Construction Loan Agreement

000,000


CONSTRUCTION LOAN AND
PERMANENT FINANCING AGREEMENT


dated as of


April , 2000


between


CRYOLIFE, INC.
as Borrower,


and


BANK OF AMERICA, N.A,


as Lender


TABLE OF CONTENTS


ARTICLE ONE - PARTICULAR TERMS AND DEFINITIONS..................................................1
1.01 Definitions.....................................................................1
1.02 Accounting Terms...............................................................10
1.03 Titles.........................................................................10
1.04 Number and Gender..............................................................10 ARTICLE TWO - ADVANCES.........................................................................10
2.01 Construction Loan..............................................................10
2.02 Form of Requests...............................................................10
2.03 Number of Requests.............................................................10
2.04 Place of Advances..............................................................11
2.05 Affirmation of Warranties......................................................11
2.06 Final Disbursement.............................................................11
2.07 Authority to Make Advances.....................................................11
2.08 Direct Advances................................................................11
2.09 Waivers........................................................................11
2.10 Total Advances.................................................................12
2.11 Interest Rates.................................................................12
2.12 Interest Computation...........................................................12
2.13 Payment of Interest............................................................12
2.14 Voluntary Prepayment...........................................................12 ARTICLE THREE - CONVERSION TO TERM LOAN........................................................12
3.01 Conversion.....................................................................12
3.02 Interest Rates.................................................................12
3.03[INTENTIONALLY LEFT BLANK].............................................................13
3.04 Interest Computation...........................................................13
3.05 Payments of Principal and Interest.............................................13
3.06 Voluntary Prepayment...........................................................13 ARTICLE FOUR - GENERAL LOAN PROVISIONS.........................................................13
4.01 LIBO Protection; Availability; Illegality.....................................13
4.02 Agreement Regarding Interest and Charges.......................................14
4.03 Usury..........................................................................14
4.04 Payments.......................................................................15
4.05 Insufficient Funds.............................................................15
4.06 Statements of Account..........................................................15
4.07 Taxes..........................................................................15
4.08 Default Interest...............................................................16
4.09 [INTENTIONALLY OMITTED]........................................................16
4.10 Collateral.....................................................................16
4.11 Guaranties.....................................................................17


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4.12 Landlord and Mortgagee Consents................................................17 ARTICLE FIVE - CONDITIONS PRECEDENT TO CLOSING AND LENDER'S OBLIGATION TO MAKE ADVANCES........17
5.01 Conditions for Closing.........................................................17
5.02 Conditions for Advances........................................................19 ARTICLE SIX - REPRESENTATIONS AND WARRANTIES OF BORROWER.......................................20
6.01 Organization and Existence; Subsidiaries.......................................20
6.02 Financial Statements...........................................................20
6.03 Borrower Authority and Power...................................................20
6.04 No Defaults....................................................................20
6.05 No Pending Claims..............................................................21
6.06 No Outstanding Judgments.......................................................21
6.07 No Liens.......................................................................21
6.08 Outstanding Securities.........................................................21
6.09 Tax Returns....................................................................21
6.10 Satisfactory Plans.............................................................21
6.11 Utility Service................................................................22
6.12 Materialmen....................................................................22
6.13 Environmental..................................................................22
6.14 Franchises, Licenses, Permits, Etc.............................................22
6.15 No Governmental Consents Required..............................................22
6.16 No Defaults....................................................................23
6.17 Compliance with Laws...........................................................23
6.18 ERISA Matters..................................................................23
6.19 Regulation U and Other Securities Law Matters..................................23
6.20 Environmental Representations..................................................23
6.21 Reaffirmation..................................................................24 ARTICLE SEVEN - AFFIRMATIVE COVENANTS..........................................................24
7.01 Conveyance; Encumbrance........................................................24
7.02 Governmental Requirements......................................................24
7.03 Project Inspections............................................................24
7.04 Expenses.......................................................................25
7.05 Construction...................................................................25
7.06 Use of Advances................................................................25
7.07 Indemnification................................................................25
7.08 Negative Pledge of Materials and Fixtures......................................25
7.09 Disclosure of Contractors......................................................26
7.10 Proof of Title.................................................................26
7.11 Correction of Defects and Unauthorized Changes.................................26
7.12 Compliance with Restrictive Covenants..........................................26
7.13 Maintenance of Insurance.......................................................26


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7.14 Compliance with Government Regulations.......................................................27
7.15 Payment of Taxes.............................................................................27
7.16 Professional Consultants and Superintendent..................................................27
7.17 Financial Statements.........................................................................27
7.18 ERISA........................................................................................28
7.19 Depository Relationship......................................................................28
7.20 Inspection and Examination...................................................................28
7.21 Books and Records............................................................................29
7.22 Existence; Assets............................................................................29
7.23 Notices......................................................................................29
7.24 Environmental Matters......................................................................29 ARTICLE EIGHT - NEGATIVE COVENANTS...........................................................................30
8.01 Type of Business.............................................................................30
8.02 Transactions with Affiliates.................................................................30
8.03 Merger, Consolidation, Acquisitions, Etc.....................................................30
8.04 ERISA Matters................................................................................31
8.05 Liens........................................................................................31
8.06 Guaranties...................................................................................32
8.07 Dividends and Distributions..................................................................32
8.08 Financial Covenants..........................................................................32
8.09 Funded Debt..................................................................................33
8.11 Sale of Assets...............................................................................33 ARTICLE NINE - EVENTS OF DEFAULT.............................................................................33
9.01 Events of Default............................................................................33
9.02 Acceleration and Other Remedies..............................................................36
9.03 Application of Proceeds; Collection Costs....................................................36 ARTICLE TEN - GENERAL CONDITIONS.............................................................................37
10.01 No Waiver....................................................................................37
10.02 Remedies Cumulative..........................................................................37
10.03 Approval of Lender...........................................................................37
10.04 Investigation by Lender......................................................................38
10.05 No Beneficiaries.............................................................................38
10.06 Notices......................................................................................38
10.07 Modifications................................................................................38
10.08 No Partnership...............................................................................39
10.09 No Assignments...............................................................................39
10.10 Counterparts.................................................................................39
10.11 Choice of Law................................................................................39
10.12 NO ORAL AGREEMENT............................................................................39
10.13 Survival of Certain Agreements...............................................................39
10.14 ARBITRATION/OTHER MATTERS/WAIVERS............................................................40


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10.15 SPECIAL RULES................................................................................40
10.16 RESERVATION OF RIGHTS; UNCONDITIONAL OBLIGATIONS.............................................40


Exhibit "A" -- Form of Note Exhibit "B" -- Copy of Commitment Letter Exhibit "C" -- Legal Description of Premises Exhibit "D" -- Permitted Encumbrances Exhibit "E" - Form of Compliance Certificate


Schedule 6.01(b) - Subsidiaries Schedule 6.04 - Defaults Schedule 6.05 - Pending Claims Schedule 8.09 - Funded Debt


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CONSTRUCTION LOAN AND PERMANENT FINANCING AGREEMENT


CONSTRUCTION LOAN AND PERMANENT FINANCING AGREEMENT (this "Agreement") dated as of April __, 2000, by and between CRYOLIFE, INC., a corporation organized and existing under the laws of the State of Florida ("Borrower") and BANK OF AMERICA, N.A., a national banking association ("Lender").


The parties hereto agree as follows:


ARTICLE ONE


PARTICULAR TERMS AND DEFINITIONS


1.01 Definitions. The terms as defined in this Section 1.01 shall, for all purposes of this Agreement and any amendment hereto (except as herein otherwise expressly provided or unless the context otherwise requires), have the meanings set forth herein.


"Account to Receive Advances" means Account #6218199 maintained by Borrower with Lender, which account shall be the account into which all Advances shall be deposited pursuant to Section 2.08 hereof.


"Adjusted LIBO Rate" means the Rate divided by a percentage equal to one (1) minus the then average stated maximum amount (stated as a decimal) of all reserve requirements applicable to any member of the Federal Reserve System in respect of Eurocurrency liabilities as defined in Regulation D of the Board of Governors of the Federal Reserve System (or any successor categories for such liabilities under such Regulation D). The Adjusted LIBO Rate shall be set on the date of Closing and shall be recalculated each thirtieth (30th) day thereafter. The Adjusted LIBO Rate, once so calculated or recalculated, shall remain in effect until the next scheduled recalculation date. If any recalculation date for the Adjusted LIBO Rate is not a Business Day, the recalculation of the Adjusted LIBO Rate shall be made on the next Business Day following such date.


"Advance" means any direct or indirect advance made by Lender to Borrower pursuant to Article Two of this Agreement.


"Affiliate" means any Person directly or indirectly controlling or controlled by or under direct or indirect common control with Borrower. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person,


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directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.


"Agent to Request Advances" means Mr. Edwin Cordell, Jr. or Mr. Ashley Lee or such other person(s) as shall be appointed by Borrower from time to time, such notice to be effective upon receipt of written notice thereof by Lender.


"Agreement" means this Construction Loan and Permanent Financing Agreement, as the same may be amended, supplemented or modified from time to time in accordance with the terms hereof.


"Amortization Term" means a period of 60 months from the Conversion Date.


"Applicable Law" means all applicable provisions of constitutions, statutes, rules, regulations and orders of all governmental bodies and all orders and decrees of all courts, tribunals and arbitrators.


"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended from time to time, and as codified at 11 U.S.C. ss. 101 et seq.


"Borrower" has the meaning given in the recitals hereto, and shall include Borrower's successors and assigns.


"Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in Georgia or North Carolina are closed.


"Capital Expenditures" means expenditures of over $10,000 each made or liabilities incurred by Borrower for the acquisition of any fixed assets or improvements (and any replacements, substitutions or additions thereto) which have a useful life of more than one (1) year, including the direct or indirect acquisition of such assets by way of increased product or service changes, off-set items or otherwise, and payments made during the relevant fiscal period with respect to Capitalized Lease Obligations, all as determined on a consolidated basis.


"Capitalized Lease Obligations" means any indebtedness of Borrower represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such indebtedness shall be the capitalized amount of such obligations determined on a consolidated basis in accordance with GAAP.


"Closing" means the time of the execution and delivery hereof by Borrower and Lender.


"Collateral" means all property assigned or pledged to Lender or in which Lender has been granted a security interest or to which Lender has been granted security title under this Agreement, the other Financing Documents or otherwise, to secure the Obligations, and the proceeds thereof.


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"Commitment" means $8,000,000.


"Commitment Letter" means that certain letter from Lender to Borrower dated March 9, 2000 by which Lender has extended its offer to make the Loan to Borrower upon the satisfaction of the terms and conditions set forth therein, as accepted by Borrower, a copy of which is attached hereto as Exhibit "B".


"Construction Contractor" means Choate Design Build Company, the construction contractor for the Project, whose address is 1640 Powers Ferry Road, Building 11, Suite 300, Marietta, Georgia 30067.


"Construction Loan" means the construction loan to be made by Lender to Borrower pursuant to Article Two hereunder in an amount not to exceed the Commitment.


"Construction Period" means the period commencing on the Commencement Date and continuing through and including the Business Day immediately preceding the Conversion Date, during which the Construction Loan shall be funded.


"Conversion Date" means the earlier of (a) June 30, 2001, or (b) the date on which the Final Disbursement is made.


"Credit Parties" means, collectively, Borrower and its Subsidiaries.


"Current Maturities of Funded Debt" means, with respect to any particular period, the sum of all principal payments scheduled to be made during such period in respect of the Funded Debt of Borrower (which for purposes hereof shall include the allocated principal portion of payments due on Capitalized Lease Obligations, and also shall include the current portion of any other Funded Debt).


"Debt Coverage Ratio" means, with respect to any particular fiscal period of Borrower, the ratio of (a) Borrower's EBITDAR for the consecutive 4-quarter period ending therewith to (b) the sum (without duplication) of (i) Borrower's Current Maturities of Funded Debt for the immediately succeeding consecutive 4-quarter period plus (ii) Borrower's Interest Expense for the consecutive 4-quarter period ending therewith plus (iii) Borrower's Rental Expense for the immediately succeeding consecutive 4-quarter period, all as determined on a consolidated basis.


"Default" means any event which, with the giving of notice or the lapse of time (or both) would become an Event of Default.


"Default Rate" means, on any day, the rate otherwise in effect hereunder plus four percent (4%) per annum.


"Dollars" means the lawful currency of the United States of America.


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"EBIT" means, for any fiscal period of Borrower, an amount equal to the sum of Borrower's Net Income (Loss) for such period plus, to the extent subtracted in determining such Net Income (Loss), (i) Borrower's taxes based on income and (ii) Borrower's Interest Expense, all as determined on a consolidated basis.


"EBITDAR" means, for any fiscal period of Borrower, an amount equal to Borrower's EBIT for such period plus, to the extent deducted in determining such EBIT, Borrower's depreciation and amortization expenses and Rental Expense, all as determined on a consolidated basis.


"Environmental Laws" means all federal, state and local laws relating to pollution or protection of the environment, including laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including without limitation ambient air, surface water, ground water, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes, and any and all regulations, codes, plans, orders, decrees, judgments, injunctions, notices or demand letters issued, entered, promulgated or approved thereunder.


"ERISA" means the Employee Retirement Income Security Act of 1974, P.L. 93-406, as amended.


"Event of Default" means any of the events or conditions described in Article Eight of this Agreement, provided that any express requirement therein for notice or lapse of time shall have been satisfied.


"Final Disbursement" shall have the meaning set forth in Section 2.06 hereof.


"Financing Documents" means and includes this Agreement, the Note, the Security Agreement, each Subsidiary Guaranty, any Hedge Agreement and any extensions, renewals, modifications or substitutions thereof or therefor, and all other associated loan and collateral documents including, without limitation, all guaranties, suretyship agreements, security agreements, pledge agreements, security deeds, subordination agreements, exhibits, schedules, attachments, financing statements, notices, consents, waivers, opinions, letters, reports, records, title certificates and applications therefor, assignments, stock powers or transfers, documents, instruments, information and other writings related thereto, or furnished by any Credit Party to Lender in connection therewith or in connection with any of the Collateral, including without limitation any such documents executed and delivered pursuant to Section 4.10 or 4.11 hereof.


"Funded Debt" means, for any particular Person, all Indebtedness for money borrowed, Indebtedness secured by Purchase Money Liens, Capitalized Lease Obligations, conditional sales contracts and similar title retention debt instruments, all as determined for such Person on a consolidated basis. The calculation of Funded Debt for any particular Person shall include all Funded Debt of such Person plus all Funded Debt of other Persons to the extent


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guaranteed by such Person, to the extent secured by any assets of such Person, or to the extent supported by a letter of credit issued for the account of such Person.


"GAAP" means generally accepted accounting principles as set forth in statements from Auditing Standards No. 69 entitled "The Meaning of Present Fairly in Conformance with Generally Accepted Accounting Principles in the Independent Auditors Reports" issued by the Auditing Standards Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable to the circumstances.


"Governmental Authority" means any applicable nation or government, any state, local, or other political subdivision thereof, any court, and any other entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government.


"Guaranty" means any Contractual Obligation, contingent or otherwise, of a Person with respect to any Indebtedness or other obligation or liability of another Person, including, without limitation, any such Indebtedness, obligation or liability directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable, including contractual obligations (contingent or otherwise) arising through any agreement to purchase, repurchase, or otherwise acquire such Indebtedness, obligation or liability or any security therefor, or any agreement to provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, or other financial condition, or to make any payment other than for value received.


"Hazardous Materials" means all materials defined as hazardous wastes or substances under any Environmental Law.


"Hedge Agreement" means any agreement between Borrower and Lender or any affiliate of Lender now existing or hereafter entered into, which provides for an interest rate or commodity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross-currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging Borrower's exposure to fluctuations in interest rates, currency valuations or commodity prices.


"Herein", "hereof", and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular article, paragraph, section or other subdivision.


"Improvements" means all buildings, structures and other improvements located on the Premises and in which Borrower has an ownership, leasehold or other interest, including, without limitation, the Project.


"Indebtedness" means, without duplication: (i) all obligations of such Person which in accordance with GAAP consistently applied would be shown on a consolidated balance sheet of such Person as a liability (including, without


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limitation, obligations for borrowed money and for the deferred purchase price of property or services, and obligations evidenced by bonds, debentures, notes or other similar instruments); (ii) all rental obligations under ...