EXHIBIT 10.1
AMENDED AND RESTATED LOAN AGREEMENT
AMENDED AND RESTATED LOAN AGREEMENT, dated as of the 27th day of June,
2003, by and among THE HEART HOSPITAL OF MILWAUKEE, LLC, a Delaware limited
liability company, as Borrower, the lenders who are or may become a party to
this Agreement, as Lenders, BANK OF AMERICA, N.A., as Administrative Agent for
the Lenders, BANKERS TRUST COMPANY, as Syndication Agent for the Lenders, and
WACHOVIA BANK, NATIONAL ASSOCIATION, as Documentation Agent.
STATEMENT OF PURPOSE
The Borrower has requested, and the Lenders have agreed, to extend a
certain credit facility to the Borrower on the terms and conditions of this
Agreement.
WHEREAS, the Borrower entered into that certain Construction Loan
Agreement, dated as of August 1, 2002 (as amended, restated, supplemented or
otherwise modified as of the date hereof, the "Existing Loan Agreement"),
between the Borrower and MedCath Incorporated, which was secured by that certain
Mortgage and Security Agreement dated August 1, 2002 (as amended, restated,
supplemented or otherwise modified as of the date hereof, the "Existing Deed of
Trust"), recorded as Instrument No. 8330420 in the Milwaukee County, Wisconsin
records, from Borrower in favor of MedCath Incorporated;
WHEREAS, the Borrower has requested that the Lenders provide the
Construction Loan Facility (defined below) for the purpose of refinancing the
Existing Loan Agreement and for the purposes hereinafter set forth;
WHEREAS, in connection with the refinancing of the Existing Loan
Agreement, MedCath Incorporated shall assign all of its right, title and
interest in and to the Existing Loan Agreement and the Existing Deed of Trust in
favor of the Administrative Agent, on behalf of the Lenders, and the
Administrative Agent and the Lenders are willing to accept such assignment (the
"Assignment");
WHEREAS, in connection with the Assignment and subject to the terms and
conditions hereof, the Borrower and the Lenders desire to amend, restate and
consolidate the terms of the Existing Loan Agreement, as amended hereby, and
have agreed to amend, restate and consolidate the Existing Deed of Trust in its
entirety.
WHEREAS, upon the consummation of the Assignment and subject to the
terms and conditions set forth herein, the Lenders have agreed to make the
requested Construction Loan Facility available to the Borrower;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"Adjusted Debt Service" means, with respect to the Borrower for any
period, the sum of the following determined, without duplication, in accordance
with GAAP: (i) all Interest Expense due and payable in cash or which was paid
during such period (excluding all Interest Expense paid during such period by
the Borrower to MedCath Incorporated) plus (ii) all scheduled principal payments
of Debt (excluding payments of Debt to MedCath Incorporated) which were paid
during such period.
"Adjusted EBITDA" means, with respect to the Borrower for any period,
(i) EBITDA for such period less (ii) maintenance Capital Expenditures of
$200,000 for each fiscal quarter during such period.
"Administrative Agent" means Bank of America, N.A. in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant to
Section 11.9.
"Administrative Agent's Office" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of Section
12.1(c).
"Affiliate" means, with respect to any Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries. The term "control" means (a) the
power to vote five percent (5%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the possession,
directly or indirectly, of any other power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise; provided, however, that the term
"Affiliate" shall not include any owner of the Borrower (other than the Parent
and its Subsidiaries).
"Administrative Agent-Related Persons" means the Administrative Agent
(including any successor administrative agent), together with its Affiliates
(including, in the case of Bank of America in its capacity as the Administrative
Agent, Banc of America Securities LLC as a Co-Lead Arranger), and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced or modified at any time or
from time to time pursuant to the terms hereof. On the Closing Date, the
Aggregate Commitment shall be seventeen million two hundred fifty thousand
Dollars ($17,250,000).
"Aggregate Project Cost" shall have the meaning assigned thereto in
Section 5.1(v).
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"Agreement" means this Loan Agreement, as amended, restated,
supplemented or otherwise modified from time to time.
"Applicable Law" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, guidelines, regulations,
requirements, ordinances, codes, constitutions and administrative or judicial
precedents or authorities, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authority, in each case whether or not having
the force of law.
"Applicable Margin" shall have the meaning assigned thereto in Section
3.1(c).
"Appraised Value" means $38,700.000.
"Approved Fund" shall have the meaning assigned thereto in Section
12.10(h).
"Architect" means Xxxxx Associates, Inc..
"Architect's Contract" means the Agreement for Architectural Services
between the Borrower and the Architect, dated January 25, 2002.
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit G attached hereto.
"Assignment of Mortgage" means the Sale and Transfer of Note and
Security Therefor of even date executed by MedCath Incorporated, Borrower and
the Administrative Agent for the benefit of the Administrative Agent and the
Lenders, securing the Land, the Improvements and the other property and fixtures
described therein, as amended, restated, supplemented or otherwise modified from
time to time.
"Attorney Costs" means and includes all fees and disbursements of any
law firm or other external counsel.
"Bank of America" means Bank of America, N.A., a national banking
association, and its successors.
"Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." Such rate is a rate set by Bank of America based
upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.
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"Base Rate Loan" means any Construction Loan Advance bearing interest
at a rate based upon the Base Rate as provided in Section 3.1(a).
"Benefited Lender" shall have the meaning assigned thereto in Section
3.6.
"Borrower" means The Heart Hospital of Milwaukee, LLC, a Delaware
limited liability company, in its capacity as borrower hereunder.
"Budget" means the budget prepared with respect to the Project by the
Borrower and approved by the Administrative Agent, which is attached hereto as
Exhibit M.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina and New York, New York, are open for
the conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any Eurodollar Rate Loan, any day that is a Business Day described
in clause (a) and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.
"Calculation Date" shall have the meaning assigned thereto in Section
3.1(c).
"Capital Asset" means, with respect to the Borrower, any asset that
should, in accordance with GAAP, be classified and accounted for as a capital
asset on a balance sheet of the Borrower.
"Capital Expenditures" means, with respect to the Borrower for any
period, the aggregate cost of all Capital Assets acquired by the Borrower during
such period, as determined in accordance with GAAP.
"Capital Lease" means any lease of any property by the Borrower, as
lessee, that should, in accordance with GAAP, be classified and accounted for as
a capital lease on a balance sheet of the Borrower.
"Cash Flow Available For Distribution" means, with respect to the
Borrower for any period, the sum of the following determined, without
duplication, in accordance with GAAP: (i) EBITDA for such period less (ii) all
principal and interest payments required to be paid with respect to Senior Debt
during such period less (iii) all Unfinanced Capital Expenditures during such
period.
"Change in Control" shall have the meaning assigned thereto in Section
10.1(j).
"Closing Date" means the date of this Agreement or such later Business
Day upon which each condition described in Section 4.2 shall be satisfied or
waived in all respects in a manner acceptable to the Administrative Agent, in
its sole discretion.
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"CMS" means the Center for Medicare and Medicaid Administration of the
United States Department of Health and Human Services and any successor agency.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or modified from time to time.
"Co-Lead Arrangers" means Banc of America Securities LLC and Deutsche
Bank Alex. Xxxxx Inc. in their capacity as lead arrangers and book managers.
"Collateral" means the collateral security for the Obligations pledged
or granted pursuant to the terms of this Agreement and the Security Documents.
"Collateral Assignment of Architect's Contract" means the collateral
assignment of even date with respect to the Architect's Contract executed by the
Borrower in favor of the Administrative Agent for the benefit of itself and the
Lenders, as amended, restated, supplemented or otherwise modified from time to
time.
"Collateral Assignment of Construction Contract" means the collateral
assignment of even date with respect to the Construction Contract executed by
the Borrower in favor of the Administrative Agent for the benefit of itself and
the Lenders, as amended, restated, supplemented or otherwise modified from time
to time.
"Commitment" means (a) as to any Lender, the obligation of such Lender
to make Construction Loan Advances for the account of the Borrower in an
aggregate principal amount not to exceed the amount set forth opposite such
Lender's name on Schedule 1.1(a) hereto, as such amount may be reduced or
modified at any time or from time to time pursuant to the terms hereof and (b)
as to all Lenders, the aggregate commitment to make Construction Loan Advances.
"Commitment Agreement" means the Commitment Agreement dated as of July
27, 2001 by and among MedCath Incorporated, the Lenders who are or may become
party thereto and the Administrative Agent, as amended, restated, supplemented
or otherwise modified in accordance with the terms thereof.
"Commitment Percentage" means, as to any Lender, (a) prior to making
all of the Construction Loan Advances, the ratio of (i) the Commitment of such
Lender to (ii) the Commitments of all Lenders and (b) after all of the
Construction Loan Advances are made, the ratio of (i) the outstanding principal
balance of the Construction Loan Advances of such Lender to (ii) the aggregate
outstanding principal balance of the Construction Loan Advances of all Lenders.
"Completion Date" means the date upon which the Borrower has received
the final certificate of occupancy for the Improvements, all permits and
licenses required under Applicable Law to operate the Hospital, the Medicare
Certification with respect to the Hospital, and the Medicaid Certification with
respect to the Hospital (as applicable), which date shall not be later than the
Construction Loan Termination Date.
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"Consolidated" means, when used with reference to financial statements
or financial statement items of the Parent and its Subsidiaries, such statements
or items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"Construction Consultant" means the construction consultant, if any,
engaged by the Administrative Agent with respect to the Project.
"Construction Contract" means the Standard Form of Agreement between
the Borrower and the General Contractor for the construction of the Improvements
dated August 2, 2002 and converted to a lump sum contract by letter agreement
dated September 24, 2002.
"Construction Loan Advances" means the construction loan advances made
to the Borrower by the Lenders pursuant to Section 2.1.
"Construction Loan Facility" means the construction loan facility
established pursuant to Article II.
"Construction Loan Notes" means the Construction Loan Notes made by the
Borrower payable to the order of each of the Lenders, substantially in the form
of Exhibit B hereto, evidencing the Debt incurred by the Borrower pursuant to
the Construction Loan Facility, and any amendments, modifications and
supplements thereto, any substitute therefor, and any replacement, restatements,
renewals or extensions thereof, in whole or in part; "Construction Loan Note"
means any of such Construction Loan Notes.
"Construction Loan Termination Date" means July 31, 2004.
"Corporate Revolver" means the Credit Agreement dated as of July 31,
1998, as amended, restated, supplemented or otherwise modified from time to
time, by and among MedCath Intermediate Holdings, Inc., as borrower, the Initial
Lenders named therein, as lenders, the Initial Issuing Bank named therein, as
issuing bank, Bank of America, N.A. as administrative agent and collateral
agent, and Banc of America Securities LLC, as arranger and syndication agent.
"Cost Savings" means either (i) the completion of any line item in the
Budget without the expenditure of all amounts allocated to such line item in the
Budget or (ii) demonstration by the Borrower to the Administrative Agent's
reasonable satisfaction that a Cost Savings has been realized with respect to
any uncompleted line item in the Budget.
"Debt" means, with respect to the Borrower at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness for borrowed money including, but
not limited to, obligations evidenced by bonds, debentures, notes or other
similar instruments of the Borrower, (b) all obligations to pay the deferred
purchase price of property or services of the Borrower (including, without
limitation, all obligations under non-competition agreements), except trade
payables arising in the ordinary course of business not more than one hundred
and twenty (120) days past due, (c) all obligations of the Borrower as lessee
under Capital Leases, (d) all Debt of any other Person secured by a Lien on any
asset of the Borrower, (e) all Guaranty Obligations of the Borrower, (f) all
obligations,
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contingent or otherwise, of the Borrower relative to the face amount of letters
of credit, whether or not drawn, and banker's acceptances issued for the account
of the Borrower, (g) all obligations of the Borrower to redeem, repurchase,
exchange, defease or otherwise make payments in respect of capital stock or
other securities or partnership interests of the Borrower, (h) all net payment
obligations incurred by the Borrower pursuant to Hedging Agreements and (i) all
outstanding payment obligations of the Borrower with respect to any synthetic
lease, tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an operating
lease in accordance with GAAP.
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America, and all other liquidation, conservatorship, bankruptcy, assignment for
the benefit of creditors, receivership, insolvency, reorganization, or similar
debtor relief Applicable Laws of the United States of America or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
"Default" means any of the events specified in Section 10.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Documentation Agent" means Wachovia Bank, National Association, in its
capacity as Documentation Agent hereunder.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"Draw Request" means a properly completed and executed written
application by the Borrower to the Administrative Agent in the form of Exhibit C
attached hereto (or any other form approved by the Administrative Agent) setting
forth the amount of Construction Loan Advance proceeds desired, together with
such schedules, affidavits, releases, waivers, statements, invoices, bills and
other documents, certificates and information as may be required by the
Administrative Agent.
"EBITDA" means, with respect to the Borrower for any period, the sum of
the following determined, without duplication, in accordance with GAAP: (a) Net
Income for such period plus (b) the sum of the following to the extent deducted
in determining Net Income for such period: (i) Interest Expense for such period,
(ii) income and franchise taxes for such period, (iii) amortization and
depreciation for such period, (iv) non-cash charges for such period solely with
respect to the impairment of goodwill in accordance with GAAP, and (v) non-cash
impairment charges for such period solely with respect to loan acquisition costs
minus (c) to the extent added in the determination of Net Income, extraordinary
gains for such period.
"Eligible Assignee" shall have the meaning assigned thereto in Section
12.10(h).
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower (or, as applicable, any Guarantor) or any ERISA Affiliate or (b) has at
any time within the preceding six (6) years been
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maintained for the employees of the Borrower (or, as applicable, any Guarantor)
or any current or former ERISA Affiliate.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by any Person in the ordinary course of business and not in response to any
third party action or request of any kind) or proceedings relating in any way to
any actual or alleged violation of or liability under any Environmental Law or
relating to any permit issued, or any approval given, under any such
Environmental Law, including, without limitation, any and all claims by
Governmental Authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages, contribution, indemnification cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to human health or the environment.
"Environmental Laws" means any and all federal, foreign, state,
provincial and local laws, statutes, ordinances, rules, regulations, permits,
licenses, approvals, interpretations and orders of courts or Governmental
Authorities, relating to the protection of human health or the environment,
including, but not limited to, requirements pertaining to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation,
handling, reporting, licensing, permitting, investigation or remediation of
Hazardous Materials.
"Equipment Lender" shall have the meaning assigned thereto in Section
7.16.
"Equipment Loan Financing" shall have the meaning assigned thereto in
Section 7.16.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
"ERISA Affiliate" means any Person who together with the Borrower (or,
as applicable, any Guarantor) is treated as a single employer within the meaning
of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent
pursuant to the following formula:
Eurodollar Rate = Eurodollar Base Rate/1.00 - Eurodollar Reserve Percentage
"Eurodollar Base Rate" means for any Interest Period:
(a) the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate that appears on the page of the
Telerate screen that displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, or
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(b) in the event the rate referenced in the preceding subsection
(a) does not appear on such page or service or such page or service shall cease
to be available, the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or other service
that displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such Interest Period)
with a term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or
(c) in the event the rates referenced in the preceding subsections
(a) and (b) are not available, the rate per annum determined by the
Administrative Agent as the rate of interest (rounded upward to the next 1/100th
of 1%) at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the Eurodollar
Rate Loan being made, continued or converted by the Administrative Agent and
with a term equivalent to such Interest Period would be offered by Bank of
America's London Branch to major banks in the offshore Dollar market at their
request at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period.
"Eurodollar Rate Loan" means any Construction Loan Advance bearing
interest at a rate based upon the Eurodollar Rate as provided in Section 3.1(a).
"Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward to the
next 1/100th of 1%) in effect on such day, whether or not applicable to any
Lender, under regulations issued from time to time by the Board of Governors of
the Federal Reserve System for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate Loan
shall be adjusted automatically as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means any of the events specified in Section 10.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Excusable Delays" means unusually adverse weather conditions which
have not been taken into account in the construction schedule, fire, earthquake
or other acts of God, strike, lockout, acts of public enemy, any Governmental
Authority having jurisdiction over the operation of the hospital which is part
of the Project ceases to operate in the ordinary course, riot or insurrection or
any unforeseen circumstances or events (except financial circumstances or events
or matters which may be resolved by the payment of money) beyond the control of
the Borrower, not to exceed a total of thirty (30) days, provided the Borrower
shall notify the Administrative Agent in writing within ten (10) days after such
occurrence, but no Excusable Delay shall extend the Completion Date or suspend
or xxxxx any obligation of the Borrower or any Guarantor or any other Person to
pay any money.
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"Existing Loan Agreement" shall have the meaning assigned thereto in
the Statement of Purpose.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Bank of America on such day on such
transactions as determined by the Administrative Agent.
"Financing Statements" means the UCC financing statements filed to
perfect the Lien of the Administrative Agent and the Lenders on certain personal
property and fixtures as more particularly described therein.
"Fiscal Year" means the fiscal year of the Borrower ending on September
30.
"Five-Year US Treasury Yield" means the Weekly Average Yield on U.S.
Treasury Securities adjusted to a constant maturity of five (5) years as
published in the Federal Reserve Board Statistical Release H.15 (519) on the
applicable date of determination.
"Foreign Lender" shall have the meaning assigned thereto in Section
3.11(e).
"Fund" shall have the meaning assigned thereto in Section 12.10(h).
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for the Borrower and the Guarantors throughout the period indicated and
(subject to Section 12.9) consistent with the prior financial practice of the
Borrower and the Guarantors.
"General Contractor" means X.X. Xxxxxxx, Inc..
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
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"Guarantor Leverage Ratio" means the ratio determined pursuant to
Section 12(c) of the Guaranty Agreement.
"Guarantors" means the Persons who have executed the Guaranty Agreement
(a) on the Closing Date or (b) after such date in accordance with Section 11(j)
of the Guaranty Agreement. The Guarantors as of the Closing Date are set forth
on Schedule 1.1(b).
"Guaranty Agreement" means the unconditional guaranty agreement of even
date executed by the Guarantors in favor of the Administrative Agent for the
ratable benefit of itself and the Lenders, substantially in the form of Exhibit
H attached hereto, as amended, restated, supplemented or otherwise modified from
time to time.
"Guaranty Obligation" means, with respect to the Borrower, without
duplication, any obligation, contingent or otherwise, of any such Person
pursuant to which such Person has directly or indirectly guaranteed any Debt or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of any
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
condition or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part); provided, that the term Guaranty Obligation shall not include
endorsements for collection or deposit in the ordinary course of business. The
amount of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein) be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made and (b) the maximum amount for which such
guaranteeing Person may be liable pursuant to the terms of the instrument
evidencing such Guaranty Obligation.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release of
which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance or a
trespass which pose a health or safety hazard to Persons or neighboring
properties, (f) which consist of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (g) which
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to any Interest
Rate Contract, forward rate agreement, commodity swap, forward foreign exchange
agreement, currency swap agreement, cross-currency rate swap agreement, currency
option agreement or other agreement or
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arrangement designed to alter the risks of any Person arising from fluctuations
in interest rates, currency values or commodity prices, all as amended,
restated, supplemented or otherwise modified from time to time.
"HHS" means the United States Department of Health and Human Services,
and any successor thereto.
"Hospital" means a hospital owned and operated by the Borrower which
(a) is certified to participate in Medicare programs and Medicaid programs (as
applicable), (b) is at least 60,000 square feet, (c) contains at least 32
licensed beds and (d) is situated on the Land.
"Improvements" means the Hospital and other improvements constructed
on, or to be constructed on, the Land, together with all fixtures, improvements,
and appurtenances now or later to be located on the Land and/or in such
improvements.
"Indemnitees" shall have the meaning assigned thereto in Section 12.2
(b).
"Indemnified Liabilities" shall have the meaning assigned thereto in
Section 12.2 (b).
"Information" shall have the meaning assigned thereto in Section 12.12.
"Initial Pricing Adjustment Date" means the first Calculation Date
occurring after the date which is six (6) full fiscal quarters after the
Completion Date.
"Intercompany Loan Subordination Agreement" means any intercompany
subordination agreement of even date executed by MedCath Incorporated in favor
of the Administrative Agent for the benefit of itself and the Lenders, as
amended, restated, supplemented or otherwise modified from time to time.
"Interest Expense" means, with respect to the Borrower for any period,
the gross interest expense (including, without limitation, interest expense
attributable to Capital Leases and all net payment obligations pursuant to
Hedging Agreements) of the Borrower, all determined for such period, without
duplication, in accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in Section
3.1(b).
"Interest Rate Contract" means any interest rate swap agreement,
interest rate cap agreement, interest rate floor agreement, interest rate collar
agreement, interest rate option or any other agreement regarding the hedging of
interest rate risk exposure executed in connection with hedging the interest
rate exposure of any Person and any confirming letter executed pursuant to such
agreement, all as amended, restated, supplemented or otherwise modified from
time to time.
"Land" means the real estate described in Exhibit A attached hereto,
which is owned by the Borrower and to be encumbered by the Mortgage.
12
"Lender" means each Person executing this Agreement as a Lender set
forth on the signature pages hereto and each Person that hereafter becomes a
party to this Agreement as a Lender pursuant to Section 12.10.
"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Commitment Percentage of the Construction Loan
Advances.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, hypothecation or encumbrance of any kind in respect
of such asset. For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to such asset.
"Loan Allocation" means the loan allocation identified as such in the
Budget for the Project attached hereto as Exhibit M.
"Loan Documents" means, collectively, this Agreement, the Construction
Loan Notes, the Guaranty Agreement, the Security Documents, the Management Fee
and Guaranty Fee Subordination Agreement, each Intercompany Loan Subordination
Agreement and each other document, instrument, certificate and agreement
executed and delivered by the Borrower or any Guarantor in connection with this
Agreement or otherwise referred to herein or contemplated hereby (excluding any
Hedging Agreement), all as may be amended, restated, supplemented or otherwise
modified from time to time.
"Management Agreement" means (i) the management services agreement
dated December 12, 2001 between the Borrower and the Management Company or (ii)
the agreement between that Management Company and the Borrower as set forth in
the operating agreement of the Borrower pursuant to which the Management Company
and the Borrower agree that the Management Company shall manage the Hospital.
"Management Company" means Milwaukee Hospital Management, Inc., a North
Carolina corporation.
"Management Fee and Guaranty Fee Subordination Agreement" means the
subordination agreement of even date executed by the Management Company in favor
of the Administrative Agent for the benefit of itself and the Lenders, as
amended, restated, supplemented or otherwise modified from time to time.
"Material Adverse Effect" means, with respect to the Borrower or any of
the Guarantors, a material adverse effect on (i) the properties, business,
operations or condition (financial or otherwise) of (A) the Borrower or (B) the
Guarantors on a consolidated basis, taken as a whole, or (ii) any such Person or
the ability of any such Person to perform its obligations under the Loan
Documents to which it is a party.
"Material Contract" means (a) as of the Closing Date, the contracts and
agreements set forth on Schedule 5.1(l) and (b) after the Closing Date, (i) the
contracts and agreements set forth
13
on Schedule 5.1(l), (ii) any contract or other agreement, written or oral, of
the Borrower or any of the Guarantors (A) which involves monetary liability of
or to any such Person in an amount in excess of (1) $1,000,000 per annum with
respect to the Borrower or any Guarantor (other than the MedCath Parent
Entities) and (2) $5,000,000 with respect to any MedCath Parent Entity and (B)
which by its terms may not be canceled within ninety (90) days, or (iii) any
other contract or agreement, written or oral, of the Borrower or any of the
Guarantors the failure to comply with which could reasonably be expected to have
a Material Adverse Effect.
"Maturity Date" shall have the meaning assigned thereto in Section 2.3.
"MedCath Parent Entities" means MedCath Corporation, MedCath Holdings,
Inc., MedCath Intermediate Holdings, Inc. and MedCath Incorporated.
"Medicaid Certification" means certification by CMS or a Governmental
Authority under contract with CMS that health care operations are in compliance
with all the conditions of participation set forth in the Medicaid Regulations.
"Medicaid Provider Agreement" means an agreement entered into between a
Governmental Authority or other such entity administering the Medicaid program
and a health care operation under which the health care operation agrees to
provide services for Medicaid beneficiaries in accordance with the terms of the
agreement and Medicaid Regulations.
"Medicaid Regulations" means, collectively, (i) all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting the medical assistance program established by Title XIX of the Social
Security Act and any statutes succeeding thereto; (ii) all applicable provisions
of all federal rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (i) above and all federal administrative, reimbursement and other
guidelines of all Governmental Authorities (whether or not having the force of
law) promulgated pursuant to or in connection with the statutes described in
clause (i) above; (iii) all state statutes and plans for medical assistance
enacted in connection with the statutes and provisions described in clauses (i)
and (ii) above; and (iv) all applicable provisions of all rules, regulations,
manuals and orders of all Governmental Authorities promulgated pursuant to or in
connection with the statutes described in clause (iii) above and all state
administrative, reimbursement and other guidelines of all Governmental
Authorities (whether or not having the force of law) promulgated pursuant to or
in connection with the statutes described in clause (ii) above, in each case as
may be amended, supplemented or otherwise modified from time to time.
"Medicare Certification" means certification by CMS or a Governmental
Authority under contract with CMS that the health care operation is in
compliance with all the conditions of participation set forth in the Medicare
Regulations.
"Medicare Provider Agreement" means an agreement entered into between a
Governmental Authority administering the Medicare program and a health care
operation under which the health care operation agrees to provide services for
Medicare beneficiaries in accordance with the terms of the agreement and
Medicare Regulations.
14
"Medicare Regulations" means, collectively, (i) all federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled established by
Title XVIII of the Social Security Act and any statutes succeeding thereto; and
(ii) all applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines (whether or not having the
force of law) of all Governmental Authorities (including without limitation,
HHS, CMS, the Office of the Inspector General for HHS, or any person succeeding
to the functions of any of the foregoing) promulgated pursuant to or in
connection with any of the foregoing (whether or not having the force of law),
as each may be amended, supplemented or otherwise modified from time to time.
"Mortgage" means the Amended and Restated Mortgage and Security
Agreement of even date executed by the Borrower in favor of the Administrative
Agent for the benefit of the Administrative Agent and the Lenders securing the
Land, the Improvements and the other property and fixtures described therein, as
amended, restated, supplemented or otherwise modified from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower (or, as applicable, any Guarantor) or
any ERISA Affiliate is making, or is accruing an obligation to make, or has
accrued an obligation to make contributions within the preceding six (6) years.
"Net Income" means, with respect to the Borrower for any period, the
net income (or loss) of the Borrower for such period, determined in accordance
with GAAP; provided that there shall be excluded from Net Income (a) the net
income (or loss) of any Person (other than a Subsidiary which shall be subject
to clause (c) below), in which the Borrower has a joint interest with a third
party, except to the extent such net income is actually paid to the Borrower by
dividend or other distribution during such period, (b) the net income (or loss)
of any Person accrued prior to the date it becomes a Subsidiary of such Person
or is merged into or consolidated with such Person or any of its Subsidiaries or
that Person's assets are acquired by such Person or any of its Subsidiaries
except to the extent included pursuant to the foregoing clause (a), (c) the net
income (if positive) of any Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary to the Borrower
of such net income (i) is not at the time permitted by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute rule
or governmental regulation applicable to such Subsidiary or (ii) would be
subject to any taxes payable on such dividends or distributions.
"Notice of Account Designation" shall have the meaning assigned thereto
in Section 2.2(c).
"Notice of Conversion/Continuation" shall have the meaning assigned
thereto in Section 3.2.
"Notice of Prepayment" shall have the meaning assigned thereto in
Section 2.4.
15
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the
Construction Loan Advances, (b) all existing or future payment and other
obligations owing by the Borrower to any Lender or the Administrative Agent
under any Hedging Agreement with any Lender or the Administrative Agent, and (c)
all other fees and commissions (including Attorney Costs), charges,
indebtedness, loans, liabilities, financial accommodations, obligations,
covenants and duties owing by the Borrower or any of the Guarantors to the
Lenders or the Administrative Agent, in each case under or in respect of this
Agreement, any Construction Loan Note or any of the other Loan Documents of
every kind, nature and description, direct or indirect, absolute or contingent,
due or to become due, contractual or tortious, liquidated or unliquidated, and
whether or not evidenced by any note.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 6.2.
"Other Taxes" shall have the meaning assigned thereto in Section
3.11(b).
"Parent" means MedCath Corporation, a Delaware corporation.
"Participant" shall have the meaning assigned thereto in Section
12.10(d).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for the employees of the
Borrower (or, as applicable, any Guarantor) or any ERISA Affiliates or (b) has
at any time within the preceding six (6) years been maintained for the employees
of the Borrower (or, as applicable, any Guarantor) or any of its current or
former ERISA Affiliates.
"Permitted Changes" means changes to the Plans or Improvements and
related changes to the Construction Contract (including those resulting from the
final agreement with the General Contractor on the contract sum); provided that
the cost of any single change shall not exceed $500,000 and the aggregate amount
of all such changes (whether positive or negative) shall not exceed $1,500,000.
"Permitted Distributions" shall have the meaning assigned thereto in
Section 9.6(c).
"Permitted Distribution Date" shall have the meaning assigned thereto
in Section 9.6(c).
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"Plans" means the detailed plans and specifications for the
construction of the Improvements currently being prepared by the Architect and
to be approved by the Administrative
16
Agent (which approval shall not be unreasonably withheld), and including such
amendments thereto as may from time to time be made by the Borrower pursuant to
the terms of the Agreement, which plans and specifications are listed on Exhibit
L attached hereto, provided that the Administrative Agent shall approve such
plans and specifications as long as they are consistent with the plans shown to
the Administrative Agent prior to the date hereof.
"Pledge Agreement" means the pledge and security agreement of even date
executed by the Management Company in favor of the Administrative Agent for the
benefit of itself and the Lenders, substantially in the form of Exhibit K
attached hereto, as amended, restated, supplemented or otherwise modified from
time to time.
"Pre-Opening Operating Costs" means those items of expense identified
as such in the Budget.
"Previously Funded MedCath Incorporated Loans" means all of the loans
from MedCath Incorporated to the Borrower advanced prior to the Closing Date,
the proceeds of which have been used by the Borrower solely to fund costs of the
Project (excluding any Pre-Opening Operating Costs) incurred prior to the
Closing Date in accordance with the Loan Allocation column in the Budget.
"Project" means construction, development and operation of Improvements
which shall consist of the Hospital.
"Project Deposit" shall have the meaning assigned thereto in Section
2.8.
"Project Equity" means the required $4,312,500 equity investment made
or to be made in or to the Borrower to partially fund the cost of the Project.
"Property" means the Land, the Improvements, the Tangible Personalty
and all other property constituting the "Mortgaged Property," as described in
the Mortgage, or subject to a right, lien or security interest to secure the
Construction Loan Advances pursuant to any other Loan Document.
"Register" shall have the meaning assigned thereto in Section 12.10(c).
"Related Credit Documents" means the collective reference to (i) each
of the loan agreements set forth on Schedule 1.1(c) hereto (including all Loan
Documents executed in connection therewith and as defined in each of the loan
agreements) and (ii) each other loan agreement (including all Loan Documents
executed in connection therewith and as defined in each of the loan agreements)
executed in connection with the Commitment Agreement, in each case as amended,
restated, supplemented or otherwise modified in accordance with the terms
thereof.
"Related Guaranty Agreements" means the collective reference to (i)
each of the guaranty agreements executed by certain of the Guarantors set forth
on Schedule 1.1(d) hereto and (ii) each other guaranty agreement executed by
certain of the Guarantors in connection with the
17
Commitment Agreement, in each case as amended, restated, supplemented or
otherwise modified in accordance with the terms thereof.
"Replaced Lender" shall have the meaning assigned thereto in Section
3.13(c).
"Replacement Lender" shall have the meaning assigned thereto in Section
3.13(c).
"Required Lenders" means, at any date, any combination of Lenders
holding of at least sixty-six and two-thirds percent (66-2/3%) of the aggregate
unpaid principal amount of the Construction Loan Notes, or if no amounts are
outstanding under the Construction Loan Notes, any combination of Lenders whose
Commitment Percentages aggregate at least sixty-six and two-thirds percent
(66-2/3%) of the Aggregate Commitment.
"Responsible Officer" means, with respect to any Person, any of the
following: the chief executive officer or chief financial officer of such Person
or any other officer of such Person reasonably acceptable to the Administrative
Agent
"Security Agreement" means the security agreement of even date executed
by the Borrower in favor of the Administrative Agent for the benefit of itself
and the Lenders, substantially in the form of Exhibit J, as amended, restated,
supplemented or otherwise modified from time to time.
"Security Documents" means collectively, the Guaranty Agreement, the
Mortgage, the Security Agreement, the Financing Statements, the Pledge
Agreement, the Collateral Assignment of Architect's Contract, the Collateral
Assignment of Construction Contract and each other agreement or writing pursuant
to which the Borrower or any other Person party thereto pledges or grants a
security interest in any property or assets to secure the Obligations or any
such Person guaranties the payment and/or performance of the Obligations.
"Senior Debt" means, with respect to the Borrower at any date of
determination, all Debt other than Subordinated Debt.
"Social Security Act" means Chapter 7 of Title 42 of the United States
Code, as amended from time to time, or any successor statute thereto.
"Solvent" means, as to the Borrower and each Guarantor on a particular
date, that any such Person (a) has capital sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage and is able to pay its debts as they mature, (b) owns property having a
value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.
"Subordinated Debt" means the collective reference to any Debt of the
Borrower which is subordinated to the Obligations with respect to right and time
of payment, remedies, covenants and such other terms and conditions, in each
case to the reasonable satisfaction of the Required Lenders.
18
"Subordinated Working Capital Loan" shall have the meaning assigned
thereto in Section 9.1(f).
"Subsidiary" means as to any Person, any corporation, partnership,
limited liability company or other entity of which more than fifty percent (50%)
of the outstanding capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other managers of
such corporation, partnership, limited liability company or other entity is at
the time owned by or the management is otherwise controlled by such Person
(irrespective of whether, at the time, capital stock or other ownership
interests of any other class or classes of such corporation, partnership,
limited liability company or other entity shall have or might have voting power
by reason of the happening of any contingency). Unless otherwise qualified
references to "Subsidiary" or "Subsidiaries" herein shall refer to those of the
Borrower.
"Survey Affidavit" shall have the meaning assigned thereto in Section
4.2(c)(viii).
"Syndication Agent" means Bankers Trust Company, in its capacity as
Syndication Agent hereunder.
"Tangible Personalty" means all fixtures, equipment, furnishings and
other articles of personal property now or hereafter owned by the Borrower and
attached to or contained in and used in connection with the Land and the
Improvements and all renewals or replacements thereof or articles in
substitution thereof, whether or not the same are or shall be attached to the
Land and Improvements in any manner.
"Taxes" shall have the meaning assigned thereto in Section 3.11(a).
"Termination Event" means: (a) except for any such event that could not
reasonably be expected to have a Material Adverse Effect, a "Reportable Event"
described in Section 4043 of ERISA for which the notice requirement has not been
waived by the PBGC, or (b) except for any withdrawal that could not reasonably
be expected to have a Material Adverse Effect, the withdrawal of the Borrower
(or, as applicable, any Guarantor) or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the
filing of a notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination, each under Section 4041(c) of ERISA, or
(d) the institution of proceedings to terminate, or the appointment of a trustee
with respect to, any Pension Plan by the PBGC, or (e) any other event or
condition which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
or (f) the imposition of a Lien pursuant to Section 412 of the Code or Section
302 of ERISA, or (g) except for any such event or condition that could not
reasonably be expected to have a Material Adverse Effect, any event or condition
which results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (h) except for any such event or condition
that could not reasonably be expected to have a Material Adverse Effect, any
event or condition which results in the termination of a Multiemployer Plan
under Section 4041A of
19
ERISA or the institution by PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA.
"Title Insurer" means First American Title Insurance Company.
"Title Policy" means the mortgagee title policy issued by the Title
Insurer and meeting the requirements of this Agreement and the Mortgage.
"UCC" means the Uniform Commercial Code as in effect in the State of
North Carolina.
"Unfinanced Capital Expenditures" means, with respect to the Borrower
for any period, all Capital Expenditures other than (a) Capital Expenditures
made to replace assets to the extent financed by (i) the net cash proceeds of
asset dispositions not prohibited hereunder or (ii) the proceeds of insurance
received with respect to the loss or taking or damage to the asset or assets
being replaced or (b) Capital Expenditures financed by the proceeds of Senior
Debt.
"United States" means the United States of America.
SECTION 1.2 General. Unless otherwise specified, a reference in
this Agreement to a particular article, section, subsection, Schedule or Exhibit
is a reference to that article, section, subsection, Schedule or Exhibit of this
Agreement. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Any reference herein to "Charlotte time"
shall refer to the applicable time of day in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein,
all capitalized terms defined in this Agreement shall have the defined meanings
when used in this Agreement, the Construction Loan Notes and the other Loan
Documents or any certificate, report or other document made or delivered
pursuant to this Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
CONSTRUCTION LOAN FACILITY
SECTION 2.1 Commitment. Subject to the terms and conditions of
this Agreement, and in reliance upon the representations and warranties set
forth herein, each Lender severally agrees to make Construction Loan Advances to
the Borrower from time to time from the Closing Date through the Construction
Loan Termination Date as requested by the Borrower in
20
accordance with the terms of Section 2.2. The Construction Loan Facility is not
revolving, and any amount repaid may not be reborrowed. The aggregate principal
amount of all outstanding Construction Loan Advances (after giving effect to any
amount requested) shall not exceed the Aggregate Commitment less the sum of all
outstanding Construction Loan Advances, and the principal amount of outstanding
Construction Loan Advances from any Lender to the Borrower shall not at any time
exceed such Lender's Commitment. Each Construction Loan Advance by a Lender
shall be in a principal amount equal to such Lender's Commitment Percentage of
the principal amount of the Construction Loan Advance to be made on such
occasion.
SECTION 2.2 Procedure for Disbursement of Construction Loan
Advances.
(a) Requests for Construction Loan Advances.
(i) The Borrower shall deliver a Draw Request to the
Administrative Agent not later than 11:00 a.m. (Charlotte time) at
least five (5) Business Days before each Construction Loan Advance
specifying (A) the date of such Construction Loan Advance, which shall
be a Business Day, (B) the amount of such Construction Loan Advance,
which shall be (1) with respect to Base Rate Loans in an aggregate
principal amount of $100,000 or a whole multiple of $10,000 in excess
thereof and (2) with respect to Eurodollar Rate Loans in an aggregate
principle amount of $100,000 or a whole multiple of $10,000 in excess
thereof, (C) whether such Construction Loan Advance is to be to be a
Eurodollar Rate Loan or a Base Rate Loan, and (D) in the case of a
Eurodollar Rate Loan, the duration of the Interest Period applicable
thereto. A Draw Request received after 11:00 a.m. (Charlotte time)
shall be deemed received on the next Business Day. The Administrative
Agent shall promptly notify the Lenders of each Notice of Borrowing.
(ii) The Borrower shall be entitled to a Construction Loan
Advance only in an amount reasonably approved by the Administrative
Agent in accordance with the terms of this Agreement and the other Loan
Documents. The Lenders shall not be required to make Construction Loan
Advances more frequently than once each calendar month. The Lenders
shall, only upon the reasonable satisfaction of all applicable
conditions of this Agreement and the other Loan Documents, make the
requested Construction Loan Advance to the Borrower in accordance with
Section 2.2(c).
(iii) Each Draw Request, and the Borrower's acceptance of
any Construction Loan Advance, shall be deemed to ratify and confirm
that all representations and warranties in the Loan Documents remain
true and correct as of the date of the Draw Request and the
Construction Loan Advance, respectively.
(b) Basis for Construction Loan Advances. Following receipt and
approval of a Draw Request, all supporting documentation and information, and
receipt and approval of a written report from the Construction Consultant, the
Administrative Agent will determine the amount of the Construction Loan Advance
the Lenders will make in accordance with this Agreement, the other Loan
Documents and the Budget, and the following standards:
21
(i) Construction Loan Advances for construction work will
be made on the basis of ninety percent (90%) of the costs shown on the
application for payment from the General Contractor reviewed and
approved by the Administrative Agent for the work or material in place
on the Improvements that comply with the terms of the Loan Documents,
minus all previous Construction Loan Advances and all amounts required
to be paid by the Borrower, as described in Columns (B) and (C) of the
Budget. When the Work (as defined in the Construction Contract) is
fifty percent (50%) complete, there shall be no further retainage for
the balance of the Work if the Borrower is satisfied that the General
Contractor maintains the construction schedule provided for in the
Construction Contract and is performing to the Borrower's satisfaction.
If the General Contractor subsequently fails to maintain the
construction schedule or fails to perform the Work to the Borrower's
satisfaction, the ten percent (10%) retainage may be resumed. There
shall be no retainage with respect to the General Contractor's fee or
with respect to the payment of costs and expenses included in the
Budget as part of the General Conditions.
(ii) Construction Loan Advances will not be made for
building materials or furnishings that are not yet incorporated into
the Improvements ("stored materials") unless the stored materials are
in the Borrower's possession or control and satisfactorily stored on
the Land and the aggregate amount of Construction Loan Advances for
stored materials does not exceed $250,000.
(iii) Construction Loan Advances will be made available to
the Borrower solely to the extent that, at the time of each requested
advance for construction work, the Borrower shall make available to the
Administrative Agent in immediately available funds such portion of the
requested advance for construction work as shall be necessary to ensure
that the aggregate outstanding principal amount of the Construction
Loan Advances at no time exceeds the lesser of (A) eighty percent (80%)
of the Aggregate Project Cost or (B) seventy-five percent (75%) of the
Appraised Value.
(c) Disbursement Procedures. Subject to the satisfaction of all
applicable conditions set forth in this Agreement and in the other Loan
Documents, not later than 2:00 p.m. (Charlotte time) on the date of the proposed
Construction Loan Advance, each Lender will make available to the Administrative
Agent, for the account of the Borrower, at the office of the Administrative
Agent in funds immediately available to the Administrative Agent, such Lender's
Commitment Percentage of the Construction Loan Advance to be made on such
borrowing date. The Borrower hereby irrevocably authorizes the Administrative
Agent to disburse the proceeds of each Draw Request approved by the
Administrative Agent in immediately available funds to the Borrower, the General
Contractor or the Architect, as designated by the Borrower. Each disbursement to
the Borrower shall be made by crediting or wiring such proceeds to the deposit
account of the Borrower identified in the most recent notice substantially in
the form of Exhibit D attached hereto (a "Notice of Account Designation")
delivered by the Borrower to the Administrative Agent or as may be otherwise
agreed upon by the Borrower and the Administrative Agent from time to time. Each
disbursement to the General Contractor or the Architect shall be made by wire
transfer to the following accounts:
22
If to the Architect: Xxxxx Associates, Inc.
Bank: Centura Bank Charlotte, NC
ABA#: 000000000
Account Name: Xxxxx Associates
Account Number: 0790075436
Reference Info: Project Heart Hospital
of Milwaukee
If to the General Contractor: X.X. Xxxxxxx, Inc.
Bank: Park Bank
ABA#: 000000000
Account Name: X.X. Xxxxxxx, Inc.
Account Number: 00000000
Reference Info: Project #01638-1 Heart
Hospital of Milwaukee
Subject to Section 3.7 hereof, the Administrative Agent shall not be obligated
to disburse the portion of the proceeds of any Construction Loan Advance
requested pursuant to this Section 2.2 to the extent that any Lender has not
made available to the Administrative Agent its Commitment Percentage of such
Construction Loan Advance.
SECTION 2.3 Repayment of Construction Loan Advances. The
principal amount of the Construction Loan Advances outstanding eighteen (18)
months after the Closing Date shall be repaid by the Borrower in consecutive
monthly installments commencing on the last day of the nineteenth (19th) month
after the Closing Date and continuing on the same day of each month thereafter.
Each monthly payment shall be in an amount sufficient to fully amortize the
principal balance of the Construction Loan Facility outstanding eighteen (18)
months after the Closing Date over a 240-month term; provided that,
notwithstanding the foregoing, the outstanding unpaid principal balance of the
Construction Loan Facility and all accrued and unpaid interest shall be due and
payable in full on July 27, 2006 (the "Maturity Date").
SECTION 2.4 Prepayment of Construction Loan Advances.
(a) Optional Prepayment. The Borrower may at any time and from
time to time prepay the Construction Loan Advances, in whole or in part, upon at
least three (3) Business Days' irrevocable notice to the Administrative Agent
with respect to any prepayment, in the form attached hereto as Exhibit E (a
"Notice of Prepayment"), specifying the date and amount of prepayment and
whether the prepayment is of Eurodollar Rate Loans, Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender. If any such notice is given, the amount specified in such
notice shall be due and payable on the date set forth in such notice. Partial
prepayments shall be in an aggregate amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof. Partial prepayments shall be applied ratably to
the remaining scheduled principal installments of the Construction Loan Advances
(including the final payment thereof) until the Construction Loan Advances are
paid in full. Any such prepayments shall be applied first to Base Rate Loans and
then to Eurodollar Rate Loans in direct order of maturities of Interest Periods;
provided that any payment of any Eurodollar Rate Loan shall be accompanied by
23
any amount required to be paid pursuant to Section 3.9 hereof (but otherwise
without premium or penalty).
(b) Mandatory Prepayment.
(i) The Borrower shall make mandatory principal
prepayments of the Construction Loan Advances (A) in accordance with Section
9.5(b) hereof following the receipt thereby of the net cash proceeds pursuant to
any asset disposition permitted under Section 9.5(b), (B) in accordance with
Section 1.6 of the Mortgage following the receipt thereby of the net cash
proceeds under any insurance policy required to be maintained pursuant to this
Agreement, the Mortgage and the other Loan Documents and (C) in accordance with
Section 1.15 of the Mortgage following the receipt thereby of the net cash
proceeds in connection with any condemnation proceeding.
(ii) Upon the occurrence of any event triggering the
prepayment requirement pursuant to this Section 2.4(b), the Borrower shall
promptly deliver a Notice of Prepayment to the Administrative Agent and, upon
receipt of such notice, the Administrative Agent shall promptly so notify the
Lenders. Each prepayment under this Section 2.4(b) shall be applied (i) with
respect to prepayments required in connection with any asset disposition
permitted under Section 9.5(b) in the inverse order of maturity until the
Construction Loan Advances are paid in full and (ii) all other prepayments under
this Section 2.4(b), ratably to the remaining scheduled principal installments
of the Construction Loan Advances (including the final payment thereof) until
the Construction Loan Advances are paid in full. Any such prepayments shall be
applied first to Base Rate Loans and then to Eurodollar Rate Loans in direct
order of maturities of Interest Periods; provided that any payment of any
Eurodollar Rate Loan shall be accompanied by any amount required to be paid
pursuant to Section 3.9 hereof (but otherwise without premium or penalty);
(c) General Conditions. Amounts prepaid under the Construction
Loan Advances pursuant to this Section 2.4 may not be reborrowed and will
constitute a permanent reduction in the Aggregate Commitment. Each prepayment
shall be accompanied by any amount required to be paid pursuant to Section 3.9
hereof.
SECTION 2.5 Construction Loan Notes. Each Lender's Construction
Loan Advances and the obligation of the Borrower to repay such Construction Loan
Advances shall be evidenced by a separate Construction Loan Note executed by the
Borrower payable to the order of such Lender.
SECTION 2.6 Use of Proceeds. The Borrower shall use the proceeds
of the Construction Loan Advances to fund the costs of the Project in accordance
with the Loan Allocation column in the Budget (including, without limitation, to
refinance on the Closing Date any Previously Funded MedCath Incorporated Loans).
The portion of the Budget allocated to Pre-Opening Operating Costs shall be
funded by the Borrower.
SECTION 2.7 Budget Reallocation. Construction Loan Advances may
be allocated to line items in the Budget for other purposes or in different
proportions as the
24
Administrative Agent in its sole discretion deems reasonably necessary or
advisable. The Borrower may reallocate Cost Savings from one line item to
another line item in the Budget provided the amount of such reallocation does
not exceed the lesser of (i) the amount of the applicable line item then being
reallocated, and (ii) $500,000 per line item increased or $1,500,000 in the
aggregate. The Borrower shall (i) not, except as provided in the immediately
preceding sentence, reallocate the proceeds of the Construction Loan Advances
from one Budget line item to another or otherwise amend the Budget without the
prior written consent of the Administrative Agent, not to be unreasonably
withheld, other than changes resulting from Permitted Changes; and (ii) notify
the Administrative Agent promptly whenever the Borrower becomes aware that the
Budget is, or might be, inaccurate in any material respect, and submit to the
Administrative Agent an amended Budget.
SECTION 2.8 Project Deposit. If at any time the Administrative
Agent determines that the sum of (i) the unadvanced portion of the Construction
Loan Facility to which the Borrower is entitled plus (ii) the amount of the
Aggregate Project Cost scheduled to be paid by the Borrower from other funds
which are available, set aside and committed, to the Administrative Agent's
reasonable satisfaction, is or will be insufficient to pay the unpaid actual
Aggregate Project Cost, the Borrower shall cause MedCath Incorporated, within
seven (7) days after written notice from the Administrative Agent, to deposit
with the Administrative Agent for the benefit of the Lenders the amount of the
deficiency (the "Project Deposit") in an interest-bearing account, with interest
earned thereon to be part of the Project Deposit. The Project Deposit is hereby
pledged as additional collateral for the Obligations, and the Borrower hereby
grants and conveys to the Administrative Agent for the benefit of the Lenders a
security interest in all funds so deposited with the Administrative Agent as
additional collateral for the Obligations. Upon the occurrence of an Event of
Default, the Administrative Agent may (but shall have no obligation to) apply
all or any part of the Project Deposit against the unpaid Obligations in such
order as the Required Lenders determine. Upon (i) the issuance of the
certificate of occupancy for the Improvements and (ii) the Administrative
Agent's confirmation that either (A) the Borrower has satisfied all of
obligations required to be paid by the Borrower in connection with the
construction of the Project or (B) the Borrower has reserved such funds
necessary to satisfy the remaining obligations to be paid by the Borrower in
connection with the construction of the Project, all funds remaining in the
Project Deposit, shall be used to prepay the Construction Loan Facility to the
extent necessary to ensure that the outstanding principal amount under the
Construction Loan Facility does not exceed an amount equal to the lesser of (x)
eighty percent (80%) of the Aggregate Project Cost or (y) seventy-five percent
(75%) of the Appraised Value. The balance, if any, shall be returned to the
Borrower.
SECTION 2.9 Direct Construction Loan Advances. The Borrower
hereby irrevocably authorizes the Administrative Agent, during the continuance
of any Event of Default (but the Administrative Agent shall have no obligation),
to hold, use, disburse and apply the proceeds of any Construction Loan Advance
to the satisfaction of the Obligations. Each such direct Construction Loan
Advance (except for application of the Project Deposit) shall be added to the
outstanding principal balance of the Construction Loan Advances and shall be
secured by the Loan Documents. Unless the Borrower pays such interest from other
resources, the Administrative Agent may make Construction Loan Advances pursuant
to this Section 2.9 for interest payments as and when due. Nothing contained in
this Agreement shall be construed to
25
permit the Borrower to defer payment of interest beyond the date(s) due. The
allocation of the proceeds of the Construction Loan Advances in the Budget for
interest shall not affect the Borrower's absolute obligation to pay the same in
accordance with the Loan Documents. The Administrative Agent may hold, use,
disburse and apply the Construction Loan Advances and the Project Deposit for
payment of any obligation of the Borrower under the Loan Documents. The Borrower
hereby assigns and pledges the proceeds of the Construction Loan Facility and
the Project Deposit to the Administrative Agent for such purposes. The
Administrative Agent may advance and incur such expenses as the Administrative
Agent deems necessary for the completion of the Improvements and to preserve the
Property and any Liens thereon, and such expenses, even though in excess of the
amount of the Construction Loan Advances, shall be secured by the Loan Documents
and shall be payable to the Lenders on demand. The Administrative Agent may
disburse any portion of any Construction Loan Advance at any time, and from time
to time, to Persons other than the Borrower for the purposes specified in this
Section 2.9 and the amount of Construction Loan Advances to which the Borrower
shall thereafter be entitled shall be correspondingly reduced. Notice of the
disbursement of any Construction Loan Advance under this Section 2.9 shall be
given by the Administrative Agent to the Borrower.
ARTICLE III
GENERAL LOAN PROVISIONS
SECTION 3.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this
Section 3.1, at the election of the Borrower, Construction Loan Advances shall
bear interest at (A) the Base Rate plus the Applicable Margin as set forth in
Section 3.1(c) or (B) the Eurodollar Rate plus the Applicable Margin as set
forth in Section 3.1(c). The Borrower shall select the rate of interest and
Interest Period, if any, applicable to any Construction Loan Advance at the time
a Draw Request is delivered to the Administrative Agent pursuant to Section 2.2
or at the time a Notice of Conversion/Continuation is given pursuant to Section
3.2. Each Construction Loan Advance or portion thereof bearing interest based on
the Base Rate shall be a "Base Rate Loan" and each Construction Loan Advance or
portion thereof bearing interest based on the Eurodollar Rate shall be an
"Eurodollar Rate Loan". Any Construction Loan Advance or any portion thereof as
to which the Borrower has not duly specified an interest rate as provided herein
shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each Eurodollar Rate
Loan, the Borrower, by giving notice at the times described in Section 3.1(a),
shall elect an interest period (each, an "Interest Period") to be applicable to
such Construction Loan Advance, which Interest Period shall be a period of one
(1), two (2), three (3), or six (6) months with respect to each Eurodollar Rate
Loan; provided that:
(i) the Interest Period shall commence on the date of
advance of or conversion to any Eurodollar Rate Loan and, in the case
of immediately successive Interest Periods,
26
each successive Interest Period shall commence on the date on which the
next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day; provided, that if any Interest Period
with respect to a Eurodollar Rate Loan would otherwise expire on a day
that is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(iii) any Interest Period with respect to a Eurodollar Rate
Loan that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the relevant calendar month at the end of such Interest
Period;
(iv) no Interest Period shall extend beyond the Maturity
Date, and Interest Periods shall be selected by the Borrower so as to
permit the Borrower to make the monthly principal installment payments
pursuant to Section 2.3 without payment of any amounts pursuant to
Section 3.9; and
(v) there shall be no more than five (5) Interest Periods
in effect at any time.
(c) Applicable Margin. The Applicable Margin provided for in
Section 3.1(a) with respect to any Construction Loan Advance (the "Applicable
Margin") shall be based upon the table set forth below and shall be determined
and adjusted quarterly on the date (each a "Calculation Date") ten (10) Business
Days after the date by which the Borrower is required to provide an Officer's
Compliance Certificate for the most recently ended fiscal quarter of the
Borrower; provided, however, that (i) the initial Applicable Margin shall be
3.50% for Eurodollar Rate Loans and 2.25% for Base Rate Loans and shall remain
in effect until the Initial Pricing Adjustment Date and thereafter the
Applicable Margin shall be determined by reference to the Guarantor Leverage
Ratio as of the last day of the most recently ended fiscal quarter of the
Borrower preceding the applicable Calculation Date and (ii) if the Borrower
fails to provide the Officer's Compliance Certificate as required by Section 6.2
for the most recently ended fiscal quarter of the Borrower preceding the
applicable Calculation Date, the Applicable Margin from such Calculation Date
shall be based on Pricing Level IV (as shown below) until such time as an
appropriate Officer's Compliance Certificate is provided, at which time the
Pricing Level shall be determined by reference to the Guarantor Leverage Ratio
as of the last day of the most recently ended fiscal quarter of the Borrower
preceding such Calculation Date. The Applicable Margin shall be effective from
one Calculation Date until the next Calculation Date. Any adjustment in the
Applicable Margin shall be applicable to all Construction Loan Advances then
existing or subsequently made or issued.
27
Applicable Margin
Eurodollar
Pricing Level Guarantor Leverage Ratio Rate Base Rate
------------------------------------------------------------------------------------------------------------------
I Less than or equal to 2.00 to 1.00 2.50% 1.25%
------------------------------------------------------------------------------------------------------------------
II Less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00 2.75% 1.50%
------------------------------------------------------------------------------------------------------------------
III Less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00 3.00% 1.75%
------------------------------------------------------------------------------------------------------------------
IV Greater than 3.00 to 1.00 3.50% 2.25%
------------------------------------------------------------------------------------------------------------------
(d) Default Rate. Subject to Section 10.3, at the discretion of
the Administrative Agent or the Required Lenders, upon the occurrence and during
the continuance of an Event of Default, (i) the Borrower shall no longer have
the option to request Eurodollar Rate Loans, (ii) all outstanding Eurodollar
Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess
of the rate then applicable to Eurodollar Rate Loans until the end of the
applicable Interest Period and thereafter at a rate equal to two percent (2%) in
excess of the rate then applicable to Base Rate Loans, and (iii) all outstanding
Base Rate Loans and other Obligations shall bear interest at a rate per annum
equal to two percent (2%) in excess of the rate then applicable to Base Rate
Loans or such other Obligations. Interest shall continue to accrue on the
Construction Loan Notes after the filing by or against the Borrower of any
petition seeking any relief in bankruptcy or under any act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign.
(e) Interest Payment and Computation. Interest on each Base Rate
Loan shall be payable in arrears on the last Business Day of each calendar
quarter commencing September 30, 2003; and interest on each Eurodollar Rate Loan
shall be payable on the last day of each Interest Period applicable thereto, and
if such Interest Period extends over three (3) months, at the end of each three
(3) month interval during such Interest Period. Interest on Eurodollar Rate
Loans and all fees payable hereunder shall be computed on the basis of a 360-day
year and assessed for the actual number of days elapsed and interest on Base
Rate Loans shall be computed on the basis of a 365/66-day year and assessed for
the actual number of days elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the
Construction Loan Notes charged or collected pursuant to the terms of this
Agreement or pursuant to any of the Construction Loan Notes exceed the highest
rate permissible under any Applicable Law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that the Lenders have charged or received
interest hereunder in excess of the highest applicable rate, the rate in effect
hereunder shall automatically be reduced to the maximum rate permitted by
Applicable Law and the Lenders shall at the Administrative Agent's option (i)
promptly refund to the Borrower any interest received by the Lenders in excess
of the maximum lawful rate or (ii) shall apply such excess to the principal
balance of the Obligations. It is the intent hereof that the Borrower not pay or
contract to pay, and that neither the Administrative Agent nor any Lender
receive or contract to receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be paid by the Borrower under Applicable
Law.
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SECTION 3.2 Notice and Manner of Conversion or Continuation of
Construction Loan Advances. Provided that no Default or Event of Default has
occurred and is then continuing, the Borrower shall have the option to (a)
convert at any time all or any portion of any outstanding Base Rate Loans in a
principal amount equal to $100,000 or any whole multiple of $10,000 in excess
thereof into one or more Eurodollar Rate Loans and (b) upon the expiration of
any Interest Period, (i) convert all or any part of its outstanding Eurodollar
Rate Loans in a principal amount equal to $100,000 or a whole multiple of
$10,000 in excess thereof into Base Rate Loans or (ii) continue such Eurodollar
Rate Loans as Eurodollar Rate Loans. Whenever the Borrower desires to convert or
continue Construction Loan Advances as provided above, the Borrower shall give
the Administrative Agent irrevocable prior written notice in the form attached
hereto as Exhibit F (a "Notice of Conversion/Continuation") not later than 12:00
p.m. (Charlotte time) three (3) Business Days before the day on which a proposed
conversion or continuation of such Construction Loan Advance is to be effective
specifying (A) the Construction Loan Advances to be converted or continued, and,
in the case of any Eurodollar Rate Loan to be converted or continued, the last
day of the Interest Period therefor, (B) the effective date of such conversion
or continuation (which shall be a Business Day), (C) the principal amount of
such Construction Loan Advances to be converted or continued, and (D) the
Interest Period to be applicable to such converted or continued Eurodollar Rate
Loan. The Administrative Agent shall promptly notify the Lenders of such Notice
of Conversion/Continuation.
SECTION 3.3 Fees.
(a) Commitment Fee. During the period commencing on the Closing
Date through and including the Construction Loan Termination Date, the Borrower
shall pay to the Administrative Agent, for the account of the Lenders, a
non-refundable commitment fee at a rate per annum equal to .50% on the average
daily unused portion of the Aggregate Commitment. The commitment fee shall be
payable in arrears on the last Business Day of each calendar quarter during the
term of this Agreement commencing on the last Business Day of the first calendar
quarter end following the Closing Date, and on the Construction Loan Termination
Date. Such commitment fee shall be distributed by the Administrative Agent to
the Lenders pro rata in accordance with the Lenders' respective Commitment
Percentages.
(b) Annual Administrative Fees. In order to compensate the
Administrative Agent for administering the Construction Loans, the Borrower
agrees to pay to the Administrative Agent, for its account, the annual
administrative fees set forth in the separate fee letter agreement executed by
the Borrower, Bank of America and Banc of America Securities dated June 1, 2001.
SECTION 3.4 Manner of Payment. Each payment by the Borrower on
account of the principal of or interest on the Construction Loan Advances or of
any fee, commission or other amounts payable to the Lenders under this Agreement
or any Construction Loan Note shall be made not later than 1:00 p.m. (Charlotte
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office for the account of the
Lenders (other than as set forth below) pro rata in accordance with their
respective Commitment Percentages (except as specified below), in Dollars, in
immediately available funds and shall be made without any condition, set-off,
counterclaim, recoupment or deduction whatsoever. Any payment received after
such time but before 2:00 p.m. (Charlotte time) on such day shall be
29
deemed a payment on such date for the purposes of Section 10.1, but for all
other purposes shall be deemed to have been made on the next succeeding Business
Day. Any payment received after 2:00 p.m. (Charlotte time) shall be deemed to
have been made on the next succeeding Business Day for all purposes. Upon
receipt by the Administrative Agent of each such payment, the Administrative
Agent shall distribute to each Lender at its address for notices set forth
herein its pro rata share of such payment in accordance with such Lender's
Commitment Percentage (except as specified below) and shall wire advice of the
amount of such credit to each Lender. Each payment to the Administrative Agent
of Administrative Agent's fees or expenses shall be made for the account of the
Administrative Agent and any amount payable to any Lender under Sections 3.8,
3.9, 3.10, 3.11 or 12.2 shall be paid to the Administrative Agent for the
account of the applicable Lender. Subject to Section 3.1(b)(ii) if any payment
under this Agreement or any Construction Loan Note shall be specified to be made
upon a day which is not a Business Day, it shall be made on the next succeeding
day which is a Business Day and such extension of time shall in such case be
included in computing any interest if payable along with such payment.
SECTION 3.5 Crediting of Payments and Proceeds. In the event that
the Borrower shall fail to pay any of the Obligations when due and the
Obligations have been accelerated pursuant to Section 10.2, all payments
received by the Lenders upon the Construction Loan Notes and the other
Obligations and all net proceeds from the enforcement of the Obligations shall
be applied first to all expenses then due and payable by the Borrower hereunder
and under the other Loan Documents, then to all indemnity obligations then due
and payable by the Borrower hereunder, then to all Administrative Agent's fees
then due and payable, then to all commitment and other fees and commissions then
due and payable, then to accrued and unpaid interest on the Construction Loan
Notes, then to any termination payments due in respect of a Hedging Agreement
with any Lender or the Administrative Agent (which such Hedging Agreement is
permitted or required hereunder) (pro rata in accordance with all such amounts
due), and then to the principal amount of the Construction Loan Notes, in that
order.
SECTION 3.6 Adjustments. If any Lender (a "Benefited Lender")
shall at any time receive any payment of all or part of the Obligations owing to
it, or interest thereon, or if any Lender shall at any time receive any
collateral in respect to the Obligations owing to it (whether voluntarily or
involuntarily, by set-off or otherwise) in a greater proportion than any such
payment to and collateral received by any other Lender, if any, in respect of
the Obligations owing to such other Lender, or interest thereon, such Benefited
Lender shall purchase for cash from the other Lenders such portion of each such
other Lender's Construction Loan Advances, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion of
another Lender's Construction Loan Advances may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
30
SECTION 3.7 Nature of Obligations of the Lenders Regarding
Construction Loan Advances; Assumption by the Administrative Agent. The
obligations of the Lenders under this Agreement to make the Construction Loan
Advances are several and are not joint or joint and several. Unless the
Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 2.2(c), and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If such amount is made available to the Administrative
Agent on a date after such borrowing date, such Lender shall pay to the
Administrative Agent on demand an amount, until paid, equal to the product of
(a) the amount not made available by such Lender in accordance with the terms
hereof, times (b) the daily average Federal Funds Rate during such period as
determined by the Administrative Agent, times (c) a fraction the numerator of
which is the number of days that elapse from and including such borrowing date
to the date on which such amount not made available by such Lender in accordance
with the terms hereof shall have become immediately available to the
Administrative Agent and the denominator of which is 360. A certificate of the
Administrative Agent with respect to any amounts owing under this Section 3.7
shall be conclusive, absent manifest error. If such Lender's Commitment
Percentage of such borrowing is not made available to the Administrative Agent
by such Lender within three (3) Business Days after such borrowing date, the
Administrative Agent shall be entitled to recover such amount made available by
the Administrative Agent with interest thereon at the rate per annum applicable
to such borrowing, on demand, from the Borrower. The failure of any Lender to
make available its Commitment Percentage of any Construction Loan requested by
the Borrower shall not relieve it or any other Lender of its obligation, if any,
hereunder to make its Commitment Percentage of such Construction Loan Advance
available on the borrowing date, but no Lender shall be responsible for the
failure of any other Lender to make its Commitment Percentage of such
Construction Loan Advance available on the borrowing date. Notwithstanding
anything set forth herein to the contrary, any Lender that fails to make
available its Commitment Percentage shall not (a) have any voting or consent
rights under or with respect to any Loan Document or (b) constitute a "Lender"
(or be included in the calculation of Required Lenders hereunder) for any voting
or consent rights under or with respect to any Loan Document.
SECTION 3.8 Changed Circumstances.
(a) Circumstances Affecting Eurodollar Rate Availability. If with
respect to any Interest Period the Administrative Agent or any Lender (after
consultation with Administrative Agent) shall determine that, by reason of
circumstances affecting the foreign exchange and interbank markets generally,
deposits in eurodollars, in the applicable amounts are not being quoted via any
applicable page or screen or otherwise offered to the Administrative Agent or
such Lender for such Interest Period, then the Administrative Agent shall
forthwith give notice thereof to the Borrower. Thereafter, until the
Administrative Agent notifies the Borrower that such circumstances no longer
exist, the obligation of the Lenders to make Eurodollar Rate Loans and the right
of the Borrower to convert any Construction Loan Advance to or continue any
Construction Loan Advance as a Eurodollar Rate Loan shall be suspended, and the
Borrower shall
31
repay in full (or cause to be repaid in full) the then outstanding principal
amount of each such Eurodollar Rate Loan together with accrued interest thereon,
on the last day of the then current Interest Period applicable to such
Eurodollar Rate Loan or convert the then outstanding principal amount of each
such Eurodollar Rate Loan to a Base Rate Loan as of the last day of such
Interest Period.
(b) Laws Affecting Eurodollar Rate Availability. If, after the
date hereof, the introduction of, or any change in, any Applicable Law or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any of its Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any Eurodollar Rate Loan, such Lender shall promptly give notice
thereof to the Administrative Agent and the Administrative Agent shall promptly
give notice to the Borrower and the other Lenders. Thereafter, until the
Administrative Agent notifies the Borrower that such circumstances no longer
exist, (i) the obligations of the Lenders to make Eurodollar Rate Loans and the
right of the Borrower to convert any Construction Loan Advance or continue any
Construction Loan Advance as a Eurodollar Rate Loan shall be suspended and
thereafter the Borrower may select only Base Rate Loans hereunder, and (ii) if
any of the Lenders may not lawfully continue to maintain a Eurodollar Rate Loan
to the end of the then current Interest Period applicable thereto as a
Eurodollar Rate Loan, the applicable Eurodollar Rate Loan shall immediately be
converted to a Base Rate Loan for the remainder of such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction
of, or any change in, any Applicable Law, or in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any of the Lenders (or any of their respective Lending Offices) with any
request or directive (whether or not having the force of law) of such
Governmental Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with
respect to any Construction Loan Note or shall change the basis of
taxation of payments to any of the Lenders (or any of their respective
Lending Offices) of the principal of or interest on any Construction
Loan Note or any other amounts due under this Agreement in respect
thereof (except for changes in the rate of tax on the overall net
income of any of the Lenders or any of their respective Lending Offices
imposed by the jurisdiction in which such Lender is organized or is or
should be qualified to do business or such Lending Office is located);
or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit, insurance or capital
or similar requirement against assets of, deposits with or for the
account of, or credit extended by any of the Lenders (or any of their
respective Lending Offices) or shall impose on any of the Lenders (or
any of their respective Lending Offices) or the foreign exchange and
interbank markets any other condition affecting any
32
Construction Loan Note; and the result of any of the foregoing is to
increase the costs to any of the Lenders of maintaining any Eurodollar
Rate Loan or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the
Construction Loan Notes in respect of a Eurodollar Rate Loan, then such
Lender shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify the Borrower of such fact
and demand compensation therefor and, within fifteen (15) days after
such notice by the Administrative Agent, the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender
or Lenders for such increased cost or reduction. The Administrative
Agent will promptly notify the Borrower of any event of which it has
knowledge which will entitle such Lender to compensation pursuant to
this Section 3.8(c);
provided, that the Administrative Agent shall incur no liability whatsoever to
the Lenders or the Borrower in the event it fails to do so. The amount of such
compensation shall be determined, in the applicable Lender's sole discretion,
based upon the assumption that such Lender funded its Commitment Percentage of
the Eurodollar Rate Loans in the London interbank market and using any
reasonable attribution or averaging methods which such Lender deems appropriate
and practical. A certificate of such Lender setting forth the basis for
determining such amount or amounts necessary to compensate such Lender shall be
forwarded to the Borrower through the Administrative Agent and shall be
conclusively presumed to be correct save for manifest error.
SECTION 3.9 Indemnity. The Borrower hereby indemnifies each of
the Lenders against any loss or expense which may arise or be attributable to
each Lender's obtaining, liquidating or employing deposits or other funds
acquired to effect, fund or maintain any Construction Loan Advance (a) as a
consequence of any failure by the Borrower to make any payment when due of any
amount due hereunder in connection with a Eurodollar Rate Loan, (b) due to any
failure of the Borrower to borrow on a date specified therefor in a Draw Request
or a Notice of Continuation/Conversion or (c) due to any payment, prepayment or
conversion of any Eurodollar Rate Loan on a date other than the last day of the
Interest Period therefor. The amount of such loss or expense shall be
determined, in the applicable Lender's sole discretion, based upon the
assumption that such Lender funded its Commitment Percentage of the Eurodollar
Rate Loans in the London interbank market and using any reasonable attribution
or averaging methods which such Lender deems appropriate and practical. A
certificate of such Lender setting forth the basis for determining such amount
or amounts necessary to compensate such Lender shall be forwarded to the
Borrower through the Administrative Agent and shall be conclusively presumed to
be correct save for manifest error.
SECTION 3.10 Capital Requirements. If either (a) the introduction
of, or any change in, or in the interpretation of, any Applicable Law or (b)
compliance with any guideline or request from any central bank or comparable
agency or other Governmental Authority (whether or not having the force of law),
has or would have the effect of reducing the rate of return on the capital of,
or has affected or would affect the amount of capital required to be maintained
by, any Lender or any corporation controlling such Lender as a consequence of,
or with reference to the Commitments and other commitments of this type, below
the rate which such Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within five (5) Business Days
after written demand by any such Lender, the Borrower shall pay to
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such Lender from time to time as specified by such Lender additional amounts
sufficient to compensate such Lender or other corporation for such reduction. A
certificate as to such amounts submitted to the Borrower and the Administrative
Agent by such Lender, shall, in the absence of manifest error, be presumed to be
correct and binding for all purposes.
SECTION 3.11 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder or under the Construction Loan Notes shall be made free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholding, and all liabilities with respect thereto
excluding, (i) in the case of each Lender and the Administrative Agent, income
and franchise taxes imposed by the jurisdiction under the laws of which such
Lender or the Administrative Agent (as the case may be) is organized or is or
should be qualified to do business or any political subdivision thereof and (ii)
in the case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct or withhold any Taxes from or in
respect of any sum payable hereunder or under any Construction Loan Note to any
Lender or the Administrative Agent, (A) the sum payable shall be increased as
may be necessary so that after making all required deductions or withholdings
(including deductions or withholdings applicable to additional sums payable
under this Section 3.11) such Lender or the Administrative Agent (as the case
may be) receives an amount equal to the amount such party would have received
had no such deductions or withholdings been made, (B) the Borrower shall make
such deductions or withholdings, (C) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other authority in accordance with
Applicable Law, and (D) the Borrower shall deliver to the Administrative Agent
evidence of such payment to the relevant taxing authority or other Governmental
Authority in the manner provided in Section 3.11(d).
(b) Stamp and Other Taxes. In addition, the Borrower shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Construction Loan Advances, or the other Loan Documents, or the perfection of
any rights or security interest in respect thereof (hereinafter referred to as
"Other Taxes").
(c) Indemnity. The Borrower shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 3.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
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(d) Evidence of Payment. Within thirty (30) days after the date of
any payment of Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 12.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of
a jurisdiction other than the United States or any state thereof (a "Foreign
Lender") shall deliver to the Borrower, with a copy to the Administrative Agent,
on the Closing Date or concurrently with the delivery of the relevant Assignment
and Acceptance, as applicable, (i) two United States Internal Revenue Service
Forms W-8ECI or Forms W-8BEN, as applicable (or successor forms) properly
completed and certifying in each case that such Lender is entitled to a complete
exemption from withholding or deduction for or on account of any United States
federal income taxes, and (ii) an Internal Revenue Service Form W-8BEN or W-8ECI
or successor applicable form, as the case may be, to establish an exemption from
United States backup withholding taxes. Each such Lender further agrees to
deliver to the Borrower, with a copy to the Administrative Agent, a Form W-8BEN
or W-8ECI, or successor applicable forms or manner of certification, as the case
may be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower, certifying in the case of a Form
W-8BEN or W-8ECI that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes (unless in any such case an event (including, without limitation, any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders such forms inapplicable
or the exemption to which such forms relate unavailable and such Lender notifies
the Borrower and the Administrative Agent that it is not entitled to receive
payments without deduction or withholding of United States federal income taxes)
and, in the case of a Form W-8BEN or W-8ECI, establishing an exemption from
United States backup withholding tax.
(f) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 3.11 shall survive the payment in full of the
Obligations and the termination of the Commitments.
SECTION 3.12 Security. The Obligations of the Borrower shall be
secured as provided in the Security Documents.
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SECTION 3.13 Replacement of Lenders.
(a) If any Lender requests compensation pursuant to Section 3.8 or
Section 3.10, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.11, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Construction Loan Advances
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (A) would eliminate or reduce amounts payable pursuant
to Section 3.8, Section 3.10 or Section 3.11, as the case may be, in the future
and (B) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation pursuant to Section 3.8 or
Section 3.10, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.11, then the Borrower may, at its sole expense and effort, upon notice
to such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 12.10), all its interests, rights and obligations under
this Agreement to an Eligible Assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (A) the Borrower shall have received the prior written consent of the
Administrative Agent, which consent shall not unreasonably be withheld, (B) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Construction Loan Advances, accrued interest thereon, accrued
fees, breakage costs and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (C) in the case of
any such assignment resulting from a claim for compensation pursuant to Section
3.8 or Section 3.10, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
(c) To the extent that any Lender (a "Replaced Lender") is
required to assign all of its interests, rights and obligations under this
Agreement to an Eligible Assignee (a "Replacement Lender") pursuant to this
Section 3.13, upon the execution of all applicable assignment documents and the
satisfaction of all other conditions set forth herein, the Replacement Lender
shall become a Lender hereunder and the Replaced Lender shall cease to be a
Lender hereunder, except with respect to the indemnification provisions under
this Agreement, which provisions shall survive as to such Replaced Lender.
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ARTICLE IV
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 4.1 Closing. The closing shall take place at the offices
of Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P., Hearst Tower, 47th Floor, 000 X.
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, at 10:00 a.m. on June 27, 2003,
or on such other date and time as the parties hereto shall mutually agree.
SECTION 4.2 Conditions to Closing and Initial Construction Loan
Advance. The obligation of the Lenders to close this Agreement and to make the
initial Construction Loan Advance is subject to the satisfaction of each of the
following conditions:
(a) Executed Loan Documents. This Agreement, the
Construction Loan Notes, the Guaranty Agreement, the Pledge Agreement,
the Security Agreement, the Mortgage, the Assignment of Mortgage, the
Collateral Assignment of Architect's Contract, the Collateral
Assignment of Construction Contract, the Management Fee and Guaranty
Fee Subordination Agreement, each Intercompany Loan Subordination
Agreement, together with any other applicable Loan Documents, shall
have been duly authorized, executed and delivered to the Administrative
Agent by the parties thereto, shall be in full force and effect and no
default or event of default shall exist thereunder, and the Borrower
shall have delivered original counterparts thereof to the
Administrative Agent.
(b) Closing Certificates; etc.
(i) Officer's Certificate of the Borrower. The
Administrative Agent shall have received a certificate from a
Responsible Officer of the Management Company, in its capacity
as the duly authorized and acting Manager of the Borrower, in
form and substance satisfactory to the Administrative Agent,
to the effect that all representations and warranties of the
Borrower contained in this Agreement and the other Loan
Documents are true, correct and complete; that the Borrower is
not in violation of any of the covenants contained in this
Agreement and the other Loan Documents; that, after giving
effect to the transactions contemplated by this Agreement, no
Default or Event of Default has occurred and is continuing;
and that the Borrower has satisfied each of the closing
conditions.
(ii) Officer's Certificate of the Guarantors. The
Administrative Agent shall have received a certificate from a
Responsible Officer of the Parent, on behalf of itself and the
other Guarantors, in form and substance satisfactory to the
Administrative Agent, to the effect that all representations
and warranties of the Guarantors contained in the Guaranty
Agreement and the other Loan Documents are true, correct and
complete; that the Guarantors are not in violation of any of
the covenants contained in the Guaranty Agreement and the
other Loan Documents; that, after giving effect to the
transactions contemplated by the Guaranty Agreement, no
Default or Event of Default has occurred and is continuing;
and that the Guarantors have satisfied each of the closing
conditions.
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(iii) Certificate of Secretary of the Borrower.
The Administrative Agent shall have received a certificate of
the secretary or assistant secretary of the Management
Company, in its capacity as the duly authorized Manager of the
Borrower, certifying as to the incumbency and genuineness of
the signature of each officer of the Management Company
executing Loan Documents to which the Borrower is a party and
certifying that attached thereto is a true, correct and
complete copy of (A) the articles of organization of the
Borrower and all amendments thereto, certified as of a recent
date by the appropriate Governmental Authority in its
jurisdiction of incorporation, (B) the operating agreement on
behalf of the Borrower as in effect on the date of such
certifications, (C) resolutions duly adopted by the Board of
Directors of the Borrower authorizing the borrowings
contemplated hereunder and the execution, delivery and
performance of this Agreement and the other Loan Documents to
which the Borrower is a party, (D) each certificate required
to be delivered pursuant to Section 4.2(b)(v) and (E) the
Management Agreement (if applicable).
(iv) Certificate of Secretary of the Guarantors.
The Administrative Agent shall have received a certificate of
the secretary or assistant secretary of each Guarantor
certifying as to the incumbency and genuineness of the
signature of each officer of each Guarantor executing Loan
Documents to which it is a party, certifying that attached
thereto is a true, complete and correct copy of (A) the
articles of organization, the articles of incorporation or
such other charter documents of such Guarantor and all
amendments thereto, certified as of a recent date by the
appropriate Governmental Authority in its jurisdiction of
organization or incorporation, (B) the operating agreement,
the bylaws or such other applicable documents governing
management of such Guarantor as in effect on the date of such
certification, (C) resolutions duly adopted by the Board of
Directors of such Guarantor authorizing the execution,
delivery and performance of the Loan Documents to which it is
a party and (D) each certificate required to be delivered
pursuant to Section 4.2(b)(v).
(v) Certificates of Good Standing.
(A) The Administrative Agent shall have
received certificates as of a recent date of the good standing
of the Borrower and of the Management Company under the laws
of their respective jurisdictions of organization and
certificates as of a recent date of the good standing of the
Borrower and the Management Company under the laws of the
State in which the Project is located and certificates of the
relevant taxing authorities of such jurisdictions certifying
that such Person has filed required tax returns and owes no
delinquent taxes.
(B) The Administrative Agent shall have
received certificates as of a recent date of the good standing
of each Guarantor (other than the Management Company) under
the laws of its jurisdiction of organization and, to the
extent requested by the Administrative Agent, each other
jurisdiction where the
38
each Guarantor is qualified to do business and a certificate
of the relevant taxing authorities of such jurisdictions
certifying that each Guarantor has filed required tax returns
and owes no delinquent taxes.
(vi) Opinions of Counsel. The Administrative
Agent shall have received favorable opinions of counsel to the
Borrower and the Guarantors addressed to the Administrative
Agent and the Lenders with respect to the Borrower and the
Guarantors, the Loan Documents and such other matters as the
Lenders shall request.
(vii) Tax Forms. The Administrative Agent shall
have received copies of the United States Internal Revenue
Service forms required by Section 3.11(e) hereof.
(c) Collateral.
(i) Filings and Recordings. All filings and
recordations necessary to perfect the liens and security
interests of the Lenders in the collateral described in the
Security Documents shall have been executed and delivered to
the Administrative Agent.
(ii) Pledged Collateral. The Administrative Agent
shall have received original stock certificates or other
certificates evidencing the capital stock or other ownership
interests pledged pursuant to the Pledge Agreement, if any,
together with an undated stock power for each such certificate
duly executed in blank by the registered owner thereof.
(iii) Lien Search. The Administrative Agent shall
have received (A) the results of a Lien search (including a
search as to judgments, pending litigation and tax matters)
made against the Borrower under the Uniform Commercial Code
(or applicable judicial docket) as in effect in any state in
which any of its assets are located, indicating among other
things that its assets are free and clear of any Lien except
for Liens permitted hereunder and (B) if required by the
Administrative Agent, the results of a search of the
appropriate judgment and tax lien records, showing no
outstanding judgment or tax lien against the Borrower or any
Guarantor.
(iv) Hazard (Builder's Risk) and Liability
Insurance. The Administrative Agent shall have received
certificates of insurance, evidence of payment of all
insurance premiums for the current policy year of each
insurance policy, and, if requested by the Administrative
Agent, copies (certified by a Responsible Officer of the
Management Company) of each insurance policy in the form
required hereunder and under the Security Documents and
otherwise in form and substance reasonably satisfactory to the
Administrative Agent.
39
(v) Title Insurance. The Administrative Agent
shall have received a marked-up commitment for a policy of
title insurance, insuring the Lenders' first priority Lien and
showing no Liens prior to the Lenders' Lien other than for ad
valorem taxes not yet due and payable and encumbrances on, and
exceptions to, title acceptable to the Administrative Agent,
with title insurance companies and coverages acceptable to the
Administrative Agent on the property subject to the Mortgage,
with the final title insurance policy being delivered within
thirty (30) days after the Closing Date. Furthermore, the
Borrower agrees to provide or obtain any customary affidavits
and indemnities as may be required or necessary to obtain
title insurance satisfactory to the Administrative Agent.
(vi) Title Exceptions. The Administrative Agent
shall have received copies of all recorded documents creating
exceptions to the title policy referred to in Section
4.2(c)(v).
(vii) Matters Relating to Flood Hazard Properties.
The Administrative Agent shall have received a certification
from a nationally recognized reporting agency, certifying that
none of the Land is located in a flood hazard area.
(viii) Boundary Survey. The Administrative Agent
shall have a boundary survey of the Land as of a date not more
than thirty (30) days prior to the Closing Date certified by a
registered engineer or land surveyor. To the extent necessary
to permit the issuance of title insurance without exception
for matters of survey, such survey shall be accompanied by an
affidavit (a "Survey Affidavit") of the Management Company, on
behalf of the Borrower, in form and substance satisfactory to
the Administrative Agent. Such survey shall show the area of
the Land, all boundaries of the Land with courses and
distances indicated, including chord bearings and arc and
chord distances for all curves, and shall show dimensions and
locations of all easements, private drives, roadways, and
other facts materially affecting the Land, and shall show such
other details as the Administrative Agent may reasonably
request, including, without limitation, any encroachment (and
the extent thereof in feet and inches) onto the Land or by any
of the improvements on the property upon adjoining land or
upon any easement burdening the Land; any improvements, to the
extent constructed, and the relation of the improvements by
distances to the boundaries of the Land, to any easements
burdening the Land, and to the established building lines and
the street lines; and if improvements are existing, (A) a
statement of the number of each type of parking space required
by applicable laws, ordinances, orders, rules, regulations,
restrictive covenants and easements affecting the
improvements, and the number of each such type of parking
space provided, and (B) the location of all utilities serving
the improvements.
(ix) Environmental Assessment. The Administrative
Agent shall have received a Phase I environmental assessment
and such other environmental reports reasonably requested by
the Administrative Agent regarding the Land by an
environmental engineering firm acceptable to the
Administrative Agent showing
40
no environmental conditions or liabilities in violation of
Environmental Laws that could reasonably be expected to have a
Material Adverse Effect.
(x) Plans. The Administrative Agent shall have
received and approved a true and correct copy of all existing
Plans (including the site plan), together with satisfactory
evidence that all applicable Governmental Authorities, the
Borrower, Architect, General Contractor and Construction
Consultant have approved the same.
(xi) Contracts. The Administrative Agent shall
have received and approved (a) a list containing the names and
addresses of the General Contractor and Architect, their
respective contract amounts, and a copy of their contracts;
and (b) duly executed, acknowledged and delivered originals
from the General Contractor and the Architect of (i) consents
or other agreements reasonably satisfactory to Administrative
Agent and (ii) agreements reasonably satisfactory to
Administrative Agent subordinating all rights, liens, claims
and charges they may have or acquire against the Borrower or
the Property to the rights, liens and security interests of
Administrative Agent on behalf of the Lenders.
(xii) Soil Reports. The Administrative Agent shall
have received and approved a soil composition and test boring
report with respect to the Land, which shall be satisfactory
to the Administrative Agent and upon which the Administrative
Agent shall be entitled to rely, made within thirty (30) days
of the Closing Date of this Agreement by a licensed
professional engineer satisfactory to the Administrative
Agent.
(xiii) Access, Utilities, and Laws. The
Administrative Agent shall have received and approved (a)
satisfactory evidence that the Land abuts and has fully
adequate direct access to a public street (indication of such
access on the as-built survey noted in clause (viii) above
being deemed satisfactory evidence); (b) evidence that all
utilities necessary for the Improvements are available at the
Land in sufficient capacity (indication of such availability
on the as-built survey noted in clause (viii) above being
deemed satisfactory evidence); (c) satisfactory evidence that
all applicable zoning ordinances, restrictive covenants and
governmental requirements affecting the Land permit the use
for which the Property is intended and have been or will be
complied with without the necessity of variance and without
the Property being a nonconforming use; (d) a true and correct
copy of a valid building permit or grading permit, as
applicable, for the Improvements, together with all other
permits and approvals necessary for construction of the
Improvements; and (e) evidence satisfactory to the
Administrative Agent of compliance by the Borrower and the
Property, and the proposed construction, use and occupancy of
the Improvements, with such other applicable laws and
governmental requirements as the Administrative Agent may
request, including all laws and governmental requirements
regarding access and facilities for handicapped or disabled
persons including, without limitation and to the extent
applicable, The Federal Architectural Barriers Act (42 U.S.C.
Section 4151 et seq.), The
41
Fair Housing Amendments Act of 1988 (42 U.S.C. Section 3601 et
seq.), The Americans With Disabilities Act of 1990 (42 U.S.C.
Section 12101 et seq.), The Rehabilitation Act of 1973 (29
U.S.C. Section 794) and any applicable state requirements.
(xiv) Priority. The Administrative Agent shall
have received and approved evidence satisfactory to the
Administrative Agent that (A) no activity or circumstance was
visible on or near the Land which would constitute inception
of a mechanic's or materialman's lien against the Land unless
(1) such lien has been fully waived or subordinated or (2) the
underlying obligation with respect to such lien has been paid
in full, in each case to the Administrative Agent's
satisfaction, (B) no contract, or memorandum thereof, for
construction, design, surveying, or any other service relating
to the Project has been filed for record in the county where
the Land is located and (C) no mechanic's or materialman's
lien claim or notice, lis pendens, judgment, or other claim or
encumbrance against the Land has been filed for record in the
county where the Land is located or in any other public record
which by law provides notice of claims or encumbrances
regarding the Land.
(xv) Bonds. The Administrative Agent shall have
received and approved (a) a performance bond for the General
Contractor, in amount, form and content reasonably
satisfactory to the Administrative Agent and (b) a payment
bond for the General Contractor, in amount, form and content
reasonably satisfactory to the Administrative Agent.
(xvi) Tax and Standby Fee Certificates. The
Administrative Agent shall have received and approved
satisfactory evidence (a) of the identity of all taxing
authorities and utility districts (or similar authorities)
having jurisdiction over the Property or any portion thereof;
(b) that all taxes, standby fees and any other similar charges
have been paid, including copies of receipts or statements
marked "paid" by the appropriate authority; and (c) that the
Land is a separate tax lot or lots with separate assessment or
assessments of the Land and Improvements, independent of any
other land or improvements.
(xvii) Construction Contract. The Construction
Contract shall be in full force and effect.
(xviii) Appraisal. The Administrative Agent shall
have received and accepted a market value appraisal of the
Property (including, without limitation, evidence that the
Aggregate Commitment does not exceed seventy-five percent
(75%) of the Appraised Value).
(xix) Budget and Draw Schedule. The Administrative
Agent shall have received and approved (A) the Budget and (B)
the Borrower's proposed cash flow, draw schedule and
construction schedule for the Project.
42
(xx) Other Information. The Administrative Agent
shall have received such other certificates, documents and
information as are reasonably requested by the Lenders,
including, without limitation, local opinions of counsel,
engineering and structural reports and evidence of zoning
compliance, each in form and substance satisfactory to the
Administrative Agent.
(d) Consents; Defaults.
(i) Governmental and Third Party Approvals. The
Borrower shall have obtained all necessary approvals,
authorizations and consents of any Person which are material
to the conduct of its business and of all Governmental
Authorities and courts having jurisdiction with respect to the
transactions contemplated by this Agreement and the other Loan
Documents and the conduct of its business.
(ii) No Injunction, Etc. No action, proceeding,
investigation, regulation or legislation shall have been
instituted or threatened in writing before any Governmental
Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or
arises out of this Agreement or the other Loan Documents or
the consummation of the transactions contemplated hereby or
thereby, or which, in the Administrative Agent's sole
discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement and such other
Loan Documents.
(iii) No Event of Default. No Default or Event of
Default shall have occurred and be continuing.
(e) Financial Matters.
(i) Financial Statements. The Administrative
Agent shall have received the most recent audited Consolidated
financial statements of the Parent and its Subsidiaries, all
in form and substance reasonably satisfactory to the
Administrative Agent and prepared in accordance with GAAP.
(ii) Financial Condition Certificate.
(A) The Borrower shall have delivered
to the Administrative Agent a certificate, in form and
substance reasonably satisfactory to the Administrative Agent,
and certified as accurate by a Responsible Officer of the
Borrower, that (1) the Borrower is Solvent, (2) the Borrower's
payables are current and not past due except those contested
in good faith and (3) the financial projections previously
delivered to the Administrative Agent represent the good faith
estimates (utilizing reasonable assumptions) of the financial
condition and operations of the Borrower.
43
(B) The Parent shall have delivered to
the Administrative Agent a certificate, in form and substance
reasonably satisfactory to the Administrative Agent, and
certified as accurate by a Responsible Officer of the Parent,
that (1) the Parent and each of its Subsidiaries are each
Solvent, (2) the payables of the Parent and each of its
Subsidiaries are current and not past due except those
contested in good faith, (3) attached thereto are calculations
evidencing compliance on a pro forma basis with the covenants
contained in Section 12 of the Guaranty Agreement and (4) the
financial projections previously delivered to the
Administrative Agent represent the good faith estimates
(utilizing reasonable assumptions) of the financial condition
and operations of the Parent and its Subsidiaries.
(iii) Project Equity. The Administrative Agent
shall have received evidence satisfactory to the
Administrative Agent that (i) the net cash proceeds of the
Project Equity have been contributed to the Borrower or (ii)
to the extent such net cash proceeds of the Project Equity
have not been contributed to the Borrower, the Borrower shall
have received an irrevocable letter of credit securing the
irrevocable obligation of the equityholders to make such
contribution, which letter of credit shall be in form and
substance satisfactory to the Administrative Agent.
(iv) Payment at Closing; Fee Letters. The
Borrower shall have paid to the Administrative Agent and the
Lenders the fees set forth or referenced in Section 3.1 of the
Commitment Agreement and Section 3.3 hereof and any other
accrued and unpaid fees or commissions due thereunder or
hereunder (including, without limitation, Attorney Costs of
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P.) and to any other
Person such amount as may be due thereto in connection with
the transactions contemplated hereby, including all taxes,
fees and other charges in connection with the execution,
delivery, recording, filing and registration of any of the
Loan Documents.
(v) Payment of Budget Amounts. The Borrower
shall have paid all amounts required to be paid by the
Borrower as described in Column (B) and (C) of the Budget.
(f) Miscellaneous.
(i) Draw Request and Notice of Account
Designation. The Administrative Agent shall have received a
Draw Request from the Borrower in accordance with Section
2.2(a) and a Notice of Account Designation from the Borrower
in accordance with Section 2.2(c).
(ii) Other Documents. All opinions, certificates
and other instruments and all proceedings in connection with
the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Administrative
Agent. The Administrative Agent shall have received copies of
all other documents, certificates and instruments reasonably
requested thereby, with respect to the transactions
contemplated by this Agreement.
44
SECTION 4.3 Conditions to All Construction Loan Advances. The
obligations of the Lenders to make any Construction Loan Advance (including the
initial Construction Loan Advance), or convert or continue any Construction Loan
Advance are subject to the satisfaction of the following conditions precedent on
the relevant borrowing, conversion or continuation date:
(a) Continuation of Representations and Warranties. The
representations and warranties contained in Article V hereof and
Section 9 of the Guaranty Agreement shall be true and correct on and as
of such borrowing, conversion or continuation date with the same effect
as if made on and as of such date, except for any representation and
warranty made as of an earlier date, which representation and warranty
shall remain true and correct as of such earlier date.
(b) No Existing Default. No Default or Event of Default
shall have occurred and be continuing on such borrowing, conversion or
continuation date with respect to such Construction Loan Advance or
after giving effect to the Construction Loan Advances to be made,
converted or continued on such date.
(c) Additional Documents. The Administrative Agent shall
have received each additional document, instrument or other item
reasonably requested by it.
(d) Mechanics Liens. No mechanic's or materialman's lien
or other encumbrance shall have been filed and remain in effect against
the Property (except Liens permitted under this Agreement), and
releases or waivers of mechanics' liens and receipted bills showing
payment of all amounts due to all parties who have furnished materials
or services or performed labor of any kind in connection with the
Property shall have been obtained.
(e) Construction Consultant Certification. The
Administrative Agent shall have received written certification by the
Construction Consultant, and if required by the Administrative Agent,
the Architect, that to the best of each such Person's knowledge,
information, and belief, construction is in accordance with the Plans,
the quality of the work for which the Construction Loan Advance is
requested is in accordance with the applicable contract, the amount of
the Construction Loan Advance requested represents work in place based
on on-site observations and the data comprising the Draw Request, the
work has progressed as indicated, and the applicable contractor is
entitled to payment of the amount certified.
(f) No Damage. The Improvements shall not have been
materially damaged and not repaired.
(g) Payment of Budgeted Amounts. The Borrower shall have
paid all amounts required to be paid by the Borrower under Columns (B)
and (C) of the Budget.
(h) Applications for Payment. With respect to any
Construction Loan Advance to pay a contractor, the Administrative Agent
shall have received original
45
applications for payment in form approved by the Administrative Agent,
containing a breakdown by trade and/or other categories acceptable to
the Administrative Agent, executed and certified by each contractor and
the Architect, accompanied by invoices, and reasonably approved by
Construction Consultant.
(i) Title Updates. The Administrative Agent shall have
received, at the discretion of the Administrative Agent or if required
by the applicable title insurance company, updates of the title
insurance policy referred to in Section 4.2(c)(v) (such updates in form
and substance reasonably satisfactory to the Administrative Agent).
(j) Miscellaneous. (A) The cost to be funded with the
Construction Loan Advance is contained in the Budget, other than costs
in connection with Permitted Changes, (B) the Construction Loan Advance
for any line item in the Budget, when added to all prior Construction
Loan Advances for such line item, does not exceed the lesser of (i) the
actual cost incurred by the Borrower for such line item or (ii) the sum
allocated in the Loan Allocation column in the Budget for such item
(which shall include any Cost Savings that have been allocated to such
line pursuant to this Section 4.3), (C) with respect to any
Construction Loan Advance for a contingency line item, the
Administrative Agent shall have consented to such Construction Loan
Advance, which consent shall not be unreasonably withheld, (D) the
Lenders shall not be required to make any Construction Loan Advance to
fund interest on the Construction Loan Facility after the earlier of
(i) the Construction Loan Termination Date or (ii) commencement of
operations in the Improvements if and to the extent that there is
sufficient net operating income from the Property to pay such interest
and (E) the Lenders shall not be required to make any Construction Loan
Advance to fund any Improvement which requires a valid building permit
unless the Borrower shall have delivered a true and correct copy of
such valid building permit to the Administrative Agent.
SECTION 4.4 Final Construction Loan Advance for Improvements. The
final Construction Loan Advance for the Improvements (including retainage) shall
not be made until thirty (30) days after the date on which a final certificate
of occupancy for the Project has been issued. The Administrative Agent shall
have received the following as additional conditions precedent to the requested
Construction Loan Advance:
(a) Construction Matters.
(i) Certificates from the Architect, the General
Contractor and, if required by the Administrative Agent, the
Construction Consultant, certifying that the Improvements (including
any off-site improvements) have been completed substantially in
accordance with, and as completed comply with, the Plans and all
Applicable Laws; and
(ii) Two (2) sets of detailed "as built" Plans
approved in writing by the Borrower, the Architect, the General
Contractor and, if required by the Administrative Agent, the
Construction Consultant.
46
(b) Lien Affidavits. Final affidavits (in a form approved
by the Administrative Agent) from the Architect and the General
Contractor certifying that each of them and their subcontractors,
laborers, and materialmen has been paid in full for all labor and
materials for construction of the Improvements; and final lien releases
or waivers (in a form approved by the Administrative Agent) executed by
the Architect and the General Contractor, and all subcontractors,
materialmen, and other parties who have supplied labor, materials, or
services for the construction of the Improvements, or who otherwise
might be entitled to claim a contractual, statutory or constitutional
lien against the Property.
(c) Title Insurance. The Title Insurer shall commit in
writing to issue an endorsement to remove any exception for mechanics'
or materialmen's liens or pending disbursements, with no additional
title change or exception objectionable to the Administrative Agent,
and such other endorsements as may be required by the Administrative
Agent, such obligation to be conditioned only upon the making of the
final Construction Loan Advance for the Improvements (including
retainage).
(d) Compliance with Laws. Evidence satisfactory to the
Administrative Agent that all material Applicable Laws have been
satisfied in connection with the completion, use, occupancy and
operation of the Improvements, including, without limitation, receipt
by the Borrower of all material governmental licenses, certificates and
permits (including certificates of occupancy, the license to operate
the Hospital, the Medicare Certification and the Medicaid Certification
(as applicable)) with respect to the completion, use, occupancy and
operation of the Improvements, together with evidence satisfactory to
the Administrative Agent that all such material governmental licenses,
certificates, and permits are in full force and effect and have not
been revoked, cancelled or modified.
(e) As-Built Survey. Two (2) copies of a final as-built
survey of the Land and Improvements satisfactory to the Administrative
Agent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 5.1 Representations and Warranties. To induce the
Administrative Agent and the Lenders to enter into this Agreement and to induce
the Lenders to make the Construction Loan Advances, the Borrower hereby
represents and warrants to the Administrative Agent and the Lenders both before
and after giving effect to the transactions contemplated hereunder that:
(a) Organization; Power; Qualification. The Borrower is
(i) duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, (ii) has
the power and authority to own its properties and to carry on its
business as now being and hereafter proposed to be conducted and (iii)
is duly qualified and authorized to do business in each jurisdiction in
which the character of its properties or the nature of its business
requires such qualification and authorization except where the
47
failure to be so qualified and authorized could not reasonably be
expected to have a Material Adverse Effect. The jurisdictions in which
the Borrower is organized and qualified to do business as of the
Closing Date are only (i) its state of formation and (ii) the state in
which the Project is located.
(b) Ownership. The Borrower has no Subsidiaries. As of
the Closing Date, the capitalization of the Borrower consists of the
membership interests, authorized, issued and outstanding, described on
Schedule 5.1(b). All outstanding membership interests have been duly
authorized and validly issued and are fully paid and nonassessable,
with no personal liability attaching to the ownership thereof, and not
subject to any preemptive or similar rights. As of the Closing Date,
there are no outstanding purchase warrants, subscriptions, options,
securities, instruments or other rights of any type or nature
whatsoever, which are convertible into, exchangeable for or otherwise
provide for or permit the issuance of membership interests of the
Borrower, except as set forth in the operating agreement of the
Borrower.
(c) Authorization of Agreement, Loan Documents and
Borrowing. Each of the Borrower and the Management Company has the
right, power and authority and has taken all necessary corporate and
other action to authorize the execution, delivery and performance of
this Agreement and each of the other Loan Documents to which it is a
party in accordance with their respective terms. This Agreement and
each of the other Loan Documents have been duly executed and delivered
by the duly authorized officers of the Management Company on behalf of
the Borrower, and each such document constitutes the legal, valid and
binding obligation of the Borrower, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the
enforcement of creditors' rights in general and the availability of
equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing
with Laws, Etc. The execution, delivery and performance by the Borrower
of the Loan Documents to which the Borrower is a party, in accordance
with their respective terms, the borrowings hereunder and the
transactions contemplated hereby do not and will not, by the passage of
time, the giving of notice or otherwise, (i) require any Governmental
Approval or violate any Applicable Law relating to the Borrower, (ii)
conflict with, result in a breach of or constitute a default under the
organizational documents of the Borrower or any indenture, agreement or
other instrument to which the Borrower is a party or by which any of
its properties may be bound or any Governmental Approval relating to
the Borrower, (iii) result in or require the creation or imposition of
any Lien upon or with respect to any property now owned or hereafter
acquired by the Borrower other than Liens arising under the Loan
Documents or (iv) require any consent or authorization of, filing with,
or other act in respect of, an arbitrator or Governmental Authority and
no consent of any other Person is required in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement.
48
(e) Compliance with Law; Governmental Approvals. The
Borrower (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business, each of which is in full force and
effect, is final and not subject to review or appeal and is not the
subject of any pending or, to the best of its knowledge, threatened
attack by direct or collateral proceeding, (ii) is in compliance with
each Governmental Approval applicable to it and in compliance with all
other Applicable Laws relating to it or any of its respective
properties, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect, and (iii) has timely
filed all material reports, documents and other materials required to
be filed by it under all Applicable Laws with any Governmental
Authority and has retained all material records and documents required
to be retained by it under Applicable Law.
(f) Tax Returns and Payments. The Borrower has duly filed
or caused to be filed all federal, state, local and other tax returns
required by Applicable Law to be filed, and has paid, or made adequate
provision for the payment of, all federal, state, local and other
material taxes, assessments and governmental charges or levies upon it
and its property, income, profits and assets which are due and payable,
except for taxes (i) that are not yet delinquent or (ii) that are being
contested in good faith and against which adequate reserves are being
maintained in accordance with GAAP. Such returns accurately reflect in
all material respects all liability for taxes of the Borrower for the
periods covered thereby. There is no ongoing audit or examination or,
to the knowledge of the Borrower, other investigation by any
Governmental Authority of the tax liability of the Borrower. No
Governmental Authority has asserted any Lien or other claim against the
Borrower with respect to unpaid taxes which has not been discharged or
resolved. The charges, accruals and reserves on the books of the
Borrower in respect of federal, state, local and other taxes for all
Fiscal Years and portions thereof since the organization of the
Borrower are in the judgment of the Borrower adequate, and the Borrower
does not anticipate any additional material taxes or assessments for
any of such periods.
(g) Intellectual Property Matters. The Borrower owns or
possesses rights to use all franchises, licenses, copyrights, copyright
applications, patents, patent rights or licenses, patent applications,
trademarks, trademark rights, service xxxx, service xxxx rights, trade
names, trade name rights, copyrights and rights with respect to the
foregoing which are required to conduct its business. No event has
occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such rights, and the
Borrower is not liable to any Person for infringement under Applicable
Law with respect to any such rights as a result of its business
operations, except for such infringements that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(h) Environmental Matters.
(i) The properties owned, leased or operated by
the Borrower now or in the past do not contain, and to its
knowledge have not previously contained, any Hazardous
Materials in amounts or concentrations which (A) constitute or
49
constituted a material violation of applicable Environmental
Laws or (B) could give rise to material liability under
applicable Environmental Laws;
(ii) The Borrower and such properties and all
operations conducted in connection therewith are in
compliance, in all material respects, with all applicable
Environmental Laws, and there is no contamination at, under or
about such properties or such operations which could
reasonably interfere with the continued operation of such
properties or impair the fair saleable value thereof;
(iii) The Borrower has not received any notice of
violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters, Hazardous
Materials, or compliance with Environmental Laws from (A) any
Governmental Authority or (B) to the extent any such
violation, alleged violation, non-compliance, liability or
potential liability could reasonably be expected to have a
Material Adverse Effect, any other Person, nor does the
Borrower have knowledge or reason to believe that any such
notice will be received or is being threatened;
(iv) Hazardous Materials have not been
transported or disposed of to or from the properties owned,
leased or operated by of the Borrower in violation of, or in a
manner or to a location which could give rise to a material
liability under, Environmental Laws, nor have any Hazardous
Materials been generated, treated, stored or disposed of at,
on or under any of such properties in violation of, or in a
manner that could give rise to a material liability under, any
applicable Environmental Laws;
(v) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the
Borrower, threatened, under any Environmental Law to which the
Borrower is or will be named as a potentially responsible
party with respect to such properties or operations conducted
in connection therewith, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the
Borrower or such properties or such operations; and
(vi) There has been no release, or to the best of
the Borrower's knowledge, threat of release, of Hazardous
Materials at or from properties owned, leased or operated by
the Borrower, now or in the past, in violation of or in
amounts or in a manner that could give rise to a material
liability under Environmental Laws.
(i) ERISA.
(i) The Borrower and each ERISA Affiliate is in
material compliance with all applicable provisions of ERISA
and the regulations and published interpretations thereunder
with respect to all Employee Benefit Plans
50
except for any required amendments for which the remedial
amendment period as defined in Section 401(b) of the Code has
not yet expired and except where a failure to so comply could
not reasonably be expected to have a Material Adverse Effect.
Each Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified, and each trust
related to such plan has been determined to be exempt under
Section 501(a) of the Code except for such plans that have not
yet received determination letters but for which the remedial
amendment period for submitting a determination letter has not
yet expired. No liability has been incurred by the Borrower or
any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan except for a liability that could not
reasonably be expected to have a Material Adverse Effect;
(ii) As of the Closing Date, no Pension Plan has
been terminated, nor has any accumulated funding deficiency
(as defined in Section 412 of the Code) been incurred (without
regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service
been received or requested with respect to any Pension Plan,
nor has the Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required
by Section 412 of the Code, Section 302 of ERISA or the terms
of any Pension Plan prior to the due dates of such
contributions under Section 412 of the Code or Section 302 of
ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect
to any Pension Plan;
(iii) Except where the failure of any of the
following representations to be correct in all material
respects could not reasonably be expected to have a Material
Adverse Effect, neither the Borrower nor any ERISA Affiliate
has: (A) engaged in a nonexempt prohibited transaction
described in Section 406 of the ERISA or Section 4975 of the
Code, (B) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are
no premium payments which are due and unpaid, (C) failed to
make a required contribution or payment to a Multiemployer
Plan, or (D) failed to make a required installment or other
required payment under Section 412 of the Code;
(iv) No Termination Event with respect to the
Borrower or any ERISA Affiliate has occurred or is reasonably
expected to occur; and
(v) Except where the failure of any of the
following representations to be correct in all material
respects could not reasonably be expected to have a Material
Adverse Effect, no proceeding, claim (other than a benefits
claim in the ordinary course of business), lawsuit and/or
investigation is existing or, to the best knowledge of the
Borrower after due inquiry, threatened concerning or involving
any (A) employee welfare benefit plan (as defined in Section
3(1) of
51
ERISA) currently maintained or contributed to by the Borrower
or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer
Plan.
(j) Margin Stock. The Borrower is not engaged principally
or as one of its activities in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" (as each such
term is defined or used, directly or indirectly, in Regulation U of the
Board of Governors of the Federal Reserve System). No part of the
proceeds of any of the Construction Loan Advances will be used for
purchasing or carrying margin stock or for any purpose which violates,
or which would be inconsistent with, the provisions of Regulation T, U
or X of such Board of Governors.
(k) Government Regulation. The Borrower is not an
"investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment
Company Act of 1940, as amended) and the Borrower is not, or after
giving effect to any Construction Loan Advance will not be, subject to
regulation under the Public Utility Holding Company Act of 1935 or the
Interstate Commerce Act, each as amended, or any other Applicable Law
which limits its ability to incur or consummate the transactions
contemplated hereby.
(l) Material Contracts. From and after the Closing Date,
each Material Contract is, and after giving effect to the consummation
of the transactions contemplated by the Loan Documents will be, in full
force and effect in accordance with the terms thereof. The Borrower has
delivered to the Administrative Agent a true and complete copy of each
Material Contract listed on Schedule 5.1(l). Neither the Borrower nor,
to the knowledge of the Borrower, any other party thereto, is in breach
of or in default under any Material Contract, except where such breach
or default could not reasonably be expected to have a Material Adverse
Effect.
(m) Employee Relations. As of the Completion Date, the
Borrower has a stable work force in place. The Borrower knows of no
pending, threatened or contemplated strikes, work stoppage or other
collective labor disputes involving its employees.
(n) Burdensome Provisions. The Borrower is not a party to
any indenture, agreement, lease or other instrument, or subject to any
corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable
future could be reasonably expected to have a Material Adverse Effect.
The Borrower does not presently anticipate that future expenditures
needed to meet the provisions of any statutes, orders, rules or
regulations of a Governmental Authority will be so burdensome as to
have a Material Adverse Effect.
(o) No Material Adverse Change. Since the Closing Date,
there has been no Material Adverse Effect with respect to the Borrower
and no event has occurred or condition arisen that could reasonably be
expected to have a Material Adverse Effect.
52
(p) Solvency. As of the Closing Date and both before and
after giving effect to each Construction Loan Advance made hereunder,
the Borrower and each Guarantor will be Solvent.
(q) Title to Properties. The Borrower and each Guarantor
has such title to the real property owned or leased by it, including,
but not limited to, the Land and the Improvements, which are material
to the conduct of its business and valid and legal title to all of its
personal property and assets which are material to the conduct of its
business, including, but not limited to, the Tangible Personalty,
except those which have been disposed of by the Borrower or such
Guarantor subsequent to such date which dispositions have been in the
ordinary course of business or as otherwise expressly permitted
hereunder.
(r) Liens. None of the properties and assets of the
Borrower is subject to any Lien, except Liens permitted pursuant to
Section 9.2. No financing statement under the Uniform Commercial Code
of any state which names the Borrower as debtor and which has not been
terminated, has been filed in any state or other jurisdiction and the
Borrower has not signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such
financing statement, except to perfect those Liens permitted by Section
9.2.
(s) Debt and Guaranty Obligations.
(i) Schedule 5.1(s) is a complete and correct
listing of all Debt and Guaranty Obligations of the Borrower
as of the Closing Date.
(ii) As of the Closing Date, the Borrower has
performed and is in compliance with all of the terms of all
Debt and Guaranty Obligations set forth on Schedule 5.1(s)
which are in excess of $1,000,000 and all instruments and
agreements relating thereto, and no default or event of
default, or event or condition which with notice or lapse of
time or both would constitute such a default or event of
default on the part of the Borrower exists with respect to any
such Debt or Guaranty Obligation.
(t) Litigation. Except for matters existing on the
Closing Date and set forth on Schedule 5.1(t), there are no actions,
suits or proceedings pending nor, to the knowledge of the Borrower,
threatened in writing against or in any other way relating adversely to
or affecting the Borrower or any of its properties in any court or
before any arbitrator of any kind or before or by any Governmental
Authority which could reasonably be expected to have a Material Adverse
Effect.
(u) Absence of Defaults. No event has occurred or is
continuing which constitutes a Default or an Event of Default, or which
constitutes, or which with the passage of time or giving of notice or
both would constitute, a default or event of default by the Borrower
under any Material Contract or judgment, decree or order to which the
Borrower is a party or by which the Borrower or any of its properties
may be bound or
53
which would require the Borrower to make any payment thereunder prior
to the scheduled maturity date therefor which could reasonably be
expected to have a Material Adverse Effect.
(v) Budget. The Budget has been prepared by the Borrower
and the Borrower represents to the Lenders that it includes all costs
and expenses, the aggregate amount of which costs and expenses are
specifically identified thereon (the "Aggregate Project Cost"),
incident to the Construction Loan Advances and the Project (excluding
costs and expenses attributable to any equipment which is subject to
the Equipment Loan Financing), through the Construction Loan
Termination Date, after taking into account the requirements of this
Agreement.
(w) Mortgage.
(i) As of the Closing Date, the Mortgage, and
the rights of the Administrative Agent and the Lenders
thereunder, will have priority over all other Liens on the
Land or Improvements, including, without limitation, any
mechanic's or materialman's lien or similar lien.
(ii) After the Closing Date, the Mortgage, and
the rights of the Administrative Agent and the Lenders
thereunder, will have priority over all other Liens on the
Land or Improvements, including, without limitation, any
mechanic's or materialman's lien or similar lien (other than
Liens permitted pursuant to Section 9.2(i)).
(x) Plans. The Plans when completed will contain all
detail necessary and will be adequate for the construction of the
Improvements, and will comply with the Loan Documents, Applicable Laws,
restrictive covenants, and governmental requirements, rules and
regulations.
(y) Separate Tax Lot. The Land is not part of a larger
tract of land owned by the Borrower or its affiliates or any Guarantor
and is not otherwise included under any unity of title or similar
covenant with other lands not encumbered by the Mortgage, and the
Borrower has obtained a separate tax lot or lots with a separate tax
assessment or assessments for the Land and the Improvements,
independent of any other lands or improvements.
(z) Compliance with Laws. The Land and Improvements
comply with all Applicable Laws, including all subdivision and platting
requirements, without reliance on any adjoining or neighboring
property, the violation of which could reasonably be expected to have a
Material Adverse Effect.
(aa) Construction Schedule. The construction schedule for
the Project is realistic and the Completion Date is a reasonable
estimate of the time required to complete the Project.
54
(bb) Healthcare Matters. From and after the Completion
Date,
(i) The Borrower:
(A) has not been convicted of an
offense or committed an act or omission which could reasonably
form a basis under 42 U.S.C. Section 1320a-7 and any statutes
succeeding thereto and any regulations promulgated thereunder
for the Secretary of HHS to exclude the Borrower from
participation in a "Federal health care program" (as that term
is defined by 42 U.S.C. Section 1320a-7b(f), or any successor
statute thereto); and
(B) is not in default in the
performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Medicaid
Provider Agreement, any Medicare Provider Agreement or any
other agreement or instrument to which the Borrower is a
party, which default has resulted in, or if not remedied
within any applicable grace period could result in, the
revocation, termination, cancellation or suspension of the
Medicaid Certification of the Borrower or the Medicare
Certification of the Borrower.
(ii) Reimbursement from Third Party Payors.
(A) Accounts Receivable. The accounts
receivable of the Borrower have been and will continue to be
adjusted to reflect reimbursement policies of third party
payors such as Medicare, Medicaid, Blue Cross/Blue Shield,
private insurance companies, health maintenance organizations,
preferred provider organizations, alternative delivery
systems, managed care systems, government contracting agencies
and other third party payors. In particular, accounts
receivable relating to such third party payors do not and
shall not exceed amounts any obligee is entitled to receive
under any capitation arrangement, fee schedule, discount
formula, cost-based reimbursement or other adjustment or
limitation to its usual charges.
(B) Filings and Reports. The Borrower
has timely filed all material reports, administrative forms
and filings required to be filed in connection with the
Medicare Regulations and the Medicaid Regulations (as
applicable) due on or before the date hereof, and all required
reports and administrative forms and filings are true and
complete in all material respects, in each case except to the
extent that any such failure could not reasonably be expected
to have a Material Adverse Effect; there are no claims,
actions, proceedings or appeals pending (and the Borrower has
not filed anything that would result in any claims, actions or
appeals) before any Governmental Authority with respect to any
cost reports required to be filed by the Medicare Regulations
or the Medicaid Regulations (as applicable) or claims filed by
the Borrower on or before the date hereof, or with respect to
any adjustments, denials, recoupments or disallowances by any
intermediary, carrier, other insurer, commission, board or
agency in connection with any cost reports or claims; no
validation review, survey, inspection, audit,
55
investigation or program integrity review related to the
Borrower has been conducted with respect to the Borrower by
any Governmental Authority or government contractor in
connection with the Medicare program or the Medicaid program
(as applicable), and no such reviews are scheduled, pending
or, to the knowledge of Borrower, threatened against or
affecting the Borrower; and the Borrower has timely filed all
material reports, data and other information required by any
other Governmental Authority with authority to regulate the
Borrower or its business in any manner.
(iii) Licensing and Accreditation. The Borrower
has, to the extent applicable: (A) obtained (or been duly
assigned) and maintains in good standing all required (if any)
certificates of need or determinations of need as required by
the relevant state Governmental Authority for the acquisition,
construction, expansion of, investment in or operation of its
businesses as currently operated; (B) obtained and maintains
in good standing all required licenses, permits, certificates,
approvals and other authorizations (or waivers thereof)
required by any Governmental Authority which are necessary to
the conduct of its business; (C) to the extent prudent and
customary in the industry in which it is engaged, obtained and
maintains accreditation from all generally recognized
accrediting agencies; (D) obtained and maintains Medicaid
Certification and Medicare Certification; and (E) entered into
and maintains in good standing its Medicare Provider Agreement
and its Medicaid Provider Agreement.
(iv) Fraud and Abuse. Neither the Borrower nor,
to the knowledge of the Borrower's officers, any of its
officers or directors, have engaged in any activities which
are prohibited under the Medicare Regulations and Medicaid
Regulations, 42 U.S.C. Section 1320a-7b, 42 U.S.C. Section
1395nn, or the regulations promulgated pursuant to such
statutes or related state or local statutes or regulations, or
which are prohibited by binding rules of professional conduct,
or which are prohibited under any statute which constitutes a
"Federal health care offense" (as that term is defined by 18
U.S.C. Section 24, or any successor statute thereto), or the
regulations promulgated pursuant to such statutes, including
but not limited to the following: (A) knowingly and willfully
making or causing to be made a false statement or
representation of a material fact in any applications for any
benefit or payment; (B) knowingly and willfully making or
causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or
payment; (C) failing to disclose knowledge by a claimant of
the occurrence of any event affecting the initial or continued
right to any benefit or payment on its own behalf or on behalf
of another, with intent to secure such benefit or payment
fraudulently; (D) knowingly and willfully soliciting or
receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash
or in kind or offering to pay such remuneration (1) in return
for referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which
payment may be made in whole or in part by a Federal health
care program or other applicable third party payors, or (2) in
return for purchasing, leasing or ordering or arranging for or
56
recommending the purchasing, leasing or ordering of any good,
facility, service, or item for which payment may be made in
whole or in part by a Federal health care program or other
applicable third party payors; (E) knowingly or willfully
offering or paying any remuneration (including any kickback,
bribe, or rebate) directly or indirectly, overtly or covertly,
in cash or in kind to any Person to induce such Person (1) to
refer an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which
payment may be made in whole or in part under a Federal health
care program, or (2) to purchase, lease, order, or arrange for
or recommend purchasing, leasing, or ordering any good,
facility, service, or item for which payment may be made in
whole or in part under a Federal health care program.
(cc) Senior Debt Status. The Obligations of the Borrower
and each Guarantor under this Agreement and each of the other Loan
Documents ranks and shall continue to rank at least senior in priority
of payment to all Subordinated Debt.
(dd) Accuracy and Completeness of Information. All written
information, reports, statements and other papers and data produced by
or on behalf of the Borrower and furnished to the Administrative Agent
or any Lender in connection with this Agreement, or any of the other
Loan Documents, were, at the time the same were so furnished, complete
and correct in all material respects to the extent necessary to give
the Administrative Agent or any Lender complete, true and accurate
knowledge of the subject matter based on the Borrower's knowledge
thereof (other than projections, budgets or other estimates which shall
be determined in good faith utilizing reasonable assumptions). No
document furnished or written statement made to the Administrative
Agent or the Lenders by the Borrower in connection with the
negotiation, preparation or execution of this Agreement or any of the
Loan Documents contains or will contain any untrue statement of a fact
material to the creditworthiness of the Borrower or omits or will omit
to state a fact necessary in order to make the statements contained
therein not misleading to the extent material to the creditworthiness
of the Borrower. The Borrower is not aware of any facts which it has
not disclosed in writing to the Administrative Agent having a Material
Adverse Effect, or insofar as the Borrower can now foresee, which could
reasonably be expected to have a Material Adverse Effect.
(ee) Tax Shelter Regulations. Borrower does not intend to
treat the Loans and/or Letters of Credit and related transactions as
being a "reportable transaction" (within the meaning of Treasury
Regulation Section 1.6011-4). In the event Borrower determines to take
any action inconsistent with such intention, it will promptly notify
the Administrative Agent thereof. If Borrower so notifies the
Administrative Agent, Borrower acknowledges that one or more of the
Lenders may treat its Construction Loan Advances as part of a
transaction that is subject to Treasury Regulation Section 301.6112-1,
and such Lender or Lenders, as applicable, will maintain the lists and
other records required by such Treasury Regulation.
SECTION 5.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article V and all
representations and warranties
57
contained in any certificate, or any of the Loan Documents (including, but not
limited to, any such representation or warranty made in or in connection with
any amendment thereto) shall constitute representations and warranties made
under this Agreement. All representations and warranties made under this
Agreement shall be made or deemed to be made at and as of the Closing Date
(except those that are expressly made as of a specific date), shall survive the
Closing Date and shall not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of the Lenders or any
borrowing hereunder.
ARTICLE VI
FINANCIAL INFORMATION AND REPORTS
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.11, the Borrower will furnish or
cause to be furnished to the Administrative Agent at the Administrative Agent's
Office at the address set forth in Section 12.1 and to the Lenders at their
respective addresses as set forth Schedule 1.1(a), or such other office as may
be designated by the Administrative Agent and the Lenders from time to time:
SECTION 6.1 Financial Statements.
(a) Monthly and Quarterly Financial Statements.
(i) Monthly Financial Statements. Commencing with the
first full month after the Completion Date and continuing for the first
twelve months after the Completion Date, as soon as practicable and in
any event within thirty (30) days after the end of each fiscal month,
an unaudited balance sheet of the Borrower as of the close of such
fiscal month and unaudited statements of income and expenses and cash
flow for the fiscal month then ended and that portion of the Fiscal
Year then ended, all in reasonable detail and prepared by the Borrower
in accordance with GAAP (without footnotes) and certified by a
Responsible Officer of the Borrower to present fairly in all material
respects the financial condition of the Management Company on behalf of
the Borrower as of their respective dates and the results of operations
of the Borrower for the respective periods then ended, subject to
normal year end adjustments; provided that (A) with respect to each
fiscal month end which is also fiscal quarter end, the Borrower shall
provide such monthly financial statements as soon as practicable and in
any event within fifty-five days after the end of each such fiscal
month and (B) with respect to each fiscal month end which is also
Fiscal Year end, the Borrower shall provide such monthly financial
statements as soon as practicable and in any event within one hundred
(100) days after the end of each such fiscal month.
(ii) Quarterly Financial Statements. With respect to each
fiscal quarter ending after the date which is twelve (12) months after
the Completion Date, as soon as practicable and in any event within
fifty-five (55) days after the end of each fiscal quarter, an unaudited
balance sheet of the Borrower as of the close of such fiscal quarter
and
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unaudited statements of income and expenses and cash flow for the
fiscal quarter then ended and that portion of the Fiscal Year then
ended, all in reasonable detail and prepared by the Borrower in
accordance with GAAP (without footnotes) and certified by a Responsible
Officer of the Borrower to present fairly in all material respects the
financial condition of the Borrower as of their respective dates and
the results of operations of the Borrower for the respective periods
then ended, subject to normal year end adjustments.
(b) Annual Financial Statements. As soon as practicable and in any
event within one hundred (100) days after the end of each Fiscal Year,
commencing with the Fiscal Year ending September 30, 2003, an audited balance
sheet of the Borrower as of the close of such Fiscal Year and audited statements
of income and expenses, retained earnings and cash flow for the Fiscal Year then
ended, including the notes thereto, all in reasonable detail and prepared in
accordance with GAAP and accompanied by a report thereon prepared by Deloitte &
Touche, LLP, or another independent certified public accounting firm of
nationally recognized standing which is reasonably acceptable to the
Administrative Agent, that such financial statements are not qualified with
respect to scope limitations imposed by the Borrower or with respect to
accounting principles followed by the Borrower not in accordance with GAAP.
(c) Annual Forecasts. As soon as practicable and in any event no
later than thirty (30) days after the beginning of each Fiscal Year, an annual
forecast prepared by management of the Borrower, in reasonable detail and in the
form customarily prepared by management of the Borrower for its internal use and
setting forth an explanation for the principal assumptions on which such
forecasts were based, of balance sheets, income statements and cash flow
statements on a quarterly basis for each Fiscal Year thereafter until the
Maturity Date.
(d) Other Information. Such other information regarding the
operations, business affairs and financial condition of the Borrower as the
Administrative Agent may reasonably request.
SECTION 6.2 Officer's Compliance Certificate. At each time
financial statements are delivered pursuant to Sections 6.1(a)(ii) or 6.1(b) and
at such other times as the Administrative Agent shall reasonably request a
certificate of the chief financial officer or the treasurer of Borrower in the
form of Exhibit I attached hereto (an "Officer's Compliance Certificate"):
(a) stating that such officer has reviewed such financial
statements and, to the best of his knowledge, such financial statements
fairly present in all material respects the financial condition of the
Borrower as of the dates indicated and the results of its operations
and cash flows for the periods indicated;
(b) stating that to such officer's knowledge, based on a
reasonable examination, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default and
its nature, when it occurred, whether it is continuing and the steps
being taken by the Borrower with respect to such Default or Event of
Default;
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(c) stating that the Borrower is in compliance with the
covenants and restrictions set forth in Articles VII, VIII and IX of
this Agreement and, with respect to the covenants set forth in Article
VIII, the calculations applicable thereto; and
(d) setting forth any other information reasonably
required by the Administrative Agent to ensure compliance with this
Agreement.
SECTION 6.3 Accountant's Certificate. At each time financial
statements are delivered pursuant to Section 6.1(b), a certificate of the
independent public accountants certifying such financial statements addressed to
the Administrative Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge of any
Default or Event of Default or, if such is not the case, specifying such Default
or Event of Default and its nature and period of existence; and
(b) including the calculations prepared by such accountants
required to establish whether or not the Borrower are in compliance with the
financial covenants set forth in Article VIII hereof as at the end of each
respective period.
SECTION 6.4 Other Reports.
(a) Accountants Reports. Promptly upon receipt thereof, copies of
all reports, if any, submitted to the Borrower or its Board of Directors by its
independent public accountants in connection with their auditing function,
including, without limitation, any management report and any management
responses thereto.
(b) Clinical Procedures Reports. At such times as the
Administrative Agent shall reasonably request, and at least quarterly, a
certificate of an executive officer of the Borrower setting forth the types of
clinical procedures performed during such period, the number of the clinical
procedures performed during such period, the patient days related to the
clinical procedures performed during such period and any other operating
statistics reasonably requested by the Administrative Agent, in a form prepared
by the Borrower in the ordinary course of its business.
(c) Permitted Payment Certificate. Not less than ten (10) days
prior to the proposed date of any Permitted Distribution pursuant to Section
9.6, a certificate of the chief financial officer or the treasurer of the
Management Company on behalf of the Borrower:
(i) stating that such officer has reviewed the most
recent financial statements of the Borrower and, to the best of his
knowledge, such financial statements fairly present in all material
respects the financial condition of the Borrower as of the dates
indicated and the results of its operations and cash flows for the
periods indicated;
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(ii) setting forth the calculations required to establish
that the Borrower shall be in compliance with the requirements set
forth in Section 9.6(c) both before and after giving effect to such
Permitted Distribution; and
(iii) setting forth any other information reasonably
required by the Administrative Agent to ensure compliance with this
Agreement.
(d) Other Reports. Such other information regarding the
operations, business affairs and financial condition of the Borrower as the
Administrative Agent or any Lender may reasonably request.
SECTION 6.5 Notice of Litigation and Other Matters. Prompt (but
in no event later than ten (10) days after an officer of the Borrower obtains
knowledge thereof) telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or
before any Governmental Authority and all actions and proceedings in any court
or before any arbitrator against or involving the Borrower or any of its
properties, assets or businesses which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(b) any violation by the Borrower of any Applicable Law or any
notice of any violation received by the Borrower from any Governmental Authority
including, without limitation, any notice of violation of Environmental Laws,
which in any such case could reasonably be expected to have a Material Adverse
Effect;
(c) any labor controversy that has resulted in, or threatens to
result in, a strike or other work action against the Borrower or any contractor
or any material development in any labor controversy which if adversely
determined could reasonably be expected to have a Material Adverse Effect;
(d) any actual or threatened condemnation of any portion of the
Property, any negotiations with respect to any such taking, or any loss of or
substantial damage to the Property (excluding any such condemnation which only
affects a de minimus portion of the Property);
(e) any notice received by the Borrower with respect to the
cancellation, alteration or non-renewal of any insurance coverage maintained by
the Borrower except as in the ordinary course of the business of the Borrower
solely in connection with the replacement of any such insurance coverage;
(f) any failure by the Borrower or any contractor to perform any
material obligation under any construction contract that is a Material Contract
(including, without limitation, the Construction Contract), any event or
condition which would permit termination of any such construction contract or
suspension of work thereunder, or any notice given by the Borrower or any
contractor with respect to any of the foregoing.
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(g) any attachment, judgment, lien, levy or order exceeding
$500,000 that may be assessed against the Borrower (to the extent such
attachment, judgment, lien, levy or order is not fully covered by insurance and
with respect to which the applicable insurance carrier has not acknowledged that
such attachment, judgment, lien, levy or order is fully covered by insurance);
(h) (i) any Default or Event of Default or (ii) any event which
constitutes or which with the passage of time or giving of notice or both would
constitute a default or event of default under any Material Contract to which
the Borrower is a party or by which the Borrower or any of its properties may be
bound which could reasonably be expected to have a Material Adverse Effect;
(i) (i) any unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit Plan under
Section 401(a) of the Code (along with a copy thereof), (ii) all notices
received by the Borrower or any ERISA Affiliate of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (iii) all notices received by the Borrower or any ERISA Affiliate
from a Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA and (iv) the Borrower
obtaining knowledge or reason to know that the Borrower or any ERISA Affiliate
has filed or intends to file a notice of intent to terminate any Pension Plan
under a distress termination within the meaning of Section 4041(c) of ERISA;
(j) from and after the Completion Date, any expiration,
termination or cancellation of the Borrower's license to operate, Medicare
Certification or Medicaid Certification or the receipt by the Borrower of any
notice with respect thereto;
(k) any event which makes any of the representations set forth in
Section 5.1 inaccurate in any respect; and
(l) promptly after Borrower has notified the Administrative Agent
of any intention by Borrower to treat Construction Loan Advances and related
transactions as being a "reportable transaction" (within the meaning of Treasury
Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any
successor form.
SECTION 6.6 Accuracy of Information. All written information,
reports, statements and other papers and data furnished by or on behalf of the
Borrower to the Administrative Agent or any Lender pursuant to this Article VI,
or any other provision of this Agreement or any of the other Loan Documents,
shall be, at the time the same is so furnished, in compliance with the
representations and warranties set forth in Section 5.1(dd).
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ARTICLE VII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been paid and satisfied in full and
the Commitments terminated, unless consent has been obtained in the manner
provided for in Section 12.11, the Borrower will:
SECTION 7.1 Preservation of Existence and Related Matters.
Preserve and maintain its separate existence as a limited liability company and
all rights, franchises, licenses and privileges necessary to the conduct of its
business, and qualify and remain qualified as a foreign company and authorized
to do business in each jurisdiction where the nature and scope of its activities
require it to so qualify under Applicable Law, including in any event, the state
of its formation and the state in which the Project is located.
SECTION 7.2 Maintenance of Property. In addition to the
requirements of any of the Security Documents, protect and preserve all
properties useful in and material to the conduct of its business, including
copyrights, patents, trade names, service marks and trademarks material to the
conduct of its business; maintain in good working order and condition,
reasonable wear and tear and casualty excepted, all buildings, items of
equipment and other items of tangible real and personal property material to the
conduct of its business; and from time to time make or cause to be made all
renewals, replacements and additions to such property necessary for the conduct
of its business, so that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 7.3 Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which shall be
true and complete in all material respects) as may be required or as may be
necessary to permit the preparation of financial statements in accordance with
GAAP and in compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 7.4 Payment and Performance of Obligations. Pay and
perform all Obligations under this Agreement and the other Loan Documents, and
pay or perform (a) all taxes, assessments and other governmental charges that
may be levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices; provided, that the Borrower may contest any item described in clauses
(a) or (b) of this Section 7.4 in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 7.5 Compliance With Laws and Approvals. Observe and
remain in compliance in all material respects with all Applicable Laws and
maintain in full force and effect all Governmental Approvals, in each case
applicable to the conduct of its business, except where the failure to observe
or comply could not reasonably be expected to have a Material Adverse Effect.
63
SECTION 7.6 Environmental Laws. In addition to and without
limiting the generality of Section 7.5, (a) comply in all material respects
with, and use its best efforts to ensure such compliance in all material
respects by all tenants and subtenants (if any) with, all applicable
Environmental Laws and obtain and comply in all material respects with and
maintain, and use its best efforts to ensure that all tenants and subtenants, if
any, obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, (b) conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws, and promptly comply in all material respects
with all lawful orders and directives of any Governmental Authority regarding
Environmental Laws, except to the extent that the same are being contested in
good faith by appropriate proceedings and the pendency of such proceedings could
not reasonably be expected to have a Material Adverse Effect, and (c) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
presence of Hazardous Materials, or the violation of, noncompliance with or
liability under any Environmental Laws applicable to the operations of the
Borrower, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing
directly result from the gross negligence or willful misconduct of the party
seeking indemnification therefor.
SECTION 7.7 Compliance with ERISA. In addition to and without
limiting the generality of Section 7.5, (a) except where the failure to so
comply could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, (i) comply with all material applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to all Employee Benefit Plans, (ii) not take any action or fail to
take action the result of which could be a liability to the PBGC or to a
Multiemployer Plan, (iii) not participate in any prohibited transaction that
could result in any civil penalty under ERISA or tax under the Code and (iv)
operate each Employee Benefit Plan in such a manner that will not incur any tax
liability under Section 4980B of the Code or any liability to any qualified
beneficiary as defined in Section 4980B of the Code and (b) furnish to the
Administrative Agent upon the Administrative Agent's request such additional
information about any Employee Benefit Plan as may be reasonably requested by
the Administrative Agent.
SECTION 7.8 Compliance With Agreements. Comply in all respects
with each term, condition and provision of all leases, agreements and other
instruments entered into in the conduct of its business including, without
limitation, any Material Contract, except (i) where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect or (ii) where
any such term, condition or provision is contested in good faith through
applicable proceedings and where adequate reserves are maintained in accordance
with GAAP.
64
SECTION 7.9 Visits and Inspections.
(a) Upon reasonable notice to the Borrower (unless there exists
any Default or Event of Default), permit representatives of the Administrative
Agent or any Lender, from time to time, to visit and inspect its properties and
any materials thereon (including, without limitation, the Land and the
Improvements); inspect, audit and make extracts from its books, records and
files, including, but not limited to, management letters prepared by independent
accountants; and discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition, results of
operations and business prospects; provided that the Administrative Agent and
the Lenders shall use their best efforts not to unreasonably interfere with the
construction of the Improvements;
(b) Upon reasonable notice to the Borrower (unless there exists
any Default or Event of Default), furnish to the Administrative Agent at any
time for inspection and copying all Plans, shop drawings, specifications, books
and records, and other documents and information required by the Administrative
Agent or the Lenders; and
(c) Cooperate with the General Contractor in the performance of
all inspections performed thereby in order to use their best efforts to keep
construction on schedule.
SECTION 7.10 Construction of the Improvements. Prosecute the
construction of the Improvements with diligence and continuity, in a good and
workmanlike manner, and in accordance with sound building and engineering
practices, all applicable laws and governmental requirements, the Loan
Documents, and the Plans. The Borrower shall not permit cessation of work for a
period in excess of twenty (20) days (whether or not consecutive but excluding
weekends and legal holidays), except for Excusable Delays. The Borrower shall
complete construction of the Improvements, and shall obtain a permanent
unconditional certificate of occupancy and all other permits, licenses, and
approvals for the occupancy, use and operation of the Improvements from all
applicable Governmental Authorities on or before the Completion Date, free and
clear of all Liens except as permitted pursuant to Section 9.2. The Borrower
shall correct promptly (a) any material defect in the Improvements, (b) any
material departure from the Plans, except with respect to Permitted Changes, or
governmental requirements, or (c) any encroachment by any Improvements or
structure on any building setback line, easement, property line or restricted
area. All increases in the cost of constructing the Improvements which result
from Permitted Changes shall be applied against the $1,000,000 building
contingency in the Budget and, to the extent such increases exceed $1,000,000
shall be paid by the Borrower from its own funds.
SECTION 7.11 Storage of Materials. Except as provided in Exhibit
N, cause all materials supplied for, or intended to be utilized in the
construction of the Improvements, but not yet affixed to or incorporated into
the Improvements on the Land, to be stored on the Land with adequate safeguards
as required by the Administrative Agent to prevent loss, theft, damage or
commingling with other materials or projects.
SECTION 7.12 Advertising by the Lenders. At the Lenders' request
and expense, erect and maintain on the Property one or more advertising signs
approved by the Administrative
65
Agent and the Borrower indicating that the construction financing for the
property has been provided by the Lenders.
SECTION 7.13 Annual Appraisal. Upon the request of the
Administrative Agent, during the continuance of any Event of Default, permit the
Administrative Agent to obtain, at the Borrower's expense, once in each calendar
year an appraisal of any part of the Property prepared in accordance with
written instructions from the Administrative Agent by a third-party appraiser
engaged directly by the Administrative Agent. Each such appraiser and appraisal
shall be satisfactory to the Administrative Agent (including satisfaction of
applicable regulatory requirements). The cost of each such appraisal shall be
due and payable by the Borrower on demand and shall be secured by the Security
Documents.
SECTION 7.14 Construction Consultant. Cooperate with the
Construction Consultant and furnish Construction Consultant whatever documents
or cooperation the Construction Consultant considers reasonably necessary or
useful to perform its duties. The duties of the Construction Consultant run
solely to the Administrative Agent and the Lenders, and the Construction
Consultant shall have no obligations or responsibilities whatsoever to the
Borrower, the Architect, the General Contractor or to any of their agents or
employees. The Construction Consultant may, among other duties, perform
construction cost analyses, review the Plans and any proposed changes thereto,
observe work in place, and review Draw Requests. Unless prohibited by Applicable
Law, the reasonable fees, costs and expenses of the Construction Consultant
shall be paid by the Borrower. The Administrative Agent shall use its best
efforts to ensure that the Construction Consultant acts promptly in the
discharge of its duties in order to facilitate construction as scheduled.
SECTION 7.15 Reports and Vouchers.
(a) Promptly deliver to the Administrative Agent copies of all
reports, studies, inspections and tests made on the Land, the Improvements or
the materials to be incorporated into the Improvements (including, without
limitation, any such report, study, inspection or test which indicates any
material adverse condition in the Land or the Improvements);
(b) Make additional tests as the Administrative Agent or any
Lender reasonably requires; and
(c) Deliver to the Administrative Agent, on demand, any contracts,
bills of sale, statements, receipted vouchers or agreements under which the
Borrower claims title to any materials, fixtures or articles incorporated or to
be incorporated in the Improvements or otherwise subject to a lien or security
interest in favor of the Administrative Agent for the benefit of the Lenders.
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SECTION 7.16 Equipment Financing.
(a) Within nine (9) months following the Closing Date, secure a
binding commitment from MedCath Incorporated or one or more third party lenders
(each, in such capacity, an "Equipment Lender" and collectively, the "Equipment
Lenders") to finance the purchase or lease by the Borrower of the equipment to
be included within the Project (the "Equipment Loan Financing"). The terms and
conditions of each such commitment shall be in form and substance satisfactory
to the Administrative Agent. Such terms and conditions shall include, without
limitation, the following: (a) an interest rate not to exceed the Five-Year US
Treasury Yield plus 7%, (b) a term of not less than thirty-six (36) months or
more than one hundred twenty (120) months and (c) an amount equal to not less
than eighty percent (80%) or more than one hundred percent (100%) of the cost of
the equipment.
(b) Maintain the Equipment Loan Financing (after obtaining it as
required pursuant to Section 7.16(a)); provided that the terms and conditions of
the Equipment Loan Financing shall not be amended, modified or changed in a
manner which is adverse in any respect to the rights or interests of the
Administrative Agent or the Lenders unless approved in writing by the
Administrative Agent
SECTION 7.17 Maintenance of Licenses, Etc. In addition to and
without limiting the generality of Section 7.5, (a) observe and remain in
compliance in all material respects with all Applicable Laws, including, without
limitation, Medicare Regulations and Medicaid Regulations (as applicable), in
connection with the ownership or operation of the Hospital, (b) obtain and
preserve, to the fullest extent permitted by Applicable Law, all certifications
and authorizations necessary to ensure that the Hospital and the Borrower are
eligible for reimbursement under the Medicare Regulations and the Medicaid
Regulations (as applicable), and (c) obtain and preserve all material licenses,
permits, authorizations and qualifications required under Applicable Laws in
connection with the ownership or operation of the Hospital.
SECTION 7.18 Insurance.
(a) Maintain insurance with financially sound and reputable
insurance companies against such risks and in such amounts as are customarily
maintained by similar businesses and as may be required by Applicable Law and as
are required by any Security Documents (including, without limitation, Sections
1.4 through 1.8 of the Mortgage), and on the Closing Date and from time to time
thereafter deliver to the Administrative Agent upon its request a detailed list
of the insurance then in effect, stating the names of the insurance companies,
the amounts and rates of the insurance, the dates of the expiration thereof and
the properties and risks covered thereby.
(b) For the purpose of Section 1.6 of the Mortgage, decisions to
be made by the Administrative Agent regarding the application of net cash
proceeds under any insurance policy shall be made by the Administrative Agent at
the direction of the Required Lenders.
SECTION 7.19 Further Assurances. Make, execute and deliver all
such additional and further acts, things, deeds and instruments as the
Administrative Agent or any Lender may reasonably require to document and
consummate the transactions contemplated hereby and to vest
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completely in and insure the Administrative Agent and the Lenders their
respective rights under this Agreement, the Construction Loan Notes and the
other Loan Documents.
ARTICLE VIII
FINANCIAL COVENANTS
Until all of the Obligations have been paid and satisfied in full and
the Commitments terminated, unless consent has been obtained in the manner set
forth in Section 12.11, the Borrower will not:
SECTION 8.1 Minimum EBITDA. As of the end of each of the fourth
(4th) full fiscal quarter and the fifth (5th) full fiscal quarter following the
Completion Date, permit EBITDA for such fiscal quarter to be less than $0.
SECTION 8.2 Debt Service Coverage Ratio. As of the end of any
fiscal quarter, commencing with the end of the sixth (6th) full fiscal quarter
following the Completion Date, permit the ratio of (a) Adjusted EBITDA for the
fiscal quarter then ended to (b) Adjusted Debt Service for such fiscal quarter
to be less than the corresponding ratio set forth below:
Period Ratio
------ -----
Sixth full fiscal quarter following
the Completion Date 1.25 to 1.00
ARTICLE IX
NEGATIVE COVENANTS
Until all of the Obligations have been paid and satisfied in full and
the Commitments terminated, unless consent has been obtained in the manner set
forth in Section 12.11, the Borrower will not:
SECTION 9.1 Limitations on Debt. Create, incur, assume or suffer
to exist any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with the Equipment Loan
Financing in an aggregate principal amount not to exceed $16,000,000 at
any time (or any refinancing, but not any increase in the principal
amount, thereof);
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(c) Debt incurred after the Closing Date consisting of
Capital Leases or other purchase money Debt incurred to provide all or
a portion of the purchase price (or to finance such purchase price
within ninety (90) days of acquisition) or the cost of construction of
an asset; provided that (i) such Debt when incurred shall not exceed
one hundred percent (100%) of the purchase price or the cost of
construction of such asset; (ii) no such Debt shall be refinanced for a
principal amount in excess of the principal balance outstanding thereon
at the time of such refinancing; and (iii) the total amount of all such
Debt shall not exceed $5,000,000 on any date of determination;
(d) Debt which may be deemed to exist pursuant to any
performance, surety, statutory, appeal or similar obligations obtained
in the ordinary course of business;
(e) Debt incurred in connection with a Hedging Agreement
with a counterparty and upon terms and conditions (including interest
rate) reasonably satisfactory to the Administrative Agent; provided,
that any counterparty that is a Lender shall be deemed satisfactory to
the Administrative Agent; and
(f) Subordinated Debt to MedCath Incorporated evidencing
intercompany loans by MedCath Incorporated to the Borrower for
short-term working capital and other general corporate purposes in an
aggregate principal amount not to exceed $20,000,000 (the "Subordinated
Working Capital Loan"); provided that the Subordinated Working Capital
Loan shall be subordinated pursuant to an Intercompany Loan
Subordination Agreement in form and substance satisfactory to the
Administrative Agent.
SECTION 9.2 Limitations on Liens. Create, incur, assume or suffer
to exist, any Lien on or with respect to any of the Borrower's assets or
properties (including, without limitation, shares of capital stock or other
ownership interests), real or personal, whether now owned or hereafter acquired,
except:
(a) Liens for taxes, assessments and other governmental
charges or levies (excluding any Lien imposed pursuant to any of the
provisions of Environmental Laws) not yet due or as to which the period
of grace (not to exceed thirty (30) days), if any, related thereto has
not expired;
(b) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to secure payment
of, obligations under workers' compensation, unemployment insurance or
similar legislation;
(c) Liens in favor of the Administrative Agent for the
benefit of the Administrative Agent and the Lenders;
(d) encumbrances on and exceptions to title contained in
the Title Policy;
(e) Liens securing Debt permitted under Section 9.1(b);
provided that such Liens do not at any time encumber any property other
than the equipment (and the
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proceeds thereof) of the Borrower to be included in the Project which
is financed by such Debt;
(f) purchase money Liens securing purchase money Debt
(and refinancings thereof) to the extent permitted under Section
9.1(c); provided that (i) such purchase money Liens shall be created
substantially simultaneously with the acquisition of the related asset
and (ii) such purchase money Liens do not at any time encumber any
property other than the property (and the proceeds thereof) financed by
such Debt;
(g) Liens arising in connection with Capital Leases to
the extent permitted under Section 9.1(c); provided that (i) such Liens
shall be created substantially simultaneously with the lease of the
related asset and (ii) such Liens do not at any time encumber any
property other than the property (and the proceeds thereof) financed by
such Debt;
(h) Liens arising from judgments, decrees or attachments
in circumstances not constituting an Event of Default under Section
10.1(o);
(i) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business (i) which secure obligations which are not overdue for a
period of more than sixty (60) days or (ii) which are being contested
in good faith by appropriate proceedings;
(j) Liens in an aggregate amount not to exceed $250,000
which are being contested by the Borrower in good faith and which are
dismissed, discharged, stayed, bonded off or quashed within thirty (30)
days of issuance; and
(k) Liens on accounts receivable of the Borrower in
connection with the Subordinated Working Capital Loan; provided that
such Liens are subordinated to the Liens on such accounts receivable in
favor of the Administrative Agent (for the benefit of the
Administrative Agent and the Lenders) on the terms and conditions which
are satisfactory to the Administrative Agent.
SECTION 9.3 Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership, limited liability
company or joint venture (including, without limitation, the creation or
capitalization or any Subsidiary), evidence of Debt or other obligation or
security, substantially all or a portion of the business or assets of any other
Person or any other investment or interest whatsoever in any other Person, or
make or permit to exist, directly or indirectly, any loans, advances or
extensions of credit to, or any investment in cash or by delivery of property
in, any Person, or enter into, directly or indirectly, any commitment or option
in respect of the foregoing except investments in:
(a) cash and marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within 120 days from the date of acquisition thereof;
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(b) commercial paper maturing no more than 120 days from the date
of creation thereof and currently having the highest rating obtainable from
either Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc. or Xxxxx'x Investors Service, Inc.;
(c) certificates of deposit maturing no more than 120 days from
the date of creation thereof issued by commercial banks incorporated under the
laws of the United States of America, each having combined capital, surplus and
undivided profits of not less than $500,000,000 and having a rating of "A" or
better by a nationally recognized rating agency; provided, that the aggregate
amount invested in such certificates of deposit shall not at any time exceed
$5,000,000 for any one such certificate of deposit and $10,000,000 for any one
such bank;
(d) time deposits maturing no more than thirty (30) days from the
date of creation thereof with commercial banks or savings banks or savings and
loan associations each having membership either in the FDIC or the deposits of
which are insured by the FDIC and in amounts not exceeding the maximum amounts
of insurance thereunder;
(e) loans and advances to officers, directors, employees and
Affiliates (including advances for travel and miscellaneous expenses) in the
ordinary course of business in an aggregate amount not to exceed $25,000 on any
date of determination (without regard to write-offs or write-downs thereof);
(f) investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and customers and
in settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business;
(g) investments by the Borrower in Hedging Agreements permitted
under Section 9.1(e); and
(h) investments by the Borrower in joint ventures; provided that
(i) such investments shall not exceed $150,000 individually or $300,000 in the
aggregate during the term of this Agreement, (ii) each such joint venture shall
be in substantially the same field of business as that to be conducted by the
Borrower on the Completion Date, (iii) the Borrower shall provide written notice
of each such joint venture not less than ten (10) Business Days prior to the
proposed date of consummation of such joint venture, (iv) the Borrower shall
comply with all terms and conditions of the Security Documents in connection
with its interest in each such joint venture within thirty (30) days of the date
of consummation of each such joint venture and (v) the Borrower shall provide to
the Administrative Agent all other agreements, certificates and other documents
reasonably requested thereby in connection with each such joint venture.
SECTION 9.4 Limitations on Mergers and Liquidation. Merge,
consolidate or enter into any similar combination with any other Person or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution).
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SECTION 9.5 Limitations on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired except:
(a) the sale of obsolete assets no longer used or usable
in the business of the Borrower;
(b) the sale of not more than .85 acres of the Land for
the purpose of constructing a medical office building on such Land;
provided that, (i) the fair market value of the Land sold shall not
exceed $100,000 and (ii) 100% of the net cash proceeds of such asset
disposition shall be promptly applied to the remaining scheduled
principal installments of the Construction Loan Advances as required by
Section 2.4(b) hereof; and
(c) the sale of assets which are replaced in the ordinary
course of business, the fair market value of which shall not exceed
$500,000 with respect to any transaction and $2,000,000 in the
aggregate for all such transactions during the term of this Agreement.
Upon a sale, contribution or transfer of assets permitted by
this Section 9.5, the Administrative Agent shall (to the extent
applicable) deliver to the Borrower, upon the Borrower's request and at
the Borrower's expense, such documentation as is reasonably necessary
to evidence the release of the Administrative Agent's security
interest, if any, in such assets.
SECTION 9.6 Limitation on Distributions. Purchase, redeem, retire
or otherwise acquire, directly or indirectly, any of its ownership or equity
interests, or make any distribution of cash, property or assets among the
holders of its ownership or equity interests or make any changes in its capital
structure; provided that:
(a) so long as no Default or Event of Default shall have
occurred and be continuing or will exist immediately after giving
effect to the distributions described herein, the Borrower may make
distributions to its equityholders, not otherwise permitted hereunder,
in an aggregate amount not to exceed $200,000 during the term of this
Agreement; provided that the Borrower shall (i) notify the
Administrative Agent in writing prior to making any such distribution
and (ii) provide to the Administrative Agent all documentation in
connection therewith;
(b) so long as (i) no Default or Event of Default under
Sections 10.1(a) or 10.1(b) shall have occurred and be continuing or
will exist immediately after giving effect to the distributions
described herein and (ii) no obligations have been accelerated pursuant
to Section 10.2(a), the Borrower may make quarterly distributions to
its equityholders on their pro rata share of the income of the Borrower
in an aggregate amount not to exceed in any year the amount of the
income tax liability incurred by such equityholders as a result
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of the reporting of the Borrower's income, deductions, gains or losses
on the federal or state income tax returns of the equityholders, the
aggregate amount of which shall be calculated assuming all
equityholders will pay taxes at the highest combined federal and state
tax rate; provided that the Borrower shall provide to the
Administrative Agent all documentation in connection therewith; and
(c) the Borrower may declare or make distributions to its
equityholders to the extent not otherwise permitted hereunder or redeem
the membership interests of its equityholders to the extent provided
for in the operating agreement of the Borrower (as in effect on the
date of this Agreement or as subsequently amended, modified or changed
in accordance with Section 9.10) (such distributions and payments, the
"Permitted Distributions"); provided that:
(i) the aggregate amount of all Permitted
Distributions made during any Fiscal Year of the Borrower
shall not exceed Cash Flow Available for Distribution for the
preceding Fiscal Year of the Borrower; and
(ii) all Permitted Distributions made during any
Fiscal Year must be made during the sixty (60) day period (A)
commencing on the date of delivery by the Borrower to the
Agent and the Lenders of the annual financial statements for
the prior Fiscal Year of the Borrower which are required to be
delivered pursuant to Section 6.1(b) and (B) ending on the
date which is sixty (60) days after the date of such delivery
(provided that no Permitted Distributions may be made until
the first Fiscal Year following the date which is six (6) full
fiscal quarters after the Completion Date);
(iii) no Default or Event of Default shall have
occurred and be continuing or will exist immediately after
giving effect to any Permitted Distribution;
(iv) the sum of (A) the cash balance of the
Borrower plus (B) the aggregate amount of unused availability
under Section 11(l)(ii) of the Guaranty Agreement shall not be
less than $2,000,000 (such amount, the "Required Cash
Availability") as of the end of the Business Day on which any
Permitted Distribution is made (such date, the "Permitted
Distribution Date") (the Required Cash Availability to exist
after the payment and disbursement of (A) all operating
expenses due and payable as of the Permitted Distribution
Date, (B) all principal and interest on any Senior Debt due
and payable as of the Permitted Distribution Date, (C) all
principal and interest on any Subordinated Debt due and
payable as of the Permitted Distribution Date and (D) all
other Permitted Distributions due and payable as of such
date); and
(v) the Borrower shall deliver to the
Administrative Agent, as required by Section 6.4(c), a
certificate in form and substance satisfactory to the
Administrative Agent demonstrating compliance by the Borrower
with the requirements set forth in this Section 9.6(c).
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SECTION 9.7 Amendments, Payments and Prepayments of Subordinated
Debt. Amend or modify (or permit the modification or amendment of) any of the
terms or provisions of any Subordinated Debt, or cancel or forgive, make any
principal payment on, make any voluntary or optional payment or prepayment on,
or redeem or acquire for value (including, without limitation, by way of
depositing with any trustee with respect thereto money or securities before due
for the purpose of paying when due) any Subordinated Debt; provided that if no
Default or Event of Default shall have occurred and be continuing or would exist
immediately after giving effect to the payments described below, the Borrower
may:
(a) make all scheduled interest payments on Subordinated Debt;
(b) repay the Subordinated Working Capital Loan; and
(c) increase the amount of the Subordinated Working Capital Loan
(to the extent any such increase is permitted under Section 9.1(f)).
SECTION 9.8 Transactions With Affiliates. Except as disclosed on
Schedule 9.8 attached hereto, directly or indirectly:
(a) make any loan or advance to, or purchase or assume any note or
other obligation to or from, any of its officers, members, managers or other
Affiliates, or to or from any member of the immediate family of any of its
officers, members, managers, shareholders or other Affiliates, or subcontract
any operations to any of its Affiliates (other than loans and advances to
officers, directors, employees and Affiliates permitted pursuant to Section
9.3(e)), or
(b) enter into, or be a party to, any other transaction not
described in subsection (a) above with any of its Affiliates, except in the
ordinary course of business pursuant to the reasonable requirements of its
business and upon fair and reasonable terms that are no less favorable to the
Borrower than the Borrower would obtain in a comparable arm's length transaction
with a Person not its Affiliate.
SECTION 9.9 Restrictive Agreements. Enter into any Debt which
contains any negative pledge on assets (other than, with respect to assets
financed thereby, the Equipment Loan Financing) or any covenants more
restrictive than the provisions hereof, or which restricts, limits or otherwise
encumbers its ability to incur Liens on or with respect to any of its assets or
properties other than the assets or properties securing such Debt.
SECTION 9.10 Certain Accounting Changes; Organizational
Documents. (a) Change its Fiscal Year end, or make any change in its accounting
treatment and reporting practices except as required by GAAP or (b) amend,
modify or change its articles of organization (or corporate charter or other
similar organizational documents) or amend, modify or change its operating
agreement (or other similar documents) in any manner adverse in any respect to
the rights or interests of the Lenders.
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SECTION 9.11 Changes to the Plans. Without the Administrative
Agent's prior written consent, which consent shall not to be unreasonably
withheld, change or modify the Plans, undertake any construction on the Land
except as shown in the Plans, agree to any change order, or allow any extras to
any contractor or any subcontractor, except Permitted Changes. The
Administrative Agent shall not be obligated to review a proposed change which
requires the Administrative Agent's consent unless it has received all documents
necessary to review such change, including the change order, cost estimates,
plans and specifications, and evidence that all approvals by all applicable
parties have been obtained. The Administrative Agent shall furnish the Lenders
with timely written notice of any change to the Plans consented to by the
Administrative Agent.
SECTION 9.12 Contracts. Without the Administrative Agent's prior
written approval as to parties, terms and all other matters, which approval
shall not be unreasonably withheld, (a) enter into any Material Contract for the
performance of any work or the supplying of any labor, materials or services for
the design or construction of the Improvements (other than the Construction
Contract or the Architect's Contract), (b) enter into any management or leasing
contract with a third party pertaining to the Property not described in clause
(a) above that is not unconditionally terminable by the Borrower or any
successor owner without penalty or payment on not more than thirty (30) days
notice to the other party thereunder, or (c) materially modify, amend or
terminate any such contracts except for Permitted Changes. All such contracts
shall provide that all Liens of the applicable contractor, architect, supplier,
surveyor or other party and any right to remove removable Improvements are or
will be subordinate to rights of the Administrative Agent and the Lenders. The
Borrower shall not default under any Material Contract or permit any Material
Contract to terminate by reason of any failure of the Borrower to perform
thereunder, and the Borrower shall promptly notify the Administrative Agent of
any material default thereunder. The Borrower will deliver to the Administrative
Agent, upon request of the Administrative Agent, the names of all persons or
entities with whom each contractor has contracted or intends to contract for the
construction of the Improvements or for the furnishing of labor or materials
therefor. The Administrative Agent shall furnish the Lenders on a monthly basis
with a written report of all approvals granted by the Administrative Agent under
this Section 9.12 and of any notice of default received from the Borrower.
ARTICLE X
DEFAULT AND REMEDIES
SECTION 10.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any Governmental Authority or otherwise:
(a) Default in Payment of Principal of Construction
Loans. The Borrower shall default in any payment of principal of any
Construction Loan Advance or
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Construction Loan Note when and as due (whether at maturity, by reason
of acceleration or otherwise), and such default shall continue
unremedied for two (2) Business Days.
(b) Other Payment Defaults. The Borrower shall default in
the payment of any interest on any Construction Loan Advance or
Construction Loan Note or the payment of any other Obligation when and
as due (whether at maturity, by reason of acceleration or otherwise),
and such default shall continue unremedied for five (5) Business Days.
(c) Misrepresentation. Any representation or warranty
made or deemed to be made by the Borrower or any Guarantor under this
Agreement, any Loan Document or any amendment hereto or thereto, shall
at any time prove to have been incorrect or misleading in any material
respect when made or deemed made.
(d) Default in Performance of Certain Covenants. The
Borrower shall default in the performance or observance of any covenant
or agreement contained in Sections 6.1, 6.2 or 6.5(h)(i) or Articles
VIII or IX of this Agreement or any Guarantor shall default in the
performance or observance of any covenant or agreement contained in
Sections 10(a), 10(b), 10(e)(v)(A), 11(l), 12 and 13 of the Guaranty
Agreement.
(e) Default in Performance of Other Covenants and
Conditions. The Borrower or any Guarantor shall default in the
performance or observance of any term, covenant, condition or agreement
contained in this Agreement (other than as specifically provided for
otherwise in this Section 10.1) or any other Loan Document and such
default shall continue for a period of thirty (30) days after written
notice thereof has been given to the Borrower or such Guarantor by the
Administrative Agent.
(f) Hedging Agreement. The Borrower shall default in the
performance or observance of any terms, covenant, condition or
agreement under any Hedging Agreement with the Administrative Agent or
any Lender.
(g) Specific Cross Defaults.
(i) The occurrence of an event of default under
the Corporate Revolver.
(ii) Any Guarantor shall default in the
performance of any of its obligations under any of the Related Guaranty
Agreements; provided, however, that a default by any Affiliate of any
Guarantor which owns or operates a hospital or diagnostic center under
the terms of any instrument or loan to which it is a party and for
which such Guarantor provided its guaranty shall not be considered a
Default or an Event of Default of such Guarantor pursuant to this
Section 10.1(g)(ii) unless (A) written demand for payment of all or a
portion of such debt has been made against such Guarantor by the lender
or lenders thereunder (or an agent or trustee acting on behalf of the
lender or lenders) and (B) such Guarantor fails to immediately (1) pay
such debt and (2) perform all other related obligations in connection
therewith.
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(h) Other Debt Cross-Default. The Borrower or any
Guarantor shall (i) default in the payment of any Debt (other than (A)
Debt evidenced by the Construction Loan Notes and (B) any inter-company
Debt, including any Debt of the Borrower to any Guarantor) beyond the
period of grace, if any, provided in the instrument or agreement under
which such Debt was created and provided that with respect to the
Parent and MedCath Incorporated, such Debt exceeds an aggregate of
$1,000,000 and with respect to the Borrower and any other Guarantor,
such Debt exceeds an aggregate of $500,000, or (ii) default in the
observance or performance of any other agreement or condition relating
to any Debt (other than Debt evidenced by the Construction Loan Notes)
or contained in any instrument or agreement evidencing, securing or
relating thereto or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Debt (or a trustee or agent on
behalf of such holder or holders) to cause, with the giving of notice
if required, any such Debt to become due prior to its stated maturity
(any applicable grace period having expired); provided, however, that a
default by any Affiliate of any Guarantor which owns or operates a
hospital or diagnostic center under the terms of any instrument or loan
to which it is a party and for which such Guarantor provided its
guaranty shall not be considered a Default or an Event of Default of
such Guarantor pursuant to this Section 10.1(h) unless demand for
payment of all or a portion of such debt has been made against such
Guarantor by the lender or lenders thereunder (or an agent or trustee
acting on behalf of the lender or lenders).
(i) Other Cross-Defaults. The Borrower or any Guarantor
shall default in the payment when due, or in the performance or
observance, of any material obligation or condition of any Material
Contract and such default shall continue beyond the period of grace, if
any, provided in such Material Contract unless, but only as long as,
the existence of any such default is being contested by the Borrower or
such Guarantor in good faith by appropriate proceedings and adequate
reserves in respect thereof have been established on the books of the
Borrower or such Guarantor to the extent required by GAAP.
(j) Change in Control. (i) Any person or group of persons
(within the meaning of Section 13(d) of the Securities Exchange Act of
1934, as amended), other than any direct or indirect shareholder of the
Parent existing immediately prior to the Initial Public Offering (as
defined in the Commitment Agreement), shall obtain ownership or control
in one or more series of transactions of more than fifty percent (50%)
of the common stock or fifty percent (50%) of the voting power of the
Parent entitled to vote in the election of members of the board of
directors of the Parent, (ii) MedCath Incorporated shall cease to be a
wholly-owned Subsidiary of the Parent, (iii) the Management Company
shall cease to be a wholly-owned Subsidiary of MedCath Incorporated or
(iv) the Management Company shall be the beneficial owner of less than
that percentage of the equity interests in the Borrower owned by the
Management Company on the Closing Date or shall cease to be the manager
of the Borrower (any such event, a "Change in Control").
(k) Voluntary Bankruptcy Proceeding. The Borrower or any
Guarantor shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition
seeking to take advantage of any other laws, domestic or foreign,
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relating to bankruptcy, insolvency, reorganization, winding up or
composition for adjustment of debts, (iii) consent to or fail to
contest in a timely and appropriate manner any petition filed against
it in an involuntary case under such bankruptcy laws or other laws,
(iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by,
a receiver, custodian, trustee, or liquidator of itself or of a
substantial part of its property, domestic or foreign, (v) admit in
writing its inability to pay its debts as they become due, (vi) make a
general assignment for the benefit of creditors, or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
(l) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against the Borrower or any Guarantor in
any court of competent jurisdiction seeking (i) relief under the
federal bankruptcy laws (as now or hereafter in effect) or under any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like
for the Borrower or any Guarantor or for all or any substantial part of
their respective assets, domestic or foreign, and such case or
proceeding shall continue undismissed or unstayed for a period of sixty
(60) consecutive days, or an order granting the relief requested in
such case or proceeding (including, but not limited to, an order for
relief under such federal bankruptcy laws) shall be entered.
(m) Failure of Agreements. Any provision of this
Agreement or of any other Loan Document shall for any reason cease to
be valid and binding on the Borrower, any Guarantor or any other Person
party thereto or the Borrower, any Guarantor or any other Person party
thereto shall so state in writing, or this Agreement or any other Loan
Document shall for any reason cease to create a valid and perfected
first priority Lien on, or security interest in, any of the collateral
purported to be covered thereby, in each case other than in accordance
with the express terms hereof or thereof, the priority of which shall
be subject only to Liens permitted pursuant to Section 9.2.
(n) ERISA Events. The occurrence of any of the following
events: (i) the Borrower, any Guarantor or any ERISA Affiliate fails to
make full payment when due of all amounts which, under the provisions
of any Pension Plan or Section 412 of the Code, the Borrower, any
Guarantor or any ERISA Affiliate is required to pay as contributions
thereto, (ii) an accumulated funding deficiency in excess of $2,000,000
occurs or exists, whether or not waived, with respect to any Pension
Plan of the Borrower, any Guarantor or any ERISA Affiliate, (iii) a
Termination Event with respect to the Borrower, any Guarantor or any
ERISA Affiliate or (iv) the Borrower, any Guarantor or any ERISA
Affiliate as an employer under one or more Multiemployer Plans makes a
complete or partial withdrawal from any such Multiemployer Plan and the
plan sponsor of any such Multiemployer Plan notifies such withdrawing
employer that such employer has incurred a withdrawal liability
requiring payment in an amount exceeding $2,000,000.
(o) Judgment. A judgment or order by any court for the
payment of money which causes the aggregate amount of all judgments and
orders by any court in any Fiscal
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Year (which are not fully covered by insurance or with respect to which
the applicable insurance carrier has not acknowledged that such
judgment is fully covered by insurance) to exceed (i) $500,000 with
respect to the Borrower, (ii) $1,000,000 with respect to any Guarantor
(other than MedCath Parent Entities), (iii) $1,500,000 in the aggregate
with respect to the Borrower and the Guarantors (other than the MedCath
Parent Entities) or (iv) $2,000,000 with respect to any of the MedCath
Parent Entities, and such judgment or order shall continue without
discharge or stay for a period of thirty (30) days.
(p) Certificate of Occupancy; Medicare Certification and
Medicaid Certification. The Borrower shall fail to obtain a final
certificate of occupancy, a license to operate, Medicare Certification
and Medicaid Certification (as applicable) within eighteen (18) months
after the Closing Date or after the receipt thereof, such license to
operate, Medicare Certification or Medicaid Certification (as
applicable) shall expire, terminate, be cancelled or otherwise lost.
(q) Operating Agreement. The Borrower shall amend the
Borrower's operating agreement in a manner which would have a Material
Adverse Effect without the prior written consent of the Required
Lenders.
(r) Management Agreement. The Management Agreement shall
be amended in a manner which would have a Material Adverse Effect,
without the prior written consent of the Required Lenders, or shall
cease to be valid and binding in accordance with its terms.
(s) Environmental. Any one or more Environmental Claims
shall have been asserted against the Borrower or any Guarantor; the
Borrower or any Guarantor would be reasonably likely to incur liability
as a result thereof; and such liability would be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 10.2 Remedies.
(a) Upon the occurrence of an Event of Default, with the consent
of the Required Lenders, the Administrative Agent may, and upon the request of
the Required Lenders, the Administrative Agent shall, do any one or more of the
following:
(i) declare the principal of and interest on the
Construction Loan Advances and the Construction Loan Notes at the time
outstanding, and all other amounts owed to the Lenders and the
Administrative Agent under this Agreement or any other Loan Document
and all other Obligations (other than obligations owing under any
Hedging Agreement), to be forthwith due and payable, whereupon the same
shall immediately become due and payable without presentment, demand,
protest or other notice of any kind, all of which are expressly waived,
anything in this Agreement or any other Loan Document to the contrary
notwithstanding, and terminate the Construction Loan Facility, any
right of the Borrower to request borrowings thereunder and any
obligation to disburse any sum from the Project Deposit; provided, that
upon the occurrence of an Event of Default specified in Section 10.1(k)
or (l), the Construction Loan Facility, any
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right of the Borrower to request borrowings thereunder and any
obligation to disburse any sum from the Project Deposit shall be
automatically terminated and all Obligations (other than obligations
owing under any Hedging Agreement) shall automatically become due and
payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this Agreement or
any other Loan Document to the contrary notwithstanding;
(ii) institute an action to reduce any claim to judgment;
(iii) exercise any and all rights and remedies afforded by
this Agreement, the other Loan Documents, Applicable Law, equity or
otherwise;
(iv) set-off and apply, to the extent thereof and to the
maximum extent permitted by law, any and all deposits, funds or assets
at any time held and any and all other indebtedness at any time owing
by any Lender to or for the credit or account of the Borrower against
any Obligations (other than Obligations owing under any Hedging
Agreement); or
(v) in its own name or in the name of the Borrower, enter
into possession of the Property, perform all work necessary to complete
the construction of the Improvements substantially in accordance with
the Plans, the Loan Documents, laws and governmental requirements, and
continue to employ the Architect and any engineer or contractor
pursuant to the applicable contracts or otherwise.
(b) The Borrower hereby appoints the Administrative Agent as the
attorney-in-fact of the Borrower, which power of attorney is irrevocable and
coupled with an interest, with full power of substitution and in the name of the
Borrower, if the Administrative Agent elects to do so, upon the occurrence of a
Default or an Event of Default, to:
(i) use such sums as are necessary, including any
proceeds of the Construction Loan Advances and the Project Deposit,
make such changes or corrections in the Plans and employ such
architects, engineers and contractors as may be required for the
purpose of completing the construction of the Improvements
substantially in accordance with the Plans, the Loan Documents, laws
and governmental requirements, or as otherwise may be reasonably
necessary for purposes of completing such construction;
(ii) execute all applications and certificates in the name
of the Borrower which may be required for completion of construction of
the Improvements;
(iii) endorse the name of the Borrower on any checks or
drafts representing proceeds of any insurance policies, or other checks
or instruments payable to the Borrower with respect to the Property;
(iv) do every act with respect to the construction of the
Improvements which the Borrower may do;
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(v) prosecute or defend any action or proceeding incident
to the Property,
(vi) pay, settle or compromise all bills and claims so as
to clear title to the Property; and
(vii) take over and use all or any part of the labor,
materials, supplies and equipment contracted for, owned by or under the
control of the Borrower, whether or not previously incorporated into
the Improvements.
Any amounts expended by the Administrative Agent or the Lenders shall be a
demand obligation owing by the Borrower to the Lenders. The Lenders shall have
no liability to the Borrower for the sufficiency or adequacy of any such actions
taken by the Administrative Agent or the Lenders unless such actions constitute
gross negligence or willful misconduct on the part of the Administrative Agent
or the Lenders.
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the other Loan Documents or that may now or hereafter exist
at law or in equity or by suit or otherwise. No delay or failure to take action
on the part of the Administrative Agent or any Lender in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
or shall be construed to be a waiver of any Event of Default. No course of
dealing between the Borrower, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
ARTICLE XI
THE ADMINISTRATIVE AGENT
SECTION 11.1 Appointment and Authorization of the Administrative
Agent. Each Lender hereby irrevocably (subject to Section 11.9) appoints,
designates and authorizes the Administrative Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere herein or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Administrative Agent have or be deemed
to have any fiduciary relationship with any Lender or participant, and no
implied covenants, functions,
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responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
Applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.
SECTION 11.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.
SECTION 11.3 Liability of the Administrative Agent. No
Administrative Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct in connection with its duties
expressly set forth herein), or (b) be responsible in any manner to any Lender
or participant for any recital, statement, representation or warranty made by
the Borrower, any Guarantor or any officer thereof, contained herein or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Borrower, any Guarantor or
any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Administrative Agent-Related Person shall be under any obligation
to any Lender or participant to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrower, any Guarantor or any Affiliate thereof.
SECTION 11.4 Reliance by the Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Borrower and the Guarantors),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent shall be fully justified in failing or refusing to take
any action under any Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in
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refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders or all the Lenders,
if required hereunder, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and participants. Where
this Agreement expressly permits or prohibits an action unless the Required
Lenders otherwise determine, the Administrative Agent shall, and in all other
instances, the Administrative Agent may, but shall not be required to, initiate
any solicitation for the consent or a vote of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 4.2, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender.
SECTION 11.5 Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Lenders, unless the Administrative Agent shall have received
written notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." The Administrative Agent will notify the Lenders of its
receipt of any such notice. The Administrative Agent shall take such action with
respect to such Default or Event of Default as may be directed by the Required
Lenders in accordance with Article X; provided, however, that unless and until
the Administrative Agent has received any such direction, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Lenders.
SECTION 11.6 Credit Decision; Disclosure of Information by the
Administrative Agent. Each Lender acknowledges that no Administrative
Agent-Related Person has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any consent to and
acceptance of any assignment or review of the affairs of the Borrower, any
Guarantor or any Affiliate thereof, shall be deemed to constitute any
representation or warranty by any Administrative Agent-Related Person to any
Lender as to any matter, including whether Administrative Agent-Related Persons
have disclosed material information in their possession. Each Lender represents
to the Administrative Agent that it has, independently and without reliance upon
any Administrative Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Borrower, the Guarantors and their
respective Subsidiaries, and all applicable bank or other regulatory Applicable
Laws relating to the transactions contemplated hereby, and made its own decision
to enter into this Agreement and to extend credit to the Borrower hereunder.
Each Lender also represents that it will, independently and without reliance
upon any Administrative Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this
83
Agreement and the other Loan Documents, and to make such investigations as it
deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower and
the Guarantors. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent herein, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Borrower or any of the Guarantors or any of their respective Affiliates which
may come into the possession of any Administrative Agent-Related Person.
SECTION 11.7 Indemnification of the Administrative Agent. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand each Administrative Agent-Related Person (to the extent
not reimbursed by or on behalf of the Borrower or the Guarantors promptly upon
demand therefor and without limiting the obligation of the Borrower and the
Guarantors to do so), pro rata, and hold harmless each Administrative
Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that no Lender shall be liable for the
payment to any Administrative Agent-Related Person of any portion of such
Indemnified Liabilities resulting from such Person's gross negligence or willful
misconduct; provided, however, that no action taken in accordance with the
directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section 11.7. Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Administrative Agent is not
reimbursed for such expenses by or on behalf of the Borrower promptly upon
demand therefor. The undertaking in this Section 11.7 shall survive termination
of the Commitments, the payment of all Obligations hereunder and the resignation
or replacement of the Administrative Agent.
SECTION 11.8 The Administrative Agent in Its Individual Capacity.
Bank of America and its Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Borrower and each of the Guarantors and their
respective Affiliates as though Bank of America were not the Administrative
Agent hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, Bank of America or its Affiliates
may receive information regarding the Borrower, any Guarantor or any Affiliate
thereof (including information that may be subject to confidentiality
obligations in favor of the Borrower, any Guarantor or any Affiliate thereof)
and acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them. With respect to its Construction Loan
Advances, Bank of America shall have the same rights and powers under this
Agreement as any other Lender and may exercise such rights and powers as though
it were not the
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Administrative Agent, and the terms "Lender" and "Lenders" include Bank of
America in its individual capacity.
SECTION 11.9 Successor Administrative Agent. The Administrative
Agent may resign as Administrative Agent upon thirty (30) days' notice to the
Lenders. If the Administrative Agent resigns under this Agreement, the Required
Lenders shall appoint from among the Lenders a successor administrative agent
for the Lenders which successor administrative agent shall be consented to by
the Borrower at all times other than during the existence of an Event of Default
(which consent of the Borrower shall not be unreasonably withheld or delayed).
If no successor administrative agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders and the Borrower, a successor
administrative agent from among the Lenders. Upon the acceptance of its
appointment as successor administrative agent hereunder, such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term "Administrative Agent" shall mean
such successor administrative agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article XI and Sections 5.2 and
10.3 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is thirty (30) days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.
SECTION 11.10 Syndication Agent; Documentation Agent; Co-Lead
Arranger. None of the Lenders identified on the facing page or signature pages
of this Agreement as a "syndication agent", "documentation agent" or "co-lead
arranger" shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, none of the Lenders so identified shall have or
be deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall
85
be presumed to be received by a party hereto (i) on the date of delivery if
delivered by hand or sent by telecopy, (ii) on the next Business Day if sent by
recognized overnight courier service and (iii) on the third Business Day
following the date sent by certified mail, return receipt requested. A
telephonic notice to the Administrative Agent as understood by the
Administrative Agent will be deemed to be the controlling and proper notice in
the event of a discrepancy with or failure to receive a confirming written
notice.
(b) Addresses for Notices. Notices to any party shall be sent to
it at the following addresses, or any other address as to which all the other
parties are notified in writing.
If to the Parent: MedCath Corporation
00000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to the Borrower: The Heart Hospital of Milwaukee, LLC
c/o Milwaukee Hospital Management, Inc.
00000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to: Xxxxx & Xxx Xxxxx, PLLC
Bank of America Corporate Center
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Bank of America as Bank of America, N.A.
Administrative Agent: IL1-231-08-03
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to: Bank of America, N.A.
Commercial Construction Administration
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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With copies to: Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P.
Hearst Tower
47th Floor
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to any Lender: To the address set forth on Schedule 1.1(a)
hereto
(c) Administrative Agent's Office. The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrower and Lenders, as the Administrative Agent's Office referred to herein,
to which payments due are to be made and at which Construction Loan Advances
will be disbursed.
SECTION 12.2 Expenses; Indemnity.
(a) The Borrower agrees (i) to pay or reimburse the Administrative
Agent and the Syndication Agent for all costs and expenses incurred in
connection with the development, preparation, negotiation and execution of this
Agreement and the other Loan Documents and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, all out-of-pocket syndication and due
diligence expenses and all Attorney Costs (provided that such Attorney Costs
shall be limited to the fees and expenses of a single law firm representing the
Administrative Agent and the Syndication Agent), and (ii) to pay or reimburse
the Administrative Agent and each Lender for all costs and expenses incurred in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Loan Documents (including
all such costs and expenses incurred during any "workout" or restructuring in
respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including, without limitation, all
Attorney Costs. The foregoing costs and expenses shall include all search,
filing, recording, title insurance and appraisal charges and fees and taxes
related thereto, and other out-of-pocket expenses incurred by the Administrative
Agent and the cost of independent public accountants and other outside experts
retained by the Administrative Agent or any Lender. The agreements in this
Section 12.2(a) shall survive the termination of the Commitments and repayment
of all the other Obligations.
(b) Whether or not the transactions contemplated hereby are
consummated, the Borrower agrees to indemnify, save and hold harmless each
Agent-Related Person, each Lender and their respective Affiliates, directors,
officers, employees, counsel, agents and attorneys-in-
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fact (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 (other than the Administrative Agent or any Lender) relating directly
or indirectly to a claim, demand, action or cause of action that such Person
asserts or may assert against the Borrower, any Guarantor, any Affiliate thereof
or any of their respective officers or directors; (ii) any and all claims,
demands, actions or causes of action that may at any time (including at any time
following repayment of the Obligations and the resignation or removal of the
Administrative Agent or the replacement of any Lender) be asserted or imposed
against any Indemnitee, arising out of or relating to, the Loan Documents, any
predecessor loan documents, the Commitments, the use or contemplated use of the
proceeds of any Construction Loan Advance, or the relationship of the Borrower,
the Guarantors, the Administrative Agent and the Lenders under this Agreement or
any other Loan Document; (iii) any administrative or investigative proceeding by
any Governmental Authority arising out of or related to a claim, demand, action
or cause of action described in clause (i) or (ii) above; and (iv) any and all
liabilities (including liabilities under indemnities), losses, costs or expenses
(including Attorney Costs) that any Indemnitee suffers or incurs as a result of
the assertion of any foregoing claim, demand, action, cause of action or
proceeding, or as a result of the preparation of any defense in connection with
any foregoing claim, demand, action, cause of action or proceeding, in all
cases, whether or not arising out of the negligence of an Indemnitee, and
whether or not an Indemnitee is a party to such claim, demand, action, cause of
action or proceeding (all the foregoing, collectively, the "Indemnified
Liabilities"); provided that no Indemnitee shall be entitled to indemnification
for any claim caused by its own gross negligence or willful misconduct or for
any loss asserted against it by another Indemnitee. The agreements in this
Section 12.2(b) shall survive the termination of the Commitments and repayment
of all the other Obligations.
SECTION 12.3 Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Lenders and any assignee or participant of a Lender in accordance
with Section 12.10 are hereby authorized by the Borrower at any time or from
time to time, without notice to the Borrower or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, time or demand, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the account
of the Borrower against and on account of the Obligations irrespective of
whether or not (a) the Lenders shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 10.2 and although such Obligations shall be contingent or unmatured.
Notwithstanding the preceding sentence, each Lender agrees to notify the
Borrower and the Administrative Agent after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
SECTION 12.4 Governing Law. THIS AGREEMENT, THE CONSTRUCTION LOAN
NOTES AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE EXPRESSLY SET FORTH
THEREIN, SHALL BE GOVERNED BY,
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CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
SECTION 12.5 Jurisdiction and Venue.
(a) Jurisdiction. The Borrower hereby irrevocably consents to the
personal jurisdiction of the state and federal courts located in Mecklenburg
County, North Carolina, in any action, claim or other proceeding arising out of
any dispute in connection with this Agreement, the Construction Loan Notes and
the other Loan Documents, any rights or obligations hereunder or thereunder, or
the performance of such rights and obligations. The Borrower hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Administrative Agent or any Lender in
connection with this Agreement, the Construction Loan Notes or the other Loan
Documents, any rights or obligations hereunder or thereunder, or the performance
of such rights and obligations, on behalf of itself or its property, in the
manner specified in Section 12.1. Nothing in this Section 12.5 shall affect the
right of the Administrative Agent or any Lender to serve legal process in any
other manner permitted by Applicable Law or affect the right of the
Administrative Agent or any Lender to bring any action or proceeding against the
Borrower or its properties in the courts of any other jurisdictions.
(b) Venue. The Borrower hereby irrevocably waives any objection it
may have now or in the future to the laying of venue in the aforesaid
jurisdiction in any action, claim or other proceeding arising out of or in
connection with this Agreement, any other Loan Document or the rights and
obligations of the parties hereunder. The Borrower irrevocably waives, in
connection with such action, claim or proceeding, any plea or claim that the
action, claim or other proceeding has been brought in an inconvenient forum.
SECTION 12.6 Waiver of Right to Trial by Jury. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 12.6 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
89
SECTION 12.7 Reversal of Payments. To the extent the Borrower
makes a payment or payments to the Administrative Agent for the ratable benefit
of the Lenders or the Administrative Agent receives any payment or proceeds of
the collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.
SECTION 12.8 Injunctive Relief; Punitive Damages.
(a) The Borrower recognizes that, in the event the Borrower fails
to perform, observe or discharge any of its obligations or liabilities under
this Agreement, any remedy of law may prove to be inadequate relief to the
Lenders. Therefore, the Borrower agrees that the Lenders, at the Lenders'
option, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
(b) The Administrative Agent, the Lenders and the Borrower (on
behalf of itself and the Guarantors) hereby agree that no such Person shall have
a remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that it may now have or which may arise in the future in
connection with any dispute, whether such dispute is resolved through
arbitration or judicially.
SECTION 12.9 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower or the Guarantors to determine compliance with any covenant contained
herein, shall, except as otherwise expressly contemplated hereby or unless there
is an express written direction by the Administrative Agent to the contrary
agreed to by the Borrower, be performed in accordance with GAAP as in effect on
the Closing Date. In the event that changes in GAAP shall be mandated by the
Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Borrower's certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Borrower and the
Required Lenders shall have amended this Agreement to the extent necessary to
reflect any such changes in the financial covenants and other terms and
conditions of this Agreement.
SECTION 12.10 Successors and Assigns; Participations.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void). Nothing in this Agreement,
90
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Construction Loan Advances at the time owing
to it); provided that:
(i) except in the case of an assignment of the entire
remaining amount of the assigning Lender's Commitment and the
Construction Loan Advances at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund
with respect to a Lender, the aggregate amount of the Commitment (which
for this purpose includes Construction Loan Advances outstanding
thereunder) of the assigning Lender subject to each such assignment,
determined as of the date the Assignment and Acceptance with respect to
such assignment is delivered to the Administrative Agent, shall not be
less than $5,000,000, unless each of the Administrative Agent and, so
long as no Event of Default has occurred and is continuing, the
Borrower otherwise consents (each such consent not to be unreasonably
withheld or delayed);
(ii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights
and obligations under this Agreement with respect to the Construction
Loan Advances or the Commitment assigned; and
(iii) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section 12.10, from and after the effective date
specified in each Assignment and Acceptance, the Eligible Assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.8, 3.9, 3.10, 3.11 and 12.2). Upon
request, the Borrower (at its expense) shall execute and deliver new or
replacement Construction Loan Notes to the assigning Lender and the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this subsection (b) shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with subsection (d) of this Section
12.10.
91
(c) The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent's Office a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Construction Loan Advances owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Any Lender may, with notice to, but without the consent of,
the Borrower or the Administrative Agent, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Construction Loan Advances owing to it); provided that
(i) such Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification that would (i) postpone any date
upon which any payment of money is scheduled to be paid to such Participant,
(ii) reduce the principal, interest, fees or other amounts payable to such
Participant, (iii) release any Guarantor from the Guaranty or (iv) release all
or substantially all of the Collateral. Subject to subsection (e) of this
Section 12.10, the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 3.8(c), 3.9, 3.10 and 3.11; provided that, subject to
subsection (e) of this Section 12.10, no Participant shall be entitled to
receive any greater amount pursuant to such Sections 3.8(c), 3.9, 3.10 and 3.11
than the transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 12.3 as though it
were a Lender; provided such Participant agrees to be subject to Section 3.6 as
though it were a Lender.
(e) A Participant shall not be entitled to receive any greater
payment under Sections 3.8(c), 3.10 or 3.11 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 3.11
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 3.11(e) as though it were a Lender.
92
(f) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Construction Loan Notes, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(g) If the consent of the Borrower to an assignment or to an
Eligible Assignee is required hereunder (including a consent to an assignment
which does not meet the minimum assignment threshold specified in clause (i) of
the proviso to the first sentence of Section 12.10(b)), the Borrower shall be
deemed to have given its consent ten (10) Business Days after the date notice
thereof has been delivered by the assigning Lender (through the Administrative
Agent) unless such consent is expressly refused by the Borrower prior to such
fifth (5th) Business Day.
(h) As used herein, the following terms have the following
meanings:
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a
Lender; (c) an Approved Fund; or (d) any other Person (other than a
natural Person) approved by the Administrative Agent and, unless (i)
such Person is taking delivery of an assignment in connection with
physical settlement of a credit derivatives transaction or (ii) an
Event of Default has occurred and is continuing, the Borrower (each
such approval not to be unreasonably withheld or delayed).
"Fund" means any Person (other than a natural Person) that is
(or will be) engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the
ordinary course of its business.
"Approved Fund" means any Fund that is administered or managed
by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.
93
SECTION 12.11 Amendments, Waivers and Consents.
(a) Except as set forth below or as specifically provided in any
Loan Document, any term, covenant, agreement or condition of this Agreement or
any of the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or consent
is in writing signed by the Required Lenders (or by the Administrative Agent
with the consent of the Required Lenders) and delivered to the Administrative
Agent and, in the case of an amendment, signed by the Borrower; provided, that
no amendment, waiver or consent shall (i) increase the Commitment of any Lender,
(ii) reduce the rate of interest or fees payable on any Construction Loan
Advance, (iii) reduce or forgive the principal amount of any Construction Loan
Advance, (iv) extend the originally scheduled time or times of payment of the
principal of any Construction Loan Advance or the time or times of payment of
interest on any Construction Loan Advance or any fee or commission with respect
thereto, (v) permit any subordination of the principal or interest on any
Construction Loan Advance, (vi) release the Borrower from the Obligations
hereunder, (vii) release any Guarantor from its obligations under the Guaranty
Agreement (other than as specifically permitted or contemplated in this
Agreement or the Guaranty Agreement), (viii) permit any assignment (other than
as specifically permitted or contemplated in this Agreement) of any of the
Borrower's rights and obligations hereunder, (ix) release all or any material
portion of the Collateral or release any Security Document (other than asset
sales permitted pursuant to Section 9.5 and as otherwise specifically permitted
or contemplated in this Agreement or the applicable Security Document) or (x)
amend the provisions of this Section 12.11 or the definition of Required
Lenders, in each case, without the prior written consent of each Lender. In
addition, no amendment, waiver or consent to the provisions of Article XI shall
be made without the written consent of the Administrative Agent.
(b) In the case of any amendment, waiver, consent or other
modification in connection with this Agreement for which a substantially similar
corresponding amendment, waiver, consent or other modification with regard to
any the Related Credit Documents will be made effective thereunder
contemporaneously, each Lender must vote in the same manner with respect to each
such amendment, waiver, consent or other modification in connection with this
Agreement and all such other Related Credit Documents.
SECTION 12.12 Confidentiality. The Administrative Agent and each of
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential); (b) to the
extent requested by any regulatory authority; (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process; (d)
to any other party to this Agreement; (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder; (f) subject to an agreement containing
provisions substantially the same as those of this Section 12.12, to (i) any
Eligible Assignee of or Participant in, or any prospective Eligible Assignee of
or Participant in, any of its rights or obligations under this Agreement or (ii)
any direct or indirect contractual
94
counterparty or prospective counterparty (or such contractual counterparty's or
prospective counterparty's professional advisor) to any credit derivative
transaction relating to obligations of the Borrower and the Guarantors; (g) with
the consent of the Borrower; (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section 12.12 or
(ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower and the Guarantors;
or (i) to the National Association of Insurance Commissioners or any other
similar organization or any nationally recognized rating agency that requires
access to information about a Lender's or its Affiliates' investment portfolio
in connection with ratings issued with respect to such Lender or its Affiliates.
For the purposes of this Section 12.12, "Information" means all information
received from the Borrower and the Guarantors relating to the Borrower and the
Guarantors or the business, other than any such information that is available to
the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower or the Guarantors; provided that, in the case of
information received from the Borrower or any Guarantor after the date hereof,
such information is clearly identified in writing at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section 12.12 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information. Notwithstanding anything herein to the
contrary, "Information" shall not include, and the Administrative Agent and each
Lender may disclose to any and all Persons, without limitation of any kind, any
information with respect to the "tax treatment" and "tax structure" (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Administrative Agent or
such Lender relating to such tax treatment and tax structure; provided that with
respect to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transaction as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the Construction Loan Advances and transactions contemplated hereby.
SECTION 12.13 Performance of Duties. The Borrower's obligations
under this Agreement and each of the other Loan Documents shall be performed by
the Borrower at its sole cost and expense.
SECTION 12.14 All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Lenders, the Administrative
Agent and any Persons designated by the Administrative Agent or any Lender
pursuant to any provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Obligations remain unpaid or unsatisfied or the Construction Loan
Facility has not been terminated.
SECTION 12.15 Survival of Indemnities. Notwithstanding any
termination of this Agreement, the indemnities to which the Administrative Agent
and the Lenders are entitled under the provisions of this Article XII and any
other provision of this Agreement and the other Loan
95
Documents shall continue in full force and effect and shall protect the
Administrative Agent and the Lenders against events arising after such
termination as well as before.
SECTION 12.16 Titles and Captions. Titles and captions of Articles,
Sections and subsections in, and the table of contents of, this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 12.17 Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 12.18 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
SECTION 12.19 Term of Agreement. This Agreement shall remain in
effect from the Closing Date through and including the date upon which all
Obligations shall have been indefeasibly and irrevocably paid and satisfied in
full. The Administrative Agent is hereby permitted to release all Liens on the
Collateral in favor of the Administrative Agent, for the ratable benefit of
itself and the Lenders, upon repayment of the outstanding principal of and all
accrued interest on the Construction Loan Advances, payment of all outstanding
fees and expenses hereunder and the termination of the Lender's Commitments. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination or in respect of any provision
of this Agreement which survives such termination.
SECTION 12.20 Advice of Counsel. Each of the parties represents to
each other party hereto that it has discussed this Agreement with its counsel.
SECTION 12.21 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
SECTION 12.22 Inconsistencies with Other Documents; Independent
Effect of Covenants.
(a) In the event there is a conflict or inconsistency between this
Agreement and any other Loan Document, the terms of this Agreement shall
control; provided, that any provision of the Security Documents which imposes
additional burdens on the Borrower or the Guarantors or further restricts the
rights of the Borrower or the Guarantors or gives the Administrative Agent or
Lenders additional rights shall not be deemed to be in conflict or inconsistent
with this Agreement and shall be given full force and effect.
96
(b) The Borrower expressly acknowledges and agrees that each
covenant contained in Articles VII, VIII and IX hereof and Sections 11, 12 and
13 of the Guaranty Agreement shall be given independent effect. Accordingly, the
Borrower shall not engage in any transaction or other act otherwise permitted
under any covenant contained in Articles VII, VIII and IX hereof and Sections
11, 12 and 13 of the Guaranty Agreement if, before or after giving effect to
such transaction or act, the Borrower shall or would be in breach of any other
covenant contained in Articles VII, VIII and IX hereof and Sections 11, 12 and
13 of the Guaranty Agreement.
[Signature pages to follow]
97
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
[CORPORATE SEAL] THE HEART HOSPITAL OF MILWAUKEE,
LLC, as Borrower
By: Milwaukee Hospital Management, Inc.,
its Manager
By: _________________________________
Name: _________________________________
Title: _________________________________
BANK OF AMERICA, N.A., as Administrative
Agent
By: _________________________________
Name: _________________________________
Title: _________________________________
BANK OF AMERICA, N.A., as Lender
By: _________________________________
Name: _________________________________
Title: _________________________________
DEUTSCHE BANK TRUST COMPANY AMERICAS, as
Syndication Agent Agent and as Lender
By: _________________________________
Name: _________________________________
Title: _________________________________
WACHOVIA BANK, NATIONAL
ASSOCIATION, as Documentation Agent
and as Lender
By: _________________________________
Name: _________________________________
Title: _________________________________
GE HEALTHCARE FINANCIAL SERVICES, as
Lender
By: _________________________________
Name: _________________________________
Title: _________________________________
THE FOOTHILL GROUP, INC., as Lender
By: _________________________________
Name: _________________________________
Title: _________________________________
JPMORGAN CHASE BANK, as Lender
By: _________________________________
Name: _________________________________
Title: _________________________________
FIFTH THIRD BANK (WESTERN OHIO), as
Lender
By: _________________________________
Name: _________________________________
Title: _________________________________
HIBERNIA NATIONAL BANK, as Lender
By: _________________________________
Name: _________________________________
Title: _________________________________
100
Schedule 1.1(a)
Lenders and Commitments
COMMITMENT
LENDER PERCENTAGE COMMITMENT
----------------------------------------------------------------------------------------------
Bank of America, N.A.
IL1-231-08-30
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000 30.47559620% $ 5,257,040.34
----------------------------------------------------------------------------------------------
Deutsche Bank Trust Company Americas
00 Xxxx Xxxxxx, 00xx Xxxxx
XX XXX00-0000
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000 5.67400861% $ 978,766.49
----------------------------------------------------------------------------------------------
Wachovia Bank, National Association
000 X. Xxxxxxx Xxxxxx, XX-0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000 29.22782313% $ 5,041,799.49
----------------------------------------------------------------------------------------------
GE Healthcare Financial Services
00000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Dev Lobo
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000 6.35442972% $ 1,096,139.13
----------------------------------------------------------------------------------------------
The Foothill Group, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xx Xxxxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000 3.40479694% $ 587,327.47
----------------------------------------------------------------------------------------------
Hibernia National Bank
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telephone: 000-000-0000
Fax: 000-000-0000 9.92063492% $ 1,711,309.52
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
XX Xxxxxx Xxxxx Bank
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxx Xxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000 13.66591159% $ 2,357,369.75
----------------------------------------------------------------------------------------------
Fifth Third Bank (Western Ohio)
000 X. Xxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000 1.27679889% $ 220,247.81
----------------------------------------------------------------------------------------------
TOTAL: 100% $17,250,000.00
----------------------------------------------------------------------------------------------
Schedule 1.1(b)
Guarantors
MedCath Corporation (DE)
MedCath Holdings, Inc. (DE)
MedCath Intermediate Holdings, Inc. (DE)
MedCath Incorporated (NC)
MedCath Diagnostics, LLC (NC)
Heart Research Centers International, LLC (NC)
MedCath Nuclear Services, LLC (NC)
MedCath Cardiology Consulting & Management, Inc. (AZ)
MedCath Management of Ohio, Inc. (OH)
WMS Management, Inc. (OH)
Austin MOB, Inc. (NC)
Metuchen Nuclear Management, LLC
Milwaukee Hospital Management, Inc. (NC)
[EXECUTION COPY]
================================================================================
AMENDED AND RESTATED LOAN AGREEMENT
dated as of June 27, 2003
by and among
THE HEART HOSPITAL OF MILWAUKEE, LLC,
as Borrower,
the Lenders referred to herein,
BANK OF AMERICA, N.A.,
as Administrative Agent,
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Syndication Agent
and
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Documentation Agent
BANC OF AMERICA SECURITIES, LLC and
DEUTSCHE BANC XXXX XXXXX INC.,
as Co-Lead Arrangers and Co-Book Managers
================================================================================
TABLE OF CONTENTS
ARTICLE I DEFINITIONS........................................................................................ 2
SECTION 1.1 Definitions............................................................................. 2
SECTION 1.2 General................................................................................. 20
SECTION 1.3 Other Definitions and Provisions........................................................ 20
ARTICLE II CONSTRUCTION LOAN FACILITY........................................................................ 20
SECTION 2.1 Commitment.............................................................................. 20
SECTION 2.2 Procedure for Disbursement of Construction Loan Advances................................ 21
SECTION 2.3 Repayment of Construction Loan Advances................................................. 23
SECTION 2.4 Prepayment of Construction Loan Advances................................................ 23
SECTION 2.5 Construction Loan Notes................................................................. 24
SECTION 2.6 Use of Proceeds......................................................................... 24
SECTION 2.7 Budget Reallocation..................................................................... 24
SECTION 2.8 Project Deposit......................................................................... 25
SECTION 2.9 Direct Construction Loan Advances....................................................... 25
ARTICLE III GENERAL LOAN PROVISIONS.......................................................................... 26
SECTION 3.1 Interest................................................................................ 26
SECTION 3.2 Notice and Manner of Conversion or Continuation of Construction Loan Advances........... 29
SECTION 3.3 Fees.................................................................................... 29
SECTION 3.4 Manner of Payment....................................................................... 29
SECTION 3.5 Crediting of Payments and Proceeds...................................................... 30
SECTION 3.6 Adjustments............................................................................. 30
SECTION 3.7 Nature of Obligations of the Lenders Regarding Construction Loan Advances;
Assumption by the Administrative Agent.................................................. 31
SECTION 3.8 Changed Circumstances................................................................... 31
SECTION 3.9 Indemnity............................................................................... 33
SECTION 3.10 Capital Requirements.................................................................... 33
SECTION 3.11 Taxes................................................................................... 34
SECTION 3.12 Security................................................................................ 35
SECTION 3.13 Replacement of Lenders.................................................................. 36
ARTICLE IV CLOSING; CONDITIONS OF CLOSING AND BORROWING...................................................... 37
SECTION 4.1 Closing................................................................................. 37
SECTION 4.2 Conditions to Closing and Initial Construction Loan Advance............................. 37
SECTION 4.3 Conditions to All Construction Loan Advances............................................ 45
SECTION 4.4 Final Construction Loan Advance for Improvements........................................ 46
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BORROWER..................................................... 47
SECTION 5.1 Representations and Warranties.......................................................... 47
SECTION 5.2 Survival of Representations and Warranties, Etc......................................... 57
i
FINANCIAL INFORMATION AND REPORTS............................................................................ 58
SECTION 6.1 Financial Statements.................................................................... 58
SECTION 6.2 Officer's Compliance Certificate........................................................ 59
SECTION 6.3 Accountant's Certificate................................................................ 60
SECTION 6.4 Other Reports........................................................................... 60
SECTION 6.5 Notice of Litigation and Other Matters.................................................. 61
SECTION 6.6 Accuracy of Information................................................................. 62
ARTICLE VII AFFIRMATIVE COVENANTS............................................................................ 63
SECTION 7.1 Preservation of Existence and Related Matters........................................... 63
SECTION 7.2 Maintenance of Property................................................................. 63
SECTION 7.3 Accounting Methods and Financial Records................................................ 63
SECTION 7.4 Payment and Performance of Obligations.................................................. 63
SECTION 7.5 Compliance With Laws and Approvals...................................................... 63
SECTION 7.6 Environmental Laws...................................................................... 64
SECTION 7.7 Compliance with ERISA................................................................... 64
SECTION 7.8 Compliance With Agreements.............................................................. 64
SECTION 7.9 Visits and Inspections.................................................................. 65
SECTION 7.10 Construction of the Improvements........................................................ 65
SECTION 7.11 Storage of Materials.................................................................... 65
SECTION 7.12 Advertising by the Lenders.............................................................. 65
SECTION 7.13 Annual Appraisal........................................................................ 66
SECTION 7.14 Construction Consultant................................................................. 66
SECTION 7.15 Reports and Vouchers.................................................................... 66
SECTION 7.16 Equipment Financing..................................................................... 67
SECTION 7.17 Maintenance of Licenses, Etc............................................................ 67
SECTION 7.18 Insurance............................................................................... 67
SECTION 7.19 Further Assurances...................................................................... 67
ARTICLE VIII FINANCIAL COVENANTS............................................................................. 68
SECTION 8.1 Minimum EBITDA.......................................................................... 68
SECTION 8.2 Debt Service Coverage Ratio............................................................. 68
ARTICLE IX NEGATIVE COVENANTS................................................................................ 68
SECTION 9.1 Limitations on Debt..................................................................... 68
SECTION 9.2 Limitations on Liens.................................................................... 69
SECTION 9.3 Limitations on Loans, Advances, Investments and Acquisitions............................ 70
SECTION 9.4 Limitations on Mergers and Liquidation.................................................. 71
SECTION 9.5 Limitations on Sale of Assets........................................................... 72
SECTION 9.6 Limitation on Distributions............................................................. 72
SECTION 9.7 Amendments, Payments and Prepayments of Subordinated Debt............................... 74
SECTION 9.8 Transactions With Affiliates............................................................ 74
SECTION 9.9 Restrictive Agreements.................................................................. 74
SECTION 9.10 Certain Accounting Changes; Organizational Documents.................................... 74
SECTION 9.11 Changes to the Plans.................................................................... 75
SECTION 9.12 Contracts............................................................................... 75
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ARTICLE X DEFAULT AND REMEDIES............................................................................... 75
SECTION 10.1 Events of Default....................................................................... 75
SECTION 10.2 Remedies................................................................................ 79
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc......................................... 81
ARTICLE XI THE ADMINISTRATIVE AGENT.......................................................................... 81
SECTION 11.1 Appointment and Authorization of the Administrative Agent............................... 81
SECTION 11.2 Delegation of Duties.................................................................... 82
SECTION 11.3 Liability of the Administrative Agent................................................... 82
SECTION 11.4 Reliance by the Administrative Agent.................................................... 82
SECTION 11.5 Notice of Default....................................................................... 83
SECTION 11.6 Credit Decision; Disclosure of Information by the Administrative Agent.................. 83
SECTION 11.7 Indemnification of the Administrative Agent............................................. 84
SECTION 11.8 The Administrative Agent in Its Individual Capacity..................................... 84
SECTION 11.9 Successor Administrative Agent.......................................................... 85
SECTION 11.10 Syndication Agent; Documentation Agent; Co-Lead Arranger................................ 85
ARTICLE XII MISCELLANEOUS.................................................................................... 85
SECTION 12.1 Notices................................................................................. 85
SECTION 12.2 Expenses; Indemnity..................................................................... 87
SECTION 12.3 Set-off................................................................................. 88
SECTION 12.4 Governing Law........................................................................... 88
SECTION 12.5 Jurisdiction and Venue.................................................................. 89
SECTION 12.6 Waiver of Right to Trial by Jury........................................................ 89
SECTION 12.7 Reversal of Payments.................................................................... 90
SECTION 12.8 Injunctive Relief; Punitive Damages..................................................... 90
SECTION 12.9 Accounting Matters...................................................................... 90
SECTION 12.10 Successors and Assigns; Participations.................................................. 90
SECTION 12.11 Amendments, Waivers and Consents........................................................ 94
SECTION 12.12 Confidentiality......................................................................... 94
SECTION 12.13 Performance of Duties................................................................... 95
SECTION 12.14 All Powers Coupled with Interest........................................................ 95
SECTION 12.15 Survival of Indemnities................................................................. 95
SECTION 12.16 Titles and Captions..................................................................... 96
SECTION 12.17 Severability of Provisions.............................................................. 96
SECTION 12.18 Counterparts............................................................................ 96
SECTION 12.19 Term of Agreement....................................................................... 96
SECTION 12.20 Advice of Counsel....................................................................... 96
SECTION 12.21 No Strict Construction.................................................................. 96
SECTION 12.22 Inconsistencies with Other Documents; Independent Effect of Covenants................... 96
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EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A - Land
Exhibit B - Form of Construction Loan Note
Exhibit C - Form of Draw Request
Exhibit D - Form of Notice of Account Designation
Exhibit E - Form of Notice of Prepayment
Exhibit F - Form of Notice of Conversion/Continuation
Exhibit G - Form of Assignment and Acceptance
Exhibit H - Form of Guaranty Agreement
Exhibit I - Form of Officer's Compliance Certificate
Exhibit J - Form of Security Agreement
Exhibit K - Form of Pledge Agreement
Exhibit L - Plans and Specifications
Exhibit M - Budget
Exhibit N - Storage of Materials
SCHEDULES
Schedule 1.1(a) - Lenders and Commitments
Schedule 1.1(b) - Guarantors
Schedule 1.1(c) - Related Credit Documents
Schedule 1.1(d) - Related Guaranty Agreements
Schedule 5.1(b) - Capitalization
Schedule 5.1(l) - Material Contracts
Schedule 5.1(s) - Debt and Guaranty Obligations
Schedule 5.1(t) - Litigation
Schedule 9.8 - Permitted Transactions With Affiliates
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