EXHIBIT 99.2
[LETTERHEAD OF SEDGWICK, DETERT, MORAN & ARNOLD LLP]
June 18, 2007
INTEGRATED HEALTHCARE HOLDINGS, INC.
1301 North Tustin Avenue
Santa Ana, California 92705
Attn: Larry Anderson, President
Bruce Mogel, CEO
AND TO THE CO-BORROWERS, CREDIT PARTIES,
AND GUARANTORS IDENTIFIED ON THE
SIGNATURE PAGE HERETO
Re: Amendment No. 1 to Forbearance Agreement
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File No.: 2994-128721
Gentlemen:
Reference is made to that certain Agreement to Forbear ("Forbearance
Agreement") dated to be effective as of June 18, 2007. Capitalized terms not
otherwise defined herein shall have the same meaning as set forth in the
Forbearance Agreement.
The Forbearance Agreement is hereby amended as follows, but said amendments
shall not take force or effect until July 1, 2007 ("Amendment Effective Date"):
1. Credit Agreements: Lenders, Borrowers, Credit Parties and Guarantors
hereby agree as follows:
a. During the period starting on the Amendment Effective Date and
ending at expiration of the Term of the Forbearance Agreement, Lenders each
waive their right to declare that an Event of Default has occurred under Section
8.1(w) of the $80 Million Credit Agreement.
b. During the period starting on the Amendment Effective Date and
ending at expiration of the Term of the Forbearance Agreement, Lenders each
waive their right to declare that an Event of Default has occurred under Section
10.1(o) of the $10.7 Million Credit Agreement.
c. During the period starting on the Amendment Effective Date and
ending at expiration of the Term of the Forbearance Agreement, if IHHI appoints,
nominates and/or elects a Person to become a member of its Board of Directors
and such Person is an "independent director," Lenders each waive their right to
declare that an Event of Default has occurred due to the occurrence of a Change
of Control under the Credit Agreements. For purposes of this paragraph, the
phrase "independent director" means (i) such Person does not have a pre-existing
business, financial or social relationship with any of the Borrowers, or the
Credit Parties, or the Guarantors, or any of their respective officers,
directors, members, managers, employees, agents or affiliates, (ii) such Person
does not practice medicine and/or is not a practicing physician, and (iii) such
Person certifies to the foregoing under penalty of perjury in a writing
delivered to the Lenders prior his/her appointment, or nomination, or election
to the Board of Directors.
d. During the period starting on the Amendment Effective Date and
ending at expiration of the Term of the Forbearance Agreement, if IHHI engages
the services of either Centrepointe, or Navigant Consulting, or Alvarez and
Marsel ("New Management") to take over management and control of the Hospital
Facilities, a Change of Control will not be deemed to have occurred under the
Credit Agreements. Provided, however, New Management (i) must agree to and shall
consult with Lenders to insure an orderly transition of the operating managers
of the Hospital Facilities, (ii) shall take all steps reasonably necessary or
required to retain the operating managers of the Hospital Facilities, and (iii)
shall not terminate any operating managers of the Hospital Facilities or their
local executive staff without first obtaining the prior written consent of
Lenders, which consent will not be unreasonably nor untimely withheld, delayed
or conditioned.
2. Releases, Waivers, Covenants Not To Sue, Indemnities and Reaffirmations.
Borrowers, Credit Parties and Guarantors acknowledge and agree that they
requested each Lender to agree to the provisions of this Amendment No. 1 to
Forbearance Agreement. As a consequence, following the Effective Date of the
Forbearance Agreement, and pursuant to this Amendment No. 1 to Forbearance
Agreement, Lenders will be asked or required to take certain acts, make certain
decisions, engage in certain analyses and grant or withhold consent to certain
requests (collectively and together, the "Lender Acts"). In order to induce
Lenders to execute and deliver this Amendment No. 1 to Forbearance Agreement and
to take the Lender Acts required hereby, Borrowers, Credit Parties and
Guarantors jointly and severally agree, represent, warrant and covenant as
follows:
a. Each and every of the releases, waivers, covenants not so sue,
indemnities and reaffirmations set forth in the Forbearance Agreement
(including, but not limited, to those set forth in Section 3.6, Section 3.7,
Section 3.8 and Section 3.9) shall apply to each of the Lender Acts with the
same force and effect as if said Lender Acts had occurred prior to the Effective
Date of the Forbearance Agreement, despite the fact that the Lender Acts will
occur after the Effective Date of the Forbearance Agreement.
b. Each of the Releasing Parties hereby promises, covenants and agrees
not to sue any of the Released Parties, and not to bring any legal action or
proceeding of any kind against any of the Released Parties, in any court or
administrative proceeding, or in any venue,
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based on the occurrence of any one or more of the Lender Acts after the
Effective Date of the Forbearance Agreement (including this Amendment No. 1 to
Forbearance Agreement).
c. Each of the Releasing Parties acknowledges and agrees that Lenders
have agreed to perform the Lender Acts at the request of the Releasing Parties,
and Lenders would not have agreed to perform the Lender Acts without the
foregoing agreements, representations, warranties and covenants of the Release
Parties. As a consequence, the Releasing Parties hereby agree to and shall
jointly and severally indemnify, defend, protect and hold each of the Released
Parties free and harmless from and against any and all legal actions, suites,
proceedings or claims brought or asserted against any of the Released Parties
for damages, losses, liabilities and expenses (including but not limited to
reasonably attorneys' fees, witness and expert witness fees, court fees and
charges) directly or indirectly arising out of or relating to the performance or
non-performance of any Lender Acts.
3. Forbearance Agreement to Remain In Force and Effect. Except as amended
hereby, the Forbearance Agreement shall remain in force and effect. In the event
of any inconsistency between the Forbearance Agreement and this Amendment No. 1
to Forbearance Agreement, this Amendment No. 1 to Forbearance Agreement shall
govern and prevail.
Please indicate your agreement to the foregoing Amendment No. 1 to
Forbearance Agreement by affixing your signatures in the places indicated below,
and returning a copy of this fully executed Amendment No. 1 to Forbearance
Agreement, along with a copy of the fully executed Forbearance Agreement
(including all Exhibits thereto) to Martin Fleisher at the address indicated
above, no later than 10:00 a.m. Monday, June 18, 2007. If a copy of this fully
executed this Amendment No. 1 to Forbearance Agreement, along with a copy of the
fully executed Forbearance Agreement (including all Exhibits thereto) is not
timely delivered to Martin Fleisher, then this Amendment No. 1 to Forbearance
Agreement shall have no force or effect.
Very truly yours,
Gary C. Sheppard
cc: Joseph J. Lampariello (via email)
Andrew Demetriou, Esq. (via email)
Bill Mitchell, Esq. (via email)
Bill Thomas, Esq. (via email)
Greg Amber, Esq. (via email)
Allen Sussman, Esq. (via email)
Scott Schoeffel, Esq. (via email)
Martin M. Fleisher, Esq. (via email)
Tom Fazio, Esq. (via email)
[SIGNATURE PAGES FOLLOW]
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BORROWERS:
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INTEGRATED HEALTHCARE HOLDINGS, INC.,
a Nevada corporation
By: /s/ Bruce Mogel
------------------------------------
Bruce Mogel, CEO
WMC-SA, INC.,
a California corporation
By: /s/ Larry B. Anderson
------------------------------------
Larry B. Anderson, President
WMC-A, INC.,
a California corporation
By: /s/ Larry B. Anderson
------------------------------------
Larry B. Anderson, President
COASTAL COMMUNITIES HOSPITAL, INC.,
a California corporation
By: _/s/_Larry B. Anderson ______
Larry B. Anderson, President
CHAPMAN MEDICAL CENTER, INC.,
a California corporation
By: /s/ Larry B. Anderson
------------------------------------
Larry B. Anderson, President
[SIGNATURE PAGES CONTINUE]
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CREDIT PARTIES:
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PACIFIC COAST HOLDINGS INVESTMENT, LLC,
a California limited liability company,
By: /s/ Anil V. Shah
------------------------------------
Anil V. Shah, M.D., Manager
By: /s/ Kali P. Chaudhuri
------------------------------------
Kali P. Chaudhuri, M.D., Manager
WEST COAST HOLDINGS, LLC,
a California limited liability company,
By: /s/ Anil V. Shah
------------------------------------
Anil V. Shah, M.D., Manager
GANESHA REALTY, LLC, a
California limited liability company
By: /s/ Kali P. Chaudhuri
Kali P. Chaudhuri, M.D., Manager
GUARANTORS:
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PACIFIC COAST HOLDINGS INVESTMENT, LLC,
a California limited liability company,
By: /s/ Anil V. Shah
------------------------------------
Anil V. Shah, M.D., Manager
By: /s/ Kali P. Chaudhuri
------------------------------------
Kali P. Chaudhuri, M.D., Manager
ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC,
a Nevada limited liability company,
By: /s/ Anil V. Shah
Anil V. Shah, M.D., Manager
By: ____________________________________
Name:_______________________________
Title: _____________________________
[SIGNATURE PAGES CONTINUE]
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LENDERS:
--------
MEDICAL PROVIDER FINANCIAL CORPORATION II,
a Nevada corporation,
By: /s/ Joseph J. Lampariello
------------------------------------
Joseph J. Lampariello, President and COO
MEDICAL PROVIDER FINANCIAL CORPORATION
III, a Nevada corporation,
By: /s/ Joseph J. Lampariello
------------------------------------
Joseph J. Lampariello, President and COO
MCC:
----
MEDICAL CAPITAL CORPORATION, a
Nevada corporation,
By: /s/ Joseph J. Lampariello
------------------------------------
Joseph J. Lampariello, President and COO
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