EXHIBIT 10.23
CONSTRUCTION LOAN AGREEMENT
by and between
SUNTRUST BANK,
as Bank
and
CTI, INC.,
as Borrower
Dated as of August 16, 2001
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1 Definitions ........................................................... 1
Section 1.2 Rules of Construction ................................................. 8
ARTICLE II
THE LOAN
Section 2.01 The Loan ............................................................. 9
Section 2.02 Loan Advances ........................................................ 9
Section 2.03 Estimates of Completion and Construction Costs ....................... 9
Section 2.04 Requisitions ......................................................... 9
Section 2.05 Advances to General Contractor ....................................... 9
Section 2.06 Interest Rates ....................................................... 9
Section 2.07 Conversion Date ...................................................... 9
Section 2.08 Payments ............................................................. 10
Section 2.09 Prepayments .......................................................... 10
Section 2.10 Late Charge .......................................................... 10
Section 2.11 Loan Closing ......................................................... 10
Section 2.12 Additional Sums ...................................................... 10
Section 2.13 Interest Rate Protection Arrangements ................................ 10
Section 2.14 Collateral Security .................................................. 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 3.01 Borrower's Organization and Authority ................................ 11
Section 3.02 No Conflicts, Defaults or Unpermitted Liens .......................... 11
Section 3.03 Valid Execution and Delivery of Documents ............................ 11
Section 3.04 First Lien of Deed of Trust .......................................... 11
Section 3.05 No Consents Necessary ................................................ 12
Section 3.06 Plans and Specifications; No Defects or Violations ................... 12
Section 3.07 Financial Condition of Borrower ...................................... 12
Section 3.08 No Pending Actions ................................................... 12
Section 3.09 Utilities Available .................................................. 12
Section 3.10 No Contracts Giving Rise to Liens .................................... 13
Section 3.11 Access to Project .................................................... 13
Section 3.12 No Litigation ........................................................ 13
Section 3.13 Enforceability of Certain Contracts .................................. 13
Section 3.14 Use and Operation of the Existing Facility and the Project ........... 13
Section 3.15 No Violation of Laws ................................................. 13
Section 3.16 Licenses, Permits and Approvals ...................................... 13
Section 3.17 No Defaults .......................................................... 13
Section 3.18 Leases ............................................................... 14
Section 3.19 Nature of Borrower's Representations and Warranties .................. 14
ARTICLE IV
COVENANTS OF BORROWER
Section 4.01 No Conveyances or Encumbrances ....................................... 14
Section 4.02 Compliance With Law .................................................. 14
Section 4.03 Inspections .......................................................... 14
Section 4.04 Payment of Costs ..................................................... 15
Section 4.05 Construction of the Project .......................................... 15
Section 4.06 Satisfaction of Conditions ........................................... 15
Section 4.07 Use of Loan Proceeds ................................................. 15
Section 4.08 Indemnification ...................................................... 16
Section 4.09 Correction of Defects ................................................ 16
Section 4.10 Change Orders ........................................................ 16
Section 4.11 Right to Cure ........................................................ 16
Section 4.12 No Other Contracts ................................................... 16
Section 4.13 Project Information .................................................. 17
Section 4.14 Receipts ............................................................. 17
Section 4.15 Insurance ............................................................ 17
Section 4.16 Payment of Charges ................................................... 17
Section 4.17 Books and Records .................................................... 17
Section 4.18 Eminent Domain; Condemnation ......................................... 18
Section 4.19 Financial Covenants .................................................. 18
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default .................................................... 18
Section 5.02 Remedies ............................................................. 20
Section 5.03 Bank's Appointment as Attorney-in-Fact ............................... 21
Section 5.04 Performance by Bank of Borrower's Obligations ........................ 21
ARTICLE VI
CONDITIONS PRECEDENT TO BANK'S OBLIGATION
TO MAKE THE FIRST LOAN ADVANCE
Section 6.01 First Loan Advance ................................................... 22
ARTICLE VII
ADDITIONAL CONDITIONS OF BANK'S
OBLIGATIONS TO MAKE ADVANCES
Section 7.01 General Provisions Regarding Disbursement of Loans ................... 24
Section 7.02 Additional Requirements for All Advances ............................. 26
ARTICLE VIII
CONDITIONS OF BANK'S OBLIGATION
TO MAKE THE FINAL ADVANCE
Section 8.01 Final Advance ........................................................ 27
ARTICLE IX
AFFIRMATIVE COVENANTS
Section 9.01 Financial Statements; Reports ........................................ 29
Section 9.02 Corporate Existence .................................................. 29
Section 9.03 Access to Premises and Records ....................................... 29
Section 9.04 Litigation and Other Notices ......................................... 29
Section 9.05 Maintenance of Property .............................................. 29
Section 9.06 Compliance with Laws ................................................. 29
Section 9.07 Indemnity by Borrower ................................................ 30
ARTICLE X
NEGATIVE COVENANTS
Section 10.01 Negative Pledge ..................................................... 31
Section 10.02 Breach or Violation ................................................. 31
Section 10.03 Restrictions on Indebtedness ........................................ 31
ARTICLE XI
GENERAL CONDITIONS
Section 11.01 Third Parties; Benefits; Miscellaneous .............................. 31
Section 11.02 Liability of Bank ................................................... 31
Section 11.03 Broker's Fees ....................................................... 32
Section 11.04 Governing law ....................................................... 32
Section 11.05 Borrower's Payment of Costs and Expenses ............................ 32
Section 11.06 Offset .............................................................. 32
Section 11.07 Miscellaneous Conditions ............................................ 33
Section 11.08 Notices ............................................................. 33
Section 11.09 Amendments .......................................................... 34
Section 11.10 Successors and Assigns .............................................. 34
Section 11.11 Waiver .............................................................. 35
Section 11.12 Non-Merger .......................................................... 35
Section 11.13 Publicity ........................................................... 35
Section 11.14 Counterparts ........................................................ 35
Section 11.15 Waiver of Trial by Jury ............................................. 35
Section 11.16 Obligations of the Bank ............................................. 35
Section 11.17 Application of Payments ............................................. 35
Signatures
Schedule of Exhibits
Exhibit A - Form of Promissory Note ............................................... 38
Exhibit B - Form of Construction Draw Request and Certificate ..................... 40
Exhibit C - Schedule of Sources and Uses of Loan Proceeds ......................... 42
CONSTRUCTION LOAN AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT (this "Agreement"), dated as of August
16, 2001, by and between CTI, INC., a Tennessee corporation (the "Borrower") and
SUNTRUST BANK, a Georgia bank (the "Bank"), recites and provides:
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Borrower intends to purchase certain real property in ▇▇▇▇ County,
Tennessee and construct improvements thereon for use by Borrower. The proceeds
of the Loan described herein are to be used by Borrower to pay the costs of such
acquisition of property and the construction of such improvements thereon and
the acquisition of furniture, fixtures and equipment to be used and/or
incorporated therein. The parties hereto desire that the Loan be made by Bank to
Borrower pursuant to the terms, provisions, covenants and conditions contained
herein.
For and in consideration of the premises, the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. Definitions. As used in this Agreement, the terms listed
below shall have the indicated meanings unless otherwise required by the
context:
"Act of Bankruptcy" shall mean the occurrence of any one or more of the
following:
(a) if a court of competent jurisdiction shall enter a decree or
order of relief in respect of Borrower in any involuntary case
under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or
similar official of Borrower or of any substantial part of its
property, or ordering the winding up of its affairs or
liquidation of its property, and such decree or order shall
continue unstayed and in effect for a period of sixty (60)
days; or
(b) if Borrower shall commence a voluntary case under any
applicable bankruptcy, insolvency or similar law now or
hereafter in effect, shall consent to the entry of an order
for relief in an involuntary case under any such law, or shall
consent to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or other similar
official of Borrower or of any substantial part of its
property, or shall make any general assignment for the benefit
of creditors, or shall fail generally or admit in writing its
inability to pay its debts as they become due, or shall take
any action in furtherance of any of the foregoing.
"Agreement" shall mean this Construction Loan Agreement, dated as of the date
hereof between the Borrower and the Bank, and all amendments, modifications and
restatements thereto.
"Applicable LIBOR Margin" means the annual rate of interest to be added to the
LIBOR Rate in calculating interest payable on the Loan, and shall be determined
based on the ratio of Borrower's Funded Debt to EBITDALM as of the last day of
the most recent fiscal quarter for which quarterly financial statements have
been delivered to the Bank, and such determination of EBITDALM shall be based on
a rolling four quarters basis, with the Applicable LIBOR Margin calculated as
follows:
Ratio Applicable LIBOR Margin
===== =======================
Greater than or equal to 2.50 to Default Rate substituted for LIBOR
1.00 Rate plus Applicable LIBOR Margin
Greater than or equal to 2.25%
2.25 to 1.00 but less
than 2.50 to 1.00
Greater than or equal to 2.00%
2.00 to 1.00 but less
than 2.25 to 1.00
Greater than or equal to 1.75%
1.75 to 1.00 but less
than 2.00 to 1.00
Greater than or equal to 1.50%
1.25 to 1.00 but less
than 1.75 to 1.00
Less than 1.25 to 1.00 1.25%
The ratio of Funded Debt to EBITDALM upon which a determination of the
"Applicable LIBOR Margin" is based shall be computed on the basis of the
quarterly financial statements of the Borrower and the Compliance Certificate as
such are required to be delivered to the pursuant to Section 5.6 of the
Revolving Credit Agreement. Changes in the Applicable LIBOR Margin shall be made
retroactively effective to the first day of the fiscal quarter succeeding the
fiscal quarter most recently ending and to which the Compliance Certificate
relates. In the event that any financial information provided by the Borrower is
subsequently determined to be inaccurate and accurate information would have
resulted in a higher Applicable LIBOR Margin, such higher Applicable LIBOR
Margin shall be given effect retroactively, and the Borrower shall, upon request
by the Bank, promptly pay to the Bank such amount as is necessary to give effect
to such change.
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"Architectural Contract" shall mean that certain contract for architectural
services dated August 7, 2000 between Borrower and Borrower's Architect, and all
amendments thereto.
"Assignment of Architectural Contract" shall mean that certain assignment of
even date herewith from Borrower to Bank of all of Borrower's rights under the
Architectural Contract.
"Assignment of Construction Contract" shall mean that certain assignment of even
date herewith from Borrower to Bank of all of Borrower's rights under the
Construction Contract.
"Bank's Architect" shall mean any architect, engineer, inspector or other
representative of the Bank.
"Base Rate" means the rate of interest established and announced by the Bank
from time to time in its sole discretion as its Base Rate of interest (or any
designated substitute therefore) and does not necessarily constitute the lowest
rate of interest charged to borrowers by the Bank. For purpose of this
Agreement, the Base Rate shall be changed and take effect without notice to
Borrower on the effective date of each change in the Base Rate.
"Borrower's Architect" shall mean ▇▇▇▇▇▇▇ Holsaple ▇▇▇▇▇▇▇, Inc.
"Business Day" shall mean any day other than Saturday, Sunday or other day on
which commercial banks in Knoxville,
Tennessee, are authorized or required to
close under applicable laws.
"Change Orders" shall mean any amendments to the Plans and Specifications, the
Construction Contract, the Architectural Contract or any subcontract related to
the Project.
"Closing Date" means August 16, 2001 or such later date for the closing of the
Loan as agreed to by the Borrower and the Bank.
"Collateral" shall mean collectively all collateral security described or
provided for in Section 2.14, plus all such other collateral security granted or
evidenced by, or described in, the Loan Documents.
"Completion Date" means the later of (i) February 15, 2003 or (ii) that date
which is eighteen (18) months from the beginning of construction of the
Improvements, as determined by the Bank in its reasonable judgment.
"Construction Contract" shall mean that certain construction contract dated
January 19, 2001, between Borrower and General Contractor attached as Exhibit A
to the Assignment of Construction Contract, and all amendments thereto.
"Construction Cost" or "Construction Costs" shall mean the actual cost of labor,
materials, grading, excavation, improvements, utility installation, survey
expenses
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architectural and engineering services, interest, legal and accounting fees,
real estate taxes, insurance premiums, Loan closing costs and related hard and
soft cost expenditures to be incurred by Borrower in acquiring, constructing and
equipping the Project in accordance with the Plans and Specifications, this
Agreement and the other Loan Documents.
"Construction Disbursement Account" means the non-interest-bearing construction
checking account of the Borrower established with the Bank in connection with
the Project.
"Conversion Date" means September 15, 2002.
"Conversion Rate" means that rate of interest equal to the then-current market
interest rate on the secondary loan market for commercial mortgage loans
approximately equal in principal to the Loan and having a maturity of 25 years,
as such rate is determined by the Bank in its reasonable discretion.
"Deed of Trust" means the Amended and Restated Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Rents and Leases dated as of the
date hereof by the Borrower in favor of the Bank and encumbering the Existing
Facility and the Project, as further amended, modified or restated from time to
time.
"Default Rate" means the Base Rate plus one percent (1%) per annum.
"Environmental Laws" shall mean any and all federal, state or local laws, rules,
regulations or ordinances relating to (i) Hazardous Materials, (ii) the use,
treatment, storage, disposal, handling, manufacturing, or transportation of
Hazardous Materials; (iii) pollution or toxic substances or wastes; or (iv) the
protection of human health or the environment.
"Environmental Survey" shall mean the environmental engineering survey and
assessment report prepared for the benefit of the Borrower and certified to the
Bank by Law Engineering and Environmental Services, Inc. dated May 9, 2001, as
such may be amended or supplemented from time to time.
"Equipment" means "equipment," as such term is defined in Section
9-109(2)(a)(33) of the UCC, in which the Borrower shall now or hereafter have
any rights, titles or interests.
"Event of Default" shall mean the occurrence of any of the events described in
Section 5.01.
"Existing Facility" means the Borrower's office, warehouse, research and
development and manufacturing facility currently existing and located at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, which facility is currently financed by
the Term Loan and secured by the Deed of Trust.
"FF&E" means furniture, Fixtures and Equipment.
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"Fixtures" means all goods as defined in Section 9-109(2)(a)(41) of the UCC, in
which the Borrower shall now or hereafter have any right, title or interest.
"Force Majeure" shall mean without limitation, acts of God, strikes, lockouts or
other industrial disturbances, acts of public enemies, orders of any kind of the
government of the United States of America or the State of
Tennessee or any of
their departments, agencies or officials, or any civil or military authority,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
hurricanes, tornadoes, storms, floods, washouts, droughts, arrests, restraint of
government and people, civil disturbances, explosions, breakage or accident to
machinery, transmission pipes or canals, partial or entire failure of utilities,
or any other cause or event not reasonably within the control of the Borrower.
"Funding Period" means that period beginning on the Closing Date and ending on
the Completion Date.
"GAAP" means generally accepted accounting principles consistently applied.
"General Contractor" shall mean Merit Construction Company, Inc., with its
principal offices in Knoxville,
Tennessee.
"Hazardous Materials" shall mean any substance, material or item (whether solid,
liquid or gas) constituting (i) hazardous materials, hazardous wastes or
hazardous substances, as those terms are defined under any Environmental Laws,
including, but not limited to, the following: the Hazardous Materials
Transportation Act, 49 U.S.C. SS.1801 et seq., as amended from time to time
("HMTA"), the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq.,
as amended from time to time ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. SS.9601 et seq., and as further amended from time
to time ("CERCLA"), the Clean ▇▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. ▇▇.▇▇▇▇ et seq., as amended
from time to time and/or the Toxic Substances Control Act, 15 U.S.C. SS.2601 et
seq., as amended from time to time ("TSCA"); (ii) petroleum and petroleum
products including crude oil and any fractions thereof; (iii) natural gas,
synthetic gas, and any mixtures thereof; (iv) asbestos and/or any materials
which contain any hydrated mineral silicate, including, but not limited to,
chrysotile, amosite, crocidolite, tremolite, anthophylite and/or actinolite,
whether friable or non-friable; (v) PCBs, or PCB-containing materials, or
fluids; (vi) radon; (vii) any other hazardous or radioactive substance,
material, pollutant, contaminant, or waste; (viii) any substance with respect to
which any federal, state or local Environmental Law or governmental agency
requires environmental investigation, monitoring or remediation.
"Improvements" shall mean the improvements now standing or to be constructed on
the Land pursuant to the Plans and Specifications, and all replacements thereof.
"Indebtedness" shall mean all obligations of such Person that would be disclosed
as a direct or contingent liability on the balance sheet of such Person in
accordance with GAAP.
5
"Interest Change Date" means that date during the period from the Closing Date
through the Conversion Date or Maturity Date, as applicable, on which the
effective interest rate on the Loan changes, and such date shall be the first
day of each calendar month.
"Interest Rate Protection Arrangements" means those certain interest rate
protection and hedging arrangements (including, without limitation, interest
rate "cap," "collar" and "swap" arrangements) entered into from time to time by
the Borrower and the Bank (or any affiliate of the Bank), pursuant to the
Interest Rate Protection Documents.
"Interest Rate Protection Documents" means the ISDA Master Agreement entered
into between the Borrower and the Bank (or any affiliate of the Bank) and all
schedules, exhibits and other accompanying documents, instruments and
certificates relating thereto, all of which govern the terms and conditions of
the Interest Rate Protection Arrangements.
"Jurisdiction" shall mean ▇▇▇▇ County,
Tennessee.
"Land" shall mean that certain parcel of real estate lying and being in the
Jurisdiction and containing approximately six (6) acres, as more particularly
described in the Deed of Trust.
"LIBOR Rate" means the rate per annum equal to the offered rate for deposits in
U.S. dollars offered to leading European Banks for a one-month term, in amounts
equal or comparable to the outstanding principal amount of the Loan, which rate
appears on the Bloomberg Financial Markets Telerate Screen (or such other
financial reporting service medium as the Bank may elect to use from time to
time) as of 11:00 a.m. Knoxville,
Tennessee time, two (2) Business Days prior to
each Interest Change Date. Changes in the LIBOR Rate shall be effective on each
Interest Change Date.
"Loan" or "Loans" shall mean the $7,900,000 loan made by Bank to Borrower for
the acquisition of the Land, construction of the Improvements and acquisition of
the FF&E in accordance with the Construction Contract, this Agreement and the
other Loan Documents.
"Loan Documents" shall mean this Agreement, the Note, the Deed of Trust, the
Assignment of Construction Contract, the Assignment of Architectural Contract,
the Interest Rate Protection Documents, the Mortgagee Title Policy and every
other instrument or document executed by Borrower or any other Person that
evidences, secures or guarantees the Loan.
"Maturity Date" means February 15, 2003.
"Mortgagee Title Policy" shall mean the mortgagee title insurance policy, in the
form of ALTA Loan Policy - 1970 Form B, or such other form as is acceptable to
the Bank, to be issued to Bank by the Title Company, and including all
endorsements thereto, all in a form and with such exceptions as deemed
reasonable by the Bank and insuring the lien of the Deed of Trust.
6
"Note" shall mean the Promissory Note of even date herewith made by Borrower
payable to Bank in the principal amount of the Loan and in the form attached
hereto as Exhibit A, and all amendments, modifications and restatements thereof.
"Obligations" means the Indebtedness represented by the Note and all other
obligations of payment or performance under this Agreement or any other Loan
Document (and including, without limitation, those liabilities and obligations
of the Borrower under Interest Rate Protection Arrangements).
"Permanent Loan Commitment" means a commitment for permanent, long-term
financing of the Project and the Existing Facility to be obtained by the
Borrower from a long-term commercial mortgage lender on terms reasonably
satisfactory to the Borrower.
"Permits" means those licenses, permits and approvals issued by any Person and
obtained or hereafter to be obtained by Borrower or on Borrower's behalf in
connection with the ownership, use or operation of the Project.
"Permitted Encumbrances" shall mean collectively those liens and encumbrances
(i) relating to the Project and permitted by the terms of the Deed of Trust and
(ii) permitted by the terns of the Revolving Credit Loan Agreement which are
incorporated herein by reference as if fully set forth herein.
"Person" means any corporation, partnership, limited liability company,
individual, trust, joint venture, proprietorship, municipality, government
agency or authority or any other entity having the capacity to contract.
"Plans and Specifications" shall mean the final working drawings and
specifications for the development, construction and equipping of the Project,
prepared by Borrower's Architect and approved by the Borrower and Bank, together
with all amendments thereto and modifications thereof made by Change Orders
approved by Bank.
"Project" shall mean the Land, the Improvements and the FF&E.
"Project Budget" shall mean the Project Budget supplied by the Borrower to the
Bank describing the costs for the development, construction and equipping of the
Project.
"Register's Office" shall mean the Office of the Register of Deeds of ▇▇▇▇
County,
Tennessee.
"Requisition" shall mean the Construction Draw Request and Certificate to be
supplied by the Borrower pursuant to Articles VI and VII and in the form
attached hereto as Exhibit B.
"Retainage" means the 5% of Loan proceeds not advanced during the course of
construction of the Project, which proceeds are held by Bank in a separate
escrow account as retainage for completion of the Project pursuant to Sections
2.02 and 7.01.
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"Revolving Credit Loan Agreement" means the Amended and Restated Credit
Agreement by and among the Borrower, CTI Pet Systems, Inc., CTI Services, Inc.
and Advanced Crystal Technology, Inc. (ACT, INC.) as borrowers, the Bank as
agent and the financial institutions listed therein as lenders dated as of May
31, 2001, as further amended, modified or restated from time to time.
"Schedule of Sources and Uses of Loan Proceeds" shall mean the schedule attached
hereto as Exhibit C setting forth the source, amount and manner in which the
proceeds of the Loan will be used and the dates on which advances of the Loan
are contemplated to be requested and on which various stages of the Project are
contemplated to be completed.
"Term Loan Agreement" means the Loan Agreement dated January 13, 2000 by and
between the Bank and the Borrower relating to a $4,900,000 term loan made by the
Bank to the Borrower (the "Term Loan") for financing the Existing Facility and
that is secured by the Deed of Trust, as amended, modified or restated from time
to time.
"Title Company" shall mean the title insurance company licensed to conduct
business as such in the State of
Tennessee that is selected by Borrower,
acceptable to Bank and will issue the Mortgagee Title Policy.
"UCC" means the Uniform Commercial Code as adopted in
Tennessee, as amended from
time to time.
Section 1.2. Rules of Construction. The following rules shall apply to
the construction of this Agreement unless the context otherwise requires:
(a) Singular words shall connote the plural as well as the
singular, and vice versa.
(b) All references herein to particular articles or sections are
references to articles or sections of this Agreement.
(c) The headings and table of contents herein are solely for
convenience of reference and shall not constitute a part of this Agreement nor
shall they affect its meaning, construction or effect.
(d) Each party hereto and its counsel have reviewed and revised
this Agreement and agrees that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments or exhibits
thereto.
ARTICLE II
THE LOAN
Section 2.01. The Loan. Subject to and in accordance with the terms,
provisions, covenants and conditions of this Agreement and the other Loan
Documents, Bank agrees
8
to make the Loan in installments in a total amount not to exceed $7,900,000 to
Borrower and Borrower agrees to accept the Loan from Bank. The Borrower shall
repay the Loan pursuant to the terns of Section 2.08.
Section 2.02. Loan Advances. The proceeds of the Loan applicable to the
cost of acquisition of the Land shall be advanced on the Closing Date or as soon
as practicable after recordation of the Deed of Trust. The proceeds of the Loan
applicable to the Construction Costs shall be advanced from time to time only
during the Funding Period in amounts which shall equal the amount of the Loan
applicable to the Improvements and FF&E multiplied by the percentage of
completion of construction then attained less Loan amounts theretofore advanced,
all as determined by the Bank's Architect as described in Section 2.03 below.
The Retainage shall be paid to Borrower upon satisfaction of the conditions for
the receipt of the final Loan advance set forth in Article VIII hereof, free and
clear of all liens and claims for material supplied or for labor or services
performed in connection with the Project.
Section 2.03. Estimates of Completion and Construction Costs. The
percentage of completion of construction at any time and the estimated total
cost of construction shall be determined by Bank's Architect in his sole but
reasonable discretion.
Section 2.04. Requisitions. All Loan advances are to be made pursuant
to a Requisition, properly completed by Borrower or Borrower's Architect and
submitted to the principal office of Bank, or at such other place as Bank may
designate. Each Requisition shall, at the option of Bank, be submitted not less
than five (5) Business Days prior to the date of the requested Loan advance.
Section 2.05. Advances to General Contractor. At its option Bank may
make all Loan advances directly to the General Contractor for deposit in an
appropriately designated special bank account and the execution of this
Agreement by Borrower shall, and hereby does, constitute an irrevocable
direction and authorization to so advance the funds. No further direction or
authorization from Borrower shall be necessary to warrant such direct Loan
advances to the General Contractor and all such Loan advances shall satisfy pro
tanto the obligations of Bank hereunder and shall be secured by the Deed of
Trust as fully as if made to Borrower, regardless of the disposition thereof by
General Contractor.
Section 2.06. Interest Rates. Interest shall accrue on the outstanding
principal balance of the Loan at all times on the basis of actual days elapsed
over a year of 360 days, and interest shall be computed (a) at all times prior
to the Conversion Date, and as long as there is no Event of Default, at the
LIBOR Rate plus the Applicable LIBOR Margin, and (b) upon the occurrence and
continuation of an Event of Default (whether before or after the Conversion
Date), at the Default Rate.
Section 2.07. Conversion Date. If Borrower has not obtained the
Permanent Loan Commitment by the Conversion Date, Bank shall have the right in
its sole discretion to convert the applicable interest rate on the Loan on the
Conversion Date to
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the Conversion Rate by providing Borrower with not less than three (3) days
prior written notice.
Section 2.08. Payments. Borrower shall make payments of accrued
interest on the outstanding principal balance of the Loan on the first day of
each calendar month during the term of the Loan. The entire outstanding
principal balance of the Loan and all accrued, unpaid interest shall be due and
payable in full on the Maturity Date. Each and every payment on the Loan shall
be applied first to the payment of interest and the remainder, if any, to
principal; provided however, that any payment may be applied, at the option of
the holder hereof and without notice to the Borrower, first to the repayment of
any sums which may (but need not be) advanced by the holder hereof for payment
of taxes, assessments, insurance premiums, or for keeping and maintaining the
Project in accordance with the terms and conditions given therein to secure the
Loan, or the holder hereof may require such sums so advanced to be repaid on
demand, together with interest thereon at the Default Rate.
Section 2.09. Prepayments. The Borrower shall have the right at any
time after the Completion Date to prepay the Loan in whole, or from time to
time, in part, provided that (a) each prepayment of principal shall be in the
minimum amount of $5,000, and (b) all such prepayments will be applied to the
installments due on the Note in the inverse order of their maturity.
Section 2.10. Late Charge. If the Borrower shall default in the payment
of the principal of or interest on any advance under the Loan, the Borrower
shall on demand from time to time pay a late charge on any overdue payment of
principal and, to the extent permitted by law, on overdue payments of interest
up to the date of actual payment (after as well as before judgment) equal to
five percent (5%) of such payment to cover the administrative expense involved
in handling such delinquent payments, and such late charge shall be in addition
to the interest rate charged on the Loan.
Section 2.11. Loan Closing. Closing of the Loan shall occur on the
Closing Date and shall be held at such location as may be mutually agreeable to
the parties hereto.
Section 2.12. Additional Sums. If at any time pending or during the
disbursement of the Loan, the Bank, in its sole discretion, shall determine that
the undisbursed proceeds of the Loan will be insufficient to complete the
construction of the Improvements in accordance with the Plans and Specifications
and to pay for all Construction Costs, then the Borrower shall, promptly upon
demand from the Bank, deposit with the Bank, at the Bank's option, additional
sums which shall, when added to the undisbursed proceeds of the Loan, be
sufficient to complete the Improvements and pay all costs and expenses in
connection therewith.
Section 2.13. Interest Rate Protection Arrangements. The Bank (or any
affiliate of Bank) and the Borrower may enter into the Interest Rate Protection
Arrangements pursuant to the Interest Rate Protection Documents, and upon such
event,
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Borrower's obligations under such Interest Rate Protection Arrangements shall be
secured by the Deed of Trust and shall constitute Obligations hereunder.
Section 2.14. Collateral Security. As security for the Loan and other
Obligations, the Borrower has granted to the Bank a lien and security interest
on the Project and the Existing Facility pursuant to the Deed of Trust.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF BORROWER
To induce the Bank to make the Loan, the Borrower hereby represents,
warrants and covenants to the Bank the following:
Section 3.01. Borrower's Organization and Authority. Borrower (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Tennessee, (b) has all requisite power and authority under such
laws to enter into, and perform or otherwise comply with all of its obligations
under this Agreement and the other Loan Documents to which it is a party, and
(c) has taken all action necessary to authorize (i) the execution and delivery
of this Agreement and the other Loan Documents to which it is a party, and (ii)
the performance by Borrower of all of its obligations under this Agreement and
the other Loan Documents to which it is a party.
Section 3.02. No Conflicts, Defaults or Unpermitted Liens. Neither the
execution and delivery of this Agreement or the other Loan Documents by or on
behalf of Borrower, nor the performance by Borrower of its obligations hereunder
and thereunder (a) conflicts or will conflict with, or results or will result in
a breach of, or constitutes or will constitute a default under (i) the
organizational documents of Borrower, (ii) any law or any order, writ,
injunction or decree of any court or governmental authority or (iii) any
agreement or instrument to which Borrower is a party or by which it is bound or
(b) results or will result in the creation or imposition of any lien, charge or
encumbrance upon the property of Borrower, except the Permitted Encumbrances.
Section 3.03. Valid Execution and Delivery of Documents. This Agreement
and all of the other Loan Documents to which Borrower is a party have been duly
executed and delivered on behalf of Borrower, and each is a legal, valid and
binding instrument enforceable against Borrower in accordance with its terms.
The Loan Documents contain all the terms of the Loan, and the Borrower has not
relied on any oral representations of the Bank concerning the terms of the Loan.
Section 3.04. First Lien of Deed of Trust. The Borrower hereby
represents and warrants that the Deed of Trust constitutes a valid first lien on
the Existing Facility and the Project. The Borrower also warrants that it has,
or will obtain upon acquisition, good and marketable title to all FF&E free and
clear of all liens, security interests and
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encumbrances except in favor of the Bank. Further, the Bank shall not be
obligated to make any disbursements hereunder, unless it has a perfected first
priority security interest in the FF&E and such other personal property
collateral pursuant to the Deed of Trust.
Section 3.05. No Consents Necessary. No consent, authorization or
approval of any Person is required, which has not been received, or applied for
or requested with the reasonable expectation that it will be received in a
timely manner, in connection with the execution and delivery by Borrower of this
Agreement or any of the other Loan Documents.
Section 3.06. Plans and Specifications; No Defects or Violations. The
Plans and Specifications are satisfactory to and have been approved by Borrower
and General Contractor and, to the extent required by applicable law or any
restrictive covenant, by all applicable government authorities and the
beneficiary of any such covenant, respectively. All construction, if any,
heretofore performed with respect to the Improvements has been performed within
the perimeter of the Land in accordance with the Plans and Specifications as
approved by Bank's Architect and in accordance with any restrictive covenants
applicable thereto. There are no structural defects in the Improvements (to the
extent currently constructed), no violation of any applicable laws, ordinances,
rules or regulations exists with respect thereto and the anticipated use thereof
complies with all applicable zoning ordinances and regulations and any
restrictive covenants affecting the Land.
Section 3.07. Financial Condition of Borrower. The financial statements
(if any) heretofore delivered to Bank by Borrower are complete and correct in
all respects, have been prepared in accordance with GAAP, and fairly present the
respective financial conditions of the subjects thereof as of the respective
dates thereof, and no materially adverse change has occurred in the financial
conditions reflected therein since the respective dates thereof and no
additional borrowings have been made by Borrower since the date thereof other
than the borrowing contemplated hereby or approved in writing by Bank.
Section 3.08. No Pending Actions. There are no actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower, the Existing Facility or the Project, or involving the
validity or enforceability of the Deed of Trust or the priority of the lien and
security interests evidenced thereof, at law or in equity, or before or by any
governmental authority except actions, suits and proceedings fully covered by
insurance or which, if adversely determined, would not substantially impair the
ability of Borrower to pay when due any amounts which may become payable in
respect of the Note; and, to Borrower's knowledge, it is not in default with
respect to any order, writ, injunction, decree or demand of any court or
governmental authority.
Section 3.09. Utilities Available. All utility services necessary for
the construction of the Improvements and the operation thereof for their
intended purpose are available within the boundaries of the Land, including
public water supply, storm and sanitary sewer facilities, gas, electric and
telephone facilities.
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Section 3.10. No Contracts Giving Rise to Liens. Borrower has made no
contract or arrangement of any kind the performance of which by the other party
thereto would give rise to a lien on the Land except in favor of the Bank and
except for its arrangements with Borrower's Architect and the General
Contractor.
Section 3.11. Access to Project. All roads, pedestrian walkways and all
parking areas necessary for the full utilization of the Project for its intended
purpose have been completed or the necessary rights of way therefor have been
acquired by Borrower. All necessary steps have been taken by Borrower and any
such applicable governmental authority to assure the complete construction and
installation of such roads, walkways and parking areas and their dedication to,
and acceptance for maintenance purposes by, the appropriate governmental
authority or private Person, as applicable.
Section 3.12. No Litigation. There are no actions, suits or proceedings
of a material nature pending or overtly threatened against or affecting
Borrower, the Existing Facility or the Project, or involving the validity or
enforceability of the Loan Documents, or the priority of the liens and security
interests created by the Loan Documents and assignments made therein.
Section 3.13. Enforceability of Certain Contracts. The Architectural
Contract and the Construction Contract have been duly authorized, executed and
delivered and constitute valid and binding obligations of the parties thereto
enforceable in accordance with their respective terms, and to the best knowledge
of Borrower, there are no defaults thereunder.
Section 3.14. Use and Operation of the Existing Facility and the
Project. The use of the Existing Facility and the Project complies with all
applicable laws, zoning ordinances, parking use regulations, land use
regulations and any restrictive covenants affecting them and all requirements
for such use have been satisfied. Upon the completion of construction, Borrower
shall use the Project for its business purposes in strict compliance with
applicable law. No other documents, instruments, agreements or contracts are, to
the best knowledge of Borrower, required to be made or obtained in order for
Borrower to use and operate the Existing Facility and the Project for its
intended purpose in accordance with this Agreement and in compliance with
applicable law.
Section 3.15. No Violation of Laws. The making of the Loan will not
violate any securities, usury, doing business, truth-in-lending, environmental
or similar applicable state, federal or local law or regulation.
Section 3.16. Licenses, Permits and Approvals. All governmental and
regulatory Permits, licenses and approvals commensurate with the construction of
the Project have been issued and all fees and bonds commensurate with
construction have been paid in full or posted, as the circumstances may require.
Section 3.17. No Defaults. There is no default on the part of the
Borrower under the Loan Documents, and no event has occurred and is continuing
which with notice or the passage of time, or both, would constitute a default
under the Loan Documents.
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Section 3.18. Leases. The Borrower intends to lease a portion of the
Project to CTI PET Systems, Inc.
Section 3.19. Nature of Borrower's Representations and Warranties. The
representations and warranties made in this Agreement shall remain true and
correct in all material respects and shall survive so long as any of the
Obligations have not been satisfied or the Loan or any part thereof shall remain
outstanding, and for any applicable statute of limitations period thereafter.
All representations and warranties made in this Agreement or in any certificate
or other document delivered to the Bank by or on behalf of Borrower pursuant to
or in connection with the Loan shall be deemed to have been relied upon by the
Bank, its successors and assigns, notwithstanding any investigation heretofore
or hereafter made by or on behalf of the Bank. The representations and
warranties contained herein have been made after diligent inquiry calculated to
ascertain the truth and accuracy of the subject matter of each of such
representations and warranties. All of such representations and warranties are
true and correct in all material respects and do not omit any material fact
necessary to make such representations and warranties not misleading.
ARTICLE IV
COVENANTS OF BORROWER
Borrower covenants with Bank as follows:
Section 4.01. No Conveyances or Encumbrances. (a) It will not sell,
lease, mortgage, assign, pledge, convey or encumber the Project or any part
thereof or interest therein in any way without the prior written consent of Bank
excepting, however, the leasing of a portion of the Project to CTI PET Systems,
Inc., an affiliate of Borrower. All easements and restrictive covenants not
already in existence at the Closing Date affecting the Land shall be submitted
to Bank for its approval prior to the execution thereof by Borrower, accompanied
by a drawing or survey showing the location thereof.
(b) The Borrower will promptly pay and discharge all claims and liens
for labor done and materials and services furnished in connection with the
construction of the Improvements. The Borrower will have the right to contest in
good faith any claim or lien, provided that it does so diligently and without
prejudice to the Bank. Upon the Bank's request, the Borrower will promptly
provide a bond, cash deposit, or other security reasonably satisfactory to the
Bank to protect the Bank's interest and security, should the contest be
unsuccessful.
Section 4.02. Compliance With Law. It will comply promptly with all
existing and future applicable laws, ordinances, rules and regulations of all
governmental, judicial or other legal authorities having jurisdiction over the
Land or the Improvements and it will comply with all recorded restrictions
affecting the Property.
Section 4.03. Inspections. (a) It will permit Bank, or its
representatives, and Bank's Architect to enter upon the Land, inspect the
Project and all materials to be used in
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the construction thereof and to examine all detailed plans and shop drawings
which are or may be kept at the construction site and will cooperate, and cause
the General Contractor to cooperate, with Bank and Bank's Architect to enable
him to perform his functions hereunder. The Borrower agrees to bear the cost,
expense or fee of such inspections.
(b) If the Bank determines in good faith that any work or materials do
not conform to the approved Plans and Specifications or sound building practice
or otherwise materially depart from any of the requirements of this Agreement,
the Bank may require the work to be stopped and may withhold disbursements until
the matter is corrected to the reasonable satisfaction of Bank. In that event,
the Borrower will promptly correct the work to the Bank's reasonable
satisfaction. No such action by the Bank will affect the Borrower's obligation
to complete the Improvements on or before the Completion Date.
(c) The Bank is under no duty to supervise or inspect the construction
or examine any books and records. Any inspection or examination by the Bank is
for the sole purpose of protecting the Bank's security and preserving the Bank's
rights under this Agreement and the other Loan Documents. No default of the
Borrower will be waived by any inspection by the Bank. In no event will any
inspection by the Bank be a representation that there has been or will be
compliance with the Plans and Specifications or that the construction is free
from defective materials or workmanship.
Section 4.04. Payment of Costs. It will pay to Bank at closing, and
thereafter upon demand, all fees, charges and expenses incurred by Bank
(including Bank's reasonable attorneys' fees, court costs, etc.) in connection
with the Loan.
Section 4.05. Construction of the Project. It agrees to begin
construction of the Improvements promptly after the Closing Date and to
prosecute diligently and continuously the construction of the Improvements in
accordance with the Plans and Specifications so that the Improvements are fully
complete and ready for use and occupancy on or before the Completion Date.
Pursuant to Section 6.01 (e) on or before the date hereof, a master set of the
Plans and Specifications shall be delivered to the Bank, each page of which
shall be initialed or otherwise identified and approved by the Bank and the
Borrower, which master set shall govern all questions that may arise with
respect thereto. All requests for material changes in the Plans and
Specifications must be made in writing by the Borrower according to the terms of
Section 4.10 below.
Section 4.06. Satisfaction of Conditions. It will cause all conditions
hereof to be satisfied to the extent it is within its power to do so.
Section 4.07. Use of Loan Proceeds. Borrower shall use the Loan
proceeds only for the following purposes: (i) acquisition of the Land, (ii)
Construction Costs approved by Bank, (iii) payment of any fees, charges or
expenses related to the Project, (iv) such other purposes as may be approved in
advance in writing by Bank and (v), at the option of the Bank, accrued interest
upon unpaid Loan advances. Borrower shall furnish to Bank, promptly after Bank's
request therefore, evidence satisfactory to Bank that all Loan proceeds have
actually been paid or applied by Borrower for the purposes specified in this
Section.
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Section 4.08. Indemnification. It will indemnify Bank from claims of
brokers arising by reason of the execution hereof or the consummation of the
transactions contemplated hereby. The Borrower also agrees to indemnify the Bank
and hold it harmless from and against all liabilities, claims, damages, costs,
and expenses (including, but not limited to, reasonable legal fees, court costs
and disbursements) arising out of, or resulting from, any defective workmanship
or materials occurring in the construction of the Improvements. Upon demand by
the Bank, the Borrower will defend any action or proceeding brought against the
Bank alleging any defective workmanship or materials, or the Bank may elect to
conduct its own defense at the expense of the Borrower. The provisions of this
Section will survive the termination of this Agreement and the payment and
performance of the Obligations.
Section 4.09. Correction of Defects. It will, upon demand of Bank's
Architect, correct any structural defect in the Improvements or any material
departure from the Plans and Specifications not approved by Bank's Architect,
and the advance of and proceeds of the Loan shall not constitute a waiver of
Bank's right to require compliance with this covenant with respect to any such
defects or departures from the Plans and Specifications not theretofore
discovered by, or called to the attention of, Bank's Architect.
Section 4.10. Change Orders. It will not enter into any Change Order in
an amount in excess of $50,000 or an aggregate of Change Orders during the
construction period in an amount in excess of $150,000 except with the prior
written consent of Bank. The Borrower shall be required to provide Bank notice
of each Change Order after Change Orders have been made in an aggregate amount
equal to $50,000. The Borrower must also obtain the Bank's prior written
approval of any material change in the Plans and Specifications for the
Improvements approved by the Bank that might adversely affect the value of the
Bank's security. The Borrower must also obtain all approvals of any changes in
plans, specifications, work, materials, or contracts that are required by law or
under the terms of any recorded instrument affecting the Project or under any
lease, loan commitment, or other agreement relating to the Project. The Bank
will have a reasonable time to evaluate any requests for its approval of any
changes referred to in this Section, and the Bank will not be required to
consider approving any changes unless all other approvals that are required from
other parties have been obtained. The Bank may approve or disapprove changes in
its reasonable discretion.
Section 4.11. Right to Cure. Bank may apply amounts due hereunder to
the satisfaction of the conditions hereof, and amounts so applied shall be part
of the Loan, shall be evidenced by and accrue interest at the rate set forth in
the Note and shall be secured by the Deed of Trust.
Section 4.12. No Other Contracts. It will not execute any material
contract or become party to any material arrangement for the acquisition,
construction or equipping of the Project unless (a) such contract or arrangement
is approved in writing by Bank, (b) Borrower delivers to Bank a photocopy of the
fully executed contract or other document evidencing the arrangement, and (c) if
requested by the Bank, Borrower delivers to Bank
16
a performance and payment bond, with surety satisfactory to Bank, in the amount
of the contract price, in such form as Bank may require and naming Bank as
co-obligee.
Section 4.13. Project Information. It shall provide Bank with such
information and documentation with respect to the construction, ownership and
operation of the Project as Bank may reasonably require from time to time during
the term of the Loan.
Section 4.14. Receipts. It will deliver to Bank, upon Bank's reasonable
demand, any contracts, bills of sale, statements, receipted vouchers or
agreements under which Borrower claims title to any materials, fixtures or
articles incorporated in the Improvements or subject to the lien of the Deed of
Trust. In addition, Borrower shall furnish to Bank, whenever reasonably
requested to do so, satisfactory evidence showing that all moneys theretofore
advanced or paid by Bank on account of the Loan have actually been paid or
applied by Borrower for the purposes represented.
Section 4.15. Insurance. It will keep the Project in good repair,
maintain insurance on its property in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same vicinity,
promptly deliver to the Bank true copies of all renewal and replacement
insurance policies and, within 10 days after notice in writing from the Bank,
obtain such additional insurance as the Bank may reasonably request. Upon the
request of the Bank, any insurance policy insuring the Project must name the
Bank as mortgagee, loss payee and additional insured and require that all net
proceeds from any claim in excess of $50,000 are paid to the Bank. The proceeds
of insurance will be applied as provided by the Deed of Trust. Each policy shall
contain an undertaking by the insurer that such policy shall not be modified
adversely to the interests of the Bank or canceled without at least 30 days'
prior written notice to the Bank. All such policies shall be deposited with the
Bank, provided that in lieu of such policies there may be deposited with the
Bank a certificate or certificates of the respective insurers attesting the fact
that the insurance required by this Section is in force and effect. If requested
by the Bank, the Borrower shall furnish to the Bank prior to the Closing Date
and annually thereafter a certificate of a person selected by the Borrower and
knowledgeable in the insurance business who is not an officer, partner, member
or employee of the Borrower reciting that all policies required to be in effect
at that time are in full force and effect and that the amounts and types of
insurance evidenced thereby comply with and satisfy all the requirements of this
Section. Prior to the expiration of any such policy, the Borrower shall furnish
the Bank evidence satisfactory to the Bank that the policy has been renewed or
replaced or is no longer required by this Agreement.
Section 4.16. Payment of Charges. Borrower shall pay all insurance
premiums, taxes, assessments and other charges that have or will become liens or
encumbrances upon the Project or any part thereof.
Section 4.17. Books and Records. The Borrower will maintain full and
correct books and records in accordance with GAAP showing in detail the earnings
and expenses relating to the Project and will permit representatives of the Bank
to examine such books and records and all supporting vouchers and data at any
time and from time to time as the
17
Bank may reasonably request at such place in the vicinity of the Project as such
books and records are customarily kept.
Section 4.18. Eminent Domain: Condemnation. In the event that any
proceedings to take the Project or any part thereof by exercise of the power of
eminent domain are undertaken or threatened, the Borrower will give the Bank
prompt notice thereof. Any award made to the Borrower will be paid to the Bank,
and the Borrower hereby appoints the Bank its attorney-in-fact to receive and
give all appropriate discharges for any such award. Any such award may, at the
option of the Bank, be applied to (a) the prepayment of the principal of the
Note in inverse order of maturity of any installments thereof or (b) the payment
of accrued interest, if any, or (c) be released to the Borrower in whole or in
part upon conditions satisfactory to the Bank. Upon any default hereunder, all
of the Borrower's rights, title and interest in and to all such awards are
hereby assigned to the Bank. Upon payment of accrued interest and the unpaid
principal balance of the Note and all other Obligations, the Borrower will be
entitled to the remaining balance, if any, of any such award.
Section 4.19. Financial Covenants. Borrower shall maintain the
financial covenants set forth in the Revolving Credit Loan Agreement, all of
which are incorporated herein by reference as if fully set forth herein, and
such covenants shall continue in full force and effect for the purposes of this
Agreement notwithstanding the expiration or termination of Borrower's
obligations under the Revolving Credit Loan Agreement.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01. Events of Default. Each of the following shall be an
Event of Default hereunder:
(a) Borrower's failure to make any payment of principal or
interest with respect to the Note and five (5) days shall have elapsed since the
Bank shall have provided Borrower notice of such payment default, or Borrower's
failure to make any payment under any other Obligation on the due date thereof
after the expiration of any applicable notice or cure period, whether at
maturity, by notice of intention to prepay or otherwise;
(b) Borrower's breach or failure to perform any other material
term, covenant, warranty or agreement herein, or in any other Loan Document, and
such default shall continue for 30 days after written notice thereof has been
given to the Borrower by the Bank (except to the extent such other term,
covenant, warranty or agreement herein or in such other Loan Document expressly
specifies a different notice period, in which event such other notice period
shall apply);
(c) if any representation or warranty contained herein or in any
of the other Loan Documents was false or misleading in any material respect when
made;
18
(d) the occurrence of an Act of Bankruptcy;
(e) if the Project is materially damaged by fire or otherwise and
(i) the insurance proceeds together with the unadvanced portion of the Loan are
insufficient to complete the construction, renovation and equipping of the
Project according to the Plans and Specifications, or (ii) Borrower shall be
unable to complete the Project within the time permitted under this Agreement,
or if any material portion of the Project is taken by eminent domain or
purchased in lieu of such taking;
(f) if for any cause whatsoever the construction of the Project
has at any time been discontinued for fifteen (15) consecutive days (except as
may be consented to in writing by Bank for reasons of Force Majeure) or not
carried on with diligence and dispatch, in the opinion of Bank, or if the
Project, in the reasonable judgment of Bank, has not been completed
substantially in accordance with the Plans and Specifications, or if the
certificate of occupancy for the Project or the certificate of compliance with
zoning ordinances, use restrictions and building regulations has not been issued
at the time required hereby;
(g) Borrower's failure to comply with any requirement of any
governmental authority having jurisdiction over the Project (or any part
thereof);
(h) Borrower executes any security agreement on any materials,
fixtures or articles used in the construction, renovation or equipping of the
Project, or if any such materials, fixtures or articles are purchased by means
of conditional sale transactions or otherwise so that the ownership thereof will
not vest unconditionally in Borrower, free from encumbrance, on delivery at the
site of the Project, or if Borrower does not furnish to Bank, upon request
therefore, the contracts, bills of sale, statements, receipted vouchers and
agreements under which Borrower claims title to such materials, fixtures and
articles;
(i) if the proceeds of the Loan or any part thereof are being, or
shall at any time have been, diverted to a purpose other than the payment of the
cost of acquiring, constructing and equipping the Project;
(j) upon the issuance of a writ or warrant of attachment,
sequestration or any similar process against all or a substantial part of the
property of Borrower;
(k) if Borrower permits or suffers to exist, without the prior
written consent of Bank, any lien or encumbrance on all or any part of the
Project other than as provided by the Loan Documents, and which lien or
encumbrance is not discharged within sixty (60) days;
(1) if the Borrower defaults under the terms and conditions of any
Indebtedness owed to the Bank;
(m) if an event of default as defined under any of the other Loan
Documents occurs;
(n) the liquidation, termination or dissolution of the Borrower;
19
(o) the construction of the Improvements is not completed within
30 days of the Completion Date; or
(p) if an event of default occurs under the Revolving Credit Loan
Agreement;
Section 5.02. Remedies. Upon the occurrence of an Event of Default,
Bank may take any one or more or all of the following actions:
(i) Declare the outstanding principal balance of the Note
and all other Obligations, plus accrued interest
thereon and all fees and costs, if any, to be
immediately due and payable.
(ii) Terminate this Agreement, the Revolving Credit Loan
Agreement and the Term Loan Agreement and all of
Bank's obligations hereunder and thereunder,
including the obligation of Bank to make additional
advances hereunder or thereunder and accelerate in
full or in part any and all obligations or
indebtedness thereunder.
(iii) Exercise all rights and remedies provided by
applicable law, this Agreement, the other Loan
Documents and any and all other documents,
instruments and agreements executed by Borrower in
favor of Bank.
(iv) Enter into possession of the Project and perform or
cause performance of any and all work and labor and
purchase any and all materials, equipment, fixtures
and other property which it may deem necessary or
desirable to complete the Project substantially in
accordance with the Plans and Specifications, employ
such persons in connection therewith and take
whatever other action (including contracting with
contractors, subcontractors or the General
Contractor) which may be necessary or desirable, in
the opinion of Bank, to complete the construction and
equipping of the Project substantially in accordance
with the Plans and Specifications. All sums expended
or advanced by Bank for such purposes shall be deemed
to be paid to Borrower, shall bear interest at the
Default Rate and shall be secured by the Deed of
Trust, it being understood and agreed that Bank shall
be under no obligation to complete the construction
and equipping of the Project. For this purpose,
Borrower hereby constitutes and appoints Bank as its
true and lawful attorney-in-fact with full power of
substitution to complete the Project in the name of
Borrower, and hereby empowers Bank (1) to use any
funds of Borrower for the purpose of completing the
construction and equipping of the Project
substantially as provided in the Plans and
Specifications; (2) to make such additions, changes
and corrections to the Plans and Specifications as
shall be necessary
20
or desirable to complete the construction and
equipping of the Project substantially in accordance
with the Plans and Specifications; (3) to employ such
contractors, subcontractors, agents, architects and
inspectors as shall be required for such purposes;
(4) to pay, settle or compromise all existing bills
and claims which are or maybe liens against the
Project, or maybe necessary or desirable for the
completion of the construction and equipping of the
Project, or for the clearance of title; and (5) to
execute all applications, certificates, promissory
notes and other documents in the name of Borrower
which may be required under any agreement of Borrower
and to do any and every act which Borrower might do
in its own behalf. It is further understood and
agreed that this power of attorney shall be deemed to
be a power coupled with an interest which cannot be
revoked. Bank also shall have the power to prosecute
and defend all actions or proceedings in connection
with the construction and equipping of the Project
and to take such action and require such performance
as it deems necessary.
(v) Without waiving in any manner its right to take any
one or more of the actions listed in clauses (i)-(iv)
above, Bank may continue to make advances of the Loan
to Borrower on such terms as Bank may require.
Section 5.03. Bank's Appointment as Attorny-in-Fact. (a) The Borrower
hereby irrevocably constitutes and appoints the Bank and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower and in the name of the Borrower or in the Bank's own name,
from time to time in the Bank's discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, provided, however, that this
appointment shall be effective only upon the occurrence and continuation of an
Event of Default.
Section 5.04. Performance by Bank of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements contained herein
and the Bank, as provided for by the terms of this Agreement, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the expenses of the Bank incurred in connection with such performance
or compliance, together with interest thereon at the Default Rate, shall be
payable by the Borrower to the Bank on demand and shall constitute Obligations
secured hereby.
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ARTICLE VI
CONDITIONS PRECEDENT TO BANK'S OBLIGATION
TO MAKE THE FIRST LOAN ADVANCE
Section 6.01. First Loan Advance. Bank shall not be obligated to make
the first advance of Loan proceeds hereunder unless and until the following
conditions shall have been satisfied (as determined in the sole discretion of
Bank) or unless and until waived in writing by Bank:
(a) the Loan Documents shall be duly authorized,
executed, acknowledged (where appropriate), delivered to the Bank and recorded
(where appropriate);
(b) the delivery to Bank of proper corporate documents,
including certified charter, good standing certificate and resolutions executed
by the necessary representatives of the Borrower approving the Borrower's
undertaking and participation in the Project and the Loan and authorizing
certain officers to execute all the Loan Documents to which Borrower is a party;
(c) the delivery to Bank of a Requisition, appropriately
completed and signed by an authorized representative of the Borrower, in the
form attached hereto as Exhibit B;
(d) the receipt by Bank of current financial statements
of Borrower;
(e) the receipt by Bank of a certified copy of the Plans
and Specifications and approval by the Bank and by all applicable governmental
authorities of the same;
(f) Borrower's delivery to the Bank of an appraisal of
the Project made by an appraiser acceptable to the Bank, showing the value of
the Project to be satisfactory in amount, form and substance to the Bank;
(g) the receipt by Bank of the completed Schedule of
Sources and Uses of Loan Proceeds attached hereto as Exhibit C;
(h) receipt by Bank of a copy of the Project Budget
detailing all costs associated with the completion of the development, design,
construction and financing of the Project, including a schedule of anticipated
disbursements;
(i) the receipt by Bank of evidence satisfactory to Bank
that Borrower has caused to be placed into effect insurance required by the
terms of this Agreement and the Deed of Trust;
(j) the opening of the Construction Disbursement Account;
22
(k) Borrower's execution and delivery to the Bank of such
financing statements as the Bank may require to perfect its security interests
created in the Loan Documents;
(1) the receipt by Bank of copies of all authorizations,
Permits, and other matters, which are then presently procurable and which are
required by any governmental authority for the construction, equipping and/or
operation of the Project, including without limitation, a properly approved
re-subdivision plat for the Project and evidence of road ingress to and egress
from the Project;
(m) the receipt by Bank of the Mortgagee Title Policy and
a current title report from the Title Company which shall set forth a
description of the Land, shall have attached thereto copies of all instruments
which appear as exceptions in the report, and shall state the status of the
title to abutting streets and roads;
(n) the receipt by Bank of an original current survey of
the Land certified to the Borrower, the Bank and the Title Company, and showing:
(i) the location of the perimeter of the Land by
courses and distances;
(ii) all easements and rights-of-way;
(iii) the established building lines;
(iv) the lines of the streets abutting the Land
and the width thereof;
(v) encroachments, and the extent thereof in
feet and inches upon the Land;
(vi) all Improvements, to the extent constructed,
and the relation of such Improvements by
distances to the perimeter of the Land, the
established building lines and the street
lines;
(vii) if the Land is described as being on a filed
map, a legend relating the survey to that
map;
(viii) evidence satisfactory to Bank's counsel that
no part of the Land is located within an
area designated as a flood hazard area by
the Federal Insurance Administration,
Department of Housing and Urban Development,
under the Flood Disaster Protection Act of
1973 (P.L. 93-234); and
(ix) all adjoining landowners.
23
(p) the receipt by Bank of copies of the Construction
Contract as well as any subcontractor contracts requested by the Bank certified
by Borrower to be true and complete;
(q) the receipt by Bank of copies of letters from local
utility companies, municipal authorities or the Borrower's Architect stating
that electric, gas, sewer and water facilities will be available to the Land
upon the completion of the Improvements;
(r) the receipt by Bank of a zoning letter from the
proper governmental authority certifying that the Project and its intended use
properly fits within the zoning classification established by the Jurisdiction;
(s) the receipt by Bank of the Environmental Survey
showing no environmental conditions unsatisfactory to the Bank;
(t) the receipt by Bank of an opinion of Borrower's
counsel in a form satisfactory to the Bank and its counsel; and
(u) all other documents, instruments or other matters
reasonably requested by the Bank in connection with the funding of the Loan and
the development of the Project.
ARTICLE VII
ADDITIONAL CONDITIONS OF BANK'S
OBLIGATION TO MAKE ADVANCES
Section 7.01. General Provisions Regarding Disbursement of Loans. If
all conditions precedent to the advance have been performed to the satisfaction
of the Bank, the Bank shall make advances for payment of the Construction Costs
into the Construction Disbursement Account or payable to the Borrower, or
jointly to the Borrower and the General Contractor (or other appropriate
subcontractors), or, after a default or an event which with notice or lapse of
time or both could constitute a default hereunder, in such other manner as the
Bank may elect; provided, however, the Bank shall in no event be required to
make any advance based on a percentage of completion greater than that estimated
by the Bank's Architect, and provided further, the Bank may, at its option, (a)
retain the Retainage until completion of the Improvements and/or issuance of the
certificate of occupancy and (b) withhold an additional amount of the Loan
sufficient to cover the unpaid balance of the Construction Costs and to complete
construction. The proceeds of each advance hereunder shall be applied solely and
exclusively to payment, or reimbursement to the Borrower for payment, of the
Construction Costs and the application for such advance. The Bank may also
elect, without further notice to or authorization by the Borrower, to use the
Loan proceeds to pay, as and when due, any Loan fees owing to the Bank, interest
on the Loan, release charges under prior deeds of trust on the Land, legal fees
and disbursements of the Bank's attorneys that are payable by the Borrower, and
any other sums with respect to
24
the Loan that may be owing from time to time by the Borrower to the Bank. These
payments may be made, at the option of the Bank, by (i) debiting or charging the
Loan proceeds in the amount of the payments without first disbursing that amount
into the Construction Disbursement Account, or (ii) disbursing all or any part
of the amount of the payments into the Borrower's Construction Disbursement
Account and then debiting that account for those payments or invoicing the
Borrower therefor. Each advance whether made to the Borrower or in any other
manner permitted hereby, shall be deemed to be an advance under the Note and
shall be secured by the Deed of Trust.
The Bank shall not be required to make any advance of the Loan if, in
the opinion of the Bank, (a) the amount of such Loan advance shall (i) together
with all Loan amounts previously advanced hereunder and applied to the
Construction Costs, be greater than the Construction Costs (as estimated from
time to time by the Bank's Architect and the Bank) incurred by the Borrower to
the date of the requested Loan advance, or (ii) together with the balance of the
Loan, be less than the amount of the Construction Costs (as estimated by the
Bank's Architect and the Bank) of completing the Improvements, (b) the
representations made and the information furnished by the Borrower to the Bank
with regard to the Loan and the Borrower's qualification therefor shall not have
been or not continue to be true and not misleading in all material respects, (c)
any Event of Default or any event which with notice or lapse of time or both
could constitute an Event of Default shall exist hereunder or (d) all conditions
precedent to all prior Loan advances shall not have been or continue to be
satisfied or shall not have been waived in writing by the Bank. The Bank shall
have no obligation to advance Loan proceeds more than once per month unless
otherwise permitted by the Bank.
The Borrower's Requisition shall constitute a representation by the
Borrower to the Bank that the monies therein referred to have been or are to be
used in the construction of the Improvements, and the Bank shall be entitled to
rely thereon and shall be held harmless for all liability in connection
therewith. The payment of any Requisition maybe made upon such additional terms
and conditions as may be deemed appropriate and reasonable by the Bank.
If the Bank makes Loan advances before they are due in accordance with
the schedule of payments because the Bank believes it advisable to do so, such
Loan advances shall be deemed to be made in pursuance and not in modification
hereof, but the making of any such Loan advance or part thereof shall not be
deemed an approval or acceptance by the Bank of the work done on the
Improvements prior thereto.
Bank's obligation to make each Loan advance hereunder shall be subject
to the satisfaction (as determined in the sole discretion of Bank) or written
waiver by Bank of the following additional conditions:
(a) all conditions of the first Loan advance shall have been and
remain satisfied;
25
(b) there shall be no default under this Agreement, any of the
other Loan. Documents, the Revolving Credit Loan Agreement, the Term Loan
Agreement or any documents executed in connection therewith;
(c) Bank shall have received from Borrower a properly completed
Requisition at least three (3) Business Days before the date on which the Loan
advance is to be made;
(d) the Project shall not have been materially damaged or
destroyed by fire or other casualty and no portion of the Project shall be
subject to any pending or threatened condemnation, eminent domain or other
similar proceedings;
(e) Borrower's financial condition shall not have changed
materially and adversely since the date of the financial statements of Borrower
last delivered to Bank;
(f) if requested by the Bank, Borrower shall deliver or cause to
be delivered to Bank an endorsement to the Mortgagee Title Policy (i) advancing
the effective date thereof to the date of the requested Loan advance, (ii)
acknowledging liability of the Title Company in an amount equal to all prior
Loan advances (if any) plus the requested Loan advance and (iii) reflecting that
subsequent to the last preceding Loan advance there has been no change in the
status of title and that no survey or other exceptions not previously approved
by Bank have arisen;
(g) if requested by the Bank, Borrower shall deliver or cause to
be delivered to Bank a sworn statement of Borrower that, to the best of its
knowledge, at the time of the Loan advance (i) there are no uncured defaults
with respect to the Loan Documents and there are no existing facts or
circumstances known to Borrower which, with notice or the passage of time, or
both, would give rise to or constitute such a default, (ii) each of the
representations and warranties made by Borrower herein are true and correct as
of the date of such Loan advance and (iii) Borrower's financial condition has
not changed materially and adversely from that set forth in Borrower's most
recent financial statements delivered to Bank; and
(h) if requested by the Bank, Borrower shall deliver to Bank an
updated Project Budget in the form required by Section 6.01(h).
Section 7.02. Additional Requirements for all Advances.
(a) The Deed of Trust shall have been duly recorded in the
Register's Office and financing statements perfecting Bank's security interest
in the collateral described in the Deed of Trust shall be duly filed in the
Office of the Secretary of State of Tennessee;
(b) Where any portion of the proceeds of such Loan advance is to
be paid on account of work by the General Contractor, in addition to the
Requisition, a Contractor's Application for Payment in the forms of American
Institute of Architects Documents AIA G-702 and G-702A, or a similar application
approved by the Bank;
26
(c) All of the conditions of the Loan Term Sheet shall have been
satisfied (as determined in Bank's sole discretion) or waived in writing by
Bank;
(d) The representations and warranties made in Article III hereof
shall be true and correct on and as of the date of the Loan advance with the
same effect as if made on such date;
(e) All documents required under this Article VII shall be in form
and substance satisfactory to Bank and its counsel, properly executed and duly
recorded or filed (as applicable), and all approvals to be given by Bank
hereunder shall be at the sole reasonable discretion of Bank and no changes or
amendments to such documents shall be made (except as otherwise permitted
hereunder) without the prior written consent of Bank;
(f) If requested by the Bank, waivers by the General Contractor
and each major subcontractor and materialman of their rights to file or perfect
mechanics' or materialmen's liens for the work for which payment has been
requested from such Loan advance, in form and substance satisfactory to the
Bank; and
(g) If requested by the Bank, a sworn statement of the Borrower
and the General Contractor setting forth the names, addresses and amounts due,
or to become due, as well as the amounts previously paid, to every major
subcontractor furnishing materials or performing labor in connection with the
construction of the Improvements, together with evidence of actual payment of
amounts previously requisitioned.
Upon the satisfaction of all the heretofore mentioned conditions by the
Borrower, the Bank agrees to deposit the proceeds of each Loan advance in the
Construction Disbursement Account of the Borrower to be maintained at the Bank.
ARTICLE VIII
CONDITIONS OF BANK'S OBLIGATION
TO MAKE THE FINAL ADVANCE
Section 8.01. Final Advance. When the Project has been completed in
accordance with the Plans and Specifications, and all other terms and conditions
of the Loan Documents required to be satisfied as of the date of the final
advance of Loan proceeds have been satisfied, Borrower agrees to supply Bank
with the following documents (in addition to those required pursuant to Articles
VI and VII hereof as a condition precedent to the final advance of Loan
proceeds:
(a) evidence satisfactory to Bank and Bank's Architect that (i)
the Project, including landscaping and interior finish, has been completed in
accordance with the Plans and Specifications, (ii) all utilities, including,
without limitation, public water, sanitary and storm sewers, electricity, gas
and telephones, have been connected to the Project and are operational and (iii)
the Project is suitable for occupancy;
27
(b) evidence satisfactory to Bank that Borrower has obtained all
Permits and other approvals (including, without limitation, environmental and
land use permits) required by law for the operation and occupancy of the Project
for its intended purpose;
(c) evidence satisfactory to Bank that all streets adjoining, and
necessary for access to, the Project have been completed and dedicated to and
accepted by the appropriate governmental authorities for maintenance and public
use;
(d) a certificate from Borrower stating the total amount of the
Construction Costs;
(e) a photographic copy of a final and unconditional certificate
of occupancy issued by the appropriate official of the Jurisdiction;
(f) an "as-built" plat of survey of the Land, acceptable to Bank,
prepared by a land surveyor licensed as such by the State of Tennessee, and
showing the dimensions of the Land, all easements and other title exceptions,
all Improvements, appurtenances, building restriction lines, utilities, parking
spaces, means of ingress and egress and rights of way, whether above or below
ground;
(g) an endorsement to the Mortgagee Title Policy (i) advancing the
effective date thereof to the date of the final Loan advance, (ii) acknowledging
liability of the Title Company in an amount equal to all prior Loan advances
plus the final Loan advance, (iii) deleting the exception for "pending
disbursements" and (iv) reflecting that subsequent to the last preceding Loan
advance there has been no change in the status of title and that no survey or
other exceptions not previously approved by Bank have arisen;
(h) evidence that 30 days have elapsed since a notice of
completion has been filed in the Register's Office pursuant to T.C.A.
ss.▇▇-▇▇-▇▇▇, as amended, naming the Bank as its designee as the person to whom
all claims should be addressed, or, if requested by the Bank, a full and
complete release of all contractors', laborers' and materialmen's liens in form
and substance as may be satisfactory to the Bank from the General Contractor and
all subcontractors and materialmen;
(i) an affidavit by the General Contractor in the form provided by
T.C.A. ss.▇▇-▇▇-▇▇▇, as amended;
(j) policies of hazard and such other types of insurance as are
required by Bank hereunder, in such amounts, containing such terms and written
by such companies as are required by Bank hereunder; and
(k) such other instruments and documents as may be reasonably
required by Bank.
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ARTICLE IX
AFFIRMATIVE COVENANTS
Until payment and performance in full of the Obligations, unless the
Bank shall otherwise consent in writing, the Borrower agrees that it will:
Section 9.01. Financial Statements, Reports. Furnish to the Bank (i) as
soon as available but not later than 30 days after preparation, Borrower's
federal and state tax returns for the preceding tax year and (ii) such
additional information, reports or statements (financial or otherwise) as the
Bank from time to time may reasonably request, including without limitation,
those financial statements required by the terms of the Revolving Credit Loan
Agreement which are hereby incorporated herein by reference as if fully set
forth herein.
Section 9.02. Corporate Existence. Maintain its corporate existence and
carry on and conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and maintained.
Section 9.03. Access to Premises and Records. Maintain financial
records in accordance with GAAP, and permit representatives of the Bank to have
access to such financial records and the premises of the Borrower at reasonable
times and to make such excerpts from such records as such representatives deem
necessary, all without hindrance or delay.
Section 9.04. Litigation and Other Notices. Give the Bank prompt
written notice of the following:
(a) any Event of Default and any event which with notice or lapse
of time or both would constitute an Event of Default;
(b) all breaches or violations of this Agreement (other than an
Event of Default) or any event that would become a breach or violation (other
than an Event of Default) upon notice or lapse of time or both under any of the
terms or provisions of any note, or of any other evidence of Indebtedness or
agreement or contract governing the borrowing of money by the Borrower; and
(c) levy of an attachment, execution or other process against any
of the property or assets, real or personal, of the Borrower, which property and
assets in the aggregate have a book value or fair market value in excess of
$100,000.
Section 9.05. Maintenance of Property. Maintain all of its properties
and assets in good condition, repair and working order, ordinary wear and tear
excepted.
Section 9.06. Compliance with Laws. Comply in all material respects
with all laws and governmental regulations of the United States of America and
all political subdivisions thereof applicable to the rights of the Borrower to
transact business under any such laws and regulations, including, without
limitation, all applicable federal, state
29
and local laws and regulations relating to environmental matters, including,
without limitation, air and water pollution and safety, health and
discrimination, the noncompliance with which would have a material adverse
effect on the business, properties or financial condition of the Borrower or the
Borrower's ability to perform its obligations hereunder.
Section 9.07. Indemnity by Borrower. Indemnify, save, and hold harmless
the Bank and its directors, officers, agents, attorneys, and employees
(collectively, the "Indemnitees") from and against: (i) any and all claims,
demands, actions, or causes of action that are asserted against any Indemnitee
by any Person if the claim, demand, action, or cause of action directly or
indirectly relates to a claim, demand, action, or cause of action that the
Person asserts or may assert against Borrower, any affiliate of Borrower or any
officer, director, shareholder or member of Borrower, as applicable, (ii) any
and all claims, demands, actions or causes of action that are asserted against
any Indemnitee if the claim, demand, action or cause of action directly or
indirectly relates to this Agreement, the use of proceeds of the Note, or the
relationship of Borrower and Bank under this Agreement or any other Loan
Document or any transaction contemplated pursuant to this Agreement or any other
Loan Document, (iii) any administrative or investigative proceeding by any
governmental authority directly or indirectly related to a claim, demand, action
or cause of action described in clauses (i) or (ii) above, and (iv) any and all
liabilities, losses, costs, or expenses (including reasonable attorneys' fees,
court costs and disbursements) that any Indemnitee suffers or incurs as a result
of any of the foregoing; provided, however, that Borrower shall have no
obligation under this Section to the Bank with respect to any of the foregoing
arising out of the gross negligence or willful misconduct of the Bank or the
breach by the Bank of this Agreement or any other Loan Document or from the
transfer or disposition of the Note by the Bank. If any claim, demand, action or
cause of action is asserted against any Indemnitee, such Indemnitee shall
promptly notify Borrower, but the failure to so promptly notify Borrower shall
not affect Borrower's obligations under this Section unless such failure
materially prejudices Borrower's right to participate in the contest of such
claim, demand, action or cause of action, as hereinafter provided. If requested
by Borrower in writing and so long as no Event of Default shall have occurred
and be continuing, such Indemnitee shall in good faith contest the validity,
applicability and amount of such claim, demand, action or cause of action and
shall permit Borrower to participate in such contest. Any Indemnitee that
proposes to settle or compromise any claim or proceeding for which Borrower may
be liable for payment of indemnity hereunder shall give Borrower written notice
of the terms of such proposed settlement or compromise reasonably in advance of
settling or compromising such claim or proceeding and shall obtain Borrower's
concurrence thereto. Each Indemnitee is authorized to employ counsel at the
expense of the Borrower in enforcing its rights hereunder and in defending
against any claim, demand, action, or cause of action covered by this Section;
provided, however, that each Indemnitee shall endeavor, but shall not be
obligated, in connection with any matter covered by this Section which also
involves other Indemnitees, to use reasonable efforts to avoid unnecessary
duplication of effort by counsel for all Indemnitees. Any obligation or
liability of Borrower to any Indemnitee under this Section shall survive the
expiration or termination of this Agreement and the other Loan Documents and the
repayment of the Obligations.
30
ARTICLE X
NEGATIVE COVENANTS
The Borrower agrees that until payment and performance in full of the
Obligations, without the prior written consent of the Bank, the Borrower shall
not:
Section 10.01. Negative Pledge. Create, incur, assume or suffer to come
into existence after the date hereof any mortgage, pledge or other encumbrance
upon any of its property or assets whether now owned or thereafter arising or
acquired other than Permitted Encumbrances.
Section 10.02. Breach or Violation. Enter into any agreement containing
any provision that would be violated or breached by the performance of the
Borrower's obligations under this Agreement or any other Loan Document.
Section 10.03. Restrictions on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except that Indebtedness permitted pursuant to
the terms of the Revolving Credit Loan Agreement, which terms are incorporated
herein by reference as if fully set forth herein.
ARTICLE XI
GENERAL CONDITIONS
Section 11.01. Third Parties; Benefit; Miscellaneous. All obligations
of Borrower set forth in the Loan Documents are imposed solely for the benefit
of Bank, its successors and assigns, and no other Person shall be deemed to be a
beneficiary of such obligations or be entitled to require satisfaction of such
obligations in accordance with their terms or to assume that Bank will require
strict compliance therewith. The terms and provisions of the Loan Documents are
for the benefit of the parties hereto and no other Person shall have any right
or cause of action on account thereof. Bank shall in no event be liable to any
Person other than Borrower for any advance of Loan proceeds and no contractor,
subcontractor, materialman or other Person (including, without limitation, the
General Contractor) shall have any right or claim against Bank pursuant to this
Agreement, any such Loan Document, or the administration of the Loan. Nothing
contained in the Loan Documents shall be construed to create any relationship
between Borrower and Bank other than the relationship of debtor and lender. By
accepting or approving anything required to be observed, performed or fulfilled
by Borrower, or to be given to Bank pursuant to the terms of the Loan Documents,
Bank shall not be deemed to have warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision
or condition thereof, and such acceptance or approval thereof shall not
constitute any warranty or representation to any party with respect thereto by
Bank.
Section 11.02. Liability of Bank. Bank shall not be liable for any act
or omission by it pursuant to the provisions of the Loan Documents in the
absence of fraud, willful malfeasance, gross negligence or breach of contract.
Bank shall incur no liability to
31
Borrower or any other Person in connection with the acts or omissions of Bank in
reliance upon any certificate or other paper believed by Bank to be genuine or
with respect to any other thing that Bank may do or refrain from doing, unless
such act or omission amounts to fraud, willful malfeasance, gross negligence or
breach of contract. In connection with the performance of its duties pursuant to
the Loan Documents, Bank may consult with counsel of its own selection, and
anything that Bank may do or refrain from doing, in good faith and in reliance
upon the opinion of such counsel, shall be a complete defense against any claim
of any Person on account thereof. Borrower shall indemnify and hold Bank
harmless from and against all liability disclaimed in this Section.
Section 11.03. Brokers' Fees. Bank shall not be required to pay any
premium, brokerage fee, commission, finder's fee or other compensation in
connection with the Loan, and Borrower shall indemnify and hold Bank harmless
from and against all loss or expense suffered or incurred by Bank by reason of
any claim for such compensation.
Section 11.04. Governing Law. This Agreement and all other Loan
Documents shall be construed and enforced in accordance with and governed by the
laws of the State of Tennessee without regard to conflict of law provisions
thereof.
Section 11.05. Borrower's Payment of Costs and Expenses. Whether or not
all or a portion of the Loan is disbursed, the Borrower shall pay all fees,
charges and expenses incurred in the procuring, making, servicing and collecting
of the Loan including, without limitation, charges for mortgagee title insurance
and the examination of title for the Project, expenses of surveys, mortgage
recording taxes, and fees of the Bank's Architect, fees of attorneys for the
Bank, insurance premiums, taxes, assessments, water rates, sewer rates and other
charges, liens and encumbrances upon the Project and any other similar amounts.
Such amounts, unless sooner paid, shall be paid from time to time as the Bank
shall request either to the Person to whom such payments are due or to the Bank
if the Bank has paid the same, or the Bank may, at its option, deduct from any
Loan advance to be made under this Agreement (or advance to itself for such
purpose) any amount necessary for the payment of such costs, and apply such
amounts in making such payments, and all sums so applied shall be deemed
advances under this Agreement and be evidenced by the Note and secured by the
Deed of Trust. The obligations of the Borrower under this Section shall survive
the termination of this Agreement and the payment and performance in full of the
Obligations.
Section 11.06. Offset. In addition to, and not in limitation of, all
rights of offset that the Bank or other holder of the Note may have under
applicable law, upon the occurrence of any Event of Default hereunder or any
event which, upon notice or the lapse of time, or both, would become an Event of
Default hereunder, the Bank or other holder of such Note and, to the extent
permitted by applicable law, any participant in the Note or the Loan, shall have
the right to appropriate and apply to the payment of the Note and all other
Obligations any and all balances, credits, deposits, accounts or monies of the
Borrower then or thereafter maintained with the Bank or its affiliates or such
other holder of the Note or Obligations, as applicable.
32
Section 11.07. Miscellaneous Conditions. The following conditions shall
be applicable throughout the tern of this Agreement:
(a) No advance of Loan proceeds hereunder shall
constitute a waiver of any of the conditions of Bank's obligation to make
further advances nor, in the event Borrower is unable to satisfy any such
condition, shall any such waiver have the effect of precluding Bank from
thereafter declaring such inability to be an Event of Default as hereinabove
provided.
(b) No work shall be commenced with respect to any
particular segment of construction of the Project until the Plans and
Specifications for such segment shall have been submitted to Bank's Architect
and approved by Bank.
(c) The Bank retains the right to hire at the expense of
the Borrower an independent inspector or firm to review all documents or matters
or make any investigations related to the Project, including any investigation
for Hazardous Materials.
(d) All proceedings taken in connection with the
transactions provided for herein, all surveys, appraisals and documents required
or contemplated by this Agreement or the other Loan Documents and the persons
responsible for the execution and preparation thereof, the General Contractor,
all sureties, all insurers, the form of the Construction Contract, and all
leases, bonds, guaranties and policies of insurance shall be satisfactory to
Bank, and Bank's counsel shall have received copies (or certified copies where
appropriate in such counsel's judgment) of all documents which they may request
in connection therewith.
(e) Any condition of this Agreement which requires the
submission of evidence of the existence or non-existence of a specified fact or
facts implies as a condition the existence or non-existence, as the case may be,
of such fact or facts and Bank shall, at all times, be free independently to
establish to its satisfaction and in its absolute discretion such existence or
nonexistence.
(f) No materials, Equipment or Fixtures, incorporated by
the Borrower in the construction of the Improvements, shall be purchased or
installed under any security agreement, conditional sales contract, or other
arrangement whereby the seller reserves or purports to reserve title to or any
security interest in such items, or the right to remove or repossess such items,
or consider them personal property after their incorporation in the
Improvements, unless expressly authorized by the Bank in writing.
(g) The Borrower shall at all times keep the Bank fully
informed in writing of the cause of any substantial delay in the progress of
construction of the Improvements.
Section 11.08. Notices. All written notices hereunder to either party
hereto shall be by certified or registered mail, postage prepaid, or delivered
in person or by telefax, addressed to the party for whom intended at the address
specified below. Any party shall have the right to change its address for notice
by giving notice hereunder, including the
33
right to specify a person to whose attention notices shall be directed, and
shall also have the right by giving notice hereunder to require that copies of
any notice be given to not more than two additional persons or addresses. Any
notice sent by registered or certified mail or by telefax shall be deemed given
on the date of receipt as shown on the return receipt or as shown by telefax
confirmation, as applicable, and any notice given by personal delivery to an
officer of a party shall be deemed given on the date of receipt as evidenced by
such officer's signed receipt; provided, however, that if any party shall refuse
to accept delivery of any notice so sent, such notice shall be deemed given when
tendered for delivery. Such notices shall be addressed,
If to Bank, to:
SunTrust Bank
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Corporate Banking Department
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower, to:
CTI, Inc.
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Woolf, McClane, ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 11.09. Amendments. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
Section 11.10. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement.
34
Section 11.11. Waiver. Anything in this Agreement or any other
agreements relating to the Loan to the contrary notwithstanding, the Bank may,
at its sole discretion, waive any requirements hereof.
Section 11.12. Non-Merger. The covenants of the Borrower set forth
herein shall survive the closing of the Loan and delivery of the Note, the Deed
of Trust and all other Loan Documents.
Section 11.13. Publicity. The Bank shall have the right to erect a sign
at the Project indicating that the Bank is providing financing for the Project.
The Bank shall also have the right to release publicity concerning the Loan and
the Project by media of the Bank's choice, indicating that the Borrower is a
client of the Bank, and using the Borrower's name in such release.
Section 11.14. Counterparts. This Agreement may be executed in any
number of counterparts which together shall constitute one instrument.
Section 11.15. WAIVER OF TRIAL BY JURY. THE BORROWER AND THE BANK
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY OF THE OTHER LOAN DOCUMENTS
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (ORAL OR WRITTEN) OR
ACTIONS OF THE BANK OR THE BORROWER IN CONNECTION WITH THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK
ENTERING INTO THIS AGREEMENT AND MAKING THE LOAN.
Section 11.16. Obligations of the Bank. The Borrower agrees that,
except as otherwise expressly provided in this Agreement or the other Loan
Documents, nothing herein or therein shall be construed to impose any liability
or obligation on the Bank for notifying the Borrower or any other Person of any
matters, defaults, events, transactions, or other state of facts or law
whatsoever relating to the Loan, and the Borrower hereby releases the Bank from
any and all such liability or obligation.
Section 11.17. Application of Payments. The Bank may apply in any order
elected by the Bank all payments received from the Borrower to the amounts due
under the Loan Documents for the payment of accrued interest, principal, charges
and expenses.
35
WITNESS the following signatures as of the date first set forth above.
BANK:
SUNTRUST BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Group Vice President
BORROWER:
CTI, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer and
Secretary
36
Schedule Of Exhibits
Exhibit A Form of Promissory Note
Exhibit B Form of Construction Draw Request and Certificate
Exhibit C Schedule of Sources and Uses of Loan Proceeds
EXHIBIT A
PROMISSORY NOTE
$7,900,000.00 August 16, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, CTI, INC., a Tennessee corporation (the "Borrower")
hereby promises to pay to the order of SUNTRUST BANK, a Georgia bank (the
"Bank"), at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other
location as the holder hereof may in writing designate, the principal sum of
SEVEN MILLION NINE HUNDRED THOUSAND DOLLARS ($7,900,000.00) (or such lesser
amount as shall equal the aggregate unpaid principal amount of Loan advances
made by the Bank under the Loan Agreement (as hereinafter defined)) in lawful
money of the United States of America in immediately available funds, according
to the terms set forth in the Loan Agreement, and to pay interest on the unpaid
principal amount of the Loan, at such office, in like money and funds, for the
period commencing on the date of such Loan advance until such Loan advance shall
be paid in full, at the rate per annum and on the dates set forth in the Loan
Agreement.
If not sooner paid, the entire unpaid principal balance hereof and
accrued interest thereon shall be due and payable on the Maturity Date. The
Borrower may prepay the outstanding principal balance and all accrued interest
on this Note in whole at anytime and in part from time to time without premium
or penalty as provided in the Loan Agreement.
Notwithstanding anything to the contrary in the Loan Agreement or
herein, the rate of interest borne by this Note shall not exceed the maximum
contract rate of interest permitted from time to time by applicable law.
This Note is the Note referred to in the
Construction Loan Agreement
dated as of the date hereof between the Borrower and the Bank (as amended,
modified or restated from time to time, herein referred to as the "Loan
Agreement"), and evidences the Loan made by the Bank thereunder. Unless
otherwise defined herein, capitalized terms used in this Note have the
respective meanings assigned to them in the Loan Agreement.
Upon the occurrence and continuation of an Event of Default, the
principal hereof and accrued interest hereon may be declared to be, or may
become, forthwith due and payable in the manner, upon the conditions and with
the effect provided in the Loan Agreement and the other Loan Documents.
The Borrower shall pay all costs, fees and expenses (including court
costs and reasonable attorneys' fees) incurred by the holder hereof in
collection or attempting to collect any amount that becomes due hereunder or in
seeking legal advice with respect to such collection or a default hereunder.
The Borrower and every guarantor and endorser hereof hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices in connection with the delivery, acceptance, performance and
enforcement of this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of Tennessee.
IN WITNESS WHEREOF, the Borrower has caused its name to be signed by
its duly authorized representative as of the date and year first above
written.
CTI, INC.
By:
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer and
Secretary
2
EXHIBIT B
CONSTRUCTION DRAW REQUEST AND CERTIFICATE
Lender: SunTrust Bank
Borrower: CTI, Inc.
Project: Commercial Building, Innovation Drive, Knoxville, Tennessee
Total Loan Amount: $7,900,000
The Borrower hereby requests a disbursement in the amount of $ to be
made on , 200 , under the referenced loan for the payments shown on the attached
Schedule 1. Also included as part of Schedule 1 are all invoices and receipts
for such payments, and, if payment is for Construction Costs, as defined in the
Construction Loan Agreement dated as of August 16, 2001 between the referenced
Lender and the Borrower (the "Agreement"), completed and executed American
Institute of Architects Forms 6702 and G702A. As used herein, all capitalized
terms shall have the same meanings as in the Agreement. To induce the Lender to
make such disbursement, the undersigned hereby certifies to the Lender as
follows:
1. The Agreement is in full force and effect.
2. No event has occurred and no condition exists under the
Agreement which as of the date hereof will result, either immediately or with
the passage of time, or the giving of notice or both, in the occurrence or
existence of any Event of Default under the Agreement or under any other Loan
Document.
3. No eminent domain proceedings or other governmental action or
any judicial action of any kind is pending or, to the best of the Borrower's
knowledge, threatened against the referenced Project or any part thereof.
4. Borrower has complied with all requirements of any
governmental authority for the construction of the Improvements for the Project.
5. Attached hereto as Schedule 2 is a complete and accurate list
of all contractors, subcontractors and suppliers which have performed work,
supplied materials or which are anticipated to perform work or supply materials
with respect to the Project.
6. All representations and warranties made by the Borrower in the
Agreement and the other Loan Documents are true in all material respects, as if
made on the date hereof.
7. To the extent that the amount requested herein includes items
for the cost of any Improvements permitted by the Agreement, all such items are
within the Project Budget approved by the Lender and the construction of the
portion(s) of such Improvements will be completed at a cost which does not
materially exceed the Project Budget approved by the Lender.
8. All work for which payment is requested herein has been
completed in accordance with the Plans and Specifications, and all contractors,
subcontractors and suppliers who have performed work or supplied materials for
the Project to this date have been paid or will be paid on a timely basis with
the disbursement requested herein.
9. The Borrower has not received written notice of any lien,
right to lien or attachment upon, or claim affecting the right of the payee to
receive payment of, any of the moneys payable under this requisition to any of
the persons, firms or corporations named herein. No written notice has been
received that any materials or supplies covered by this requisition are subject
to any lien or security interest or if any notice of any such lien, attachment,
claim or security interest has been received, such lien, attachment, claim or
security interest has been or will be released or discharged upon payment of
such requisition.
Dated the _____________ day of _______________, 200_.
Submitted by:
By:
-------------------------------------
Title:
----------------------------------
Draw Request Number:
--------------------
2
Exhibit B
Schedule 1 to Requisition
Requests for Payment and List of Receipts
Contractor/ Invoice/ Invoice/ Disbursement
Subcontractor Receipt Date* Receipt Amount Amount Requested
------------- ------------- -------------- ----------------
*Attach Invoice/Receipt Total Disbursement
Amount Requested $___________________
Exhibit C
SCHEDULE OF SOURCES AND USES OF LOAN PROCEEDS
---------------------------------------------
[BORROWER TO PROVIDE]
