AMENDED AND RESTATED LOAN AGREEMENT
dated as of November 21, 2001
by and among
HARLINGEN MEDICAL CENTER, LIMITED PARTNERSHIP,
as Borrower,
the Lenders referred to herein,
BANK OF AMERICA, N.A.,
as Administrative Agent,
BANKERS TRUST COMPANY,
as Syndication Agent
and
FIRST UNION NATIONAL BANK,
as Documentation Agent
BANC OF AMERICA SECURITIES, LLC and
DEUTSCHE BANC ALEX. ▇▇▇▇▇ INC.,
as Co-Lead Arrangers and Co-Book Managers
TABLE OF CONTENTS
ARTICLE I DEFINITIONS .............................................................. 1
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 Equity Account ...................................................... 25
SECTION 2.9 Project Deposit ..................................................... 25
SECTION 2.10 Direct Construction Loan Advances .................................... 26
ARTICLE III GENERAL LOAN PROVISIONS ................................................ 27
SECTION 3.1 Interest ............................................................ 27
SECTION 3.2 Notice and Manner of Conversion or Continuation of
Construction Loan Advances .......................................... 29
SECTION 3.3 Fees ................................................................ 30
SECTION 3.4 Manner of Payment ................................................... 30
SECTION 3.5 Crediting of Payments and Proceeds .................................. 31
SECTION 3.6 Adjustments ......................................................... 31
SECTION 3.7 Nature of Obligations of the Lenders Regarding Construction Loan
Advances; Assumption by the Administrative Agent .................... 31
SECTION 3.8 Changed Circumstances ............................................... 32
SECTION 3.9 Indemnity ........................................................... 34
SECTION 3.10 Capital Requirements ................................................ 34
SECTION 3.11 Taxes ............................................................... 35
SECTION 3.12 Security ............................................................ 36
SECTION 3.13 Replacement of Lenders .............................................. 37
ARTICLE IV CLOSING; CONDITIONS OF CLOSING AND BORROWING ............................ 38
SECTION 4.1 Closing ............................................................. 38
SECTION 4.2 Conditions to Closing and Initial Construction Loan Advance ......... 38
SECTION 4.3 Conditions to All Construction Loan Advances ........................ 46
SECTION 4.4 Final Construction Loan Advance for Improvements .................... 48
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BORROWER ........................... 49
SECTION 5.1 Representations and Warranties ...................................... 49
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SECTION 5.2 Survival of Representations and Warranties, Etc ..................... 60
FINANCIAL INFORMATION AND REPORTS ................................................... 60
SECTION 6.1 Financial Statements ................................................ 60
SECTION 6.2 Officer's Compliance Certificate .................................... 62
SECTION 6.3 Accountant's Certificate ............................................ 62
SECTION 6.4 Other Reports ....................................................... 63
SECTION 6.5 Notice of Litigation and Other Matters .............................. 64
SECTION 6.6 Accuracy of Information ............................................. 65
ARTICLE VII AFFIRMATIVE COVENANTS .................................................. 65
SECTION 7.1 Preservation of Existence and Related Matters ....................... 65
SECTION 7.2 Maintenance of Property ............................................. 66
SECTION 7.3 Accounting Methods and Financial Records ............................ 66
SECTION 7.4 Payment and Performance of Obligations .............................. 66
SECTION 7.5 Compliance With Laws and Approvals .................................. 66
SECTION 7.6 Environmental Laws .................................................. 66
SECTION 7.7 Compliance with ERISA ............................................... 67
SECTION 7.8 Compliance With Agreements .......................................... 67
SECTION 7.9 Visits and Inspections .............................................. 68
SECTION 7.10 Construction of the Improvements ..................................... 68
SECTION 7.11 Storage of Materials ................................................. 68
SECTION 7.12 Advertising by the Lenders ........................................... 69
SECTION 7.13 Annual Appraisal ..................................................... 69
SECTION 7.14 Construction Consultant .............................................. 69
SECTION 7.15 Reports and Vouchers ................................................. 69
SECTION 7.16 Equipment Financing .................................................. 70
SECTION 7.17 Maintenance of Licenses, Etc ......................................... 70
SECTION 7.18 Insurance ............................................................ 70
SECTION 7.19 Equity Account ....................................................... 71
SECTION 7.20 Further Assurances ................................................... 71
ARTICLE VIII FINANCIAL COVENANTS ................................................... 71
SECTION 8.1 Minimum EBITDA ...................................................... 71
SECTION 8.2 Debt Service Coverage Ratio ......................................... 71
ARTICLE IX NEGATIVE COVENANTS ...................................................... 72
SECTION 9.1 Limitations on Debt ................................................. 72
SECTION 9.2 Limitations on Liens ................................................ 73
SECTION 9.3 Limitations on Loans, Advances, Investments and Acquisitions ........ 74
SECTION 9.4 Limitations on Mergers and Liquidation .............................. 75
SECTION 9.5 Limitations on Sale of Assets ....................................... 75
SECTION 9.6 Limitation on Distributions ......................................... 76
SECTION 9.7 Amendments, Payments and Prepayments of Subordinated Debt ........... 77
SECTION 9.8 Transactions With Affiliates ........................................ 77
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SECTION 9.9 Restrictive Agreements ............................................... 78
SECTION 9.10 Certain Accounting Changes; Organizational Documents ................. 78
SECTION 9.11 Changes to the Plans ................................................. 78
SECTION 9.12 Contracts ............................................................ 78
ARTICLE X DEFAULT AND REMEDIES ..................................................... 79
SECTION 10.1 Events of Default .................................................... 79
SECTION 10.2 Remedies ............................................................. 83
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc ...................... 85
ARTICLE XI THE ADMINISTRATIVE AGENT ................................................ 85
SECTION 11.1 Appointment and Authorization of the Administrative Agent ............ 85
SECTION 11.2 Delegation of Duties ................................................. 86
SECTION 11.3 Liability of the Administrative Agent ................................ 86
SECTION 11.4 Reliance by the Administrative Agent ................................. 86
SECTION 11.5 Notice of Default .................................................... 87
SECTION 11.6 Credit Decision; Disclosure of Information by the Administrative Agent 87
SECTION 11.7 Indemnification of the Administrative Agent .......................... 88
SECTION 11.8 The Administrative Agent in Its Individual Capacity .................. 88
SECTION 11.9 Successor Administrative Agent ....................................... 89
SECTION 11.10 Syndication Agent; Documentation Agent; Co-Lead Arranger ............. 89
ARTICLE XII MISCELLANEOUS .......................................................... 90
SECTION 12.1 Notices .............................................................. 90
SECTION 12.2 Expenses; Indemnity .................................................. 91
SECTION 12.3 Set-off .............................................................. 92
SECTION 12.4 Governing Law ........................................................ 93
SECTION 12.5 Jurisdiction and Venue ............................................... 93
SECTION 12.6 Waiver of Right to Trial by Jury ..................................... 94
SECTION 12.7 Reversal of Payments ................................................. 94
SECTION 12.8 Injunctive Relief; Punitive Damages .................................. 94
SECTION 12.9 Accounting Matters ................................................... 94
SECTION 12.10 Successors and Assigns; Participations ............................... 95
SECTION 12.11 Amendments, Waivers and Consents ..................................... 98
SECTION 12.12 Confidentiality ...................................................... 98
SECTION 12.13 Performance of Duties ................................................ 99
SECTION 12.14 All Powers Coupled with Interest ..................................... 99
SECTION 12.15 Survival of Indemnities .............................................. 99
SECTION 12.16 Titles and Captions .................................................. 100
SECTION 12.17 Severability of Provisions ........................................... 100
SECTION 12.18 Counterparts ......................................................... 100
SECTION 12.19 Term of Agreement .................................................... 100
SECTION 12.20 Advice of Counsel .................................................... 100
SECTION 12.21 No Strict Construction ............................................... 100
SECTION 12.22 Inconsistencies with Other Documents; Independent Effect of Covenants 100
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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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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT, dated as of the 21st day of
November, 2001, by and among HARLINGEN MEDICAL CENTER, LIMITED PARTNERSHIP, a
North Carolina limited partnership, 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 FIRST UNION NATIONAL BANK, as Documentation Agent.
STATEMENT OF PURPOSE
WHEREAS, the Borrower entered into that certain Construction Loan
Agreement, dated as of May 22, 2001 (as amended, restated, supplemented or
otherwise modified as of the date hereof, the "Existing Loan Agreement"),
between the Borrower and MedCath Finance Company ("▇▇▇▇▇"), which was secured by
that certain Deed of Trust, Assignment, Security Agreement and Financing
Statement, dated March 12, 2001 (as amended, restated, supplemented or otherwise
modified as of the date hereof, the "Existing Deed of Trust"), recorded as
Document No. 23981, from Grantor to Rio Grande Valley Abstract Co., Inc., as
Trustee in favor of ▇▇▇▇▇;
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, ▇▇▇▇▇ 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 ▇▇▇▇▇) plus (ii) all scheduled principal payments of Debt
(excluding payments of Debt to ▇▇▇▇▇) 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 Thirty-Seven Million Five Hundred Thousand Dollars
($37,500,000).
"Aggregate Project Cost" shall have the meaning assigned thereto in
Section 5.1(v).
"Agreement" means this Amended and Restated Loan Agreement, as amended,
restated, supplemented or otherwise modified from time to time.
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"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 Sixty Million Dollars ($60,000,000).
"Approved Fund" shall have the meaning assigned thereto in Section
12.10(h).
"Architect" means ▇▇▇▇▇ Associates Inc.
"Architect's Contract" means the Agreement for Architectural Services
between the Borrower and the Architect, dated March 9, 2000.
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit G attached hereto.
"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.
"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 Harlingen Medical Center, Limited Partnership, a North
Carolina limited partnership, in its capacity as borrower hereunder.
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"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.
"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. ▇▇▇▇▇ 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.
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"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.
"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 March 7, 2001 and converted to a lump sum contract by letter agreement
dated May 21, 2001.
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"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 the date which is eighteen (18)
months after the Closing Date.
"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, 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.
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"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 First Union National Bank, 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 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,
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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.
"Equity Account" has the meaning given to such term in Section 2.8.
"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
(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
8
(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 ▇▇▇▇▇ any obligation of the Borrower or any Guarantor or any other Person to
pay any money.
"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
9
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.
"▇▇▇▇▇" shall have the meaning assigned thereto in the Statement of
Purpose.
"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 ▇▇▇▇▇▇▇▇ Construction Company.
"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.
"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).
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"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.
"HCFA" means the Health Care Financing Administration or any successor
agency.
"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 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.
11
"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 170,000 square feet, (c) contains at least 110
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 ▇▇▇▇▇ 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.
"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.
12
"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.
"Limited Partner" means Harlingen Partnership Holdings, Inc., an Arizona
corporation.
"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 the agreement between that Management Company
and the Borrower as set forth in the limited partnership 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 Harlingen 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 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
13
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 HCFA or a Governmental
Authority under contract with HCFA 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 HCFA or a Governmental
Authority under contract with HCFA 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.
"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
14
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, HCFA, 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 Deed of Trust, Assignment,
Security Agreement and Financing Statement 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.
"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
15
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 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
16
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 and the Limited Partner, as pledgors, and the
Borrower, as issuer, 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 ▇▇▇▇▇ Loans" means all of the loans from ▇▇▇▇▇ 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 2.9.
"Project Equity" means the required $8,000,000 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 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).
17
"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.
"Subordinated Working Capital Loan" shall have the meaning assigned
thereto in Section 9.1(f).
18
"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 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.
19
"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 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
20
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:
(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
21
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
(i) the Architect shall be made by check sent to the address set forth below and
(ii) the General Contractor shall be made by wire transfer to the account set
forth below:
If to the Architect: ▇▇▇▇▇ Associates Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to the General Contractor: ▇▇▇▇▇▇▇▇ Construction Company
Bank: Bank of America
22
ABA#: ▇▇▇▇▇▇▇▇▇
Account Name: ▇▇▇▇▇▇▇▇ Construction
Account Number: 001390022182
Reference Info: Project #692
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 twenty-four (24) months after the
Closing Date shall be repaid by the Borrower in consecutive monthly installments
commencing on the last day of the twenty-fifth (25th) 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 twenty-four (24) 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
any amount required to be paid pursuant to Section 3.9 hereof (but otherwise
without premium or penalty).
23
(b) Mandatory Prepayment.
(i) The Borrower shall make mandatory principal prepayments of the
Construction Loan Advances (A) 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 (B) 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 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 ▇▇▇▇▇ 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 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
24
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. Equity Account. $6,005,518.54 shall be deposited in an
interest-bearing account to be maintained by the Borrower with the
Administrative Agent (the "Equity Account"). Interest earned on the Equity
Account shall be part of the Equity Account and shall be paid currently from
time to time to the Borrower. The Equity Account 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 in the Equity Account as additional collateral for the Obligations.
One hundred percent (100%) of each advance which is to pay, or to reimburse
▇▇▇▇▇ for paying on the Borrower's behalf, for Pre-Opening Operating Costs shall
be funded out of the Equity Account. If an Event of Default shall have occurred
and be continuing, the Administrative Agent may (but shall have no obligation
to) apply all or any part of the Equity Account against the unpaid Obligations
in such order as the Required Lenders shall 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 of all
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
Equity Account (other than the reserved funds), 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 shall at no
time exceed an amount equal to the lesser (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 Borrower.
SECTION 2.9. 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 ▇▇▇▇▇, 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 of all 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
25
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 2.10 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 2.10 for interest payments as and when due. Nothing contained in
this Agreement shall be construed to 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, the Equity Account 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 2.10 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 2.10 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
26
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, 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
27
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.
Applicable Margin
-----------------
Pricing Eurodollar Base Rate
Level Guarantor Leverage Ratio 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 2.75% 1.50%
greater than 2.00 to 1.00
III Less than or equal to 3.00 to 1.00 but 3.00% 1.75%
greater than 2.50 to 1.00
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 December 31, 2001; 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
28
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.
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.
29
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 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
30
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.
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.
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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 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
32
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 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
33
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 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
34
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.
(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
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. on November 21, 2001, 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 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.
37
(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 certificate of limited
partnership 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 limited partnership agreement
of the Borrower as in effect on the date of such certifications, (C)
resolutions duly adopted by the Board of Directors of the Management
Company as general partner of the Borrower and resolutions duly
adopted by the investor representatives 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
38
the extent requested by the Administrative Agent, each other
jurisdiction where the 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.
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(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)
(A) the net cash proceeds of the Project Equity have been
contributed to the Borrower or (B) 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 and (ii) and
$6,005,518.54 has been deposited in the Equity Account.
(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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, 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,
44
certificates and instruments reasonably requested thereby, with
respect to the transactions contemplated by this Agreement.
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.
45
(h) Applications for Payment. With respect to any Construction Loan
Advance to pay a contractor, the Administrative Agent shall have received
original 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
47
the nature of its business requires such qualification and authorization
except where the 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 partnership
interests, authorized, issued and outstanding, described on Schedule
5.1(b). All outstanding partnership 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 partnership interests of the Borrower, except as set forth in
the limited partnership 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 ▇▇▇▇, service ▇▇▇▇ 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.
SECTION 5.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article V and all
representations and warranties 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.
57
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 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
58
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;
(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.
59
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;
(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.
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(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.
(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
61
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; and
(k) any event which makes any of the representations set forth in
Section 5.1 inaccurate in any respect.
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).
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 partnership 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
62
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.
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
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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.
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
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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 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
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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.
SECTION 7.16 Equipment Financing.
(a) Within nine (9) months following the Closing Date, secure a binding
commitment from ▇▇▇▇▇ 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),
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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 Equity Account.
(a) Maintain the Equity Account with Bank of America.
(b) Use the proceeds contained in the Equity Account solely in
connection with the Project.
SECTION 7.20 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 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,
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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 1.25 to 1.00
the Completion Date
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 $20,000,000 at any time (or
any refinancing, but not any increase in the principal amount, thereof);
(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 ▇▇▇▇▇ evidencing intercompany loans by
▇▇▇▇▇ 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
68
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 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
69
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;
(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 ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc. or ▇▇▇▇▇'▇ 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;
70
(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).
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; and
(b) 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.
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:
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(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 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 partnership interests of its equityholders to the extent provided for
in the limited partnership 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
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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).
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.
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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 certificate of limited partnership (or corporate charter or other similar
organizational documents) or amend, modify or change its limited partnership
agreement (or other similar documents) in any manner adverse in any respect to
the rights or interests of the Lenders.
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.
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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 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.
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(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.
(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.
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(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 or the Limited Partner shall
cease to be a wholly-owned Subsidiary of MedCath Incorporated or (iv) the
Management Company and the Limited Partner shall be the beneficial owner
of less than that percentage of the equity interests in the Borrower owned
by the Management Company and the Limited Partner on the Closing Date or
the Management Company shall cease to be the sole general partner and
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, 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
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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 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) Limited Partnership Agreement. The Borrower shall amend the
Borrower's limited partnership 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
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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 Equity Account or 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
right of the Borrower to request borrowings thereunder and any obligation
to disburse any sum from the Equity Account or 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.
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(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 Equity Account 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;
(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,
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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, 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
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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 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
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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 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
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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
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.
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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 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
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower: Harlingen Medical Center, Limited Partnership
c/o Harlingen Hospital Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With copies to: ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC
Bank of America Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Bank of America as Bank of America, N.A.
Administrative Agent: IL1-231-08-03
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Bank of America, N.A.
Commercial Construction Administration
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Bank of America Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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
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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-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.
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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, 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
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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.
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.
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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, 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
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(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.
(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
91
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.
(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).
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"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.
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
93
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 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.
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 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.
94
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.
(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
95
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]
96
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] HARLINGEN MEDICAL CENTER,
LIMITED PARTNERSHIP, as Borrower
By: HARLINGEN HOSPITAL
MANAGEMENT, INC., its General
Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Title: Vice President
-------------------------------
BANK OF AMERICA, N.A., as Administrative
Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
BANK OF AMERICA, N.A., as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Senior Vice President
---------------------------------
BANKERS TRUST COMPANY, as Syndication
Agent and as Lender
By: /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇ ▇▇▇▇▇
---------------------------------
Title: Assistant Vice President
---------------------------------
FIRST UNION NATIONAL BANK, as
Documentation Agent and as Lender
By:
----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
GE HEALTHCARE FINANCIAL SERVICES, as
Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Title: Risk Analyst
---------------------------------
SIEMENS MEDICAL SYSTEMS, INC., as Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
THE CHASE MANHATTAN BANK, as Lender
By: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇ ▇▇▇
---------------------------------
Title: Vice President
---------------------------------
FIFTH THIRD BANK (WESTERN OHIO), as
Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Schedule 1.1(a)
Lenders and Commitments
--------------------------------------------------------------------------------
LENDER COMMITMENT COMMITMENT
PERCENTAGE
--------------------------------------------------------------------------------
Bank of America, N.A.
IL1-231-08-30
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ 18.56948301% $6,963,556.13
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
The Bankers Trust Company
c/o Deutsch Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Location: Desk 100 O 18.56948301% $6,963,556.13
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
First Union National Bank
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇ 14.48586298% $5,432,198.62
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
GE Healthcare Financial Services
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Dev Lobo 20.79631600% $7,798,618.50
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
Siemens Medical Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇ 11.14297200% $4,178,614.50
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇ ▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇ 12.25726900% $4,596,475.87
--------------------------------------------------------------------------------
Fifth Third Bank (Western Ohio)
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇ 4.17861400% $1,566,980.25
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
TOTAL: 100% $37,500,000
--------------------------------------------------------------------------------
Schedule 1.1(b)
Guarantors
MedCath Corporation (DE)
MedCath Holdings, Inc. (DE)
MedCath Finance Company (AZ)
MedCath Intermediate Holdings, Inc. (DE)
MedCath Incorporated (NC)
MedCath Diagnostics, LLC (NC)
CHF Centers of America, 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)
MedCath of Massachusetts, Inc. (NC)
Austin MOB, Inc. (NC)
Harlingen Hospital Management, Inc.
Harlingen Partnership Holdings Inc.
EXHIBIT A
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
LEGAL DESCRIPTION OF LAND
BEING a 15.00 acre tract of land situated in Conception de Carricitos Land
▇▇▇▇▇, ▇▇▇▇▇▇▇ County, Texas, and being a part of Block 183, San ▇▇▇▇▇▇ Land and
Water Company Subdivision, as recorded in Volume 1, Page 6, Map Records Cameron
County, Texas (M.R.C.C.T.), said tract also being a part of a tract of land
described in deed to ▇▇▇▇ Ventures, as recorded in Volume 5566, Page ▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ (D.R.C.C.T.), and all of a tract of land described
in deed to Harlingen Medical Center, L.P., as recorded in Volume 6272, Page 294,
D.R.C.C.T., said tract being more particularly described as follows:
BEGINNING at the southwesterly corner of said ▇▇▇▇ Ventures tract, said point
also being the southwesterly corner said Harlingen Medical Center tract, said
point also being on the north right-of-way line of U.S. Highway 83/77, said
point also being the southeasterly corner of Security Building and Investment
Corporation Subdivision, as recorded in Cabinet I, Slot 109-B, M.R.C.C.T.;
THENCE North 22 degrees 26 minutes 34 seconds East, departing said north
right-of-way line and along the west line of said ▇▇▇▇ Ventures and Harlingen
Medical Center tracts, a distance of 677.74 feet the northwesterly corner of
said Harlingen Medical Center tract;
THENCE South 64 degrees 04 minutes 47 seconds East, a distance of 991.34 feet to
a point for corner on the east line of said ▇▇▇▇ Ventures tract;
THENCE South 25 degrees 55 minutes 00 seconds West, passing at a distance of
83.18 feet the northeasterly corner of said Harlingen Medical Center tract,
continuing along the east line of said Harlingen Medical Center tract and said
▇▇▇▇ Venture tract, a total distance of 756.23 feet to the southeasterly corner
of said ▇▇▇▇ Ventures and Harlingen Medical Center tracts, said corner being on
the aforementioned north right-of-way line of U.S. Highway 83/77;
THENCE North 59 degrees 17 minutes 00 seconds West, along said north
right-of-way line, a distance of 244.96 feet to a point for corner;
THENCE North 25 degrees 55 minutes 00 seconds East, a distance of 252.62 feet to
a point for corner;
THENCE North 64 degrees 04 minutes 47 seconds West, a distance of 167.90 feet to
a point for corner;
THENCE South 25 degrees 55 minutes 00 seconds West, a distance of 238.53 feet to
a point for corner on the aforementioned north right-of-way line of U.S. Highway
83/77;
THENCE North 59 degrees 17 minutes 00 seconds West, along said north
right-of-way line, a distance of 540.17 feet to the POINT OF BEGINNING AND
CONTAINING 653,399 square feet or 15.00 acres of land more or less.
2
EXHIBIT B
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF CONSTRUCTION LOAN NOTE
2
CONSTRUCTION LOAN NOTE
$__________ November ___, 2001
FOR VALUE RECEIVED, the undersigned, Harlingen Medical Center, Limited
Partnership, a North Carolina limited partnership (the "Borrower"), promises to
pay to the order of ______________________________ (the "Lender"), at the place
and times provided in the Loan Agreement referred to below, the principal sum of
____________________ DOLLARS ($__________) or, if less, the principal amount of
all Construction Loan Advances made by the Lender pursuant to that certain
Amended and Restated Loan Agreement, dated as of November __, 2001 (as amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") by and among the Borrower, the Lenders who are or may become a party
thereto, as Lenders (collectively, the "Lenders"), and Bank of America, N.A., as
Administrative Agent (the "Administrative Agent"). Capitalized terms used herein
and not defined herein shall have the meanings assigned thereto in the Loan
Agreement.
The unpaid principal amount of this Construction Loan Note from time to
time outstanding is subject to mandatory repayment from time to time as provided
in the Loan Agreement and shall bear interest as provided in Section 3.1 of the
Loan Agreement. All payments of principal and interest on this Construction Loan
Note shall be payable in lawful currency of the United States of America in
immediately available funds to the account designated in the Loan Agreement.
This Construction Loan Note is entitled to the benefits of, and evidences
Obligations incurred under, the Loan Agreement, to which reference is made for a
description of the security for this Construction Loan Note and for a statement
of the terms and conditions on which the Borrower is permitted and required to
make prepayments and repayments of principal of the Obligations evidenced by
this Construction Loan Note and on which such Obligations may be declared to be
immediately due and payable.
THIS CONSTRUCTION LOAN NOTE SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF NORTH CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS
OR CHOICE OF LAW PRINCIPLES THEREOF.
The Debt evidenced by this Construction Loan Note is senior in right of
payment to all Subordinated Debt referred to in the Loan Agreement.
The Borrower hereby waives all requirements as to diligence, presentment,
demand of payment, protest and (except as required by the Loan Agreement) notice
of any kind with respect to this Construction Loan Note.
IN WITNESS WHEREOF, the undersigned has executed this Construction Loan
Note under seal as of the day and year first above written.
HARLINGEN MEDICAL CENTER,
LIMITED PARTNERSHIP, as Borrower [SEAL]
By: HARLINGEN HOSPITAL
MANAGEMENT, INC., its General
Partner
By:_______________________________
Name:_____________________________
Title:____________________________
2
EXHIBIT C
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF DRAW REQUEST
DRAW REQUEST
DRAW REQUEST NO. ___
PURSUANT TO THE AMENDED AND RESTATED LOAN AGREEMENT DATED AS OF NOVEMBER
__, 2001 (AS AMENDED, RESTATED SUPPLEMENTED OR OTHERWISE MODIFIED FROM
TIME TO TIME, THE "LOAN AGREEMENT") BY AND AMONG HARLINGEN MEDICAL CENTER,
LIMITED PARTNERSHIP, AS BORROWER (THE "BORROWER"), THE LENDERS WHO ARE OR
MAY BECOME PARTY THERETO, AS LENDERS (THE "LENDERS"), AND BANK OF AMERICA,
N.A., AS ADMINISTRATIVE AGENT (THE "ADMINISTRATIVE AGENT").
TO: Bank of America, N.A., as Administrative Agent Date:________
BORROWER: Harlingen Medical Center, Limited Partnership
PROJECT: __________________________
DRAW REQUEST
NUMBER: _____________________ TOTAL AMOUNT: $_________
DRAW BREAKDOWN:
(a) Borrower $__________
(b) General Contractor $__________
(c) Architect $__________
(d) Administrative Agent
[for fees and expenses] $__________
PERIOD COVERED: _____________ THROUGH _____________
BEFORE ME, the undersigned Notary, on this day personally appeared the
person executing this affidavit, who, being by me first duly sworn, deposed and
said:
1. He is the duly authorized representative of Harlingen Hospital
Management, Inc., the duly authorized and acting Manager of the Borrower (the
"Management Company"), the office which he holds in the Management Company being
indicated on the execution line of this affidavit; and he is duly authorized to
make this affidavit and to execute and deliver the related request for payment
on behalf of the Borrower.
2. All reports, statements, and other documentation heretofore or herewith
delivered by or on behalf of the Borrower to the Administrative Agent are
substantially true and correct and in all material respects what they purport
and appear to be.
3. Attached is a Draw Request for Work Completed Summary, and if a
Construction Loan Advance for hard costs is requested, also attached are AIA
Document G-702 and G-703 (1983 Edition) forms executed by the General Contractor
and approved by the Borrower's Architect, all completed for the above amount and
period, together with all supporting documentation required by the Loan
Agreement for the Project, all of which are true and correct and in all respects
what they purport and appear to be.
4. The Borrower has not been served with any written notice that a lien
will be claimed for any amount unpaid for materials delivered, labor performed,
or services provided in connection with the Project, or any part thereof.
5. This affidavit is made to induce the Administrative Agent and the
Lenders to advance funds to the Borrower, which funds shall be applied by the
Borrower in accordance with the Loan Agreement and the other Loan Documents,
and, in so lending funds, the Administrative Agent and the Lenders are relying
upon the accuracy of matters stated in this affidavit.
6. All representations and warranties contained in the Loan Agreement and
the other Loan Documents are true and accurate in all material respects as of
the date of this Draw Request and will be true in all material respects as of
the date on which the requested Construction Loan Advance is disbursed, except
as follows (if any):__________________________.
7. No Default or Event of Default exists (or would result from the
Construction Loan Advance herein requested).
8. No part of the Property has been taken by eminent domain proceedings,
and the Borrower has not received written notice of any proceedings or
negotiations therefor which are pending.
9. All previously disbursed funds received in connection with Construction
Loan Advances have been expended, or are being held in trust, for the sole
purpose of paying Project costs included in the Budget and previously incurred
by the Borrower as set forth in previous Draw Requests; and no part of said
funds has been used for any other purpose.
10. The Borrower has previously or concurrently disclosed to the
Administrative Agent and the Lenders all matters known to the Borrower that are
required to be so disclosed under the Loan Documents.
11. All conditions precedent to the Borrower's right to receive the
requested Construction Loan Advance have been met in accordance with the terms
of the Loan Agreement and the other Loan Documents.
12. The amounts and percentages set forth in this Draw Request (including
the Draw Request for Work Completed Summary and any AIA Document G-702 and G-703
submitted in connection herewith) are true and correct.
13. The aggregate sum of (i) Construction Loan Advance funds previously
disbursed for hard costs, plus (ii) the Construction Loan Advance funds included
in this Draw Request for hard costs,
plus (iii) the existing retainage required under Section 2.2(b)(i) of the Loan
Agreement, does not exceed the aggregate amount incurred and/or expended to date
for hard costs included in the Work (as defined in the Construction Contract)
incorporated into the Improvements and for stored materials.
14. No portion of the materials included within this Draw Request are
stored off the Land except as follows (if any):__________________________.
15. Upon disbursement by the Borrower of the funds advanced by the
Administrative Agent and the Lenders as requested in this Draw Request, all
obligations for Work (as defined in the Construction Contract) and other costs
heretofore incurred by the Borrower in connection with the Project and which are
due and payable will be fully paid and satisfied.
16. The actual cost required to complete all matters of a type included in
any line item in the Budget does not exceed the amount allocated to that line
item in the Budget, except as follows (if any):__________________________.
17. All change orders to the Plans have been submitted to the
Administrative Agent and all change orders for which a Construction Loan Advance
is requested hereby have been consented to by the Administrative Agent and
Required Lenders to the extent required under the Loan Agreement and the other
Loan Documents.
18. All lien waivers or payment receipts required under the terms of the
Loan Agreement and the other Loan Documents for this Draw Request have been
submitted to the Administrative Agent.
19. The construction of the Improvements is progressing in a satisfactory
manner so as to assure completion thereof on or before the Completion Date in
accordance with the Plans, the Loan Agreement and the Loan Documents.
20. As of the date hereof, the Borrower has no claims, causes of action,
demands against the Administrative Agent, demands against the Lenders, or
defenses or offsets to payment of the Construction Loan Advances or any other
amounts due under Loan Agreement and the other Loan Documents.
21. The Borrower has undertaken all investigation necessary to make
all of the foregoing statements.
22. The acceptance by the Administrative Agent and the Lenders of this
Draw Request will in no way operate as a waiver by the Administrative Agent or
the Lenders of any term, condition, covenant or agreement contained in the Loan
Agreement and the other Loan Documents, or of any right of the Administrative
Agent or the Lenders to enforce any term, condition, covenant or agreement
therein.
23. This Draw Request includes Pre-Opening Operating Costs of
$__________ to be reimbursed to the Borrower.
All capitalized, undefined terms used herein shall have the meanings
assigned thereto in the Loan Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has executed this Draw Request as of
the date first written above.
AFFIANT:
HARLINGEN HOSPITAL [SEAL]
MANAGEMENT, INC.
By:
Name: ____________________________________
Title:____________________________________
STATE OF _____________________ )
)
COUNTY OF ___________________ )
SUBSCRIBED AND SWORN BEFORE ME, on this ____ day of _______________,
200__.
___________________________________________
Notary Public:_____________________________
Printed Name:______________________________
My Commission Expires:_____________________
EXHIBIT D
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF NOTICE OF ACCOUNT DESIGNATION
NOTICE OF ACCOUNT DESIGNATION
Dated as of: November ___, 2001
Bank of America, N.A.,
as Administrative Agent
Bank of America Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Syndication Agency Services
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you under Section
2.2(c) of the Amended and Restated Loan Agreement dated as of November __, 2001
(as amended, restated, supplemented or otherwise modified from time to time, the
"Loan Agreement"), by and among Harlingen Medical Center, Limited Partnership, a
North Carolina limited partnership (the "Borrower"), the lenders who are or may
become party thereto (the "Lenders"), and Bank of America, N.A., as
administrative agent (the "Administrative Agent").
1. The Administrative Agent is hereby authorized to disburse the proceeds
of all Construction Loan Advances requested by the Borrower to be disbursed
thereto into the following account(s):
Harlingen Medical Center, Limited Partnership
ABA Routing Number: ▇▇▇▇▇▇▇▇▇
Account Number: ▇▇▇▇-▇▇▇▇-▇▇▇▇
2. This authorization shall remain in effect until revoked or until a
subsequent Notice of Account Designation is provided to the Administrative
Agent.
3. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Loan Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account
Designation as of the ____ day of November, 2001.
HARLINGEN MEDICAL CENTER, [SEAL]
LIMITED PARTNERSHIP, as Borrower
By: HARLINGEN HOSPITAL
MANAGEMENT, INC., its General
Partner
By:_______________________________
Name:_____________________________
Title:____________________________
EXHIBIT E
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF NOTICE OF PREPAYMENT
NOTICE OF PREPAYMENT
Dated as of: _____________
Bank of America, N.A.,
as Administrative Agent
Bank of America Corporate Center
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Prepayment is delivered to you under Section
2.4(a) of the Amended and Restated Loan Agreement dated as of November __, 2001
(as amended, restated, supplemented or otherwise modified from time to time, the
"Loan Agreement"), by and among Harlingen Medical Center, Limited Partnership, a
North Carolina limited partnership (the "Borrower"), the lenders who are or may
become party thereto (the "Lenders"), and Bank of America, N.A., as
administrative agent (the "Administrative Agent").
1. The Borrower hereby provides notice to the Administrative Agent that it
shall repay the following [Base Rate Loans] and/or [Eurodollar Rate Loans]:
____________________. (Complete with an amount in accordance with Section 2.4(a)
of the Loan Agreement.)
2. The Borrower shall repay the above-referenced Construction Loan
Advances on the following Business Day: ____________________. (Complete with a
Business Day at least three (3) Business Days subsequent to date of this Notice
of Prepayment.)
3. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Loan Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Prepayment as of the ____ day of __________, ____.
HARLINGEN MEDICAL CENTER, [SEAL]
LIMITED PARTNERSHIP, as Borrower
By: HARLINGEN HOSPITAL
MANAGEMENT, INC., its General Partner
By:_________________________________
Name:_______________________________
Title:______________________________
EXHIBIT F
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF NOTICE OF CONVERSION/CONTINUATION
NOTICE OF CONVERSION/CONTINUATION
Dated as of: _____________
Bank of America, N.A.,
as Administrative Agent
Bank of America Corporate Center
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the "Notice") is
delivered to you under Section 3.2 of the Amended and Restated Loan Agreement
dated as of November __, 2001 (as amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement"), by and among Harlingen
Medical Center, Limited Partnership, a North Carolina limited partnership (the
"Borrower"), the lenders who are or may become party thereto (the "Lenders") and
Bank of America, N.A., as administrative agent (the "Administrative Agent").
1. This Notice is submitted for the purpose of: (Check one and complete
applicable information in accordance with the Loan Agreement.)
[ ] Converting all or a portion of a Base Rate Loan into a
Eurodollar Rate Loan
(a) The aggregate outstanding principal balance of such
Construction Loan Advance is $_______________.
(b) The principal amount of such Construction Loan Advance to
be converted is $_______________.
(c) The requested effective date of the conversion of such
Construction Loan Advance is _______________.
(d) The requested Interest Period applicable to the converted
Construction Loan Advance is _______________.
[ ] Converting a portion of Eurodollar Rate Loan into a Base
Rate Loan
(a) The aggregate outstanding principal balance of such
Construction Loan Advance is $_______________.
(b) The last day of the current Interest Period for such
Construction Loan Advance is _______________.
(c) The principal amount of such Construction Loan Advance to
be converted is $_______________.
(d) The requested effective date of the conversion of such
Construction Loan Advance is _______________.
[ ] Continuing all or a portion of a Eurodollar Rate Loan as
a Eurodollar Rate Loan
(a) The aggregate outstanding principal balance of such
Construction Loan Advance is $_______________.
(b) The last day of the current Interest Period for such
Construction Loan Advance is _______________.
(c) The principal amount of such Construction Loan Advance to
be continued is $_______________.
(d) The requested effective date of the continuation of such
Construction Loan Advance is _______________.
(e) The requested Interest Period applicable to the continued
Construction Loan Advance is _______________.
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2. The principal amount of all Construction Loan Advances outstanding as
of the date hereof does not exceed the maximum amount permitted to be
outstanding pursuant to the terms of the Loan Agreement.
3. All of the conditions applicable to the conversion or continuation of
the Construction Loan Advance requested herein as set forth in the Loan
Agreement have been satisfied or waived as of the date hereof and will remain
satisfied or waived to the date of such Construction Loan Advance.
4. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Loan Agreement.
[Signature Page Follows]
4
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Conversion/Continuation as of the ____ day of __________, ____.
HARLINGEN MEDICAL CENTER, [SEAL]
LIMITED PARTNERSHIP, as Borrower
By: HARLINGEN HOSPITAL
MANAGEMENT, INC., its General Partner
By:_________________________________
Name:_______________________________
Title:______________________________
5
EXHIBIT G
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF ASSIGNMENT AND ACCEPTANCE
ASSIGNMENT AND ACCEPTANCE
Reference is made to that certain Amended and Restated Loan Agreement
dated as of November __, 2001 (as amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement"), by and among Harlingen
Medical Center, Limited Partnership, a North Carolina limited partnership (the
"Borrower"), the lenders who are or may become party thereto (the "Lenders"),
and Bank of America, N.A., as administrative agent (the "Administrative Agent").
The assignor identified on the signature page hereto (the "Assignor") and
the assignee identified on the signature page hereto (the "Assignee") agree as
follows:
1. (a) Subject to paragraph 11 hereof, effective as of the date
specified on Schedule 1 hereto (the "Effective Date"), the Assignor hereby
irrevocably sells and assigns to the Assignee, without recourse to the
Assignor, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, without recourse to the Assignor, the interest described on
Schedule 1 hereto (the "Assigned Interest") in and to the Assignor's
rights and obligations under the Loan Agreement.
(b) From and after the Effective Date, (i) the Assignee shall be a
party under the Loan Agreement and will have all the rights and
obligations of a Lender for all purposes under the Loan Agreement and the
other Loan Documents to the extent of the Assigned Interest and be bound
by the provisions thereof, and (ii) the Assignor shall relinquish its
rights and be released from its obligations under the Loan Agreement to
the extent of the Assigned Interest. The Assignor and/or the Assignee, as
agreed by the Assignor and the Assignee, shall deliver, in immediately
available funds, any applicable assignment fee required under Section
12.10(b) of the Agreement.
2. On the Effective Date, the Assignee shall pay to the Assignor, in
immediately available funds, an amount equal to the purchase price of the
Assigned Interest as agreed upon by the Assignor and the Assignee.
3. From and after the Effective Date, the Administrative Agent shall
make all payments under the Loan Agreement and the Notes, if any, in respect of
the Assigned Interest (including all payments of principal, interest and fees
with respect thereto) to the Assignee. The Assignor and the Assignee shall make
all appropriate adjustments in payments under the Agreement and the Notes, if
any, for periods prior to the Effective Date directly between themselves.
4. The Assignor represents and warrants to the Assignee that:
(a) the Assignor is the legal and beneficial owner of the Assigned
Interest, and the Assigned Interest is free and clear of any adverse
claim;
(b) the Assigned Interest listed on Schedule 1 accurately and
completely sets forth the outstanding amount of all Construction Loan
Advances relating to the Assigned Interest as of the Effective Date;
(c) the Assignor has the power and authority and the legal right
to make, deliver and perform, and has taken all necessary action, to
authorize the execution, delivery and performance of this Assignment and
Acceptance, and any and all other documents delivered by it in connection
herewith and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Assignment and Acceptance, the Loan
Agreement and the other Loan Documents, and no consent or authorization
of, filing with, or other act by or in respect of any Governmental
Authority, is required in connection herewith or therewith; and
(d) this Assignment and Acceptance constitutes the legal, valid
and binding obligation of the Assignor.
The Assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, the
Guarantors or any of their Affiliates or the performance by the Borrower, the
Guarantors or any of their Affiliates of their respective obligations under the
Loan Agreement and the other Loan Documents, and assumes no responsibility with
respect to any statements, warranties or representations made under or in
connection with the Loan Agreement or any other Loan Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Agreement or any other Loan Document other than as expressly set forth
above.
5. The Assignee represents and warrants to the Assignor and the
Administrative Agent that:
(a) the Assignee is an Eligible Assignee;
(b) the Assignee has the full power and authority and the legal
right to make, deliver and perform, and has taken all necessary action, to
authorize the execution, delivery and performance of this Assignment and
Acceptance, and any and all other documents delivered by it in connection
herewith and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Assignment and Acceptance, the Loan
Agreement and the other Loan Documents, and no consent or authorization
of, filing with, or other act by or in respect of any Governmental
Authority, is required in connection herewith or therewith;
(c) this Assignment and Acceptance constitutes the legal, valid
and binding obligation of the Assignee;
(d) under all Applicable Laws no tax will be required to be
withheld by the Administrative Agent or the Borrower with respect to any
payments to be made to the Assignee hereunder or under the Loan Agreement
or any other Loan Document, and unless otherwise indicated in the space
opposite the Assignee's signature below, no tax forms described in Section
3.11(e) of the Loan Agreement are required to be delivered by the
Assignee; and
(e) the Assignee has received a copy of the Loan Agreement and the
other Loan Documents, together with copies of the most recent financial
statements of the Borrower and the Guarantors delivered pursuant thereto,
and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment
and Acceptance. The Assignee has independently and without reliance upon
the Assignor or the Administrative Agent and based on such information as
the Assignee has deemed appropriate, made its own credit analysis and
decision to enter into this Assignment and Acceptance. The Assignee will,
independently and without reliance upon the Administrative Agent or any
Lender, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Agreement and the other Loan
Documents.
6. The Assignee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under the Loan Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto as are delegated to
the Administrative Agent by the terms thereof, together with such powers as are
incidental thereto.
7. The Assignor attaches the Construction Loan Note delivered to it
under the Loan Agreement and the Assignor and the Assignee request that the
Borrower exchange such Construction Loan Note for new Construction Loan Notes
payable to each of the Assignor and the Assignee as follows:
Construction Loan Note Principal Amount of
Payable to the Order of: Construction Loan Note:
____________________________ $___________
____________________________ $___________
8. The Assignor and the Assignee agree to execute and deliver such
other instruments, and take such other action, as either party may reasonably
request in connection with the transactions contemplated by this Assignment and
Acceptance.
9. This Assignment and Acceptance shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns;
provided, however, that the Assignee shall not assign its rights or obligations
hereunder without the prior written consent of the Assignor and any purported
assignment, absent such consent, shall be void.
10. This Assignment and Acceptance may be executed by facsimile
signatures with the same force and effect as if manually signed and may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This
Assignment and Acceptance shall be governed by and construed in accordance with
the laws of the North Carolina, without reference to the conflicts or choice of
law principles thereof.
11. The effectiveness of the assignment described herein is subject to:
(a) if such consent is required by the Loan Agreement, receipt by the
Assignor and the Assignee of the consent of the Administrative Agent and/or the
Borrower to the assignment described herein. By delivering a duly executed and
delivered copy of this Assignment and Acceptance to the Administrative Agent,
the Assignor and the Assignee hereby request any such required consent and
request that the Administrative Agent register the Assignee as a Lender under
the Loan Agreement effective as of the Effective Date; and
(b) receipt by the Administrative Agent of (or other arrangements
acceptable to the Administrative Agent with respect to) any applicable
assignment fee referred to in Section 12.10(b) of the Loan Agreement and any tax
forms required by Section 3.11(e) of the Loan Agreement.
By signing below, the Administrative Agent agrees to register the Assignee
as a Lender under the Loan Agreement, effective as of the Effective Date with
respect to the Assigned Interest, and will adjust the registered Commitment
Percentage of the Assignor under the Loan Agreement to reflect the assignment of
the Assigned Interest.
12. Attached hereto as Schedule 2 is all contact, address, account and
other administrative information relating to the Assignee.
13. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Loan Agreement.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers.
ASSIGNOR:
_________________________________
By: _____________________________
Name: ___________________________
Title: __________________________
ASSIGNEE:
[ ] Tax forms required by
Section 3.11(e) of the Loan _________________________________
Agreement included
By: _____________________________
Name: ___________________________
Title: __________________________
[Signature Pages Continue]
In accordance with and subject to Section 12.10 of
the Loan Agreement, the undersigned consent to the
foregoing assignment as of the Effective Date:
HARLINGEN MEDICAL CENTER, [SEAL]
LIMITED PARTNERSHIP, as Borrower
By: HARLINGEN HOSPITAL
MANAGEMENT, INC., its General Partner
By: _____________________________
Name: ___________________________
Title: __________________________
BANK OF AMERICA, N.A.,
as Administrative Agent
By: _____________________________
Name: ___________________________
Title: __________________________
Schedule 1
to
Assignment and Acceptance
THE ASSIGNED INTEREST
EFFECTIVE DATE: ______________________
TYPE AND AMOUNT OF OUTSTANDING
ASSIGNED COMMITMENT OBLIGATIONS ASSIGNED ASSIGNED PRO RATA SHARE
$______________ [type] $_________________ __________________%
Schedule 2
to
Assignment and Acceptance
ADMINISTRATIVE DETAILS
[Assignee to list names of credit contacts, addresses, phone and facsimile
numbers, electronic mail addresses and account and payment information]
EXHIBIT H
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF GUARANTY AGREEMENT
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of November __, 2001 is made by MEDCATH
CORPORATION, a Delaware corporation (the "Parent"), and certain Subsidiaries of
the Parent as identified on the signature pages attached hereto or otherwise
joined as a party hereto (such subsidiaries collectively, the "Subsidiary
Guarantors", and each, a "Subsidiary Guarantor", and together with the Parent,
the "Guarantors"), in favor of BANK OF AMERICA, N.A., a national banking
association, as Administrative Agent (the "Administrative Agent") for the
ratable benefit of itself and the financial institutions (the "Lenders") from
time to time party to the Loan Agreement (as defined below).
STATEMENT OF PURPOSE
Pursuant to the terms of the Amended and Restated Loan Agreement of even
date herewith (as amended, restated, supplemented or otherwise modified, the
"Loan Agreement"), by and among Harlingen Medical Center, Limited Partnership,
as Borrower (the "Borrower"), the Lenders party thereto (the "Lenders") and the
Administrative Agent, the Lenders have agreed to extend certain credit
facilities to the Borrower as more specifically described in the Loan Agreement.
The Borrower and the Guarantors, though separate legal entities, comprise
one integrated financial enterprise, and all Construction Loan Advances under
the Loan Agreement to the Borrower will inure, directly or indirectly, to the
benefit of each of the Guarantors.
In connection with the transactions contemplated by the Loan Agreement and
as a condition precedent thereto, the Lenders have requested that each Guarantor
execute and deliver this Guaranty, and each of the Guarantors has agreed to do
so pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, and to induce the Administrative Agent and the Lenders to
enter into and to make available Construction Loan Advances pursuant to the Loan
Agreement, each Guarantor hereby agrees with the Administrative Agent for the
ratable benefit of the Administrative Agent and the Lenders as follows:
SECTION 1. Definitions and Rules of Construction.
(a) Definitions. Capitalized terms used and not otherwise defined in
this Guaranty including the preambles and recitals hereof, shall have the
meanings ascribed to them in the Loan Agreement. In the event of a conflict
between capitalized terms defined herein and in the Loan Agreement, this
Guaranty shall control. In addition, the following terms when used in this
Guaranty shall have the meaning assigned to them below:
"Administrative Agent" shall have the meaning assigned thereto in the
Preamble.
"Adjusted EBITDA" means, for any period, the sum of the following
determined, without duplication, in accordance with GAAP: (a) Consolidated
EBITDA of the Parent and its Subsidiaries for such period plus (or minus) (b) to
the extent deducted in determining Net Income (or to the extent added in
determining Net Income), the "minority interest share of earnings of the
consolidated subsidiaries" of the Parent for such period as reflected on the
consolidated statement of operations of the Parent and its Subsidiaries plus (c)
to the extent deducted in determining Net Income, the "equity in the net losses
of unconsolidated affiliates" attributable to Unconsolidated Entities for such
period as reflected on the consolidated statement of operations of the Parent
and its Subsidiaries minus (d) to the extent added in determining Net Income,
the "equity in the net profits of unconsolidated affiliates" attributable to
Unconsolidated Entities for such period as reflected on the consolidated
statement of operations of the Parent and its Subsidiaries plus (e)
Unconsolidated EBITDA of each Unconsolidated Entity for such period plus (f)
certain adjustments approved by the Administrative Agent and the Lenders and set
forth on Schedule 1(a)(i) minus (g) to the extent in included in any of the
foregoing clauses (a) through (e), the aggregate amount of EBITDA of the
Developmental Pool for such period. For the purpose hereof, each item referred
to herein which is determined by reference to the consolidated statement of
operations of the Parent and its Subsidiaries shall be calculated in the manner
required pursuant to Section 28.
"Affiliate" shall have the meaning assigned thereto in the Loan Agreement.
"Aggregate Commitment" shall have the meaning assigned thereto in the Loan
Agreement.
"Applicable Insolvency Laws" means all Applicable Laws governing
bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U.S.C. Section 547, Section 548,
Section 550 and other "avoidance" provisions of Title 11 of the United States
Code) applicable in any proceeding involving the bankruptcy, reorganization,
arrangement, adjustment of debts, relief of debtors, dissolution or insolvency
or any similar proceeding with respect to any Guarantor or its assets or this
Guaranty.
"Applicable Law" means, collectively, all international, foreign, federal,
state and local statutes, treaties, rules, guidelines, regulations, 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.
"Available Cash" means, as of any date of determination, the sum of the
following, without duplication, calculated in accordance with GAAP: (a) the
aggregate amount of all cash and cash equivalents of the Parent and its
Subsidiaries, which such cash or cash equivalents are readily marketable and
available without restriction or limitation for the immediate payment or
repayment of Debt thereof as of such date of determination plus (b) the
aggregate amount of all Unconsolidated Cash of the Unconsolidated Entities as of
such date of determination.
2
"Borrower" shall have the meaning assigned thereto in the Statement of
Purpose.
"Capital Lease" means any lease of any property by the Parent or any of
its Subsidiaries, as Lessee, that should, in accordance with GAAP, be classified
and accounted for as a capital lease on a Consolidated balance sheet of Parent
and its Subsidiaries.
"Cash Interest Expense" means, with respect to any Person for any period,
all Interest Expense paid in cash during such period.
"Closing Date" shall have the meaning assigned thereto in the Loan
Agreement.
"Collateral" shall have the meaning assigned thereto in the Loan
Agreement.
"Commitments" shall have the meaning assigned thereto in the Loan
Agreement.
"Completion Date" means, with respect to any Hospital Facility owned by
any Hospital Joint Venture, the date upon which such Hospital Joint Venture has
received (i) the final certificate of occupancy for such Hospital Facility and
(ii) all permits and licenses required under Applicable Law (including the
Medicare Certification and the Medicaid Certification) to operate such Hospital
Facility.
"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.
"Consolidated Net Worth" means, with respect to the Parent and its
Subsidiaries at any date of determination, the sum of the following determined
on a Consolidated basis, without duplication, in accordance with GAAP: (a) the
amount of assets shown on the Consolidated balance sheet of the Parent and its
Subsidiaries less (b) all liabilities of the Parent and its Subsidiaries. For
purposes of this definition, assets shall include sums due from (i) physicians
or medical practices managed by the Parent or any of its Subsidiaries, (ii)
health care facilities owned or managed by the Parent or any of its
Subsidiaries, and (iii) physicians with whom Borrower is affiliated, to the
extent that (x) the repayment of such sums constitutes valid and enforceable
obligations of such Persons and (y) such Persons have not defaulted in the
repayment of such sums.
"Construction Loan Advances" shall have the meaning assigned thereto in
the Loan Agreement.
"Corporate Revolver" means the Loan 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 lenders referred
to therein, as lenders, and Bank of America, N. A., as agent.
"Debt" means, with respect to any Person at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness
3
for borrowed money including, but not limited to, obligations evidenced by
bonds, debentures, notes or other similar instruments of any such Person, (b)
all obligations to pay the deferred purchase price of property or services of
any such Person (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 any such Person as lessee under Capital Leases, (d) all Debt
of any other Person secured by a Lien on any asset of any such Person, (e) all
Guaranty Obligations of any such Person, (f) all obligations, contingent or
otherwise, of any such Person relative to the face amount of letters of credit,
whether or not drawn, and banker's acceptances issued for the account of any
such Person, (g) all obligations of any such Person to redeem, repurchase,
exchange, defease or otherwise make payments in respect of capital stock or
other securities or partnership interests of such Person, (h) all net payment
obligations incurred by any such Person pursuant to Hedging Agreements and (i)
all outstanding payment obligations of any such Person 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.
"Default" shall have the meaning assigned thereto in the Loan Agreement.
"Developmental Pool" shall mean the collective reference to all Hospital
Joint Ventures which own a Hospital Facility with respect to which (i) the
Completion Date has not yet occurred or (ii) six (6) full fiscal quarters or
less have elapsed since the Completion Date of such Hospital Facility.
"EBITDA" means, with respect to any Person 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, (v) non-cash
impairment charges for such period solely with respect to management contracts
of MedCath Diagnostics LLC and its Subsidiaries and MedCath Cardiology
Consulting & Management, Inc. and its Subsidiaries, and (vi) 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.
"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 Parent or
any ERISA Affiliate or (b) has at any time within the preceding six (6) years
been maintained for the employees of the Parent or any current or former ERISA
Affiliate.
"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.
4
"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 Parent 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.
"Event of Default" shall have the meaning assigned thereto in the Loan
Agreement.
"Fiscal Year" means the fiscal year of the Parent ending on September 30.
"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 Parent and its Subsidiaries or any other applicable Person
throughout the period indicated and (subject to Section 28) consistent with the
prior financial practice of the Parent and its Subsidiaries or any such other
Person.
"Governmental Approval" 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, judicial, 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.
"Guaranteed Obligations" shall have the meaning assigned thereto in
Section 2(b) of this Guaranty.
"Guarantors" shall have the meaning assigned thereto in the Preamble.
"Guaranty" means this Guaranty Agreement, as amended, restated,
supplemented otherwise modified from time to time.
"Guaranty Obligation" means, with respect to any Person at any date and
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
5
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 Agreements" 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 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.
"HFCA" means the Health Care Finance Administration or any successor
agency.
"HHS" means the United States Department of Health and Human Services, and
any successor thereto.
"Hospital Facility" shall mean any heart hospital and related facilities
or diagnostic facilities owned by a Hospital Joint Venture.
"Hospital Joint Venture" means any business entity (a) formed for the
purpose of owning, operating or managing a heart hospital and related facilities
or diagnostic facilities, and (b) a portion of the capital stock, limited
liability company interests, partnership interests or other ownership interest
of which is owned or beneficially controlled, either directly or indirectly, by
the Parent or one or more of its Wholly-Owned Subsidiaries.
"Improvements" shall have the meaning assigned thereto in the Loan
Agreement.
"Interest Expense" means, with respect to any Person 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 such Person, all determined for such period, without
duplication, in accordance with GAAP.
6
"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.
"Joinder Agreement" means, collectively, each joinder agreement executed
in favor of the Administrative Agent for the ratable benefit of itself and the
Lenders, substantially in the form of Exhibit A.
"Land" shall have the meaning assigned thereto in the Loan Agreement.
"Lease Expense" means, with respect to any Person for any period, all
obligations of such Person for payments under leases of real or personal
property, whether such leases presently exist or are hereafter entered into by
such Person.
"Lenders" shall have the meaning assigned thereto in the Preamble.
"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 Agreement" shall have the meaning assigned thereto in the Statement
of Purpose.
"Loan Documents" shall have the meaning assigned thereto in the Loan
Agreement.
"Material Adverse Effect" shall have the meaning assigned thereto in the
Loan Agreement.
"Material Contract" shall have the meaning assigned thereto in the Loan
Agreement.
"Maturity Date" shall have the meaning assigned thereto in the Loan
Agreement.
"Maximum Available Corporate Revolver Commitment" means the amount of the
unused portion of the aggregate commitment of the lenders under the Corporate
Revolver which is available for borrowing from time to time under the Corporate
Revolver to the extent that (a) no default or event of default shall have
occurred and be continuing under the Corporate Revolver on the date of any such
borrowing and after giving effect thereto and (b) the Parent and its
Subsidiaries shall be in compliance with Section 12(c) on the date of any such
borrowing and after giving effect thereto.
"Medicaid Certification" means certification by HCFA or a Governmental
Authority under contract with HCFA that health care operations are in compliance
with all the conditions of participation set forth in the Medicaid Regulations.
7
"Medicaid Regulations" means, collectively, (a) 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; (b) 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 (a) above and all federal administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (a) above;
(c) all state statutes and plans for medical assistance enacted in connection
with the statutes and provisions described in clauses (a) and (b) above; and (c)
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 (c) above and all state administrative,
reimbursement and other guidelines of all Governmental Authorities having the
force of law promulgated pursuant to or in connection with the statutes
described in clause (b) above, in each case as may be amended, supplemented or
otherwise modified from time to time.
"Medicare Certification" means certification by HCFA or a Governmental
Authority under contract with HCFA that the health care operation is in
compliance with all the conditions of participation set forth in the Medicare
Regulations.
"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 having the force of law of
all Governmental Authorities (including without limitation, HHS, HCFA, the
Office of the Inspector General for HHS, or any person succeeding to the
functions of any of the foregoing) promulgated pursuant to or in connection with
any of the foregoing having the force of law, as each may be amended,
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 Parent 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 any Person, for any period of
determination, the net income (or loss) of the such Person for such period,
determined in accordance with GAAP.
"Obligations" shall have the meaning assigned thereto in the Loan
Agreement.
"Officer's Compliance Certificate" shall have the meaning assigned thereto
in Section 10(b) of this Guaranty.
"Parent" shall have the meaning assigned thereto in the Preamble.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
8
"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 Parent or any
ERISA Affiliates or (b) has at any time within the preceding six (6) years been
maintained for the employees of the Parent or any of its current or former ERISA
Affiliates.
"Permanent Principal Payment" means, with respect to the Debt of any
Person, an actual payment or repayment of the outstanding principal amount of
(a) term Debt (excluding voluntary prepayments thereof), which by its terms does
not permit any payments or repayments of principal to be re-borrowed, or (b)
Debt under a revolving credit facility (or other facility which permits the
re-borrowing of principal payments or repayments) so long as the aggregate
commitment of the lender thereunder to allow any such re-borrowing has been
permanently reduced by an amount equal to such payment or repayment.
"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.
"Required Lenders" shall have the meaning assigned thereto in the Loan
Agreement.
"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
Parent.
"Subsidiary Guarantors" shall have the meaning assigned thereto in the
Preamble.
"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 Parent 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
9
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 ERISA or the institution by PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Capitalization" means, at any date of determination, the sum of (a)
Total Debt plus (b) Total Equity, each as of such date and calculated in
accordance with GAAP.
"Total Debt" means, as of any date of determination, the sum of the
following, without duplication, calculated in accordance with GAAP: (a) all Debt
of the Parent and its Subsidiaries less (b) all Available Cash.
"Total Equity" means, with respect to the Parent, its Subsidiaries and
each Hospital Joint Venture owned thereby, at any date of determination, the
stockholders' equity calculated in accordance with GAAP without duplication.
"Unconsolidated Cash" means, with respect to each Unconsolidated Entity,
for any period, the greater of the following clause (a) or clause (b), as
applicable, in each case determined, without duplication, in accordance with
GAAP:
(a) an amount equal to (i) the proportion of (A) the Debt of such
Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the last day of such period times (ii)
the aggregate amount of all cash and cash equivalents of such
Unconsolidated Entity, which such cash or cash equivalents are readily
marketable and available without restriction or limitation for the
immediate payment or repayment of Debt thereof as of the last day of such
period, and
(b) an amount equal to (i) the percentage of the total amount of
issued and outstanding capital stock, limited liability company interests,
partnership interests, or other ownership interests of such Unconsolidated
Entity owned by the Parent or any Wholly-Owned Subsidiary thereof as of
the last day of such period times (ii) the aggregate amount of all cash
and cash equivalents of such Unconsolidated Entity, which such cash or
cash equivalents are readily marketable and available without restriction
or limitation for the immediate payment or repayment of Debt thereof as of
the last day of such period.
"Unconsolidated Cash Interest Expense" means, with respect to each
Unconsolidated Entity, for any period, the greater of the following clause (a)
or clause (b), as applicable, in each case determined, without duplication, in
accordance with GAAP:
(a) an amount equal to (i) the proportion of (A) the Debt of such
Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the
10
last day of such period times (ii) the amount of Cash Interest Expense of
such Unconsolidated Entity for such period, and
(b) an amount equal to (i) the percentage of the total amount of
issued and outstanding capital stock, limited liability company interests,
partnership interests, or other ownership interests of such Unconsolidated
Entity owned by the Parent or any Wholly-Owned Subsidiary thereof as of
the last day of such period times (ii) the amount of Cash Interest Expense
of such Unconsolidated Entity for such period.
"Unconsolidated EBITDA" means, with respect to each Unconsolidated Entity,
for any period, the greater of the following clause (a) or clause (b), as
applicable, in each case determined, without duplication, in accordance with
GAAP:
(a) an amount equal to (i) the proportion of (A) the Debt of such
Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the last day of such period times (ii)
the amount of EBITDA of such Unconsolidated Entity for such period, and
(b) an amount equal to (i) the percentage of the total amount of
issued and outstanding capital stock, limited liability company interests,
partnership interests, or other ownership interests of such Unconsolidated
Entity owned by the Parent or any Wholly-Owned Subsidiary thereof as of
the last day of such period times (ii) the amount of EBITDA of such
Unconsolidated Entity for such period.
"Unconsolidated Entity" means any Hospital Joint Venture the financial
information with respect to which is not included in the Consolidated financial
statements of the Parent and its Subsidiaries required to be delivered pursuant
to Section 10(a)(i) hereof.
"Unconsolidated Lease Expense" means, with respect to each Unconsolidated
Entity, for any period, the greater of the following clause (a) or clause (b),
as applicable, in each case determined, without duplication, in accordance with
GAAP:
(a) an amount equal to (i) the proportion of (A) the Debt of such
Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the last day of such period times (ii)
the amount of Lease Expense of such Unconsolidated Entity for such period,
and
(b) an amount equal to (i) the percentage of the total amount of
issued and outstanding capital stock, limited liability company interests,
partnership interests, or other ownership interests of such Unconsolidated
Entity owned by the Parent or any Wholly-Owned Subsidiary thereof as of
the last day of such period times (ii) the amount of Lease Expense of such
Unconsolidated Entity for such period.
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"Unconsolidated Permanent Principal Payments" means, with respect to each
Unconsolidated Entity, for any period, the greater of the following clause (a)
or clause (b), as applicable, in each case determined, without duplication, in
accordance with GAAP:
(a) an amount equal to (i) the proportion of (A) the Debt of such
Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the last day of such period times (ii)
the amount of Permanent Principal Payments of such Unconsolidated Entity
for such period, and
(b) an amount equal to (i) the percentage of the total amount of
issued and outstanding capital stock, limited liability company interests,
partnership interests, or other ownership interests of such Unconsolidated
Entity owned by the Parent or any Wholly-Owned Subsidiary thereof as of
the last day of such period times (ii) the amount of Permanent Principal
Payments of such Unconsolidated Entity for such period.
"Wholly-Owned" means, with respect to a Subsidiary, that all of the shares
of capital stock or other ownership interests of such Subsidiary are, directly
or indirectly, owned or controlled by the Parent and/or one or more of its
Wholly-Owned Subsidiaries (except for directors' qualifying shares or other
shares required by Applicable Law to be owned by a Person other than the
Parent).
(b) General. Unless otherwise specified, a reference in this Guaranty to
a particular article, section, subsection, schedule or exhibit is a reference to
that article, section, subsection, schedule or exhibit of this Guaranty.
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.
(c) Reference to Agreement. The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Guaranty shall refer to this
Guaranty as a whole and not to any particular provision of this Guaranty.
SECTION 2. Terms of the Guaranty.
(a) Guaranty of Obligations. Each Guarantor hereby, jointly and
severally with the other Guarantors, unconditionally guarantees to the
Administrative Agent for the ratable benefit of itself and the Lenders,
and their respective permitted successors, endorsees, transferees and
assigns, the prompt payment (whether at stated maturity, by acceleration
or otherwise) and performance of all Obligations of the Borrower, whether
primary or secondary (whether by way of endorsement or otherwise), whether
now existing or hereafter arising, whether or not from time to time
reduced or extinguished (except by payment thereof) or hereafter increased
or incurred, whether or not recovery may be or hereafter become barred by
the statute of limitations, whether enforceable or unenforceable as
against the Borrower, whether or not discharged, stayed or
12
otherwise affected by any bankruptcy, insolvency or other similar law or
proceeding, whether created directly with the Administrative Agent or any
Lender or acquired by the Administrative Agent or any Lender through
assignment, endorsement or otherwise, whether matured or unmatured,
whether joint or several, as and when the same become due and payable
(whether at maturity or earlier, by reason of acceleration, mandatory
repayment or otherwise), in accordance with the terms of any such
instruments evidencing any such Obligations, including all renewals,
extensions or modifications thereof.
(b) Additional Guaranty of Performance. Additionally, each
Guarantor hereby, jointly and severally with the other Guarantors,
unconditionally guarantees to the Administrative Agent for the ratable
benefit of itself and the Lenders, and their respective permitted
successors, endorsees, transferees and assigns, the timely performance of
all other obligations of Borrower under the Loan Agreement and the other
Loan Documents, including, without limiting the generality of the
foregoing, that:
(i) the Improvements will be constructed upon the Land in
accordance with this Agreement and the Plans; and
(ii) the Improvements will be completed and ready for
occupancy, including delivery of any certificates required by
Applicable Law, the Loan Agreement and the other Loan Documents, on
or before the date required in the Loan Agreement and the other Loan
Documents.
In the event the foregoing conditions are not complied with in any respect
whatsoever, the Guarantors hereby agree to (i) assume all responsibility
for the completion of the Improvements and, at the Guarantors' own cost
and expense, to cause the Improvements to be fully completed in accordance
with the Plans and in accordance with the Loan Agreement and the other
Loan Documents; (ii) pay all bills in connection with the construction of
the Improvements; and (iii) indemnify and hold the Administrative Agent
and the Lenders harmless from any and all loss, cost, liability or expense
that the Administrative Agent or the Lenders may suffer by reason of any
such event (except with respect to the willful misconduct or the gross
negligence of the Administrative Agent or the Lenders). The Administrative
Agent shall accept performance by the Guarantors of the Borrower's
obligations under the Loan Agreement and the other Loan Documents, and so
long as all of said obligations are being performed by the Borrower or the
Guarantors, the Administrative Agent will make the proceeds of the
Construction Loan Advances available under the terms of the Loan
Agreement. If, after the occurrence of a Default or Event of Default, the
Required Lenders are not satisfied with the progress of construction by
the Borrower and/or the Guarantors, the Administrative Agent shall, if
required by the Required Lenders, and on behalf of Lenders, after first
having given notice to the Guarantors at the address and in the manner set
forth in Section 12.1 of the Loan Agreement, complete the Improvements
either before or after commencement of foreclosure proceedings or before
or after any other remedy
13
of the Administrative Agent or the Lenders against the Borrower or the
Guarantors, with such changes or modifications in the Plans which the
Administrative Agent reasonably deems necessary and expend such sums as
the Administrative Agent, in its discretion, reasonably deems necessary
and proper in order to so complete the Improvements, and the Guarantors
hereby waive any right to contest any such reasonably necessary
expenditures. The amount of any and all expenditures made by the
Administrative Agent for the foregoing purposes shall be due and payable
to the Lenders upon demand and accrue interest at a rate two percent (2%)
per annum above the rate then applicable under the Construction Loan Notes
(or that would be applicable under the Construction Loan Notes if they
were still outstanding). Neither the Borrower nor any Guarantor shall be
liable to the Lenders for the cost of completing the Improvements to the
extent that the aggregate cost of completing the Improvements exceeds the
Aggregate Commitment, provided the entire principal of and interest on the
Construction Loan Advances shall have been paid in full. The obligations
and liability of the Guarantors under this Section 2(b) shall not be
limited or restricted by the existence of (or any limitation on) the
guaranty of payment under Section 2(a). For the purposes hereof, all of
the Obligations of the Borrower to the Administrative Agent or any Lender
under the Loan Agreement and the other Loan Documents, including all of
the Obligations specified in Section 2(a) and this Section 2(b), shall be
hereinafter collectively referred to as the "Guaranteed Obligations".
(c) Bankruptcy Limitations on Guarantors. Notwithstanding anything
to the contrary contained in paragraph (a) above, it is the intention of
each Guarantor and the Lenders that, in any proceeding involving the
bankruptcy, reorganization, arrangement, adjustment of debts, relief of
debtors, dissolution or insolvency or any similar proceeding with respect
to any Guarantor or its assets, the amount of such Guarantor's obligations
with respect to the Guaranteed Obligations shall be in, but not in excess
of, the maximum amount thereof not subject to avoidance or recovery by
operation of any Applicable Insolvency Laws. To that end, but only in the
event and to the extent that such Guarantor's obligations with respect to
the Guaranteed Obligations or any payment made pursuant to the Guaranteed
Obligations would, but for the operation of the first sentence of this
Section 2(c), be subject to avoidance or recovery in any such proceeding
under Applicable Insolvency Laws, the amount of such Guarantor's
obligations with respect to the Guaranteed Obligations shall be limited to
the largest amount which, after giving effect thereto, would not, under
Applicable Insolvency Laws, render such Guarantor's obligations with
respect to such Guaranteed Obligations unenforceable or avoidable or
otherwise subject to recovery under Applicable Insolvency Laws. To the
extent any payment actually made pursuant to the Guaranteed Obligations
exceeds the limitation of the first sentence of this Section 2(c) and is
otherwise subject to avoidance and recovery in any such proceeding under
Applicable Insolvency Laws, the amount subject to avoidance shall in all
events be limited to the amount by which such actual payment exceeds such
limitation and the Guaranteed Obligations as limited by the first sentence
of this Section 2(c) shall in all events remain in full force and effect
14
and be fully enforceable against such Guarantor. The first sentence of
this Section 2(c) is intended solely to preserve the rights of the
Administrative Agent hereunder against such Guarantor in such proceeding
to the maximum extent permitted by Applicable Insolvency Laws and neither
such Guarantor, the Borrower, any other guarantor nor any other Person
shall have any right or claim under such sentence that would not otherwise
be available under Applicable Insolvency Laws in such proceeding.
(d) Mutual Grant of Present Right of Contribution and Indemnity.
To the extent that the value as of the time of execution of this Guaranty
of the benefits received by any Guarantor by reason of matters stated in
the preamble (whether determined under a standard of "fair value,"
"reasonably equivalent value" or any other valuation standard under
Applicable Law) is less than the sum of the Guaranteed Obligations
incurred by such Guarantor to the Administrative Agent and the Lenders
plus such Guarantor's liability under this Section 2(d), then subject only
to Section 15 hereof and in addition to all other rights and remedies such
Guarantor has or may have under Applicable Law, each remaining Guarantor
respectively agrees that such Guarantor has the present right to recover
the amount of such excess from the remaining Guarantors, which right shall
be enforceable jointly and severally against the remaining Guarantors to
the full extent that the Guaranteed Obligations are enforceable against
such Guarantor. Without limiting the foregoing, in the event any Guarantor
is required, by reason of this Guaranty, to pay an amount in excess of the
value of the benefit such Guarantor is deemed to have received by reason
of matters described in the preamble of this Guaranty, the remaining
Guarantors jointly and severally agree to pay such Guarantor, upon demand,
the amount of such excess. Subject only to the provisions of Section 15
hereof, such Guarantor shall be subrogated to any and all rights of the
Administrative Agent and the Lenders against the remaining Guarantors to
the extent of such excess payment.
SECTION 3. Nature of Guaranty. Each Guarantor agrees that this
Guaranty is a continuing, unconditional guaranty of payment and performance and
not of collection, and that its obligations under this Guaranty shall be
primary, absolute and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Guaranty, the Loan Agreement or
any other Loan Document or any other agreement, document or instrument to
which the Borrower, any Subsidiary thereof or any Affiliate thereof is or
may become a party;
(b) the absence of any action to enforce this Guaranty, the Loan
Agreement or any other Loan Document or the waiver or consent by the
Administrative Agent or any Lender with respect to any of the provisions
of this Guaranty, the Loan Agreement or any other Loan Document;
15
(c) the existence, value or condition of, or failure to perfect
its Lien against, any security (including, without limitation, the
Collateral) for or other guaranty of the Guaranteed Obligations or any
action, or the absence of any action, by the Administrative Agent or any
Lender in respect of such security or guaranty (including, without
limitation, the release of any such security or guaranty);
(d) any structural change in, restructuring of or other similar
change of the Borrower or any of its Subsidiaries; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor;
it being agreed by each Guarantor that, subject to the first sentence in Section
2(c) hereof, its obligations under this Guaranty shall not be discharged until
the final indefeasible payment and performance, in full, of the Guaranteed
Obligations and the termination of the Aggregate Commitment. To the extent
permitted by Applicable Law, each Guarantor expressly waives all rights it may
now or in the future have under any statute (including, without limitation,
North Carolina General Statutes Section 26-7, et seq. or similar law), or at law
or in equity, or otherwise, to compel the Administrative Agent or any Lender to
proceed in respect of the Guaranteed Obligations against the Borrower or any
other party or against any security (including, without limitation, the
Collateral) for or other guaranty of the payment and performance of the
Guaranteed Obligations before proceeding against, or as a condition to
proceeding against, such Guarantor. To the extent permitted by Applicable Law,
each Guarantor further expressly waives and agrees not to assert or take
advantage of any defense based upon the failure of the Administrative Agent or
any Lender to commence an action in respect of the Guaranteed Obligations
against the Borrower, such Guarantor, any other guarantor or any other Person or
any security (including, without limitation, the Collateral) for the payment and
performance of the Guaranteed Obligations. Each Guarantor agrees that any notice
or directive given at any time to the Administrative Agent or any Lender which
is inconsistent with the waivers in the preceding two sentences shall be null
and void and may be ignored by the Administrative Agent or such Lender, and, in
addition, may not be pleaded or introduced as evidence in any litigation
relating to this Guaranty for the reason that such pleading or introduction
would be at variance with the written terms of this Guaranty, unless the
Administrative Agent and the Required Lenders have specifically agreed otherwise
in writing. The foregoing waivers are of the essence of the transaction
contemplated by the Loan Agreement and the other Loan Documents and, but for
this Guaranty and such waivers, the Administrative Agent and the Lenders would
decline to enter into the Loan Agreement and the other Loan Documents.
SECTION 4. Demand by the Administrative Agent. In addition to the
terms set forth in Section 3 hereof, and in no manner imposing any limitation on
such terms, if all or any portion of the then outstanding Guaranteed Obligations
under the Loan Agreement are declared to be immediately due and payable, then
the Guarantors shall, upon demand in writing therefor by the Administrative
Agent to the Guarantors, pay all or such portion of the outstanding Guaranteed
Obligations then declared due and payable. Payment by the Guarantors shall be
16
made to the Administrative Agent, to be credited and applied upon the Guaranteed
Obligations, in immediately available Dollars to an account designated by the
Administrative Agent or at the address referenced herein for the giving of
notice to the Administrative Agent or at any other address that may be specified
in writing from time to time by the Administrative Agent.
SECTION 5. Waivers. In addition to the waivers contained in Section
3 hereof, each Guarantor, to the extent permitted by Applicable Law, waives and
agrees that it shall not at any time insist upon, plead or in any manner
whatever claim or take the benefit or advantage of, any appraisal, valuation,
stay, extension, marshalling of assets or redemption laws, or exemption, whether
now or at any time hereafter in force, which may delay, prevent or otherwise
affect the performance by such Guarantor of its obligations under, or the
enforcement by the Administrative Agent or the Lenders of, this Guaranty. Each
Guarantor further hereby waives, to the extent permitted by Applicable Law,
diligence, presentment, demand, protest and notice (except as specifically
required herein) of whatever kind or nature with respect to any of the
Guaranteed Obligations and waives, to the extent permitted by Applicable Law,
the benefit of all provisions of law which are or might be in conflict with the
terms of this Guaranty. Each Guarantor represents, warrants and agrees that its
obligations under this Guaranty are not and shall not be subject to any
counterclaims, offsets or defenses of any kind against the Administrative Agent,
the Lenders or the Borrower whether now existing or which may arise in the
future.
SECTION 6. Benefits of Guaranty. The provisions of this Guaranty
are for the benefit of the Administrative Agent and the Lenders and their
respective permitted successors, transferees, endorsees and assigns, and nothing
herein contained shall impair, as between the Borrower, the Administrative Agent
and the Lenders, the obligations of the Borrower under the Loan Documents. In
the event all or any part of the Guaranteed Obligations are transferred,
endorsed or assigned by the Administrative Agent or any Lender to any Person or
Persons as permitted under the Loan Agreement, any reference to the
"Administrative Agent", or the "Lenders" herein shall be deemed to refer equally
to such Person or Persons.
SECTION 7. Modification of Loan Documents etc. If the
Administrative Agent or the Lenders shall at any time or from time to time, with
or without the consent of, or notice to, the Guarantors:
(f) change or extend the manner, place or terms of payment of, or
renew or alter all or any portion of, the Guaranteed Obligations;
(g) take any action under or in respect of the Loan Agreement or
the other Loan Documents in the exercise of any remedy, power or privilege
contained therein or available to it at law, in equity or otherwise, or
waive or refrain from exercising any such remedies, powers or privileges;
(h) amend or modify, in any manner whatsoever, the Loan Agreement
or the other Loan Documents;
17
(i) extend or waive the time for performance by any Guarantor, any
other guarantor, the Borrower or any other Person of, or compliance with,
any term, covenant or agreement on its part to be performed or observed
under the Loan Agreement or any other Loan Document, or waive such
performance or compliance or consent to a failure of, or departure from,
such performance or compliance;
(j) take and hold security or collateral (including, without
limitation, the Collateral) for the payment of the Guaranteed Obligations
or sell, exchange, release, dispose of, or otherwise deal with, any
property (including, without limitation, the Collateral) pledged,
mortgaged or conveyed, or in which the Administrative Agent or the Lenders
have been granted a Lien, to secure any Debt of any Guarantor, any other
guarantor or the Borrower to the Administrative Agent or the Lenders;
(k) release anyone who may be liable in any manner for the payment
of any amounts owed by any Guarantor, any other guarantor or the Borrower
to the Administrative Agent or any Lender;
(l) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of any
Guarantor, any other guarantor or the Borrower are subordinated to the
claims of the Administrative Agent or any Lender; or
(m) apply any sums by whomever paid or however realized to any
Guaranteed Obligations owing by any Guarantor, any other guarantor or the
Borrower to the Administrative Agent or any Lender in such manner as the
Administrative Agent or any Lender shall determine in its reasonable
discretion;
then neither the Administrative Agent nor any Lender shall incur any liability
to any Guarantor as a result thereof, and no such action shall impair or release
the obligations of any Guarantor under this Guaranty.
SECTION 8. Reinstatement. Each Guarantor agrees that, if any
payment made by the Borrower or any other Person applied to the Obligations is
at any time annulled, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid or the
proceeds of any collateral are required to be refunded by the Administrative
Agent or any Lender to the Borrower, its estate, trustee, receiver or any other
party, including, without limitation, any Guarantor, under any Applicable Law or
equitable cause, then, to the extent of such payment or repayment, each
Guarantor's liability hereunder (and any Lien securing such liability) shall be
and remain in full force and effect, as fully as if such payment had never been
made, and, if prior thereto, this Guaranty shall have been canceled or
surrendered (and if any Lien or collateral securing such Guarantor's liability
hereunder shall have been released or terminated by virtue of such cancellation
or surrender), this Guaranty (and such Lien) shall be reinstated in full force
and effect, and such prior cancellation or surrender
18
shall not diminish, release, discharge, impair or otherwise affect the
obligations of such Guarantor in respect of the amount of such payment (or any
Lien securing such obligation).
SECTION 9. Representations and Warranties.
(a) Representations and Warranties. To induce the Lenders to make the
Construction Loan Advances, each Guarantor hereby represents and warrants to the
Administrative Agent and the Lenders both before and after giving effect to the
transactions contemplated under the Loan Agreement:
(i) Ownership. Each Subsidiary and each Hospital Joint Venture
owned by the Parent, either directly or indirectly, is listed on Schedule
9(a)(i) (as updated from time to time pursuant to Section 11(j)). As of
the Closing Date, the capitalization of the Parent, its Subsidiaries and
each Hospital Joint Venture consists of the number of shares or other
ownership interests, authorized, issued and outstanding, of such classes
and series, with or without par value, described on Schedule 9(a)(i). All
outstanding shares or other ownership 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. The shareholders of the Subsidiaries and the
Hospital Joint Ventures owned by the Parent, either directly or
indirectly, and the number of shares or other ownership interests owned by
each as of the Closing Date are described on Schedule 9(a)(i). As of the
Closing Date, there are no outstanding stock 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 capital stock or other
ownership interests of the Parent, any Subsidiary, or any Hospital Joint
Venture except as described on Schedule 9(a)(i).
(ii) Organization; Power; Qualification. Each Guarantor is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, 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 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 failure to so qualify could not
reasonably be expected to have a Material Adverse Effect. The
jurisdictions in which each Guarantor is organized and qualified to do
business as of the Closing Date are described on Schedule 9(a)(ii) (as
updated from time to time pursuant to Section 11(j)).
(iii) Authorization of Guaranty and Loan Documents. Each Guarantor
has the corporate or limited liability company right, power and authority
to execute, deliver and perform this Guaranty and each of the other Loan
Documents to which such Guarantor is a party and has taken all necessary
corporate or limited liability company action to authorize its execution,
delivery and
19
performance of, this Guaranty and each of the other Loan Documents to
which such Guarantor is a party.
(iv) Enforceability of Guaranty and Loan Documents. This Guaranty
and each of the other Loan Documents to which each Guarantor is a party
constitutes the legal, valid and binding obligation of such Guarantor
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(v) Compliance with Laws, Etc. The execution, delivery and
performance of this Guaranty and each of the other Loan Documents to which
each Guarantor is a party will not violate any Applicable Law or
contractual obligation of such Guarantor and will not result in the
creation or imposition of any Lien upon or with respect to any property or
revenues of such Guarantor.
(vi) Consents and Authorizations. No consent or authorization of,
filing with, or other act by or in respect of, any arbitrator or
Governmental Authority and no consent of any other Person (including,
without limitation, any stockholder or creditor of each Guarantor), is
required in connection with the execution, delivery, performance, validity
or enforceability of this Guaranty or any of the other Loan Documents to
which such Guarantor is a party, other than the approval of the board of
directors of each Guarantor (which approval has been obtained prior to the
date hereof).
(vii) Litigation. Except for matters set forth on Schedule
9(a)(vii), no actions, suits or proceedings before any arbitrator or
Governmental Authority are pending or, to the knowledge of each Guarantor,
threatened by or against such Guarantor or against any of its properties
with respect to this Guaranty, any other Loan Document or any of the
transactions contemplated hereby or thereby which could reasonably be
expected to have a Material Adverse Effect.
(viii) Title to Properties. Each Guarantor has such title to the
real property owned by it and a valid leasehold interest in the real
property leased by it, and has good and marketable title to all of its
personal property sufficient to carry on its business free of any and all
Liens of any type whatsoever.
(ix) Solvency. As of the Closing Date (or such later date upon
which such Guarantor became a party hereto), each Guarantor (A) has
capital sufficient to carry on its business and transactions and all
business and transactions in which it engages 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 on a going concern basis, greater than
the amount required to pay its probable liabilities (including
contingencies) and (C) does not believe that it will incur debts or
liabilities
20
beyond its ability to pay such debts or liabilities as they mature,
subject in each case to the first sentence in Section 2(c) hereof.
(x) Financial Statements. The (A) audited Consolidated balance
sheet of the Parent and its Subsidiaries as of September 30, 2000 and the
related audited statements of income and retained earnings and cash flows
for the Fiscal Year of the Parent and its Subsidiaries then ended and (B)
unaudited Consolidated balance sheet of the Parent and its Subsidiaries as
of June 30, 2001 and the related unaudited statements of income and
retained earnings and cash flows for the fiscal quarter of the Parent and
its Subsidiaries then ended, copies of which has been furnished to
Administrative Agent and the Lenders, are complete and correct in all
material respects and fairly present on a Consolidated basis the assets,
liabilities and financial position of the Parent and its Subsidiaries as
of such dates and the results of its operations and cash flows for the
periods then ended.
(xi) No Material Adverse Change. Since September 30, 2000, there
has been no Material Adverse Effect with respect to any Guarantor or the
Guarantors taken as a whole, as applicable, and no event has occurred or
condition arisen that could reasonably be expected to have a Material
Adverse Effect.
(xii) Tax Returns and Payments. Each Guarantor 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 such Guarantor for the periods covered
thereby; there is no ongoing audit or examination or, to the knowledge of
the such Guarantor, other investigation by any Governmental Authority of
the tax liability of such Guarantor; no Governmental Authority has
asserted any Lien or other claim against such Guarantor with respect to
unpaid taxes which has not been discharged or resolved; and the charges,
accruals and reserves on the books of such Guarantor in respect of
federal, state, local and other taxes for all Fiscal Years and portions
thereof since the organization of such Guarantor are in the judgment of
such Guarantor adequate, and such Guarantor does not anticipate any
additional material taxes or assessments for any of such periods.
(xiii) Environmental Matters.
(A) The properties owned, leased or operated by each
Guarantor now or in the past do not contain, and to its knowledge
have not previously contained, any Hazardous Materials in amounts or
concentrations which (1) constitute or constituted a material
violation of applicable Environmental
21
Laws or (2) could give rise to a material liability under applicable
Environmental Laws;
(B) Each Guarantor 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;
(C) No Guarantor has 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 any
Guarantor have knowledge or reason to believe that any such notice
will be received or is being threatened;
(D) Hazardous Materials have not been transported or
disposed of to or from the properties owned, leased or operated by
of any Guarantor 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;
(E) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of any
Guarantor, threatened, under any Environmental Law to which such
Guarantor 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 such Guarantor or such properties
or such operations; and
(F) There has been no release, or to the best of any
Guarantor's knowledge, threat of release, of Hazardous Materials at
or from properties owned, leased or operated by such Guarantor, 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.
22
(xiv) ERISA.
(A) The Parent 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 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 Parent 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;
(B) 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 Parent 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;
(C) 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 Parent nor any ERISA Affiliate has: (1) engaged in a nonexempt
prohibited transaction described in Section 406 of the ERISA or
Section 4975 of the Code, (2) 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, (3) failed
to make a required contribution or payment to a Multiemployer Plan,
or (4) failed to make a required installment or other required
payment under Section 412 of the Code;
(D) No Termination Event has occurred or is reasonably
expected to occur; and
23
(E) 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 Parent after due inquiry, threatened
concerning or involving any (1) employee welfare benefit plan (as
defined in Section 3(1) of ERISA) currently maintained or
contributed to by the Parent or any ERISA Affiliate, (2) Pension
Plan or (3) Multiemployer Plan.
(xv) Accuracy and Completeness of Information. All written
information, reports, statements and other papers and data produced by or
on behalf of the Parent or any Subsidiary thereof and furnished to the
Administrative Agent or any Lender in connection with this Guaranty, 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 Parent'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 Parent or any Subsidiary thereof in connection with the
negotiation, preparation or execution of this Guaranty or any of the Loan
Documents contains or will contain any untrue statement of a fact material
to the creditworthiness of the Parent or its Subsidiaries 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 Parent or its Subsidiaries. The Parent 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 Parent can now foresee, which
could reasonably be expected to have a Material Adverse Effect.
(b) Survival of Representations and Warranties, Etc. All representations
and warranties set forth in this Section 9 and all representations and
warranties of the Guarantors 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 Guaranty. All representations and
warranties made under this Guaranty 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 Guaranty, any investigation made by or on behalf of the
Lenders or any borrowing hereunder.
SECTION 10. Financial Information and Reports. Until all Obligations
have been finally and indefeasibly paid and satisfied in full and the
Commitments of the Lenders under the Loan Agreement have been terminated, unless
consent has been obtained in the manner provided for in Section 19, the Parent
will furnish, or cause to be furnished to the Administrative Agent and the
Lenders at their respective addresses as set forth on Schedule 1, or
24
such other office as may be designated by the Administrative Agent and the
Lenders from time to time:
(a) Financial Statements.
(i) Quarterly and Annual Financial Statements.
(A) As soon as practicable and in any event within
fifty-five (55) days after the end of each fiscal quarter, an
unaudited Consolidated and consolidating balance sheet of the Parent
and its Subsidiaries as of the close of such fiscal quarter and
unaudited Consolidated and consolidating 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 Parent and its Subsidiaries in accordance with GAAP
and certified by a Responsible Officer of Parent to present fairly
in all material respects the financial condition of the Parent and
its Subsidiaries as of their respective dates and the results of
operations of the Parent and its Subsidiaries for the respective
periods then ended, subject to normal year end adjustments.
(B) As soon as practicable and in any event within one
hundred (100) days after the end of each Fiscal Year of Parent and
its Subsidiaries, commencing with Fiscal Year ending September 30,
2001, an audited Consolidated and unaudited consolidating balance
sheet of Parent and its Subsidiaries as of the close of such Fiscal
Year and audited Consolidated and unaudited consolidating statements
of income and expenses, retained earnings and cash flows for the
Fiscal Year then ended, including the notes thereto, all in
reasonable detail and prepared in accordance with GAAP and
accompanied by a report thereon prepared by 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 Parent and
its Subsidiaries or with respect to accounting principles followed
by Parent and its Subsidiaries not in accordance with GAAP.
(ii) 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 Parent, in reasonable detail
and in the form customarily prepared by management of the Parent 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 with respect to the Parent and its
Subsidiaries on a quarterly basis for each Fiscal Year thereafter until
the Maturity Date.
(iii) SEC Reports. Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and
other materials filed with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange.
25
(iv) Other Information. Such other information regarding the
operations, business affairs and financial condition of the Parent and its
Subsidiaries as the Administrative Agent may reasonably request, in each
case in the form regularly prepared by the Parent and its Subsidiaries (if
applicable).
(b) Officer's Compliance Certificate. At each time financial statements
are delivered pursuant to Sections 10(a)(i)(A) or 10(a)(i)(B) and at such other
times as the Administrative Agent shall reasonably request a certificate of the
chief financial officer or the treasurer of Parent in the form of Exhibit B
attached hereto (an "Officer's Compliance Certificate"):
(i) 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
Parent and its Subsidiaries as of the dates indicated and the results of
their operations and cash flows for the periods indicated;
(ii) 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 Parent and its Subsidiaries with respect to such Default;
(iii) stating that Parent and its Subsidiaries are in compliance
with the covenants and restrictions set forth in Section 11, Section 12
and Section 13 of this Guaranty applicable to Parent and its Subsidiaries
and, with respect to the covenants set forth in Section 12, the
calculations applicable thereto; and
(iv) setting forth any other information reasonably required by the
Administrative Agent to ensure compliance with this Guaranty.
(c) Accountant's Certificate. At each time financial statements are
delivered pursuant to Section 10(a)(i)(B), a certificate of the independent
public accountants certifying such financial statements addressed to the
Administrative Agent for the benefit of the Lenders:
(i) 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
(ii) including the calculations prepared by such accountants
required to establish whether or not the Parent and its Subsidiaries are
in compliance with the financial covenants set forth in Section 12 hereof
as at the end of each respective period.
26
(d) Other Reports.
(i) Accountants Reports. Promptly upon receipt thereof, copies of
all reports, if any, submitted to the Parent 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.
(ii) Other Reports. Such other information regarding the
operations, business affairs and financial condition of the Parent and its
Subsidiaries as the Administrative Agent or any Lender may reasonably
request.
(e) Notice of Litigation and Other Matters. Prompt (but in no event
later than ten (10) days after an officer of the Parent obtains knowledge
thereof) telephonic and written notice of:
(i) 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 Parent or any
Subsidiary thereof or any of its properties, assets or businesses which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect;
(ii) any violation by the Parent or any Subsidiary thereof of any
Applicable Law or any notice of any violation received by the Parent or
any Subsidiary thereof 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;
(iii) any labor controversy that has resulted in, or threatens to
result in, a strike or other work action against the Parent or any
Subsidiary thereof 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;
(iv) any attachment, judgment, lien, levy or order exceeding
$1,000,000 that may be assessed against the Parent or any Subsidiary
thereof (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);
(v) (A) any Default or Event of Default or (B) 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 Parent or any Subsidiary thereof is a party or by which the
Parent or any Subsidiary thereof or any of their respective properties may
be bound which could reasonably be expected to have a Material Adverse
Effect;
(vi) (A) 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), (B) all
notices received by the Parent or any ERISA Affiliate of
27
the PBGC's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan, (C) all notices received by the
Parent or any ERISA Affiliate from a Multiemployer Plan sponsor concerning
the imposition or amount of withdrawal liability pursuant to Section 4202
of ERISA and (D) the Parent obtaining knowledge or reason to know that the
Parent 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; and
(vii) any event which makes any of the representations set forth in
Section 9 inaccurate in any respect.
(f) Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of the Parent or
its Subsidiaries to the Administrative Agent or any Lender pursuant to this
Section 10, or any other provision of this Guaranty 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 9(a)(xv).
SECTION 11. Affirmative Covenants. Until all of the Obligations have
been paid and satisfied in full and the Commitments of the Lenders under the
Loan Agreement have been terminated, unless consent has been obtained in the
manner provided for in Section 19, each Guarantor will, and will cause each of
its Subsidiaries to:
(a) Preservation of Existence and Related Matters. Preserve and
maintain:
(i) its separate corporate existence, and will not sell, lease or
otherwise dispose of all or substantially all of its business or assets;
provided that any Subsidiary Guarantor may be merged or consolidated with
or into, or be liquidated, wound up or dissolved, or all or substantially
all of its business or assets may be conveyed, sold, assigned, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to the Parent, any other Subsidiary Guarantor or the
Borrower; and
(ii) all rights, franchises, licenses and privileges necessary to
the conduct of its business, and qualify and remain qualified to do
business in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect.
(b) Compliance with Laws and Approvals. Observe and remain in compliance
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 were
the failure to observe or comply could not reasonably be expected to have a
Material Adverse Effect.
(c) Compliance with Agreements. Comply in all respects with each term,
condition and provision of each Material Contract to which it is a party or by
which it is bound and with all other material leases, agreements and other
instruments entered into in the conduct of its business, 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
28
faith through applicable proceedings and where adequate reserves are maintained
in accordance with GAAP.
(d) Maintenance of Properties. Protect and preserve all properties
useful in and material to 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.
(e) 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.
(f) Payment and Performance of Obligations. Pay and perform all
obligations under this Guaranty and the other Loan Documents, and pay or perform
(i) all taxes, assessments and other governmental charges that may be levied or
assessed upon it or any of its property, and (ii) all other indebtedness,
obligations and liabilities in accordance with customary trade practices;
provided, that each Guarantor and each of its Subsidiaries may contest any item
described in clauses (i) or (ii) of this Section 11(f) in good faith so long as
adequate reserves are maintained with respect thereto in accordance with GAAP.
(g) Visits and Inspections. Upon reasonable notice to the Parent (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; 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.
(h) Insurance. 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
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.
(i) Conduct of Business. Engage only in businesses in substantially the
same fields as the businesses conducted or proposed to be conducted in
accordance with business plans delivered to the Administrative Agent and the
Lenders on or prior to the Closing Date or in lines of business reasonably
related thereto.
29
(j) New Subsidiaries. Concurrently with the creation or acquisition of
any Subsidiary by the Parent (other than any Hospital Joint Venture) which is
not a "controlled foreign corporation" under Section 957 of the Code, cause such
Subsidiary to:
(i) execute a Joinder Agreement in substantially the same form as
Exhibit A attached hereto; and
(ii) deliver to the Administrative Agent, with the Joinder
Agreement, such other documentation as the Administrative Agent may
reasonably request, including, certified resolutions and other
organizational and authorizing documents of such Subsidiary, favorable
opinions of counsel to such Subsidiary (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
Joinder Agreement), all in form and substance satisfactory to the
Administrative Agent.
For the purposes of this Section 11(j), a Subsidiary shall not be deemed to have
been created or acquired until the earlier of (i) the date upon which such
Subsidiary begins to conduct business operations, (ii) the date upon which such
Subsidiary obtains assets with a fair market value in excess of $10,000.00 or
(iii) the date upon which such Subsidiary is initially capitalized.
(k) Transactions with Affiliates. Conduct all transactions otherwise
permitted under this Guaranty, the Loan Agreement and the other Loan Documents
with any of their Affiliates on terms that are fair and reasonable and no less
favorable to such Guarantor or such Subsidiary than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
(l) Subordinated Working Capital Loan.
(i) Cause ▇▇▇▇▇ to make working capital advances to the Borrower
in an amount necessary to ensure that the Borrower can meet all of its
working capital and other general corporate needs (the "Working Capital
Advances");
(ii) Immediately upon the request of the Administrative Agent or
the Required Lenders, cause ▇▇▇▇▇ to make additional Working Capital
Advances to the Borrower (in addition to any Working Capital Advances made
to the Borrower pursuant to clause (i) above); provided that ▇▇▇▇▇ shall
not be required to make such Working Capital Advances to the extent that
the sum of (A) the aggregate amount of such Working Capital Advances plus
(B) the aggregate amount of Subordinated Working Capital Loans outstanding
as of any applicable date of determination would exceed $8,000,000; and
(iii) Cause all Working Capital Advances to be subordinated pursuant
to an Intercompany Loan Subordination Agreement in form and substance
satisfactory to the Administrative Agent.
SECTION 12. Financial Covenants. Until all of the Obligations have
been paid and satisfied in full and the Commitments of the Lenders under the
Loan Agreement have been terminated, unless consent has been obtained in the
manner provided for in Section 19, the Parent and its Subsidiaries on a
Consolidated basis will not:
30
(a) Minimum Fixed Charge Ratio. As of the end of any fiscal quarter
during any period set forth in the table below, permit the ratio of:
(i) the sum of (A) Adjusted EBITDA for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date
plus (B) the aggregate amount of Lease Expense of the Parent and its
Subsidiaries for such period of four (4) consecutive fiscal quarters plus
(C) Unconsolidated Lease Expense of the Unconsolidated Entities for such
period of four (4) consecutive fiscal quarters minus (D) Lease Expense of
the Developmental Pool (to the extent added above) for such period of four
(4) consecutive fiscal quarters, to
(ii) the sum of:
(A) the aggregate amount of Cash Interest Expense of the
Parent and its Subsidiaries for such period of four (4) consecutive
fiscal quarters plus the aggregate amount of Unconsolidated Cash
Interest Expense of the Unconsolidated Entities for such period of
four (4) consecutive fiscal quarters minus the aggregate amount of
Cash Interest Expense of the Developmental Pool (to the extent added
above) for such period of four (4) consecutive fiscal quarters minus
the aggregate amount of Cash Interest Expense paid by the Parent,
its Subsidiaries and each Unconsolidated Entity to ▇▇▇▇▇ for such
period of four (4) consecutive fiscal quarters plus or minus the
aggregate amount of certain adjustments related to Cash Interest
Expense approved by the Administrative Agent and the Lenders as set
forth on Schedule 12(a)(ii)(B); plus
(B) the aggregate amount of Permanent Principal Payments of
the Parent and its Subsidiaries for such period of four (4)
consecutive fiscal quarters plus the aggregate amount of
Unconsolidated Permanent Principal Payments of the Unconsolidated
Entities for such period of four (4) consecutive fiscal quarters
minus the aggregate amount of Permanent Principal Payments of the
Developmental Pool (to the extent added above) for such period of
four (4) consecutive fiscal quarters plus or minus the aggregate
amount of certain adjustments related to Permanent Principal
Payments approved by the Administrative Agent and the Lenders as set
forth on Schedule 12(a)(ii)(B); plus
(C) the aggregate amount of Lease Expense of the Parent and
its Subsidiaries for such period of four (4) consecutive fiscal
quarters plus the aggregate amount of Unconsolidated Lease Expense
of the Unconsolidated Entities for such period of four (4)
consecutive fiscal quarters minus the aggregate amount of Lease
Expense of the Developmental Pool (to the extent added above) for
such period of four (4) consecutive fiscal quarters plus or minus
the aggregate amount of certain adjustments related to Lease Expense
approved by the
31
Administrative Agent and the Lenders as set forth on Schedule
12(a)(ii)(B),
to be less than the corresponding ratio set forth below:
Period Ratio
Closing Date through
March 30, 2002 1.20 to 1.00
March 31, 2002 and
thereafter 1.25 to 1.00
(b) Maximum Debt to Capitalization Ratio. As of the end of any fiscal
quarter, permit the ratio of (i) Total Debt on such date to (ii) Total
Capitalization on such date to exceed 0.60 to 1.00.
(c) Maximum Leverage Ratio. As of the end of any fiscal quarter during
any period set forth in the table below, permit the ratio of (i) the sum of (A)
Total Debt on such date less (B) Debt of or attributable to the Developmental
Pool (to the extent included in the calculation of Total Debt) on such date to
(ii) Adjusted EBITDA for the period of four (4) consecutive fiscal quarters
ending on or immediately prior to such date, to exceed the corresponding ratio
set forth below:
Period Ratio
Closing Date through
September 29, 2002 3.50 to 1.00
September 30, 2002 and
thereafter 3.00 to 1.00
(d) Consolidated Net Worth. As of the Closing Date and as of the end of
any fiscal quarter thereafter, permit Consolidated Net Worth on such date to be
less than the sum of (i) $130,000,000 plus (ii) fifty percent (50%) of
cumulative Net Income of the Parent and its Subsidiaries (if positive) after
July 27, 2001 plus (iii) an amount equal to one hundred percent (100%) of the
net cash proceeds received by the Parent or any Subsidiary thereof from any
issuance of equity after July 27, 2001.
(e) Minimum Liquid Assets. As of the end of any fiscal quarter, permit
the sum of (i) Available Cash as of such date of determination plus (ii) the
Maximum Available Corporate Revolver Commitment as of such date of determination
(in each case to be calculated on a Consolidated basis, without duplication, in
accordance with GAAP) to be less than $30,000,000.
32
SECTION 13. Negative Covenants.
(a) Negative Covenants. Until all of the Obligations have been paid and
satisfied in full and the Commitments of the Lenders under the Loan Agreement
have been terminated, unless consent has been obtained in the manner provided
for in Section 19, the Guarantors will:
(i) Comply with each and every covenant and agreement set forth in
Section 5.02 of the Corporate Revolver (as such agreement may be amended
from time to time) as if such Section 5.02 of the Corporate Revolver
(including, without limitation, each defined term, article, section,
exhibit or schedule referenced in or relating to such Section 5.02 of the
Corporate Revolver) was written herein; provided that the aggregate amount
of Debt permitted under Section 5.02(b)(iii) of the Corporate Revolver
(including any amendment, restatement, refinancing or replacement thereof,
the "Corporate Revolver Debt") shall not exceed $125,000,000 unless (A)
the Obligations, the Guaranteed Obligations and all other obligations
under the Related Credit Documents (as defined in the Loan Agreement)
shall be secured on a pari passu basis with the Corporate Revolver Debt or
(B) the Corporate Revolver Debt shall be unsecured; and
(ii) Notify the Administrative Agent and the Lenders promptly upon
the execution of any amendment, restatement, supplement or other
modification to the Corporate Revolver.
(b) Rules of Construction.
(i) The terms and conditions of the Corporate Revolver which are
incorporated in this Guaranty by reference shall continue as such terms
and conditions are set forth in the Corporate Revolver irrespective of any
termination of the Corporate Revolver. Such terms and conditions shall
include any amendments, restatements, supplements or other modifications
which are approved by the Required Lender pursuant to Section 5(a)(ii).
(ii) All definitions and other provisions of the Corporate Revolver
which are incorporated herein by reference shall be construed in such a
manner so as to give such incorporated terms legal effect and meaning
hereunder. More specifically, any references to the terms defined in both
the Corporate Revolver and this Guaranty shall be deemed references to
such terms as defined herein; provided that any references to the
"Borrower" and the "Parent" in the Corporate Revolver shall be deemed to
be references to MedCath Intermediate Holdings, Inc. and MedCath Holdings,
Inc. hereunder. For example, references in the Corporate Revolver to the
"Loan Documents", the "Commitments", the "Obligations", the
"Administrative Agent" and the "Lenders" shall be deemed to be references
to the Loan Documents, the Commitments, the Obligations, the
Administrative Agent and the Lenders as defined in this Guaranty, in each
case to the extent necessary to give any such incorporated provisions
legal effect and meaning hereunder. In addition, any references to defined
terms in the Corporate Revolver which are similarly defined in this
Guaranty shall be deemed references to such similar terms as defined
herein. For example, references in the Corporate Revolver to an "Advance"
shall be deemed to be references to a "Construction Loan Advance"
hereunder, in each case to the
33
extent necessary to give any such incorporated provisions legal effect and
meaning hereunder.
SECTION 14. Remedies. Upon the occurrence and during the continuance
of any Default or Event of Default, with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, enforce against the Guarantors their respective
obligations and liabilities hereunder and exercise such other rights and
remedies as may be available to the Administrative Agent hereunder, under the
Loan Agreement or the other Loan Documents or otherwise.
SECTION 15. No Subrogation. Notwithstanding any payment or payments
by any of the Guarantors hereunder, or any set-off or application of funds of
any of the Guarantors by the Administrative Agent or any Lender, or the receipt
of any amounts by the Administrative Agent or any Lender with respect to any of
the Guaranteed Obligations, none of the Guarantors shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or the other Guarantors or any other guarantor or against
any collateral security (including, without limitation, the Collateral) held by
the Administrative Agent or any Lender for the payment of the Guaranteed
Obligations nor shall any of the Guarantors seek any reimbursement from the
Borrower or any of the other Guarantors in respect of payments made by such
Guarantor in connection with the Guaranteed Obligations, until all amounts owing
to the Administrative Agent and the Lenders on account of the Guaranteed
Obligations are paid in full and the Aggregate Commitment is terminated. If any
amount shall be paid to any Guarantor on account of such subrogation rights at
any time when all of the Guaranteed Obligations shall not have been paid in
full, such amount shall be held by such Guarantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent in the exact form received by such Guarantor (duly
endorsed by such Guarantor to the Administrative Agent, if required) to be
applied against the Guaranteed Obligations, whether matured or unmatured, in
such order as set forth in the Loan Agreement.
SECTION 16. Expenses. All costs and expenses (including reasonable
attorneys' fees, legal expenses and court costs) incurred by the Administrative
Agent or any Lender in enforcing or protecting their rights or remedies
hereunder shall be payable by the Guarantors on demand and shall bear interest
(after as well as before judgment) until paid at the interest rate then
applicable to Base Rate Loans under the Loan Agreement and shall be additional
Guaranteed Obligations hereunder.
SECTION 17. Notices. All notices and communications hereunder shall
be made in accordance with Section 12.1 of the Loan Agreement; provided that
notices and communications to the Guarantors shall be directed to the Guarantors
at the address of the Parent set forth in Section 12.1 of the Loan Agreement.
34
SECTION 18. Successors and Assigns. This Guaranty is for the benefit
of the Administrative Agent and the Lenders and their permitted successors and
assigns. This Guaranty shall be binding on each Guarantor and its successors and
assigns; provided that no Guarantor may assign any of its rights or obligations
hereunder without the prior written consent of the Administrative Agent and the
Lenders.
SECTION 19. Amendments, Waivers and Consents. No term, covenant,
agreement or condition of this Guaranty may be amended or waived, nor may any
consent be given, except in the manner set forth in Section 12.11 of the Loan
Agreement.
SECTION 20. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
SECTION 21. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY,
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 22. Jurisdiction and Venue.
(a) Jurisdiction. The Guarantors hereby irrevocably consent 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 Guaranty and the other Loan Documents, any
rights or obligations hereunder, or the performance of such rights and
obligations. The Guarantors hereby irrevocably consent 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
Guaranty any the other Loan Documents, any rights or obligations hereunder, or
the performance of such rights and obligations, on behalf of itself or its
property, in the manner specified in Section 12.1 of the Loan Agreement. Nothing
in this Section 22 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 any Guarantor or its properties in the courts of any other
jurisdictions.
(b) Venue. Each Guarantor 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 Guaranty, any other Loan Document or the rights and obligations of the
parties hereunder. Each Guarantor 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 23. Waiver of Right to Trial by Jury. EACH PARTY TO THIS
GUARANTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
35
GUARANTY OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS GUARANTY, 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 GUARANTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 23 WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 24. Injunctive Relief; Punitive Damages.
(a) Injunctive Relief. Each Guarantor recognizes that, in the event such
Guarantor fails to perform, observe or discharge any of its obligations or
liabilities under this Guaranty, any remedy of law may prove to be inadequate
relief to the Lenders. Therefore, each Guarantor 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) Punitive Damages. Each Guarantor agrees that it shall not have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Guarantor 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 the dispute is resolved by arbitration or
judicially.
SECTION 25. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible; and (b) the invalidity or unenforceability of any
provisions hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 26. Headings. The various headings of this Guaranty are
inserted for convenience only and shall not affect the meaning or interpretation
of this Guaranty or any provisions hereof.
SECTION 27. Counterparts. This Guaranty may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SECTION 28. Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Guaranty, including, without limitation, all computations utilized by 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
Parent, be
36
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 Parent'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 Parent and the Required Lenders shall
have amended this Guaranty to the extent necessary to reflect any such changes
in the financial covenants and other terms and conditions of this Guaranty.
[Signature Pages Follow]
37
IN WITNESS WHEREOF, each of the Guarantors has executed and delivered this
Guaranty under seal as of the date first above written.
PARENT:
[CORPORATE SEAL] MEDCATH CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
SUBSIDIARY GUARANTORS:
[CORPORATE SEAL] MEDCATH HOLDINGS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] MEDCATH INTERMEDIATE HOLDINGS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] MEDCATH INCORPORATED
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] MEDCATH FINANCE COMPANY
By: ____________________________________
Name: __________________________________
Title: _________________________________
[Signature Pages Continue]
MEDCATH DIAGNOSTICS, LLC
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] MEDCATH OF MASSACHUSETTS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
HEART RESEARCH CENTERS INTERNATIONAL,
LLC
By: ____________________________________
Name: __________________________________
Title: _________________________________
CHF CENTERS OF AMERICA, LLC
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] MEDCATH CARDIOLOGY CONSULTING &
MANAGEMENT, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] MEDCATH MANAGEMENT OF OHIO, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
[Signature Pages Continue]
[CORPORATE SEAL] WMS MANAGEMENT, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] AUSTIN MOB, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] MEDCATH NUCLEAR SERVICES, LLC
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] HARLINGEN HOSPITAL MANAGEMENT, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
[CORPORATE SEAL] HARLINGEN PARTNERSHIP HOLDINGS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
Schedule 1
Addresses of Administrative Agent and Lenders
Bank of America, N.A.
ILI-231-08-03
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Bankers Trust Company
c/o Deutsch Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Location: Desk 100 O
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
GE Healthcare Financial Services
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Siemens Medical Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fifth Third Bank (Western Ohio)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Bank One, NA (Main Office Columbus, Ohio)
Kettering Tower
P.O. Box 1103
OH3 4215
Dayton, Ohio 45401-1103(1)
First National Bank of Southwestern Ohio
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
--------
(1) Applicable only to the Dayton, Ohio Loan.
Schedule 1(a)(i)
Adjustments to Adjusted EBITDA
Schedule 9(a)(i)
Jurisdictions of Organization and Qualification
Schedule 9(a)(ii)
Capitalization
Schedule 9(a)(vii)
Litigation
Schedule 12(a)(ii)(B)
Permanent Principal Payment Adjustments
Exhibit A
to
Guaranty Agreement
FORM OF JOINDER AGREEMENT
Joinder Agreement
THIS JOINDER AGREEMENT, dated as of the ____ day of __________, ____ (the
"Agreement"), to the Guaranty Agreement referred to below is entered into by and
among MedCath Corporation, a corporation organized under the laws of Delaware
(the "Parent"), ____________, a corporation organized under the laws of
__________ (the "New Subsidiary Guarantor"), and Bank of America, N.A., as
administrative agent (the "Administrative Agent") for the ratable benefit of
itself and the financial institutions (the "Lenders") from time to time party to
the Loan Agreement referred to below.
Statement of Purpose
____________________, a __________ organized under the laws of __________
(the "Borrower"), the Lenders and the Administrative Agent are parties to that
certain Amended and Restated Loan Agreement dated as of _________, ____ (as
amended, restated, supplemented or otherwise modified, the "Loan Agreement). In
connection with the Loan Agreement, the Parent and certain Subsidiaries of the
Parent who are or may become party thereto (collectively, the "Guarantors")
entered into that certain Guaranty Agreement dated as of November ___, 2001 in
favor of the Administrative Agent for the ratable benefit of itself and the
Lenders (as supplemented hereby and as further amended, restated, supplemented
or otherwise modified, the "Guaranty Agreement").
The New Subsidiary Guarantor has become a direct or indirect Subsidiary of
the Parent pursuant to [insert description of agreement or transaction relating
to creation of the New Subsidiary Guarantor]. Pursuant to Section 11(j) of the
Guaranty Agreement, the New Subsidiary Guarantor is required to execute and
deliver this joinder agreement.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
1.01 Guaranty Agreement Supplement. Pursuant to Section 11(j) of the
Guaranty Agreement, the New Subsidiary Guarantor hereby agrees that it is a
Guarantor and a Subsidiary Guarantor under the Guaranty Agreement as if a
signatory thereof on the Closing Date, and the New Subsidiary Guarantor shall
comply with and be subject to and have the benefit of all of the terms,
conditions, covenants, agreements and obligations set forth therein. The New
Subsidiary Guarantor hereby agrees that each reference to a "Guarantor", the
"Guarantors", a "Subsidiary Guarantor" or the "Subsidiary Guarantors" in the
Loan Agreement, the Guaranty Agreement and other Loan Documents shall include
the New Subsidiary Guarantor, and each reference to the "Guaranty Agreement" or
"Guaranty" as used therein shall mean the Guaranty Agreement as supplemented
hereby.
2.01 Effectiveness. This Agreement shall become effective upon receipt by
the Administrative Agent of (a) an originally executed counterpart hereof, (b)
an update of Schedule (a)(i) and Schedule 9(a)(ii) and (c) any other agreement
or document required to be delivered in accordance with Section 11(j) of the
Guaranty Agreement (including, without limitation, any other agreement or
document required to be delivered in connection with any Loan Document) and (c)
all fees and expenses required to be paid by the Borrower pursuant to Section
12.2 of the Loan Agreement.
3.01 General Provisions.
(a) Representations and Warranties of the New Subsidiary Guarantor.
(i) The New Subsidiary Guarantor hereby confirms that each
representation and warranty made under the Guaranty Agreement is true and
correct with respect to such New Subsidiary Guarantor as of the date hereof
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of the earlier
date).
(ii) The New Subsidiary Guarantor hereby acknowledges it has
received a copy of the Loan Agreement, the Guaranty Agreement and the other Loan
Documents and that it has read and understands the terms thereof.
(b) Representations and Warranties of the Parent.
(i) The Parent hereby confirms that that no Default or Event of
Default has occurred or is continuing under the Loan Agreement, the Guaranty
Agreement and the other Loan Documents.
(ii) The Parent hereby represents and warrants that as of the date
hereof there are no claims or offsets against or defenses or counterclaims to
the obligations of the Borrower and the Guarantors under the Loan Agreement, the
Guaranty Agreement and the other Loan Documents and the other Loan Documents.
(b) Limited Effect. Except as supplemented hereby, the Loan Agreement, the
Guaranty Agreement and each other Loan Document shall continue to be, and shall
remain, in full force and effect. This Agreement shall not be deemed (i) to be a
waiver of, or consent to, or a modification or amendment of, any other term or
condition of the Loan Agreement, the Guaranty Agreement or any other Loan
Document or (ii) to prejudice any right or rights which the Administrative Agent
or any Lender may now have or may have in the future under or in connection with
the Loan Agreement, the Guaranty Agreement or any other Loan Document or any of
the instruments or agreements referred to therein, as the same may be amended or
modified from time to time.
(c) Counterparts. This Agreement may be executed by one or more of the
parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
(d) Definitions. All capitalized terms used and not defined herein shall
have the meanings given thereto in the Guaranty Agreement.
(e) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, 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.
IN WITNESS WHEREOF the undersigned hereby causes this Agreement to be
executed and delivered as of the date first above written.
PARENT:
[CORPORATE SEAL] MEDCATH CORPORATION
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
NEW SUBSIDIARY GUARANTOR:
[CORPORATE SEAL]
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative
Agent
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
Exhibit B
to
Guaranty Agreement
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
Officer's Compliance Certificate
The undersigned, on behalf of MedCath Corporation, a corporation organized
under the laws of Delaware (the "Parent"), hereby certifies to the
Administrative Agent and the Lenders, each as defined below, as follows:
1. This Certificate is delivered to you pursuant to Section 10(b) of the
Guaranty Agreement dated as of November ___, 2001 (as amended, restated,
supplemented or otherwise modified from time to time, the "Guaranty Agreement"),
made by the Parent and certain Subsidiaries of the Parent who are or may become
party thereto (collectively, the "Guarantors"), in favor of Bank of America,
N.A., as administrative agent (the "Administrative Agent") for the ratable
benefit of itself and the financial institutions (collectively, the "Lenders")
from time to time party to the Loan Agreement referred to therein. Capitalized
terms used herein and not defined herein shall have the meanings assigned
thereto in the Guaranty Agreement.
2. I have reviewed the financial statements of the Parent and its
Subsidiaries dated as of _______________ and for the _______________ period[s]
then ended and, to the best of my knowledge, such statements fairly present in
all material respects the financial condition of the Parent and its Subsidiaries
as of the dates indicated and the results of their operations and cash flows for
the period[s] indicated.
3. I have reviewed the terms of the Guaranty Agreement, the Loan
Agreement, and the other related Loan Documents and have made, or caused to be
made under my supervision, a review in reasonable detail of the transactions and
the condition of the Parent and its Subsidiaries during the accounting period
covered by the financial statements referred to in Paragraph 2 above. Such
review has not disclosed, to my knowledge, the existence during or at the end of
such accounting period of any condition or event that constitutes a Default or
an Event of Default, nor do I have any knowledge of the existence of any such
condition or event as at the date of this Certificate [except, if such condition
or event existed or exists, describe the nature and period of existence thereof
and what action the Parent and its Subsidiaries have taken, are taking and
propose to take with respect thereto].
4. The Parent and its Subsidiaries are in compliance with the financial
covenants contained in Section 12 of the Guaranty Agreement as shown on such
Schedule 1 and the Parent and its Subsidiaries are in compliance with the other
covenants and restrictions contained in the Guaranty Agreement.
[Signature Page Follows]
WITNESS the following signature as of the _____ day of _________, ____.
[CORPORATE SEAL] MEDCATH CORPORATION
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
Schedule 1
to
Officer's Compliance Certificate
[To be provided by Parent in form acceptable to Administrative Agent]
EXHIBIT I
to
Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
OFFICER'S COMPLIANCE CERTIFICATE
The undersigned, on behalf of Harlingen Medical Center, Limited
Partnership, a North Carolina limited partnership (the "Borrower"), hereby
certifies to the Administrative Agent and the Lenders, each as defined below, as
follows:
1. This Certificate is delivered to you pursuant to Section 6.2 of the
Amended and Restated Loan Agreement dated as of November __, 2001 (as amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement"), by and among the Borrower, the lenders who are or may become party
thereto (the "Lenders"), and Bank of America, N.A., as administrative agent (the
"Administrative Agent"). Capitalized terms used herein and not defined herein
shall have the meanings assigned thereto in the Loan Agreement.
2. I have reviewed the financial statements of the Borrower dated as of
_______________ and for the _______________ period[s] then ended and such
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 period[s] indicated.
3. I have reviewed the terms of the Loan Agreement, and the related Loan
Documents and have made, or caused to be made under my supervision, a review in
reasonable detail of the transactions and the condition of the Borrower during
the accounting period covered by the financial statements referred to in
Paragraph 2 above. Such review has not disclosed the existence during or at the
end of such accounting period of any condition or event that constitutes a
Default or an Event of Default, nor do I have any knowledge of the existence of
any such condition or event as at the date of this Certificate [except, if such
condition or event existed or exists, describe the nature and period of
existence thereof and what action the Borrower has taken, is taking and proposes
to take with respect thereto].
4. The Borrower is in compliance with the financial covenants contained in
Article VIII of the Loan Agreement as shown on such Schedule 1 and the Borrower
is in compliance with the other covenants and restrictions contained in the Loan
Agreement.
5. The Applicable Margin and calculations determining such figure are set
forth on the attached Schedule 2.
[Signature Page Follows]
WITNESS the following signature as of the _____ day of _________, 200__.
HARLINGEN MEDICAL CENTER, [SEAL]
LIMITED PARTNERSHIP, as Borrower
By: HARLINGEN HOSPITAL
MANAGEMENT, INC., its General Partner
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
2
Schedule 1
to
Officer's Compliance Certificate
[To be provided by Borrower in form acceptable to Administrative Agent]
Schedule 2
to
Officer's Compliance Certificate
[To be provided by Borrower in form acceptable to Administrative Agent]
2
EXHIBIT J
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this "Agreement"), dated as of November __, 2001, by
and between HARLINGEN MEDICAL CENTER, LIMITED PARTNERSHIP, a North Carolina
limited partnership (the "Grantor"), and BANK OF AMERICA, N.A., a national
banking association, as administrative agent (the "Administrative Agent") for
the ratable benefit of itself and the financial institutions (the "Lenders") as
are, or may from time to time become, parties to the Loan Agreement (as defined
below).
STATEMENT OF PURPOSE
Pursuant to the terms of the Amended and Restated Loan Agreement dated as
of even date herewith (as amended, restated, supplemented or otherwise modified,
the "Loan Agreement"), by and among the Grantor, as Borrower, the Lenders and
the Administrative Agent, the Lenders have agreed to extend a certain credit
facility to the Grantor as more particularly described therein.
To induce the Lenders and the Administrative Agent to enter into the Loan
Agreement, and as a condition to the extension of the credit facility
thereunder, the Lenders require that the Grantor grant a continuing security
interest in and to the "Collateral" (as hereinafter defined) to secure the
payment and performance of the "Obligations" (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Grant of Security.
(a) The Grantor hereby assigns and pledges to the Administrative Agent,
for the ratable benefit of the Administrative Agent and the Lenders, and hereby
grants to the Administrative Agent, for the ratable benefit of the
Administrative Agent and the Lenders, a security interest (the "Security
Interests") in all of the Grantor's right, title and interest in and to the
following, whether now owned or hereafter acquired (the "Collateral"):
(i) all inventory in all of its forms, wherever located, now or
hereafter existing, including, but not limited to, all raw materials,
other materials, supplies, work-in-process and finished goods (including
all drugs, medical supplies, hospital supplies, books and uniforms), all
accessions thereto, documents therefor and any products made or processed
therefrom and all substances, if any, commingled therewith or added
thereto (any and all such inventory, accessions, documents, products and
substances, the "Inventory");
(ii) (A) all accounts, contract rights, chattel paper, electronic
chattel paper, instruments, deposit accounts, letter of credit rights,
general intangibles and other obligations of any kind, now or hereafter
existing, whether or not arising out of or in connection with the sale or
lease of goods or the rendering of services, including, without
limitation, all present or future accounts receivable, all rights to
payment of a monetary obligation, whether or not earned by performance,
for property sold, leased, licensed, assigned or otherwise disposed of or
to be sold, leased, licensed, assigned or otherwise disposed of, for
services rendered or to be rendered, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, or
arising out of the use of a credit card or charge card or information
contained on or for use with the card, all rights in any merchandise or
goods which any of the same may represent, all notes receivable, health
care insurance receivables, book debts, notes, bills, drafts, acceptances,
choses in action, and all sums of money due or to become due thereon and
all proceeds thereof and all rights, title, security interests and
guarantees with respect to each of the foregoing, and (B) all rights now
or hereafter existing in and to all security agreements, leases, and other
contracts securing or otherwise relating to any such accounts, contract
rights, chattel paper, electronic chattel paper, instruments, deposit
accounts, letter of credit rights, general intangibles or obligations (any
and all such accounts, contract rights, chattel paper, electronic chattel
paper, instruments, deposit accounts, letter of credit rights, general
intangibles and obligations being the "Receivables," and any and all such
security agreements, leases and other contracts being the "Related
Contracts"); provided, however, that the security interest granted herein
in any accounts or contract rights referred to above is subject to any
applicable legal restriction on such security interest, including under
any Medicare Regulations or any Medicaid Regulations;
(iii) all equipment of the Grantor, wherever located, now or
hereafter existing, including, without limitation, all other machinery,
furniture, equipment and goods (other than Inventory) and all other
tangible assets of the Grantor used or bought for use primarily in the
business of the Grantor, including all accessions, additions, attachments,
improvements, alterations, modifications, substitutions, repairs and
replacements thereto and therefor (any and all such equipment, machinery,
accessions, and additions, the "Equipment"); provided, however, that
Equipment does not include any and all equipment financed solely by an
Equipment Lender that does not permit the Administrative Agent, on behalf
of itself and the other Lenders, to encumber or obtain a security interest
in such financed equipment (the "Excluded Equipment"), but does include
(A) all equipment financed by an Equipment Lender that does not prohibit
the grant of a security interest in such financed equipment and (B) all
equipment financed with the proceeds obtained under the Loan Agreement.
(iv) all right, title and interest in all now owned or hereafter
acquired (A) patents, copyrights, trademarks, service marks, trade names
and similar intangible property and all registrations and applications, in
respect thereof, (B) licenses and rights in, and the right to ▇▇▇ for all
past, present and future infringements of, any and all such now owned or
hereafter acquired patents, copyrights, trademarks, service marks, trade
names and similar intangible property and registrations and applications
in respect thereof, (C) all inventions and tangible property embodying or
incorporating such now owned or hereafter acquired patents, copyrights,
trademarks, service marks, trade names and similar intangible property and
registrations and applications in respect thereof and (D) all goodwill
relating to such now owned or hereafter acquired patents, copyrights,
trademarks, service marks, trade names and similar intangible property and
registrations and applications in respect thereof (collectively, the
"Intellectual Property");
2
(v) all general intangibles and all investment property, whether now
existing or hereafter arising and wherever arising, including, but not
limited to, (A) all partnership, corporate, and other interests of the
Grantor in and to any Person, (B) all permits, licenses, contracts
(including all Material Contracts), payment intangibles, agreements,
software, franchises, instruments, indentures, certificates, records,
customer lists, customer and supplier contracts, firm sales orders, bills
of lading (negotiable and non-negotiable) and other rights, privileges and
goodwill obtained or used in connection therewith or any of the
Collateral, (C) all rights, title and interest of the Grantor (1) in or
under the Equity Account and the Project Deposit and to any and all funds
therein, (2) in and to the Plans, and (3) in and to all construction
contracts, architectural contracts, engineering contracts, drawings,
plans, renderings, profiles, studies, shop drawings, plats, reports and
specifications, building permits, sanitary sewer permits, environmental
permits and similar items and all other documents of any kind relating to
the design, construction and operation of the Hospital and (D) all tax
refunds and other refunds or rights to receive payment from U.S. federal,
state or local governments or foreign governments;
(vi) all construction materials and supplies now or hereafter
acquired by the Grantor, which are now or hereafter attached to or
situated in, on or about the Property; and
(vii) all proceeds and products of any and all of the foregoing
Collateral (including, without limitation, proceeds that constitute
property of the types described in clauses (i) - (vi) of this Section
1(a)) and, to the extent not otherwise included, all (i) all collateral
security and supporting obligations given by any Person with respect to
any of the foregoing Collateral, (ii) all payments under insurance
(whether or not the Administrative Agent is the loss payee thereof), or
any indemnity, warranty or guaranty, payable by reason of loss or damage
to or otherwise with respect to any of the foregoing Collateral and (iii)
all cash.
(b) Unless otherwise defined herein or in the Loan Agreement, terms in
Articles 8 and 9 of the Uniform Commercial Code of the State of North Carolina
(as in effect from time to time, the "Code") are used in this Agreement as
therein defined. In addition, to the extent any amendment, revision or other
modification of the Code after the date hereof results in the renumbering of
specific sections, revision of the order of specific sections or other changes
in the organization of the Code in effect as of the date hereof, all references
herein to specific sections of the Code in effect as of the date hereof shall be
deemed to refer to such new section or sections which correspond to such
original sections.
SECTION 2. Security for Obligations.
(a) This Agreement secures the payment and performance of all of the
Obligations, including, without limitation, all amounts that constitute part of
the Obligations and would be owed by the Grantor to the Administrative Agent or
the Lenders under the Loan Agreement or any other Loan Document but for the fact
that due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Grantor such Obligations are unenforceable or not allowable.
3
(b) For the purpose of this Agreement, "Obligations" means the Obligations
as defined in the Loan Agreement and any renewals or extensions of any of the
Obligations.
SECTION 3. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Administrative Agent of
any of the rights hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral and
(c) neither the Lenders nor the Administrative Agent shall have any obligation
or liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Administrative Agent or the Lenders be
obligated to perform any of the obligations or duties of Grantor thereunder or
to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. Representations and Warranties. The Grantor represents and
warrants as follows:
(a) All of the Inventory and the Equipment is located at the places
specified on Schedule I hereto. The chief place of business and chief
executive office of the Grantor and the office where the Grantor keeps its
records concerning the Receivables, and the originals of all chattel paper
that evidence Receivables, are located at the places specified on Schedule
I hereto.
(b) None of the Receivables is evidenced by a promissory note or
other instrument.
(c) The Grantor is the legal and beneficial owner of the Collateral
free and clear of any lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement and
except as permitted under the Loan Agreement. No effective financing
statement or other similar document used to perfect and preserve a
security interest under the laws of any jurisdiction (a "Financing
Statement") covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of the
Administrative Agent relating to this Agreement or as permitted by the
Loan Agreement. As of the date hereof, the Grantor has the trade names set
forth on Schedule II hereto.
(d) The Grantor has exclusive possession and control of the
Inventory and the Equipment.
(e) This Agreement creates a valid, first priority lien on and
Security Interest in the Collateral, enforceable against all third parties
and securing the payment of the Obligations. The financing statements
naming the Grantor as debtor are in appropriate form and when filed in the
offices specified on the Schedules attached hereto, the Security Interests
will constitute valid and perfected Security Interests in the Collateral,
prior to all other Liens and rights of others therein except for Permitted
Liens (to the extent that a security interest therein may be perfected by
filing pursuant to the Code) and all filings and
4
other actions necessary or desirable to perfect and protect such Security
Interests have been duly taken.
(f) No consent of any other Person or entity and no authorization,
approval, or other action by, and no notice to or filing with, any
governmental, administrative or judicial authority or regulatory body and
no payment of any stamp or similar tax on, or in respect of, this
Agreement is necessary or legally advisable (i) for the grant by the
Grantor of the liens and security interests granted hereby or for the
execution, delivery or performance of this Agreement by the Grantor, (ii)
for the perfection or maintenance of the Security Interest created hereby
(including the first priority nature of such Security Interest) other than
the filing of financing statements (and continuation, when applicable)
referred to in clause (e) above and the Loan Agreement, (iii) for the
assignment of any Material Contract or (iv) for the exercise by the Lender
of its rights and remedies hereunder.
(g) The execution, delivery and performance by the Grantor of this
Agreement will not, by the passage of time, the giving of notice or
otherwise, violate any material provision of any Applicable Law or any
Material Contract and will not result in the creation or imposition of any
Lien, other than the Security Interests granted to the Administrative
Agent hereunder, upon or with respect to any property or revenues of the
Grantor.
(h) Material Contracts.
(i) The Grantor has performed all of its material obligations
under each Material Contract to which it is a party and, to the best
knowledge of the Grantor, each party to any Material Contract is in
compliance in all material respects with each such Material Contract and
there are no material defaults by the Grantor or, to the knowledge of the
Grantor, by any other party under any such Material Contract.
(ii) Each Material Contract is in full force and effect and
constitutes a legally enforceable obligation of the Grantor party thereto,
and to the knowledge of the Grantor, each other party thereto, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
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 and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
(iii) No consent or authorization of, filing with or other act
by or in respect of any Governmental Authority is required in connection
with the execution, delivery, performance, validity or enforceability of
any of the Material Contracts by any party thereto other than those which
have been duly obtained, made or performed, are in full force and effect
and do not subject the scope of any such Material Contract to any material
adverse limitation, either specific or general in nature.
5
(iv) The right, title and interest of the Grantor in, to and under
the Material Contracts are not subject to any defenses, offsets, counterclaims
or claims, which such defenses, offsets, counterclaims or claims could
reasonably be expected to have a Material Adverse Effect.
(i) Intellectual Property.
(i) All Intellectual Property owned by the Grantor in its own
name on the date hereof is listed on Schedule III attached hereto.
(ii) On the date hereof, all material Intellectual Property is
valid, subsisting, unexpired and enforceable, has not been abandoned and does
not infringe the intellectual property rights of any other Person.
(iii) Except as set forth in Schedule III on the date hereof,
none of the Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which the Grantor is the licensor or franchisor.
(iv) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
the Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(v) No action or proceeding is pending, or, to the knowledge
of the Grantor, threatened, on the date hereof (i) seeking to limit, cancel or
question the validity of any Intellectual Property or the Grantor's ownership
interest therein, or (ii) which, if adversely determined, would have a material
adverse effect on the value of any Intellectual Property.
SECTION 5. Further Assurances.
(a) The Grantor agrees that from time to time, at the expense of the
Grantor, the Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable
or reasonably requested by the Lender, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the foregoing
the Grantor will: (i) ▇▇▇▇ conspicuously each document included in the Inventory
and each chattel paper included in the Receivables and each Related Contract and
each of its records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Administrative Agent, indicating that such
document, chattel paper, Related Contract or record is subject to the security
interest granted hereby; (ii) if any Receivable shall be evidenced by a
promissory note or other instrument, deliver and pledge to the Administrative
Agent such note or instrument duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Administrative Agent; (iii) if any Inventory or Equipment shall be put into
the possession and control of any Person other than the Grantor, shall cause
such Person to
6
execute and deliver to the Grantor a lien waiver letter in respect of such
Inventory and Equipment; and (iv) execute and file such financing statements or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or reasonably requested by the Administrative
Agent, in order to perfect and preserve the security interest granted or
purported to be granted hereby.
(b) In the event that any Collateral is in the possession of a third
party, the Grantor will join with Administrative Agent in the notification to
such third party of Administrative Agent's interest in the Collateral and the
Grantor will assist Administrative Agent in obtaining the written acknowledgment
of such third party that such third party is holding the Collateral for the
benefit of Administrative Agent. Furthermore, the Grantor shall cooperate with
Administrative Agent as necessary to permit Administrative Agent to obtain
control (as such term is now or hereafter defined in the Code) over all
Collateral consisting of deposit accounts, investment property, letter of credit
rights or electronic chattel paper.
(c) No Grantor will, except upon thirty (30) days' prior written
notice to the Administrative Agent and delivery to the Administrative Agent of
all additional executed financing statements and other documents reasonably
requested by the Administrative Agent to maintain the validity, perfection and
priority of the security interests provided for herein:
(i) change its jurisdiction of organization or the location of
its chief executive office; or
(ii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent
in connection with this Agreement would become misleading.
(d) The Grantor hereby authorizes the Administrative Agent to file
one or more financing statements or continuation statements, and
amendments thereto, relating to all or any part of the Collateral without
the signature of Grantor where permitted by law.
(e) The Grantor will furnish to the Administrative Agent from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Lender may reasonably request, all in reasonable detail.
SECTION 6. Inventory. The Grantor shall keep the Inventory (other than
Inventory sold in the ordinary course of business) at the places therefor
specified on Schedule I or, upon 30 days' prior written notice to the
Administrative Agent, at such other places in a jurisdiction where all action
required by Section 5 shall have been taken with respect to the Inventory.
SECTION 7. Equipment.
(a) The Grantor shall keep the Equipment at the places specified on
Schedule I, or, upon 30 days' prior written notice to the Administrative
Agent, at such
7
other places in a jurisdiction where all action required by Section 5
shall have been taken with respect to the Equipment.
(b) The Grantor shall maintain each item of Equipment in good
working order and condition (reasonable wear and tear and obsolescence
excepted), and in accordance with any manufacturer's manual, and will as
quickly as practicable provide all maintenance, service and repairs
necessary for such purpose and will promptly furnish to the Administrative
Agent a statement respecting any loss or damage to any of the Equipment
which may have a Material Adverse Effect.
SECTION 8. Receivables.
(a) The Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Receivables, and the originals of all chattel paper that evidence
Receivables, at Grantor's address specified in Schedule I hereto or, upon
30 days' prior written notice to the Administrative Agent, at any other
locations in a jurisdiction where all actions required by Section 5 shall
have been taken with respect to the Receivables. The Grantor will hold and
preserve such records and chattel paper and will permit representatives of
the Administrative Agent at any time during normal business hours upon
reasonable notice to inspect and make abstracts from such records and
chattel paper.
(b) Except as otherwise provided in this subsection (b), the Grantor
shall continue to collect, at its own expense, all amounts due or to
become due to the Grantor under the Receivables. In connection with such
collections, the Grantor may take (and, at the Administrative Agent's
direction following the occurrence of a Default or an Event of Default,
shall take) such action as the Grantor or the Administrative Agent may
deem necessary or advisable to enforce collection of the Receivables;
provided, however, that the Administrative Agent shall have the right at
any time after the occurrence and continuance of a Default or an Event of
Default, upon written notice to Grantor of its intention to do so, to
notify the account debtors or obligors under any Receivables of the
assignment of such Receivables to the Administrative Agent and to direct
such account debtors or obligors to make payment of all amounts due or to
become due to Grantor thereunder directly to the Administrative Agent and,
upon such notification and at the expense of Grantor, to enforce
collection of any such Receivables, and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent
as the Grantor might have done. After receipt by the Grantor of the notice
from the Administrative Agent referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including instruments) received by
the Grantor in respect of the Receivables shall be received in trust for
the benefit of the Lenders, shall be segregated from other funds of the
Grantor and shall be forthwith paid over to the Administrative Agent for
the benefit of the Lenders in the same form as so received (with any
necessary endorsement) to be held as cash collateral and applied as
provided by Section 13(b), and (ii) the Grantor shall not adjust, settle
or compromise the amount or payment of any Receivable, release wholly or
partly any account debtor or obligor thereof, or allow any credit or
discount thereon other than in the ordinary course of business. Promptly
after request of the Administrative Agent following the occurrence of a
Default or an Event of Default, the Grantor shall cause all collections
8
of Receivables to be forwarded to such lockboxes as the Lender may direct,
which lockboxes shall be under the exclusive control and dominion of the
Administrative Agent.
SECTION 9. Material Contracts.
(a) The Grantor will perform and comply in all material respects
with all of its obligations under the Material Contracts.
(b) The Grantor will not amend, modify, terminate or waive any
provision of any Material Contract in any manner which could reasonably be
expected to materially adversely affect the value of such Material
Contract as Collateral.
(c) The Grantor will exercise promptly and diligently each and every
material right which it may have under each Material Contract (other than
any right of termination), unless the failure to exercise any such
material right could not reasonably be expected to have a Material Adverse
Effect.
(d) The Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it relating in any
way to any Material Contract that questions the validity or enforceability
of such Material Contract.
SECTION 10. Intellectual Property.
(a) The Grantor (either itself or through licensees) will (i)
continue to use each material trademark applicable to its current business
in order to maintain such trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such trademark, (iii) use such
trademark with the appropriate notice of registration and all other
notices and legends required by Applicable Laws, (iv) not adopt or use any
trademark which is confusingly similar or a colorable imitation of such
trademark unless the Administrative Agent, for the ratable benefit of
itself and the Lenders, shall obtain a perfected security interest in such
▇▇▇▇ pursuant to this Agreement; and (v) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do any act
whereby such trademark may become invalidated or impaired in any way.
(b) The Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any material patent may become
forfeited, abandoned or dedicated to the public.
(c) The Grantor (either itself or through licensees) (i) will employ
each material copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby any material portion of the copyrights may become invalidated
or otherwise impaired. The Grantor will not (either itself or through
licensees) do any act whereby any material portion of the copyrights may
fall into the public domain.
9
(d) The Grantor (either itself or through licensees) will not do any
act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) The Grantor will notify the Administrative Agent and the Lenders
promptly after if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation, the
institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any court or tribunal in any country) regarding
the Grantor's ownership of, or the validity of, any material Intellectual
Property or the Grantor's right to register the same or to own and
maintain the same.
(f) Whenever the Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent
and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision
thereof, the Grantor shall report such filing to the Administrative Agent
within five (5) Business Days after the last day of the fiscal quarter in
which such filing occurs. Upon request of the Administrative Agent, the
Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Administrative Agent
may reasonably request to evidence the Administrative Agent's and the
Lenders' security interest in any Copyright, Patent or Trademark and the
goodwill and General Intangibles of such Grantor relating thereto or
represented thereby.
(g) The Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of the material
Intellectual Property, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of
incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, the Grantor shall
(i) take such actions as the Grantor shall reasonably deem appropriate
under the circumstances to protect such Intellectual Property and (ii) if
such Intellectual Property is of material economic value, promptly notify
the Administrative Agent after it learns thereof and ▇▇▇ for infringement
misappropriation or dilution, to seek injunctive relief where appropriate
and to recover any and all damages for such infringement, misappropriation
or dilution.
SECTION 11. Insurance. The Grantor shall, at its own expense, maintain
insurance with respect to the Inventory in such amounts, against such risks, in
such form and with such insurers, as is specified in the Loan Agreement. The
Grantor shall, if so requested by the Administrative Agent, deliver to the
Administrative Agent original or duplicate policies of such insurance and, as
10
often as the Administrative Agent may reasonably request, a report of a
reputable insurance broker with respect to such insurance. Further, the Grantor
shall, at the request of the Administrative Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of the Loan Agreement and use its best efforts to cause the
insurers to acknowledge notice of such assignment.
SECTION 12. Transfers and Other Liens. The Grantor shall not (i) except as
permitted by the Loan Agreement, sell, assign (by operation of law or otherwise)
or otherwise dispose of, or grant any option with respect to, any of the
Collateral or (ii) create or permit to exist any lien, security interest, option
or other charge or encumbrance upon or with respect to any of the Collateral,
except for the security interest under this Agreement and except as permitted in
the Loan Agreement.
SECTION 13. Administrative Agent Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Administrative Agent the Grantor's
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time in the Administrative
Agent's discretion after and during the occurrence of a Default or an Event of
Default, to take any action and to execute any instrument that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Agreement (subject to the rights of the Grantor under Section 9),
including, without limitation:
(a) to ask for, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in connection with the Collateral,
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with subclause (a)
above, and
(c) to file any claims or take any action or institute any
proceedings that the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral.
SECTION 14. Administrative Agent May Perform. If the Grantor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause the performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by
Grantor under Section 17(b).
SECTION 15. The Administrative Agent's Duties. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which the Administrative Agent accords its own property.
11
SECTION 16. Remedies. If any Default or Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the Code in effect at that time, and also may (i)
require the Grantor to, and the Grantor hereby agrees that it will at its
expense and upon request of the Administrative Agent forthwith, assemble
all or part of the Collateral as directed by the Administrative Agent and
make it available to the Administrative Agent at a place to be designated
by the Administrative Agent that is reasonably convenient to both parties;
(ii) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any of
the Administrative Agent's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Administrative Agent
may deem commercially reasonable; (iii) occupy any premises owned or
leased by the Grantor where the Collateral or any part thereof is
assembled for a reasonable period in order to effectuate its rights and
remedies hereunder or under law, without obligation to the Grantor in
respect of such occupation; and (iv) exercise any and all rights and
remedies of the Grantor under or in connection with the Related Contracts
or otherwise in respect of the Collateral, including, without limitation,
any and all rights of the Grantor to demand or otherwise require payment
of any amount under, or performance of any provision of, the Related
Contracts. The Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to the Grantor of the time and
place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Administrative Agent
shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Administrative Agent may adjourn any public
or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(b) Any cash held by the Administrative Agent as Collateral and all
cash proceeds received by the Administrative Agent in respect of any sale
of, collection from, or other realization upon, all or any part of the
Collateral may, in the discretion of the Administrative Agent, be held by
the Administrative Agent as collateral for, and/or then or at any time
thereafter be applied (after payment of any amounts payable to the
Administrative Agent pursuant to Section 17) in whole or in part by the
Administrative Agent against, all or any part of the Obligations, in such
order and manner as the Administrative Agent may elect. Any surplus of
such cash or cash proceeds held by the Administrative Agent and remaining
after payment in full of all the Obligations shall be paid over to the
Grantor or to whomsoever may be lawfully entitled to receive such surplus.
SECTION 17. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Administrative Agent from
and against any and all claims, losses and liabilities (including
reasonable attorneys' fees) arising out of or resulting from this
Agreement (including, without limitation, enforcement
12
of this Agreement), except claims, losses or liabilities resulting from
the Administrative Agent's gross negligence or willful misconduct as
determined by a non-appealable final judgment of a court of competent
jurisdiction.
(b) The Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents,
that the Administrative Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon,
any of the Collateral in accordance with this Agreement, (iii) the
exercise or enforcement of any of the rights of the Administrative Agent
hereunder or (iv) the failure by the Grantor to perform or observe any of
the provisions hereof.
SECTION 18. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, and no consent to any departure by the Grantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No failure
on the part of the Administrative Agent to exercise, and no delay in exercising
any right hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.
SECTION 19. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including teletransmission
communication) and mailed, transmitted or delivered, if to Grantor, to it at its
address specified in Section 12.1 of the Loan Agreement, if to the
Administrative Agent, to it at the address of the Administrative Agent specified
in Section 12.1 of the Loan Agreement, or, as to any party, to it at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. All such notices
and other communications shall, when teletransmitted, telegraphed, telexed,
faxed or cabled, be effective when teletransmitted with receipt confirmed,
delivered to the telegraph company, confirmed by telex answerback, confirmed
received or delivered to the cable company, respectively, when delivered, be
effective upon delivery, and when mailed, be effective upon being deposited in
the mails, in each case addressed as aforesaid.
SECTION 20. Continuing Security Interest; Assignments under Loan
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the indefeasible
payment in full of the Obligations (on or after their maturity) and all other
amounts payable under this Agreement, (ii) be binding upon the Grantor, its
successors and assigns and (iii) inure to the benefit of, and be enforceable by,
the Administrative Agent and its successors, transferees and assigns. Upon the
indefeasible payment in full of the Obligations (on or after their maturity) and
all other amounts payable under this Agreement, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
Grantor. Upon any such termination the Administrative Agent will, at the
Grantor's expense, execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination.
13
SECTION 21. Severability. Any provision of this Agreement 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 22. 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 23. Governing Law; Jurisdiction; Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, 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 SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) The Grantor 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, any rights or
obligations hereunder, or the performance of such rights and obligations.
The Grantor 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 in connection with this Agreement, any rights or
obligations hereunder, or the performance of such rights and obligations,
on behalf of itself or its property, in the manner specified in Section
19. Nothing in this Section 23(b) shall affect the right of the
Administrative Agent to serve legal process in any other manner permitted
by Applicable Law or affect the right of the Administrative Agent to bring
any action or proceeding against the Grantor or its properties in the
courts of any other jurisdictions.
(c) The Grantor 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 or the rights and obligations of the parties
hereunder. The Grantor 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.
(d) 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 THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR
14
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 23 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 24. Waivers, Non-Exclusive Remedies. No failure on the part of the
Administrative Agent or any Lender to exercise, and no delay in exercising and
no course of dealing with respect to, any right under the Loan Agreement, this
Agreement or any other Loan Document shall operate as a waiver thereof or
hereof; nor shall any single or partial exercise by the Administrative Agent or
any Lender of any right under the Loan Agreement, this Agreement or any other
Loan Document preclude any other or further exercise thereof, and the exercise
of any rights in this Agreement, the Loan Agreement and the other Loan Documents
are cumulative and are not exclusive of any other remedies provided by law. This
Agreement is a Loan Document executed pursuant to the Loan Agreement.
SECTION 25. Headings. The various headings of this Agreement are inserted
for convenience only and neither limit nor amplify the provisions of this
Agreement.
SECTION 26. Inconsistencies with Other Documents. In the event there is a
conflict or inconsistency between this Agreement and the Loan Agreement, the
terms of the Loan Agreement shall control; provided, that any provision herein
which imposes additional burdens on the Grantor or further restricts the rights
of the Grantor or gives the Administrative Agent or Lenders additional rights
shall not be deemed to be in conflict or inconsistent with the Loan Agreement
and shall be given full force and effect.
SECTION 27. Limitation of Liability. No party to this Agreement, nor any
Affiliate thereof shall have any liability with respect to, any other party
hereto or Affiliate thereof and each party hereby waives, releases and agrees
not to ▇▇▇ upon, any claim for any special, indirect, punitive, exemplary or
consequential damages suffered by such party in connection with, arising out of,
or in any way related to this Agreement and the other Loan Documents, the
transactions contemplated herein or therein, or any act, omission or event
occurring in connection herewith or therewith.
SECTION 28. Terms. All terms used, but not defined, herein shall have the
respective meanings set forth in the Loan Agreement.
[Signature Page Follow]
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IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered as of the date first above written.
GRANTOR:
HARLINGEN MEDICAL CENTER,
LIMITED PARTNERSHIP
By: HARLINGEN HOSPITAL
MANAGEMENT, INC., its General Partner
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative
Agent
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
SCHEDULE I
Location of Inventory
and Chief Place of Business and Executive Office
of Grantor
SCHEDULE II
Trade Names
SCHEDULE III
Intellectual Property
EXHIBIT K
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
FORM OF PLEDGE AGREEMENT
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (as amended, restated, supplemented
or otherwise modified from time to time, this "Agreement"), dated as of November
__, 2001, by and among HARLINGEN PARTNERSHIP HOLDINGS, INC., an Arizona
corporation ("HPH"), HARLINGEN HOSPITAL MANAGEMENT, INC., a North Carolina
corporation ("HMI", individually, a "Pledgor" and collectively with HPH, the
"Pledgors"), HARLINGEN MEDICAL CENTER, LIMITED PARTNERSHIP, a North Carolina
limited partnership (the "Borrower") and BANK OF AMERICA, N.A., a national
banking association, as administrative agent (the "Administrative Agent") for
the ratable benefit of itself and the financial institutions (the "Lenders") as
are, or may from time to time become, parties to the Loan Agreement (as defined
below).
STATEMENT OF PURPOSE
WHEREAS, pursuant to the terms of the Amended and Restated Loan
Agreement dated as of even date herewith (as amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement"), by and among the
Borrower, the Lenders and the Administrative Agent, the Lenders have agreed to
extend a certain credit facility to the Borrower as more particularly described
therein.
WHEREAS, pursuant to the terms and conditions of the Loan Agreement,
the Pledgors guaranteed the Obligations of the Borrower under the Loan
Agreement.
WHEREAS, HMI is the sole general partner of the Borrower and owns a
one-percent (1%) interest in the Borrower and HPH is a limited partner of the
Borrower and owns a fifty-percent (50%) interest in the Borrower. Therefore, the
Pledgors and the Borrower are related financial enterprises and all loans to the
Borrower will inure directly or indirectly to benefit the Pledgors.
WHEREAS, in connection with the transactions contemplated by the Loan
Agreement and as a condition precedent to the extensions of credit thereunder,
the Lenders have requested, and the Pledgors have agreed to execute and deliver,
this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to execute the Loan Agreement and accept
the security contemplated hereby and the Lenders to make extensions of credit
under the Loan Agreement, each Pledgor hereby agrees with the Administrative
Agent for the ratable benefit of itself and the Lenders as follows:
SECTION 1. Defined Terms.
(a) Unless otherwise defined herein, terms which are defined in the
Loan Agreement and used herein (including the preamble and statement of purpose)
are so used as so defined, and the following terms shall have the following
meanings:
"Agreement" means this Pledge and Security Agreement, as
amended, restated, supplemented or otherwise modified.
"Certificate of Partnership" means the certificate of domestic
limited partnership of the Borrower, as amended, restated, supplemented
or otherwise modified from time to time.
"Code" means the Uniform Commercial Code as in effect in the
State of North Carolina from time to time; provided that if by reason
of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interests in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than North Carolina, "Code" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
"Collateral" means all of the Partnership Interests,
including, without limitation, all books and records relating thereto,
and all Proceeds therefrom.
"Guaranty Agreement" means the Guaranty Agreement dated as of
the date hereof executed by MedCath Corporation and certain
Subsidiaries thereof in favor of Bank of America, N.A., as
Administrative Agent for the ratable benefit of itself and the Lenders.
"Partnership Interests" means the collective reference to the
following (a) all partnership interests (including, without limitation,
all general partnership interests) owned by each Pledgor in the
Borrower and all rights relating thereto, including, without
limitation, each Pledgor's capital account, each Pledgor's interest as
a partner in the net cash flow, net profit and net loss, and items of
income, gain, loss, deduction and credit of the Borrower, each
Pledgor's interest in all distributions made or to be made by the
Borrower to the such Pledgor and all of the other economic rights,
titles and interests of each Pledgor as a partner of the Borrower (the
foregoing, collectively, the "Partner Interests"), (b) all management
rights and interest of each Pledgor in the Borrower and all rights
relating thereto, including, without limitation, any and all rights to
request additional capital contributions from any partner of the
Borrower and any and all rights to restrict or limit distributions to
partners or set reserves with respect assets of the Borrower available
for distribution to partners of the Borrower and all of the other
economic rights, titles and interests of each Pledgor as a partner of
the Borrower (the foregoing, the "Management Interests"), and (c) any
and all indemnification rights and voting rights arising on account of
or relating to the Partner Interests or Management Interests, in the
case of each of clause (a), (b) and (c), whether set forth in the
Partnership Agreement, by separate agreement or otherwise.
"Obligations" means each Pledgor's Guaranteed Obligations as
defined in the Guaranty Agreement.
2
"Partnership Agreement" means the limited partnership
agreement of the Borrower, as amended, restated, supplemented or
otherwise modified from time to time.
"Perfection Certificate" means a certificate dated as of even
date herewith, setting forth the corporate or other name, chief
executive office or principal place of business in each state and other
current locations of each Pledgor and the Borrower and such other
information as the Administrative Agent deems pertinent to the
perfection of security interests, completed and supplemented with the
schedules and attachments contemplated thereby to the satisfaction of
the Administrative Agent, and duly certified by the chief executive or
chief financial officer of each Pledgor and the Borrower so authorized
to act.
"Permitted Liens" means Liens permitted pursuant to Section
9.2 of the Loan Agreement.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-102 of the Code.
(b) To the extent any amendment, revision or other modification of the
Code after the date hereof results in the renumbering of specific sections,
revision of the order of specific sections or other changes in the organization
of the Code in effect as of the date hereof, all references herein to specific
sections of the Code in effect as of the date hereof shall be deemed to refer to
such new section or sections which correspond to such original sections.
SECTION 2. Pledge and Grant of Security Interest. Each Pledgor hereby
grants, pledges and collaterally assigns to the Administrative Agent, for the
ratable benefit of the Administrative Agent and the Lenders, a first priority
security interest in all of such Pledgor's right, title and interest in the
Collateral, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations; provided that such pledge shall be effective only
to the extent that such pledge is not inconsistent with the Corporate Revolver
(as defined in the Loan Agreement).
SECTION 3. Pledgor Remains Liable. Anything herein to the contrary
notwithstanding, (a) each Pledgor shall remain liable to perform all of its
duties and obligations as a partner of the Borrower to the same extent as if
this Agreement had not been executed, (b) the exercise by the Administrative
Agent or any Lender of any of its rights hereunder shall not release any Pledgor
from any of its duties or obligations as a partner of the Borrower, and (c)
neither the Administrative Agent nor any Lender shall have any obligation or
liability as a partner of the Borrower by reason of this Agreement.
SECTION 4. Representations and Warranties. To induce the Administrative
Agent and Lenders to execute the Loan Agreement and to accept the security
contemplated hereby and the Lenders to make extensions of credit under the Loan
Agreement, each Pledgor hereby represents and warrants that:
3
(a) Such Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Collateral, free of any and all
Liens or options in favor of, or claims of, any other Person, except
the Lien created by this Agreement.
(b) Schedule I accurately reflects such Pledgor's Partnership
Interest in the Borrower and the Partnership Interest pledged by such
Pledgor constitutes all of the outstanding ownership interests of such
Pledgor in the Borrower.
(c) Upon the filing of properly completed financing or other
statements in (i) with respect to HPH, the offices of the Secretary of
State of Arizona, and (ii) with respect to HMI, the offices of the
Secretary of State of North Carolina, the Lien on the Collateral
granted pursuant to this Agreement will constitute a valid, perfected
first priority Lien on the Collateral, enforceable as such against all
creditors of such Pledgor.
(d) None of the Partnership Interests are represented by
certificates.
(e) None of the Partnership Interests are a medium for
investment which by their terms expressly provide that they are a
security governed by Article 8 of the Code.
(f) The "jurisdiction" of the Borrower for purposes of Section
8-110(d) of the Code is the jurisdiction of formation of the Borrower,
as set forth in the Perfection Certificate.
SECTION 5. Certain Covenants. Each Pledgor covenants and agrees with
the Administrative Agent, for the ratable benefit of the Administrative Agent
and Lenders, that from and after the date of this Agreement until the
Obligations are paid in full and the Commitments are terminated:
(a) Such Pledgor shall maintain the security interest created
by this Agreement as a perfected security interest having at least the
priority described in Section 4(c) and shall defend such security
interest against the claims and demands of all Persons whomsoever.
(b) Such Pledgor will not without thirty (30) days prior
written notice to the Administrative Agent (i) change its name,
identity, jurisdiction of incorporation, or corporate structure, or
(ii) permit the Borrower to change its name, identity, jurisdiction of
incorporation, corporate structure, or its "jurisdiction" for purposes
of Section 8-110(d) of the Code, in any such case so as to make any
financing or other statement filed as provided herein become seriously
misleading.
(c) Such Pledgor will not (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of any of the Collateral, except
as permitted by the Loan Agreement, or (ii) create or suffer to exist
any Lien or other charge or encumbrance upon or with respect to any of
the Collateral to secure indebtedness of any Person or entity.
4
(d) Upon reasonable request of the Administrative Agent, such
Pledgor will, and will cause the Borrower to, execute such financing
statements, notices of lien, notices of assignment and continuations or
amendments to any of the foregoing, and other documents (and pay the
costs of filing or recording the same in all public offices deemed
necessary by the Administrative Agent) and do such other acts and
things, including, without limitation, taking any actions necessary to
enable the Administrative Agent to obtain "control" (within the meaning
of the applicable Code) with respect to the Partnership Interests, all
as the Administrative Agent may from time to time reasonably request to
establish and maintain a valid perfected pledge and security interest
in the Collateral. Each of the Pledgors and the Borrower hereby
constitutes and appoints the Administrative Agent (and any of its
officers) as its attorney-in-fact with full power and authority,
exercisable after and during the occurrence of an Event of Default, to
execute and deliver all documents necessary to perfect and keep
perfected the security interests created hereby. This power of attorney
hereby granted is a special power of attorney coupled with an interest
and shall be irrevocable by each of the Pledgors and the Borrower.
(e) HMI agrees that as general partner of the Borrower it will
abide by, perform and discharge each and every material obligation,
covenant and agreement to be abided by, performed or discharged by the
general partner under the terms of the Certificate of Partnership and
the Partnership Agreement, at no cost or expense to the Administrative
Agent and the Lenders. HPH agrees that as a limited partner of the
Borrower it will abide by, perform and discharge each and every
material obligation, covenant and agreement to be abided by, performed
or discharged by a limited partner under the terms of the Certificate
of Partnership and the Partnership Agreement, at no cost or expense to
the Administrative Agent and the Lenders.
(f) If such Pledgor shall, as a result of its ownership of the
Collateral, become entitled to receive or shall receive any
certificate, option or rights, whether in addition to, in substitution
of, as a conversion of, or in exchange for any of the Collateral, or
otherwise in respect thereof, such Pledgor shall accept the same as the
agent of the Administrative Agent, hold the same in trust for the
Administrative Agent and deliver the same forthwith to the
Administrative Agent in the exact form received, duly endorsed by such
Pledgor to the Administrative Agent, if required, to be held by the
Administrative Agent, subject to the terms hereof, as additional
collateral security for the Obligations. In addition, any sums paid
upon or in respect of any Collateral upon the liquidation or
dissolution of the Borrower shall be paid over to the Administrative
Agent to be held by it hereunder as additional collateral security for
the Obligations, and upon the recapitalization or reclassification of
the Borrower, any new securities issued in connection with or in
exchange for any Collateral shall be delivered to the Administrative
Agent to be held by it hereunder as additional collateral security for
the Obligations. If any sums of money or property so paid or
distributed in respect of any Collateral shall be received by any
Pledgor, such Pledgor shall, until such money or property is paid or
delivered to the Administrative Agent, hold such money or property in
trust for the Administrative Agent, segregated from other funds of such
Pledgor, as additional collateral security for the Obligations.
5
(g) At any time and from time to time, upon the reasonable
written request of the Administrative Agent, and at the sole expense of
such Pledgor, such Pledgor and the Borrower will promptly and duly
execute and deliver such further instruments and documents and take
such further actions as the Administrative Agent may reasonably request
for the purposes of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted. If any amount
payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note, other instrument or chattel
paper, such note, instrument or chattel paper shall be immediately
delivered to the Administrative Agent, duly endorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement.
(h) Such Pledgor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp,
excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any
of the transactions contemplated by this Agreement.
SECTION 6. Distributions; Voting Rights.
(a) Unless an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have given notice to such Pledgor of the
Administrative Agent's intent to exercise its rights pursuant to Section 7
below, such Pledgor shall be permitted to receive all cash distributions paid in
accordance with the terms of the Loan Agreement in respect of the Collateral and
to exercise all voting and other rights with respect to the Collateral;
provided, that no vote shall be cast or right exercised or other action taken
which would (i) constitute a Default or an Event of Default or (ii) in the
Administrative Agent's reasonable judgment, impair the value of the Collateral.
(b) Without the prior written consent of the Administrative Agent, no
Pledgor will (i) vote to enable, or take any other action to permit, the
Borrower to issue any stock, other equity securities of any nature or to issue
any other securities convertible into or granting the right to purchase or
exchange for any stock, or other equity securities of any nature of the
Borrower, except for additional equity interests that (A) will be subject to the
security interest granted herein in favor of the Administrative Agent, the
certificates of which, if any, will be promptly delivered to the Administrative
Agent, (B) are contemplated to be issued by the Partnership Agreement (as in
effect on the date hereof) or (C) do not exceed ten percent (10%) of the
aggregate amount of equity securities of the Borrower as of the date hereof
(provided that, notwithstanding the foregoing exceptions, the Pledgors,
collectively, must own greater than fifty percent (50%) of the equity securities
of the Borrower at all times) or (ii) enter into any agreement or undertaking
restricting the right or ability of such Pledgor or the Administrative Agent to
sell, assign or transfer any of the Partnership Interests or Proceeds thereof.
Each Pledgor will defend the right, title and interest of the Administrative
Agent in and to any Collateral against the claims and demands of all Persons
whomsoever.
SECTION 7. Rights of the Administrative Agent.
6
(a) With respect to each Pledgor, if an Event of Default shall occur
and be continuing and the Administrative Agent shall give ten (10) Business Days
prior written notice of its intent to exercise such rights to such Pledgor, the
Administrative Agent shall have the right to receive any and all cash
distributions paid in respect of the Collateral and make application thereof to
the Obligations in the order set forth in the Loan Agreement, and the
Administrative Agent or its nominee may thereafter exercise all voting,
management and other rights pertaining to such collateral (to the extent
permitted under Applicable Law), all without liability except to account for
property actually received by it, but the Administrative Agent shall have no
duty to such Pledgor to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing.
(b) The rights of the Administrative Agent and the Lenders hereunder
shall not be conditioned or contingent upon the pursuit by the Administrative
Agent or any Lender of any right or remedy against the Borrower, the Guarantors
or against any other Person which may be or become liable in respect of all or
any part of the Obligations or against any collateral security therefor,
guarantee therefor or right of offset with respect thereto. Neither the
Administrative Agent nor any Lender shall be liable for any failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so, nor shall the Administrative Agent be under any obligation to sell or
otherwise dispose of any Collateral upon the request of any Pledgor or any other
Person or to take any other action whatsoever with regard to the Collateral or
any part thereof.
(c) Pursuant to any applicable provisions of the Code and any other
applicable law, each of the Pledgors and the Borrower authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Pledgor or the Borrower in such form and in such offices as
the Administrative Agent determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing or
recording in any jurisdiction.
SECTION 8. Remedies. If an Event of Default shall occur and be
continuing, with the consent of the Required Lenders, the Administrative Agent
may, and upon the request of the Required Lenders, the Administrative Agent
shall, exercise on behalf of itself and the Lenders, all rights and remedies
granted in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, and in addition thereto, all rights
and remedies of a secured party under the Code. Without limiting the generality
of the foregoing with regard to the scope of the Administrative Agent's
remedies, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by Section 7 hereof or any Applicable Law) to or upon any
Pledgor, the Borrower or any other Person (all and each of which demands,
defenses, advertisements and notices (except any notice required by Section 7
hereof or any Applicable Law) are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange, broker's
board or office of the Administrative Agent or any Lender or elsewhere
7
in a commercially reasonable manner. The Administrative Agent or any Lender
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption of
any Pledgor, which right or equity is hereby waived or released. The
Administrative Agent shall apply any Proceeds from time to time held by it in a
collateral account to be held by the Administrative Agent for the benefit of
itself and the other Lenders; and the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in respect thereof or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel thereto, to the payment in whole or in part of the
Obligations, in the order set forth in the Loan Agreement, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-610 and Section 9-615 of the Code, need the Administrative Agent account for
the surplus, if any, to any Pledgor. To the extent permitted by applicable law,
each Pledgor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Lender arising out of the exercise by them in good
faith of any rights hereunder. Notice of a proposed sale or other disposition of
Collateral shall be given in writing to each Pledgor and deemed reasonable and
proper if given at least ten (10) Business Days before such sale or other
disposition. Each Pledgor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
SECTION 9. Private Sales.
(a) Each Pledgor recognizes that the Administrative Agent may be unable
to effect a public sale of any or all the Collateral, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Collateral for
the period of time necessary to permit the Borrower thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if the Borrower would agree to do so.
(b) Each Pledgor further agrees to use commercially reasonable to do or
cause to be done all such other acts as may be reasonably necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this Section 9
valid and binding and in compliance with any and all other Applicable Laws.
SECTION 10. No Subrogation. Notwithstanding any payment or payments
made by any Pledgor hereunder, or any setoff or application of funds of any
Pledgor by the Administrative Agent or any Lender, or the receipt of any amounts
by the Administrative Agent or any Lender
8
with respect to any of the Collateral, no Pledgor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or the other Guarantors or against any other collateral
security held by the Administrative Agent or any Lender for the payment of the
Obligations, nor shall any Pledgor seek any reimbursement from the Borrower or
the other Guarantors in respect of payments made by any Pledgor in connection
with the Collateral, or amounts realized by the Administrative Agent or any
Lender in connection with the Collateral, until all amounts owing to the
Administrative Agent and Lenders on account of the Obligations are paid in full
and the Commitments are terminated. If any amount shall be paid to any Pledgor
on account of such subrogation rights at any time when all of the Obligations
shall not have been paid in full, such amount shall be held by such Pledgor in
trust for the Administrative Agent, segregated from other funds of such Pledgor,
and shall, forthwith upon receipt by such Pledgor, be turned over to the
Administrative Agent in the exact form received by such Pledgor (duly indorsed
by such Pledgor to the Administrative Agent, if required) to be applied against
the Obligations, whether matured or unmatured, in such order as set forth in the
Loan Agreement.
SECTION 11. Amendments, etc. With Respect to the Obligations.
(a) Each Pledgor shall remain obligated hereunder, and the Collateral
shall remain subject to the Lien granted hereby, notwithstanding that, without
any reservation of rights against any Pledgor, and without notice to or further
assent by any Pledgor, any demand for payment of any of the Obligations made by
the Administrative Agent or any Lender may be rescinded by the Administrative
Agent or such Lender, and any of the Obligations continued, and the Obligations,
or the liability of the Borrower or any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered, or
released by the Administrative Agent or any Lender, and the Loan Agreement, the
Notes, any other Loan Documents and any other documents executed and delivered
in connection therewith may be amended, modified, supplemented or terminated, in
whole or part, as the Lenders (or the Required Lenders, as the case may be) may
deem advisable from time to time, and any guarantee, right of offset or other
collateral security at any time held by the Administrative Agent or any Lender
for the payment of the Obligations may be sold, exchanged, waived, surrendered
or released. Neither the Administrative Agent nor any Lender shall have any
obligation to protect, secure, perfect or insure any other Lien at any time held
by it as security for the Obligations or any property subject thereto. Each
Pledgor waives any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon this Agreement; the Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Agreement; and all dealings between any Pledgor,
on the one hand, and the Administrative Agent and the Lenders, on the other,
shall likewise be conclusively presumed to have been had or consummated in
reliance upon this Agreement. Each Pledgor waives diligence, presentment,
protest, demand for payment and notice (except as required by the Loan
Agreement) of default or nonpayment to or upon such Pledgor with respect to the
Obligations.
(b) Each Pledgor waives and agrees not to assert any rights or
privileges which it may acquire under Sections 9-210, 9-607, 9-608, 9-610,
9-615, 9-620, 9-621, 9-623, 9-624, 9-625 or 9-627 of the Code. Each Pledgor
shall remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay its Obligations and the
9
fees and disbursements of any attorneys employed by the Administrative Agent or
any Lender to collect such deficiency.
SECTION 12. Limitation on Duties Regarding Collateral. The
Administrative Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar securities and property for its own
account. Neither the Administrative Agent, any Lender nor any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Pledgor or otherwise.
SECTION 13. Coupled with an Interest. All powers of attorney and other
authorizations granted to the Administrative Agent and any Persons designated by
the Administrative Agent pursuant to any provisions of this Agreement with
respect to the Collateral shall be deemed coupled with an interest and shall be
irrevocable so long as any of the Obligations remain unpaid or unsatisfied or
the Loan Agreement has not been terminated.
SECTION 14. Severability. Any provision of this Agreement 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 affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 15. Section Headings. Titles and captions of Sections and
subsections in this Agreement are for convenience only, and neither limit nor
amplify the provisions of this Agreement.
SECTION 16. No Waiver; Cumulative Remedies. Neither the Administrative
Agent nor any Lender shall by any act (except by a written instrument pursuant
to Section 17 hereof) be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Administrative Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Administrative Agent or any Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Administrative Agent or such Lender would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
SECTION 17. Waivers and Amendments; Successors and Assigns. None of the
terms or provisions of this Agreement may be amended, supplemented or otherwise
modified except by a written instrument executed by each of the Pledgors and
Administrative Agent; provided that (a) any provision of this Agreement may be
waived by the Administrative Agent in a letter or agreement executed by the
Administrative Agent or by telex or facsimile transmission from the
Administrative Agent and (b) any consent or waiver by the Administrative Agent
to any
10
amendment, supplement or modification hereto shall be subject to approval
thereof by each of the Lenders or Required Lenders, as applicable, in accordance
with Section 12.11 of the Loan Agreement. This Agreement shall be binding upon
the successors and assigns of the Pledgors and shall inure to the benefit of the
Administrative Agent and the Lenders and their respective successors and
assigns.
SECTION 18. Governing Law, Jurisdiction, Venue and Waiver of Jury
Trial.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, 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 SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) Each Pledgor 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, any rights or obligations hereunder,
or the performance of such rights and obligations. Each Pledgor 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 in
connection with this Agreement, any rights or obligations hereunder, or the
performance of such rights and obligations, on behalf of itself or its property,
in the manner specified in Section 19. Nothing in this Section 18(b) shall
affect the right of the Administrative Agent to serve legal process in any other
manner permitted by Applicable Law or affect the right of the Administrative
Agent to bring any action or proceeding against any Pledgor or its properties in
the courts of any other jurisdictions.
(c) Each Pledgor 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 or the rights and obligations of the parties hereunder. Each Pledgor
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.
(d) 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
THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, 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 18
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
11
SECTION 19. Notices. All notices and communications hereunder shall be
given to the addresses and otherwise in accordance with Section 17 of the
Guaranty Agreement.
SECTION 20. Set-Off. Each Pledgor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time pursuant
to Section 12.3 of the Loan Agreement, without notice to such Pledgor, any such
notice being expressly waived by such Pledgor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Administrative Agent or
such Lender to or for the credit or the account of such Pledgor, or any part
thereof in such amounts as the Administrative Agent or such Lender may elect,
against and on account of the obligations and liabilities of the such Pledgor to
the Administrative Agent or such Lender hereunder and claims of every nature and
description of the Administrative Agent or such Lender against such Pledgor, in
any currency, whether arising hereunder, under the Loan Agreement, any other
Loan Document or otherwise, as the Administrative Agent or such Lender may
elect, whether or not the Administrative Agent or any Lender has made any demand
for payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Administrative Agent and each Lender shall notify
the such Pledgor promptly of any such set-off and the application made by the
Administrative Agent or such Lender of the proceeds thereof; provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Administrative Agent and each Lender under this
Section 20 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Administrative Agent or such
Lender may have.
SECTION 21. Authority of Administrative Agent. Each Pledgor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Loan Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and any Pledgor, the Administrative Agent
shall be conclusively presumed to be acting as Administrative Agent for itself
and the Lenders with full and valid authority so to act or refrain from acting,
and neither any Pledgor nor the Borrower shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
SECTION 22. Control Agreement; Acknowledgment by Borrower.
(a) Each Pledgor hereby authorizes and instructs the Borrower to
comply, and the Borrower hereby agrees to so comply, with any instruction
received from the Administrative Agent in accordance with the terms of this
Agreement with respect to the Collateral, without any consent or further
instructions from any Pledgor or any other Person, and each Pledgor agrees that
the Borrower shall be fully protected in so complying. The Borrower agrees that
its agreement set forth in the preceding sentence shall be sufficient to create
in favor of the Administrative Agent, for the benefit of the Lenders, "control"
of the Partnership Interests within the meaning of such
12
term under Section 8-106(c) of the Code. (Notwithstanding the foregoing, nothing
in this Agreement is intended or shall be construed to mean or imply that the
Partnership Interests constitute "securities" within the meaning of such term
under Section 8-102(a)(15) of the Code or otherwise to limit or modify the
application of Section 8-103(c) of the Code. Rather, the Administrative Agent
has requested that this provision be included in this Agreement solely out of an
abundance of caution in the event the Partnership Interests are, nevertheless,
deemed to constitute "securities" under the Code.)
(b) The Borrower acknowledges receipt of a copy of this Agreement and
agrees to be bound thereby and to comply with the terms hereof insofar as such
terms are applicable to it. The Borrower agrees to notify the Administrative
Agent promptly in writing of the occurrence of the events described in Section
5(c) of this Agreement. The Borrower further agrees that the terms of Section 9
of this Agreement shall apply to it with respect to all actions that may be
required of it under or pursuant to or arising out of Section 9 of this
Agreement.
[Signature Page Follows]
13
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed under seal and delivered as of the date first above written.
PLEDGORS:
[CORPORATE SEAL] HARLINGEN HOSPITAL
MANAGEMENT, INC., as Pledgor
By: _____________________________________
Name: ______________________________
Title: ______________________________
HARLINGEN PARTNERSHIP
HOLDINGS, INC., as Pledgor
By: _____________________________________
Name: ______________________________
Title: ______________________________
BORROWER:
[CORPORATE SEAL] HARLINGEN MEDICAL CENTER,
LIMITED PARTNERSHIP, as Borrower
By: HARLINGEN HOSPITAL
MANAGEMENT, INC., its General Partner
By: _________________________________
Name: ______________________________
Title: ______________________________
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative
Agent
By: _____________________________________
Name: ______________________________
Title: ______________________________
[Pledge and Security Agreement]
SCHEDULE I
To Pledge
Agreement
DESCRIPTION OF PARTNERSHIP INTERESTS
ISSUER:
State of Percentage
Pledgor: Organization Ownership
-------- ------------ ---------
EXHIBIT L
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
PLANS AND SPECIFICATIONS
On file with Lender
EXHIBIT M
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
BUDGET
HARLINGEN MEDICAL CENTER
Const. Cost Analysis schematic des design dev estimate 1 DD
square footage 161,848 168,892 162,210
construction cost $28,100,203.00 173.62 $30,100,735.00 178.22 $27,689,520.00 170.70
Const. Cost Analysis estimate 2 CD BID
square footage 174,410 172,101
construction cost $32,404,760.00 $185.80 $29,951,464.00 $174.03
ITEM SD $/SF DD $/SF CE 1
---- -- ---- -- ---- ----
1. General Req. $ 2,359,968 14.58 $ 1,732,713 10.26 $ 2,818,750 17.38
2. Sitework $ 1,973,941 12.20 $ 2,020,130 11.96 $ 1,925,250 11.87
3. Concrete $ 1,182,113 7.30 $ 1,160,753 6.87 $ 664,130 4.09
4. Masonry $ 63,360 0.39 $ 146,988 0.87 $ 1,192,540 7.35
5. Metals $ 2,281,554 14.10 $ 2,302,304 13.63 $ 2,827,130 17.43
6. ▇▇▇▇▇ & Plast. $ 85,764 0.53 $ 101,036 0.60 $ 53,500 0.33
7. Thermal & Moist. $ 1,610,952 9.95 $ 1,781,875 10.55 $ 684,200 4.22
8. Doors & Wind. $ 1,600,750 9.89 $ 1,300,818 7.70 $ 875,740 5.40
9. Finishes $ 3,736,845 23.09 $ 3,968,578 23.50 $ 2,618,170 16.14
10. Specialties $ 307,265 1.90 $ 553,401 3.28 $ 496,320 3.06
11. Equipment $ 540,000 3.34 $ 520,855 3.08 $ 684,060 4.22
12. Furnishings $ 730,000 4.51 $ 1,004,635 5.95 $ 845,640 5.21
13. Special Const. $ 60,000 0.37 $ 77,063 0.45 $ 189,840 1.17
14. Conveying Sys. $ 780,000 4.82 $ 744,580 4.41 $ 644,500 3.97
15. Fire Sprinkler $ 299,419 1.85 $ 290,750 1.72 $ -- 0.00
15. Plumbing & HVAC $ 7,445,008 46.00 $ 8,056,274 47.70 $ 6,520,700 40.20
16. Electrical $ 3,043,264 18.80 $ 4,337,972 25.68 $ 3,267,860 20.15
17. Escalation $ 1,381,190 8.51
18. SUB TOTAL $28,100,203 173.62 $30,100,735 178.22 $27,699,520 170.70
19. OR Suite Add not included included $ 1,228,630
20. TOTAL $28,100,203 173.62 $30,100,735 178.22 $28,918,150 172.95
21. Const. Cont $ 1,405,010 8.68 $ 1,200,000 7.11 $ 1,315,420 8.11
22. TOTAL W/CONT. $29,505,213 182.30 $31,300,735 185.33 $30,233,570 181.05
ITEM CE 2 $/SF BID $/SF
---- ---- ---- --- ----
1. General Req. $ 3,386,020 19.41 $ 2,883,739 16.76
2. Sitework $ 2,101,120 12.05 $ 1,732,743 10.07
3. Concrete $ 1,292,770 7.41 $ 1,103,125 6.41
4. Masonry $ 1,512,810 8.67 $ 169,560 0.99
5. Metals $ 2,986,010 17.12 $ 2,072,402 12.04
6. ▇▇▇▇▇ & Plast. $ 55,000 0.32 $ 118,950 0.69
7. Thermal & Moist. $ 443,360 2.54 $ 2,047,236 11.90
8. Doors & Wind. $ 901,880 5.17 $ 1,072,869 6.23
9. Finishes $ 3,093,640 17.74 $ 2,892,732 16.51
10. Specialties $ 659,750 3.78 $ 484,930 2.82
11. Equipment $ 860,330 4.93 $ 550,992 3.20
12. Furnishings $ 1,047,240 6.00 $ 832,455 4.84
13. Special Const. $ 190,280 1.09 $ 107,232 0.62
14. Conveying Sys. $ 628,500 3.60 $ 698,197 4.06
15. Fire Sprinkler $ -- 0.00 $ -- 0.00
15. Plumbing & HVAC $ 8,226,020 47.16 $ 8,609,703 50.03
16. Electrical $ 4,218,110 24.19 $ 4,574,599 26.58
17. Escalation $ 801,920
18. SUB TOTAL $32,404,769 181.20 $29,951,464 174.03
19. OR Suite Add included included
20. TOTAL $32,404,760 185.80 $29,951,464 174.03
21. Const. Cont $ 474,040 $ --
22. TOTAL W/CONT. $32,878,800 163.51 $29,951,464 174.03
EXHIBIT N
to
Amended and Restated Loan Agreement
dated as of November __, 2001
by and among
Harlingen Medical Center, Limited Partnership,
as Borrower,
the Lenders party thereto,
and
Bank of America, N.A.,
as Administrative Agent
STORAGE OF MATERIALS
None.
Schedule 1.1(a)
Lenders and Commitments
LENDER COMMITMENT COMMITMENT
PERCENTAGE
-----------------------------------------------------------------------------------------------
Bank of America, N.A.
IL1-231-08-30
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 18.56948301% $6,963,556.13
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------
The Bankers Trust Company
1 BT Plaza
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ 18.56948301% $6,963,556.13
Fax: ▇▇▇-▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------
First Union National Bank
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇ 14.48586298% $5,432,198.62
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------
GE Healthcare Financial Services
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Dev Lobo 20.79631600% $7,798,618.50
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------
Siemens Medical Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇ 11.14297200% $4,178,614.50
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------
LENDER COMMITMENT COMMITMENT
PERCENTAGE
-----------------------------------------------------------------------------------------------
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇ ▇▇▇ 12.25726900% $4,596,475.87
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------
Fifth Third Bank (Western Ohio)
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇ 4.17861400% $1,566,980.25
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
-----------------------------------------------------------------------------------------------
TOTAL: 100% $37,500,000
-----------------------------------------------------------------------------------------------
SCHEDULE 1.1(b)
GUARANTORS
MedCath Corporation (DE)
MedCath Holdings, Inc. (DE)
MedCath Finance Company (AZ)
MedCath Intermediate Holdings, Inc. (DE)
MedCath Incorporated (NC)
Harlingen Hospital Management, Inc.
MedCath of Massachusetts, Inc. (NC)
Austin MOB, Inc. (NC)
Harlingen Partnership Holdings Inc.
MedCath Diagnostics, LLC (NC)
CHF Centers of America, 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)
SCHEDULE 1.1(c)
RELATED CREDIT DOCUMENTS
1. Amended and Restated Loan Agreement dated as of July 27, 2001 (as amended,
restated, supplemented or otherwise modified, the "DTO Loan Agreement") by
and among Heart Hospital of DTO, LLC, as Borrower, the Lenders who are or
may become party thereto, as Lenders, and Bank of America, N.A., as
Administrative Agent.
2. Amended and Restated Loan Agreement dated as of July 27, 2001 (as amended,
restated, supplemented or otherwise modified, the "Little Rock Loan
Agreement") by and among MedCath of Little Rock, L.L.C., as Borrower, the
Lenders who are or may become party thereto, as Lenders, and Bank of
America, N.A., as Administrative Agent.
3. Amended and Restated Loan Agreement dated as of July 27, 2001 (as amended,
restated, supplemented or otherwise modified, the "BK Loan Agreement") by
and among Heart Hospital of BK, L.L.C., as Borrower, the Lenders who are or
may become party thereto, as Lenders, and Bank of America, N.A., as
Administrative Agent.
SCHEDULE 1.1(d)
RELATED GUARANTY AGREEMENTS
1. Guaranty Agreement dated as of July 27, 2001 (as amended, restated,
supplemented or otherwise modified, the "DTO Guaranty Agreement") made by
MedCath Corporation and certain Subsidiaries thereof who are or may become
party thereto in favor of Bank of America, N.A., as Administrative Agent
for the retable benefit of itself and the Lenders from time to time party
to the DTO Loan Agreement.
2. Guaranty Agreement dated as of July 27, 2001 (as amended, restated,
supplemented or otherwise modified, the "Little Rock Guaranty Agreement")
made by MedCath Corporation and certain Subsidiaries thereof who are or may
become party thereto in favor of Bank of America, N.A., as Administrative
Agent for the retable benefit of itself and the Lenders from time to time
party to the Little Rock Agreement.
3. Guaranty Agreement dated as of July 27, 2001 (as amended, restated,
supplemented or otherwise modified, the "BK Guaranty Agreement") made by
MedCath Corporation and certain Subsidiaries thereof who are or may become
party thereto in favor of Bank of America, N.A., as Administrative Agent
for the retable benefit of itself and the Lenders from time to time party
to the BK Loan Agreement.
SCHEDULE 5.1(b)
CAPITALIZATION
OWNER PERCENTAGE INTEREST
----- -------------------
Management Company General - 1%
Harlingen Partnership Holdings, Inc. Limited - 50%
Investor Limited Partners Limited - 49%
SCHEDULE 5.1(l)
MATERIAL CONTRACTS
Borrower:
- Limited Partnership Agreement of the Borrower, as amended from time to
time.
- Agreement for Architectural Services dated March 9, 2000, between ▇▇▇▇▇
Associates Inc., as may be amended from time to time.
- Standard Form Agreement dated March 7, 2001, between Borrower and ▇▇▇▇▇▇▇▇
Construction Company, and converted by letter agreement dated May 21, 2001,
as may be amended from time to time.
- Loans noted with an asterisk (*) on Schedule 5.1(s).
Guarantors:
Debt Obligations:
- Commitment Agreement.
- Credit Agreement dated as of July 31, 1998, among MedCath Intermediate
Holdings, Inc., Bank of America, N.A. (formerly NationsBank, N.A.), as
Administrative Agent and Collateral Agent, NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities, LLC, as Arranger and Syndication Agent, and the Lenders named
from time to time in the principal amount of $100,000,000.
- Loan dated December 10, 1997 from MetLife Capital to MedCath Incorporated
in the principal amount of $7,000,000.
General Guaranty Obligations:
- Subsidiary Guaranty Agreement dated as of July 31, 1998, among the
Guarantors named therein, Bank of America, N.A. (formerly NationsBank,
N.A.), as Administrative Agent and Collateral Agent, NationsBanc ▇▇▇▇▇▇▇▇▇▇
in the principal amount of $100,000,000.
- Guaranty provisions in the Loan Agreement dated as of June 29, 2000, among
Bank of America, N.A., as Administrative Agent, Heart Hospital of South
Dakota, LLC, the Lenders named therein, and the Guarantors named therein in
the principal amount of $32,618,000.
- Related Guaranty Agreements set forth on Schedule 1.1(d).
MedCath Incorporated Guaranty Obligations
- Guaranty dated October 10, 1998, by MedCath, Inc. in favor of Health Care
Property Investors in the principal amount of $35,100,000.
- Guaranty dated March 2, 2000, by the Guarantors named therein to ▇▇▇▇▇▇
Financial Leasing, Inc. in the principal amount of $24,660,333
- Guaranty dated October 1, 1999, by the Guarantors named therein in favor of
HealthCare Property Investors, Inc. in the principal amount of $25,500,000
- Guaranty Agreement dated as of July 18, 1996 by MedCath Incorporated in
favor of Capstone Capital Corporation in the principal amount of
$17,800,000.
- Loan dated June 1, 1996, from Prime Leasing to MedCath of Little Rock,
L.L.C. in the principal amount of $16,000,000.
- Loan dated March 1, 1998, from US Bancorp to MedCath of Tucson, L.L.C. in
the principal amount of $11,961,000
- Loan dated ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇ Financial Services to Arizona Heart
Hospital, LLC in the principal amount of $12,292,386.
- Loan dated December 1, 1998 from DVI Financial Services to Heart Hospital
of Austin, LLC in the principal amount of $18,000,000.
- Loan dated October 1, 1998 from GE Medical Systems to Heart Hospital of BK,
L.L.C. in the principal amount of $5,000,000.
- Loan dated October 1, 1998 from GE Medical Systems to Heart Hospital of BK,
L.L.C. in the principal amount of $10,000,000.
- Loan dated ▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇ Financial Services to Heart Hospital of
New Mexico, L.L.C. in the principal amount of $17,500,000.
- Loan dated October 1, 1998 from Siemans Credit Corp. to Heart Hospital of
DTO, LLC in the principal amount of $17,000,000.
- Loan dated March 21, 2001, from Siemans to Heart Hospital of South Dakota,
LLC in the principal amount of $16,000,000.
- Loan from GE Leases to MedCath Diagnostics, LLC
SCHEDULE 5.1(s)
DEBT AND GUARANTY OBLIGATIONS
BORROWER LENDER DATE AMOUNT
-------- ------ ---- ------
Harlingen Medical Center MedCath Finance Company Face amount of $8,000,000
Limited Partnership* may advance up to
$12,000,000
SCHEDULE 5.1(t)
LITIGATION
NONE
SCHEDULE 9.8
PERMITTED TRANSACTIONS WITH AFFILATES
Loan shown on Schedule 5.1(s).