AMENDMENT NO. 1 TO CREDIT AGREEMENT
EXHIBIT
99.1
AMENDMENT
NO. 1 TO CREDIT AGREEMENT
This
AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment
No. 1”),
dated
as of December 12, 2005 (“Effective
Date”),
is
made by and among INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation
(“IHHI”),
WMC-SA, INC., a California corporation (“WMC-SA”),
WMC-A, INC., a California corporation (“WMC-A”),
XXXXXXX MEDICAL CENTER, INC., a California corporation (“Xxxxxxx”),
COASTAL COMMUNITIES HOSPITAL, INC., a California corporation (“Coastal”),
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a California limited liability company
(“PCHI”),
ORANGE
COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability company
(“OC-PIN”),
GANESHA REALTY, LLC, a California limited liability company (“Ganesha”),
WEST
COAST HOLDINGS, LLC, a California limited liability company (“West
Coast”),
and
MEDICAL PROVIDER FINANCIAL CORPORATION II, a Nevada corporation (“Lender”).
IHHI,
WMC-SA, WMC-A, Xxxxxxx and Coastal are sometimes collectively referred to
herein
as “Borrowers”; PCHI,
Ganesha, and West Coast are hereinafter together sometimes referred to as
the
“Credit
Parties”;
and
PCHI and OC-PIN are hereinafter together sometimes referred to as the
“Guarantors.”This
Amendment No. 1 amends that certain Credit Agreement dated as of March 3,
2005
(“Credit
Agreement”)
by and
between Lender, Borrowers, the Credit Parties and the Guarantors.
RECITALS
A. Lender,
Borrowers, and the Credit Parties are parties to the Credit Agreement; Lender
and PCHI are parties to that certain Guaranty Agreement dated March 3, 2005
(“PCHI
Guaranty”);
Lender
and OC-PIN are parties to that certain Guaranty Agreement dated March 3,
2005
(“OC-PIN
Guaranty”);
Lender
and West Coast are parties to that certain Pledge Agreement dated March 3,
2005
(“West
Coast Pledge Agreement”);
Lender
and the individual members of West Coast are parties to that certain Pledge
Agreement dated March 3, 2005 (“Members
of West Coast Pledge Agreement”);
Lender
and IHHI are parties to that certain Pledge Agreement dated March 3, 2005
(“IHHI
Pledge Agreement”);
and
Lender and Ganesha are parties to that certain Pledge Agreement dated March
3,
2005 (“Ganesha
Pledge Agreement”).
The
Credit Agreement, the PCHI Guaranty, the OC-PIN Guaranty, the West Coast
Pledge
Agreement, the Members of West Coast Pledge Agreement, the IHHI Pledge
Agreement, the Ganesha Pledge Agreement, and each of the other documents
and
instruments executed in connection with the Credit Agreement are hereinafter
collectively referred to as the “Loan
Documents.”
Capitalized terms not defined in this Amendment No. 1 shall have the same
meaning as set forth in the Loan Documents.
B. Pursuant
to the Loan Documents, Lender extended to Borrowers a loan in the amount
of
$50,000,000 (“Acquisition
Loan”)
to
acquire the Hospital Facilities; and Lender extended to Borrowers a
non-revolving line of credit facility of up to $30,000,000 (“Line
of Credit Loan”)
to be
used for working capital and the other purposes permitted by the Loan Documents.
The Acquisition Loan and Line of Credit Loan are hereinafter together referred
to as the “Loan.”Borrowers,
Credit Parties and Guarantors acknowledge and agree that the aggregate total
of
principal and interest due and owing under the Loan as of October 31, 2005
is
$76,004,525.58.
1
C. The
Borrowers committed certain events of default (“Events
of Default”)
under
the Loan Documents, as more particularly set forth (i) in that certain letter
from Lender to Borrowers and others entitled Notice of Events of Default
dated
May 9, 2005 (the “Contract
Default Notice”),
and
(ii) in that certain letter from Lender to Borrowers and others entitled
Notice
of Failure to Comply With Covenant dated May 9, 2005 (the “Covenant
Failure Notice”).
D. In
order
to provide Borrowers and the Credit Parties time to resolve the Events of
Default, Borrowers, the Credit Parties, the Guarantors and Lender executed
that
certain Forbearance Agreement dated June 1, 2005 (“Forbearance
Agreement”).
E. Borrowers
have requested, and Lender has agreed, that the Events of Default be deemed
cured on the terms and conditions set forth in this Amendment No. 1, and
the
parties have agreed to the further agreements and amendments set forth below.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained, and for other good and valuable consideration, the parties hereto
agree as follows:
1. Recitals.
The
foregoing Recitals are incorporated by reference as if fully set forth
herein.
2. General
Agreements and Amendments to Credit Agreement.
The
Credit Agreement is hereby amended to provide as follows:
2.1 New
$4,300,000 Capital Contribution by OC-PIN.
Section
2.1(s)
of the
Credit Agreement requires that IHHI receive capital contributions of not
less
than $15,000,000. Prior to the Effective Date hereof, OC-PIN has or shall
have
contributed to IHHI new capital in the amount of $4,300,000. When made, said
$4,300,000 capital contribution shall be credited against the $15,000,000
requirement, such that IHHI’s remaining capital contribution requirement shall
be $10,700,000.
2.2 New
$10,700,000 Loan.
On
condition that OC-PIN has timely contributed to IHHI the new capital required
by
Section
2.1
above,
on the Effective Date, Medical Provider Financial Corporation III, a Nevada
corporation and an Affiliate of Lender (“New
Lender”)
has
agreed to make a new loan to IHHI (as Borrower) in the amount of $10,700,000
(“New
Loan”).
The
New Loan shall be evidenced by a Credit Agreement (New Loan), Promissory
Note
(New Loan), Security Agreement (New Loan), UCC-1 Financing Statement (New
Loan),
Guaranty Agreement (New Loan) (PCHI), Guaranty Agreement (New Loan) (OC-PIN),
Warrant (New Loan), Collateral Assignment of Contracts (New Loan) and such
other
documents and instruments required by New Lender (collectively the “New
Loan Documents”).
IHHI
(as Borrower), WMC-SA, WMC-A, Coastal, Xxxxxxx, PCHI, West Coast and OC-PIN
(as
Credit Parties) and PCHI and OC-PIN (as Guarantors) and New Lender shall
execute
and deliver the New Loan Documents to one another on the Effective Date hereof.
2
2.3 Mandatory
$10,700,000 Additional Capital Contribution.
On or
before the Maturity Date of the New Loan, the Borrowers covenant and agree
that
they will have received not less than $10,700,000 in new capital contributions.
Said $10,700,000 in new capital contributions must consist of new capital
contributed to IHHI by its shareholders and/or third-party investors; may
not
consist of funds directly or indirectly borrowed from any source by Borrowers;
and may not consist of funds directly or indirectly borrowed from any source
by
any Credit Party or any Guarantor. Said $10,700,000 in new capital contributions
shall be used to pay in full and retire all amounts due and owing under the
New
Loan, including but not limited to principal, interest, Lender’s Costs and all
other costs, expenses, fees and charges due and owing to Lender.
2.4 Mandatory
$5,000,000 Prepayment.
On the
Effective Date hereof, from the proceeds of the New Loan, Borrowers agree
to and
shall pay Lender the amount of $5,000,000 in good and drawable funds, as
and for
the mandatory prepayment of principal against the Acquisition Loan required
by
Section
1.2(b)(ii)
of the
Credit Agreement.
2.5 Termination
of Events of Default; Agreements by Lender.
The
Events of Default set forth in the Contract Default Notice and in the Covenant
Failure Notice are hereby terminated and deemed cured. Based on the foregoing,
Lender agrees as of the Effective Date as follows:
a. Lender
shall cease applying the Default Rate to the Loans based on the Events of
Default set forth in the Contract Default Notice and in the Covenant Failure
Notice. Provided, however, the Default Rate shall continue to apply to all
Events of Default which occur subsequent to the Effective Date hereof, pursuant
to Section
1.4(d)
of the
Credit Agreement;
b. Lender’s
suspension of the Line of Credit facility with respect to additional Advances
(as set forth in the Contract Default Notice) is rescinded and terminated;
and
c. Lender’s
acceleration of the Obligations (as set forth in the Contract Default Notice)
is
terminated.
2.6 Termination
of Forbearance Agreement.
The
Forbearance Agreement is hereby terminated.
2.7 Change
of Control.
The
definition of “Change of Control” in Annex A to the Credit Agreement is hereby
deleted and the following new definition of “Change of Control” substituted in
its place therefor:
3
“Change
of Control”
means
any of the following: (a) any person or group of persons (within the meaning
of
the Securities Exchange Act of 1934) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 25% or more of the
issued and outstanding shares of capital Stock or of 25% or more of the issued
and outstanding membership interests of Borrower or any Credit Party (other
than
Ganesha) or any Guarantor having the right to vote for the election of directors
of Borrowers under ordinary circumstances; (b) other than the Lender pursuant
to
the Warrant, any person or group of persons (within the meaning of the
Securities Exchange Act of 1934) shall have been granted a security interest
in
25% or more of the issued and outstanding shares of the capital Stock or
in 25%
or more of the issued and outstanding membership interests of Borrower or
any
Credit Party (other than Ganesha) or any Guarantor having the right to vote
for
the election of directors of Borrowers under ordinary circumstances; (c)
during
any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the majority of the board of directors
or
managing members/managers of Borrower or Credit Party (other than Ganesha)
or
Guarantor cease for any reason (other than death or disability) to constitute
a
majority of the directors or majority of the managing members/managers of
Borrower or Credit Party (other than Ganesha) or Guarantor then in office;
(d)
IHHI ceases to own, directly or indirectly, and/or ceases to control all
of the
economic and voting rights associated with, all of the issued and outstanding
capital Stock of WMC-SA, or WMC-A, or Coastal, or Xxxxxxx; (e) after the
Effective Date hereof, Xx. Xxxx X. Xxxx ceases to own, directly or indirectly,
at least the same percentage of membership interests in OC-PIN, PCHI and/or
West
Coast that he owned on the Effective Date hereof; or (f) after the Effective
Date hereof, Xx. Xxxx X. Xxxx ceases to control, directly or indirectly,
the
economic and voting rights associated with the membership interests in OC-PIN,
PCHI and/or West Coast that he owned on the Effective Date hereof.
2.8 Section
8.1 - Events of Default. Section
8.1
of the
Credit Agreement is hereby amended by adding the following new “Events of
Default” to the end thereof:
“8.1(y)
On or before the Effective Date of this Amendment No. 1, OC-PIN for any reason
fails to contribute to IHHI new capital in the amount of $4,300,000 on the
terms
and conditions required by this Amendment No. 1.
8.1(z)
On
or before the Effective Date of this Amendment No. 1, Borrowers for any reason
fail to pay Lender the amount of $5,000,000 as and for the mandatory prepayment
of principal against the Acquisition Loan required by this Amendment No.
1.
8.1(aa)
On or before the Effective Date of this Amendment No. 1, Borrowers and the
Credit Parties and the Guarantors for any reason fail to execute and deliver
to
New Lender each of the New Loan Documents.
8.1(bb)
On or before the Maturity Date of the New Loan, Borrowers for any reason
fail to
receive at least $10,700,000 in new capital contributions on the terms
and
conditions required by this Amendment No. 1.
4
8.1(cc)
On or before the Maturity Date of the New Loan, Borrowers for any reason
fail to
pay all amounts due and owing under the New Loan, in full.
8.1(dd)
Any one of IHHI, WMC-SA, WMC-A, Coastal, Xxxxxxx, PCHI, West Coast and/or
OC-PIN
commits an Event of Default under any of the New Loan Documents.
8.1(ee)
A
Change of Control occurs with respect to any of the Borrowers. or a Change
of
Control occurs with respect to any Credit Party (other than Ganesha), or
a
Change of Control occurs with respect to any Guarantor.”
2.9 Consent
to New Loan; Cross Default.
Lender
hereby consents to the making of the New Loan to IHHI and the execution of
the
New Loan Documents by IHHI (as Borrower), WMC-SA, WMC-A, Coastal, Xxxxxxx,
PCHI,
West Coast and OC-PIN (as Credit Parties) and PCHI and OC-PIN (as Guarantors).
Lender agrees that no breaches or Events of Default shall be deemed to occur
under the Credit Agreement or any of the other Loan Documents as a consequence
of making the New Loan and the execution of the New Loan Documents. Provided,
however, Borrowers, the Credit Parties and the Guarantors acknowledge and
agree
that the occurrence of an Event of Default under the Credit Agreement and
the
other Loan Documents shall constitute an Event of Default under the New Loan
Documents; and that the occurrence of an Event of Default under the New Loan
Documents shall constitute an Event of Default under the Credit Agreement
and
the other Loan Documents.
3. Injunctive
Relief; Lender Liability Claims; Relinquishment of Known and Unknown Claims;
Covenants Not To Xxx.
3.1 Injunctive
Relief.
Subject
to the last sentence of this Section
3.1,
each
Borrower, each Credit Party and each Guarantor, together with their respective
officers, directors, shareholders, members, managers, employees, agents,
representatives and assigns (collectively the “Borrower
Releasing
Parties”)
hereby fully,
forever and irrevocably release, waive and relinquish their right to file
or
record in the official records of the Recorder of Orange County, California
(“Official
Records”)
a lis
pendens against any of the Hospital Facilities, or file in any court in any
venue any legal action or proceeding (including but not limited to a complaint
to enjoin foreclosure, or an order to show cause, or a complaint to set aside
foreclosure sale, or an action to quiet title, or an action to cancel one
or
more of the Loan Documents) against Lender or any trustee under any of the
Deeds
of Trust, the purpose of which is to directly or indirectly procure from
any
court or tribunal issuance of a temporary restraining order, or a preliminary
injunction, or a permanent injunction, or any other equitable relief
(collectively, “Injunctive
Relief”)
which
seeks to prohibit or prevent Lender or any trustee under any Deed of Trust
(a)
from recording a Notice of Sale with respect to any of the Deeds of Trust,
or
(b) from conducting a sale of any of the Hospital Facilities at a public
auction
as permitted by the power of sale provisions in the Deeds of Trust, or (c)
from
conveying title to any one or more of the Hospital Facilities via trustee’s deed
to a purchaser at foreclosure, or (d) from conducting a sale of the personal
property Collateral pursuant to the California Uniform Commercial Code, or
(e)
from conducting a “mixed-collateral” sale of any one or more of the Hospital
Facilities and any or all of the personal property Collateral, or (f) from
attaching or garnishing or seeking any other provisional remedy against any
real
or personal property of any Borrower, any Credit Party or any Guarantor,
or (g)
from taking any other action or pursuing any other right or remedy that Lender
is permitted to pursue under the Loan Documents, or in law or equity.
Notwithstanding the foregoing, the releases, waivers and relinquishments
set
forth in this Section
3.1
shall
apply only to Injunctive Relief based on alleged acts or omissions of Lender
which occurred prior to the Effective Date of this Amendment No. 1.
5
3.2 Lender
Liability Claims.
Each of
the Borrower Releasing Parties hereby fully,
forever and irrevocably release, waive and relinquish any claim or cause
of
action (collectively, “Lender
Liability Claims”)
that
the Borrower Releasing Parties now have or in the future may have against
Lender
to the effect that, prior to the Effective Date of this Amendment No. 1:
(a)
Lender committed a breach or default under any of the Loan Documents, or
(b)
Lender conspired with the executive officers of IHHI to deprive OC-PIN of
its
stock ownership in IHHI or otherwise inflicted any actionable damage on OC-PIN,
or (c) Lender committed an act not permitted by the Loan Documents or applicable
law, or (d) Lender omitted to take an act required by the Loan Documents
or
under applicable law, or (e) any of the Loan Documents (including, but not
limited to, the PCHI Guaranty and the OC-PIN Guaranty) are invalid or
unenforceable in whole or in part for any reason, or (f) Lender suggested,
implied, induced, cajoled or required that IHHI include any terms or conditions
in any agreements between IHHI and OC-PIN, or (g) Lender suggested, implied,
induced, cajoled or required that IHHI not include any terms or conditions
in
any agreements between IHHI and OC-PIN, or (h) Lender improperly interfered
with
or improperly exercised any control over the Borrowers, or (i) that Lender
breached in any way any alleged duty of good faith or fair dealing, or any
alleged duty of commercial reasonableness, or any quasi-duty, or any implied
duty, or (j) that Lender committed any unlawful, unfair or fraudulent business
act or practice, or (k) that Lender engaged in any unfair, deceptive, untrue
or
misleading advertising, or (l) that Lender committed any act prohibited by
California Business and Professions Code Section 17500, or (m) that Lender
engaged in predatory lending practices, or (n) that Lender engaged in or
committed any act or omission which constitutes fraud, duress, negligence,
conversion, defamation or infliction of emotional distress, or (o) that Lender
interfered with the prospective business advantage of any of the Borrowers,
or
(p) that Lender interfered with the contractual relations of any of the
Borrowers, or (q) that Lender interfered with the prospective business advantage
of any of the Credit Parties or Guarantors (including, but not limited to,
any
prospective business advantage that OC-PIN had or might have had with KSR
Medical Partners, LLC), or (r) that Lender interfered with the contractual
relations of any of the Credit Parties or Guarantors (including, but not
limited
to, any contractual relations between OC-PIN and KSR Medical Partners, LLC).
3.3 Relinquishment
of Known and Unknown Claims.
In order
to induce Lender to enter into this Amendment No. 1, effective upon the
Effective Date of this Amendment No. 1, each of the Borrower Releasing Parties
fully, forever and irrevocably releases, waives, relinquishes and discharges
Lender, Medical Capital Corporation, Medical Provider Financial Corporation
I,
Medical Provider Financial Corporation II, and each of their Affiliates and
each
of their respective officers, directors, members, employees, attorneys, agents,
and representatives (collectively, the “Lender
Released Parties”)
from
any and all claims, rights, demands, debts, causes of action, charges, expenses,
damages, attorneys’ fees and costs, obligations or liabilities of any and every
kind, nature and character whatsoever, whether or not now known, suspected
or
unsuspected, which any of the Borrower Releasing Parties may have had, may
now
have or may in the future claim to have against the Lender Released Parties
arising out of, or related in any manner to any alleged act or omission to
act
which occurred prior to the Effective Date of this Amendment No. 1.
6
The
Borrower Releasing Parties hereto have been fully advised by their respective
attorneys of the contents and effect of Section 1542 of the Civil Code of
California (and its counterpart under Nevada law) upon the rights of each
of
them, which reads as follows:
A
general
release does not extend to claims which the creditor does not know or suspect
to
exist
in his favor at the time of executing the release, which if known by him
must
have
materially affected his settlement with the debtor.
EACH
OF
THE BORROWER RELEASING PARTIES ACKNOWLEDGES THAT THEY MAY HAVE SUSTAINED
DAMAGES, LOSSES, FEES, COSTS OR EXPENSES WHICH ARE PRESENTLY UNKNOWN AND
UNSUSPECTED, AND, NOTWITHSTANDING THE PROVISIONS OF SECTION 1542 (AND ITS
COUNTERPART UNDER NEVADA LAW), AND ARE EXPRESSLY WAIVING THE SAME. EACH OF
THE
BORROWER RELEASING PARTIES AGREES THAT IT INTENDS TO RELEASE EVEN UNKNOWN
OR
UNSUSPECTED CLAIMS. EACH OF THE BORROWER RELEASING PARTIES REPRESENTS THAT
IT
HAS CONSULTED WITH ITS LEGAL COUNSEL REGARDING ITS CLAIMS AND POTENTIAL CLAIMS
AGAINST LENDER, AND HAS CAREFULLY READ AND UNDERSTAND ALL THE PROVISIONS
OF THIS
AMENDMENT NO. 1, AND HAS VOLUNTARILY ENTERED INTO THIS AMENDMENT NO.
1.
3.4 Covenants
Not To Xxx.
Each of
the Borrower Releasing Parties hereby promises, covenants and agrees not
to xxx
any of the Lender Released Parties, and not to bring any legal action or
proceeding of any kind against any of the Lender Released Parties, in any
court
or administrative proceeding, in any venue, which legal action or proceeding
directly or indirectly seeks to (a) obtain or procure issuance of any temporary
restraining order, or a preliminary injunction, or a permanent injunction,
or
any other equitable or provisional relief against any of the Lender Released
Parties based on acts or omissions which occurred prior to the Effective
Date of
this Amendment No. 1, or (b) impose any Lender Liability Claims on or against
any of the Lender Released Parties based on acts or omissions which occurred
prior to the Effective Date of this Amendment No. 1, or (c) obtain or impose
on
any of the Lender Released Parties any Injunctive Relief based on acts or
omissions which occurred prior to the Effective Date of this Amendment No.
1, or
(d) which legal action or proceeding violates any covenant, condition,
representation or warranty made by the Borrower Releasing Parties in this
Amendment No. 1.
4. Indemnification;
Release and Waiver; Condition Precedent; Non-Responsibility.
7
4.1 General
Indemnification.
Each
Borrower, each Credit Party and each Guarantor hereby jointly and severally
agrees to and shall indemnify, defend, protect and hold Lender, Medical Capital
Corporation, Medical Provider Financial Corporation I, Medical Provider
Financial Corporation II, and each of their Affiliates, and each of their
respective officers, directors, members, employees, attorneys, agents, and
representatives (each, an “Indemnified
Person”)
free
and harmless from and against any and all legal actions, suits, proceedings
or
claims brought or asserted against any Indemnified Person for damages, losses,
liabilities and expenses (including reasonable attorneys’ fees, witness and
expert witness fees, court fees and charges, and disbursements and other
costs
of investigation or defense, including those incurred upon any appeal or
in any
Bankruptcy Proceeding) directly or indirectly arising out of or relating
to (a)
the execution and delivery of the Credit Agreement by an Indemnified Person,
(b)
the execution and delivery of this Amendment No. 1 by an Indemnified Person,
(c)
the execution and delivery of any Loan Document by an Indemnified Person,
(d)
the execution and delivery of any New Loan Document by an Indemnified Person,
(e) the making of the Loan by an Indemnified Person, (f) the making of the
New
Loan by an Indemnified Person, or (g) any Lender Liability Claims brought
or
asserted against an Indemnified Person with respect to the Loan or New Loan.
Notwithstanding anything to the contrary contained in this Amendment No.
1, the
maximum liability of all Credit Parties as Credit Parties pursuant to this
Section
4.1
in the
aggregate shall be limited to One Million Dollars ($1,000,000); provided,
however, that such limitation shall not be applicable to any Credit Party’s
individual liability for the payment and performance of any liabilities and
obligations under any other Loan Document (including any pledge agreement
or
guaranty) to which such Credit Party is a direct party. With respect to the
liability of Credit Parties hereunder, Lender agrees to seek payment of any
financial Obligations (other than principal and interest payments) from
Borrowers but in the event Borrowers fail to pay within five (5) days, then
Lender shall be entitled to pursue its right to such payment from Borrowers
and/or Credit Parties. Lender further agrees that, with respect to any liability
or obligation of a Credit Party under this Credit Agreement or any other
Loan
Document, Lender’s only recourse shall be against the Credit Party itself and
any Collateral provided by the Credit Party. In this regard, Lender hereby
acknowledges that, except for distributions actually made by a Credit Party
to
an Individual(s) (defined below), it is not looking to any constituent member
or
other equity owner who is a natural person, or any manager, officer, director,
employee or other individual representative of any Credit Party (“Individuals”)
for
recourse, and waives any rights it may have, by virtue of alter ego, “piercing
the veil,” undercapitalization, failure to observe corporate or limited
liability company formalities, or any other legal theory, to pursue causes
of
action under this Credit Agreement or any other Loan Document against any
of the
Individuals.
4.2 Indemnification
by OC-PIN and West Coast.
OC-PIN
and West Coast hereby jointly and severally agree to and shall indemnify,
defend, protect and hold each of the Indemnified Persons free and harmless
from
and against any and all claims brought or asserted against any Indemnified
Person for damages, losses, liabilities and expenses (including reasonable
attorneys’ fees, witness and expert witness fees, court fees and charges, and
disbursements and other costs of investigation or defense, including those
incurred upon any appeal or in any Bankruptcy Proceeding) directly or indirectly
arising out of or relating to any agreement or contract by and between KSR
Medical Partners, LLC and any of the Borrowers, Credit Parties or Guarantors,
including but not limited to that certain litigation styled KSR
Medical Partners, LLC
v.
Orange
County Physicians Investment Group, LLC; West Coast Holdings, LLC, Xxxx X.
Xxxx,
M.D; and Does 1 through 30,
Orange
County Superior Court Case No. 05CC1091, or any subsequent claim, lawsuit
or
litigation brought by or on behalf of KSR Medical Partners, LLC.
8
4.3 Indemnification
by Borrowers and the Credit Parties.
The
Borrowers and the Credit Parties each hereby jointly and severally agree
to and
shall indemnify, defend, protect and hold each of the Indemnified Persons
free
and harmless from and against any and all claims brought or asserted against
any
Indemnified Person for damages, losses, liabilities and expenses (including
reasonable attorneys’ fees, witness and expert witness fees, court fees and
charges, and disbursements and other costs of investigation or defense,
including those incurred upon any appeal or in any Bankruptcy Proceeding)
directly or indirectly arising out of or relating to that certain litigation
styled Satchmed
Plaza Owners Association
vs.
UWMC
Hospital Corporation, et al,
Orange
County Superior Court Case No. 05CC04210.
4.4 Indemnification
by Borrowers and OC-PIN.
The
Borrowers and OC-PIN each hereby jointly and severally agree to and shall
indemnify, defend, protect and hold each of the Indemnified Persons free
and
harmless from and against any and all claims brought or asserted against
any
Indemnified Person for damages, losses, liabilities and expenses (including
reasonable attorneys’ fees, witness and expert witness fees, court fees and
charges, and disbursements and other costs of investigation or defense,
including those incurred upon any appeal or in any Bankruptcy Proceeding)
directly or indirectly arising out of or relating to (a) the sale by IHHI
of its
capital stock to OC-PIN pursuant to that certain Second Amendment to Stock
Purchase Agreement dated October 31, 2005 by and between IHHI and OC-PIN
(“Second
Amendment”),
(b)
any claims, allegations, lawsuits or causes of action made or brought by
KSR
Medical Partners, LLC against any Indemnified Person alleging that any
Indemnified Person aided, abetted, encouraged, coerced, persuaded or pressured
OC-PIN to breach or default under any agreement or contract it had or may
have
had with KSR Medical Partners, LLC, (c) any claims, allegations, lawsuits
and
causes of action made or brought by KSR Medical Partners, LLC against any
Indemnified Person alleging that any Indemnified Person tortuously interfered
with, or otherwise interfered with, an existing contract between KSR Medical
Partners, LLC and OC-PIN, and (d) any claims, allegations, lawsuits and causes
of action made or brought by KSR Medical Partners, LLC against any Indemnified
Person alleging that any Indemnified Person committed any other act, or omitted
to take any other act, which directly or indirectly caused damage or injury
to
KSR Medical Partners, LLC.
4.5 Non-Responsibility.
NO
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO THIS
AMENDMENT NO. 1 OR TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF HAVING EXECUTED THIS AMENDMENT NO. 1
OR AS A
RESULT OF ANY CREDIT HAVING BEEN EXTENDED PURSUANT TO THE NEW LOAN DOCUMENTS
OR
AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
9
5. Confirmation
of Loan Documents; Confirmation of Guaranties; Unconditional Obligations;
Waivers.
Each of
the Borrowers, each of the Credit Parties, and each of the Guarantors hereby
reaffirms, remakes and confirms each of their respective representations
and
warranties made in each of the Loan Documents. In addition, each of the
Guarantors reaffirms and remakes each of their obligations under its Guaranty
and reaffirms and restates each and every term, condition, and provision
of its
Guaranty. In addition, each Guarantor hereby agrees that its obligations
under
its Guaranty shall be unconditional, irrespective of (a) the absence of any
attempt to collect the Loan from Borrower or any other Guarantor or other
action
to enforce the same, (b) the waiver or consent by Lender with respect to
any
provision of any of the Loan Documents, the Forbearance Agreement, or any
other
agreement now or hereafter executed by Borrower and delivered to Lender,
(c)
Lender’s election, in any proceeding instituted under Chapter 11 of Title 11 of
the United States Code (11 U.S.C. §101 et seq.) (the “Bankruptcy
Code”),
of the
application of Section 1111(b)(2) of the Bankruptcy Code, (d) any borrowing
or
grant of a security interest by Borrower, as debtor-in-possession, under
Section
364 of the Bankruptcy Code, or (e) the disallowance, under Section 502 of
the
Bankruptcy Code, of all or any portion of Lender’s claims for repayment of the
Loan. Each Guarantor further reaffirms that its obligations under its Guaranty
are primary and are separate and distinct from Borrower's obligations. Each
Guarantor further represents and warrants that it has no defenses or claims
against Lender that would or might affect the enforceability of its Guaranty
and
that its Guaranty remains in full force and effect. Each Guarantor irrevocably
and permanently waives any and all rights of subrogation, reimbursement,
indemnity, contribution or any other claim arising from the existence of
performance of its Guaranty which each Guarantor may now or hereafter have
against Borrowers or any other person or entity (or their respective properties)
directly or contingently liable for said obligations. Each Guarantor understands
that if Lender forecloses by trustee's sale on one or more of the Deeds of
Trust, each Guarantor would then have a defense preventing Lender from
thereafter enforcing said Guarantor's liability for the unpaid balance of
the
Loan. This defense arises because the trustee's sale would eliminate Guarantor's
right of subrogation, and therefore Guarantor would be unable to obtain
reimbursement from Borrower. Guarantor specifically waives this defense and
all
rights and defenses that Guarantor may have because the Loan is secured by
real
property. This means, among other things: (i) Lender may collect from each
Guarantor without first foreclosing on any real or personal property collateral
pledged by Borrower; and (ii) if Lender forecloses on any real property
collateral pledged by Borrower: (A) the amount of the Loan may be reduced
only
by the price for which the collateral is sold at the foreclosure sale, even
if
the collateral is worth more than the sale price; and (B) Lender may collect
from each Guarantor even if Lender, by foreclosing on the real property
collateral, has destroyed any right Guarantor may have to collect from Borrower.
This is an unconditional and irrevocable waiver of any rights and defenses
each
Guarantor may have because the Loan is secured by real property. These rights
and defenses include, but are not limited to, any rights or defenses based
upon
Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure
or
similar laws in other states. Each Guarantor waives all rights and defenses
arising out of an election of remedies by the Lender, even though that election
of remedies, such as non-judicial foreclosure with respect to security for
a
guaranteed obligation, has destroyed said Guarantor’s rights of subrogation and
reimbursement against Borrower by operation of Section 580d of the California
Code of Civil Procedure or otherwise.
6. No
Defaults.
Except
for the referenced Events of Default, no other known breaches, defaults or
Events of Default have occurred under the Loan Documents, the Environmental
Indemnity, the PCHI Guaranty and the OC-PIN Guaranty, which have not been
cured
or which are continuing.
7. No
Offsets.
Each
Borrower, each Credit Party and each Guarantor represents and warrants that
it
has no offset, credit, claim or setoff against any amount due or owing under
the
Loan Documents, including but not limited to the aggregate total of
$76,004,525.58 in principal and interest due and owing on the Loan as of
October
31, 2005.
10
8. Authorizing
Resolutions.
Attached hereto as Exhibit
“A”
is the
Unanimous Resolution of the Board of Directors of IHHI authorizing IHHI to
execute this Amendment No. 1 and to agree to the terms and conditions set
forth
herein. Attached hereto as Exhibit
“B”
is the
Unanimous Resolution of the Board of Directors of WMC-SA authorizing WMC-SA
to
execute this Amendment No. 1 and to agree to the terms and conditions set
forth
herein. Attached hereto as Exhibit
“C”
is the
Unanimous Resolution of the Board of Directors of WMC-A authorizing WMC-A
to
execute this Amendment No. 1 and to agree to the terms and conditions set
forth
herein. Attached hereto as Exhibit
“D”
is the
Unanimous Resolution of the Board of Directors of Coastal authorizing Coastal
to
execute this Amendment No. 1 and to agree to the terms and conditions set
forth
herein. Attached hereto as Exhibit
“E”
is the
Unanimous Resolution of the Board of Directors of Xxxxxxx authorizing Xxxxxxx
to
execute this Amendment No. 1 and to agree to the terms and conditions set
forth
herein. Attached hereto as Exhibit
“F”
is the
Unanimous Resolution of the Managers of PCHI authorizing PCHI to execute
this
Amendment No. 1 and to agree to the terms and conditions set forth herein.
Attached hereto as Exhibit
“G”
is the
Unanimous Resolution of the Managers of West Coast authorizing West Coast
to
execute this Amendment No. 1 and to agree to the terms and conditions set
forth
herein. Attached hereto as Exhibit
“H”
is the
Unanimous Resolution of the Managers of Ganesha authorizing Ganesha to execute
this Amendment No. 1 and to agree to the terms and conditions set forth herein.
Attached hereto as Exhibit
“I”
is the
Unanimous Resolution of the Managers of OC-PIN authorizing OC-PIN to execute
this Amendment No. 1 and to agree to the terms and conditions set forth
herein.
9. Advice
of Legal Counsel.
Each
Borrower, each Credit Party and each Guarantor represents, warrants and
covenants that it has consulted with and received advice from its own legal
counsel, that it has read this Amendment No. 1 and/or that its legal counsel
has
explained the contents of this Amendment No. 1, that it understands the terms
and conditions of this Amendment No. 1, that it understands the legal
consequences of executing this Amendment No. 1, and agrees to execute the
same.
10. Reimburse
Lender for All Fees and Expenses.
Borrowers hereby agree to and shall (a) on the Effective Date of this Amendment
No. 1, pay to Lender all attorneys’ fees (including in-house counsel and outside
counsel), costs, charges, expenses, foreclosure fees, trustee fees, recording
charges, consultants fees, appraisal fees and other costs or expenses directly
or indirectly paid or incurred by Lender in connection with this Amendment
No.
1, and (b) following the Effective Date, within ten (10) calendar days of
receipt of written demand therefore, reimburse Lender for all attorneys’ fees
(including in-house counsel and outside counsel), costs, charges, expenses,
foreclosure fees, trustee fees, recording charges, consultants fees, appraisal
fees and other costs or expenses directly or indirectly paid or incurred
by
Lender in connection with this Amendment No. 1. If
Borrower for any reason fails to reimburse Lender the referenced fees and
costs
within ten (10) calendar days of receipt of written demand therefore, Lender
shall have (in addition to all other rights of Lender under the Loan Documents)
the right, without further notice, to make a draw upon the Line of Credit
in the
name and for the benefit of Borrower in the amount of the fees and costs
demanded. In said event, the amount drawn by Lender shall automatically be
deemed a Line of Credit Advance made by Borrower from the Line of Credit
pursuant to Section 1.1(b)(i) of the Credit Agreement and the same shall
be
repaid by Borrower pursuant to the terms of the Line of Credit
Note.
11
11. Credit
Agreement To Remain In Force And Effect .
Except
as amended by this Amendment No. 1, the Credit Agreement shall remain in
full
force and effect according to its terms. In the event of an inconsistency
or
conflict between this Amendment No. 1 and the Credit Agreement, in each instance
this Amendment No. 1 to prevail and govern.
IN
WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.
|
BORROWERS:
|
||
|
INTEGRATED
HEALTHCARE HOLDINGS, INC., a
|
||
|
Nevada
corporation,
|
||
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
|
Xxxxx
X. Xxxxxxxx, President
|
||
|
WMC-SA,
INC., a California corporation,
|
||
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
|
Xxxxx
X. Xxxxxxxx, President
|
||
|
WMC-A,
INC., a California corporation,
|
||
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
|
Xxxxx
X. Xxxxxxxx, President
|
||
|
COASTAL
COMMUNITIES HOSPITAL, INC., a California corporation,
|
||
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
|
Xxxxx
X. Xxxxxxxx, President
|
||
|
XXXXXXX
MEDICAL CENTER, INC., a California corporation,
|
||
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
|
Xxxxx
X. Xxxxxxxx, President
|
||
|
[SIGNATURE
PAGE CONTINUES]
|
||
12
|
GUARANTORS:
|
||
|
PACIFIC
COAST HOLDINGS INVESTMENT, LLC, a
|
||
|
California
limited liability company,
|
||
|
By:
|
/s/
Xxxx X. Xxxx
|
|
|
Xxxx
X. Xxxx, M.D., Manager
|
||
|
By:
|
/s/
Xxxx X. Xxxxxxxxx
|
|
|
Xxxx
X. Xxxxxxxxx, M.D., Manager
|
||
|
ORANGE
COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited
liability
company,
|
||
|
By:
|
/s/
Xxxx X. Xxxx
|
|
|
Xxxx
X. Xxxx, M.D., Manager
|
||
|
CREDIT
PARTIES:
|
||
|
PACIFIC
COAST HOLDINGS INVESTMENT, LLC, a
|
||
|
California
limited liability company,
|
||
|
By:
|
/s/
Xxxx X. Xxxx
|
|
|
Xxxx
X. Xxxx, M.D., Manager
|
||
|
By:
|
/s/
Xxxx X. Xxxxxxxxx
|
|
|
Xxxx
X. Xxxxxxxxx, M.D., Manager
|
||
|
ORANGE
COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited
liability
company,
|
||
|
By:
|
/s/
Xxxx X. Xxxx
|
|
|
Xxxx
X. Xxxx, M.D., Manager
|
||
|
[SIGNATURE
PAGE CONTINUES]
|
||
13
|
GANESHA
REALTY, LLC, a California limited liability company,
|
||
|
By:
|
/s/
Xxxx X. Xxxxxxxxx
|
|
|
Xxxx
X. Xxxxxxxxx, M.D., Manager
|
||
|
WEST
COAST HOLDINGS, LLC, a California limited liability
company,
|
||
|
By:
|
/s/
Xxxx X. Xxxx
|
|
|
Xxxx
X. Xxxx, M.D., Manager
|
||
|
LENDER:
|
||
|
MEDICAL
PROVIDER FINANCIAL CORPORATION II, a Nevada
corporation,
|
||
|
By:
|
/s/
Xxxxxx X. Xxxxxxxxxxx
|
|
|
Xxxxxx
X. Xxxxxxxxxxx, President and
COO
|
||
14
