as of the Permitted Payment Date,
(iv) distributions
39
permitted under this Agreement and distributed as of the Permitted Payment
Date, and (v) any other permitted distributions due and payable as of such
date);
(d) the aggregate amount of payments distributed pursuant to this
Section 8.9 and the payments distributed pursuant to Section 8.8 during the
during any fiscal quarter of Borrower shall not exceed the Cash Flow
Available for Distribution less (i) the amount by which Cash Flow Available
for Distribution was negative and (ii) all prior distributions; and
(e) Borrower shall deliver to Agent, as required pursuant to Section
5.3(a), a certificate in form and substance satisfactory to Agent and
demonstrating compliance by Borrower with the requirements set forth in
this Section 8.9.
8.10 Prohibited Transactions. Except as disclosed on Schedule 8.10 attached
hereto, directly or indirectly: (a) make any loan or advance to, or purchase or
assume any note or other obligation to or from, any of its officers, members,
managers or other Affiliates, or to or from any member of the immediate family
of any of its officers, members, managers, shareholders or other Affiliates, or
subcontract any operations to any of its Affiliates, other than in the ordinary
course of business, or (b) enter into, or be a party to, any transaction with
any of its Affiliates, other than in the ordinary course of business.
8.11 Restrictive Agreements. Enter into any Debt which contains any
negative pledge on assets or any covenants more restrictive than the provisions
hereof, or which restricts, limits or otherwise encumbers its ability to incur
Liens on or with respect to any of its assets or properties other than the
assets or properties securing such Debt.
ARTICLE IX - DEFAULT AND REMEDIES
9.1 Events of Default. Each of the following shall constitute a default
under this Agreement ("Default"), whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans. Borrower shall default
in any payment of principal of any Loan or Note when and as due (whether at
maturity, by reason of acceleration or otherwise), and such Default shall
continue unremedied for two (2) Business Days.
(b) Other Payment Default. Borrower shall default in the payment of
any interest on any Loan or Note when and as due (whether at maturity, by
reason of acceleration or otherwise), and such Default shall continue
unremedied for five (5) Business Days.
(c) Misrepresentation. Any representation or warranty made or deemed
to be made by Borrower or any Guarantor under this Agreement, any Loan
Document or any
40
amendment hereto or thereto, shall at any time prove to have been incorrect
or misleading in any material respect when made or deemed made, if such
default shall continue for a period of thirty (30) days after written
notice thereof has been given to Borrower by Agent.
(d) Default in Performance of Covenants and Conditions. Borrower or
any Guarantor shall default in the performance or observance of any term,
covenant, condition or agreement contained in this Agreement (other than as
specifically provided for otherwise in this Section 9.1) or any other Loan
Document and such default shall continue for a period of thirty (30) days
after written notice thereof has been given to Borrower by Agent.
(e) Change in Control. The occurrence of a Change in Control.
(f) Debt Cross-Default. Borrower or any Guarantor shall (i) default in
the payment of any Debt (other than the Notes or any Debt of Borrower or
any Guarantor with respect to any Hospital Loan or any Subordinated Debt or
any inter-company Debt) beyond the period of grace if any, provided in the
instrument or agreement under which such Debt was created and provided that
with respect to Parent only, such Debt exceeds an aggregate of $500,000 and
with respect to any other Guarantor, such Debt exceeds an aggregate of
$250,000, or (ii) default in the observance or performance of any other
agreement or condition relating to any Debt (other than the Notes) or
contained in any instrument or agreement evidencing, securing or relating
thereto or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Debt (or a trustee or agent on behalf of such
holder or holders) to cause, with the giving of notice if required, any
such Debt to become due prior to its stated maturity (any applicable grace
period having expired).
(g) Other Cross-Defaults. Borrower or any Guarantor shall default in
the payment when due, or in the performance or observance, of any
obligation or condition of any Material Contract and such default shall
continue beyond the period of grace, if any, provided in such Material
Contract unless, but only as long as, the existence of any such default is
being contested by Borrower or such Guarantor in good faith by appropriate
proceedings and adequate reserves in respect thereof have been established
on the books of Borrower or such Guarantor to the extent required by GAAP.
(h) Voluntary Bankruptcy Proceeding. Borrower or any Guarantor shall
(i) commence a voluntary case under the federal bankruptcy laws (as now or
hereafter in effect), (ii) file a petition seeking to take advantage of any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii)
consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws
or other laws, (iv) apply for or consent to, or fail to contest in a timely
and appropriate manner, the appointment of, or the taking of possession by,
a receiver, custodian, trustee, or liquidator of itself or of a substantial
part of its property, domestic or foreign, (v) admit in writing its
inability to pay its debts as they become due, (vi) make a general
assignment for the benefit of creditors, or (vii) take any corporate action
for the purpose of authorizing any of the foregoing.
41
(i) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against Borrower or any Guarantor in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws
(as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts, or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like for Borrower or any Guarantor or for all
or any substantial part of their respective assets, domestic or foreign,
and such case or proceeding shall continue undismissed or unstayed for a
period of sixty (60) consecutive days, or an order granting the relief
requested in such case or proceeding (including, but not limited to, an
order for relief under such federal bankruptcy laws) shall be entered.
(j) Failure of Agreements. Any provision of this Agreement or of any
other Loan Document shall for any reason cease to be valid and binding on
Borrower or other Person party thereto or any such Person shall so state in
writing, or this Agreement or any other Loan Document shall for any reason
cease to create a valid and perfected priority Lien on, or security
interest in, any of the collateral purported to be covered thereby, in each
case other than in accordance with the express terms hereof or thereof, the
priority of which shall be subject only to Permitted Liens.
(k) Judgment. A judgment or order for the payment of money which
causes the aggregate amount of all such judgments entered against Borrower
or any Guarantor (other than Parent) by any court in any Fiscal Year to
exceed $500,000 and in excess of an aggregate amount of $1,000,000 with
respect to Parent and such judgment or order shall continue unpaid,
undischarged or unstayed for a period of sixty (60) days.
(l) Certificate of Occupancy; Medicare Certification. Borrower shall
fail to obtain a final certificate of occupancy and Medicare Certification
within sixteen (16) months after the Closing Date or after the receipt
thereof, the Medicare Certification shall expire, terminate, be cancelled
or otherwise lost.
9.2 Remedies. Upon a Default, with the consent of the Required Lenders,
Agent may, and upon the request of the Required Lenders, Agent shall, do any one
or more of the following: (a) terminate the commitment to lend and any
obligation to disburse any sum from the Equity Account or Project Deposit
hereunder; (b) institute an action to reduce any claim to judgment; (c) exercise
any and all rights and remedies afforded by this Agreement, the other Loan
Documents, law, equity or otherwise; (d) set-off and apply, to the extent
thereof and to the maximum extent permitted by law, any and all deposits, funds,
or assets at any time held and any and all other indebtedness at any time owing
by Lenders to or for the credit or account of Borrower against any Indebtedness;
or (e) in its own name or in the name of Borrower, enter into possession of the
Property, perform all work necessary to complete the construction of the
Improvements substantially in accordance with the Plans, Loan Documents, laws,
and governmental requirements, and continue to employ Borrower's architect,
engineer, and any contractor pursuant to the applicable contracts or otherwise;
provided, upon the occurrence of a Default specified in Section 9.1(h) or (i),
the commitment to lend and any obligation to disburse any sum from the Equity
Account or Project Deposit shall be automatically terminated and all Obligations
shall automatically become due and payable. Borrower hereby appoints Agent as
the attorney-in-fact of Borrower, which power of attorney is irrevocable and
coupled with an interest, with full power of substitution and in the name of
Borrower, if Agent elects to do so, upon the occurrence of a Default, to (i) use
such sums as are necessary, including any proceeds of the Loan, Equity Account
42
and Project Deposit, make such changes or corrections in the Plans and employ
such architects, engineers, and contractors as may be required for the purpose
of completing the construction of the Improvements substantially in accordance
with the Plans, Loan Documents, laws and governmental requirements, or as
otherwise may be necessary or desirable for purposes of completing such
construction; (ii) execute all applications and certificates in the name of
Borrower which may be required for completion of construction of the
Improvements; (iii) endorse the name of Borrower on any checks or drafts
representing proceeds of any insurance policies, or other checks or instruments
payable to Borrower with respect to the Property; (iv) do every act with respect
to the construction of the Improvements which Borrower may do; (v) prosecute or
defend any action or proceeding incident to the Property, (vi) pay, settle, or
compromise all bills and claims so as to clear title to the Property; and (vii)
take over and use all or any part of the labor, materials, supplies and
equipment contracted for, owned by, or under the control of Borrower, whether or
not previously incorporated into the Improvements. Any amounts expended by Agent
or Lenders shall be a demand obligation owing by Borrower to Lenders. Lenders
shall have no liability to Borrower for the sufficiency or adequacy of any such
actions taken by Agent or Lender unless such actions constitute gross negligence
or willful misconduct on the part of Agent or Lenders.
ARTICLE X - AGENT
10.1 Appointment. Each of Lenders hereby irrevocably designates and
appoints NationsBank as Agent of such Lender under this Agreement and the other
Loan Documents and each such Lender irrevocably authorizes NationsBank as Agent
for such Lender, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to Agent by the terms of this Agreement
and such other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement or such other Loan Documents, Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against Agent.
10.2 Delegation of Duties. Agent may execute any of its respective duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by Agent
with reasonable care.
10.3 Exculpatory Provisions. Neither Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates
(including, without limitation, NationsBanc Capital Markets, Inc.) shall be (a)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or the other Loan Documents (except
for actions occasioned solely by its or such Person's own gross negligence or
willful misconduct), or (b) responsible in any manner to any of Lenders for any
recitals, statements, representations or warranties made by Borrower or any
officer thereof contained in this Agreement or the other Loan Documents or in
any certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, this
43
Agreement or the other Loan Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the other Loan
Documents or for any failure of Borrower to perform its obligations hereunder or
thereunder. Agent shall not be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement, or to inspect the properties,
books or records of Borrower.
10.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to Borrower), independent accountants and other experts
selected by Agent. Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless such Note shall have been transferred in
accordance with Section 12.18 hereof. Agent shall be fully justified in failing
or refusing to take any action under this Agreement and the other Loan Documents
unless it shall first receive such advice or concurrence of the Required Lenders
(or, when expressly required hereby or by the relevant other Loan Document, all
Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action except
for its own gross negligence or willful misconduct. Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the Notes in accordance with a request of the Required Lenders (or, when
expressly required hereby, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all Lenders and all
future holders of the Notes.
10.5 Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless it
has received notice from a Lender or Borrower referring to this Agreement,
describing such Default and stating that such notice is a "notice of default".
In the event that Agent receives such a notice, it shall promptly give notice
thereof to Lenders. Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until Agent shall have received such directions, Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default as it shall deem advisable in the best
interests of Lenders.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither Agent nor any of its respective officers, directors,
employees, agents, attorneys-in-fact, Subsidiaries or Affiliates (including,
without limitation, NationsBanc Capital Markets, Inc.) has made any
representations or warranties to it and that no act by Agent hereinafter taken,
including any review of the affairs of Borrower, shall be deemed to constitute
any representation or warranty by Agent to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Borrower and made its own decision to make its Loans. Each Lender also
represents that it will, independently and without reliance upon Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make
44
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of
Borrower. Except for notices, reports and other documents expressly required to
be furnished to Lenders by Agent hereunder or by the other Loan Documents, Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, financial
and other condition or creditworthiness of Borrower which may come into the
possession of Agent or any of its respective officers, directors, employees,
agents, attorneys-in-fact, Subsidiaries or Affiliates (including, without
limitation, NationsBanc Capital Markets, Inc.).
10.7 Indemnification. Lenders agree to indemnify Agent in its capacity as
such and (to the extent not reimbursed by Borrower and without limiting the
obligation of Borrower to do so), ratably according to the respective amounts of
their Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against Agent in any way relating to or
arising out of this Agreement or the other Loan Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by Agent under or
in connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from Agent's bad faith, gross negligence or willful misconduct.
The agreements in this Section 10.7 shall survive the payment of the Notes and
all other amounts payable hereunder and the termination of this Agreement.
10.8 Agent in Its Individual Capacity. Agent and its respective
Subsidiaries and Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with Borrower as though Agent were not
an Agent hereunder. With respect to any Loans made or renewed by it and any Note
issued to it, Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not an Agent, and the terms "Lender" and "Lenders" shall include Agent
in its individual capacity.
10.9 Resignation of Agent. Agent may resign at any time by giving prior
written notice thereof to Lenders and Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent, which
successor Agent shall, so long as no Default has occurred and is continuing, be
acceptable to MedCath, which acceptance shall not be unreasonably withheld. If
no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of Lenders, appoint a successor Agent which shall be an Eligible Assignee having
total assets of at least $25,000,000,000. Upon the acceptance of any appointment
as Agent under this Agreement by a successor, such successor shall thereupon
succeed to and become vested with all the rights, powers, discretion,
privileges, and duties of the retiring Agent upon written notice thereof to
Borrower, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement excepting with respect to its willful
misconduct or gross negligence occurring prior to its discharge. After any
retiring Agent's resignation under this Agreement as Agent, the provisions of
this Article 10 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
45
ARTICLE XI - GUARANTY
11.1 Guaranty of Payment. Subject to Section 11.11 hereof, each Guarantor
hereby unconditionally guarantees to Agent for the ratable benefit of Agent and
Lenders, and their respective successors, endorsees, transferees and assigns,
the prompt payment (whether at stated maturity, by acceleration or otherwise) of
all Obligations of Borrower, whether primary or secondary (whether by way of
endorsement or otherwise), whether now existing or hereafter arising, whether or
not from time to time reduced or extinguished (except by payment thereof) or
hereafter increased or incurred, whether or not recovery may be or hereafter
become barred by the statute of limitations, whether enforceable or
unenforceable as against Borrower, whether or not discharged, stayed or
otherwise affected by any bankruptcy, insolvency or other similar law or
proceeding, whether created directly with Agent or any Lender or acquired by
Agent or any Lender through assignment, endorsement or otherwise, whether
matured or unmatured, whether joint or several, as and when the same become due
and payable (whether at maturity or earlier, by reason of acceleration,
mandatory repayment or otherwise), in accordance with the terms of any such
instruments evidencing any such obligations, including all renewals, extensions
or modifications thereof.
11.2 Guaranty of Performance. Subject to Section 11.11, each Guarantor
additionally unconditionally guarantees to Agent for the ratable of Agent and
Lenders, and their respective successors, endorsees, transferees and assigns,
the timely performance of all other obligations of Borrower under the Loan
Documents, including, without limiting the generality of the foregoing, that:
(a) the Improvements will be constructed upon the Land in accordance
with this Agreement and the Plans; and
(b) the Improvements will be completed and ready for occupancy,
including delivery of any certificates required by law or this Agreement,
on or before the date required in this Agreement.
In the event the foregoing conditions are not complied with in any respect
whatsoever, Guarantors agree to (i) assume all responsibility for the completion
of the Improvements and, at Guarantors' own cost and expense, to cause the
Improvements to be fully completed in accordance with the Plans and in
accordance with this Agreement; (ii) pay all bills in connection with the
construction of the Improvements; and (iii) indemnify and hold Agent and Lenders
harmless from any and all loss, cost, liability or expense Agent or Lenders may
suffer by reason of any such event excepting with respect to willful misconduct
or gross negligence of Agent or Lenders. Agent shall accept performance by
Guarantors of Borrower's obligations under the Loan Documents, and so long as
all of said obligations are being performed by Borrower or Guarantors, Agent
will make the Construction Loan proceeds available under the terms of this
Agreement. If, after the occurrence of a Default, Agent, in its sole discretion,
is dissatisfied with the progress of construction by Borrower and/or Guarantors,
Agent may, at its option, and on behalf of Lenders, after first having given
notice to Guarantors at the address set forth below in the manner prescribed
herein for giving notice, complete the Improvements either before or after
commencement of foreclosure proceedings or before or after any other remedy of
Agent or Lenders against Borrower or Guarantors, with such changes or
modifications in the Plans which Agent reasonably deems necessary and expend
such sums as Agent, in its discretion, reasonably
46
deems necessary and proper in order to so complete the Improvements, and
Guarantors hereby waive any right to contest any such reasonably necessary
expenditures. The amount of any and all expenditures made by Agent for the
foregoing purposes shall be due and payable to Lenders upon demand and accrue
interest at a rate two percent (2%) per annum above the rate then applicable
under the Construction Loan Note (or that would be applicable under the
Construction Loan Note if it were still outstanding). Neither Borrower nor any
Guarantor shall be liable to Lenders for the cost of completing the Improvements
to the extent the aggregate cost of completing the Improvements exceeds the
Construction Loan Commitment. The obligations and liability of Guarantors under
this Section 11.2 shall not be limited or restricted by the existence of (or any
limitation on) the guaranty of payment under Section 11.1. (All Obligations of
Borrower to Agent or any Lender, including all of the Obligations specified in
Section 11.1 or this Section 11.2, shall be hereinafter collectively referred to
as the "Guaranteed Obligations."
11.3 Nature of Guaranty. Each Guarantor agrees that the guarantee provided
for in Section 11.2 is a continuing, unconditional guaranty of payment and
performance and not of collection, subject to the limitation on liability
provided below, and that its obligations hereunder shall be primary, absolute
and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement or any other Loan
Document or any other agreement, document or instrument to which Borrower
is or may become a party;
(b) the absence of any action to enforce this Agreement or any other
Loan Document or the waiver or consent by Agent or any Lender with respect
to any of the provisions of this Agreement or any other Loan Document;
(c) the existence, value or condition of, or failure to perfect its
Lien against, any security for or other guaranty of the Guaranteed
Obligations or any action, or the absence of any action, by Agent or any
Lender in respect of such security or guaranty (including, without
limitation, the release of any such security or guaranty); or
(d) any other action or circumstances which might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor;
it being agreed by each Guarantor that its obligations hereunder shall not be
discharged until the final and indefeasible payment and performance, in full, of
the Guaranteed Obligations and the termination of the Commitments. Each
Guarantor expressly waives all rights it may now or in the future have under any
statute (including without limitation North Carolina General Statutes Section
26-7, et seq. or similar law), or at law or in equity, or otherwise, to compel
Agent or any Lender to proceed in respect of the Guaranteed Obligations against
Borrower or any other party or against any security for or other guaranty of the
payment and performance of the Guaranteed Obligations before proceeding against,
or as a condition to proceeding against, such Guarantor. Each Guarantor further
expressly waives and agrees not to assert or take advantage of any defense based
upon the failure of Agent or any Lender to commence an action in respect of the
Guaranteed Obligations against Borrower, any Guarantor or any other party or any
security for the payment and performance of the Guaranteed Obligations. Each
Guarantor agrees that any notice or directive given at any time to Agent or any
Lender which is inconsistent with the waivers in the preceding two sentences
shall be null and void and may be ignored by Agent or Lender, and, in addition,
may not be pleaded or introduced as evidence in any litigation relating to the
guarantee
47
provided for in Section 11.2 for the reason that such pleading or introduction
would be at variance with the written terms hereof, unless Agent and the
Required Lenders have specifically agreed otherwise in writing. The foregoing
waivers are of the essence of the transaction contemplated by the Loan Documents
and, but for this guaranty and such waivers, Agent and Lenders would decline to
enter into this Agreement.
11.4 Demand by Agent. In addition to the terms set forth in Section 11.3,
and in no manner imposing any limitation on such terms, if all or any portion of
the then outstanding Guaranteed Obligations under this Agreement are declared to
be immediately due and payable, then Guarantors shall, upon demand in writing
therefor by Agent to the Guarantors, pay all or such portion of the outstanding
Guaranteed Obligations then declared due and payable. Payment by Guarantors
shall be made to Agent, to be credited and applied upon the Guaranteed
Obligations, in immediately available federal funds to an account designated by
Agent or at the address referenced herein for the giving of notice to Agent or
at any other address that may be specified in writing from time to time by
Agent.
11.5 Waivers. In addition to the waivers contained in Section 11.4, each
Guarantor waives, and agrees that it shall not at any time insist upon, plead or
in any manner whatever claim or take the benefit or advantage of, any appraisal,
valuation, stay, extension, marshalling of assets or redemption laws, or
exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by such Guarantor of its obligations
under, or the enforcement by Agent or Lenders of, this guaranty. Each Guarantor
further hereby waives diligence, presentment, demand, protest and notice of
whatever kind or nature with respect to any of the Guaranteed Obligations and
waives the benefit of all provisions of law which are or might be in conflict
with the terms of this guaranty. Each Guarantor represents, warrants and agrees
that its obligations under this guaranty are not and shall not be subject to any
counterclaims, offsets or defenses of any kind against Agent, Lenders or
Borrower whether now existing or which may arise in the future.
11.6 Benefits of Guaranty. The provisions of the guarantee under this
Article XI are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between Borrower, Agent and Lenders, the obligations of
Borrower under the Loan Documents. In the event all or any part of the
Guaranteed Obligations are transferred, endorsed or assigned by Agent or any
Lender to any Person or Persons, any reference to any "Agent" or "Lenders"
herein shall be deemed to refer equally to such Person or Persons.
11.7 Modification of Loan Documents etc. If Agent or Lenders shall at any
time or from time to time, with or without the consent of, or notice to,
Guarantors:
(a) change or extend the manner, place or terms of payment of, or
renew or alter all or any portion of, the Guaranteed Obligations;
(b) take any action under or in respect of the Loan Documents in the
exercise of any remedy, power or privilege contained therein or available
to it at law, in equity or otherwise, or waive or refrain from exercising
any such remedies, powers or privileges;
(c) amend or modify, in any manner whatsoever, the Loan Documents;
48
(d) extend or waive the time for performance by Guarantors, Borrower
or any other Person of, or compliance with, any term, covenant or agreement
(other than this guaranty) on its part to be performed or observed under a
Loan Document, or waive such performance or compliance or consent to a
failure of, or departure from, such performance or compliance;
(e) take and hold security or collateral for the payment of the
Guaranteed Obligations or sell, exchange, release, dispose of, or otherwise
deal with, any property pledged, mortgaged or conveyed, or in which Agent
or Lenders have been granted a Lien, to secure any Debt of Guarantors or
Borrower to Agent or Lenders;
(f) release anyone who may be liable in any manner for the payment of
any amounts owed by Guarantors or Borrower to Agent or any Lender;
(g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of
Guarantors or Borrower are subordinated to the claims of Agent or any
Lender; or
(h) apply any sums by whomever paid or however realized to any amounts
owing by Guarantors or Borrower to Agent or any Lender in such manner as
Agent or any Lender shall determine in its discretion;
then neither Agent nor any Lender shall incur any liability to Guarantors as a
result thereof, and no such action shall impair or release the obligations of
Guarantors hereunder.
11.8 Reinstatement. Each Guarantor agrees that, if any payment made by
Borrower or any other Person applied to the Obligations is at any time annulled,
set aside, rescinded, invalidated, declared to be fraudulent or preferential or
otherwise required to be refunded or repaid by Agent or any Lender to Borrower,
its estate, trustee, receiver or any other party, including, without limitation,
such Guarantor, under any Applicable Law or equitable cause, then, to the extent
of such payment or repayment, such Guarantor's liability hereunder shall be and
remain in full force and effect, as fully as if such payment had never been
made, and, if prior thereto, the guarantee provided for in this Article XI shall
have been canceled or surrendered, the guarantee shall be reinstated in full
force and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect the obligations of such Guarantor
in respect of the amount of such payment.
11.9 No Subrogation. Notwithstanding any payment or payments by any
Guarantor hereunder, or any set-off or application of funds of any Guarantor by
Agent or any Lender, or the receipt of any amounts by Lenders with respect to
any of the Guaranteed Obligations, Guarantors shall not be entitled to be
subrogated to any of the rights of Lenders against Borrower or any other
guarantor or against any collateral security held by Lenders for the payment of
the Guaranteed Obligations nor shall Guarantors seek any reimbursement from
Borrower or any other guarantor in respect of payments made by Guarantors in
connection with the Guaranteed Obligations, until all amounts owing to Agent or
Lenders on account of the Guaranteed Obligations are paid in full and the
Commitments are terminated. If any amount shall be paid to Guarantors on account
of such subrogation rights at any time when all of the Guaranteed Obligations
shall not have been paid in full, such amount shall be held by Guarantors in
trust for Lenders, segregated from other funds of
49
Guarantors, and shall, forthwith upon receipt by Guarantors, be turned over to
Lenders in the exact form received by Guarantors (duly endorsed by Guarantors to
Lenders, if required) to be applied against the Guaranteed Obligations, whether
matured or unmatured, in such order as determined by Lenders.
11.10 Remedies. Upon the occurrence of any Default, Agent may enforce
against any Guarantor its obligations and liabilities hereunder and exercise
such other rights and remedies as may be available to Agent hereunder, under the
Loan Documents or otherwise.
11.11 Limit of Liability.
(a) Effective with the Initial Adjustment Date and provided no Default
shall have occurred and be continuing on the Initial Adjustment Date, the
aggregate liability of Guarantors hereunder shall thereafter be limited to an
amount equal to fifty percent (50%) of the principal of and interest on
(including interest accruing after the filing of any bankruptcy or similar
petition) the Loans.
(b) The obligations of each Guarantor hereunder shall be limited to an
aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provisions of any applicable state law.
ARTICLE XII - GENERAL TERMS AND CONDITIONS
12.1 Usury Laws. Borrower, Agent, Lenders and all other parties to the Loan
Documents intend to conform to and contract in strict compliance with applicable
usury law from time to time in effect. All agreements between Borrower and
Lenders (or any other party liable with respect to any Indebtedness under the
Loan Documents) are hereby limited by the provisions of this Section which shall
override and control all such agreements, whether now existing or hereafter
arising. In no way, nor in any event or contingency (including but not limited
to prepayment, default, demand for payment, or acceleration of the maturity of
any obligation), shall the interest taken, reserved, contracted for, charged,
chargeable, or received under this Agreement, the Notes, any of the other Loan
Documents, or otherwise, exceed the maximum amount permitted under applicable
law ("Maximum Amount"). If, from any possible construction of any document,
interest would otherwise be payable in excess of the Maximum Amount, any such
construction shall be subject to the provisions of this Section and such
document shall ipso facto be automatically reformed and the interest payable
shall be automatically reduced to the Maximum Amount, without the necessity of
execution of any amendment or new document. If Lenders shall ever receive
anything of value which is characterized as interest under applicable law and
which would apart from this provision be in excess of the Maximum Amount, an
amount equal to the amount which would have been excessive interest shall,
without penalty, be applied to the reduction of the principal amount owing on
either Note in the inverse order of its maturity and not to the payment of
interest, or be refunded to Borrower or the other payor thereof, at the election
of Required Lenders in their sole discretion or as required by applicable law.
The right to accelerate maturity of the Notes or any other Indebtedness does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Lenders do not intend to charge or receive
any unearned interest in the event of acceleration. All interest paid or
50
agreed to be paid to Lenders shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full stated term
(including any renewal or extension) of such Indebtedness so that the amount of
interest on account of such Indebtedness does not exceed the Maximum Amount. As
used in this Section, the term "applicable law" shall mean the laws of the State
of North Carolina or the federal laws of the United States applicable to this
transaction, whichever laws allow the greater interest, as such laws now exist
or may be changed or amended or come into effect in the future.
12.2 Lenders' Consent. Except where otherwise expressly provided in the
Loan Documents, in any instance where the approval, consent or the exercise of
judgment of Lenders is required, the granting or denial of such approval or
consent and the exercise of such judgment shall be (a) within the sole
discretion of Lenders which discretion shall be exercised in a reasonable
manner; and (b) deemed to have been given only by a specific writing intended
for the purpose given and executed by Lender. Notwithstanding any approvals or
consents by Agent or Lenders, neither Agent nor Lender has any obligation or
responsibility whatsoever for the adequacy, form or content of the Plans, the
Budget, any contract, any change order, any lease, or any other matter incident
to the Property or the construction of the Improvements. Agent's acceptance of
an assignment of the Plans on behalf of Lenders shall not constitute approval of
the Plans. Any inspection or audit of the Property or the books and records of
Borrower, or the procuring of documents and financial and other information, by
or on behalf of Lenders shall be for Lenders' protection only, and shall not
constitute any assumption of responsibility to Borrower or anyone else with
regard to the condition, construction, maintenance or operation of the Property,
or relieve Borrower of any of Borrower's obligations. Borrower has selected all
surveyors, architects, engineers, contractors, materialmen and all other persons
or entities furnishing services or materials to the Project. Lenders have no
duty to supervise or to inspect the Property or the construction of the
Improvements nor any duty of care to Borrower or any other person to protect
against, or inform Borrower or any other person of, the existence of negligent,
faulty, inadequate or defective design or construction of the Improvements.
Lenders shall not be liable or responsible for any defect in the Property or the
Improvements, the performance or default of Borrower, Borrower's architect,
engineer, General Contractor, the Construction Consultant, or any other party,
or for any failure to construct, complete, protect or insure the Improvements,
or for the payment of costs of labor, materials, or services supplied for the
construction of the Improvements, or for the performance of any obligation of
Borrower whatsoever. Nothing, including any advance or acceptance of any
document or instrument, shall be construed as a representation or warranty,
express or implied, to any party by Lenders. Inspection shall not constitute an
acknowledgment or representation by Lenders or the Construction Consultant that
there has been or will be compliance with the Plans, Loan Documents, applicable
laws and governmental requirements or that the construction is free from
defective materials or workmanship. Inspection whether or not followed by notice
of Default shall not constitute a waiver of any Default then existing, or a
waiver of Lenders' right thereafter to insist that the Improvements be
constructed in accordance with the Plans, Loan Documents, applicable laws, and
governmental requirements. Lenders' failure to inspect shall not constitute a
waiver of any of Lenders' rights under the Loan Documents or at law or in
equity.
12.3 Miscellaneous. This Agreement may be executed in several counterparts,
all of which are identical, and all of which counterparts together shall
constitute one and the same instrument. The Loan Documents are for the sole
benefit of Lenders and Borrower and are not for the benefit of any third party.
A determination that any provision of this Agreement is unenforceable or invalid
shall not affect the enforceability or validity of any other provision and
51
the determination that the application of any provision of this Agreement to any
person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to other persons or
circumstances. Time shall be of the essence with respect to Borrower's
obligations under the Loan Documents. This Agreement, and its validity,
enforcement and interpretation, shall be governed by North Carolina law (without
regard to any conflict of laws principles) and applicable United States federal
law.
12.4 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address as to which all the other parties are
notified in writing.
If to Borrower: Arizona Heart Hospital, LLC
c/o AHH Management, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx XxXxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Guarantors: c/o MedCath Incorporated
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Post
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to: AHH Management, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Post
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Xxxxx & Xxx Xxxxx, PLLC
47th Floor
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
52
Attention: Xxx X. Xxxxxxxx
Telephone No.: 704/000-0000
Telecopy No.: 704/331-1159
If to NationsBank as
Agent: NationsBank Plaza, NC1-002-03-10
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Xx.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to: Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx
NationsBank Corporate Center, Suite 4200
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: J. Xxxxxxx Xxxxxxxx, Esq.
Telephone No.: 704/000-0000
Telecopy No.: 704/331-7598
If to any Lender: To the Address set forth on Schedule 1
hereto
(c) Agent's Office. Agent hereby designates its office located at the
address set forth above, or any subsequent office which shall have been
specified for such purpose by written notice to Borrower and Lenders, as
Agent's Office referred to herein, to which payments due are to be made and
at which Loans will be disbursed and Letters of Credit issued.
12.5 Termination. This Agreement shall continue in full force and effect
until the Indebtedness is paid in full; and all representations and warranties
and all provisions herein for indemnity of Agent or Lenders (and any other
provisions herein specified to survive) shall survive payment in full of the
Indebtedness and any release or termination of this Agreement or of any other
Loan Documents.
12.6 Capital Requirements and Yield Maintenance. If at any time after the
date hereof, any Lender determines that the adoption or modification of any
applicable law, rule or regulation regarding taxation, such Lender's required
levels of reserves, deposits, insurance or capital (including any allocation of
capital requirements or conditions), or similar requirements, or any
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation, administration or
compliance of such Lender with any of such requirements, has or would have the
effect of (a) increasing such Lender's costs relating to the obligations
hereunder, or (b) reducing the yield or rate of return of such Lender on the
obligation hereunder, to a level below that which such Lender could have
achieved but for the adoption or modification of any such requirements, Borrower
shall, within fifteen (15) days of any request by such Lender, pay to such
Lender such additional amounts as (in such Lender's sole
53
judgment, after good faith and reasonable computation) will compensate such
Lender for such increase in costs or reduction in yield or rate of return of
such Lender. No failure by any Lender to immediately demand payment of any
additional amounts payable hereunder shall constitute a waiver of such Lender's
right to demand payment of such amounts at any subsequent time. Nothing herein
contained shall be construed or so operate as to require Borrower to pay any
interest, fees, costs or charges greater than is permitted by applicable law.
12.7 Costs and Expenses. Without limitation of any Loan Document and to the
extent not prohibited by applicable laws, Borrower shall pay when due, and
reimburse to Lenders on demand, and indemnify Agent and Lenders from, all
out-of-pocket fees, costs, and expenses paid or incurred by Lender in connection
with the negotiation, preparation and execution of this Agreement and the other
Loan Documents (and any amendments, approvals, consents, waivers and releases
requested, required, proposed or done from time to time), or in connection with
the disbursement, administration or collection of the Loans or the enforcement
of the obligations or the exercise of any right or remedy of Lenders, including
(a) fees and expenses of Agent's counsel (such fees not to exceed $50,000 in
connection with the negotiation, preparation and execution of this Agreement and
the other Loan Documents); (b) reasonable and customary fees and charges of each
Construction Consultant; (c) appraisal, re-appraisal and survey costs; (d) title
insurance charges ; (e) title search or examination costs, including abstracts,
abstractors' certificates and uniform commercial code searches; (f) judgment and
tax lien searches for Borrower and each Guarantor; (g) escrow fees; (h) fees and
costs of environmental investigations and site assessments; (i) recordation
taxes, documentary taxes, transfer taxes and mortgage taxes, and (j) filing and
recording fees. Borrower shall pay all costs and expenses incurred by Agent or
Lenders, including attorneys' fees, if the obligations or any part thereof are
sought to be collected by or through an attorney at law, whether or not
involving probate, appellate, administrative or bankruptcy proceedings. Borrower
shall pay all costs and expenses of complying with the Loan Documents, whether
or not such costs and expenses are included in the Budget. Borrower's
obligations under this Section shall survive the delivery of the Loan Documents,
the making of advances, the payment in full of the obligations, the release or
determination of the Loan Documents, the foreclosure of the Mortgage or
conveyance in lieu of foreclosure, any bankruptcy or other debtor relief
proceeding, and any other event whatsoever.
12.8 Further Assurances. Borrower will, on request of Agent, (a) execute,
acknowledge, deliver, procure, record or file such further instruments and do
such further acts deemed necessary, desirable or proper by Agent to carry out
the purposes of the Loan Documents and to identify and subject to the liens and
security interest of the Loan Documents any property intended to be covered
thereby, including any renewals, additions, substitutions, replacements, or
appurtenances to the Property; (b) execute, acknowledge, deliver, procure, file
or record any document or instrument deemed necessary, desirable, or proper by
Lender to protect the liens or the security interest under the Loan Documents
against the rights or interests of third persons; and (c) provide such
certificates, documents, reports, information, affidavits and other instruments
and do such further acts deemed necessary, desirable or proper by Agent to
comply with the requirements of any agency having jurisdiction over Agent or
Lenders.
12.9 No Assignment. Borrower shall not assign, transfer or encumber its
rights or obligations under any Loan Document or any proceeds of the Loan
without the prior written consent of Required Lenders.
54
12.10 Inducement to Lenders. The representations and warranties contained
in the Loan Documents (a) are made to induce Lenders to make the Loans and
Lenders are relying thereon, and (b) shall survive any bankruptcy proceedings
involving Borrower, Guarantors or the Property, foreclosure, or conveyance in
lieu of foreclosure.
12.11 Forum. Borrower hereby irrevocably submits generally and
unconditionally for itself and in respect of its property to the jurisdiction of
any state court, or any United States federal court, sitting in the State of
North Carolina and to the jurisdiction of any state court or any United States
federal court, sitting in Arizona, over any suit, action or proceeding arising
out of or relating to this Agreement or the Indebtedness. Borrower hereby
irrevocably waives, to the fullest extent permitted by law, any objection that
Borrower may now or hereafter have to the laying of venue in any such court and
any claim that any such court is an inconvenient forum. Borrower hereby agrees
and consents that, in addition to any methods of service or process provided for
under applicable law, all service of process in any such suit, action or
proceeding in any state court, or any United States federal court, sitting in
the State of North Carolina may be made by certified or registered mail, return
receipt requested, directed to Borrower at its address for notice stated in the
Loan Documents, or at a subsequent address of which Agent received actual notice
from Borrower in accordance with the Loan Documents, and service so made shall
be complete ten (10) days after the same shall have been so mailed. Nothing
herein shall affect the right of Agent or Lenders to serve process in any manner
permitted by law or limit the right of Agent or Lenders to bring proceedings
against Borrower in any other court or jurisdiction.
12.12 Interpretation. References to "Dollars," "$," "money," "payments" or
other similar financial or monetary terms are references to lawful money of the
United States of America. References to Articles, Sections, and Exhibits are,
unless specified otherwise, references to articles, sections and exhibits of
this Agreement. Words of any gender shall include each other gender. Words in
the singular shall include the plural and words in the plural shall include the
singular. References to Borrower or Guarantor shall mean, each person comprising
same, jointly and severally. References to persons shall include any legal
entities, including public or governmental bodies, agencies or
instrumentalities, and natural persons. The words "herein," "hereof,"
"hereunder" and other similar compounds of the word "here" shall refer to the
entire Agreement and not to any particular provision or section. The words
"include" and "including" shall be interpreted as if followed by the words
"without limitation". Captions and headings in the Loan Documents are for
convenience only and shall not affect the construction of the Loan Documents.
12.13 No Partnership, etc. The relationship between Lenders and Borrower is
solely that of lenders and borrower. Lenders have no fiduciary or other special
relationship with or duly to Borrower and none is created by the Loan Documents.
Nothing contained in the Loan Documents, and no action taken or omitted pursuant
to the Loan Documents, is intended or shall be construed to create any
partnership, joint venture, association, or special relationship between
Borrower and Lenders or in any way make Lenders co-principals with Borrower with
reference to the Project, the Property or otherwise. In no event shall Lenders'
rights and interests under the Loan Documents be construed to give Lenders the
right to control, or be deemed to indicate that Lenders are in control of, the
business, properties, management or operations of Borrower.
12.14 Records. The unpaid amount of the Loans set forth on the books and
records of Lenders maintained in the ordinary course of its business shall be
presumptive evidence of the amount thereof owing and unpaid, but failure to
record any such amount on the books and records
55
shall not limit or affect the obligations of Borrower under the Loan Documents
to make payments on the Loans when due.
12.15 Exhibits. This Agreement includes the Exhibits listed below which are
marked by "X", all of which Exhibits are attached hereto and made a part hereof
for all purposes, it being agreed that if any Exhibit to be executed and
delivered contains blanks, the same shall be completed correctly and in
accordance with this Agreement prior to or at the time of the execution and
delivery thereof.
X Exhibit "A" - Legal description of the Land
----- Exhibit "B" - Reserved
X Exhibit "C" - Certain Conditions Precedent to
----- the First Advance
X Exhibit "D" - Budget
-----
X Exhibit "E" - Plans
-----
X Exhibit "F" - Advances
-----
X Exhibit "F-1" - Draw Request
-----
X Exhibit "G" - [Reserved]
-----
X Exhibit "H" - Officer's Compliance Certificate
-----
X Exhibit "I" - Assignment and Acceptance
-----
X Exhibit "J" - Notice of Working Capital Borrowing
-----
X Exhibit "K" - Notice of Working Capital Loan Prepayment
-----
X Exhibit "L" - Notice of Conversion/Continuation
-----
X Exhibit "M" - Notice of Construction Loan Prepayment
-----
12.16 Mandatory Arbitration. Any controversy or claim between or among the
parties hereto including but not limited to those arising out of or relating to
this Agreement or any related agreements or instruments, including any claim
based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Endispute, Inc., doing business as
J.A.M.S./Endispute ("J.A.M.S."), and the "Special Rules" set forth below. In the
event of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this Agreement
applies in any court having jurisdiction over such action.
(a) Special Rules. The arbitration shall be conducted in the city of
Borrower's domicile at the time of this Agreement's execution and
administered by J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is
unable or legally precluded from administering the arbitration, then the
American Arbitration Association will serve. All arbitration hearings will
be commenced within 90 days of the demand for arbitration; further, the
arbitrator shall only, upon a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional 60 days.
(b) Reservations of Rights. Nothing in this Agreement shall be deemed
to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or (ii)
be a waiver by Lenders of the protection afforded to it by 12 U.S.C. Sec.
91 or any substantially equivalent state law; or (iii) limit
56
the right of Lenders (A) to exercise self help remedies such as (but not
limited to) setoff, or (B) to foreclose against any real or personal
property collateral, or (C) to obtain from a court provisional or ancillary
remedies such as (but not limited to) injunctive relief or the appointment
of a receiver. Lenders may exercise such self help rights, foreclose upon
such property, or obtain such provisional or ancillary remedies before,
during or after the pendency of any arbitration proceeding brought pursuant
to this Agreement. At Lenders' option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following: the exercise of a
power of sale under the deed of trust or mortgage, or by judicial sale
under the deed of trust or mortgage, or by judicial foreclosure. Neither
the exercise of self help remedies nor the institution or maintenance of an
action for foreclosure or provisional or ancillary remedies shall
constitute a waiver of the right of any party, including the claimant in
any such action, to arbitrate the merits of the controversy or claim
occasioning resort to such remedies.
No provision in the Loan Documents regarding submission to jurisdiction and/or
venue in any court is intended or shall be construed to be in derogation of the
provisions in any Loan Document for arbitration of any controversy or claim.
12.17 Set-off. In addition to any rights now or hereafter granted under
Applicable Law and not by way of limitation of any such rights, upon and after
the occurrence of any Default and during the continuance thereof, Lenders and
any assignee or participant of a Lender in accordance with Section 12.18 are
hereby authorized by Borrower at any time or from time to time, without notice
to Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, time or demand, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness at any time held or owing by Lenders, or any such assignee or
participant to or for the credit or the account of Borrower against and on
account of the Obligations irrespective of whether or not (a) Lenders shall have
made any demand under this Agreement or any of the other Loan Documents or (b)
Agent shall have declared any or all of the Obligations to be due and payable as
permitted by Section 9.2 and although such Obligations shall be contingent or
unmatured.
12.18 Successors and Assigns; Participations.
(a) Assignment by Lenders. Each Lender may assign to one or more
Eligible Assignees all or a portion of its interests, rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Loans at the time owing to it and the Notes held by it);
provided that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and
obligations under this Agreement;
(ii) if less than all of the assigning Lender's Commitment is to
be assigned, the Commitment so assigned shall not be less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof;
(iii) the parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the Register, an
Assignment and
57
Acceptance in the form of Exhibit I attached hereto (an "Assignment
and Acceptance"), together with any Note or Notes subject to such
assignment;
(iv) such assignment shall not, without the consent of Borrower,
require Borrower to file a registration statement with the Securities
and Exchange Commission or apply to or qualify the Loans or the Notes
under the blue sky laws of any state; and
(v) the assigning Lender shall pay to Agent an assignment fee of
$2,500 upon the execution by such Lender of the Assignment and
Acceptance; provided that no such fee shall be payable upon any
assignment by a Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) Lender thereunder shall, to the extent provided in such assignment, be
released from its obligations under this Agreement.
(b) Rights and Duties Upon Assignment. By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder confirm to and agree with each other and the other parties
hereto as set forth in such Assignment and Acceptance.
(c) Register. Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names
and addresses of Lenders and the amount of the Loans with respect to each
Lender from time to time (the "Register"). The entries in the Register
shall be conclusive, in the absence of manifest error, and Borrower, Agent
and Lenders may treat each person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by Borrower or Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) Issuance of New Notes. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee
together with any Note or Notes subject to such assignment and the written
consent to such assignment, Agent shall, if such Assignment and Acceptance
has been completed and is substantially in the form of Exhibit I:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii) give prompt notice thereof to Lenders and Borrower; and
(iv) promptly deliver a copy of such Assignment and Acceptance to
Borrower.
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Within five (5) Business Days after receipt of notice, Borrower shall execute
and deliver to Agent, in exchange for the surrendered Note or Notes, a new Note
or Notes to the order of such Eligible Assignee in amounts equal to the
Commitment assumed by it pursuant to such Assignment and Acceptance and a new
Note or Notes to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of the assigned
Notes delivered to the assigning Lender. Each surrendered Note or Notes shall be
canceled and returned to Borrower.
(e) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of
its Loans and the Notes held by it); provided that:
(i) if less than all of such Lender's rights or obligations, each
such participation shall be in an amount not less than $5,000,000 or
an integral multiple of $1,000,000 in excess thereof;
(ii) such Lender's obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by it
for all purposes of this Agreement;
(v) Borrower, Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant the right to
approve any waivers, amendments or other modifications to this
Agreement or any other Loan Document other than waivers, amendments or
modifications which would reduce the principal of or the interest rate
on any Loan, extend the term or increase the amount of the Commitment,
reduce the amount of any fees to which such participant is entitled,
extend any scheduled payment date for principal of any Loan or, except
as expressly contemplated hereby or thereby, release substantially all
of the Collateral; and
(vii) any such disposition shall not, without the consent of
Borrower, require Borrower to file a registration statement with the
Securities and Exchange Commission to apply to qualify the Loans or
the Notes under the blue sky law of any state.
(f) Disclosure of Information; Confidentiality. Agent and Lenders
shall hold all non-public information with respect to Borrower obtained
pursuant to the Loan Documents in accordance with their customary
procedures for handling confidential
59
information. Any Lender may, in connection with any assignment, proposed
assignment, participation or proposed participation pursuant to this
Section 12.18, disclose to the assignee, participant, proposed assignee or
proposed participant, any information relating to Borrower furnished to
such Lender by or on behalf of Borrower; provided, that prior to any such
disclosure, each such assignee, proposed assignee, participant or proposed
participant shall agree with Borrower or such Lender to preserve the
confidentiality of any confidential information relating to Borrower
received from such Lender.
(g) Certain Pledges or Assignments. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
12.19 Amendments, Waivers and Consents. Except as set forth below, any
term, covenant, agreement or condition of this Agreement or any of the other
Loan Documents may be amended or waived if such amendment, waiver or consent is
in writing signed by the Required Lenders (or by Agent with the consent of the
Required Lenders) and delivered to Agent and, in the case of an amendment,
signed by Borrower; provided, that no amendment, waiver or consent shall (a)
increase the amount or extend the time of the obligation of Lenders to make
Loans, (b) extend the originally scheduled time or times of payment of the
principal of any Loan or the time or times of payment of interest on any Loan,
(c) reduce or forgive the principal of any Loan or reduce the rate of interest
or fees payable on any Loan, (d) permit any subordination of the principal or
interest on any Loan, (e) release any material portion of the Collateral or
release any Security Document (other than as specifically permitted in this
Agreement or the applicable Security Document) or (f) amend the provisions of
this Section 12.19 or the definition of Required Lenders, without the prior
written consent of each Lender. In addition, no amendment, waiver or consent to
the provisions of Article X shall be made without the written consent of Agent.
12.20 All Powers Coupled with Interest. All powers of attorney and other
authorizations granted to Lenders, Agent and any Persons designated by Agent or
any Lender pursuant to any provisions of this Agreement or any of the other Loan
Documents shall be deemed coupled with an interest and shall be irrevocable so
long as any of the Obligations remain unpaid or unsatisfied.
12.21 Survival of Indemnities. Notwithstanding any termination of this
Agreement, the indemnities to which Agent and Lenders are entitled under the
provisions of this Article XII and any other provision of this Agreement and the
Loan Documents shall continue in full force and effect and shall protect Agent
and Lenders against events arising after such termination as well as before.
12.22 Term of Agreement. This Agreement shall remain in effect from the
Closing Date through and including the date upon which all Obligations shall
have been indefeasibly and irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
12.23 Entire Agreement. The Loan Documents constitute the entire
understanding and agreement between Borrower and Lenders with respect to the
transactions arising in connection with the Loan and supersede all prior written
or oral understandings and agreements between Borrower and Lenders with respect
to the matters addressed in the Loan Documents. In particular, and without
limitation, the terms of any commitment by Lender to make the Loans are merged
into the Loan Documents. Lenders have not made any commitments to extend the
term of the
60
Loans past their stated maturity date or to provide Borrower with financing
except as set forth in the Loan Documents. Except as incorporated in writing in
the Loan Documents, there are not, and were not, and no persons are or were
authorized by Lenders to make, any representations, understandings,
stipulations, agreements or promises, oral or written, with respect to the
matters addressed in the Loan Documents.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
61
EXECUTED and DELIVERED as of the date first above written.
BORROWER:
ARIZONA HEART HOSPITAL, LLC
By: AHH Management, Inc., acting on
behalf of Arizona Heart Hospital, LLC
By: /s/ Xxxxxxx X. Post
---------------------------------
Name: Xxxxxxx X. Post
---------------------
Title: Treasurer
--------------------
The Federal Tax Identification Number for Borrower:
00-0000000
GUARANTORS:
AHH MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Post
-----------------------------------
Name: Xxxxxxx X. Post
----------------------
Title: Treasurer
----------------------
MEDCATH OF ARIZONA, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
----------------------
Title: Treasurer
---------------------
MEDCATH OF KINGMAN, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------
Title: Treasurer
-----------------------
62
MEDCATH OF MASSACHUSETTS, INC.
By: /s/ Xxxxxxx X. Post
-----------------------------------
Name: Xxxxxxx X. Post
----------------------
Title: Treasurer
----------------------
MEDCATH OF NEW JERSEY,INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------
Title: Treasurer
-----------------------
MEDCATH DIAGNOSTICS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------
Title: Treasurer
-----------------------
MEDCATH PHYSICIAN MANAGEMENT OF
VIRGINIA, INC.
By: /s/ Xxxxxxx X. Post
-----------------------------------
Name: Xxxxxxx X. Post
----------------------
Title: Treasurer
----------------------
PHYSMED MANAGEMENT SERVICES, INC.
63
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------
Title: Treasurer
-----------------------
PHYSICIAN MANAGEMENT OF MCALLEN,
INC.
By: /s/ Xxxxxxx X. Post
-----------------------------------
Name: Xxxxxxx X. Post
----------------------
Title: Treasurer
----------------------
ULTIMED, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------
Title: Treasurer
-----------------------
NATIONSBANK, N.A., as Agent
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------
Title: Senior Vice President
-----------------------
LENDERS:
NATIONSBANK, N.A., as Lender
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------
Title: Senior Vice President
-----------------------
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KEY CORPORATE CAPITAL INC.
By: /s/ J. Xxxx Xxxxxx
-----------------------------------
Name: J. Xxxx Xxxxxx
-------------------------
Title: Assistant Vice President
-------------------------
AMSOUTH BANK
By: /s/ J. Xxx Xxxxxxx
-----------------------------------
Name: J. Xxx Xxxxxxx
------------------------
Title: Commercial Banking Officer
---------------------------
65
