EXHIBIT 99.2
AGREEMENT TO FORBEAR
This AGREEMENT TO FORBEAR ("FORBEARANCE AGREEMENT") is made to be
effective as of December 18, 2006 (the "EFFECTIVE DATE") 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"), CHAPMAN MEDICAL CENTER, INC., a California corporation ("CHAPMAN"),
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"), MEDICAL PROVIDER FINANCIAL COMPANY II, a
Nevada corporation ("LENDER"), and HEALTHCARE FINANCIAL MANAGEMENT &
ACQUISITIONS, INC., a Nevada corporation ("HOLDER") . IHHI, WMC-SA, WMC-A,
Coastal and Chapman are hereinafter together sometimes referred to as the
"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."
RECITALS
A. Lender, Borrowers and the Credit Parties are parties to that certain
Credit Agreement dated as of December 12, 2005 ("CREDIT AGREEMENT"); IHHI and
Lender are parties to that certain Security Agreement dated as of December 12,
2005 ("SECURITY AGREEMENT"); PCHI executed and delivered to Lender that certain
Guaranty Agreement dated as of December 12, 2005 ("PCHI GUARANTY"); OC-PIN
executed and delivered to Lender that certain Guaranty Agreement dated as of
December 12, 2005 ("OC-PIN GUARANTY"); Lender and West Coast are parties to that
certain Pledge Agreement dated as of December 12, 2005 ("WEST COAST PLEDGE
AGREEMENT"); Lender and certain individual members of West Coast are parties to
that certain Pledge Agreement dated as of December 12, 2005 ("MEMBERS OF WEST
COAST PLEDGE AGREEMENT"); Lender and IHHI are parties to that certain Pledge
Agreement dated as of December 12, 2005 ("IHHI PLEDGE AGREEMENT"); Lender and
Ganesha are parties to that certain Pledge Agreement dated as of December 12,
2005 ("GANESHA PLEDGE AGREEMENT"); and IHHI executed and delivered to Holder
that certain Common Stock Warrant dated as of December 12, 2005 ("WARRANT"). The
Credit Agreement, the Security 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, the Warrant,
and each of the other documents and instruments executed in connection with the
Credit Agreement are hereinafter collectively referred to as the "$10.7 MILLION
LOAN DOCUMENTS." The terms and condition set forth in the $10.7 Million Loan
Documents are incorporated herein by reference even though not physically
attached hereto. Capitalized terms not defined in this Forbearance Agreement
shall have the same meaning as set forth in the $10.7 Million Loan Documents.
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B. Pursuant to the $10.7 Million Loan Documents, Lender extended to
Borrowers a loan in the amount of $10,700,000 ("$10.7 MILLION LOAN ") for the
purpose of operating and managing the Hospital Facilities defined in the Credit
Agreement. In consideration for making the $10.7 Million Loan to the Borrowers,
IHHI executed and delivered the Warrant to Holder. Borrowers, Credit Parties and
Guarantors acknowledge and agree that the aggregate total of principal and
interest due and owing under the $10.7 Million Loan as of September 30, 2006 is
$10,805,534.25.
C. The Credit Agreement provides that the $10.7 Million Loan is due and
payable in full on December 12, 2006 ("MATURITY DATE"). Section 9(a) of the
Warrant provides that IHHI (as the Company) shall file a registration statement
under the Securities Act of 1933 covering the resale of all Shares of Holder
(the "REGISTRATION STATEMENT") no later than ninety (90) calendar days prior to
the Maturity Date of the $10.7 Million Loan (which date is September 13, 2006)
(the "FILING DATE").
D. IHHI did not file the Registration Statement by September 13, 2006
(the "DEFICIENCY"), and has requested that Lender and Holder extend the Filing
Date to May 15, 2007 and forbear from exercising their respective rights and
remedies under the $10.7 Million Loan Documents and Warrant with respect to the
Deficiency. Lender and Holder each desire to extend the Filing Date and forbear
from exercising their respective rights and remedies under the $10.7 Million
Loan Documents and Warrant with respect to the Deficiency.
AGREEMENTS
NOW, THEREFORE, in consideration of the covenants and conditions set
forth in this Forbearance Agreement, and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged,
Borrowers, Credit Parties, Guarantors, Lender and Holder agree as follows:
1. INCORPORATION OF RECITALS. The foregoing Recitals are incorporated by
reference as if fully set forth herein.
2. AGREEMENTS
2.1 FORBEARANCE PERIOD; AGREEMENT TO FORBEAR. The period commencing on
the Effective Date of this Forbearance Agreement and ending on May 15, 2007 is
hereinafter referred to as the "FORBEARANCE PERIOD." So long as Borrowers,
Credit Parties and Guarantors timely comply with their respective obligations
under the $10.7 Million Loan Documents and under the Deeds of Trust, and so long
as IHHI (as the Company) timely complies with its obligations under the Warrant
(as amended below), and so long as no Event(s) of Default occurs under the $10.7
Million Loan Documents or the Warrant or the Deeds of Trust or this Forbearance
Agreement, then Lender and Holder each agree as follows ("AGREEMENT TO
FORBEAR"):
(a) The first sentence of Section 9(a) of the Warrant shall be amended
and restated in its entirety to read as follows:
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"The Company shall file a registration statement (the "REGISTRATION
STATEMENT") under the Securities Act of 1933, as amended and the rules and
regulations promulgated thereunder (the "SECURITIES ACT"), covering the resale
of all Shares of the Holder no later than May 15, 2007 (the "FILING DATE"), and
use its reasonable best efforts to have the registration statement declared
effective by the Securities and Exchange Commission ("SEC") as soon as
practicable but no later than 90 days after the Filing Date (or 120 days if the
Registration Statement is reviewed by the SEC), for distribution thereof by
means of an underwriting."
(b) During the Forbearance Period, Holder will forbear from filing a
lawsuit against IHHI to enforce its obligations under the Warrant with respect
to the Deficiency.
(c) During the Forbearance Period, Lender will forbear from charging
interest at the Default Rate.
2.2 EXPRESS RESERVATION OF OTHER REMEDIES. Lender's and Holder's
Agreement to Forbear is the exclusive and only forbearance to which Lender and
Holder have agreed. Lender and Holder expressly reserve the right to exercise
each and every of their other rights and remedies under the $10.7 Million Loan
Documents, the Warrant and the Deeds of Trust not specifically included within
Lender's and Holder's Agreement to Forbear.
2.3 NEGATIVE COVENANTS DURING THE FORBEARANCE PERIOD. Borrowers, Credit
Parties and Guarantors each promise, covenant and agree as follows:
(a) During the Forbearance Period, Borrowers, Credit Parties and
Guarantors will not directly or indirectly file, serve, take, initiate,
prosecute, participate or cooperate in the filing, serving, taking, initiating
or prosecuting of, any legal action or proceeding against Lender or Holder.
(b) During the Forbearance Period, Borrowers, Credit Parties and
Guarantors (other than Ganesha) will not directly or indirectly (i) sell,
transfer, assign, convey, lease, sublease, or otherwise transfer, or agree to
sell, transfer, assign, convey, lease or sublease, or otherwise transfer, any
interest in any real property or improvements (together "REAL PROPERTY ASSETS")
owned, controlled, leased or subleased by Borrowers, or Credit Parties or
Guarantors as of the Effective Date hereof; (ii) grant a lien or security
interest in, or otherwise pledge, encumber or hypothecate, or agree to grant a
lien or security interest in, or agree to pledge, encumber or hypothecate, any
interest in any portion of the Real Property Assets or otherwise use any of the
Real Property Assets as collateral or security for any debt, obligation or
liability of any of the Borrowers, Credit Parties or Guarantors; (iii) amend,
modify or change its articles of incorporation, bylaws, articles of organization
or operating agreement, as applicable, without first receiving the prior written
consent of Lender, which consent will not be unreasonably withheld; (iv)
increase, decrease, change, amend, modify, expand or contract on the power or
authority of any officer, director, manager, member or managing member of the
entity of which any Borrower, Credit Party or Guarantor is comprised, without
first receiving the prior written consent of Lender, which consent will not be
unreasonably withheld; (v) amend, modify, alter or change any shareholders
agreement or voting trust; (vi) change its name as it appears in official
filings in the state of its incorporation or other organization; (vii) change
its chief executive office, principal place of business, corporate office or
location at which the location of its business records are currently located;
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(viii) change the type of entity that it is; (ix) change its organization
identification number, if any, issued by its state of incorporation or other
organization; (x) change its state of incorporation or organization or
incorporate or organize in any additional jurisdictions; (xi) appoint a new
person as an officer, director, member or manager, without first receiving the
prior written consent of Lender, which consent will not be unreasonably
withheld; or (xii) terminate any person as an officer, director, member or
manager.
2.4 REQUIREMENTS TO CURE EVENT OF DEFAULT. If by expiration of the
Forbearance Period (a) the Deficiency has been fully cured, and (b) there exists
no breach or default under this Forbearance Agreement or under the $10.7 Million
Loan Documents which remains uncured or continuing, and (c) all of Lenders' and
Holder's attorneys' fees, costs, charges, expenses, foreclosure fees, trustee
fees, recording charges and other costs or expenses paid or incurred by Lender
and/or Holder with respect to the Deficiency and this Forbearance Agreement have
been paid in full by Borrowers, then in said event Lender and Holder agree to
and shall within five (5) Business Days from receipt of written demand therefore
from IHHI declare as cured and satisfied the Deficiency.
2.5 TERMINATION OF LENDER'S AGREEMENT TO FORBEAR. If by expiration if
the Forbearance Period (a) the Deficiency has not been fully cured, or (b) there
exists one or more breaches or defaults under this Forbearance Agreement or
under the $10.7 Million Loan Documents which remain uncured or continuing, or
(c) Lenders' and Holder's attorneys' fees, costs, charges, expenses, foreclosure
fees, trustee fees, recording charges and other costs or expenses paid or
incurred by Lender and/or Holder with respect to the Deficiency or this
Forbearance Agreement have not been paid in full, then upon the occurrence of
any one or more of the foregoing Lender's and Holder's Agreement to Forbear
shall automatically terminate, expire and have no further force or effect. In
said event, Borrowers, Credit Parties and Guarantors acknowledge and agree that
Lender and/or Holder, as applicable, shall have the right but not the obligation
to take any one or more of the following acts: (i) record a Notice of Default
and Election to Sell with respect to that certain Fee Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Rents dated as of March 3, 2005 and
recorded in the Official Records on March 8, 2005 as document no. 2005000169280,
and a Notice of Default and Election to Sell with respect to that certain
Leasehold Deed of Trust, Security Agreement, Fixture Filing and Assignment of
Rents dated as of March 3, 2005 and recorded in the Official Records on March 8,
2005 as document no. 2005000169281 (respectively, the "NOTICES OF DEFAULT" and
the "DEEDS OF TRUST"); (ii) file a judicial foreclosure lawsuit against the
Borrowers and the Credit Parties with respect to the Deeds of Trust; (iii) file
a lawsuit against PCHI to enforce its obligations under the PCHI Guaranty; (iv)
file a lawsuit against OC-PIN to enforce its obligations under the OC-PIN
Guaranty; (v) file a lawsuit against West Coast to enforce its obligations under
the West Coast Pledge Agreement; (vi) file a lawsuit against the members of West
Coast to enforce their obligations under the Members of West Coast Pledge
Agreement; (vii) file a lawsuit against IHHI to enforce its obligations under
the IHHI Pledge Agreement; (viii) file a lawsuit against Ganesha to enforce its
obligations under the Ganesha Pledge Agreement; (ix) file a lawsuit against IHHI
(as the Company) to enforce its obligations under the Warrant; and (x) process,
file, serve, take or initiate any other legal action or proceeding against any
one or more of the Borrowers or Credit Parties or Guarantors that Lender and/or
Holder is permitted to take under the $10.7 Million Loan Documents and
applicable law.
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2.6 RELEASES AND WAIVERS. In consideration for Lender's and Holder's
Agreement to Forbear, and effective as of the Effective Date of this Forbearance
Agreement:
(a) Subject to the last sentence of this SECTION 2.6(A), each Borrower,
each Credit Party and each Guarantor, together with their respective officers,
directors, shareholders, members, managers, employees, agents, representatives
and assigns (collectively the "RELEASING PARTIES") hereby fully, forever and
irrevocably release, waive and relinquish their right to file or record in the
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 $10.7 Million Loan Documents) against Lender
or Holder 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 Holder or any trustee under any
Deed of Trust (i) from recording a Notice of Sale with respect to any of the
Deeds of Trust, or (ii) 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 (iii) from conveying title to any one or more of the Hospital
Facilities via trustee's deed to a purchaser at foreclosure, or (iv) from
conducting a sale of the personal property Collateral pursuant to the California
Uniform Commercial Code, or (v) 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 (vi) from attaching or garnishing or seeking any other
provisional remedy against any real or personal property of any Borrower, Credit
Party or Guarantor, or (vii) from taking any other action or pursuing any other
right or remedy that Lender is permitted to pursue under the $10.7 Million Loan
Documents, or in law or equity. Notwithstanding the foregoing, the releases and
waivers set forth in this SECTION 2.6(a) shall apply only to Injunctive Relief
based on alleged acts or omissions of Lender which occurred prior to the
Effective Date of this Forbearance Agreement.
(b) Each of the Releasing Parties hereby fully, forever and irrevocably
release, waive and relinquish any claim or cause of action (collectively,
"LENDER LIABILITY CLAIMS") that the Releasing Parties now have or in the future
may have against Lender and/or Holder to the effect that, prior to the Effective
Date of this Forbearance Agreement: (i) Lender or Holder committed a breach or
default under any of the $10.7 Million Loan Documents, or (ii) Lender or Holder
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
(iii) Lender or Holder committed an act not permitted by the $10.7 Million Loan
Documents or applicable law, or (iv) Lender or Holder omitted to take an act
required by the $10.7 Million Loan Documents or under applicable law, or (v) any
of the $10.7 Million Loan Documents (including, but not limited to, the PCHI
Guaranty and the OC-PIN Guaranty) or this Forbearance Agreement is/are invalid
or unenforceable in whole or in part for any reason, or (vi) Lender or Holder
suggested, implied, induced, cajoled or required that IHHI include any terms or
conditions in any agreements between IHHI and OC-PIN, or (vii) Lender or Holder
suggested, implied, induced, cajoled or required that IHHI not include any terms
or conditions in any agreements between IHHI and OCPIN, or (viii) Lender or
Holder improperly interfered with or improperly exercised any control over the
Borrowers or Credit Parties or Guarantors, or (ix) that Lender or Holder
breached in any way any alleged duty of good faith or fair dealing, or any
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alleged duty of commercial reasonableness, or any quasi-duty, or any implied
duty, or (x) that Lender or Holder committed any unlawful, unfair or fraudulent
business act or practice, or (xi) that Lender or Holder engaged in any unfair,
deceptive, untrue or misleading advertising, or (xii) that Lender or Holder
committed any act prohibited by California Business and Professions Code Section
17500, or (xiii) that Lender or Holder engaged in predatory lending practices,
or (xiv) that Lender or Holder engaged in or committed any act or omission which
constitutes fraud, duress, negligence, conversion, defamation or infliction of
emotional distress, or (xv) that Lender or Holder interfered with an Borrower's
or any Credit Party's or any Guarantor's prospective business advantage, or
(xvi) that Lender or Holder interfered with any Borrower's or any Credit Party's
or any Guarantor's contractual relations.
(c) In order to induce Lender and Holder to enter into this Forbearance
Agreement and to agree to the Agreement to Forbear, effective upon the Effective
Date of this Forbearance Agreement, each of the Releasing Parties fully, forever
and irrevocably releases, waives, relinquishes and discharges Lender and Holder
and their respective successors and assigns, predecessors, related or affiliated
companies or entities, and their respective officers, directors, shareholders,
agents, employees, attorneys and representatives (collectively, the
"LENDER/HOLDER 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
Releasing Parties may have had, may now have or may in the future claim to have
against the Lender/Holder 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 Forbearance Agreement.
The 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 of any comparable statutes in the State of Nevada upon
the rights of each of them. By way of example, Section 1542 of the Civil Code of
California provides 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 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 OF ANY COMPARABLE NEVADA
STATUTE, AND ARE EXPRESSLY WAIVING THE SAME. EACH OF THE RELEASING PARTIES
AGREES THAT IT INTENDS TO RELEASE EVEN UNKNOWN OR UNSUSPECTED CLAIMS. EACH OF
THE RELEASING PARTIES REPRESENTS THAT IT HAS CONSULTED WITH ITS LEGAL COUNSEL
REGARDING ITS CLAIMS AND POTENTIAL CLAIMS AGAINST LENDER AND/OR HOLDER, AND HAS
CAREFULLY READ AND UNDERSTAND ALL THE PROVISIONS OF THIS FORBEARANCE AGREEMENT,
AND HAS VOLUNTARILY ENTERED INTO THIS FORBEARANCE AGREEMENT.
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2.7 COVENANTS NOT TO SUE. Each of the Releasing Parties hereby
promises, covenants and agrees not to sue Lender or Holder, and not to bring any
legal action or proceeding of any kind against Lender or Holder, 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 Lender or Holder based on acts
or omissions which occurred prior to the Effective Date of this Forbearance
Agreement, or (b) impose any Lender Liability Claims on or against Lender or
Holder based on acts or omissions which occurred prior to the Effective Date of
this Forbearance Agreement, or (c) obtain or impose on Lender or Holder any
Injunctive Relief based on acts or omissions which occurred prior to the
Effective Date of this Forbearance Agreement, or (d) which legal action or
proceeding violates any covenant, condition, representation or warranty made by
the Releasing Parties in this Forbearance Agreement.
2.8 INDEMNITY. Each Borrower, each Credit Party and each Guarantor
hereby jointly and severally agrees to and shall indemnify, defend, protect and
hold Lender and Holder and each of their respective Affiliates and 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 defined below) (collectively the "INDEMNIFIED LIABILITIES") directly
or indirectly arising out of or relating to (a) the execution and delivery of
this Forbearance Agreement by an Indemnified Person, or (b) the execution and
delivery of any $10.7 Million Loan Document by an Indemnified Person, or (c) the
making of the $10.7 Million Loan by an Indemnified Person, or (d) any Lender
Liability Claim brought or asserted against an Indemnified Person; provided,
that neither Borrowers nor any Credit Party nor any Guarantor shall be liable
for any Indemnified Liabilities to the extent that such Indemnified Liability
directly results from the accused Indemnified Person's own gross negligence or
willful misconduct; and the liability of the Credit Parties for the Indemnified
Liabilities shall not exceed the liability limitations set forth in SECTION 1.10
in the Credit Agreement. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO
ANY OTHER PARTY TO THIS FORBEARANCE AGREEMENT OR TO ANY $10.7 MILLION 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 AGREEMENT OR AS A RESULT OF ANY CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY $10.7 MILLION LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
3. REPRESENTATIONS AND WARRANTIES. To induce Lender and Holder to
forbear from pursuing their rights and remedies under the $10.7 Million Loan
Documents and the Warrant, Borrowers, Credit Parties and Guarantors jointly and
severally make the following representations and warranties to Lender and
Holder, each and all of which shall survive the execution, delivery, expiration
or earlier termination of this Forbearance Agreement.
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3.1 EXISTENCE; COMPLIANCE WITH APPLICABLE LAWS. Each Borrower, each
Credit Party and each Guarantor (a) is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation or organization; (b) is duly
qualified to conduct business and is in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its business requires
such qualification; (c) has the requisite power and authority and the legal
right to own, pledge, mortgage, or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its
business as now conducted or proposed to be conducted; and (d) is in compliance
with its articles of incorporation or articles of organization, and its bylaws
and operating agreements, as applicable.
3.2 POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS. The execution,
delivery and performance by each Borrower, each Credit Party and each Guarantor
(individually a "PERSON") of this Forbearance Agreement is: (a) within such
Person's power; (b) have been duly authorized by all necessary corporate or
limited liability company action; (c) does not contravene any provision of such
Person's articles, bylaws, agreement of organization, or operating agreement as
applicable; (d) does not violate any law or regulation, or any order or decree
of any court or Governmental Authority; (e) does not conflict with or result in
the breach or termination of, constitute a default under or accelerate or permit
the acceleration of any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which such Person is a party
or by which such Person or any of its property is bound; (f) does not result in
the creation or imposition of any Lien upon any of the property of such Person
other than those in favor of Lender pursuant to the $10.7 Million Loan
Documents; and (g) does not require the consent or approval of any Governmental
Authority or any other Person. This Forbearance Agreement shall be duly executed
and delivered by each Borrower, each Credit Party and each Guarantor and shall
constitute a legal, valid and binding obligation of each such Borrower, and each
such Credit Party, and each such Guarantor, enforceable against it in accordance
with its terms.
3.3 RATIFICATION OF $10.7 MILLION LOAN DOCUMENTS; NO DEFENSES; NO KNOWN
DEFAULTS. Each Borrower, Credit Party and Guarantor hereby ratifies and
confirms, and represents and warrants, to Lender and Holder that: (a) each and
every of the $10.7 Million Loan Documents remains enforceable according to their
terms; (b) there are no known defenses to enforcement by Lender or Holder of the
$10.7 Million Loan Documents according to their terms; (c) other than the
Deficiency, there are no known defaults under the $10.7 Million Loan Documents
by any Borrower, by any Credit Party or by any Guarantor; and (d) there are no
known defaults under any of the $10.7 Million Loan Documents or the Warrant or
the Deeds of Trust by Lender or Holder.
3.4 OTHER OBLIGATIONS SUBORDINATE TO OBLIGATIONS IN $10.7 MILLION LOAN
DOCUMENTS. Each Borrower, Credit Party and Guarantor represents and warrants
that all or their other debts, agreements, liabilities and other obligations are
subordinate to their obligation to repay the Obligations set forth in the $10.7
Million Loan Documents.
3.5 NO LITIGATION. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or threatened against any Borrower or any Credit Party
or any Guarantor before any Governmental Authority or before any arbitrator or
panel of arbitrators; and no Borrower, or Credit Party, or Guarantor has brought
an action, claim, lawsuit, demand, investigation or proceeding against Lender or
Holder or knows of any facts upon which it intends to bring an action, claim,
lawsuit or demand against Lender or Holder.
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3.6 CONFIRMATION OF $10.7 MILLION 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 $10.7 Million 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 $10.7 Million 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 $10.7 Million Loan Documents, or any other agreement
now or hereafter executed by Borrower and delivered to Lender, (c) Lender's or
Holder's election, in any proceeding instituted under Chapter 11 of Title 11 of
the United States Code (11 U.S.C. ss.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 or Holder's claims for
repayment of the $10.7 Million 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. Until such time as all Obligations to Lender have been irrevocably paid
in full, 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 Borrower 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 $10.7 Million 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 $10.7 Million 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 $10.7 Million 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 $10.7 Million 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
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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.
3.7 WAIVER OF OBJECTION TO LENDER'S AND HOLDER'S MOTION FOR RELIEF FROM
AUTOMATIC STAY. As consideration for and as an inducement to Lender and Holder
to enter into this Forbearance Agreement, each Borrower, Credit Party and
Guarantor represents and warrants that (a) should any Borrower or any Credit
Party or any Guarantor file a petition or have a petition filed against it
seeking relief under the Bankruptcy Code, or any other applicable federal, state
or foreign bankruptcy or other similar law ("BANKRUPTCY PROCEEDING"), and (b)
should Lender or Holder become subject to any automatic stay imposed in said
Bankruptcy Proceeding, then (c) each Borrower, Credit Party and Guaranty which
is subject to a Bankruptcy Proceeding hereby irrevocably and unequivocally agree
that it shall not object to nor file any motion or pleading or document in
objection to, any motion filed by the Lender in the Bankruptcy Proceeding
seeking relief from the automatic stay.
3.8 NO DEFAULTS. Except for the Deficiency, no known breaches, defaults
or Events of Default have occurred under the $10.7 Million Loan Documents, the
Environmental Indemnity, the PCHI Guaranty and the OC-PIN Guaranty or the
Warrant, which have not been cured or which are continuing.
3.9 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 $10.7 Million Loan Documents.
3.10 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 Forbearance
Agreement and/or that its legal counsel has explained the contents of this
Forbearance Agreement, that it understands the terms and conditions of this
Forbearance Agreement, that it understands the legal consequences of executing
this Forbearance Agreement, and agrees to execute the same.
4. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
4.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "EVENT OF DEFAULT" under this Forbearance
Agreement:
(a) IHHI, as the Company, fails by May 15, 2007 to file a registration
statement with the SEC as required by the Warrant, as amended hereby.
(b) An Event of Default (other than the Deficiency which forms the
basis for this Forbearance Agreement) occurs under any of the $10.7 Million Loan
Documents, the PCHI Guaranty, the OC-PIN Guaranty, the Warrant, or the
Environmental Indemnity.
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(c) A case or proceeding is commenced against any Borrower or any
Credit Party or any Guarantor seeking a decree or order in respect of such
Borrower or such Credit Party of such Guarantor (i) under the Bankruptcy Code,
or any other applicable federal, state or foreign bankruptcy or other similar
law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Borrower or such Credit Party or
such Guarantor or for any substantial part of any such Borrower or such Credit
Party or such Guarantor's assets, or (iii) ordering the winding-up or
liquidation of the affairs of such Borrower or such Credit Party or such
Guarantor, and such case or proceeding shall remain undismissed or unstayed for
sixty (60) days or more or a decree or order granting the relief sought in such
case or proceeding is granted by a court of competent jurisdiction.
(d) Any Borrower or any Credit Party or any Guarantor (i) files a
petition seeking relief under the Bankruptcy Code, or any other applicable
federal, state or foreign bankruptcy or other similar law, (ii) consents to or
fails to contest in a timely and appropriate manner the institution of
proceedings thereunder or the filing of any such petition or the appointment of
or taking possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Borrower or such Credit Party or
such Guarantor or for any substantial part of any such Borrower or such Credit
Party or such Guarantor's assets, (iii) makes a general assignment for the
benefit of creditors, (iv) takes any action in furtherance of any of the
foregoing; or (v) admits in writing its inability to, or is generally unable to,
pay its debts as such debts become due.
(e) Any Borrower or any Credit Party or any Guarantor enters into any
agreement with any other lender, creditor or third party which materially
impairs the ability of any Borrower, Credit Party or Guarantor to perform their
obligations under this Forbearance Agreement or to perform their obligations
under the $10.7 Million Loan Documents.
(f) Any Borrower or any Credit Party or any Guarantor commits a breach
or default under this Forbearance Agreement (other than those referenced in
SECTIONS 5.1(a) THROUGH AND INCLUDING (e) hereinabove) and the same remains
uncured for five (5) or more calendar days after receipt of notice thereof from
Lender.
4.2 REMEDIES. If an Event of Default occurs under this Forbearance
Agreement, Lender and Holder may, without notice, terminate their Agreement to
Forbear, in which event Lender and Holder, as applicable, shall have the right
in their sole and absolute discretion, but not the obligation, to (a) record the
Notices of Default with respect to each of the Deeds of Trust and proceed with
the non-judicial foreclosure process, (b) file, serve, take or initiate any
legal action or proceeding against any one or more of the Borrowers, Credit
Parties or Guarantors that Lender is permitted to take under the $10.7 Million
Loan Documents and/or the Warrant, and (c) pursue each and every of the other
rights and remedies granted to Lender in the $10.7 Million Loan Documents, the
PCHI Guaranty, the OC-PIN Guaranty, and the Environmental Indemnity.
4.3 WAIVERS. Each Borrower, Credit Party and Guarantor agrees as
follows:
(a) Except as otherwise provided for in this Forbearance Agreement or
by applicable law, each Borrower, each Credit Party and each Guarantor waives
(i) presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, (ii) all rights to notice and a
hearing prior to Lender's or Holder's taking possession or control of, or to
Lender's replevy, attachment or levy upon, the Collateral or any bond or
security that might be required by any court prior to allowing Lender or Holder
to exercise any of its remedies, and (iii) the benefit of all valuation,
appraisal, marshaling and exemption laws.
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(b) One or more persons who may be a director, or an officer, or a
shareholder, or a manager, or a member, of a Borrower or a Credit Party or a
Guarantor, may also be a director, or an officer, or a shareholder, or a
manager, or a member, in another Borrower or Credit Party or Guarantor. If said
person is in a position to manage or control one or both of said Borrowers, or
Credit Parties, or Guarantors, said person may be deemed to be an "INSIDER" as
that term is defined in 11 U.S.C. ss. 101. If any Borrowers or Credit Parties or
Guarantors have or share an Insider, then each such Borrower and/or Credit Party
and/or Guarantor that has or shares an Insider hereby expressly waives,
covenants and agrees not to bring or assert any cause of action or claim (as
defined in 11 U.S.C. ss. 101) against any other Borrower or Credit Party or
Guarantor that it may now have or that it may hereafter have, which cause of
action or claim seeks to prevent any Borrower or Credit Party or Guarantor from
making a payment to Lender or Holder of any amounts which said Borrower or
Credit Party or Guarantor is obligated to make to Lender or Holder under this
Forbearance Agreement or under any of the $10.7 Million Loan Documents.
5. MISCELLANEOUS
5.1 COMPLETE AGREEMENT. This Forbearance Agreement constitutes the
complete agreement between the parties with respect to the subject matter
hereof.
5.2 AMENDMENTS AND WAIVERS. Except for actions expressly permitted to
be taken by Lender or Holder, no amendment, modification, termination or waiver
of any provision of this Forbearance Agreement shall be effective unless the
same shall be in writing and signed by the Lender, Holder, the Borrowers, Credit
Parties and Guarantors.
5.3 REIMBURSE LENDER FOR ALL FEES AND EXPENSES. Borrowers hereby agree
to and shall (a) on the Effective Date, pay to Lender and Holder 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 and Holder in connection with the Deficiency and this Forbearance
Agreement, and (b) following the Effective Date, within ten (10) calendar days
of receipt of written demand therefore, reimburse Lender and Holder for all
attorneys' fees (including inhouse 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 or Holder in connection with the Deficiency and this
Forbearance Agreement.
5.4 NO WAIVER. Lender's or Holder's failure, at any time or times, to
require strict performance by the Borrowers and the Credit Parties and the
Guarantors of any provision of this Forbearance Agreement or any other $10.7
Million Loan Document shall not waive, affect or diminish any right of Lender or
Holder thereafter to demand strict compliance and performance herewith or
therewith. Any suspension or waiver of an Event of Default shall not suspend,
waive or affect any other Event of Default whether the same is prior or
subsequent thereto and whether the same is of a different type. None of the
undertakings, agreements, warranties, covenants and representations of any
Borrower or any Credit Party or any Guarantor contained in this Forbearance
Agreement, and no Event of Default, shall be deemed to have been suspended or
waived by Lender or Holder, unless an unequivocal waiver or suspension is set
forth in a writing signed by Lender or Holder, as applicable.
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5.5 REMEDIES. Lender's and Holder`s rights and remedies under this
Forbearance Agreement shall be cumulative and nonexclusive of any other rights
and remedies that Lender Holder may have under any other agreement, including
the other $10.7 Million Loan Documents, by operation of law or otherwise.
5.6 SEVERABILITY. Wherever possible, each provision of this Forbearance
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Forbearance Agreement shall
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Forbearance Agreement.
5.7 SURVIVAL. Each and every of the promises, covenants,
representations, warranties, obligations, releases, waivers and indemnities of
the parties to this Forbearance Agreement and the parties to the $10.7 Million
Loan Documents shall survive the expiration or termination of this Forbearance
Agreement, the expiration or termination of the Agreement to Forbear, and the
expiration or termination of the Forbearance Period.
5.8 CONFLICT OF TERMS. Except as otherwise provided in this Forbearance
Agreement, if any provision contained in this Forbearance Agreement conflicts
with any provision in any of the $10.7 Million Loan Documents, the provision
contained in this Forbearance Agreement shall govern and control.
5.9 CONFIDENTIALITY. Each of the Borrowers, the Credit Parties and the
Guarantors and Lender and Holder covenant and agree to keep and maintain this
Forbearance Agreement, the terms and conditions set forth in this Forbearance
Agreement, and all documents and instruments executed or delivered in connection
with this Forbearance Agreement (hereinafter, "Confidential Information")
confidential for a period of two (2) years following the Effective Date hereof,
except that Confidential Information: (a) may be disclosed to persons employed
or engaged by Lender or Holder and the Borrowers, Credit Parties and Guarantors;
(b) may be disclosed as required or requested by any Governmental Authority or
reasonably believed (based on advice of counsel) to be compelled by any court
decree, subpoena or legal or administrative order or process; (c) may be
disclosed as required by law; (d) may be disclosed in connection with the
exercise by Lender or Holder of any right or remedy granted to it under the
$10.7 Million Loan Documents and/or this Forbearance Agreement or in connection
with any legal action or proceeding relative enforcing or interpreting any of
the $10.7 Million Loan Documents and/or this Forbearance Agreement; or (e) may
be disclosed to if the Confidential Information ceases to be confidential
through no fault of any of the parties to this Forbearance Agreement. If any
party to this Forbearance Agreement is required in any proceeding, by any court
decree, subpoena or legal or administrative order or process, to disclose any
Confidential Information, said party will use commercially reasonable efforts to
give the other Borrowers and Credit Parties and Guarantors and Lender and
Holder, as applicable, prompt written notice of such request so that any
Borrower or any Credit Party or any Guarantor or Lender or Holder may seek an
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appropriate protective order. If in the absence of a protective order, a party
to this Forbearance Agreement is compelled in a proceeding to disclose any such
Confidential Information, the disclosing party may disclose such portion of such
Confidential Information that it is compelled to disclose; provided, however,
that the disclosing party agrees to and shall use commercially reasonable
efforts to provide Borrowers and to Credit Parties and to Guarantors and to
Lender and Holder, as applicable, written notice of the information to be
disclosed as far in advance of its disclosure as is practicable.
5.10 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE $10.7 MILLION LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS FORBEARANCE AGREEMENT AND THE
OBLIGATIONS SET FORTH HEREIN SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. EACH BORROWER AND EACH CREDIT PARTY AND EACH GUARANTOR AND LENDER AND
HOLDER HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN THE
STATE OF NEVADA AND/OR THE FEDERAL COURTS LOCATED IN THE STATE OF CALIFORNIA
USING NEVADA LAW, SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN OR AMONG THE BORROWERS AND THE CREDIT PARTIES AND THE
GUARANTORS ON THE ONE HAND, AND LENDER AND HOLDER, AS APPLICABLE, ON THE OTHER
HAND, PERTAINING TO THIS FORBEARANCE AGREEMENT OR TO ANY MATTER ARISING OUT OF
OR RELATING TO THIS FORBEARANCE AGREEMENT. PROVIDED HOWEVER, NOTHING IN THIS
FORBEARANCE AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER OR HOLDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN THE STATE OF CALIFORNIA,
UNDER CALIFORNIA LAW, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS SET FORTH IN THE $10.7 MILLION LOAN DOCUMENTS OR IN THIS FORBEARANCE
AGREEMENT, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER OR
HOLDER. EACH BORROWER AND EACH CREDIT PARTY AND EACH GUARANTOR AND LENDER AND
HOLDER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION(S) IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT(S), AND EACH BORROWER, EACH CREDIT
PARTY, EACH GUARANTOR, AND LENDER AND HOLDER HEREBY WAIVES ANY OBJECTION THAT
SUCH BORROWER OR SUCH CREDIT PARTY OR GUARANTOR OR LENDER OR HOLDER MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER, EACH CREDIT PARTY, EACH
GUARANTOR AND LENDER AND HOLDER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH BORROWER, CREDIT PARTIES, GUARANTORS OR TO
LENDER AND HOLDER AT THE ADDRESS SET FORTH IN ANNEX D OF THE CREDIT AGREEMENT
AND IN THE WARRANT, AS APPLICABLE, AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH BORROWER'S, SUCH CREDIT PARTY'S, SUCH
GUARANTOR'S OR LENDER'S OR HOLDER'S ACTUAL RECEIPT THEREOF OR THREE (3) BUSINESS
DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, POSTAGE PREPAID.
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5.11 NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Forbearance
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been validly
served, given or delivered upon the earlier of: (a) actual receipt; or (b) three
(3) Business Days after deposit in the United States Mail, registered or
certified mail, return receipt requested, with postage prepaid; or (c) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as provided in this SECTION 6.11(B)
above); or (d) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid; or (e) when delivered, if hand-delivered by
messenger. All of the foregoing shall be addressed to the party to be notified
and sent to the address or facsimile number indicated in ANNEX D to the Credit
Agreement or in the Warrant or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to any Person
designated in ANNEX D to the Credit Agreement or in the Warrant to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
5.12 NO THIRD PARTY BENEFICIARIES. The undersigned do not intend that
there are or will be, and there are not, any third party beneficiaries to this
Forbearance Agreement, including any debtor or trustee in bankruptcy or
successor-in-interest to any of the undersigned.
5.13 TIME. Time is of the essence of this Forbearance Agreement.
5.14 ATTORNEYS' FEES AND COSTS. If any party to this Forbearance
Agreement institutes a suit against any other party to this Forbearance
Agreement for violation of or to enforce or interpret this Forbearance
Agreement, or if any party to this Forbearance Agreement intervenes in any suit
in which any other party to this Forbearance Agreement seeks to enforce or
protect its interest or rights hereunder, the prevailing party shall be entitled
to all of its costs and expenses, including, without limitation, reasonable
attorneys' fees, costs of suit, filing fees and charges, expert witness fees,
fees of any arbitrators or mediators, printing, copying, telephone and facsimile
expenses, messenger and courier services costs, and other similar costs or
expenses of suit.
5.15 SECTION TITLES. The Section titles contained in this Forbearance
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
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5.16 COUNTERPARTS. This Forbearance Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
5.17 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG LENDER OR HOLDER, ANY BORROWER AND ANY CREDIT
PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS FORBEARANCE
AGREEMENT OR ANY OF THE OTHER $10.7 MILLION LOAN DOCUMENTS OR THE TRANSACTIONS
RELATED THERETO.
5.18 REINSTATEMENT. This Forbearance Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Borrower or any Credit Party or any Guarantor for liquidation or
reorganization, should any Borrower or any Credit Party or any Guarantor become
insolvent or make a general assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Borrower's or any Credit Party's or any Guarantor's
assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
5.19 ADVICE OF COUNSEL. Each of the parties represents to each other
party hereto that it has discussed this Forbearance Agreement with its counsel
and has received and considered the advice of its counsel.
5.20 NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Forbearance Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Forbearance Agreement shall be construed as if drafted jointly by all 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 Forbearance
Agreement.
5.21 AUTHORITY. The persons signing below represent and warrant that
they have the requisite authority to bind the entities on whose behalf they are
signing.
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IN WITNESS WHEREOF, this Forbearance Agreement will be deemed effective
as of the Effective Date first above written.
BORROWERS:
INTEGRATED HEALTHCARE HOLDINGS, INC.,
a Nevada corporation,
By: /s/ Bruce Mogel
Name: Bruce Mogel
Title: Chief Executive Officer
WMC-SA, INC., a California corporation,
By: /s/ Bruce Mogel
Name: Bruce Mogel
Title: Chief Executive Officer
WMC-A, INC., a California corporation,
By: /s/ Bruce Mogel
Name: Bruce Mogel
Title: Chief Executive Officer
COASTAL COMMUNITIES HOSPITAL, INC.,
a California corporation,
By: /s/ Bruce Mogel
Name: Bruce Mogel
Title: Chief Executive Officer
CHAPMAN MEDICAL CENTER, INC.,
a California corporation,
By: /s/ Bruce Mogel
Name: Bruce Mogel
Title: Chief Executive Officer
GUARANTORS:
PACIFIC COAST HOLDINGS INVESTMENT, LLC,
a California limited liability company,
By: /s/ Anil V. Shah, M.D.
Name: Anil V. Shah, M.D.
Title: Manager
By: /s/ Kali P. Chaudhuri, M.D.
Name: Kali P. Chaudhuri, M.D.
Title: Manager
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ORANGE COUNTY PHYSICIANS INVESTMENT
NETWORK, LLC, a Nevada limited liability
company,
By: /s/ Anil V. Shah, M.D.
Name: Anil V. Shah, M.D.
Title: Manager
CREDIT PARTIES:
PACIFIC COAST HOLDINGS INVESTMENT, LLC,
a California limited liability company,
By: /s/ Anil V. Shah, M.D.
Name: Anil V. Shah, M.D.
Title: Manager
By: /s/ Kali P. Chaudhuri, M.D.
Name: Kali P. Chaudhuri, M.D.
Title: Manager
ORANGE COUNTY PHYSICIANS INVESTMENT
NETWORK, LLC, a Nevada limited liability
company,
By: /s/ Anil V. Shah, M.D.
Name: Anil V. Shah, M.D.
Title: Manager
GANESHA REALTY, LLC, a California limited
liability company,
By: /s/ Kali P. Chaudhuri, M.D.
Name: Kali P. Chaudhuri, M.D.
Title: Manager
WEST COAST HOLDINGS, LLC, a California
limited liability company,
By: /s/ Anil V. Shah, M.D.
Name: Anil V. Shah, M.D.
Title: Manager
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LENDER:
MEDICAL PROVIDER FINANCIAL CORPORATION II,
a Nevada corporation,
By: /s/ Joseph J. Lampariello
Joseph J. Lampariello,
President and COO
HOLDER:
HEALTHCARE FINANCIAL MANAGEMENT &
ACQUISITIONS, INC., a Nevada corporation
By:/s/ Joseph J. Lampariello
Name: Joseph J. Lampariello
Title: President
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