EXHIBIT 10.4
LOAN AGREEMENT
among
SUNLINK HEALTHCARE CORP., SOUTHERN HEALTH CORPORATION, AND
SOUTHERN HEALTH CORPORATION OF JASPER, INC., collectively as Borrowers
and
SUNLINK HEALTH SYSTEMS, INC., as Guarantor
and
BANK OF NORTH GEORGIA, as Bank
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS.....................................................................................1
1.1 ADVANCE OR ADVANCES.............................................................................1
1.2 AGREEMENT.......................................................................................1
1.3 AGREEMENT DATE..................................................................................1
1.4 APPLICABLE LAW..................................................................................1
1.5 APPRAISAL.......................................................................................1
1.6 APPRAISED VALUE.................................................................................1
1.7 AUTHORIZED SIGNATORY............................................................................2
1.8 AVAILABLE INVENTORY LOAN COMMITMENT.............................................................2
1.9 BANK............................................................................................2
1.10 BASE RATE.......................................................................................2
1.11 BORROWERS.......................................................................................2
1.12 BUSINESS DAY....................................................................................2
1.13 CODE............................................................................................2
1.14 CONSTRUCTION COSTS..............................................................................2
1.15 CONSTRUCTION LOAN INTEREST ACCOUNT..............................................................2
1.16 CONVERSION DATE.................................................................................2
1.17 DEFAULT.........................................................................................2
1.18 DEFAULT RATE....................................................................................2
1.19 XXXX XXXXXX XXXXXX PROPERTY.....................................................................2
1.20 ERISA...........................................................................................3
1.21 ERISA AFFILIATE.................................................................................3
1.22 EVENT OF DEFAULT................................................................................3
1.23 EXCESS AMOUNTS..................................................................................3
1.24 GAAP............................................................................................3
1.25 GUARANTOR.......................................................................................3
1.26 HOSPITAL........................................................................................3
1.27 IMPROVEMENTS....................................................................................3
1.28 LIEN............................................................................................3
1.29 LOAN............................................................................................3
1.30 LOAN COMMITMENT.................................................................................3
1.31 LOAN DOCUMENTS..................................................................................3
1.32 MATURITY DATE...................................................................................4
1.33 OBLIGATIONS.....................................................................................4
1.34 NOTE............................................................................................4
1.35 PERMITTED ENCUMBRANCES..........................................................................4
1.36 PERSON..........................................................................................4
1.37 PLANS AND SPECIFICATIONS........................................................................4
1.38 PROPERTY........................................................................................5
1.39 REPLACEMENT HOSPITAL............................................................................5
1.40 REPORTABLE EVENT................................................................................5
1.41 REQUEST FOR ADVANCE FROM LOAN...................................................................5
1.42 RETAINAGE.......................................................................................5
1.43 SECURITY INSTRUMENTS............................................................................5
1.44 TANGIBLE NET WORTH..............................................................................5
1.45 TITLE INSURANCE.................................................................................5
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1.46 TOTAL LIABILITIES...............................................................................5
1.47 XXXX XXXXXX PARKWAY PROPERTY....................................................................5
ARTICLE 2 LOAN............................................................................................6
2.1 EXTENSION OF CREDIT.............................................................................6
2.2 MANNER OF BORROWING AND DISBURSEMENT UNDER LOAN.................................................7
2.3 INTEREST ON LOAN................................................................................7
2.4 FEES AND COMMISSIONS ON LOAN....................................................................8
2.5 LOAN NOTE ACCOUNT...............................................................................8
2.6 REPAYMENT OF LOAN NOTE AND RELEASES.............................................................8
2.7 MANNER OF PAYMENT...............................................................................9
2.8 APPLICATION OF PAYMENTS........................................................................10
ARTICLE 3 LOAN DISBURSEMENTS.............................................................................10
3.1 PRIOR TO THE FIRST ADVANCE.....................................................................10
3.2 SUBSEQUENT ADVANCES............................................................................15
ARTICLE 4 BORROWERS' AND GUARANTOR'S COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES...............16
4.1 PAYMENT........................................................................................16
4.2 PERFORMANCE....................................................................................16
4.3 FURTHER ASSURANCES.............................................................................16
4.4 ADDITIONAL INFORMATION.........................................................................16
4.5 QUARTERLY FINANCIAL STATEMENTS AND OTHER INFORMATION...........................................17
4.6 ANNUAL FINANCIAL STATEMENTS AND INFORMATION; CERTIFICATE OF NO DEFAULT.........................17
4.7 FINANCIAL AND OTHER COVENANTS..................................................................17
4.8 COMPLIANCE CERTIFICATES........................................................................17
4.9 THIRD PARTY INDEBTEDNESS.......................................................................17
4.10 INTERCOMPANY INDEBTEDNESS......................................................................18
4.11 KEY MAN INSURANCE..............................................................................18
4.12 OTHER FINANCIAL DOCUMENTATION..................................................................18
4.13 EXECUTION AND DELIVERY OF REQUIRED DOCUMENTATION...............................................18
4.14 PAYMENT OF CONTRACTORS.........................................................................18
4.15 INSPECTION AND APPRAISAL.......................................................................18
4.16 FEES AND EXPENSES..............................................................................19
4.17 HAZARDOUS SUBSTANCES...........................................................................19
4.18 TAXES..........................................................................................20
4.19 INSURANCE......................................................................................20
4.20 LITIGATION.....................................................................................20
4.21 REPORTABLE EVENT...............................................................................21
4.22 ACCOUNTS.......................................................................................21
4.23 INITIAL ACCOUNT................................................................................21
4.24 QUALIFICATION..................................................................................21
4.25 AUTHORITY, EXECUTION AND DELIVERY..............................................................21
4.26 CONSENTS AND APPROVALS.........................................................................22
4.27 FINANCIAL RECORDS..............................................................................22
4.28 PERMITS; CERTIFICATE OF NEED...................................................................23
4.29 GOVERNMENTAL BENEFIT PROGRAMS AND OTHER THIRD PARTY PAYORS.....................................24
4.30 FINANCIAL RELATIONSHIPS WITH HEALTH PROFESSIONALS..............................................25
4.31 JCAHO ACCREDITATION............................................................................25
4.32 COMPLIANCE WITH LEGAL REQUIREMENTS.............................................................26
4.33 CORRECTNESS OF REPRESENTATIONS.................................................................26
ARTICLE 5 DEFAULT AND REMEDIES...........................................................................27
5.1 DEFAULT........................................................................................27
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5.2 REMEDIES.......................................................................................29
5.3 WAIVERS........................................................................................30
5.4 CROSS-DEFAULT..................................................................................30
5.5 CROSS-COLLATERALIZATION........................................................................30
5.6 NO LIABILITY OF BANK...........................................................................31
ARTICLE 6 GENERAL CONDITIONS.............................................................................31
6.1 BENEFIT........................................................................................31
6.2 ASSIGNMENT.....................................................................................31
6.3 ADDITIONAL OBLIGATIONS AND AMENDMENTS..........................................................32
6.4 TERMS..........................................................................................32
6.5 GOVERNING LAW AND JURISDICTION.................................................................32
6.6 PUBLICITY......................................................................................33
6.7 ATTORNEYS' FEES................................................................................33
6.8 MANDATORY ARBITRATION..........................................................................33
6.9 INVALIDATION OF PROVISIONS.....................................................................34
6.10 EXECUTION IN COUNTERPARTS......................................................................34
6.11 CAPTIONS.......................................................................................34
6.12 NOTICES........................................................................................34
6.13 LOAN DOCUMENTATION/ELECTRONIC TRANSMISSION OF DATA.............................................35
6.14 BOOKS AND RECORDS..............................................................................36
6.15 PAYMENT OF TAXES...............................................................................36
6.16 PAYMENT OF TAXES...............................................................................36
6.17 TRANSFER OF PROPERTY AND RIGHTS................................................................36
6.18 FINAL AGREEMENT................................................................................36
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EXHIBITS
Schedule 1 - Environmental Reports, Notices and Documentation
Exhibit A - Property
Exhibit B - Request for Advance From Loan
Exhibit C - List of Permits
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LOAN AGREEMENT
THIS LOAN AGREEMENT dated and delivered as of the 30th day of
September, 2002, is by and among (i) SUNLINK HEALTHCARE CORP., a corporation of
the State of Delaware, SOUTHERN HEALTH CORPORATION, a corporation of the State
of Georgia, and SOUTHERN HEALTH CORPORATION OF JASPER, INC., a corporation of
the State of Georgia, collectively as Borrowers, (ii) SUNLINK HEALTH SYSTEMS,
INC., an Ohio corporation, as Guarantor, and (iii) BANK OF NORTH GEORGIA, a
state chartered bank, as Bank.
IN CONSIDERATION of the sum of TEN AND NO/100 DOLLARS ($10.00) in hand
paid by each party to the other and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the
undersigned, the undersigned hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, the words and phrases set forth
below shall have the following meanings:
1.1 ADVANCE OR ADVANCES. Amounts advanced by Bank to Borrowers
pursuant to Article 2 hereof.
1.2 AGREEMENT. This Loan Agreement between Borrowers and Bank
dated as of the Agreement Date.
1.3 AGREEMENT DATE. September 30, 2002.
1.4 APPLICABLE LAW. With respect to any Person, all provisions of
constitutions, statutes, rules, regulations, and orders of governmental bodies
or regulatory agencies applicable to such Person, including, without limitation,
all orders and decrees of all courts and arbitrators in proceedings or actions
to which the Person in question is a party or by which it is bound.
1.5 APPRAISAL. The appraisal or evaluation of the Xxxx Xxxxxx
Parkway Property prepared by Valuation Counselors dated as of May 1, 2002 (as-is
value) and dated as of May 1, 2003 (as-completed value), and addressed to Bank.
1.6 APPRAISED VALUE. The value for the Xxxx Xxxxxx Parkway
Property in the amount of $14,700,000 as reflected by the Appraisal.
1.7 AUTHORIZED SIGNATORY. With respect to any Person, such
personnel of such Person as may be duly authorized and designated in writing by
the Person to execute documents, agreements, and instruments on behalf of the
Person.
1.8 AVAILABLE LOAN COMMITMENT. As of any date of determination, an
amount equal to the lesser of (a) $6,000,000.00 less the sum of (i) sum of all
previous Advances and (ii) sum of all Retainage or (b) the Construction Costs
less the sum of (i) $8,629,738.00, (ii) sum of all previous Advances and (iii)
sum of all Retainage.
1.9 BANK. Bank of North Georgia, a state chartered bank.
1.10 BASE RATE. At any time, Base Rate shall mean the rate of
interest at the applicable time provided in the Note prior to a Default.
1.11 BORROWERS. SunLink Healthcare Corp., a corporation of the
State of Delaware, Southern Health Corporation, a corporation of the State of
Georgia, and Southern Health Corporation of Jasper, Inc., a corporation of the
State of Georgia, collectively. Any one of the Borrowers is a Borrower.
1.12 BUSINESS DAY. A day on which Bank is authorized or required to
be open for the transaction of business in Alpharetta, Georgia.
1.13 CODE. The Internal Revenue Code of 1986, as amended.
1.14 CONSTRUCTION COSTS. All costs certified to Bank by Borrowers
and actually incurred by Borrowers with respect to the construction of the
Improvements as of the date of determination, excluding (i) costs for stored
materials or materials not incorporated into the Improvements, and (ii) work not
yet physically performed, all such Construction Costs being subject to the
review and approval of USA Inspection Services, LLC, in connection with USA
Inspection Services, LLC's establishment of the Construction Costs for which
amounts are to be advanced hereunder pursuant to each Request for Advance from
Loan (as hereinafter defined).
1.15 CONSTRUCTION LOAN INTEREST ACCOUNT. Account Number 0000000 in
the name of Southern Health Corporation of Jasper, Inc., initially in the amount
of $2,500.00, but, prior to the first Advance, said Account shall be in the
amount of $300,000.00 to support the payment of interest payable under the Note
in accordance with Section 2.7(c) hereof.
1.16 CONVERSION DATE. The Conversion Date as defined in the Note.
1.17 DEFAULT. Any of the events specified in Section 5.1 hereof,
provided that any requirement for notice or lapse of time, or both, has been
satisfied.
1.18 DEFAULT RATE. The Default Rate as defined in the Note.
1.19 EAST CHURCH STREET PROPERTY. The property described on EXHIBIT
"A" hereto as the East Church Street Property.
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1.20 ERISA. The Employee Retirement Income Security Act of 1974, as
in effect on the Agreement Date and as such Act may be amended thereafter from
time to time.
1.21 ERISA AFFILIATE. (a) Any corporation which is a member of the
same controlled group of corporations (within the meaning of Code Section
414(b)) as is any Borrower, (b) any other trade or business (whether or not
incorporated) under common control (within the meaning of Code Section 414(c))
with any Borrower, (c) any other corporation, partnership or other organization
which is a member of an affiliated service group (within the meaning of Code
Section 414(m)) with any Borrower, or (d) any other entity required to be
aggregated with any Borrower pursuant to regulations under Code Section 414(o).
1.22 EVENT OF DEFAULT. Any event specified in Section 5.1 hereof
which with any passage of time or giving of notice (or both) would constitute a
Default.
1.23 EXCESS AMOUNTS. An amount paid prior to the Maturity Date in
repayment of the Note which, if applied to the repayment of the Note, would
cause the outstanding principal balance of the Note to be less than Ten Dollars
($10.00). This term shall not include any amount of the payment which reduces
the outstanding principal amount under the Note to Ten Dollars ($10.00).
1.24 GAAP. As in effect as of the Agreement Date, generally
accepted accounting principles consistently applied.
1.25 GUARANTOR. SunLink Health Systems, Inc., a corporation of the
State of Ohio.
1.26 HOSPITAL. The hospital known as Mountainside Medical Center
located on the East Church Street Property.
1.27 IMPROVEMENTS. The approximately 69,700 square foot hospital
and related improvements to be built on the Xxxx Xxxxxx
Parkway Property in accordance with the Plans and Specifications.
1.28 LIEN. With respect to any property, any mortgage, lien,
pledge, assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment, or other encumbrance of any kind in
the nature of any of the foregoing in respect of such property, whether or not
xxxxxx, vested, or perfected.
1.29 LOAN. Amounts to be advanced by Bank pursuant to the terms of
this Agreement and evidenced by the Note.
1.30 LOAN COMMITMENT. Letter to Xx. Xxxxxx X. Xxxxxxxx, Xx., Chief
Executive Officer of SunLink Healthcare Corp., from Bank dated July 24, 2002.
1.31 LOAN DOCUMENTS. This Agreement, the Note, the Security
Instruments, the Guaranty, the Environmental Indemnity Agreement and any and all
other documents evidencing or securing the Note as the same may be amended,
substituted, replaced, extended or renewed from time to time.
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1.32 MATURITY DATE. The Maturity Date provided in the Note, or such
earlier date as payment of the Loan shall be due (whether by acceleration or
otherwise).
1.33 OBLIGATIONS. (a) All payment and performance obligations of
Borrowers and all other obligors to Bank under this Agreement and the other Loan
Documents, as they may be amended from time to time, or as a result of making
the Loan, and (b) the obligation to pay an amount equal to the amount of any and
all damages which Bank may suffer by reason of a breach by Borrowers or any
other obligor of any obligation, covenant, or undertaking with respect to this
Agreement or any other Loan Document.
1.34 NOTE. The Note executed and delivered by Borrower to Bank
dated as of September 30, 2002, in the amount of SIX MILLION DOLLARS
($6,000,000).
1.35 PERMITTED ENCUMBRANCES. (i) Liens for taxes or other
governmental charges either not yet delinquent or with respect to which the
payment thereof is being contested diligently and in good faith by adequate
procedures subject to the conditions set forth in Article 19 of the Security
Deed (as hereinafter defined); (ii) encumbrances created by or relating to any
legal proceeding which at the time is being contested by Borrowers diligently
and in good faith by adequate procedures provided that any judgment resulting
from, or damage award sought in, any such legal proceeding does not give rise to
a Default under Section 5.1 (h) hereof; (iii) liens and encumbrances not arising
in connection with indebtedness for money borrowed that do not in the aggregate
materially impair the use or value of the Properties in the conduct of
Borrowers' business provided that the same do not give rise to a Default under
Section 5.1 (m) hereof; (iv) encumbrances (including capitalized leases) in
respect of personal property assets acquired which exist at the time of
acquisition of such assets or which are incurred to finance all or part of the
cost of such assets provided such encumbrances cover only the assets so acquired
and provided that the same do not violate the covenants set forth in Section 4.9
hereof; (v) leases or other occupancy agreements entered into by Borrowers in
the ordinary course of business provided that the same do not violate the
covenants set forth in Article 4.9 hereof or the representations and warranties
set forth in Article 4.30 hereof; (vi) easements or amendments to existing
easements entered into in connection with the construction and operation of the
Replacement Hospital on the Xxxx Xxxxxx Parkway Property, which easements (other
than utility easements) shall be subject to the approval and consent of Bank,
which approval and consent shall not be unreasonably withheld, delayed or
conditioned; and (vii) encumbrances existing on the Agreement Date which are
reflected in the mortgagee title insurance policy to be provided to Bank by
Borrowers pursuant to Section 3.1(e) hereof.
1.36 PERSON. An individual, corporation, partnership, limited
liability company, trust, or unincorporated organization, or a government or any
agency or political subdivision thereof.
1.37 PLANS AND SPECIFICATIONS. The Plans and Specifications
identified as Replacement Facility for Mountainside Medical Center, Jasper,
Georgia, CON #047-98,
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prepared by Xxxxxxx Xxxxxxx Xxxxxxxx Architects, PC, dated October 26, 2001,
Project No. 01338.00, as the same may be amended or modified from time to time.
1.38 PROPERTY. The Xxxx Xxxxxx Parkway Property and the East Church
Street Property, collectively.
1.39 REPLACEMENT HOSPITAL. The Improvements to be constructed on
the Xxxx Xxxxxx Parkway Property in accordance with the Plans and
Specifications.
1.40 REPORTABLE EVENT. A Reportable Event shall have the meaning
set forth in Section 4043(b) of ERISA.
1.41 REQUEST FOR ADVANCE FROM LOAN. A certificate signed by an
Authorized Signatory of Borrowers requesting an Advance hereunder which
certificate shall be denominated a "Request for Advance from Loan," and shall be
submitted on the standard AIA draw request form. Each Request for Advance from
Loan shall, among other things, (a) specify the date of the requested Advance,
which shall be a Business Day, (b) specify the amount of the requested Advance,
(c) certify that there shall not exist, on the date of the requested Advance and
after giving effect thereto, a Default or an Event of Default, and (d) certify
that all conditions precedent to the making of the requested Advance have been
satisfied.
1.42 RETAINAGE. 10% of the portion of the Construction Costs for
which each Advance is made by Bank.
1.43 SECURITY INSTRUMENTS. (i) The Deed to Secure Debt and Security
Agreement (and amendments thereto or modifications thereof) executed pursuant to
this Agreement by Southern Health Corporation of Jasper, Inc. and delivered to
Bank perfecting a security interest in the Property and other real and personal
property more particularly described therein and securing the Loan ("SECURITY
DEED"), (ii) the assignment of the Construction Loan Interest Account and (iii)
all other security instruments and amendments and modifications thereto securing
the indebtedness evidenced by the Note.
1.44 TANGIBLE NET WORTH. Stockholder's equity less all "intangible
assets" as defined under GAAP.
1.45 TITLE INSURANCE. The mortgagee title insurance policy issued
by Chicago Title Insurance Company pursuant to Section 3.1(d).
1.46 TOTAL LIABILITIES. All items required by GAAP to be set forth
as "liabilities" other than physician guarantees entered into in the ordinary
course of business and in compliance with all applicable laws.
1.47 XXXX XXXXXX PARKWAY PROPERTY The property described on EXHIBIT
"A" hereto as the Xxxx Xxxxxx Parkway Property.
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Each definition of an agreement in this Article 1 shall include such
agreement as modified, amended, or supplemented from time to time with the prior
written consent of Bank, and except where the context otherwise requires,
definitions imparting the singular shall include the plural and vice versa.
Except where otherwise specifically restricted, reference to a party to a Loan
Document includes that party and its successors and assigns. All terms used
herein which are defined in Article 10 of the Uniform Commercial Code in effect
in the State of Georgia on the date hereof and which are not otherwise defined
herein shall have the same meanings herein as set forth therein.
All accounting terms used herein without definition shall be used as
defined under GAAP.
ARTICLE 2
LOAN
2.1 EXTENSION OF CREDIT. Subject to the terms and conditions of
this Agreement, and in reliance upon the representations and warranties made in
this Agreement and the other Loan Documents, Bank agrees to extend credit to
Borrowers in an aggregate principal amount not to exceed $6,000,000 as provided
herein. All extensions of credit under this Agreement shall be evidenced by the
Note and secured by the Security Instruments.
(a) Loan. Subject to the terms, conditions and
limitations set forth in this Agreement and provided that there is no existing
Default or Event of Default, Bank agrees to lend to Borrowers, prior to the
Conversion Date, up to $6,000,000. Bank shall have no obligation prior to the
Conversion Date to make any Advance if the sum of the following exceeds
$6,000,000: (i) the requested Advance plus the Retainage thereon, (ii) the
estimated or projected cost as established by USA Inspection Services, Inc.,
acting reasonably and in good faith (subject to the approval of Bank, such
approval not to be unreasonably withheld or delayed) for completion of the
Improvements in accordance with Plans and Specifications, (iii) the sum of all
previous Retainage, and (iv) the outstanding principal balance of the Note. On
the Conversion Date and provided there is no Default or Event of Default and
Borrowers are entitled to receive the Retainage as provided in Section 2.2(c),
Bank shall advance to Borrowers, on receipt of the Borrowers' final Request for
Advance from Loan, the balance of the Loan, including any Retainage.
(b) Use of Loan Proceeds. Borrowers agree that the
proceeds of the Loan received by Borrowers shall be used only for the costs
actually incurred for the construction of the Improvements.
(c) Excess Costs. Borrowers shall be responsible for
paying from funds other than the Loan the costs of construction of Improvements
in excess of the amounts to be advanced by Bank pursuant to the terms of this
Agreement.
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2.2 MANNER OF BORROWING AND DISBURSEMENT UNDER LOAN .
(a) Advances. Provided the Available Loan Commitment is
sufficient to permit an Advance to be made under the terms of this Agreement
plus the Retainage to be withheld for such Advance as herein provided and
Borrowers have delivered to Bank an irrevocable written notice for Advance under
the Loan in the form of a Request for Advance from Loan, Bank shall make the
Advance to Borrowers after Bank has received a written report from USA
Inspection Services, LLC which establishes the Construction Costs for which the
Advance is to be made. In the event Bank needs additional information to
establish Available Loan Commitment sufficient to permit a requested Advance to
be made, such Advance will be made within a reasonable time after such Available
Loan Commitment is established and the referenced written report in respect of
such Advance from USA Inspection Services, LLC has been received by Bank. The
final Advance as provided in Section 2.1(a) above shall be made on the
Conversion Date or as soon thereafter as Bank has received all documents Bank
reasonably deems necessary to support the final Advance and Bank has received a
written report for the final Advance from USA Inspection Services, LLC, which
establishes the Construction Costs for such Advance. Bank will use commercially
reasonable efforts to disburse each Advance hereunder within a reasonable period
of time after Borrowers request such Advance.
(b) Disbursement. On the date of an Advance hereunder,
Bank shall, subject to the satisfaction of the conditions set forth in this
Agreement, disburse the amount in immediately available funds by crediting the
amount made available to the operating account in Bank established by Borrowers.
Only one Advance shall be made in any calendar month.
(c) Retainage. The Bank shall retain an amount equal to
the Retainage on each Advance except for the final Advance. No interest shall
accrue on any such Retainage until disbursed to Borrower. The Retainage shall
not be disbursed until the Bank has received satisfactory evidence that the
Improvements have been completed in accordance with the Plans and
Specifications, all permits and licenses for the operation of the Replacement
Hospital on the Xxxx Xxxxxx Parkway Property have been issued, all items to be
delivered under Section 3.2 have been delivered, certification of USA Inspection
Services, LLC has been delivered to Bank certifying that the Improvements have
been completed in accordance with the Plans and Specifications and no Default or
Event of Default has occurred and not been cured.
2.3 INTEREST ON LOAN.
(a) Generally. Interest shall be due and payable as
provided in the Note. Bank is hereby authorized to withdraw from the
Construction Loan Interest Account such amount as may be necessary to pay the
Bank all accrued interest due and payable on the Note.
(b) Upon Default. Upon the occurrence and during the
continuance of a Default, Bank shall have the option (but shall not be required
to give prior notice thereof to Borrowers) to accelerate the maturity of the
Note, to exercise any other rights or remedies hereunder in connection with the
exercise of this right, and, upon any such acceleration, to declare the interest
on the outstanding principal balance of the Note to be at the Default Rate from
and after the date of such Default and for so long as the same shall be
continuing uncured.
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2.4 FEES AND COMMISSIONS ON LOAN.
(a) Origination Fee. An initial origination fee in the
amount of $60,000 has been earned by Bank and shall be payable as follows:
(i) The sum of $15,000 was paid by Borrowers to
Bank on July 24, 2002; and
(ii) The sum of $45,000 is due and payable by
Borrowers to Bank on the Agreement Date.
(b) Permanent Loan Fee. A permanent origination loan fee
shall be deemed earned by Bank on the Conversion Date in the amount of $30,000
and shall be due and payable by Borrowers to Bank on the Conversion Date.
(c) Origination Fees Not Interest. The initial
origination fee and the permanent origination fee are in addition to and not in
lieu of any interest and other fees payable by the Borrowers and shall be deemed
fully earned on the date such are due and payable.
2.5 LOAN NOTE ACCOUNT.
(a) Payment. The Loan shall be repayable in accordance
with the terms and provisions set forth herein and in the Note.
(b) Bank Records. Bank shall maintain in accordance with
its usual practice records of account evidencing the Advances under the Note
with respect to the Loan. In any legal action or proceeding in respect of this
Agreement, the entries made in such record shall, absent manifest error, be
prima facie evidence of the existence and amounts of the Advances with respect
to the Loan. Failure of Bank to maintain any such record shall not excuse
Borrowers from the obligation to pay the Note.
2.6 REPAYMENT OF LOAN NOTE AND RELEASES.
(a) Release of East Church Street Property. The East
Church Street Property shall be released from the lien of the Security
Instruments upon the satisfaction of all four of the following conditions:
(i) the Improvements and all punch list items
have been completed and certified as to
completion by USA Inspection Services, LLC
to Bank, such certification to be subject to
the review and approval of Bank;
(ii) the day-to-day operations of the Hospital
have been entirely transferred from the East
Church Street Property to the Xxxx Xxxxxx
Parkway Property and the Replacement
Hospital is
8
fully operational as a general acute care
hospital; such transfer to be certified in
writing by Borrowers to Bank.
(iii) the Replacement Hospital, located on the
Xxxx Xxxxxx Parkway Property, has a proven
generation of cash flow to service all of
the debt of Southern Health Corporation of
Jasper, Inc. of at least 1.40 times, as
measured by EBITDA/Annual Debt Service each
month for six (6) consecutive months, as
supported by financial materials provide by
Borrowers to Bank; and
(iv) there is no Default or Event of Default that
has not been cured.
(b) Limitation on Repayment of Note. The Note may be
prepaid in whole or in part at any time and from time to time with twenty-one
(21) days' prior written notice by Borrowers to Bank. In the event the
indebtedness evidenced by the Note is paid in full (exclusive of any payment
pursuant to Section 2.6(c) hereof), Bank shall have no further obligations to
make any Advances to Borrowers under the Note or otherwise with respect to the
Loan or pursuant to this Agreement. After the installments of principal and
interest commence under the Note, a partial prepayment shall not reduce the
monthly installments provided for in the Note. The written notice shall be given
as provided in this Agreement.
(c) Loan Reduction. In the event the Bank, acting
reasonably and in good faith, determines at any time that, based on the written
report or opinion of USA Inspection Services, LLC, the cost to complete the
Improvements is greater than the then Available Loan Commitment, Borrowers agree
to make a prepayment on the Note to the extent of such excess.
2.7 MANNER OF PAYMENT.
(a) Payments. Each payment (including any prepayment) by
Borrowers on account of the principal of or interest under the Note, fees, and
any other amount owed to Bank under this Agreement, the Note, or the other Loan
Documents shall be made to an account designated by Bank, for the account of
Bank, in lawful money of the United States of America in immediately available
funds and shall be applied by Bank on the date received by Bank in accordance
with the terms of Section 2.8 hereof. Any payment received after 2:00 p.m. shall
be applied as of the next business day.
(b) Application of Payment. If any payment under this
Agreement or any of the Note shall be specified to be made upon a day which is
not a Business Day, it shall be made on the immediately following day which is a
Business Day.
(c) Construction Loan Interest Account. Borrowers have
established the Construction Loan Interest Account for the purpose of paying
interest on the Note and as additional collateral for the indebtedness evidenced
by the Note. Borrowers hereby authorize Bank to withdraw from the Construction
Loan Interest Account the necessary funds to pay to
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Bank all interest due and payable under the Note. Upon the balance in the
Construction Loan Interest Account being reduced to less than $100,000.00 at any
time after the first Advance, Borrowers covenant and agree to deposit in the
Construction Loan Interest Account within three (3) days after notice a
sufficient amount so that the account has after the deposit a balance of not
less than $200,000.00. Upon a Default, Bank shall be entitled to apply all funds
then in the Construction Loan Interest Account to any indebtedness evidenced by
the Note or secured by the Security Instruments.
(d) No Right of Set-Off or Counterclaim. Borrowers agree
to pay principal, interest, fees, and all other amounts due hereunder or under
the Note without set-off or counterclaim or any deduction whatsoever.
2.8 APPLICATION OF PAYMENTS. Unless otherwise specifically
provided in this Agreement or the other Loan Documents, payments made to Bank,
or otherwise received by Bank (from realization on collateral for the
Obligations or otherwise), shall be applied in the following order: First, to
the reasonable out-of-pocket costs and expenses, if any, incurred by Bank,
commencing upon the event giving rise to Default and during its continuance, in
the collection of such amounts under this Agreement or any of the other Loan
Documents, including, without limitation, any reasonable out-of-pocket costs
incurred in connection with the sale or disposition of any collateral for the
Obligations; Second, to any fees and commissions then due and payable by
Borrowers to Bank, under this Agreement or any Loan Document, including, without
limitation, late charges provided for in the Note and Default Rate interest (as
defined in the Note); Third, to any accrued and unpaid interest which may have
accrued on the Note; Fourth, to any unpaid principal of the Note; Fifth, to any
other Obligations not otherwise referred to in this Section 2.8 until all such
Obligations are paid in full; and Sixth, upon satisfaction in full of all
Obligations, to Borrower or as otherwise required by law.
ARTICLE 3
LOAN DISBURSEMENTS
3.1 PRIOR TO THE FIRST ADVANCE. Prior to requesting the first
Advance, Borrowers shall execute and deliver all of the following items to Bank
in form and substance reasonably satisfactory to Bank. Bank shall have no
obligation to make the first Advance until all of these items have been provided
to, executed and delivered to Bank and approved by Bank, such approval not to be
unreasonably withheld or delayed.
(a) Note. A Note by Borrowers payable to the order of
Bank.
(b) Security Instruments. Security Instruments which
shall be a first lien on all property and collateral described therein.
(c) Environmental Inspection and Indemnity Agreement.
Bank shall have received Phase I environmental reports on the Property at the
cost of the Borrowers, such reports to be addressed to Bank and conducted by
engineers acceptable to Bank stating that the Property
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is free of all Hazardous Substances. An environmental indemnity agreement by
Borrowers and Guarantor in favor of Bank whereby Borrowers and Guarantor
indemnify Bank against any and all environmental matters with respect to the
Property ("ENVIRONMENTAL INDEMNITY AGREEMENT").
(d) Guaranty. The Contract of Guaranty by Guarantor in
favor of Bank in which Guarantor guarantees the payment and performance of the
Obligations ("GUARANTY").
(e) Title Insurance. A standard mortgagee policy for Bank
as to the Property from a company approved by Bank (including any reinsurance
agreements, endorsements and special coverages required by Bank), in form and
substance acceptable to Bank, providing coverage in the aggregate amount of
$6,000,000 and containing no title exceptions other than the Permitted
Encumbrances. In the event that the title agent providing the mortgagee policy
cannot deliver a final title policy or policies prior to the first disbursement
under the Note, Bank will accept a marked mortgagee title insurance commitment
or commitments provided that such commitment or commitments are replaced by a
final mortgagee policy or policies that conform to the above requirements within
a reasonable time thereafter. Bank may, in its discretion, accept a title
insurance commitment or interim construction binder in lieu of a title insurance
policy hereunder provided that such title insurance commitment or interim
construction binder is replaced by a final mortgagee policy or policies that
conform to the above requirements within a reasonable time thereafter. Borrowers
shall be responsible for all costs of title insurance including, without
limitation, all out-of-pocket costs of the title agent and title insurance
company, the title exam fee, the title insurance premium and the cost of
issuance of all title insurance endorsements.
(f) Plans and Specifications. Borrowers shall provide to
Bank three (3) sets of completed Plans and Specifications, such Plans and
Specifications having been approved by Bank prior to the Agreement Date.
(g) Construction Budget. Borrowers shall provide to Bank
three (3) copies of the construction budget. The construction budget (including
all cost overruns) shall have been approved by the Georgia Department of
Community Health and shall demonstrate that the total cost of construction of
the Improvements does not exceed $15,500,000 (which includes all cost overruns).
The construction budget shall have been approved by Bank, and the construction
budget shall have been approved in writing by USA Inspection Services, LLC, no
such approval to be unreasonably withheld or delayed. The cost of the review and
approval of the initial construction budget by USA Inspection Services, LLC is
$1,500, which cost Borrowers represent unto Bank that Borrowers have paid in
full. Borrowers will pay prior to the first Advance hereunder any additional fee
charged by USA Inspection Services, LLC to review and approve the construction
budget reflecting all cost overruns.
(h) Construction Contract. Borrowers have provided to
Bank a copy of the AIA construction contract for the Improvements with Xxxxxxxxx
& Gorrie, LLC, general contractor, and a copy of the architect's contract for
the Improvements with Xxxxxxx Xxxxxxx Xxxxxxxx, P.C., architect, both certified
as accurate and complete by an officer of Borrowers. The Construction Contract
and the Architect's Contract shall be assigned as additional collateral to
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the Bank for the Loan, which assignment is acknowledged and approved by the
aforesaid contractor, architect and Bank.
(i) Permits. Borrowers shall provide to Bank satisfactory
evidence of all certificates of need and implementation requirements, operating
permits and licenses, of the Hospital, and zoning compliance, building permit,
land disturbance permit, and sewer allocation, if any, relating to the
development of the Xxxx Xxxxxx Parkway Property contemplated by this Agreement.
(j) Certificate of Need. Evidence satisfactory to the
Bank of the issuance and transfer of the certificate of need for the operation
of the Replacement Hospital on the Xxxx Xxxxxx Parkway Property, together with a
copy of the certificate of need, and evidence satisfactory to Bank and its
counsel that Borrower has received (1) a determination letter from the Georgia
Department of Community Health that the cost overruns on the Replacement
Hospital project (Project No. GA 047-98) do not require the filing by Borrower
of a new certificate of need application for the Replacement Hospital project
(Project No. GA 047-98), (2) a certificate of need from the Georgia Department
of Community Health for the cost overruns on the Replacement Hospital project
(Project No. GA 047-98), or (3) a new certificate of need from the Georgia
Department of Community Health for the relocation and replacement of the
Hospital from the East Church Street Property to the Xxxx Xxxxxx Parkway
Property for a budget not to exceed $15,500,000.
(k) Certification. Bank has received an equity and draw
inspection certificate completed by USA Inspection Services, LLC at Borrowers'
expense verifying that the amount requested by the Borrowers is in compliance
with the terms of this Agreement.
(l) Review of Cost Estimates. Bank has engaged USA
Inspection Services, LLC, at the expense of Borrowers to be paid prior to the
first Advance, to conduct a review of the cost estimates for the Improvements
and the Plans and Specifications. Prior to the first Advance, Bank must receive
and approve the report from USA Inspection Services, LLC.
(m) Lien Waivers. Bank has received an unconditional lien
waiver from Xxxxxxxxx & Xxxxxx, LLC, or any successor general contractor.
(n) Flood Hazard. Certifications satisfactory to Bank
that no portion of the Property is located within a flood hazard area.
(o) Insurance. Certificate(s) of insurance required
pursuant to Section 4.19 hereof and satisfactory evidence of premium payments.
(p) Authority Documents of Borrowers and Guarantor.
Articles of Incorporation of Borrowers and of Guarantor certified by the office
of the Secretary of State in which each Borrower and in which Guarantor is
incorporated; Bylaws of each Borrower and of Guarantor certified by an officer
of each such Borrower and of Guarantor; Certificate of Existence of each
Borrower and of Guarantor issued by the state in which the applicable Borrower
or Guarantor is incorporated; Incumbency Certificate of each Borrower and of
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Guarantor reflecting the Authorized Signatories; Corporate Resolutions of each
Borrower and of Guarantor certified by an officer of the applicable Borrower and
of Guarantor and authorizing the applicable Borrower to enter into this
Agreement and execute all related documents and Loan Documents applicable to the
Note, and in the case of Guarantor, authorizing Guarantor to enter into the
Guaranty; and, if required, resolutions of any Borrower's stockholders certified
by an officer of the applicable Borrower and authorizing the applicable Borrower
to enter into this Agreement and execute all related documents and Loan
Documents applicable to the Note.
(q) Attorney's Opinion. The written opinions of each
Borrower's counsel and of Guarantor's counsel to Bank in form and content
acceptable to Bank and which address the following matters:
(i) Existence, Due Authorization and Execution.
Borrower is duly organized and existing as a
corporation and is in good standing under
the laws of the state of incorporation or
formation and qualified to do business under
the laws of the State of Georgia. Guarantor
is duly organized and existing as a
corporation and is in good standing under
the laws of the state of incorporation or
formation and qualified to do business under
the laws of the State of Georgia;
(ii) Enforceability. The Loan Documents are
enforceable against Borrower in accordance
with their terms subject to customary
exceptions and limitations. The Guaranty is
enforceable against Guarantor in accordance
with its terms subject to customary
exceptions and limitations; and
(iii) Miscellaneous. As to such other matters as
Bank may reasonably request.
(r) Taxpayer Identification Number. Each Borrower's
federal taxpayer identification numbers.
(s) Request for Advance from Loan. The Request for
Advance from Loan that Borrowers are required to deliver pursuant to Section 2.2
hereof.
(t) Payments. Borrowers shall pay the cost of all
services of USA Inspection Services, LLC for which Bank has engaged them for the
purposes provided in this Agreement.
(u) Investment. Evidence reasonably satisfactory to Bank
that Borrowers have invested in the cost of the Xxxx Xxxxxx Parkway Property and
the construction of the Improvements in an amount not less than $8,629,738
(exclusive of any hold back) and that the cost to finish the Improvements is not
greater than the Loan Amount.
(v) Appraisal. An appraisal of the Xxxx Xxxxxx Parkway
Property, assuming the Improvements are completed, by Valuation Counselors
indicating a value of not less than
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$12,000,000. Borrowers shall pay the cost of such appraisal. The current
appraisal of the East Church Street Property shall also be addressed to the Bank
at the cost of Borrowers.
(w) Record Search. A search and certification is received
by Bank that there is no UCC lien, judgment lien, bankruptcy or pending
litigation affecting any collateral securing the Loan or any of the Borrowers.
(x) Surveys. Current foundation survey of the Xxxx Xxxxxx
Parkway Property and as-built survey of the East Church Street Property. The
Borrowers shall pay the cost of the surveys and all modifications thereto
reasonably required by the Bank.
(y) Evidence of Zoning. Evidence in the form of a letter
from the City of Jasper that the zoning classification of the Properties
continues to be C2 and that a hospital and medical office building continue to
be included within the permitted uses under the C2 zoning classification.
(z) Evidence of Utilities. Evidence in the form of a
letter from the City of Jasper that water and sewer can be made available at the
Xxxx Xxxxxx Parkway Property.
(aa) Leases. Copies of all leases and occupancy agreements
affecting the Properties together with a written certification from Borrowers
attached thereto that all such leases and occupancy agreements are true,
accurate and complete copies and that they have not been amended or modified
except as attached to such certification.
(bb) Certified Rent Roll. A rent roll containing the
following with respect to each tenant of the Hospital and Replacement Hospital
(i) the tenant's name, (ii) the address of the leased premises, (iii) the date
of the lease; (iv) the scheduled expiration date of the lease; (v) information
relating to any option to extend under the lease, (vi) the number of square feet
in the leased premises, (vii) the base rental amount per month and per year;
(viii) the security deposit, if any, and (ix) a statement as to any default or
claimed setoff against rent existing under said lease as of the date of the rent
roll. The rent roll shall be certified as true, accurate and complete by the
President and CEO of Southern Health Corporation of Jasper, Inc.
(cc) Construction Loan Interest Account. Borrowers'
depositing into the Construction Loan Interest Account a sufficient amount so
that the account has after the deposit a balance of not less than $300,000.00.
(dd) Evidence satisfactory to the Bank that Borrowers and
the Xxxx Xxxxxx Parkway Property, or any condition, use or activity on the Xxxx
Xxxxxx Parkway Property, is in compliance with each and every requirement of the
Federal Water Pollution Control Act, 33 U.S.C. ss. 1251 et seq., the Georgia
Water Quality Control Act, O.C.G.A. ss. 12-5-20 et seq., the Georgia Erosion and
Sedimentation Act of 1975, O.C.G.A. ss. 12-7-1 et seq., and any permits,
authorizations, rules and regulations promulgated pursuant to these Acts.
Borrowers hereby agree that Bank may retain a qualified environmental consulting
firm to confirm and verify independently such compliance at Borrowers' sole
expense.
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(ee) Evidence satisfactory to the Bank that Borrowers have
fully resolved all matters addressed in the September 5, 2002 letter to
Borrowers from the Georgia Department of Natural Resources, including without
limitation, the violations cited in the "Expedited Enforcement Compliance Order
and Settlement Agreement" attached thereto, such letter identified as Item 3 on
SCHEDULE 1 attached hereto. Borrowers represent and warrant to Bank that
Borrowers have delivered to Bank a true, accurate and complete copy of such
letter, attached order and related notices or writings.
(ff) Due Diligence/Other Documents. Completion of due
diligence by Bank and its counsel to Bank's and its counsel's satisfaction, and
the receipt of other documents, information, materials or items that Bank may
reasonably require, including, without limitation, that certain estoppel
certificate from R. Xxxx Xxxxxxxx with respect to the "DEVELOPMENT PARCEL" as
defined in that certain Declaration of Covenants and Restrictions recorded in
Deed Book 421, page 577, Xxxxxxx County, Georgia Records.
3.2 SUBSEQUENT ADVANCES. Prior to requesting subsequent Advances
(subsequent to the first Advance), Borrowers shall execute and deliver to Bank
the following items. Bank shall have no obligation to make further Advances
until the following items requested by Bank have been properly executed and
delivered to Bank and approved by Bank.
(a) Title Insurance Endorsement. If requested by Bank, an
endorsement to the Title Insurance to cover the Advance, reflecting no change in
the aggregate dollar amount of coverage or the exceptions previously accepted
and approved by Bank except that all taxes due and payable have been paid. In
the event that the title agent providing the endorsement to the Title Insurance
cannot deliver a final title endorsement prior to such subsequent disbursement,
Bank will accept a representation and covenant from issuer of the Title
Insurance that such title endorsement will be issued upon the recording of the
applicable documentation.
(b) Request for Advance from Loan. The Request for
Advance from Loan that Borrowers are required to deliver pursuant to Section 2.2
hereof.
(c) Certification. Prior to each Advance, Bank shall
request, at Borrowers' expense, an equity and draw inspection certificate to be
completed by USA Inspection Services, LLC at a cost to Borrower of $500 which
certificate approves the requested Advance. The aforesaid cost shall be paid by
Borrowers before each Advance. Each Advance shall be subject to the approval by
Bank of the applicable certificate and as a condition of each Advance
verification that the amount requested by the Borrowers is in compliance with
the terms of this Agreement to which Borrowers are entitled.
(d) Lien Waiver. Bank has received an unconditional lien
waiver from Xxxxxxxxx & Gorrie, LLC, or any successor general contractor.
(e) Other Documents. Other documents or items that Bank
may reasonably require.
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BORROWERS' AND GUARANTOR'S COVENANTS, AGREEMENTS,
REPRESENTATIONS AND WARRANTIES
Borrowers and where applicable, Guarantor, make the following
covenants, agreements, representations and warranties to Bank:
4.1 PAYMENT. Borrowers shall pay when due all sums owing under
this Agreement, the Note, the Security Instruments and the other Loan Documents.
4.2 PERFORMANCE. Borrowers shall perform all their obligations
under this Agreement, the Note, the Security Instruments and the other Loan
Documents. Borrowers covenant and agree to use commercially reasonable efforts
to cause the Improvements to be completed on or before eighteen (18) months from
the Agreement Date. Guarantor shall perform all its obligations under this
Agreement and the Guaranty.
4.3 FURTHER ASSURANCES. On demand of Bank, Borrowers shall do any
act, or execute any additional documents reasonably required by Bank to further
evidence or secure the indebtedness evidenced by the Note or to confirm that the
liens of the Security Instruments are first liens or to comply with this
Agreement, including, but not limited to, executing and delivering new or
replacement notes and/or security instruments and agreements supplementing,
extending or otherwise modifying the Note, this Agreement, the Security
Instruments, and certificates as to the amount of the indebtedness evidenced by
the Note from time to time.
4.4 ADDITIONAL INFORMATION. On demand of Bank, Borrowers shall
deliver to Bank any additional documents or information with respect to the
Improvements that Bank may reasonably request and that are in the possession of,
or have been prepared on behalf of, any one of the Borrowers or Guarantor,
including, without limitation, surveys. Bank shall not disclose without the
prior written consent of Borrowers (other than to Bank's employees, auditors or
counsel or holders of a participation in the Note) any information with respect
to Borrowers or Guarantor which is furnished to Bank under this Agreement or the
Loan Documents or in connection with the transactions contemplated hereby or
thereby which is designated by any Borrower or Guarantor as confidential,
provided that Bank may disclose any such information (other than medical records
created by Borrowers or their affiliates which are subject to protection under
the Health Insurance Portability and Accountability Act of 1996, none of which
shall be disclosed by Bank except to the extent such disclosure is permitted by
law) (i) as has become generally available to the public through no fault of
Bank, its employees, auditors or counsel or other holder of a participation in
the Note, (ii) as may be required or appropriate in any report, statement or
testimony submitted to any state or federal regulatory body having jurisdiction
over Bank, (iii) as may be required in response to any summons or subpoena or in
connection with any litigation, (iv) to the extent required to protect Bank's
rights or interests in the Note or collateral or in order to comply with any
law, order, regulation or ruling applicable to Bank, or (v) to any prospective
transferee to whom Bank would be permitted under the Loan Documents to convey a
participation or transfer its interest therein.
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4.5 QUARTERLY FINANCIAL STATEMENTS AND OTHER INFORMATION. Within
sixty (60) calendar days after the last day of each quarter in each fiscal year
of each of the Borrowers, except the last quarter in each such fiscal year of
each of the Borrowers, Borrowers shall cause to be delivered to Bank quarterly
financial statements for each of the Borrowers certified by the chief financial
officer of each applicable Borrower.
4.6 ANNUAL FINANCIAL STATEMENTS. Within ninety (90) calendar days
after the end of each fiscal year of each Borrower and of Guarantor, Borrowers
shall cause to be delivered to Bank the audited consolidated financial
statements of Guarantor and its subsidiaries (including the Borrowers) issued by
Deloitte & Touche, LLP or such other accounting firm of recognized national or
regional standing as may be engaged by Borrowers.
4.7 FINANCIAL COVENANTS. Until the Note is paid in full and all
obligations secured by the Security Instruments are satisfied, Borrowers shall
cause compliance with the following financial covenants:
(a) Leverage Ratio. Borrowers represent and warrant unto Bank
that Southern Health Corporation of Jasper, Inc. had a Leverage Ratio, as
hereinafter defined, on June 30, 2002, and shall have on the last day of each
fiscal year of Southern Health Corporation of Jasper, Inc. thereafter until the
Note is paid in full a Leverage Ratio of 1.50:1.00 or less.
(b) Debt Service Coverage. Borrowers covenant and agree unto
Bank that Southern Health Corporation of Jasper, Inc. has on the Agreement Date
and shall maintain thereafter until the Note is paid in full, a minimum amount
debt service coverage of 1.50x as defined by EBITDA/Total Debt Service.
(c) Definitions. The following definitions shall be applicable
for Section 5.8(a):
"Leverage Ratio" means the ratio of Total Liabilities to
Tangible Net Worth for Southern Health Corporation of Jasper, Inc. as of the
last day of each fiscal year.
4.8 COMPLIANCE CERTIFICATES. Within sixty (60) calendar days from
the end of each fiscal quarter except for the fiscal year end, in which event
within ninety (90) calendar days from the fiscal year end of Southern Health
Corporation of Jasper, Inc., Borrowers shall provide to Bank a certificate
signed by the chief financial officer or the controller of Southern Health
Corporation of Jasper, Inc. setting forth such calculations required to
establish whether Southern Health Corporation of Jasper, Inc. is in compliance
with Section 4.7 herein.
4.9 THIRD PARTY INDEBTEDNESS. Borrowers covenant and agree that
prior to the Note being paid in full, no additional indebtedness, direct or
indirect, including through guaranty obligations (exclusive of physician
guarantees entered into in the ordinary course of business and in compliance
with all applicable laws), may be incurred which exceeds $100,000 and which is
secured by (i) any real or personal property described in the Security
Instruments (exclusive of purchase money indebtedness on after-acquired property
which does not exceed the fair market value of the property at the time of its
acquisition), or (ii) the capital stock of Southern Health Corporation of
Jasper, Inc., without the prior, written consent of the Bank.
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4.10 INTERCOMPANY INDEBTEDNESS. Borrowers and Guarantor covenant
and agree that except as hereinafter provided, all intercompany indebtedness
among Borrowers and Guarantor is subordinate to the indebtedness evidenced by
the Note or secured by the Secured Indebtedness, and to evidence such
subordination each of the Borrowers and Guarantor hereby subordinate all present
and future indebtedness among Borrowers and Guarantor to the obligations and all
security held by the Bank for the Obligations. The foregoing subordination shall
not include current charges for services rendered by SunLink Health Systems,
Inc., to Borrowers. Further, Borrowers agree that if there is a Default or Event
of Default, Southern Health Corporation of Jasper, Inc. shall not loan
additional money to or incur additional intercompany indebtedness from the other
Borrowers other than current charges for services rendered until such time as
there is no Default or Event of Default.
4.11 KEY MAN INSURANCE. Borrowers covenant and agree to provide to
Bank within one hundred eighty (180) days after the Agreement Date evidence of
Key Man Life Insurance on the chief executive officer of SunLink Healthcare
Corp. in the amount of $1,500,000 by a company acceptable to Bank, with Southern
Healthcare Corporation of Jasper, Inc. being named as beneficiary, which
insurance has been assigned to the Bank as additional collateral for the Loan
together with evidence of the payment of the premium for one (1) year in
advance. Borrowers covenant and agree to pay the premium for such insurance on
or before thirty (30) days before such payments become delinquent and submit
within such time to Bank evidence of such payment. Such insurance shall remain
in full force and effect through ten (10) years after the Conversion Date and
thereafter until any Default and Event of Default has been eliminated. In the
event of the failure to make any premium payments required to keep such
insurance in full force and effect, Bank shall be authorized to make such
payments and all amounts so paid shall be secured by the Security Instruments.
4.12 OTHER FINANCIAL DOCUMENTATION. Borrowers shall provide to Bank
such other financial information as Bank may reasonably request from time to
time to clarify or amplify the information required to be furnished to Bank
under this Agreement.
4.13 EXECUTION AND DELIVERY OF REQUIRED DOCUMENTATION. Borrowers
shall, in a timely manner, deliver to Bank all documents and information that
Borrowers are required to execute and deliver hereunder.
4.14 PAYMENT OF CONTRACTORS. Borrowers shall pay in a timely manner
any and all contractors and subcontractors who conduct work in or on the
Improvements, subject to the right of Borrowers to contest any amount in
dispute, so long as the contesting of such amount is pursued diligently and in
good faith and no lien is filed which is senior to the Security Instruments.
4.15 INSPECTION AND APPRAISAL. Borrowers shall permit Bank and its
authorized agents to enter upon the Property during normal working hours and as
often as it desires, for the purpose of inspecting or appraising the
Improvements.
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4.16 FEES AND EXPENSES. Borrowers shall pay when due the reasonable
out-of-pocket expenses, costs and fees incurred by Bank associated with the
closing or administration prior to the Conversion Date of the Loan or incurred
by Borrowers in order to meet the requirements of this Agreement, including
(without limitation) commitment and renewal fees, recording fees and title
insurance, survey charges, builder's risk and other insurance premiums, property
taxes, intangible taxes, and legal fees incurred by Bank in connection with the
making of the Loan.
4.17 HAZARDOUS SUBSTANCES. Except as set forth in the environmental
reports and documentation identified on SCHEDULE 1 attached hereto and
incorporated herein by this reference, Borrowers, jointly and severally, hereby
warrant and represent to, and covenant with, Bank to the best knowledge and
belief of Borrowers, without regard to whether Bank has or hereafter obtains any
knowledge or report of the environmental condition of the Property as follows:
that during the period of Borrowers' or any one of Borrowers' ownership of the
Property, the Property has not been and is not now being used in violation of
any federal, state or local environmental law, ordinance or regulation, that no
proceedings have been commenced, or notice(s) received, concerning any alleged
violation of any such environmental law, ordinance or regulation, and that the
Property is free of hazardous or toxic substances and wastes, contaminants, oil,
radioactive or other materials the removal of which is required or the
maintenance of which is restricted, prohibited or penalized by any federal,
state or local agency, authority or governmental unit. Borrowers covenant that
they shall neither permit any such materials to be brought on to the Property,
nor shall they acquire real property to be added to the collateral for the Loan
upon which any such materials exist, except to the extent disclosed to Bank in
environmental assessments or other writings; and if such materials are so
brought or found located thereon, such materials shall be immediately removed,
with proper disposal, to the extent required by applicable environmental laws,
ordinances and regulations, and all required environmental cleanup procedures
shall be diligently undertaken pursuant to all such laws, ordinances and
regulations. Borrowers further represent and warrant to, and covenant with, Bank
that Borrowers will promptly transmit to Bank copies of any citations, orders,
notices or other material governmental or other communications received with
respect to any hazardous materials, substances, wastes or other environmentally
regulated substances affecting the Property. Notwithstanding the foregoing,
there shall not be a default of this provision should Borrowers store or use the
aforesaid materials, provided that: such materials are necessary for the
construction, operation, maintenance and repair of hospitals and medical office
buildings and are stored or used in normal quantities for such purposes and
provided that such materials are being held, stored and used in compliance with
all applicable laws, regulations, ordinances and requirements. The indemnity set
forth below shall always apply to such materials, and it shall continue to be
the responsibility of Borrowers to take all remedial actions required under and
in accordance with this Agreement in the event of any unlawful release of any
such materials.
4.18 TAXES. Borrowers shall take all necessary measures to insure
that the Xxxx Xxxxxx Parkway Property and the East Street Church Property are,
or will be, separately assessed for tax purposes (or satisfactorily insured by
the title insurer as a separate parcel for tax purposes) and will upon the
request of Bank provide Bank with information as to tax parcel identification
numbers, tax rates, estimated tax values and the identities of the taxing
authorities.
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4.19 INSURANCE. During the construction of the Improvements,
Borrowers shall maintain and provide satisfactory evidence to Bank of builders'
risk completed value insurance for the benefit of Bank and in amounts and with
an insurance company or companies satisfactory to Bank. Borrowers shall keep the
improvements located on the East Church Street Property and, upon completion,
the Improvements insured for the benefit of Bank (a) against loss or damage by
fire, lightening, windstorm, hail, explosion, riot, riot attending a strike,
civil commotion, aircraft, vehicles and smoke and other such hazards as Bank may
from time to time reasonably require (b) in amounts approved by Bank, not to be
required to exceed 100% of the full insurable value of the Improvements and (c)
with loss payable to Bank, pursuant to the New York Standard or other mortgagee
clause satisfactory to Bank. All insurance herein provided for shall be in form
and with companies approved by Bank, such approval not to be unreasonably
withheld or delayed, and, regardless of the types or amounts of insurance
required and approved by Bank, Borrowers shall assign to Bank, as collateral and
further security for the repayment of the Loan, all policies of insurance which
insure against any loss or damage to the improvements located on the East Church
Street Property or the Improvements. If Bank, by reason of such insurance,
receives any money for loss or damage at a time when a Default or Event of
Default exists hereunder, such amount may, at the option of Bank, be retained
and applied by Bank, toward the repayment of the Note, or be paid over, wholly
or in part, to Borrowers for the repair or replacement of the improvements
located on the East Church Street Property or the Improvements, as the case may
be, or any part thereof, or for any other purpose or object satisfactory to
Bank, but Bank shall not be obligated to see to the proper application of any
amount paid over to Borrowers. If Bank, by reason of such insurance, receives
any money for loss or damage at a time when a Default shall not exist hereunder,
such amount shall be paid over to Borrowers for the repair or replacement of the
improvements located on the East Church Street Property or the Improvements, as
the case may be, or any part thereof, or for any other purpose or object
satisfactory to Bank, but Bank shall not be obligated to see to proper
application of any amount paid over to Borrowers. Borrowers shall also maintain
general liability insurance, xxxxxxx'x compensation insurance, automobile
insurance for all vehicles owned by any Borrower and other insurance with such
coverage and in such amounts as shall be customary for hospital companies
similarly situated with Borrowers to maintain. Such insurance shall list Bank as
a certificate holder (except as to worker's compensation, automobile and medical
malpractice insurance) and provide for thirty (30) days written notice to Bank
prior to the cancellation, expiration or termination thereof. Borrowers shall
deliver to Bank certificates of the aforesaid insurance.
In the event of a foreclosure under one or more of the Security
Instruments, the purchaser shall, to the extent of any amounts then owing and
unpaid on the Loan, succeed to all the rights of Borrowers, including any right
to unearned premiums, in and to all policies of insurance assigned to Bank with
respect to the applicable Property pursuant to the terms of this Agreement.
4.20 LITIGATION. Borrowers warrant and represent to Bank that as of
the Agreement Date, none of the Borrowers is a party to any litigation, suit,
action, arbitration, grievance, proceeding or investigation (collectively,
"ACTIONS"), nor are any such Actions threatened against any Borrower, in any
such case which would materially adversely affect such Borrower's ability to
perform its obligations under this Agreement and the Loan Documents.
20
4.21 REPORTABLE EVENT. Promptly after any Borrower receives notice
or otherwise becomes aware thereof, such Borrower shall notify Bank of the
occurrence of any Reportable Event with respect to any Plan (as defined in
ERISA) as to which the Pension Benefit Guaranty Corporation has not by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within thirty (30) calendar days of the occurrence of such event,
provided that such Borrower shall give Bank notice of any failure to meet the
minimum funding standards of Section 412 of the Code or Section 302 of ERISA,
regardless of the issuance of any waivers in accordance with Section 412(d) of
the Code.
4.22 ACCOUNTS. Until the Note is paid in full and all obligations
secured by the Security Instruments are paid in full each Borrower covenants and
agrees to maintain its primary operating accounts, investment accounts and cash
management accounts with the Bank. Each Borrower also covenants and agrees with
Bank to provide to Bank the opportunity to bid on the merchant card servicing
business of all current and future hospitals in which Guarantor has a legal or
beneficial interest.
4.23 INITIAL ACCOUNT. Borrowers have deposited on the Agreement
Date with Bank in the Construction Loan Interest Account the sum of $2,500.00.
Upon the Construction Loan Interest Account being reduced to $100,000.00 after
the first Advance, Borrowers consent and agree to deposit in the Construction
Loan Interest Account a sufficient amount so that the balance in such account is
not less than $200,000.00. On the Conversion Date, all funds in such account
after the payment of all accrued and unpaid interest on the Note shall be
delivered to Borrowers and the account closed and the security interest on such
account satisfied.
4.24 QUALIFICATION. The Borrowers represent and warrant that
Southern Health Corporation of Jasper, Inc. has the power and authority to own
and operate the Hospital offering all of the services offered by the Hospital as
of the Agreement Date, to conduct the business of the Hospital, and to own,
lease and use its assets. Further, each Borrower represents and warrants that it
has the power and authority to own, lease, use and operate its respective assets
and to conduct its respective business or businesses.
4.25 AUTHORITY, EXECUTION AND DELIVERY.
(a) Each Borrower has the power and authority to enter
into this Agreement, the other Loan Documents and all other agreements
contemplated herein and therein and to execute and deliver all certificates,
instruments and other documents for consummation of the loan transaction
contemplated in this Agreement and the other Loan Documents to which it is a
party and to consummate the transactions contemplated thereby. The execution,
delivery, and performance of this Agreement and the other Loan Documents by each
Borrower has been authorized and approved by all necessary action on the part of
such Borrower and any other affiliated person or entity whose approval is
required therefor, and each of the Loan Documents is the legal, valid, and
binding obligation of each Borrower enforceable against each Borrower in
accordance with its terms, except as enforceability may be limited by applicable
equitable principles or by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by the exercise of
judicial discretion in accordance with general equitable principles.
21
(b) Neither the execution nor delivery of this Agreement
or any of the other Loan Documents by Borrowers, nor the consummation or
performance by Borrowers of any of the transactions contemplated hereby will,
directly or indirectly (with or without notice or lapse of time or both):
(i) violate any Borrower's Articles or
Certificate, as applicable, of Incorporation
or Bylaws;
(ii) violate or contravene any existing
federal, state, local, municipal or other
administrative constitution, law, statute,
ordinance, regulation, principle of common
law, or any award, decision, injunction,
judgment, order, ruling, subpoena or verdict
entered, issued, made or rendered by any
court, administrative agency, department,
official, or other tribunal or other
governmental body or agency, to which, in
any such case, any of the Borrowers is
subject or by which the Hospital or any of
the assets or business of the Hospital are
bound;
(iii) contravene or result in a violation
of any of the terms or requirements of any
permit, license, certificate of need,
accreditation, waiver, certificate, and
governmental authorization that is held by
any Borrower relating to and material to the
use or operation of the Hospital or the
business or assets of the Hospital;
(iv) result in a material breach of, or
constitute a default under any indenture,
mortgage, lease, agreement, or other
instrument to which any of the Borrowers is
a party or by which the Hospital or any of
its assets are bound; or
(v) result in the imposition or
creation of any lien upon any of the
property or collateral under the Security
Instruments in favor of any other than Bank.
4.26 CONSENTS AND APPROVALS. Except as otherwise expressly
contemplated hereby, no consent, order, approval, authorization, filing with or
action by any third party or governmental body or agency is required in
connection with the execution and delivery by Borrowers of the Agreement and the
other Loan Documents or the consummation by Borrowers of the loan transactions
contemplated herein.
4.27 FINANCIAL RECORDS. Any and all financial statements delivered
by any and all of the Borrowers pursuant to this Agreement or the other Loan
Documents (collectively, the "FINANCIAL STATEMENTS"): (i) are in accordance with
the books and records of Borrowers, (ii) present fairly in accordance with GAAP,
in all material respects the financial condition of Borrowers and the Hospital
and the business and operations of Borrowers and the Hospital as of the
respective dates indicated and the results of operations for such periods, (iii)
have been
22
prepared in accordance with GAAP, consistently applied throughout the periods
involved (with the exception of the absence of footnotes for unaudited
statements and subject to normal audit adjustments), (iv) reflect reserves
reasonably believed adequate by management of Borrowers for all known
liabilities and reasonably anticipated losses with respect to the Hospital and
the other property and collateral under the Security Instruments, (v) do not
contain any untrue statement of a material fact relating to their respective
businesses and assets or the Hospital, and (vi) do not contain any items of
special or nonrecurring income, or other income not earned in the ordinary
course of business relating to their respective businesses or assets or the
Hospital, except as set forth in the notes, if any, to the Financial Statements.
4.28 PERMITS; CERTIFICATE OF NEED.
(a) EXHIBIT "C" attached hereto and made a part hereof
contains a complete and accurate list of each permit, license, certificate of
need, accreditation, waiver, certificate, and governmental authorization held by
Borrowers that relates to the Hospital, or the business or assets of the
Hospital (the "PERMITS"). To the best knowledge and belief of Borrowers, the
Permits collectively constitute all of the Permits required under applicable law
for the ownership and use of the Hospital and it assets, and the operation of
business of the Hospital. Each Permit listed or required to be listed in EXHIBIT
"C" is valid and in full force and effect. To the best knowledge and belief of
Borrowers, the Hospital and the assets and the business of the Hospital are and
at all times have been, in compliance with all of the terms and requirements of
each Permit identified or required to be identified in EXHIBIT "C" except for
any noncompliance which has been remedied by Borrowers and would not have a
material adverse effect upon the business, assets or operation of the Hospital.
Each Permit has been duly obtained and (i) is not subject to any pending or to
Borrowers' knowledge, threatened administrative or judicial proceeding to
revoke, cancel, or declare such Permit invalid in any respect, and (ii) no event
has occurred which constitutes, or with due notice or lapse or time or both
would constitute, a material default by Borrowers under, or a violation of, any
Permit. Borrowers have received no notice of and have no knowledge of any
alleged violation of the terms of issuance of any Permit.
(b) The Hospital, and the assets and the business of the
Hospital operate under a valid certificate of need or exemption from certificate
of need review and are otherwise in compliance with the certificate of need
laws. All representations made in connection with obtaining a certificate of
need or an exemption from or a waiver of certificate of need review for any
expenditure, service or project relating to the Hospital, and the assets or the
business of the Hospital (specifically including the certificate of need
approval held by Borrowers for the relocation of the Hospital (Project No. GA
047-98) to the Xxxx Xxxxxx Parkway Property) were and are accurate and
consistent with the basis for the granting of the certificate of need or the
determination that certificate of need review was not required. Borrowers have
taken no action and to Borrowers' best knowledge and belief no action has been
taken by any previous owner of the Hospital that has or is likely to subject
Borrowers, the Hospital, the assets or the business of the Hospital or any of
their services or equipment to certificate of need review or to penalties or
enforcement action under the certificate of need law. The certificate of need
approval held by Borrowers for the relocation of the Hospital (Project No. GA
047-98) is in good standing, and may be implemented according to its terms
without further certificate of need review, and Borrowers have taken all action
required to be taken in a timely manner to implement and
23
preserve the good standing of such certificate of need. Any appeal of the
certificate of need approval held by Borrowers for the relocation of the
Hospital (Project No. GA 047-98) has been dismissed with prejudice under terms
that will not subject the Hospital to any restrictions, costs, expenses,
liabilities or damages.
4.29 GOVERNMENTAL BENEFIT PROGRAMS AND OTHER THIRD PARTY PAYORS.
(a) The Hospital is duly certified to participate in, and
has provider agreements for participation in the Medicare and Medicaid programs.
The Hospital is in material compliance with all of the terms, conditions and
provisions of such contracts, as well as state and federal laws related thereto.
(b) All cost reports for the Hospital required to be
filed by Borrowers under the Medicare, Medicaid or other programs or any other
applicable governmental or private provider regulations have been, or by the
respective due date will be, prepared and filed in accordance with applicable
laws, rules and regulations, and Borrowers have paid or made provisions to pay
all Notices of Program Reimbursement received from the Medicare and Medicaid
programs, tentative settlements and other adjustments for the Hospital for
periods ended prior to the Agreement Date. With respect to any cost reports for
the Hospital which remain to be filed or settled: (i) each will be timely filed
by Borrowers, (ii) to Borrowers' best knowledge and belief, each is or will be
complete and accurate in all material respects for the periods indicated, and
(iii) all liabilities associated with such filings have been or will be paid in
full by Borrowers. All liabilities and contractual adjustments of the Hospital
under any third party payor or reimbursement programs have been properly
reflected and reserved in a manner believed adequate by management of Borrowers
in the Financial Statements.
(c) To the best of Borrowers' knowledge and belief,
Borrowers have not claimed or received reimbursements from the Medicare program,
the Medicaid program, TRICARE/CHAMPUS, or any other governmental health benefit
program in connection with the operation of the Hospital materially in excess of
the amounts permitted by law, except as and to the extent that liability for
such overpayment has already been satisfied in full. To the best of Borrowers'
knowledge and belief, Borrowers have not claimed or received reimbursements from
any private insurer, health maintenance organization, employer, or other payor
in connection with the operation of the Hospital materially in excess of the
amounts permitted by the applicable benefit plan or any applicable contract of
Borrowers with any such payor, except as to the extent that liability for such
overpayment has already been satisfied in full.
(d) No notice of overpayment, false claims, civil money
penalties, or any offsets against future reimbursement has been received by
Borrowers in connection with the operation of the Hospital nor to Borrowers'
knowledge is there any basis therefor. There are no pending appeals,
adjustments, challenges, audits, litigation, notices of intent to reopen or open
cost reports in connection with the operation of the Hospital with respect to
the Medicare, Medicaid, or other federal or state governmental health care
programs. Borrowers have received no notice of pending, threatened or possible
decertification or other loss of participation in Medicare, Medicaid or any
other governmental health program. Other than regularly scheduled reviews, no
validation review, complaint review, peer review or program integrity review
related
24
to the Hospital has been conducted, scheduled, demanded or requested by any
entity, commission, board or agency in connection with Medicare, Medicaid or
other governmental health benefit program, and to Borrowers' knowledge, no such
reviews are threatened against or affecting the Hospital.
(e) Borrowers have received no notice of any violation of
federal or state fraud and abuse or self-referral laws, or any investigation or
claim of such violation on the part of Borrowers in connection with the
operation of the Hospital, nor to Borrowers' best knowledge and belief have any
such laws been violated in connection with the operation of the Hospital. To
Borrowers' best knowledge and belief, no Borrower nor any manager, director,
governing body member, officer or employee of any Borrower, nor any other Person
acting on behalf of any Borrower, acting alone or together, has engaged in any
activities which are prohibited under the federal false claims and false
statements statutes (31 U.S.C. ss. 3729, 18 U.S.C. ss. 287, 18 U.S.C. ss. 1001),
the federal health care fraud statute (18 U.S.C. ss. 1387), or related state or
local statutes and regulations. To Borrowers' best knowledge and belief, all
claims for reimbursement presented to Medicare, Medicaid, or other governmental
programs by Borrowers in connection with the operation of the Hospital have been
accurate and in compliance with all applicable statutes, rules and regulations
in all material respects.
(f) Neither Borrowers, nor the Hospital, nor to
Borrowers' best knowledge and belief any member of the governing body, officer,
employee or agent of Borrowers or of the Hospital, nor any member of the medical
staff of the Hospital, (i) is or has been suspended, excluded, or otherwise
terminated from participation in Medicare, Medicaid, CHAMPUS/TRICARE, or any
other federal or state governmental health benefit program; (ii) has been
convicted in a court of competent jurisdiction for any offense or has been
adjudicated to have liability for a civil monetary penalty which, in either
case, would allow or require the exclusion of Borrowers from participating in
federal healthcare programs or the Medicaid program.
4.30 FINANCIAL RELATIONSHIPS WITH HEALTH PROFESSIONALS. To the best
knowledge and belief of Borrowers the Hospital and the business of the Hospital
are and have been conducted and operated by Borrowers in compliance with, and
Borrowers' contracts and financial arrangements with physicians and other
referral sources (including ownership interests and compensation relationships
between the Hospital and physicians as defined in 42 U.S.C. ss. 1395nn and
regulations adopted pursuant thereto) are in compliance with, the federal
statutes regarding kickbacks and health professional self-referrals in
connection with federal and state health care programs, 42 U.S.C. ss. 1320a-7b,
42 U.S.C. ss. 1395nn and 42 U.S.C. ss. 1396b, and the regulations promulgated
pursuant to such statutes, 42 U.S.C. ss. 1320a-7a(b) regarding payments to
induce reduction or limitation of services, and similar state and local statutes
and regulations, including without limitation the Georgia Patient Self-Referral
Act (O.C.G.A. ss. 43-1B-1 et seq.).
4.31 JCAHO ACCREDITATION. The Hospital is duly accredited for
operation of its beds and services by the Joint Commission on Accreditation of
Healthcare Organizations ("JCAHO"). No Borrower has received notice with respect
to any threatened, pending or possible revocation, early termination, suspension
or limitation of JCAHO accreditation for the Hospital, nor, to Borrowers' best
knowledge and belief, are there any grounds for such action.
25
4.32 COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) To Borrowers' best knowledge and belief, the Hospital
and the business of the Borrowers have been constructed, used, operated and
conducted in compliance with all constitutions, laws, statutes, rules,
regulations, orders, and ordinances, of any governmental body or agency
exercising any authority or jurisdiction with respect to Borrowers, the
Hospital, or the business of Borrowers, including without limitation, those
relating to governmental program reimbursement, licensure of the Hospital and
the property, plant and equipment used therein, certificate of need, and
employee health and safety, except for any noncompliance which would not have a
material adverse effect upon the operation of the Hospital or Borrowers.
(b) To Borrowers' best knowledge and belief, no event has
occurred or circumstance exists that (with or without notice or lapse of time or
both) (i) would constitute or result in a violation of, or a failure on the part
of any Borrower or the Hospital to comply with, any constitutions, laws,
statutes, rules, regulations, orders, ordinances, and policies of any
governmental body or agency applicable to the Borrowers, the Hospital, the
business of the Hospital, or any of the other property or collateral or property
described in the Security Instruments, except for any noncompliance which would
not have a material adverse effect upon the Hospital or Borrowers, or (ii) would
give rise to any obligation on the part of Borrowers or the Hospital to
undertake, or to bear all or any portion of the cost of, any material remedial
action of any nature.
(c) Borrowers have not received, and Borrowers have no
knowledge of, any notice or other communication (whether oral or written) from
any governmental body or agency regarding (i) any actual, alleged, possible, or
potential violation of, or failure to comply with, any federal, state, local,
municipal or other administrative order, constitution, law ordinance,
regulation, or statute, with respect to the Hospital, Borrowers, or the business
of the Hospital except to the extent that such violation or noncompliance would
not have a material adverse effect upon the Hospital, Borrowers, or the business
of the Hospital, or (ii) any actual, alleged, or potential obligation on the
part of Borrowers or the Hospital to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature. Without limiting the generality
of the foregoing, Borrowers have not received notice of any, and to Borrowers'
knowledge there exists no, violation of any zoning, land use, building code or
other similar laws, regulations or ordinances (including without limitation the
Americans with Disabilities Act, and ordinances and regulations applicable
thereto), and there do not exist any variances, conditional use permits, waivers
or exemptions relating to the Property or the Improvements with respect to such
matters, except to the extent that any such violation would not have a material
adverse effect upon the Hospital, Borrowers, or the business of the Hospital.
4.33 CORRECTNESS OF REPRESENTATIONS. No representation or warranty
of Borrowers in this Agreement or any schedule, exhibit, certificate or
agreement attached hereto or furnished pursuant hereto or in any of the other
Loan Documents, contains, or on the date of any subsequent Advance hereunder
will contain, any untrue statement of material fact; and all such statements,
representations, warranties, exhibits, certificates, schedules and other Loan
26
Documents shall be true and complete in all material respects on and as of the
date of any subsequent Advance hereunder as though made on that date.
ARTICLE 5
DEFAULT AND REMEDIES
5.1 DEFAULT. The occurrence of each of the following events shall
constitute a 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 or non-governmental body:
(a) Any representation or warranty made by Borrowers
under this Agreement shall prove incorrect or misleading in any material respect
when made or deemed to have been made;
(b) Borrowers shall default in the payment of any
principal or interest due and payable under the Note for more than ten (10) days
after such payment is due and payable;
(c) Borrowers shall default in the payment of any other
monetary amounts due and payable to Bank hereunder or under the Loan Documents
for more than ten (10) days after Borrowers receive written demand for payment
from the Bank specifying the nature of and amount so payable;
(d) Borrowers shall default in the performance or
observance of any other agreement or covenant contained in this Agreement not
specifically referred to elsewhere in this Section 5.1, and such event of
default shall not be cured to Bank's satisfaction within a period of thirty (30)
calendar days from the date Borrowers receive notice from Bank with respect
thereto;
(e) There shall occur any Event of Default or Default of
Borrowers in the performance or observance of any agreement or covenant or
breach of any representation or warranty contained in any of the Loan Documents
(other than this Agreement or as otherwise provided in this Section 5.1), which
shall not be cured within the applicable grace or cure period, if any, provided
for in such Loan Document or thirty (30) calendar days after the date Borrowers
receive notice from Bank with respect thereto if no cure period is provided in
such Loan Document;
(f) There shall be entered a decree or order for relief
in respect to any Borrower, as debtor, under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other applicable federal or
state bankruptcy law or other similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or similar official to any Borrower,
or of any substantial part of any Borrower's respective properties, or ordering
the winding-up or liquidation of the affairs of any Borrower, or an involuntary
petition shall be filed against any Borrower and a temporary stay entered, and
(i) such petition and stay shall not be diligently
27
contested, or (ii) any such petition and stay shall continue undismissed for a
period of sixty (60) consecutive calendar days;
(g) Any Borrower, as debtor, shall file a petition,
answer, or consent seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable federal or state
bankruptcy law or other similar law, or any Borrower, as debtor, shall consent
to the institution of proceedings thereunder or to the filing of any such
petition or to the appointment or taking of possession of a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other similar
official to such Borrower or of any substantial part of such Borrower's
respective properties, or any Borrower shall fail generally to pay its
respective debts as they become due, or any Borrower shall take any corporate
action to authorize any such action;
(h) A final judgment shall be entered by any court
against any Borrower for the payment of money which exceeds $3,000,000 which
judgment is not covered by insurance or a warrant of attachment or execution or
similar process shall be issued or levied against property of any Borrower
which, together with all other such property of such Borrower subject to other
such process, exceeds in value $3,000,000 in the aggregate, and if, within
thirty (30) calendar days after the entry, issue, or levy thereof, such
judgment, warrant, or process shall not have been paid or discharged or bonded
or stayed pending appeal, or if, after the expiration of any such stay, such
judgment, warrant, or process shall not have been reversed, dismissed, paid or
discharged;
(i) (1) There shall be at any time any "accumulated
funding deficiency," as defined in ERISA or in Section 412 of the Code, with
respect to any Plan; or (2) a trustee shall be appointed by a United States
District Court to administer any Plan; or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any Plan; or (3) any of
Borrower and their ERISA Affiliates shall incur any liability to the Pension
Benefit Guaranty Corporation in connection with the termination of any Plan; or
(4) any Plan or trust created under any Plan of any of Borrower and their ERISA
Affiliates shall engage in a non-exempt "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) which would
subject any of Borrower or any ERISA Affiliate to the tax or penalty on
"prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of the
Code; and by reason of any or all of the events described in clauses (1) through
(4), as applicable, such Borrower shall have waived (and/or is likely to incur)
and/or incurred liability in excess of $1,000,000.00 in the aggregate;
(j) Any Loan Document, or any portion thereof (the
striking of which would negatively impact the repayment of the Note or the
Bank's realization on the collateral by the exercise of its remedies under the
loan Documents), shall at any time and for any reason be declared by a court of
competent jurisdiction in a suit with respect to such Loan Document to be null
and void, or a proceeding shall be commenced by any governmental authority
involving a legitimate dispute, having jurisdiction over Borrowers or Guarantor,
seeking to establish the invalidity or unenforceability thereof (exclusive of
questions of interpretation or customary exceptions to the enforceability of any
provisions thereof), or any Borrower or Guarantor, shall
28
deny that it has any liability or obligation for the payment of principal or
interest purported to be created under any Loan Document;
(k) There shall occur any sale, lease, conveyance,
assignment, pledge, encumbrance, or transfer of all or any part of the Property
or any interest therein, voluntarily or involuntarily, whether by operation of
law or otherwise, except (i) in accordance with the terms of this Agreement, and
(ii) for execution of contracts with prospective purchasers which contracts will
require the release of a portion of the Property from the lien of a Security
Instrument at the closing of the transaction contemplated by such contract; and
(iii) for Permitted Encumbrances;
(l) Except in the normal course of Borrowers'
construction of the Improvements, without the prior written consent of Bank, not
to be unreasonably withheld or delayed, Borrowers shall not grant any easement
(other than for utilities) or dedication, file any plat, condominium
declaration, or restriction or otherwise encumber all or any portion of the
Property, or seek or permit any zoning reclassification or variance, unless such
action is expressly permitted by the Loan Documents or results in Permitted
Encumbrances or does not affect the Property;
(m) A Default or Event of Default occurs under any lien,
security interest or assignment covering the Property or any part thereof which
results in acceleration of the obligations secured thereby (whether or not Bank
has consented, and without hereby implying Bank's consent, to any such lien,
security interest or assignment not created pursuant to the Loan Documents), and
the holder of any such lien, security interest or assignment institutes
foreclosure or other proceedings for the enforcement of its remedies thereunder;
provided that Borrowers may bond over such lien within twenty (20) days of
notice that foreclosure proceedings have been instituted by the lienholder; or
(n) (1) Failure by Borrowers to implement the
construction of the Replacement Hospital on the Xxxx Xxxxxx Parkway Property in
accordance with certificate of need approval held by Borrowers for the
relocation of the Hospital to the Xxxx Xxxxxx Parkway Property, and in
accordance with any determination letters issued by the Georgia Department of
Community Health in connection therewith, (2) failure of Borrowers to file for
and obtain a new certificate of need for the cost overruns associated with the
relocation of the Replacement Hospital to the Xxxx Xxxxxx Parkway Property, or,
if necessary, a new certificate of need for the relocation of the Hospital from
the East Church Street Property to the Xxxx Xxxxxx Parkway Property, and (3) if
the certificate of need currently held by Borrowers for the relocation of the
Replacement Hospital to the Xxxx Xxxxxx Parkway Property becomes invalid for any
reason.
5.2 REMEDIES. If a Default shall have occurred and shall be
continuing:
(a) With the exception of a Default specified in Sections
5.1(e), (f) or (g) hereof, Bank shall have the right to (i) declare the Note,
all interest thereon and all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the Note, all
such interest and all such amounts shall become and be forthwith due
29
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Borrower and/or (ii) terminate the
Loan Commitment.
(b) Upon the occurrence of a Default under Sections
5.1(e), (f) or (g) hereof, the Loan Commitment shall automatically terminate and
such principal, interest (including without limitation, interest which would
have accrued but for the commencement of a case or proceeding under the federal
bankruptcy laws), and other amounts payable under this Agreement or the Note
shall thereupon and concurrently therewith become due and payable, all without
any action by Bank, all without presentment, demand, protest or other notice of
any kind, all of which are expressly waived, anything in this Agreement or in
the Note to the contrary notwithstanding.
(c) Bank may exercise all of the post-default rights
granted to it and to them under the Loan Documents or under Applicable Law.
(d) The rights and remedies of Bank hereunder shall be
cumulative, and not exclusive.
5.3 WAIVERS. Neither a waiver of any Default or Event of Default
hereunder nor any representation by Bank as to the nonoccurrence or nonexistence
thereof shall be implied from any delay or omission by Bank to notify Borrowers
thereof or to take action on account of such Default or Event of Default, and no
express waiver shall affect any Default or Event of Default other than the
matter specified in the waiver and it shall be operative only for the time and
to the extent therein stated. Waivers of any covenants, terms or conditions
contained herein must be in writing and shall not be construed as a waiver of
any subsequent breach of the same covenant, term or condition. Bank's consent or
approval to or of any act by Borrowers requiring further consent or approval
shall not be deemed to waive or render unnecessary the consent or approval to or
of any subsequent or similar act. Bank's exercise of any right or remedy or
hereunder shall not in any way constitute a cure or waiver of a Default or an
Event of Default, or invalidate any act done pursuant to any notice of the
occurrence of a Default or an Event of Default, or prejudice Bank in the
exercise of any of its rights hereunder or under the Note, the Security
Instruments or any other Loan Documents.
5.4 CROSS-DEFAULT. The Note, Security Instruments and other Loan
Documents are "cross defaulted" such that (a) the occurrence of an Event of
Default under any one of the Loan Documents shall constitute an Event of Default
under this Agreement and all of the Loan Documents and (b) the occurrence of a
Default under any one of the Loan Documents shall constitute a Default under
this Agreement and all of the other Loan Documents.
5.5 CROSS-COLLATERALIZATION. All Security Instruments and all
other Loan Documents, save the Guaranty and the Environmental Indemnity
Agreement, are "cross-collateralized" such that all of the Security Instruments
shall secure all of the obligations of Borrowers under the Note and the other
Loan Documents (save the Guaranty and the Environmental Indemnity Agreement).
30
5.6 NO LIABILITY OF BANK. Bank shall not be liable to any party
for (i) the development of or construction of the Improvements, (ii) the failure
to develop or construct the Improvements in accordance with the Plans and
Specifications, (iii) the payment of any expense incurred in connection with the
development of or construction of the Improvements, (iv) the performance or
nonperformance of any other obligation of Borrowers or (v) Bank's exercise of
any remedy available to it under the Loan Documents after the occurrence and
during the continuance of a Default. In addition, Bank shall not be liable to
Borrowers or any third party for the failure of Bank or its authorized agents to
discover or to reject materials or workmanship during the course of Bank's
inspections of the Improvements.
ARTICLE 6
GENERAL CONDITIONS
6.1 BENEFIT. This Agreement is made and entered into for the sole
protection and benefit of Bank, Borrowers, and Bank's successors and assigns,
and no other person or persons shall have any right of action hereon or rights
to the Loan proceeds at any time. Bank shall not (a) owe any duty whatsoever to
any claimant for labor performed or material furnished in connection with the
construction of the Improvements on the Property, or (b) owe any duty to apply
any undisbursed portion of the Loan to the payment of any claim, or (c) owe any
duty to exercise any right or power of Bank hereunder or arising from any
Default by Borrowers.
6.2 ASSIGNMENT. The terms hereof shall be binding upon and inure
to the benefit of the heirs, successors, assigns, and personal representatives
of the parties hereto; provided, however, that Borrowers shall not assign the
Loan Commitment or this Agreement or any of its rights, interests, duties or
obligations under the Loan Commitment or this Agreement or any Loan proceeds or
other monies to be advanced hereunder in whole or in part and any such
assignment (whether voluntary or by operation law) shall be void and render
automatically terminated any obligation of Bank hereunder to advance any further
monies pursuant to this Agreement or any other Loan Document. Bank may assign
its rights and obligations under this Agreement, the Note, the Security
Instruments and any other Loan Documents, in whole or in part, to any other bank
or financial institution with a combined capital and surplus equivalent to at
least that of Bank, provided that all of the provisions hereof shall continue in
full force and effect and, in the event of such assignment, Bank shall
thereafter be relieved of all liability hereunder with respect to actions or
omissions of Bank occurring thereafter, but only to the extent of the interest
so assigned and any Loan disbursements made by any assignee(s) shall be deemed
made in pursuance and not in modification hereof and shall be evidenced by the
applicable Note and secured by the applicable Security Instrument and any other
Loan Documents. Notwithstanding the foregoing, without the prior written consent
of Borrowers, Bank shall not have the right to assign any portion of its
interest, rights or obligations hereunder to any other Person unless the
assignee shall assume all of the obligations of the assigning Bank under this
Agreement, to the extent of the interest so assigned. no assignment shall be
made to any other hospital, company or entity providing healthcare services to
the public. Notwithstanding anything in this Section 6.2 to the contrary, Bank
may enter into participation agreements with any other Person, so long as such
agreement does not confer any rights under
31
this Agreement or any of the other Loan Documents to any purchaser thereof, or
relieve Bank from any of its obligations under this Agreement (it being
understood that all actions hereunder shall be conducted as if no such
participation had been granted).
6.3 ADDITIONAL OBLIGATIONS AND AMENDMENTS. Bank shall be under no
obligation to extend any loan to Borrowers other than as specifically set forth
in this Agreement. This Agreement shall not be amended except by a written
instrument signed by all parties hereto which instrument contains a specific
reference to this Agreement.
6.4 TERMS. Whenever the context and construction require, all
words used in the singular number herein shall be deemed to have been used in
the plural, and vice versa, and the masculine gender shall include the feminine
and neuter and the neuter shall include the masculine and feminine.
6.5 GOVERNING LAW AND JURISDICTION. This Agreement shall be
construed in accordance with the laws of the State of Georgia, and such laws
shall govern the interpretation, construction and enforcement hereof. For the
purposes of any legal action or proceeding brought by Bank with respect to this
Agreement or the Loan Documents, Borrowers and Guarantor hereby irrevocably
submit to the jurisdiction and venue of the Superior Court of Xxxxxx County,
Georgia, and hereby irrevocably designates and appoints Xx. Xxxxxx X. Xxxxxxxx,
Xx., 900 Circle 75 Parkway, Suite 1300, Xxxxxxx, Xxxxxxx 00000, as their
authorized agent for service of process in the State of Georgia. Borrowers and
Guarantor also hereby submit to the non-exclusive jurisdiction and venue of the
United States District Court for the Northern District of Georgia for any
action, suit or proceeding arising out of or relating to this Agreement or the
Loan Documents. Bank shall for all purposes be entitled to treat such designee
of Borrowers and Guarantor as the authorized agent to receive for or on their
respective behalf service of writs or summons or other legal process in Georgia;
delivery of such service to such authorized agent shall be deemed to be made
when delivered or mailed by certified mail addressed to such authorized agent,
with a copy to Borrowers and to Guarantor at the address of Borrowers' and the
address of Guarantor, as the case may be, last known to Bank, sent by overnight
delivery service. In the event that, for any reason, such agent or its successor
shall no longer serve as agent of Borrowers and Guarantors to receive service of
process in the State of Georgia, Borrowers and guarantor shall jointly establish
a successor so to serve, and shall advise Bank thereof, so that at all times
Borrowers and Guarantor will maintain an agent to receive service of process in
the State of Georgia on their respective behalf with respect to this Agreement
and the Loan Documents. In the event that, for any reason, service of legal
process cannot be made in the manner described above, such service may be made
in such other manner permitted by law. Borrowers and Guarantor hereby
irrevocably waive any objection they each might now or hereafter be entitled to
make with respect to the venue of any suit, action or proceeding arising out of
or relating to this Agreement and the Loan Documents which is brought in the
Superior Court of Xxxxxx County, Georgia or, at the election of Bank, in the
United States District Court for the Northern District of Georgia, and Borrowers
and Guarantor hereby irrevocably waive any right to claim that any such suit,
action or proceeding brought in any such court has been brought in an incorrect
forum.
32
6.6 PUBLICITY. Bank shall have the right to incorporate the name
of Bank into signage placed upon the Property during construction. Bank shall
have the right to secure printed publicity through newspaper and other media
concerning the Property and Hospital and source of financing. All such publicity
shall be submitted to Borrowers prior to its dissemination, and all such
publicity shall be subject to the prior written approval of Borrowers, such
approval not to be unreasonably withheld or delayed.
6.7 ATTORNEYS' FEES. Borrowers shall pay on demand all reasonable
attorneys' fees and expenses and other costs and expenses actually incurred by
Bank in the enforcement of or preservation of Bank's rights under this Agreement
and the other Loan Documents in any such case after the occurrence and during
the continuance of a Default. To the full extent permitted by applicable law,
Borrowers agree to pay interest on any fees, costs or expenses due to Bank under
this Section 6.7 which are not paid when due at the Default Rate. In the event
that any Loan Document contains a provision regarding enforcement or
preservation of rights which is different from this Section 6.7, this Section
6.7 shall control.
6.8 MANDATORY ARBITRATION. Any controversy or claim between or
among the parties hereto arising out of or relating to this Agreement, the Loan
Documents or any related 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."),
as amended from time to time, 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 judgment or expedited
proceeding, to compel arbitration of any controversy or claim to which this
provision applies in any court having jurisdiction over such action.
(a) Special Rules. The arbitration shall be conducted in
the City of Atlanta, Georgia 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 ninety (90) calendar 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 sixty (60) calendar days.
(b) Reservation 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 Bank of the protection afforded to it or them by 12 U.S.C.
Sec. 91 or any substantially equivalent state law; or (iii) limit the right of
Bank after the occurrence and during the continuance of a Default (A) to
exercise self help remedies such as (but not limited to) setoff, or (B) to
foreclose against the Property, or (C) to obtain from a court provisional or
ancillary remedies such as injunctive relief or the appointment of a receiver.
After the occurrence and during the continuance of a Default, Bank may exercise
such self help remedies (including, without limitation, remedies under Section
5.2 hereof), foreclose upon the Property, or obtain such provisional or
ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Loan Agreement. At
33
the option of Bank, foreclosure under a Security Instrument may be accomplished
by any of the following: the exercise of the power of sale under a Security
Instrument, or by judicial sale under a Security Instrument 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 this Agreement or any 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 this Agreement.
6.9 INVALIDATION OF PROVISIONS. In the event that any one or more
of the provisions of this Agreement is deemed invalid by a court having
jurisdiction over this Agreement or other similar authority, the remaining
provisions of this Agreement shall not be rendered invalid or unenforceable, and
in lieu of any invalid or unenforceable provision, there shall be automatically
substituted a valid and enforceable provision as similar in terms to such
invalid or unenforceable provision as may be possible.
6.10 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same instrument.
6.11 CAPTIONS. The captions herein are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this Agreement or the intent of any provision hereof.
6.12 NOTICES. All notices, requests, consents, demands and other
communications required or which any party desires to give hereunder or under
any other Loan Document shall, unless otherwise specifically provided in such
other Loan Document, be deemed sufficiently given or furnished if (a) in writing
and delivered by personal delivery, by courier, or by registered or certified
United States mail, postage prepaid, addressed to the party to whom directed at
the addresses specified below (unless changed by similar notice in writing given
by the particular party whose address is to be changed), (b) by facsimile to the
facsimile number specified below with confirmation thereof in writing by sender
pursuant to subsection (a) above, or (d) by oral communication with confirmation
thereof in writing by the notifying party pursuant to subsection (a) above
delivered within three (3) Business Days after such oral communication. Any such
notice or communication shall be deemed to have been given and to be effective
either at the time of personal delivery or, in the case of courier or mail, as
of the date of first attempted delivery at the address and in the manner
provided herein, or, in the case of facsimile, upon receipt or, in the case of
oral communication, upon the effectiveness of written confirmation as
hereinabove provided. Notwithstanding the foregoing, no notice of change of
address shall be effective except upon receipt. This Section shall not be
construed in any way to affect or impair any waiver of notice or demand provided
in any Loan Document or to require giving of notice or demand to or upon any
person in any situation or for any reason.
BORROWERS AND GUARANTOR:
34
c/o SunLink Healthcare Corp.
000 Xxxxxx 00 Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn.: Xx. Xxxxxx X. Xxxxxxxx, Xx.
Facsimile No.: (000) 000-0000
Telephone No. (000) 000-0000
With a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, XXX
Xxxxx 0000, Xxxxxxxxx XX
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn.: Xxxxxx X. Xxxxxx, Esquire
Facsimile No.: (000) 000-0000
Telephone No. (000) 000-0000
BANK:
Bank of North Georgia
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn.: Xx. Xxxxx Xxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
With copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xx. X.X.
Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esquire
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
6.13 LOAN DOCUMENTATION/ELECTRONIC TRANSMISSION OF DATA. Loan
Documents and other documents, certificates, insurance policies, surveys and
survey certifications, and other items required under this Agreement or under
any other Loan Documents, to be executed and/or delivered to the Bank, shall be
in form and content satisfactory to the Bank, acting reasonably and in good
faith. Borrowers and Bank agree certain loan related data (including
confidential information, documents, applications and reports) may be
transmitted electronically, including over the Internet. This data may be
transmitted to, received from or circulated among
35
Borrowers, Guarantor or Bank and the agents and representatives of Borrowers,
Guarantor and Bank, and Borrowers and Bank acknowledge and agree that (a) there
are risks associated with the use of electronic transmission and that neither
Borrowers, Guarantor nor Bank, controls the method of transmittal or service
providers, (b) neither Borrowers, Guarantor nor Bank has no obligation or
responsibility whatsoever and assumes no duty or obligation for the security,
receipt or third party interception of such transmissions and (c) Borrowers,
Guarantor and Bank release and will release each other from any claim, damage or
loss, including those arising in whole or part from any of the parties' strict
liability or sole, comparative or contributory negligence, which are related to
the electronic transmittal of data, subject, however, in all cases to the
parties' obligations, if any, under mandatory provisions of applicable law,
including, without limitation, the Health Insurance Portability and
Accountability Act of 1996.
6.14 BOOKS AND RECORDS. Subject to the confidentiality provisions
hereof, Bank shall be provided access, upon reasonable prior written notice and
without expense to Borrowers, to the business premises, all collateral securing
the Loan and, on a confidential basis, to all of the books and records of each
of Borrowers during normal working hours.
6.15 PAYMENT OF TAXES. Borrowers covenant and agree unto Bank to
pay or cause to be paid all uncontested (as determined in good faith) taxes
assessed or levied on each of the Borrowers and all collateral securing the Loan
on a timely basis and before the taxes become delinquent and comply with all
federal, state and local laws, rules and regulations applying to each of the
Borrowers and any collateral securing the Loan.
6.16 LOAN COMMITMENT. The terms and conditions of the Loan
Commitment shall survive the closing of the Loan, delivery of the Loan Documents
and all Advances.
6.17 TRANSFER OF PROPERTY AND RIGHTS. Borrowers covenant and agree
that without the written consent of Bank (i) Southern Health Corporation of
Jasper, Inc. shall not sell, transfer or convey all or any part of its interest
in the East Church Street Property (except simultaneously with the release of
the East Church Street Property), Xxxx Xxxxxx Parkway Property or any other
property or collateral securing the indebtedness evidenced by the Note (except
for inventory, equipment and other non-real property traded in, sold or
otherwise disposed of in the ordinary course of business and with respect to
which the proceeds of such trade-in, sale or disposition are reinvested by
Southern Health Corporation of Jasper, Inc. in its business within 180 days
after such trade-in, sale or other disposition and except for Permitted
Encumbrances) and (ii) SunLink Healthcare Corp. shall not sell, transfer or
convey any of its ownership interest in any of the other Borrowers.
6.18 FINAL AGREEMENT. THE WRITTEN LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
BORROWERS REPRESENT UNTO BANK THAT BORROWERS HAVE COMPLIED, AND WHERE APPLICABLE
WILL COMPLY, WITH ALL OF THE TERMS AND CONDITIONS UNDER THIS AGREEMENT.
36
IN WITNESS WHEREOF, Borrowers, Guarantor and Bank have caused this
Agreement to be executed by their duly authorized officers and their seals
affixed hereto as of the day and year set forth above.
BORROWERS:
SUNLINK HEALTHCARE CORP.,
a Delaware corporation
By: /s/ X. X. Xxxxxx
--------------------------------------
Printed Name: X. X. Xxxxxx
Title: President
[CORPORATE SEAL]
SOUTHERN HEALTH CORPORATION,
a Georgia corporation
By: /s/ X. X. Xxxxxx
--------------------------------------
Printed Name: X. X. Xxxxxx
Title: President
[CORPORATE SEAL]
SOUTHERN HEALTH CORPORATION OF
JASPER, INC., a Georgia corporation
By: /s/ Xxxx Xxxxxxxx
--------------------------------------
Printed Name: Xxxx Xxxxxxxx
Title: CEO
[CORPORATE SEAL]
37
GUARANTOR:
SUNLINK HEALTH SYSTEMS, INC.,
an Ohio corporation
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
--------------------------------------
Printed Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: CEO
[CORPORATE SEAL]
BANK:
BANK OF NORTH GEORGIA,
a state chartered bank
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Printed Name: Xxxxx Xxxxxx
Its: SVP
[BANK SEAL]
38
SCHEDULE 1
1. Report of Phase I Environmental Site Assessment Update, Xxxxxx
Xxxxxxxx, Xxxxxxx 000, Xxxxxxx Xxxxxx, Xxxxxxx, prepared by
Geotechnical Consultants, Inc., dated September 25, 2002, and being PGC
Project No. 102364.
2. Phase I Environmental Site Assessment, Mountainside Medical Center,
0000 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxx, prepared by Environmental
Corporation of America, dated September 25, 2002, and being ECA Project
#C-760-1, as supplemented by letter dated September 26, 2002.
3. Letter dated September 5, 2002, from Xxxxx X. Xxxxxxxxxxx, Manager,
Mountain District Office, Georgia Department of Natural Resources, to
Xxxx Xxxxxxxx-CEO, Mountainside Medical Center, outlining certain
violations of General Permit No. GAR 100000 entitled "Authorization to
Discharge Under the National Pollutant Discharge Elimination System
Storm Water Discharges Associated with Construction Activity."
39
EXHIBIT A
XXXX XXXXXX PARKWAY PROPERTY
EAST CHURCH STREET PROPERTY
EXHIBIT B
REQUEST FOR ADVANCE FROM LOAN
(AFTER INITIAL FUNDING)
On _________________________, the undersigned ("Borrowers"), request an
Advance from Loan No. _______ of $___________ to be made to Account for
__________________ at Bank of North Georgia ("Bank").
Borrowers certify and attest to Bank that since the date of the last
Advance, and as of the date of this Advance:
(i) there has not been nor does there exist any adverse
material change in the business, assets, liabilities,
financial condition, results of operations or business
prospects of Borrowers;
(j) the representations and warranties contained in the
Loan Documents are true and correct as of the date hereof;
(k) there exists no Event of Default or Default, as such
terms are defined in that certain Loan Agreement by and among
Borrowers and Bank dated as of September 30, 2002 ("Loan
Agreement"), prior to or subsequent to this Advance;
(l) Borrowers are in compliance with the financial
covenants, representations and warranties contained in the
Loan Agreement;
(m) the construction of the Improvements is progressing
in a satisfactory manner; and
(n) all conditions precedent to Borrowers' right to
receive the requested Advance have been met in accordance with
the terms and conditions of the Loan Agreement.
BORROWERS:
SUNLINK HEALTHCARE CORP.
By:
--------------------------------------
Printed Name:
----------------------------
Its:
-------------------------------------
--------------------------- [CORPORATE SEAL]
Date
SOUTHERN HEALTH CORPORATION
By:
--------------------------------------
Printed Name:
----------------------------
Its:
-------------------------------------
--------------------------- [CORPORATE SEAL]
Date
SOUTHERN HEALTH CORPORATION OF
JASPER, INC.
By:
--------------------------------------
Printed Name:
----------------------------
Its:
-------------------------------------
--------------------------- [CORPORATE SEAL]
Date