Exhibit 99.1
CREDIT AGREEMENT
($80,000,000 FACILITY)
Effective Date: October 9, 2007
among
INTEGRATED HEALTHCARE HOLDINGS, INC.,
WMC-A, INC.,
WMC-SA, INC.,
CHAPMAN MEDICAL CENTER, INC., and
COASTAL COMMUNITIES HOSPITAL, INC.,
as Borrowers,
THE CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE GUARANTORS SIGNATORY HERETO,
as Guarantors,
and
MEDICAL PROVIDER FINANCIAL CORPORATION II,
as Lender.
INDEX OF ANNEXES, EXHIBITS AND DISCLOSURE SCHEDULES
ANNEXES
- -------
Annex A Definitions
Annex B Cash Management System
Annex C Collateral Reports
Annex D Notice Addresses
EXHIBITS
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Exhibit "A" Form of $45,000,000 Real Estate Term Note
Exhibit "B" Form of $35,000,000 Non-Revolving Line of Credit Note
Exhibit "C" [Intentionally Omitted]
Exhibit "D" Form of Notice of Request for Advance
Exhibit "E" Form of $80,000,000 Deed of Trust
Exhibit "F" Form of Absolute Assignment
Exhibit "G" Form of Security Agreement
Exhibit "H" Form of Collateral Assignment of Contracts
Exhibit "I" Form of Deposit Account Security Agreement
Exhibit "J" Form of Control Agreement
Exhibit "K" Form of Post-Closing Agreement
Exhibit "L" Form of Intellectual Property Security Agreement
Exhibit "M" Form of Environmental Indemnity Agreement
Exhibit "N" Form of Guaranty Agreement
Exhibit "O" Form of Intercreditor Agreement
Exhibit "P" Form of Pledge Agreement
Exhibit `Q" Form of Stock Power
Exhibit "R" Form of Membership Power
Exhibit "S" Form of Landlord's Consent and Estoppel Certificate (Chapman
Leases)
Exhibit "T" Form of Landlord's Consent and Estoppel Certificate (Triple
Net Lease)
Exhibit "U" Form of Warrant
DISCLOSURE SCHEDULES
- --------------------
Disclosure Schedule 1.3 Sources and Uses of Funds
Disclosure Schedule 2.1(b) Required Consents and Approvals
Disclosure Schedule 2.1(c) Capital Structure of Each Borrower
Disclosure Schedule 3.1 Executive Office, Collateral Locations, FEIN
Disclosure Schedule 3.5 Schedule of Real Estate Owned and Leased
Disclosure Schedule 3.6 Labor Matters
Disclosure Schedule 3.7 Ventures, Subsidiaries and Affiliates; Outstanding
Stock
Disclosure Schedule 3.10 Taxes
Disclosure Schedule 3.11 ERISA Plans
Disclosure Schedule 3.12 Litigation
Disclosure Schedule 3.13 Brokers
Disclosure Schedule 3.14 Intellectual Property
Disclosure Schedule 3.16 Environmental Matters
Disclosure Schedule 3.17 Insurance (With Copies of All Certificates of
Insurance)
Disclosure Schedule 3.18 Deposit and Disbursement Accounts
Disclosure Schedule 3.20 Bonding; Licenses; Permits
Disclosure Schedule 6.3 Indebtedness
Disclosure Schedule 6.4 Transactions with Affiliates and Employees
Disclosure Schedule 6.7 Existing Liens.
CREDIT AGREEMENT
----------------
($80,000,000 FACILITY)
This CREDIT AGREEMENT ($80,000,000 Facility) ("AGREEMENT"), dated to be
effective as of October 9, 2007 ("EFFECTIVE DATE"), is made by and among
INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation ("IHHI"), WMC-A,
INC., a California corporation ("WMC-A"), WMC-SA, INC., a California corporation
("WMC-SA"), CHAPMAN MEDICAL CENTER, INC., a California corporation ("CHAPMAN"),
and COASTAL COMMUNITIES HOSPITAL, INC., a California corporation ("COASTAL")
(IHHI, WMC-A, WMC-SA, Chapman and Coastal are hereinafter together referred to
as "BORROWERS" and individually as a "BORROWER"); PACIFIC COAST HOLDINGS
INVESTMENT, LLC, a California limited liability company ("PCHI"); WEST COAST
HOLDINGS, LLC, a California limited liability company ("WEST COAST"); GANESHA
REALTY, LLC, a California limited liability company ("GANESHA"); ORANGE COUNTY
PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability company
("OC-PIN") (PCHI, West Coast, Ganesha and OC-PIN are hereinafter together
referred to as the "CREDIT PARTIES" and individually as a "CREDIT PARTY," and
West Coast and OC-PIN are hereinafter together referred to as the "GUARANTORS"
and individually as a "GUARANTOR"); and MEDICAL PROVIDER FINANCIAL CORPORATION
II, a Nevada corporation ("LENDER"). Initially capitalized terms used in this
Agreement but not otherwise defined herein shall have the meanings ascribed to
them in Annex A.
RECITALS
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A. PCHI owns the fee simple title in the Western Medical Center - Anaheim,
in the Western Medical Center - Santa Ana, and in the Coastal Communities
Hospital (including the medical office buildings located thereon). PCHI leases
the Western Medical Center - Anaheim, the Western Medical Center - Santa Ana,
and the Coastal Communities Hospital (including the medical office buildings
located thereon) to IHHI pursuant to the Triple Net Lease. IHHI subleased the
Western Medical Center - Anaheim to SMC-A; IHHI subleased the Western Medical
Center - Santa Ana to WMC-SA; and IHHI subleased the Coastal Communities
Hospital (including the medical office buildings located thereon) to Coastal.
IHHI owns all (100%) of the Stock of WMC-A, WMC-SA and Coastal.
B. IHHI leases the Hospital Facility and the related medical office
buildings located at the Chapman Medical Center from the Hospital Landlord and
from the MOB Landlord pursuant to the Chapman Leases. IHHI subleased the
Hospital Facility and the related medical office buildings to Chapman. IHHI owns
all (100%) of the Stock of Chapman.
C. PCHI, OC-PIN and West Coast are Shareholders of IHHI. West Coast and
Ganesha own all (100%) of the Membership Interests in PCHI.
D. IHHI, WMC-A, WMC-SA, Coastal and Chapman are in the business of
delivering acute care services to the public through the acute care Hospital
Facilities; incident thereto, IHHI, WMC-A, WMC-SA, Coastal and Chapman are in
the business of owning, operating and/or leasing medical office buildings and
other healthcare businesses related thereto.
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E. Lender, the Credit Parties and Borrowers are parties to the First Credit
Agreement, pursuant to which Lender made available to Borrowers the Previous
$50,000,000 Acquisition Loan and the Previous $30,000,000 Line of Credit Loan.
In addition, Lender, the Credit Parties and Borrowers are parties to the certain
Second Credit Agreement, pursuant to which Medical Provider Financial
Corporation III, a Nevada corporation, ("MPFC III") made available to Borrowers
the Previous $10,700,000 Term Loan.
F. The loans referenced in the First and Second Credit Agreements have each
matured and are now due and owing in full.
G. Borrowers have requested that Lender make available to them a credit
facility in the aggregate amount of $80,000,000, and that MPFC III make
available to Borrowers a separate credit facility in the aggregate amount of
$10,700,000 for the purposes of (i) paying in full all amounts due and owing
under the First Credit Agreement, (ii) paying in full all amounts due and owing
under the Second Credit Agreement, (iii) providing working capital financing for
Borrowers, and (iv) providing funds for other purposes permitted hereunder.
H. Lender is willing to make an $80,000,000 credit facility available to
Borrowers on the terms and conditions set forth herein below. MPFC III is
willing to make a $10,700,000 credit facility available to Borrowers on the
terms and conditions set forth in a separate credit agreement between MPFC III,
Borrowers and Credit Parties of even date herewith (the "NEW $10,700,000 CREDIT
AGREEMENT").
I. All Annexes, Disclosure Schedules, Exhibits and other attachments, or
expressly identified to this Agreement, are incorporated herein by reference,
and taken together with this Agreement, shall constitute but a single agreement.
These Recitals shall be construed as part of the Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the covenants and conditions
hereinafter contained, and for other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, Borrowers, Lender, Credit
Parties and Guarantors agree as follows:
1. AMOUNT AND TERMS OF CREDIT FACILITIES
-------------------------------------
1.1 $45,000,000 Real Estate Term Loan.
(a) Subject to the terms and conditions hereof, on the Closing Date,
Lender agrees to and shall make the $45,000,000 Real Estate Term Loan available
to Borrowers for the sole purpose of repaying all amounts due Lender under the
Previous $50,000,000 Acquisition Note referenced in the First Credit Agreement.
The $45,000,000 Real Estate Term Loan shall be charged as a single Advance to
Borrowers on the Closing Date but shall not be disbursed to Borrowers on the
Closing Date; instead said Advance shall be withheld by Lender and paid directly
to Lender to repay all amounts due and owing on the Previous $50,000,000
Acquisition Note. As of August 31, 2007, (i) the amount of unpaid principal due
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under the Previous $50,000,000 Acquisition Note is $45,000,000; (ii) the amount
of accrued but unpaid interest due under the Previous $50,000,000 Acquisition
Note was $542,500; and (iii) after August 31, 2007, interest has and will accrue
at the daily rate of $17,500 under the Previous $50,000,000 Acquisition Note. If
the single Advance from the $45,000,000 Real Estate Term Loan is not sufficient
to pay in full and retire the entire amount due under the Previous $50,000,000
Acquisition Note, the shortfall shall be paid from the first Advance from the
$35,000,000 Non-Revolving Line of Credit.
(b) On the Closing Date, Borrowers agree to and shall execute and
deliver to Lender the $45,000,000 Real Estate Term Note in the form of Exhibit
"A" attached hereto. The $45,000,000 Real Estate Term Note represents the
obligation of Borrowers, jointly and severally, individually and collectively,
to repay the $45,000,000 Real Estate Term Loan to Lender. During the term of the
$45,000,000 Real Estate Term Note, Borrowers shall not be required to make any
payments of principal, however, Borrowers shall pay interest to Lender on the
entire principal balance outstanding from time to time, in arrears, on each
applicable Interest Payment Date, at the Interest Rate applicable to the
$45,000,000 Real Estate Term Loan, and the entire balance of unpaid principal,
plus all accrued but unpaid interest thereon and all other non-contingent
Obligations due and owing thereunder, shall be due and payable in full in a
single payment in immediately available funds, on the Maturity Date.
1.2 $35,000,000 Non-Revolving Line of Credit Loan.
(a) Subject to the terms and conditions hereof, Lender agrees to make
available to Borrowers from time to time until the Commitment Termination Date,
Advances under the $35,000,000 Non-Revolving Line of Credit Loan. Advances under
the $35,000,000 Non-Revolving Line of Credit Loan may only be used for the
following purposes: (i) to repay in full all amounts due and owing under the
Previous $30,000,000 Line of Credit Note; (ii) to pay any shortfall necessary to
pay in full all amounts due and owing under the Previous $50,000,000 Acquisition
Note; (iii) to pay any shortfall necessary to pay in full all amounts due and
owing under the Previous $10,700,000 Term Note; (iv) to pay all Origination Fees
(as defined herein or in the New $10,700,000 Credit Agreement, as applicable)
due and owing pursuant to this Agreement and the New $10,700,000 Credit
Agreement; (v) to pay all Unused Commitment Fees due and owing under this
Agreement; (vi) to pay all Lender's Costs (as defined herein or in the New
$10,700,000 Credit Agreement, as applicable) due and owing under this Agreement
and the New $10,700,000 Credit Agreement; and (vii) for working capital as
approved by Lender in its sole and absolute discretion. As of August 31, 2007,
(i) the amount of unpaid principal due under the Previous $30,000,000 Line of
Credit Note was $27,341,458.61; (ii) the amount of accrued but unpaid interest
due under the Previous $30,000,000 Line of Credit Note was $329,616.47; and
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(iii) after August 31, 2007, interest has and will accrue at the daily rate of
$10,632.79 under the Previous $30,000,000 Line of Credit Note. Except for
Advances approved by Lender for working capital (which shall be funded as
directed by Borrowers), all Advances from the $35,000,000 Non-Revolving Line of
Credit Loan shall be charged to Borrowers on the date said Advances are made but
shall not be disbursed to Borrowers; instead said Advances shall be withheld by
Lender and paid directly to Lender and/or MPFC III, as applicable, to repay all
amounts due and owing under the Previous $30,000,000 Line of Credit Note; or to
pay any shortfall amounts required to pay in full the Previous $50,000,000
Acquisition Note; or to pay any shortfall amounts required to pay in full to
MPFC III the Previous $10,700,000 Term Note; or disbursed directly to Lender to
pay the Origination Fee (as defined herein or in the New $10,700,000 Credit
Agreement, as applicable) or to pay Unused Commitment Fees due and owing from
time to time under this Agreement; or disbursed directly to Lender and/or MPFC
III to pay Lender's Costs (as defined herein or in the New $10,700,000 Credit
Agreement, as applicable) due and owing from time to time under this Agreement
and/or the New $10,700,000 Credit Agreement.
(b) Advances from the $35,000,000 Non-Revolving Line of Credit Loan
may not be used to make or pay principal payments due under any other Loan made
available by Lender to Borrowers under this Agreement or any Loan (as defined in
the New $10,700,000 Credit Agreement) made available by MPFC III to Borrowers
under the New $10,700,000 Credit Agreement. Borrowers may borrow, but may not
repay and reborrow, from the $35,000,000 Non-Revolving Line of Credit Loan. Each
Advance under the $35,000,000 Non-Revolving Line of Credit Loan must be made on
written notice, in the form of a Notice of Request for Advance in the form of
Exhibit "D" attached hereto, signed and delivered by Borrower's Representative
to Lender's Representative. Each such Notice of Request for Advance must be
delivered to Lender no later than (1) 2:00 p.m. (Nevada local time) on the date
which is at least three (3) Business Days prior to the date the proposed Advance
is to be made. Only one request for an Advance from the $35,000,000
Non-Revolving Line of Credit Loan may be made during any calendar week. Each
Notice of Request for Advance must separately identify the amount of the
requested Advance, the specific Loan from which said Advance is to be made, and
shall include the information required in the Notice for Request for Advance and
such other information as may be required by Lender. In no event shall Borrowers
be permitted to request further Advances from the $35,000,000 Non-Revolving Line
of Credit Loan at any time during the thirty (30) day period prior to the
Maturity Date.
(c) On the Closing Date hereof, Borrowers agree to and shall execute
and deliver to Lender the $35,000,000 Non-Revolving Line of Credit Note in the
form of Exhibit "B" attached hereto. The $35,000,000 Non-Revolving Line of
Credit Note represents the obligation of Borrowers, jointly and severally,
individually and collectively, to repay the $35,000,000 Non-Revolving Line of
Credit Loan to Lender. During the term of the $35,000,000 Non-Revolving Line of
Credit Note, Borrowers shall not be required to make any payments of principal,
however, Borrowers shall pay interest to Lender on the entire principal balance
outstanding from time to time, in arrears, on each applicable Interest Payment
Date, at the Interest Rate applicable to the $35,000,000 Non-Revolving Line of
Credit Loan, and the entire balance of unpaid principal, plus all accrued but
unpaid interest thereon and all other non-contingent Obligations due and owing
thereunder, shall be due and payable in full in a single payment in immediately
available funds, on the Maturity Date.
1.3 [Intentionally Omitted]
1.4 Prepayments.
(a) Voluntary Prepayments.
(i) $45,000,000 Real Estate Term Loan; Subordination.
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(A) Borrowers may prepay all, but not less than all, of the
$45,000,000 Real Estate Term Loan at any time without fee, charge or penalty.
(B) If the $45,000,000 Real Estate Term Loan is paid in full
prior to the Maturity Date, then Lender agrees to and shall subordinate the
Liens of the Deeds of Trust securing repayment of the remaining Loan (i.e., the
$35,000,000 Non-Revolving Line of Credit Loan) to the Lien of a deed of trust or
mortgage securing repayment of a new loan, but only if (1) the proceeds of the
new loan to which subordination is requested were used to repay the $45,000,000
Real Estate Term Loan in full, and (2) the new lender and Lender execute and
deliver to one another a subordination agreement on commercially reasonable
terms and conditions approved by Lender in its discretion.
(ii) $35,000,000 Non-Revolving Line of Credit Loan. Borrowers may
prepay all or any part of the $35,000,000 Non-Revolving Line of Credit Loan at
any time without fee, charge or penalty. Notwithstanding the foregoing, the
unused portion of the $35,000,000 Non-Revolving Line of Credit Loan as the same
may be determined from time to time (inclusive of amounts prepaid) shall remain
subject to the Unused Commitment Fee.
(b) Mandatory Prepayments. Notwithstanding the foregoing, immediately
upon receipt by Borrowers or Credit Parties of any cash proceeds of any sale or
other disposition of any Collateral, Borrowers shall prepay the Loans in an
amount equal to all such proceeds, net of (i) commissions and other reasonable
and customary transaction costs, fees and expenses properly attributable to such
transaction and payable by Borrowers in connection therewith (in each case, paid
to non-Affiliates), (ii) transfer taxes, and (iii) an appropriate reserve for
income taxes. Any such prepayment shall be applied in accordance with Section
1.4(c) (Application of Prepayments). The following shall not be subject to
mandatory prepayment under this subsection: (1) proceeds of sales of Inventory
in the ordinary course of business; (2) proceeds of collection of Accounts in
the ordinary course of business; and (3) proceeds of sales of Equipment and
other personal property in the ordinary course of business so long as such
Equipment and other personal property is replaced (if necessary in the exercise
of prudent business judgment) by Equipment and other personal property of equal
or greater value or utility.
(c) Application of Prepayments. Any prepayments made pursuant to
Section 1.4 (a) or (b) (Prepayments) above shall be applied as follows: first,
to reimbursable expenses of Lender then due and payable pursuant to any of the
Loan Documents; second, to interest then due and payable on any of the Loans;
third, and last, in such order as Lender shall determine in its sole and
absolute discretion, to the principal balance of the Loans until the same has
been paid in full. If an Event of Default has occurred and is continuing, Lender
shall have the absolute right, in its sole discretion, to determine which of the
Obligations shall be paid and in what order and amounts.
(d) Application of Prepayments from Insurance and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in accordance with
Section 5.4 (Insurance) shall be applied to the Loans in the manner described in
Section 1.4(c) (Application of Prepayments) above.
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(e) No Implied Consent. Nothing in this Section 1.4 (Prepayments)
shall be construed to constitute Lender's consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan Documents.
(f) Use of Proceeds. Borrowers shall utilize the proceeds of the Loans
solely for the express purposes authorized in Sections 1.1 through 1.3 in this
Agreement. Disclosure Schedule 1.3 (Sources and Uses of Funds) contains a
description of Borrower's sources and uses of funds as of the Closing Date,
including the Loans to be made or incurred on that date.
(g) Reliance on Notices; Appointment of Borrower's Representative.
Lender shall be entitled to rely upon, and shall be fully protected in relying
upon, any Notice of Request for Advance or other notice believed by Lender to be
genuine. Lender may assume that each Person executing and delivering any notice
in accordance herewith, including without limitation the Notice of Request for
Advance, was duly authorized, unless the responsible individual acting thereon
for Lender has actual knowledge to the contrary. Borrowers hereby designate
Bruce Mogel as Borrower's Representative for the purposes of issuing Notices of
Request for Advances, giving instructions with respect to the disbursement of
the proceeds of the applicable Loan, giving and receiving all other notices and
consents hereunder or under any of the other Loan Documents and taking all other
actions (including in respect of compliance with covenants) on behalf of
Borrowers under the Loan Documents. Borrower's Representative hereby accepts
such appointment. Lender may regard any notice or other communication pursuant
to any Loan Document from Borrower's Representative as a notice or communication
from Borrowers, and may give any notice or communication required or permitted
to be given to Borrowers hereunder to Borrower's Representative on behalf of
Borrowers. Borrowers agree that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by Borrower's
Representative shall be deemed for all purposes to have been made by Borrowers
and shall be binding upon and enforceable against Borrowers to the same extent
as if the same had been made directly by Borrowers. Borrowers may, by written
notice to Lender, seek to terminate the appointment of Bruce Mogel as Borrower's
Representative and propose appointment of replacement Borrower's Representative;
provided, however, said proposed replacement Borrower's Representative (i) must
be an officer or director of IHHI, and (ii) must be acceptable to Lender in its
sole discretion. Lender shall within ten (10) Business Days from receipt of said
notice deliver a written notice to Borrowers either approving, or disapproving,
of said proposed replacement. If Lender timely delivers a notice to Borrowers
disapproving the proposed replacement(s), or fails to timely deliver any notice
to Borrowers, then Bruce Mogel shall remain as Borrower's Representative until
an acceptable replacement(s) is proposed by Borrowers and approved by Lender. If
Lender timely approves said proposed replacement, then from and after the date
Lender delivers written notice of approval of said proposed replacement to
Borrowers, Bruce Mogel shall cease to be Borrower's Representative and the
proposed replacement shall become Borrower's Representative.
1.5 Interest; Payments.
(a) Interest on Loans. During the term of the Loans, Borrowers shall
pay interest to Lender on all outstanding Advances, in arrears, on each
applicable Interest Payment Date, at the Interest Rate applicable to the Loan in
question.
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(b) Principal on the Loans. During the term of the Loans, no payments
of principal shall be due or owing until the Maturity Date.
(c) Payment Date. If any payment on any Loan becomes due and payable
on a day other than a Business Day, the due date thereof will be extended to the
next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable Interest Rate during
such extension.
(d) Computation of Interest. All computations of interest shall be
made by Lender at the applicable Interest Rate and calculated on the basis of a
three hundred sixty (360) day year comprised of twelve (12) months of thirty
(30) days each.
(e) Default Rate. Notwithstanding the foregoing, so long as an Event
of Default has occurred and is continuing under any Loan Document, the Interest
Rate applicable to all of the Loans shall be increased to the Default Rate, and
all outstanding Obligations shall bear interest at the Default Rate applicable
to such Obligations. Interest at the Default Rate shall accrue from the initial
date of such Event of Default until that Event of Default is cured or waived and
shall be payable upon demand. All interest payments owing hereunder or under any
of the other Loan Documents, including interest accruing at the Default Rate,
shall constitute additional Obligations hereunder and shall be secured by the
Collateral.
(f) Payment to Lender's Account. All payments by Borrowers to Lender
hereunder shall be made to the following deposit account:
Bank of America (Las Vegas, Nevada)
Medical Capital Corporation (Collection account for Medical
Provider Financial Corporation II)
Acct# 4966876714
ABA# 026009593
Address: 6900 West Cliff Drive, 4th Floor, Las Vegas, Nevada 89145
Contact Person: Gin Richardson
1.6 Maximum Lawful Rate of Interest. Notwithstanding anything to the
contrary set forth in Section 1.5 (Interest; Payments), if a court of competent
jurisdiction determines in a final unappealable order that the rate of interest
payable hereunder exceeds the Maximum Lawful Rate, then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate. In no event shall the total interest
received by Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. Any payments
made by Borrowers in excess of the Maximum Lawful Rate shall be considered
voluntary prepayments of the Loans under Section 1.4(a) (Voluntary Prepayments).
1.7 Cash Management System. On or prior to the Closing Date, Borrowers will
establish and will maintain until the Termination Date, the Cash Management
System described in Annex B (Cash Management System) attached hereto, including
but not limited to the provisions of the Deposit Account Security Agreement and
related Control Agreements.
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1.8 Unused Commitment Fees. Borrowers agree to and shall pay Lender an
Unused Commitment Fee on the $35,000,000 Non-Revolving Line of Credit Loan,
which shall be non-refundable. The Unused Commitment Fee shall be due and
payable in arrears, in installments, at the expiration of each one hundred
eighty (180) calendar day period between the Closing Date and the Termination
Date, without notice. If any installment of the Unused Commitment Fee is not
paid to Lender within ten (10) Business Days following the due date of said
installment, then Lender shall have the right, without further notice, to charge
such payment of the Unused Commitment Fee against the $35,000,000 Non-Revolving
Line of Credit Loan as an approved Advance. If, however, at the time said
installment becomes delinquent either (i) Borrowers have drawn the maximum
amount available under both the $35,000,000 Non-Revolving Line of Credit Loan
and no further funds are available to borrow, or (ii) Borrowers have committed
one or more other Events of Default under this Agreement which remain uncured,
then said failure to timely pay the Unused Commitment Fee installment shall
itself constitute an Event of Default hereunder, entitling Lender to all rights
and remedies available to it under this Agreement, at law or in equity.
1.9 Origination Fees. For each Loan, Borrowers agree to and shall pay
Lender an Origination Fee applicable to said Loan, which shall be nonrefundable.
Each Origination Fee shall be deemed fully earned by Lender as of the Effective
Date of this Agreement, however, the Origination Fee shall be due and payable on
the Closing Date.
1.10 Closing Date; Notice of Request for Advance. At least three (3)
Business Days prior to the Closing Date, Borrowers shall execute and deliver to
Lender a Notice of Request for Advance requesting that Lender make initial
Advances under the Loans which at a minimum are sufficient to pay each of the
following:
(a) Previous $50,000,000 Acquisition Loan. From the $45,000,000 Real
Estate Term Loan, the amount necessary to pay in full all principal and interest
due and owing on the Previous $50,000,000 Acquisition Loan. The Advance from the
$45,000,000 Real Estate Term Loan shall not be disbursed to Borrowers at Closing
but shall be withheld by Lender and paid directly to Lender to pay in full and
satisfy the Previous $50,000,000 Acquisition Loan.
(b) Previous $30,000,000 Non-Revolving Line of Credit Loan. >From the
$35,000,000 Non-Revolving Line of Credit Loan, the amount necessary to pay in
full all principal and interest due and owing on the Previous $30,000,000 Line
of Credit Loan. The Advance from the $35,000,000 Non-Revolving Line of Credit
Loan shall not be disbursed to Borrowers at Closing but shall be withheld by
Lender and paid directly to Lender to pay in full and satisfy the Previous
$30,000,000 Line of Credit Loan.
(c) [Intentionally Omitted]
(d) Shortfall Amounts. From the $35,000,000 Non-Revolving Line of
Credit Loan: (i) the amount necessary (if any) to pay in full any shortfall
amounts that remain due and owing on the Previous $50,000,000 Acquisition Loan
after the Advance is made under Section 1.10(a) above; (ii) the amount necessary
(if any) to pay in full any shortfall amounts that remain due and owing on the
Previous $30,000,000 Line of Credit Loan after the Advance is made under Section
1.10(b) above; and (iii) the amount necessary (if any) to pay in full any
shortfall amounts that remain due and owing on the Previous $10,700,000 Term
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Loan to MPFC III after the initial Advance (as such term is defined in the New
$10,700,000 Credit Agreement) is made pursuant to the New $10,700,000 Credit
Agreement. The foregoing Advances (if any) from the $35,000,000 Non-Revolving
Line of Credit Loan shall not be disbursed to Borrowers at Closing but shall be
withheld by Lender and paid directly to Lender and/or MPFC III to satisfy the
referenced shortfall amounts (if any).
(e) Origination Fees. From the $35,000,000 Non-Revolving Line of
Credit Loan, the amounts necessary to pay (i) to Lender each Origination Fee on
each Loan, and (ii) to MPFC III each Origination Fee on each Loan (as such terms
are defined in the New $10,700,000 Credit Agreement). The Origination Fees shall
not be disbursed to Borrowers at Closing but shall be withheld by Lender and
paid directly to Lender and/or MPFC III from the Advance from the $35,000,000
Non-Revolving Line of Credit Loan.
(f) Lender's Costs. From the $35,000,000 Non-Revolving Line of Credit
Loan, the amount necessary to pay (i) Lender's Costs, which shall be deemed
fully earned as of the Effective Date of this Agreement, and (ii) Lender's Costs
(as defined in the New $10,700,000 Credit Agreement), which shall be deemed
fully earned as of the Effective Date of the New $10,700,000 Credit Agreement.
Lender's Costs include, but are not limited to, outside legal counsel of Lender
and/or MPFC III and other closing costs. Lender's Costs shall not be disbursed
to Borrowers at Closing but shall be withheld by Lender and paid directly to
Lender, MPFC III and/or to any other parties entitled thereto from the initial
Advance from the $35,000,000 Non-Revolving Line of Credit Loan.
1.11 Receipt of Payments. Borrowers shall make each payment under this
Agreement and the Notes not later than 2:00 p.m. (Las Vegas time) on the day
when due in immediately available funds in Dollars to Lender's account described
in Section 1.5(f) (Payment to Lender's Account) above. For purposes of computing
interest as of any date, all payments shall be deemed received on the Business
Day on which immediately available funds therefore are received in Lender's
deposit account prior to 2:00 p.m. (Las Vegas time). Payments received in good
and immediate funds after 2:00 p.m. (Las Vegas time) on any Business Day or on a
day that is not a Business Day shall be deemed to have been received on the
following Business Day.
(a) Application and Allocation of Payments.
(i) Application of Payments. So long as no Event of Default has
occurred and is continuing, for each Loan, (1) scheduled monthly payments shall
be applied first, to reimbursable expenses of Lender then due and payable
pursuant to any of the Loan Documents; second, to interest then due and payable
on Loan in question; third, and last, to the principal balance of the Loan in
question until the same has been paid in full; and (2) voluntary prepayments and
mandatory prepayments shall be applied as set forth in Section 1.4(c)
(Application of Prepayments). As to any other payment, and as to all payments
made when an Event of Default has occurred and is continuing or following the
Commitment Termination Date, Borrowers and the Credit Parties hereby irrevocably
waive the right to direct the application of any and all payments received from
or on behalf of Borrowers, and Borrowers hereby irrevocably agree that Lender
shall have the continuing exclusive right to apply any and all such payments
against the Obligations of Borrowers as Lender may deem advisable
notwithstanding any previous entry by Lender in the Loan Account or any other
books and records.
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(ii) Charges to the Loans. Lender is authorized to, and in its
sole and absolute discretion may, charge to its respective Loans (which charges
shall be deemed to be Advances requested by Borrowers) on behalf of Borrowers
and cause to be paid all expenses, Charges, costs (including insurance premiums
in accordance with Section 5.4 (Insurance)) and interest and principal, other
than principal of the Loan in question, if and to the extent Borrowers fail to
pay promptly any such amounts as and when due. Such charges to the Loan in
question shall not waive any Event of Default due to Borrower's non-payment,
unless Lender in its sole and absolute discretion, agrees in writing. At
Lender's option and to the extent permitted by law, any charges so made shall
constitute part of the Loan in question and shall reduce the aggregate amount of
the Commitment remaining available to Borrowers, and shall be secured by the
Collateral.
1.12 Loan Account. Lender shall maintain a Loan Account on its books to
record all Advances, all payments made by Borrowers, and all other debits and
credits as provided in this Agreement with respect to the Loan in question or
any other Obligations. All entries in the Loan Account shall be made in
accordance with Lender's customary accounting practices as in effect from time
to time. The balance in the Loan Account, as recorded on Lender's most recent
printout or other written statement, shall, absent demonstrable error, be
presumptive evidence of the amounts due and owing to Lender by Borrowers;
provided that any failure to so record or any error in so recording shall not
limit or otherwise affect Borrower's duty to pay the Obligations. Lender shall
render to Borrower's Representative a monthly accounting of transactions with
respect to the Loans setting forth the balance of the Loan Account as to
Borrowers for the immediately preceding month. Unless Borrower's Representative
notifies Lender in writing of any objection to any such accounting (specifically
describing the basis for such objection), within thirty (30) calendar days after
the date of Borrower's Representative's receipt thereof, each and every such
accounting shall be presumptive evidence of all matters reflected therein. Only
those items expressly objected to in such notice and explaining the basis for
such objection(s) shall be deemed to be disputed by Borrowers.
1.13 Access. Borrowers and Credit Parties (other than Ganesha) shall,
during normal business hours, from time to time upon 24 hours prior notice as
frequently as Lender reasonably determines to be appropriate: (a) provide Lender
and any of its officers, employees and agents access to its properties,
facilities, advisors, officers and employees of Borrowers and Credit Parties
(other than Ganesha) and to the Collateral for purposes of exercising and
enforcing Lender's rights and remedies under the Loan Documents, (b) permit
Lender and any of its officers, employees and agents, to inspect, audit and make
extracts from Borrower's and Credit Party's (other than Ganesha's) respective
books and records pertaining to the Loans and the Collateral, and (c) permit
Lender and its officers, employees and agents, to inspect, review, evaluate and
make test verifications and counts of the Collateral of Borrowers and Credit
Parties. If an Event of Default has occurred and is continuing, Borrowers and
Credit Parties (other than Ganesha) shall provide such access to Lender at all
times and without advance notice. Furthermore, so long as any Event of Default
has occurred and is continuing, Borrowers shall use commercially reasonable
efforts to provide Lender with access to their suppliers and customers.
Borrowers and Credit Parties (other than Ganesha) shall make available to Lender
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and its counsel reasonably promptly originals or copies of all books and records
that Lender may reasonably request. Borrowers and Credit Parties (other than
Ganesha) shall deliver any document or instrument necessary for Lender as it may
from time to time request, to obtain records from any service bureau or other
Person that maintains records for Borrowers and Credit Parties pertaining to the
Loans or the Collateral.
1.14 Taxes.
(a) No Deduction for Taxes. Any and all payments by Borrowers
hereunder (including any payments made pursuant to Section 13 (Suretyship
Waivers) or under the Notes shall be made, in accordance with this Section 1.14
(Taxes), free and clear of and without deduction for any and all present or
future Taxes. If Borrowers shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder (including any sum payable pursuant to
Section 13 (Suretyship Waivers)) or under such Notes, (i) the sum payable shall
be increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 1.14 (Taxes)) Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) Borrowers shall make such
deductions, and (iii) Borrowers shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of Taxes, Borrower's
Representative shall furnish to Lender the original or a certified copy of a
receipt evidencing payment thereof.
(b) Indemnity for Taxes. Borrowers hereby agree to indemnify, defend,
protect and hold Lender free and harmless from any claim or demand for payment
of, and within ten (10) calendar days of receipt of demand therefor agrees to
pay to Lender, (i) any and all Taxes that Borrowers are obligated to pay
pursuant to this Section 1.14 (Taxes) (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.14 (Taxes)), plus (ii) the
full amount of any additional liability (including penalties, interest and
expenses) payable or paid by Lender arising therefrom or with respect thereto,
whether or not the same were correctly or legally asserted. Notwithstanding the
foregoing, Lender remains ultimately responsible for paying any and all income
taxes measured by Lender's own gross income.
1.15 Capital Adequacy; Increased Costs; Illegality.
(a) Capital Adequacy. If any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by Lender
with any request or directive compliance regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law),
in each case, adopted after the Closing Date, from any Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by Lender and thereby reducing the rate
of return on Lender's capital as a consequence of its obligations hereunder,
then Borrowers shall from time to time upon demand by Lender pay to Lender
additional amounts sufficient to compensate Lender for such reduction. A
certificate as to the amount of that reduction and showing the basis of the
computation thereof submitted by Lender to Borrower's Representative shall be
presumptive evidence of the matters set forth therein.
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(b) Increased Costs. If, due to either (i) the introduction of or any
change in any law or regulation (or any change in the interpretation thereof) or
(ii) the compliance with any guideline or request from any Governmental
Authority (whether or not having the force of law), in each case adopted after
the Closing Date, there shall be any increase in the cost to Lender of agreeing
to make or making, funding or maintaining the Loans, then Borrowers shall from
time to time, upon demand by Lender pay to Lender additional amounts sufficient
to compensate Lender for such increased cost. A certificate as to the amount of
such increased cost, submitted to Borrower's Representative by Lender, shall be
presumptive evidence of the matters set forth therein. Lender agrees that, as
promptly as practicable after they become aware of any circumstances referred to
above which would result in any such increased cost, Lender shall, to the extent
not inconsistent with Lender's internal policies of general application, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrowers pursuant to this Section 1.15(b) (Increased Costs).
Provided, however, the amounts due from Borrowers under Sections 1.15(a) and (b)
(Capital Adequacy; Increased Costs) shall not include amounts attributable to
Lender's non-compliance with any requirement of any Governmental Authority or to
Lender's non-payment of its own income taxes or to any increase in Lender's
income taxes.
1.16 Single Loan. The Loans to Borrowers and all of the other Obligations
of Borrowers arising under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrowers secured by the Liens on all of
the Collateral.
2. CONDITIONS PRECEDENT
--------------------
2.1 Conditions Precedent to the Closing Date. Lender shall not be obligated
to take, fulfill, or perform any action hereunder, nor shall Lender be obligated
to fund any portion of the Loans, until the following conditions precedent have
been satisfied or provided for in a manner satisfactory to Lender, in its sole
discretion, or waived in writing by Lender:
(a) Credit Agreement; Disclosure Schedules. Two (2) duplicate original
counterparts of this Agreement shall have been duly executed by and delivered by
each Borrower and each Credit Party and each Guarantor to Lender; and Lender
shall have received original updated two (2) sets of Disclosure Schedules in
form and substance satisfactory to Lender, each dated and executed by each
Borrower.
(b) Approvals. Lender shall have received satisfactory evidence that
each Borrower and each Credit Party have obtained, or in the case of necessary
Governmental Authority approvals, have applied for, all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents. Disclosure Schedule 2.1(b) attached hereto lists all required
consents and approvals of all Governmental Authorities and all other Persons.
(c) Capital Structure: Other Indebtedness. The capital structure of
each Borrower and each Credit Party (other than Ganesha) as of the Closing Date,
the ownership of each Borrower and each Credit Party (other than Ganesha) as of
the Closing Date, and the terms and conditions of all Indebtedness of each
Borrower and each Credit Party (other than Ganesha) as of the Closing Date,
shall certified by each applicable Person to Lender and must be acceptable to
Lender in its sole and absolute discretion. The capital structure of each
Borrower as of the Effective Date is set forth in Disclosure Schedule 2.1(c)
attached hereto.
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(d) Charter Documents. Each Borrower and each Credit Party (including
each Guarantor) shall have delivered the following documents to Lender:
(i) A copy of the articles of incorporation for each Borrower and
a copy of the or articles of organization for each Credit Party, certified by
the Secretary of State for the state of incorporation or organization within the
most recent 30 day period prior to the Closing Date of this Agreement.
(ii) A certificate of good standing issued by the applicable
state of incorporation or organization for each Borrower and each Credit Party,
certified by the Secretary of State for the state or incorporation or
organization within the most recent 30 day period prior to the Closing Date of
this Agreement.
(iii) The bylaws or operating agreement for each Borrower and
each Credit Party, certified to be true and accurate by the corporate secretary
of each Borrower and by the manager of each Credit Party within the most recent
30 day period prior to the Closing Date of this Agreement.
(iv) An incumbency certificate (officers and directors, or
managers and members) for each Borrower and each Credit Party (including each
Guarantor), certified to be true and accurate by the corporate secretary of each
Borrower and by the manager of each Credit Party within the most recent 30 day
period prior to the Closing Date of this Agreement.
(v) The unanimous written consent of the board of directors of
each Borrower and the unanimous written consent of all managers of each Credit
Party (including each Guarantor), authorizing the transactions set forth in this
Agreement and the other Loan Documents, executed by each such director or
manager within most recent 30 day period prior to the Closing Date of this
Agreement.
(e) Voluntary Resignation of Dr. Shah. Based on Lender's prior
experience in connection with the Previous Loans, Lender has determined in the
exercise of its discretion that it is unable to work with Dr. Shah and that it
will not make the Loans available to Borrowers unless Dr. Shah shall have
voluntarily resigned as a director of and from all other management positions
with or in IHHI prior to the Closing Date.
(f) Plan Regarding Engagement of Independent Directors. Lender shall
have received from IHHI and approved, in its sole discretion, a Plan Regarding
Engagement of Independent Directors.
(g) Appraisal. Lender shall have received from IHHI and approved, in
its sole discretion, the Appraisal.
(h) Loan to Value Ratio. The sum of the $45 Million Real Estate Term
Loan and the $35 Million Non-Revolving Line of Credit Loan shall not exceed
seventy percent (70%) of the Appraised Value of the Properties as set forth in
the Appraisal.
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(i) Due Diligence. Lender shall have completed its business and legal
due diligence and shall have waived all objections thereto.
(j) Title Commitment. For each of the Properties, the Title Company
shall have delivered a Title Commitment to Lender in form and content acceptable
to Lender in its sole and absolute discretion.
(k) Notes. The Borrowers shall have each executed and delivered to
Lender one (1) original of each of the following Notes:
(i) To Lender, the $45,000,000 Real Estate Term Note in the form
of Exhibit "A" attached hereto; and
(ii) To Lender, the $35,000,000 Non-Revolving Line of Credit Note
in the form of Exhibit "B" attached hereto.
(l) Notices of Request for Advance. Borrower's Representative shall
have executed and delivered to Lender two (2) duplicate original counterparts of
the Notice of Request for Advance in the form of Exhibit "D" attached hereto,
requesting initial Advances from each of the Loans in the minimum amounts
required by this Agreement.
(m) $80,000,000 Deeds of Trust.
(i) With respect to the Western Medical Center - Anaheim, PCHI
shall have executed, acknowledged and delivered to Lender (or shall have
deposited the same into Escrow as, when and if required by Lender) one (1)
original $80,000,000 Deed of Trust in the form of Exhibit "E" attached hereto,
with the legal description describing the fee simple interest in the Western
Medical Center - Anaheim;
(ii) With respect to the Western Medical Center - Santa Ana, PCHI
shall have executed, acknowledged and delivered to Lender (or shall have
deposited the same into Escrow as, when and if required by Lender) one (1)
original $80,000,000 Deed of Trust in the form of Exhibit "E" attached hereto,
with the legal description describing the fee simple interest in the Western
Medical Center - Santa Ana;
(iii) With respect to the Coastal Communities Hospital (and
medical office buildings), PCHI shall have executed, acknowledged and delivered
to Lender (or shall have deposited the same into Escrow as, when and if required
by Lender) one (1) original $80,000,000 Deed of Trust in the form of Exhibit "E"
attached hereto, with the legal description describing the fee simple interest
in the Coastal Communities Hospital;
(iv) With respect to the Chapman Medical Center:
(A) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and if required by
Lender) one (1) original Deed of Trust in the form of Exhibit "E" attached
hereto, with the legal description describing (1) the fee simple interest in the
Chapman Medical Center, and (2) IHHI's interest, as MOB Tenant, in the Chapman
MOB Lease; and
14
(B) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and if required by
Lender) one (1) original Deed of Trust in the form of Exhibit "E" attached
hereto, with the legal description describing (1) the fee simple interest in the
Chapman Medical Center, and (2) IHHI's interest, as Hospital Tenant, in the
Chapman Hospital Lease.
(n) Absolute Assignment of Leases and Rents.
(i) With respect to the Western Medical Center - Anaheim, PCHI
shall have executed, acknowledged and delivered to Lender (or shall have
deposited the same into Escrow as, when and if required by Lender) one (1)
original Absolute Assignment of Leases and Rents in the form of Exhibit "F"
attached hereto, with the legal description describing the fee simple interest
in the Western Medical Center - Anaheim;
(ii) With respect to the Western Medical Center - Santa Ana, PCHI
shall have executed, acknowledged and delivered to Lender (or shall have
deposited the same into Escrow as, when and if required by Lender) one (1)
original Absolute Assignment of Leases and Rents in the form of Exhibit "F"
attached hereto, with the legal description describing the fee simple interest
in the Western Medical Center - Santa Ana;
(iii) With respect to the Coastal Communities Hospital, PCHI
shall have executed, acknowledged and delivered to Lender (or shall have
deposited the same into Escrow as, when and if required by Lender) one (1)
original Absolute Assignment of Leases and Rents in the form of Exhibit "F"
attached hereto, with the legal description describing the fee simple interest
in the Coastal Communities Hospital;
(iv) With respect to the Chapman Medical Center:
(A) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and if required by
Lender) one (1) original Absolute Assignment of Leases and Rents in the form of
Exhibit "F" attached hereto, with the legal description describing (1) the fee
simple interest Chapman Medical Center, and (2) IHHI's interest, as MOB Tenant,
in the Chapman MOB Lease; and
(B) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and if required by
Lender) one (1) original Absolute Assignment of Leases and Rents in the form of
Exhibit "F" attached hereto, with the legal description describing (1) the fee
simple interest Chapman Medical Center, and (2) IHHI's interest, as Hospital
Tenant, in the Chapman Hospital Lease.
(o) Security Agreement. Borrowers shall have executed and delivered to
Lender two (2) duplicate original counterparts of the Security Agreement in the
form of Exhibit "G" attached hereto.
(p) Collateral Assignment of Contracts.
15
(i) With respect to the Western Medical Center - Anaheim, IHHI
and WMC-A shall have executed, acknowledged and delivered to Lender (or shall
have deposited the same into Escrow as, when and if required by Lender) one (1)
original Collateral Assignment of Contracts in the form of Exhibit "H" attached
hereto, with the legal description describing the fee simple interest in the
Western Medical Center - Anaheim;
(ii) With respect to the Western Medical Center - Santa Ana, IHHI
and WMC-SA shall have executed, acknowledged and delivered to Lender (or shall
have deposited the same into Escrow as, when and if required by Lender) one (1)
original Collateral Assignment of Contracts in the form of Exhibit "H" attached
hereto, with the legal description describing the fee simple interest in the
Western Medical Center - Santa Ana;
(iii) With respect to the Coastal Communities Hospital (and
medical office buildings), IHHI and Coastal shall have executed, acknowledged
and delivered to Lender (or shall have deposited the same into Escrow as, when
and if required by Lender) one (1) original Collateral Assignment of Contracts
in the form of Exhibit "H" attached hereto, with the legal description
describing the fee simple interest in the Coastal Communities Hospital;
(iv) With respect to the Chapman Medical Center:
(A) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and if required by
Lender) one (1) original Collateral Assignment of Contracts in the form of
Exhibit "H" attached hereto, with the legal description describing (1) the fee
simple interest in the Chapman Medical Center, and (2) IHHI's interest, as MOB
Tenant, in the Chapman MOB Lease; and
(B) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and if required by
Lender) one (1) original Collateral Assignment of Contracts in the form of
Exhibit "H" attached hereto, with the legal description describing (1) the fee
simple interest in the Chapman Medical Center, and (2) IHHI's interest, as
Hospital Tenant, in the Chapman Hospital Lease.
(q) Deposit Account Security Agreement.
(i) With respect to the Western Medical Center - Anaheim, IHHI
and WMC-A shall have executed, acknowledged and delivered to Lender (or shall
have deposited the same into Escrow as, when and if required by Lender) one (1)
original Deposit Account Security Agreement in the form of Exhibit "I" attached
hereto, with the legal description describing the fee simple interest in the
Western Medical Center - Anaheim;
(ii) With respect to the Western Medical Center - Santa Ana, IHHI
and WMC-SA shall have executed, acknowledged and delivered to Lender (or shall
have deposited the same into Escrow as, when and if required by Lender) one (1)
original Deposit Account Security Agreement in the form of Exhibit "I" attached
hereto, with the legal description describing the fee simple interest in the
Western Medical Center - Santa Ana;
(iii) With respect to the Coastal Communities Hospital (and
medical office buildings), IHHI and Coastal shall have executed, acknowledged
and delivered to Lender (or shall have deposited the same into Escrow as, when
and if required by Lender) one (1) original Deposit Account Security Agreement
in the form of Exhibit "I" attached hereto, with the legal description
describing the fee simple interest in the Coastal Communities Hospital;
16
(iv) With respect to the Chapman Medical Center:
(A) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and if required by
Lender) one (1) original Deposit Account Security Agreement in the form of
Exhibit "I" attached hereto, with the legal description describing (1) the fee
simple interest in the Chapman Medical Center, and (2) IHHI's interest, as MOB
Tenant, in the Chapman MOB Lease; and
(B) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and if required by
Lender) one (1) original Deposit Account Security Agreement in the form of
Exhibit "I" attached hereto, with the legal description describing (1) the fee
simple interest in the Chapman Medical Center, and (2) IHHI's interest, as
Hospital Tenant, in the Chapman Hospital Lease
(r) Control Agreement. Borrowers and Bank shall have executed and
delivered to Lender two (2) duplicate original counterparts of the Control
Agreement in the form of Exhibit "J" attached hereto.
(s) Post-Closing Agreement. Borrowers shall have executed and
delivered to Lender two (2) duplicate original counterparts of the Post-Closing
Agreement in the form of Exhibit "K" attached hereto.
(t) Intellectual Property Security Agreement. Borrowers shall have
executed and delivered to Lender two (2) duplicate original counterparts of the
Intellectual Property Security Agreement in the form of Exhibit "L" attached
hereto.
(u) Environmental Indemnity Agreement. Borrowers and the Credit
Parties (other than Ganesha) shall have executed and delivered to Lender two (2)
duplicate original counterparts of the Environmental Indemnity Agreement in the
form of Exhibit "M" attached hereto.
(v) Guaranty Agreement. Guarantors shall have executed and delivered
to Lender two (2) duplicate original counterparts of the Guaranty Agreement in
the form of Exhibit "N" attached hereto.
(w) Intercreditor Agreement. Borrowers shall have executed and
delivered to Lender two (2) duplicate original counterparts of the Intercreditor
Agreement in the form of Exhibit "O" attached hereto.
(x) Pledge Agreement. IHHI, Ganesha and West Coast shall have executed
and delivered to Lender two (2) duplicate original counterparts of the Pledge
Agreement (IHHI) in the form of Exhibit "P" attached hereto.
(y) Stock Power. IHHI shall have executed and delivered to Lender two
(2) duplicate original counterparts of the Stock Power in the form of Exhibit
"Q" attached hereto.
17
(z) Membership Power. Ganesha and West Coast shall have executed and
delivered to Lender two (2) duplicate original counterparts of the Membership
Power in the form of Exhibit "R" attached hereto
(aa) Landlord's Consent and Estoppel Certificate (Chapman Hospital
Lease). The Landlord under the Chapman Hospital Lease shall have executed and
delivered to Lender, for the benefit of Lender, two (2) duplicate original
counterparts of the Landlord's Consent and Estoppel Certificate in the form of
Exhibit "S" attached hereto.
(bb) Landlord's Consent and Estoppel Certificate (Chapman MOB Lease).
The Landlord under the Chapman MOB Lease shall have executed and delivered to
Lender, for the benefit of Lender, two (2) duplicate original counterparts of
the Landlord's Consent and Estoppel Certificate in the form of Exhibit "S"
attached hereto
(cc) Landlord's Consent and Estoppel Certificate (Triple Net Lease).
PCHI, landlord under the Triple Net Lease, shall have executed and delivered to
Lender, for the benefit of Lender, two (2) duplicate original counterparts of
the Landlord's Consent and Estoppel Certificate in the form of Exhibit "T"
attached hereto.
(dd) Warrant. IHHI shall have executed and delivered to Lender one (1)
original Warrant in the form of Exhibit "U" attached hereto.
(ee) Legal Opinions.
(i) Legal Opinion of California Counsel. An original legal
opinion (from counsel licensed to practice law and in good standing in the State
of California) for PCHI, West Coast, Ganesha, WMC-A, WMC-SA, Coastal and Chapman
regarding the transactions contemplated by this Agreement and the other Loan
Documents shall be delivered to Lender, containing among other things legal
opinions with respect to the following: (A) the valid existence of PCHI, West
Coast, Ganesha, WMC-A, WMC-SA, Coastal and Chapman in the State of California;
(B) the good standing of PCHI, West Coast, Ganesha, WMC-A, WMC-SA, Coastal and
Chapman in the State of California; (C) the requisite power of PCHI, West Coast,
Ganesha, WMC-A, WMC-SA, Coastal and Chapman to execute this Agreement and the
other Loan Documents; (D) that the execution of this Agreement and the other
Loan Documents by PCHI, West Coast, Ganesha, WMC-A, WMC-SA, Coastal and Chapman
will not constitute a breach or default under any contracts or agreements
executed by or to which PCHI, West Coast, Ganesha, WMC-A, WMC-SA, Coastal and
Chapman is a party; (E) ) that the choice of law provisions set forth in this
Agreement and the other Loan Documents are enforceable; and (F) such other
opinions that Lender may require.
(ii) First Legal Opinion of Nevada Counsel. A first original
legal opinion (from counsel licensed to practice law and in good standing in the
State of Nevada) for IHHI and OC-PIN regarding the transactions contemplated by
this Agreement and the other Loan Documents shall be delivered to Lender,
containing among other things legal opinions with respect to the following: (A)
the valid existence of IHHI and OC-PIN in the State of Nevada; (B) the good
standing of IHHI and OC-PIN in the State of Nevada; (C) the requisite power of
IHHI and OC-PIN to execute this Agreement and the other Loan Documents; (D) that
18
the execution of this Agreement and the other Loan Documents by IHHI and OC-PIN
will not constitute a breach or default under any contracts or agreements
executed by or to which IHHI and OC-PIN is a party; (E) ) that the choice of law
provisions set forth in this Agreement and the other Loan Documents are
enforceable; and (F) such other opinions that Lender may require.
(iii) Second Legal Opinion of Nevada Counsel. A second original
legal opinion from counsel (licensed to practice law and in good standing in the
State of Nevada) for all Borrowers and all Credit Parties and all Guarantors
regarding the transactions contemplated by this Agreement and the other Loan
Documents shall be delivered to Lender, containing among other things legal
opinions with respect to the following: (A) that this Agreement and the other
Loan Documents comply with Nevada law; (B) that this Agreement and the other
Loan Documents are enforceable under Nevada law; (C) that the choice of Nevada
law under this Agreement and the other Loan Documents is valid and enforceable
under Nevada law; (D) that the Interest Rate applicable to each of the Loans is
not usurious under Nevada law; and (E) such other matters as Lender may require.
(ff) Fairness Opinion. A fairness opinion executed by a qualified,
independent, third-party professional financial advisor or investment bank
opining as to (i) the fairness of the transactions contemplated by this
Agreement as between the Borrowers and Credit Parties and Guarantors, and (ii)
an allocation of fair value to each Hospital Facility, in form and substance
satisfactory to Lender.
(gg) Closing and Funding Checklist - Other Documents and Instruments.
Each Borrower and each Credit Party and each Guarantor shall have executed
(where required) and delivered to Lender each of the other documents, exhibits,
disclosure schedules, instruments and other items listed in the Closing and
Funding Checklist, in form and content satisfactory to Lender.
(hh) $50,000,000 Revolving Credit Agreement. All conditions precedent
to the obligation of Medical Provider Financial Corporation I (as lender) under
Article 4 of the $50,000,000 Revolving Credit Agreement shall have been
satisfied or provided for in a manner satisfactory to said lender, in its sole
discretion, or waived in writing by said lender.
(ii) Documents Required by Title Commitment. Each Borrower shall have
executed (where required) and deposited into Escrow all documents and
instruments required by the Title Commitment and/or the Escrow Company.
(jj) New $10,700,000 Credit Agreement. All conditions precedent to the
obligation of MPFC III under Article 2 of the New $10,700,000 Credit Agreement
shall have been satisfied or provided for in a manner satisfactory to said MPFC
III, in its sole discretion, or waived in writing by MPFC III.
2.2 Further Conditions Precedent to Making Loans; Further Conditions
Precedent to Funding Advances. The obligations of Lender to making the Loans to
Borrowers and to funding any Advances under the Loans to Borrowers, shall be
subject to the following further conditions precedent:
19
(a) Further Conditions Precedent to Making Loans. Lender shall not be
obligated to make any of the Loans to Borrowers unless and until the following
additional conditions precedent have been satisfied or provided for in a manner
reasonably satisfactory to Lender, or waived in writing by Lender, on or before
the Closing Date:
(i) Loan Documents. All Loan Documents having been executed and
delivered on or before the Closing Date shall remain in full force and effect,
and Lender shall have received such further documents, instruments, agreements
and legal opinions as Lender shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Loan Documents, each
in form and substance satisfactory to Lender.
(ii) $50,000,000 Revolving Credit Agreement. All loan documents
having been executed and delivered on or before the closing date of the
transaction contemplated by the $50,000,000 Revolving Credit Agreement shall
remain in full force and effect, and the lender under the $50,000,000 Revolving
Credit Agreement shall have received such further documents, instruments,
agreements and legal opinions as such lender shall reasonably request in
connection with the transactions contemplated by the $50,000,000 Revolving
Credit Agreement and the loan documents referenced therein, each in form and
substance satisfactory to said lender.
(iii) Approvals. Lender shall have received (A) satisfactory
evidence (or, shall, in its reasonable discretion, continue to be satisfied with
such evidence received under Section 2.1(b) (Required Consents and Approvals)),
that each Borrower and each Credit Party have obtained, or in the case of
necessary Governmental Authority approvals, have applied for, all required
consents and approvals of all Persons including all requisite Governmental
Authorities, to the execution, delivery and performance of this Agreement and
the other Loan Documents to which they are parties or a signatory, or (B) an
officer's certificate signed by an executive officer of each Borrower in form
and substance satisfactory to Lender affirming that no such consents or
approvals are required.
(iv) Timing. The Closing must occur by the Closing Date.
(v) Collateral. Lender shall have approved of the Collateral in
its sole and absolute discretion.
(vi) Changes to Disclosure Schedules. Borrower shall have
delivered to Lender updates to all Disclosure Schedules as required by Section
5.6 (Supplemental Disclosures), and Lender shall have approved in their
discretion all updates to the Disclosure Schedules as have been delivered to
Lender on or before the Closing Date.
(vii) No Material Adverse Effect. No event or circumstance shall
have occurred that has or reasonably could be expected by Lender to have a
Material Adverse Effect.
(viii) Title Policies. Title Company shall irrevocably be
committed to issue the Title Policy to Lender on the Closing Date for each
Property, at Borrower's sole cost and expense, in form and content acceptable to
Lender in its sole discretion.
20
(ix) Escrow. Borrowers shall have opened Escrow at the offices of
the Title Company and the escrow officer shall be prepared to close Escrow on
the terms and conditions set forth in the Escrow Instructions on deposit
therein.
(b) Conditions to Funding Advances. Lender shall not be obligated to
fund any Advance under any of the Loans to Borrowers on the Closing Date or on
any other date if:
(i) Any representation or warranty by any Borrower or by any
Credit Party or by any Guarantor contained herein or in any other Loan Document
is untrue or incorrect in any material respect as of such date;
(ii) Any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance; or
(iii) Any event or circumstance shall have occurred that has or
reasonably could be expected by Lender to have a Material Adverse Effect.
The request by any Borrower or Borrower's Representative that Lender fund
an Advance under any Loan on the Closing Date or on any other date shall in each
event be deemed to constitute, as of the date thereof, (A) a representation and
warranty by all Borrowers and all Credit Parties and all Guarantors that the
conditions precedent in this Section 2.2 (Further Conditions Precedent to Making
Loans; Further Conditions Precedent to Funding Advances) to which it is a party
or a signatory have been satisfied, and (B) a reaffirmation by each Borrower and
by each Credit Party and by each Guarantor of their respective obligations under
the Loan Documents.
2.3 Place of Closing; Delivery of Loan Documents to Lender; Deposits Into
Escrow; Close of Escrow; Distribution of Funds and Documents. The transactions
contemplated by this Agreement and the other Loan Documents will close on the
Closing Date, as follows:
(a) Place Of Closing. Unless otherwise agreed in writing by Borrowers
and Lender, the Closing will take place on the Closing Date at the offices of
the Lender at c/o Medical Capital Corporation, 2100 South State College Blvd.,
Anaheim, California 92806, Attn: Joseph J. Lampariello, President and COO,
telephone: 714-935-3100.
(b) Delivery of Loan Documents to Lender's Counsel. Each Borrower
shall, not less than three (3) Business Days prior to the Closing Date, deliver
or cause to be delivered to legal counsel for Lender the following Loan
Documents, each duly executed by each Borrower, each Credit Party (where
applicable), each Guarantor (where applicable), any other Person required by
this Agreement, and, where required, witnessed, acknowledged and in recordable
form, with all exhibits, schedules and annexes (each pre-approved by Lender)
attached and executed as required:
(i) Two (2) duplicate original counterparts of this Agreement,
executed by each Borrower and each Credit Party and each Guarantor and with all
completed Annexes and Disclosure Schedules attached.
21
(ii) One (1) original of the $45,000,000 Real Estate Term Note,
executed by Borrowers.
(iii) One (1) original of the $35,000,000 Non-Revolving Line of
Credit Note, executed by Borrowers.
(iv) [Intentionally Omitted]
(v) Two (2) duplicate original counterparts of the Notice of
Request for Advance, executed by Borrower's Representative.
(vi) Two (2) duplicate original counterparts of the Security
Agreement, executed by Borrowers.
(vii) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts re Western Medical Center - Anaheim, executed by IHHI
and WMC-A.
(viii) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts re Western Medical Center - Santa Ana, executed by IHHI
and WMC-SA.
(ix) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts re Coastal Community Hospital, executed by IHHI and
Coastal.
(x) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts re Chapman MOB Lease, , executed by IHHI.
(xi) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts re Chapman Hospital Lease, executed by IHHI.
(xii) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Western Medical Center - Anaheim, executed by IHHI
and WMC-A.
(xiii) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Western Medical Center - Santa Ana, executed by
IHHI and WMC-SA.
(xiv) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Coastal Community Hospital, executed by IHHI and
Coastal.
(xv) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Chapman MOB Lease, executed by IHHI.
(xvi) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Chapman Hospital Lease, executed by IHHI.
(xvii) Two (2) duplicate original counterparts of the Control
Agreement, executed by Borrowers and Bank.
22
(xviii) Two (2) duplicate original counterparts of the
Post-Closing Agreement, executed by Borrowers.
(xix) Two (2) duplicate original counterparts of the Intellectual
Property Security Agreement, executed by Borrowers.
(xx) Two (2) duplicate original counterparts of the Environmental
Indemnity Agreement, executed by Borrowers and by each Credit Party (other than
Ganesha).
(xxi) Two (2) duplicate original counterparts of the Guaranty
Agreement, executed by each Guarantor.
(xxii) Two (2) duplicate original counterparts of the
Intercreditor Agreement, executed by Borrowers.
(xxiii) Two (2) duplicate original counterparts of the Pledge
Agreement, executed by IHHI, Ganesha and West Coast.
(xxiv) Two (2) duplicate original counterparts of the Stock Power
executed by IHHI.
(xxv) All original Stock certificates in WMC-A, WMC-SA, Coastal
and Chapman owned, held or controlled by IHHI.
(xxvi) Two (2) duplicate original counterparts of the Membership
Power executed by Ganesha and West Coast.
(xxvii) All original Membership Certificates in PCHI owned, held
or controlled by Ganesha; and all Membership Certificates in PCHI owned, held or
controlled by West Coast.
(xxviii) Two (2) duplicate original counterparts of the
Landlord's Consent and Estoppel Certificate (Chapman MOB Lease), executed by the
Landlord under the Chapman MOB Lease.
(xxix) Two (2) duplicate original counterparts of the Landlord's
Consent and Estoppel Certificate (Chapman Hospital Lease), executed by the
Landlord under the Chapman Hospital Lease.
(xxx) Two (2) duplicate original counterparts of the Landlord's
Consent and Estoppel Certificate (Triple Net Lease), executed by PCHI.
(xxxi) One (1) original Warrant, executed by IHHI.
(xxxii) Two (2) original executed opinions of California legal
counsel for PCHI, West Coast, Ganesha, WMC-A, WMC-SA, Coastal and Chapman,
executed by said counsel.
23
(xxxiii) Two (2) original executed first opinions of Nevada legal
counsel for IHHI and OC-PIN, executed by said Nevada counsel.
(xxxiv) Two (2) original executed second opinions of Nevada legal
counsel for all Borrowers and Credit Parties and Guarantors, executed by said
Nevada counsel.
(xxxv) One (1) original executed fairness opinion, in form and
content acceptable to Lender.
(xxxvi) All other documents, instruments, agreements, Annexes,
Schedules, Exhibits not set forth above but required by the Closing and Funding
Checklist.
(c) Deposits Into Escrow. Unless otherwise set forth below, Borrowers
and Lender shall, not less than two (2) Business Days prior to the Closing Date,
deposit the following documents, instruments and other items into Escrow, each
duly executed and, where appropriate, witnessed, acknowledged and in recordable
form, with all exhibits, schedules and annexes (each pre-approved by Lender)
attached and executed as required:
(i) One (1) copy of this Agreement, executed by Lender, by each
Borrower and by each Credit Party and by each Guarantor and with all completed
Annexes and Disclosure Schedules and Exhibits attached.
(ii) With respect to the Western Medical Center - Anaheim, one
(1) original Deed of Trust executed and acknowledged by PCHI with the legal
description describing the fee simple interest in the Western Medical Center -
Anaheim.
(iii) With respect to the Western Medical Center - Santa Ana, one
(1) original Deed of Trust executed and acknowledged by PCHI with the legal
description describing the fee simple interest in the Western Medical Center -
Santa Ana.
(iv) With respect to the Coastal Communities Hospital, one (1)
original Deed of Trust executed and acknowledged by PCHI with the legal
description describing the fee simple interest in the Coastal Communities
Hospital.
(v) With respect to the Chapman Medical Center:
(A) one (1) original Deed of Trust executed and acknowledged
by IHHI with the legal description describing (1) the fee simple interest in the
Chapman Medical Center, and (2) IHHI's interest, as MOB Tenant, in the Chapman
MOB Lease; and
(B) one (1) original Deed of Trust executed and acknowledged
by IHHI with the legal description describing (1) the fee simple interest in the
Chapman Medical Center, and (2) IHHI's interest, as Hospital Tenant, in the
Chapman Hospital Lease
(vi) With respect to the Western Medical Center - Anaheim, one
(1) original Absolute Assignment of Leases and Rents executed and acknowledged
by PCHI, IHHI and WMC-A with the legal description describing the fee simple
interest in the Western Medical Center - Anaheim.
24
(vii) With respect to the Western Medical Center - Santa Ana, one
(1) original Absolute Assignment of Leases and Rents executed and acknowledged
by PCHI, IHHI and WMC-SA with the legal description describing the fee simple
interest in the Western Medical Center - Santa Ana.
(viii) With respect to the Coastal Communities Hospital, one (1)
original Absolute Assignment of Leases and Rents executed and acknowledged by
PCHI, IHHI and Coastal with the legal description describing the fee simple
interest in the Coastal Communities Hospital.
(ix) With respect to the Chapman Western Medical Center:
(A) one (1) original Absolute Assignment of Leases and Rents
executed and acknowledged by IHHI with the legal description describing (1) the
fee simple interest in the Chapman Medical Center, and (2) IHHI's interest, as
Hospital Tenant, in the Chapman Hospital Lease; and.
(B) one (1) original Absolute Assignment of Leases and Rents
executed and acknowledged by IHHI with the legal description describing (1) the
fee simple interest in the Chapman Medical Center, and (2) IHHI's interest, as
MOB Tenant, in the Chapman MOB Lease.
(x) Escrow Instructions executed by each Borrower and each Credit
Party and each Guarantor.
(xi) For each Property, all UCC-1 Financing Statements (Fixture
Filing) as are required by Lender under the Loan Documents, naming the
applicable Person's as Debtor.
(xii) All other documents, resolutions, charter documents,
affidavits and items required by any Title Company pursuant to and as set forth
in any Title Commitment.
(xiii) By 11:00 a.m. Los Angeles time on the Closing Date, Lender
and Borrowers shall deposit into Escrow any funds required by this Agreement.
(d) Close of Escrow; Recordation of Loan Documents. At such time as
(i) Escrow Holder holds for the account of Lender each of the documents,
instruments and funds set forth above; (ii) each Borrower, each Credit Party,
each Guarantor and Lender have complied with their respective obligations under
this Agreement and their respective Escrow Instructions; (iii) Escrow Holder is
prepared to close and consummate the transactions contemplated by the
$50,000,000 Revolving Credit Agreement and has complied with the escrow
instructions by the parties to the $50,000,000 Revolving Credit Agreement; (iv)
Escrow Holder is prepared to close and consummate the transactions contemplated
by the New $10,700,000 Credit Agreement and has complied with the escrow
instructions by the parties to the New $10,700,000 Credit Agreement; and (v) the
Title Company is irrevocably prepared to issue and deliver each Title Policy to
Lender at Closing, then Escrow Holder shall close Escrow as follows:
25
(i) With respect to fee simple interest at Western Medical Center
- - Anaheim, Escrow Holder will (1) release from record all existing Lender Liens
re the Previous $50,000,000 Acquisition Loan, the Previous $30,000,000 Line of
Credit Loan, the Previous Accounts Receivable Purchase Agreement, and all
Previous UCC-1 Financing Statements (Fixture Filings) except any Previous UCC-1
Financing Statements (Fixture Filings) recorded against each of the Properties
in conjunction with the Previous $10,700,000 Term Loan; (2) cause the Western
Medical Center - Anaheim $80,000,000 Deed of Trust to be recorded as a first
Lien and encumbrance against the fee simple title of the Western Medical Center
- - Santa Ana; (3) cause the Western Medical Center - Anaheim Absolute Assignment
of Leases and Rents to be recorded as a Lien and encumbrance against the fee
simple title of the Western Medical Center - Anaheim; and (4) cause the Western
Medical Center - Anaheim UCC-1 Financing Statement (Fixture Filing) to be
recorded, in each case subject only to the applicable Permitted Exceptions.
(ii) With respect to the fee simple interest at Western Medical
Center - Santa Ana, Escrow Holder will (1) release from record all existing
Lender Liens re the Previous $50,000,000 Acquisition Loan, the Previous
$30,000,000 Line of Credit Loan, the Previous Accounts Receivable Purchase
Agreement, and all Previous UCC-1 Financing Statements (Fixture Filings) except
any Previous UCC-1 Financing Statements (Fixture Filings) recorded against each
of the Properties in conjunction with the Previous $10,700,000 Term Loan; (2)
cause the Western Medical Center - Santa Ana $80,000,000 Deed of Trust to be
recorded as a first Lien and encumbrance against the fee simple title of the
Western Medical Center - Santa Ana; (3) cause the Western Medical Center - Santa
Ana Absolute Assignment of Leases and Rents to be recorded as a Lien and
encumbrance against the fee simple title of the Western Medical Center - Santa
Ana; and (4) cause the Western Medical Center - Santa Ana UCC-1 Financing
Statement (Fixture Filing) to be recorded, in each case subject only to the
applicable Permitted Exceptions.
(iii) With respect to the fee simple interest at Coastal
Communities Hospital, Escrow Holder will (1) release from record all existing
Lender Liens re the Previous $50,000,000 Acquisition Loan, the Previous
$30,000,000 Line of Credit Loan, the Previous Accounts Receivable Purchase
Agreement, and all Previous UCC-1 Financing Statements (Fixture Filings) except
any Previous UCC-1 Financing Statements (Fixture Filings) recorded against each
of the Properties in conjunction with the Previous $10,700,000 Term Loan; (2)
cause the Coastal Communities Hospital $80,000,000 Deed of Trust to be recorded
as a first Lien and encumbrance against the fee simple title of the Coastal
Communities Hospital; (3) cause the Coastal Communities Hospital Absolute
Assignment of Leases and Rents to be recorded as a Lien and encumbrance against
the fee simple title of the Coastal Communities Hospital; and (4) cause the
Coastal Communities Hospital UCC-1 Financing Statement (Fixture Filing) to be
recorded, in each case subject only to the applicable Permitted Exceptions.
(iv) With respect to IHHI's interest, as MOB Tenant, in the
Chapman MOB Lease at the Chapman Medical Center, Escrow Holder will (1) release
from record all existing Lender Liens re the Previous $50,000,000 Acquisition
Loan, the Previous $30,000,000 Line of Credit Loan, the Previous Accounts
Receivable Purchase Agreement, and all Previous UCC-1 Financing Statements
(Fixture Filings) except any Previous UCC-1 Financing Statements (Fixture
Filings) recorded against each of the Properties in conjunction with the
26
Previous $10,700,000 Term Loan; (2) cause the Chapman Medical Center $80,000,000
Deed of Trust (Chapman MOB Lease) to be recorded as a first Lien and encumbrance
against IHHI's interest, as MOB Tenant, in the Chapman MOB Lease; (3) cause the
Chapman Medical Center Absolute Assignment of Leases and Rents (Chapman MOB
Lease) to be recorded as a Lien and encumbrance against IHHI's interest, as MOB
tenant, in the Chapman MOB Lease; and (4) cause the Chapman Medical Center UCC-1
Financing Statement (Fixture Filing) (Chapman MOB Lease) to be recorded against
Chapman's interest, as MOB Tenant, in the Chapman MOB Lease, in each case
subject only to the applicable Permitted Exceptions.
(v) With respect to IHHI's interest, as Hospital Tenant, in the
Chapman Hospital Lease at the Chapman Medical Center, Escrow Holder will (1)
release from record all existing Lender Liens re the Previous $50,000,000
Acquisition Loan, the Previous $30,000,000 Line of Credit Loan, the Previous
Accounts Receivable Purchase Agreement, and all Previous UCC-1 Financing
Statements (Fixture Filings) except any Previous UCC-1 Financing Statements
(Fixture Filings) recorded against each of the Properties in conjunction with
the Previous $10,700,000 Term Loan; (2) cause the Chapman Medical Center
$80,000,000 Deed of Trust (Chapman Hospital Lease) to be recorded as a first
Lien and encumbrance against IHHI's interest, as Hospital Tenant, in the Chapman
Hospital Lease; (3) cause the Chapman Medical Center Absolute Assignment of
Leases and Rents (Chapman Hospital Lease) to be recorded as a Lien and
encumbrance against IHHI's interest, as Hospital tenant, in the Chapman Hospital
Lease; and (4) cause the Chapman Medical Center UCC-1 Financing Statement
(Fixture Filing) (Chapman Hospital Lease) to be recorded against Chapman's
interest, as Hospital Tenant, in the Chapman Hospital Lease, in each case
subject only to the applicable Permitted Exceptions
(e) Distribution of Funds and Documents by Escrow Holder at Closing.
When Escrow Holder is in the position to close Escrow as required by Section
2.3(d) (Close of Escrow; Recordation of Loan Documents) immediately above, but
in no event later than the Closing Date, Escrow Holder shall distribute funds
and documents then on deposit in Escrow to Borrowers as set forth in Lender's
separate escrow instructions.
(f) Distribution of Documents by Escrow Holder.
(i) The original and one (1) copy of each Lender's Title Policy
to Lender.
(ii) A true and correct copy of each of the $80,000,000 Deeds of
Trust to Lender (with a copy to Borrowers) as recorded.
(iii) A true and correct copy of each of the Absolute Assignment
of Leases and Rents to Lender (with a copy to Borrowers) as recorded.
(iv) A true and correct copy of each UCC-1 Financing Statement
(Fixture Filing) (with a copy to Borrowers) as recorded.
(v) Final settlement statement to Lender and to Borrowers with
respect to distribution of amounts deposited into this Escrow. Even though the
following amounts were not deposited into Escrow, said final settlement
statement shall list the total amount of the Advances made by Lender to
Borrowers pursuant to this Agreement but which were withheld by Lender to pay in
full the Previous $50,000,000 Acquisition Loan, the Previous $30,000,000 Line of
Credit Loan, the Origination Fees and Lender's Costs.
27
(g) Distribution of Documents by Lender at Closing. When Escrow Holder
has closed Escrow and distributed the documents and funds as and when required
by this Agreement, Lender shall cause the documents then in its possession to be
distributed as follows:
(i) To Borrower's Representative: one (1) duplicate original
counterpart of the Absolute Assignments of Leases and Rents; the Security
Agreement; the Collateral Assignments of Contracts; the Deposit Account Security
Agreements; the Control Agreement; the Post-Closing Agreement; the Intellectual
Property Security Agreement; the Environmental Indemnity Agreement; the Guaranty
Agreement; the Intercreditor Agreement; the Pledge Agreement; the Stock Power;
the Membership Power; the Landlord's Consent and Estoppel Certificate (Chapman
MOB Lease); the Landlord's Consent and Estoppel Certificate (Chapman Hospital
Lease)and the Landlord's Consent and Estoppel Certificate (Triple Net Lease).
(ii) To Borrower's Representative: one (1) copy of the
$45,000,000 Real Estate Term Note; one (1) copy of the $35,000,000 Non-Revolving
Line of Credit Note; and one (1) copy of the fairness opinion.
(iii) To Lender: one (1) duplicate original counterpart of the
Absolute Assignments of Leases and Rents; the Security Agreement; the Collateral
Assignments of Contracts; the Deposit Account Security Agreements; the Control
Agreement; the Post-Closing Agreement; the Intellectual Property Security
Agreement; the Environmental Indemnity Agreement; the Guaranty Agreement; the
Intercreditor Agreement; the Pledge Agreement; the Stock Power; the Membership
Power; the Landlord's Consent and Estoppel Certificate (Chapman MOB Lease); the
Landlord's Consent and Estoppel Certificate (Chapman Hospital Lease); and the
Landlord's Consent and Estoppel Certificate (Triple Net Lease).
(iv) To Lender: the original executed $45,000,000 Real Estate
Term Note; the original executed $35,000,000 Non-Revolving Line of Credit Note;
the original, executed Warrant; the original of each of the executed legal
opinions; and the original executed fairness opinion.
3. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Lender to make the Loans, Borrowers make the following
representations and warranties to Lender with respect to Borrowers; each Credit
Party makes the following representations and warranties to Lender with respect
to itself; and each Guarantor makes the following representations and warranties
to Lender with respect to itself. Each and all of said representations and
warranties (i) shall be true, correct, complete and accurate on the Closing Date
and on each subsequent funding date (unless expressly limited to a particular
date), and (ii) shall survive the execution and delivery of this Agreement (it
being understood, that, for purposes of any representation and warranty
expressly made as of the Closing Date and each subsequent funding date with
reference to, or qualified by, a Disclosure Schedule, such reference shall
include such updated version, if any, of such Disclosure Schedule as may be made
effective (including by consent of Lender) pursuant to Section 5.6 (Supplemental
Disclosure) on or before the Closing Date).
28
3.1 Borrowers and Credit Parties.
(a) Corporate Existence; Compliance with Applicable Laws.
(i) IHHI (1) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada; (2) is registered as
a foreign corporation in the State of California and is qualified to do business
in and is doing business in the State of California; (3) 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, except where the failure to be so qualified would not result in
exposure to losses or liabilities which could reasonably be expected to have a
Material Adverse Effect; (4) 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; (5) has applied for all
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(6) is in compliance with its bylaws; and (7) is in compliance in all material
respects with all other Applicable Laws.
(ii) WMC-A, WMC-SA, Coastal and Chapman are each (1) corporations
duly organized, validly existing and in good standing under the laws of the
State of California; (2) doing business in the State of California; (3) 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, except where the failure to be so qualified would not result
in exposure to losses or liabilities which could reasonably be expected to have
a Material Adverse Effect; (4) 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; (5) has applied for all
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(6) is in compliance with its bylaws; and (7) is in compliance in all material
respects with all other Applicable Laws.
(iii) PCHI, Ganesha and West Coast are each (1) limited liability
companies duly organized, validly existing and in good standing under the laws
of the State of California; (2) doing business in the State of California; (3)
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, except where the failure to be so
qualified would not result in exposure to losses or liabilities which could
reasonably be expected to have a Material Adverse Effect; (4) have 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;
(5) have applied for all licenses, permits, consents or approvals from or by,
29
and has made all material filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (6) is in compliance with its operating
agreement; and (7) is in compliance in all material respects with all other
Applicable Laws.
(iv) OC-PIN is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Nevada; (2)
is registered as a foreign limited liability company in the State of California
and is qualified to do business in and is doing business in the State of
California; (3) 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, except where the failure to be so
qualified would not result in exposure to losses or liabilities which could
reasonably be expected to have a Material Adverse Effect; (4) 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;
(5) has applied for all licenses, permits, consents or approvals from or by, and
has made all material filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (6) is in compliance with its operating
agreement; and (7) is in compliance in all material respects with all other
Applicable Laws.
(b) Executive Office, Collateral Locations, FEIN. As of the Closing
Date, the name of each Borrower and each Credit Party and each Guarantor, as its
name appears in official filings in the States of Nevada and California (as
applicable), and the current location of each Borrower's and each Credit Party's
and each Guarantor's chief executive office and the premises at which any
Collateral is located are set forth in Disclosure Schedule 3.1. None of such
locations has changed within the four (4) months preceding the Closing Date
(except that Collateral may have been transferred from one Hospital Facility to
another during said period) and each Borrower and Credit Party and each
Guarantor has only one state of incorporation or organization and has not
changed the state of incorporation or organization at any time within the five
(5) year period prior to the Closing Date. During the preceding five (5) years,
no Borrower and no Credit Party and no Guarantor has conducted business under or
used any name (whether corporate, partnership or assumed) other than as shown on
Schedule 3.1. Each Borrower and each Credit Party and each Guarantor is the sole
owner of all of its names listed on Schedule 3.1, and any and all business done
and invoices issued in such names are such Borrower's and/or such Credit Party's
and such Guarantor's sales, business and invoices. Each trade name of each
Borrower and each Credit Party and each Guarantor represents a division or
trading style of such Borrower and/or such Credit Party and/or such Guarantor.
All Accounts of each Borrower and each Credit Party (other than Ganesha) and
each Guarantor (other than Ganesha) arise, originate and are located, and all of
the Collateral and all books and records in connection therewith or in any way
relating thereto or evidencing the Collateral are located and shall only be
located, in and at such locations other than goods in transit and immaterial
amounts of property. All of the Collateral is located only in the continental
United States. Each Borrower's and each Credit Party's (other than Ganesha) and
each Guarantor's (other than Ganesha) Medicare and Medicaid Provider Numbers are
set forth on Schedule 3.1. In addition, Disclosure Schedule 3.1 lists the
federal employer identification number of each Borrower and each Credit Party
and each Guarantor.
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3.2 Power, Authorization, Enforceable Obligations. The execution, delivery
and performance by Borrowers of the Loan Documents to which it is a party and
the creation of all Liens provided for therein: (a) are within such Person's
power; (b) have been duly authorized by all necessary corporate or limited
liability company action; (c) do not contravene any provision of such Person's
bylaws or operating agreement; (d) do not violate any law or regulation, or any
order or decree of any court or Governmental Authority; (e) do 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) do 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
Loan Documents; and (g) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in Section
2.1(b) (Required Consents and Approvals), all of which will have been duly
obtained, made or complied with prior to the Closing Date. Each of the Loan
Documents shall be duly executed and delivered by Borrowers and Credit Parties
and each such Loan Document shall constitute a legal, valid and binding
obligation of Borrowers and Credit Parties enforceable against it in accordance
with its terms. Credit Parties hereby make the foregoing representations and
warranties in clauses (d), (e), (f) and (g) of this Section 3.2 (Power,
Authorization, Enforceable Obligations) with respect to the execution, delivery
and performance by Credit Parties of the Loan Documents to which Credit Parties
are a party and the creation of all Liens provided for therein.
3.3 Financial Statements and Projections. Except for the Projections, all
Financial Statements delivered to Lender by Borrowers that are referred to below
have been prepared in accordance with GAAP consistently applied throughout the
periods covered (except as disclosed therein and except, with respect to
unaudited Financial Statements, for the absence of footnotes and normal year-end
audit adjustments) and present fairly in all material respects the financial
position of Borrowers as of the dates thereof and the results of their
operations and cash flows for the periods then ended. Credit Parties (other than
Ganesha) hereby represent and warrant to Lender that all financial statements
delivered to Lender by Credit Parties present fairly in all material respects
the financial position of the Credit Parties as of the dates thereof, and since
the date of the most recent financial statements submitted to Lender, there has
not occurred any Material Adverse Effect or, to Credit Parties' knowledge, any
other event or condition that would reasonably be likely to have a Material
Adverse Effect.
(a) Financial Statements. The Financial Statements which have been
delivered by Borrowers to Lender on or before the date hereof are comprised of:
(i) The consolidated, unaudited balance sheets of Borrowers as of
December 31, 2006, and the related statements of income and cash flows of
Borrowers for the nine (9) month period then ended.
(ii) The unaudited balance sheet(s) at June 30, 2007 of Borrowers
and the related consolidated statement(s) of income and cash flows of Borrowers
for the Fiscal Quarter then ended.
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(b) Pro Forma. The pro forma financial statements which have been
delivered by Borrowers to Lender on or before the date hereof were prepared by
Borrowers giving pro forma effect to the Related Transactions, was based on the
unaudited consolidated and consolidating balance sheets of Borrowers and its
Subsidiaries, and were prepared in accordance with GAAP (to the extent
applicable), with only such adjustments thereto as would be required in
accordance with GAAP.
(c) Projections. All Projections which have been delivered by
Borrowers to Lender on the date hereof were prepared by Borrowers in light of
Borrower's past experience, but including reasonably estimated future payments
of known contingent liabilities, and reflect projections on a quarterly basis
for the 2007/2008 Fiscal Year and on an annual basis for all periods thereafter
through 2009/2010. The Projections are based upon the same accounting principles
as those used in the preparation of the financial statements described above
with certain normalizing assumptions made by Borrowers, and the estimates and
assumptions stated therein, all of which Borrowers believe to be reasonable and
fair in light of current conditions and current facts known to Borrowers and, as
of the Closing Date, reflect Borrower's good faith and reasonable estimates of
the future financial performance of Borrowers for the period set forth therein.
3.4 Material Adverse Effect.
(a) Borrowers. The Borrowers hereby represent to Lender that, between
the Effective Date of this Agreement and the Closing Date: (i) to the best of
Borrower's knowledge, after due inquiry, there has not been any material
increase in contingent or noncontingent liabilities, liabilities for Charges, or
obligations with respect to long-term leases or unusual forward or long-term
commitments of Borrowers, (ii) to the best of Borrower's knowledge, after due
inquiry, there has not been any material decrease in the assets of Borrowers,
(iii) no contract, lease or other agreement or instrument has been entered into
by Borrowers or has become binding upon Borrower's assets and, to the knowledge
of Borrowers, no law or regulation applicable to Borrowers has been adopted that
has had or could reasonably be expected to have a Material Adverse Effect with
respect to Borrowers or the Collateral, (iv) to the best of Borrower's
knowledge, after due inquiry, neither Borrowers nor any of the Credit Parties is
in default under any material contract, lease or other agreement or instrument,
that alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect with respect to Borrowers or the Collateral, and (v) to the best
of Borrower's knowledge, after due inquiry, no event has occurred, that alone or
together with other events, has had, or could reasonably be expected to have, a
Material Adverse Effect with respect to Borrowers or the Collateral.
(b) Credit Parties. The Credit Parties (other than Ganesha) hereby
represent to Lender that, between the Effective Date of this Agreement and the
Closing Date: (i) to the best of each Credit Party's knowledge, there has not
been any material increase in contingent or noncontingent liabilities,
liabilities for Charges, or obligations with respect to long-term leases or
unusual forward or long-term commitments of Borrowers, (ii) to the best of each
Credit Party's knowledge, there has not been any material decrease in the assets
of any Credit Party, (iii) no contract, lease or other agreement or instrument
has been entered into by any Credit Party or has become binding upon Credit
Parties assets and, to the knowledge of Credit Parties, no law or regulation
applicable to Credit Parties or to Borrowers has been adopted that has had or
32
could reasonably be expected to have a Material Adverse Effect with respect to
Credit Party's or Borrowers or the Collateral, (iv) to the best of each Credit
Party's knowledge, neither Borrowers nor any of the Credit Parties is in default
under any material contract, lease or other agreement or instrument, that alone
or in the aggregate could reasonably be expected to have a Material Adverse
Effect with respect to Borrowers or the Credit Parties or the Collateral, and
(v) to the best of each Credit Party's knowledge, no event has occurred, that
alone or together with other events, has had, or could reasonably be expected to
have, a Material Adverse Effect with respect to Borrowers or the Credit Parties
or the Collateral.
3.5 Ownership of Collateral; Liens. Borrowers and Credit Parties (other
than Ganesha) (a) each separately own good, valid and marketable title to or a
valid leasehold interest in, all of its properties and assets, including all of
its Collateral whether personal or real, subject to no transfer restrictions or
Liens of any kind except for Permitted Encumbrances, and (b) is in compliance in
all material respects with each lease to which it is a party or otherwise bound.
None of the Collateral is subject to any Liens other than Permitted
Encumbrances, and there are no facts, circumstances or conditions known to
Borrowers or to Credit Parties that may result in any Liens (including Liens
arising under Environmental Laws or other Applicable Laws) other than Permitted
Encumbrances. Disclosure Schedule 3.5 attached hereto sets forth a list of all
real estate and leases to be owned or held by Borrowers immediately after the
Closing Date. Each Borrower enjoys peaceful and undisturbed possession under all
such leases and such leases are all the leases necessary for the operation of
such properties and assets are valid and subsisting and are in full force and
effect.
3.6 Labor Matters. Except as set forth on Disclosure Schedule 3.6, as of
the Closing Date, (a) no strikes or other material labor disputes against
Borrowers are pending or, to any Borrower's or to any Credit Party's knowledge,
threatened; (b) hours worked by and payment made to employees of Borrowers
comply in all material respects with the Fair Labor Standards Act and other
Applicable Laws; (c) all payments due from Borrowers for employee health and
welfare insurance have been paid or accrued as a liability on the books of
Borrowers; (d) Borrowers are not a party to or bound by any collective
bargaining agreement, management agreement, consulting agreement, employment
agreement, bonus, restricted stock, stock option, or stock appreciation plan or
agreement or any similar plan, agreement or arrangement unless true and complete
copies of any agreements described on Disclosure Schedule 3.6 have been
delivered to Lender; (e) there is no organizing activity involving Borrowers
pending or, to Borrower's or Credit Party's knowledge, threatened by any labor
union or group of employees of Borrowers; (f) except as otherwise disclosed on
Disclosure Schedule 3.6, there are no representation proceedings pending or, to
Borrower's or Credit Party's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of any Borrower
has made a pending demand for recognition; and (g) there are no material
complaints or charges against any Borrower pending or, to the knowledge of
Borrowers or Credit Parties, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any
Borrower of any individual.
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock. Except as
listed on Disclosure Schedule 3.7, the Borrowers and the Credit Parties have no
Subsidiaries. Disclosure Schedule 3.7 states the authorized and issued
capitalization of each Borrower and of each Credit Party (other than Ganesha),
33
the number and class of equity securities and/or ownership, voting or
partnership interests issued and outstanding of each Borrower and each Credit
Party (other than Ganesha) and the record and beneficial owners thereof
(including options, warrants and other rights to acquire any of the foregoing).
The ownership or partnership interests of each Credit Party are not
certificated, the documents relating to such interests do not expressly state
that the interests are governed by Article 8 of the Uniform Commercial Code, and
the interests are not held in a securities account. The outstanding equity
securities and/or ownership, voting or partnership interests of each Borrower
and each Credit Party (other than Ganesha) have been duly authorized and validly
issued and are fully paid and non-assessable, and each Person listed on
Disclosure Schedule 3.7 owns beneficially and of record all the equity
securities and/or ownership, voting or partnership interests it is listed as
owning free and clear of any Liens other than Liens created by the Collateral
Documents. Disclosure Schedule 3.7 also lists the directors, members, managers
and/or partners of each Borrower and each Credit Party (other than Ganesha).
Except as listed on Disclosure Schedule 3.7, no Credit Party (other than
Ganesha) owns an interest in, participates in or engages in any joint venture,
partnership or similar arrangements with any Person. Except as set forth in
Disclosure Schedule 3.7, as of the Closing Date, there are no outstanding rights
to purchase, options, warrants or similar rights or agreements pursuant to which
any Borrower or any Credit Party (other than Ganesha) has issued or may be
required to issue, sell, repurchase or redeem any of its Stock. All outstanding
Indebtedness and Guaranteed Indebtedness of Borrowers and Credit Parties (other
than Ganesha) as of the Closing Date identified in Section 6.3 (Indebtedness) is
described in Disclosure Schedule 6.3.
3.8 Government Regulation. No Borrower is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Borrower is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Loans by Lender to Borrowers, the
application of the proceeds thereof and repayment thereof and the consummation
of the Related Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission or other Applicable Laws binding on Borrowers.
3.9 Margin Regulations. Borrowers are not engaged, nor will they engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" as such
terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect. Borrowers do not own any margin stock, and
none of the proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin stock, for the purpose of reducing or retiring any
Indebtedness that was originally incurred to purchase or carry any stock or for
any other purpose that might cause any of the Loans or other extensions of
credit under this Agreement to be considered a "purpose credit" within the
meaning of Regulations T, U or X of the Federal Reserve Board. Borrowers will
not take or permit to be taken any action that might cause any Loan Document to
violate any regulation of the Federal Reserve Board. Each Credit Party (other
than Ganesha) hereby makes the foregoing representations, warranties and
covenants to Lender set forth in this Section 3.9 (Margin Regulations) with
respect to such Credit Party.
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3.10 Taxes. Except as described in Disclosure Schedule 3.10, all Federal
and other material tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by Borrowers have
been filed with the appropriate Governmental Authority, and all Charges have
been paid prior to the date on which any fine, penalty, interest or late charge
may be added thereto for nonpayment thereof excluding Charges or other amounts
being contested in accordance with Section 5.2(b) (Right to Contest Charges) and
unless the failure to so file or pay would not reasonably be expected to result
in fines, penalties or interest in excess of $100,000 in the aggregate. Proper
and accurate amounts have been withheld by Borrowers for all periods in full and
complete compliance with all applicable federal, state, local and foreign laws
and such withholdings have been timely paid to the respective Governmental
Authorities. Disclosure Schedule 3.10 sets forth as of the Closing Date and the
Closing Date those taxable years for which each Borrower's tax returns are
currently being audited by the IRS or any other applicable Governmental
Authority, and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described in Disclosure
Schedule 3.10, as of the Closing Date, no Borrower has executed or filed with
the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. Borrowers are not liable for any Charges: (a) under
any agreement (including any tax sharing agreements) or (b) to Borrower's and
Credit Party's knowledge, as a transferee. As of the Closing Date, Borrowers
have not agreed or been requested to make any adjustment under IRC Section
481(a), by reason of a change in accounting method or otherwise. Each Credit
Party (other than Ganesha) hereby make the foregoing representations, warranties
and covenants to Lender set forth in this Section 3.10 (Taxes) with respect to
all Charges and tax returns of such Credit Party.
3.11 ERISA.
(a) Disclosure Schedule 3.11 lists, as of the Closing Date, for each
Borrower (i) all ERISA Affiliates and (ii) all Plans and separately identifies
all Pension Plans, including Title IV Plans, Multiemployer Plans, and all
Retiree Welfare Plans. Copies of all such listed Plans have been delivered to
Lender. Except with respect to Multiemployer Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred that would cause
the loss of such qualification or tax-exempt status. Each Plan is in compliance
in all material respects with the applicable provisions of ERISA, the IRC and
its terms, including the timely filing of all reports required under the IRC or
ERISA. Neither any Borrower nor any ERISA Affiliate has failed to make any
material contribution or pay any material amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan. No
"prohibited transaction," as defined in Section 406 of ERISA and Section 4975 of
the IRC, has occurred with respect to any Plan, that would subject any Borrower
to a material tax on prohibited transactions imposed by Section 502(i) of ERISA
or Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule 3.11: (i) no Title IV
Plan has any material Unfunded Pension Liability; (ii) no ERISA Event has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of Borrowers, threatened material claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
35
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) neither any Borrower nor any ERISA Affiliate has incurred or reasonably
expects to incur any material liability as a result of a complete or partial
withdrawal from a Multiemployer Plan; and (v) within the last five years no
Title IV Plan of any Borrower or any ERISA Affiliate has been terminated,
whether or not in a "standard termination" as that term is used in Section 4041
of ERISA, nor has any Title IV Plan of any Borrower or any ERISA Affiliate
(determined at any time within the last five years) with material Unfunded
Pension Liabilities been transferred outside of the "controlled group" (within
the meaning of Section 4001(a)(14( of ERISA) of any Borrower or any ERISA
Affiliate (determined at such time).
3.12 No Litigation. Except as set forth in Disclosure Schedule 3.12, no
Litigation, action, claim, lawsuit, demand, investigation or proceeding is now
pending or, to the knowledge of Borrowers or Credit Parties, threatened against
Borrowers, before any Governmental Authority or before any arbitrator or panel
of arbitrators, (a) that challenges the execution, delivery and performance of
Borrower's or Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
has a reasonable risk of being determined adversely to Borrowers or Credit
Parties and that, if so determined, could reasonably be expected to have a
Material Adverse Effect. Except as set forth on Disclosure Schedule 3.12, as of
the Closing Date there is no Litigation pending or, to Borrower's or Credit
Party's knowledge, threatened, that seeks damages in excess of One Hundred
Thousand Dollars ($100,000) or injunctive relief against, or alleges criminal
misconduct of, Borrowers.
3.13 Brokers. Except as set forth on Disclosure Schedule 3.13, no broker or
finder brought about the obtaining, making or closing of the Loans or the
Related Transactions, and neither Borrowers nor any Affiliates thereof has any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.14 Intellectual Property. As of the Closing Date, Borrowers own or will
own, and have or will have, rights to use all Intellectual Property necessary to
continue to conduct its business as now conducted by it or presently proposed to
be conducted by it, and each Patent, Trademark, registered Copyright and License
is listed, together with application or registration numbers, as applicable, in
Disclosure Schedule 3.14. Borrowers conduct their businesses and affairs without
knowingly infringing or interfering with any Intellectual Property of any other
Person which could reasonably be expected to have a Material Adverse Effect.
Except as set forth in Disclosure Schedule 3.14, neither Borrowers nor Credit
Parties is aware of any material infringement claim by any other Person with
respect to any Intellectual Property.
3.15 Full Disclosure. All representations and warranties made in any of the
Loan Documents by Borrowers or Credit Parties or Guarantors shall be made after
giving full effect to the transactions contemplated in this Agreement. No
information contained in this Agreement, any of the other Loan Documents,
Financial Statements or Collateral Reports or other written reports from time to
time prepared by Borrowers or Credit Parties or Guarantors and delivered
hereunder or any written statement prepared by Borrowers or Credit Parties or
Guarantors and furnished by or on behalf of Borrowers or Credit Parties or
Guarantors to Lender pursuant to the terms of this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
36
materially misleading in light of the circumstances under which they were made.
Projections from time to time delivered hereunder are or will be based upon the
estimates and assumptions stated therein, all of which Borrowers and Credit
Parties (other than Ganesha) and Guarantors (other than Ganesha), as applicable,
believed at the time of delivery to be reasonable and fair in light of current
conditions and current facts known to Borrowers and Credit Parties (other than
Ganesha) and Guarantors (other than Ganesha), as applicable, as of such delivery
date, and reflect Borrower's and Credit Party's (other than Ganesha's) and
Guarantor's (other than Ganesha's) good faith and reasonable estimates of the
future financial performance of Borrowers and of the other information projected
therein for the period set forth therein. The Liens granted to Lender pursuant
to the Collateral Documents will at all times be fully perfected first priority
Liens in and to the Collateral described therein, subject, as to priority, only
to Permitted Encumbrances.
3.16 Environmental Matters. Each Borrower and each Credit Party (other than
Ganesha) and each Guarantor represent and warrant to Lender as follows:
(a) Except as set forth in Disclosure Schedule 3.16, as of the date
hereof, no Borrower and no Credit Party and no Guarantor knows of any Hazardous
Material which is present, used, manufactured, handled, generated, transported,
stored, treated, discharged, released, buried or disposed of on, in, under or
about any Property in violation of applicable Environmental Laws;
(b) To the best of each Borrower's and each Credit Party's and each
Guarantor's knowledge, following diligent inquiry, there has not been any use,
generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Material by any prior owners of prior occupants of any
Property or by any third parties on, in, under or about any Property;
(c) As of the date hereof there is no pending or, to each Borrower's
and each Credit Party's and each Guarantor's knowledge, threatened litigation or
proceedings before any administrative agency in which any person or entity
alleges the release, threat of release, placement on, under or about any
Property by any Borrower or any Credit Party or any Guarantor, or the
manufacture, handling, generation, transportation, storage, treatment,
discharge, burial or disposal on, in, under or about any Property by any
Borrower or any Credit Party or any Guarantor, or the transportation to or from
any Property by any Borrower or any Credit Party or any Guarantor, of any
Hazardous Material, in violation of Environmental Laws;
(d) As of the date hereof, no Borrower and no Credit Party and no
Guarantor has received any notice and no Borrower and no Credit Party and no
Guarantor has any actual knowledge that any Governmental Authority or any
employee or agent thereof been determined, or threatens to determine, that there
is a presence, release, threat of release, placement on, in, under or about any
Property caused by any Borrower or by any Credit Party or by any Guarantor, or
the manufacture, handling, generation, transportation, storage, treatment,
discharge, burial or disposal on, in, under or about any Property caused by any
Borrower or any Credit Party or any Guarantor, or the transportation to or from
any Property by any Borrower or any Credit Party or any Guarantor, of any
Hazardous Material, in violation of Environmental Laws; and
37
(e) To each Borrower's and each Credit Party's and each Guarantor's
knowledge, there have been no communications or agreements with any Governmental
Authority or any private entity indicating that there has occurred, a release,
threat of release, placement on, in, under or about any Property by any Borrower
or any Credit Party or any Guarantor, or the manufacture, handling, generation,
transportation, storage, treatment, discharge, burial or disposal on, in, under
or about any Property by any Borrower or any Credit Party or any Guarantor, or
the transportation to or from any Property by any Borrower or by any Credit
Party or by any Guarantor, of any Hazardous Material in violation of any
Environmental Laws.
3.17 Insurance. Disclosure Schedule 3.17 lists all insurance policies of
any nature maintained, as of the Closing Date, for current occurrences by
Borrowers, as well as a brief description thereof; and a copy of each current
certificate of insurance naming Lender as an additional co-insured.
3.18 Deposit and Disbursement Accounts. Disclosure Schedule 3.18 lists all
banks and other financial institutions at which Borrowers maintain or will
maintain deposit, commodities, investment or other accounts as of each of the
Closing Date, including any Disbursement Accounts, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number therefor. Disclosure Schedule 3.18 shall identify
which deposit accounts of each entity are used to receive Governmental Authority
payments.
3.19 Vendor Relations. As of the Closing Date, there exists no actual or,
to the knowledge of Borrowers or Credit Parties or Guarantors, threatened
termination or cancellation of, or any material adverse modification or change
in the business relationship of Borrowers with any supplier essential to its
operations.
3.20 Bonding; Licenses; Permits. Except as set forth on Disclosure Schedule
3.20, as of the Closing Date, no Borrower is a party to or bound by any surety
bond agreement or bonding requirement with respect to products or services sold
by it or any trademark or patent license agreement with respect to products sold
by it. Disclosure Schedule 3.20 list each permit each Borrower is required to
obtain and maintain in order to conduct its respective Business in its
respective Hospital Facility.
3.21 Solvency. Both before and after giving effect to (a) the Loans to be
made or incurred on the Closing Date or such other date as Advances are made or
incurred, (b) the disbursement of the proceeds of such Advances pursuant to the
instructions of Borrower's Representative; (c) the consummation of the other
Related Transactions; and (d) the payment and accrual of all transaction costs
in connection with the foregoing, Borrowers are each and will be Solvent.
4. FINANCIAL STATEMENTS AND INFORMATION
------------------------------------
4.1 Reports and Notices.
(a) Lender have received from Borrowers and Credit Parties (other than
Ganesha), and have approved, certain Financial Statements and Projections of
Borrowers and the Credit Parties (other than Ganesha). Borrowers hereby agree
38
that they shall, between the Closing Date and the Termination Date, deliver to
Lender updated Financial Statements and Projections (and, if requested by
Lender, components thereof or statistical information related thereto not later
than the 30th calendar day following expiration of each Fiscal Quarter to the
address of Lender set forth in Annex D (Notice Addresses). Further, Lender shall
have the right but not the obligation to require Borrowers to deliver updated
Financial Statements and Projections (with all requested additional information)
to Lender on a monthly basis, in Lender's sole discretion.
(b) Borrowers hereby agree that, from and after the Closing Date and
until the Termination Date, they shall deliver to Lender, the various Collateral
Reports and other reports at the times, to the Persons and in the manner set
forth in Annex D (Notice Addresses) including all certifications required with
respect to Certified Cash balances.
4.2 Communication with Accountants. Borrowers and Credit Parties authorize
Lender to communicate and/or meet directly with all independent certified public
accountants of Borrowers, and Borrowers shall authorize and shall instruct those
accountants to communicate and/or meet with Lender with regard to any and all
financial statements and supporting financial documentation relating to
Borrowers with respect to the business, results of operations and financial
condition of Borrowers. Prior to communicating with the independent public
accounts of Borrowers, Lender shall deliver a reasonable advance written notice
to Borrowers stating the purpose and scope of the communication and/or meeting.
5. AFFIRMATIVE COVENANTS
---------------------
To induce Lender to make the Loans, Borrowers and Credit Parties and
Guarantors, as applicable, make the following affirmative covenants in favor of
Lender, each of which shall survive the execution and delivery of this
Agreement.
5.1 Maintenance of Existence and Conduct of Business. Borrowers and Credit
Parties and Guarantors shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate and/or limited
liability company existence and its material rights; continue to conduct its
business substantially as conducted prior to the Closing Date, anticipated to be
conducted, or as otherwise permitted hereunder; at all times maintain, preserve
and protect all of their assets and properties necessary to the conduct of its
business, and keep the same in good repair, working order and condition in all
material respects (taking into consideration ordinary wear and tear) and from
time to time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices.
5.2 Payment of Charges.
(a) Obligation to Pay Charges. Subject to Section 5.2(b) (Right to
Contest Charges), Borrowers shall pay and discharge or cause to be paid and
discharged promptly all Charges payable by them, including (i) Charges imposed
upon them, their income and profits, or any of their property (real, personal or
mixed) and all Charges with respect to Taxes, social security and unemployment
withholding with respect to their employees, (ii) lawful claims for labor,
materials, supplies and services or otherwise, and (iii) all storage or rental
charges payable to warehousemen or bailees in possession of any Collateral, in
each case, before any thereof shall become past due, except in the case of
clauses (ii) and (iii) where the failure to pay or discharge such Charges would
not result in aggregate liabilities in excess of $100,000.
39
(b) Right to Contest Charges. Borrowers may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges, Taxes or claims
described in Section 5.2(a) (Obligation to Pay Charges); provided, that (i)
adequate reserves with respect to such contest are maintained on the books of
Borrowers, in accordance with GAAP; (ii) no Lien shall be imposed to secure
payment of such Charges (other than payments to warehousemen and/or bailees)
that is superior to any of the Liens securing the Obligations and such contest
is maintained and prosecuted continuously and with diligence and operates to
suspend collection or enforcement of such Charges; (iii) none of the Collateral
becomes subject to forfeiture or loss as a result of such contest; and (iv)
Borrowers shall promptly pay or discharge such contested Charges, Taxes or
claims and all additional charges, interest, penalties and expenses, if any, and
shall deliver to Lender evidence reasonably acceptable to Lender of such
compliance, payment or discharge, if such contest is terminated or discontinued
adversely to Borrowers or the conditions set forth in this Section 5.2(b) (Right
to Contest Charges) are no longer met.
5.3 Books and Records. Borrowers shall keep adequate books and records with
respect to their business activities in which proper entries, reflecting all
financial transactions, are made in accordance with GAAP (except as otherwise
disclosed on the Financial Statements).
5.4 Insurance; Damage to or Destruction of Collateral.
(a) Insurance. Borrowers shall, in Disclosure Schedule 3.17, list all
existing policies of insurance that they carry and maintain, along with the
names and contact information for each existing insurance carrier, which
policies and carriers shall be subject to the prior written consent of Lender,
which consent shall not be unreasonably withheld. If Lender fails or refuses to
approve Borrower's existing policies of insurance or existing insurance
carriers, then Borrowers agrees to increase or change its insurance coverage or
change its insurance carrier as required by Lender, and the same shall be listed
in Disclosure Schedule 3.17. Thereafter, Borrowers shall, at its sole cost and
expense, maintain the policies of insurance described on Disclosure Schedule
3.17 as approved by Lender or may obtain and maintain other policies of
insurance in form and amounts and with insurers reasonably acceptable to Lender.
All policies of insurance (or the loss payable and additional insured
endorsements delivered to Lender) that relate to coverage involving the
Collateral shall contain provisions pursuant to which the insurer agrees to
provide thirty (30) days prior written notice to Lender in the event of any
non-renewal, cancellation or amendment of any such insurance policy. If
Borrowers at any time or times hereafter shall fail to obtain or maintain any of
the policies of insurance required above, or to pay all premiums relating
thereto, Lender may at any time or times thereafter obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto that Lender deems advisable. Lender shall have no obligation to
obtain insurance for Borrowers or pay any premiums therefor. By doing so, Lender
shall not be deemed to have waived any Default or Event of Default arising from
Borrower's failure to maintain such insurance or pay any premiums therefore. All
sums so disbursed, including reasonable attorneys' fees, court costs and other
charges related thereto, shall be charged as an Advance against the $35,000,000
Non-Revolving Line of Credit Loan, or shall be payable on demand by Borrowers to
Lender and shall be additional Obligations hereunder secured by the Collateral,
and shall bear interest at the Default Rate until paid in full to Lender.
40
(b) Lender's Insurance Rights. Upon any change in Borrower's insurance
risk profile (as determined by Borrower's insurance broker or as reasonably
determined by Lender pursuant to and based upon generally recognized insurance
underwriting standards (including changes caused by changes in laws affecting
the potential liability of a Borrowers), Lender reserves the right to require
additional forms and limits of insurance to, in Lender's reasonable opinion,
adequately protect Lender's interests and Lien in all or any portion of the
Collateral and to ensure that Borrowers are protected by insurance in amounts
and with coverage customary for its industry. If reasonably requested by Lender,
Borrowers shall to deliver to Lender from time to time a report of a reputable
insurance broker, reasonably satisfactory to Lender, with respect to its
insurance policies.
(c) Endorsements. Borrowers shall deliver to Lender, in form and
substance reasonably satisfactory to Lender, endorsements to all general
liability and other liability policies naming Lender as an additional insured.
Borrowers shall irrevocably make, constitute and appoint Lender (and all
officers, employees of Lender designated by Lender), so long as any Default or
Event of Default has occurred and is continuing, as each Borrower's true and
lawful agent and attorney-in-fact for the purpose of making, settling and
adjusting claims under all policies of insurance relating to coverage of the
Collateral, endorsing the name of Borrowers on any check or other item of
payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance. Lender
shall have no duty to exercise any rights or powers granted to it pursuant to
the foregoing power-of-attorney. Borrower's Representative shall promptly notify
Lender of any loss, damage, or destruction to the Collateral in the amount of
$100,000 or more, whether or not covered by insurance. After deducting from such
proceeds (i) the expenses incurred by Lender in the collection or handling
thereof, and (ii) amounts required to be paid to creditors (other than Lender)
having Permitted Encumbrances, Lender may, at its option, apply such proceeds to
the reduction of the Obligations in accordance with Section 1.3(c) (Application
of Prepayments). Notwithstanding the foregoing, if the casualty giving rise to
such insurance proceeds could not reasonably be expected to have a Material
Adverse Effect, Lender shall permit Borrowers to replace, restore, repair or
rebuild the property.
5.5 Compliance with Applicable Laws. Borrowers shall comply in all material
respects with all federal, state, local and foreign laws and regulations
applicable to it, including those relating to ERISA, labor laws, Environmental
Laws and Environmental Permits.
5.6 Supplemental Disclosure. At Closing, and thereafter from time to time
as may be reasonably requested by Lender, Borrowers shall supplement and update
each Disclosure Schedule attached to this Agreement, or any representation
herein or in any other Loan Document, with respect to any matter hereafter
arising that, if existing or occurring at the date of this Agreement, would have
been required to be set forth or described in such Disclosure Schedule or as an
exception to such representation or that is necessary to correct any information
in such Disclosure Schedule or representation which has been rendered inaccurate
thereby (and, in the case of any supplements or updates to any Disclosure
Schedule, such Disclosure Schedule shall be appropriately marked to show the
changes made therein); provided that (a) no such supplement or update to any
41
such Disclosure Schedule or representation shall amend, supplement or otherwise
modify any Disclosure Schedule or representation, or be deemed a waiver of any
Default or Event of Default resulting from the matters disclosed therein, except
as consented to by Lender in writing, and (b) no supplement or update shall be
required or permitted as to representations and warranties that expressly relate
only to the Closing Date (except as set forth in the introduction to Section 3
(Representations and Warranties) for purposes of representations and warranties
made as of the Closing Date). If any Borrower has a material "commercial tort
claim" (as defined in the Code), it shall promptly notify Lender in writing of
the existence thereof.
5.7 Intellectual Property. Borrowers and Credit Parties will conduct their
business and affairs without material infringement of or material interference
with any Intellectual Property of any other Person.
5.8 Environmental Matters. Each Borrower and each Credit Party (other than
Ganesha) shall (a) comply with and use commercially reasonable efforts to cause
each Borrower and its employees, agents and representatives at any Property to
comply with all Environmental Laws; (b) without limiting the generality of
clause (a) above, not engage in, permit or acquiesce in to any Hazardous
Material Activity on, under or about any Property, except in strict accordance
with all Environmental Laws, and with then prudent business practices as
determined by said Borrower or Credit Party; (c) immediately advise Lender in
writing of (i) the receipt by any Borrower or any Credit Party of written notice
of any and all Hazardous Material Claims, (ii) any knowledge by any Borrower or
any Credit Party that any Property does not comply with any Environmental Laws,
(iii) any remedial action taken by any Borrower or any Credit Party or any other
Person in response to any Hazardous Materials or Hazardous Materials Activity
on, under or about any Property, or to any Hazardous Material Claims, and (iv)
any Borrower's or any Credit Party's discovery of the presence of any Hazardous
Materials or Hazardous Material Activity on, in, under or about any Property or
any real property immediately adjacent to any Property whether or not the same
requires notice to be given to any governmental entity or agency under
Environmental Laws; and (d) submit to Lender, promptly upon receipt or
preparation, copies of any and all reports, studies, analyses, correspondence,
governmental comments or approvals, proposed removal or other remedial work
contracts and similar information prepared or received by any Borrower or any
Credit Party in connection with any remedial work or Hazardous Materials
relating to any Property. If Lender at any time has a reasonable basis to
believe that there may be a violation of any Environmental Laws or Environmental
Permits by any Borrower or any Credit Party (other than Ganesha) or any
Environmental Liability of any Borrower or any Credit Party (other than Ganesha)
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any Property or any of their other real estate, that,
in each case, could reasonably be expected to have a Material Adverse Effect,
then such Borrower and/or Credit Party (other than Ganesha) shall, upon Lender's
written request (i) cause the performance of such environmental investigations
including subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at such Borrower's or such Credit Party's expense, as
Lender may from time to time reasonably request, which shall be conducted by
reputable environmental consulting firms reasonably acceptable to Lender and
shall be in form and substance reasonably acceptable to Lender, and (ii) if such
Borrower or Credit Party shall not have timely performed such environmental
investigations, permit Lender or its representatives to have access to all real
42
estate for the purpose of conducting such environmental investigations and
testing as Lender reasonably deems appropriate, including subsurface sampling of
soil and groundwater. Each Borrower and Credit Party (other than Ganesha) shall
reimburse Lender for the costs of such investigations and the same will
constitute a part of the Obligations secured hereunder.
5.9 Landlord Agreements. With respect to any location where any material
amount of Collateral is stored or located, Lender may require Borrowers to
provide a reasonable landlord or mortgagee agreement or bailee letter as a
condition to the continued storage of the Collateral at such location(s).
Borrowers shall timely and fully pay and perform all obligations under all
leases and other agreements with respect to each leased location or public
warehouse where any Collateral is or may be located.
5.10 Further Assurances. Borrowers and Credit Parties each agree that it
shall, at Borrower's or Credit Party's expense and upon the reasonable request
of Lender, duly execute and deliver, or cause to be duly executed and delivered,
to Lender such further instruments and do and cause to be done such further acts
as may be necessary or proper in the reasonable opinion of Lender to carry out
more effectively the provisions and purposes of this Agreement and each Loan
Document.
5.11 Qualified Cash. Borrowers shall deposit all net cash proceeds of
Collateral as Qualified Cash in a Qualified Cash Account subject to the right of
Borrowers to withdraw such cash proceeds. From and during the continuance of an
Event of Default, Lender may exercise all rights under the applicable Control
Agreements relating to any Qualified Cash, including the right to deliver
applicable control exercise notices to each applicable Bank and securities
intermediary and cause all such Qualified Cash to be forwarded immediately to a
collection account designated by Lender through daily sweeps (or as otherwise
directed by Lender).
5.12 Operation of Business. Borrowers shall have and maintain at all times
from the Closing Date until the Obligations have been paid in full, sufficient
approvals, consents, and permits from all necessary Governmental Authorities to
fully operate the Business in accordance with Applicable Laws. Borrowers shall
use their best efforts and use appropriate diligence to secure all approvals,
consents and permits as and when required by Applicable Laws to fully operate
the Business.
5.13 After-Acquired Property; Acquisition of other Real Property Interests.
In the event from time to time Borrower acquires any fee interest in any real
property or improvements or any master leasehold interest or ground leasehold
interest in any real property or improvements, then Borrowers agrees to promptly
notify Lender in writing at least ten (10) Business Days prior to such
acquisition and to execute, acknowledge and deliver to Lender at least five (5)
Business Days prior to such acquisition a deed of trust or mortgage for
recordation on said other real property or improvements, as a first lien or
encumbrance on Borrower's fee interest or, if applicable, on Borrower's interest
in a master lease or ground lease. Each such deed of trust or mortgage shall
secure repayment of the Obligations, including but not limited to repayment of
the Loans. All reasonable expenditures incurred by Lender in performing this
paragraph shall be additional Obligations payable upon demand and delivery of
reasonable backup documentation, and shall bear interest at the Default Interest
Rate from the date of demand for payment until paid in full.
43
5.14 Observer Status on Borrower's Board of Directors. Until the Loan is
paid in full and satisfied, Borrowers each hereby grant Lender non-voting
observer status with respect to all meetings of their respective boards of
directors (and committees thereof) and all meetings of their shareholders (and
committees thereof), excluding meetings (or portions thereof) held in executive
session called in good faith and that relate matters not in Borrower's ordinary
course of business. Concurrently with delivery of all notices of meetings and
agendas to its directors and shareholders, Borrowers agree to and shall deliver
a copy of each such notice and agenda to Lender.
5.15 Independent Directors. Until the Loan is paid in full and satisfied,
Independent Directors shall at all times constitute a majority of the directors
serving as members of IHHI's board of directors. Notwithstanding the foregoing,
if as of the Closing Date, Independent Directors do not constitute a majority of
the directors serving as members of IHHI's board of directors, then (a) within
thirty (30) calendar days following the Closing Date, IHHI shall deliver to
Lender a written statement identifying at least two (2) new Independent
Directors (with contact and biographical information included) who have been
approached by IHHI and who have agreed to serve as members of IHHI's board of
directors, if nominated and elected or if appointed; and (b) not later than
ninety (90) calendar days following the Closing Date, Independent Directors
shall at all times thereafter constitute a majority of the directors serving as
members of IHHI's board of directors.
6. NEGATIVE COVENANTS
------------------
To induce Lender to make the Loans, Borrowers and Credit Parties, as
applicable, make the following negative covenants in favor of Lender, each of
which shall survive the execution and delivery of this Agreement.
6.1 Mergers, Subsidiaries, Etc. Borrowers shall not, directly or
indirectly, by operation of law or otherwise, (i) form or acquire any Subsidiary
in addition to the existing Subsidiaries of Borrowers; or (ii) merge with,
consolidate with, acquire all or substantially all of the assets or Stock of, or
otherwise combine with or acquire, any Person, without first receiving the prior
written consent of Lender.
6.2 Investments; Line of Credit Loan and Advances. Borrowers shall not make
or permit to exist any investment in, or make, accrue or permit to exist loans
or advances of money to, any Person, through the direct or indirect lending of
money, holding of securities or otherwise, except that: (a) Borrowers may hold
investments constituting notes payable, or stock or other securities issued to
Borrowers pursuant to negotiated agreements with respect to settlement of such
issuer's accounts in the ordinary course of business consistent with past
practices; (b) Borrowers may invest Qualified Cash in Qualified Cash Accounts
(i) as of the Closing Date in the kinds and types of investments that they are
then so invested, and (ii) thereafter, as to any new investments made after the
Closing Date in other kinds and types of investments as are in conformity with
Borrower's investment policies previously adopted by its board of directors or
managers so long as Lender's Liens remain perfected therein, and (c) Borrowers
may invest cash and cash equivalents (other than Qualified Cash in the Qualified
Cash Accounts) (i) as of the Closing Date in the kinds and types of investments
that they are then so invested, and (ii) thereafter, as to any new investments
made after the Closing Date in other kinds and types of investments as are in
conformity with Borrower's investment policies previously adopted by its board
of directors.
44
6.3 Indebtedness.
(a) Borrowers shall not create, incur or assume any Indebtedness,
except (without duplication) (i) Indebtedness created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures or other capital assets acquired by Borrowers in the ordinary course of
business; (ii) the Loans and the other Obligations; (iii) unsecured Indebtedness
(other than Funded Debt) incurred in the ordinary course of Borrower's business;
(iv) Indebtedness created after the date hereof for financing of insurance
premiums; and (v) existing Indebtedness, if any, described in Disclosure
Schedule 6.3.
(b) Borrowers shall not, directly or indirectly, voluntarily purchase,
redeem, defease or prepay any principal of, premium, if any, interest or other
amount payable in respect of any Funded Debt prior to its scheduled due date,
other than the Obligations.
6.4 Employee Loans and Affiliate Transactions. Except as set forth in
Disclosure Schedule 6.4, no Borrower has entered into any transaction with any
of its Affiliates or with any of its employees. Borrowers shall not enter into
or be a party to any transaction with any Affiliate thereof except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms that are no less favorable to
Borrowers than would be obtained in a comparable arm's length transaction with a
Person not an Affiliate of Borrowers. Borrowers shall not enter into any lending
or borrowing transaction with any employees of Borrowers, except loans to its
respective employees in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs, pension plan
advances, and similar purposes.
6.5 Capital Structure and Business. No Borrower or Credit Party (other than
Ganesha) shall amend its charter, articles, bylaws or operating agreement
without first receiving the prior written consent of Lender. No Borrower or
Credit Party (other than Ganesha) shall engage in any business other than the
businesses currently engaged in by it, without first receiving the prior written
consent of Lender.
6.6 Guaranteed Indebtedness. Borrowers shall not create, incur, or assume
any Guaranteed Indebtedness unless such Guaranteed Indebtedness would be
permitted to be incurred directly by Borrowers pursuant to Section 6.3
(Indebtedness).
6.7 Liens. Except as set forth in Disclosure Schedule 6.7, no Borrower is
subject to any existing Liens (excluding Lender's Liens). Borrowers shall not
create, incur, assume or permit to exist any Lien on or with respect to any of
the Collateral (whether now owned or hereafter acquired) except for Permitted
Encumbrances.
6.8 Sale of Collateral and Intellectual Property. Borrowers shall not sell,
transfer, convey, assign, license or otherwise dispose of any interest in
Collateral, other than in the ordinary course of business, with an aggregate
value in excess of $100,000. Borrowers shall not sell, transfer, convey, assign,
license or otherwise dispose of any interest in Intellectual Property.
45
6.9 ERISA. Borrowers shall not cause or permit any ERISA Affiliate to,
cause or permit to occur (a) an event that could result in the imposition of a
Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or (b) an
ERISA Event to the extent such ERISA Event would reasonably be expected to
result in taxes, penalties and other liabilities in an aggregate amount in
excess of $100,000 in the aggregate.
6.10 Hazardous Materials. Borrowers shall not cause or permit a Release of
any Hazardous Material on, at, in, under, above, to, from or about any real
property owned or leased by Borrowers where such Release would (a) violate in
any respect, or form the basis for any Environmental Liabilities under, any
Environmental Laws or Environmental Permits or (b) otherwise adversely impact
the value or marketability of any real property owned or leased by Borrowers or
any of the Collateral, other than such violations or Environmental Liabilities
that could not reasonably be expected to have a Material Adverse Effect.
6.11 Restricted Payments. During the term of this Agreement, Borrowers
shall not make any Restricted Payment, except (a) employee loans permitted under
Section 6.4 (Employee Loans and Affiliate Transactions), (b) so long as no Event
of Default shall have occurred and is continuing, dividends and distributions by
Borrowers to its Shareholders or partners or members, and (c) ordinary course
payments to Borrowers and/or to Credit Parties for services rendered to the
Business.
6.12 Change of Corporate Name, State of Organization or Location; Change of
Fiscal Year. No Borrower and no Credit Party and no Guarantor shall (a) change
its name as it appears in official filings in the state of its incorporation or
organization, (b) change its chief executive office, principal place of
business, corporate offices or locations at which Collateral is held or stored,
or the location of their records concerning the Collateral, (c) change the type
of entity that it is, (d) change its organization identification numbers issued
by its state of its incorporation or organization, or (e) change its state of
incorporation or organization or incorporate or organize in any additional
jurisdictions, in each case without at least ten (10) Business Days prior
written notice to Lender and provided that Borrowers and Credit Parties and
Guarantors shall have taken such actions and executed such documents as Lender
reasonably requests in connection therewith to continue the perfection of any
Liens in favor of Lender in any Collateral, and provided further that, any
change to such Borrowers or such Credit Party's or such Guarantor's jurisdiction
or state of incorporation or organization, such new jurisdiction or state of
incorporation or organization shall be located in the United States. Borrowers
shall not change their Fiscal Year without giving Lender at least thirty (30)
calendar days prior written notice thereof.
6.13 No Impairment of Intercompany Transfers. Borrowers shall not directly
or indirectly enter into or become bound by any agreement, instrument, indenture
or other obligation (other than this Agreement and the other Loan Documents)
that could directly or indirectly restrict, prohibit or require the consent of
any Person with respect to the payment of dividends or distributions.
6.14 Dividends; Redemptions. No Borrower shall (a) declare, pay or make any
dividend or Distribution on any shares of capital stock or other securities or
interests, (b) apply any of its funds, property or assets to the acquisition,
redemption or other retirement of any capital stock or other securities or
interests or of any options to purchase or acquire any of the foregoing, (c)
46
otherwise make any payments or distributions to any shareholder, member, partner
or other equity owner in such Person's capacity as such, or (d) make any payment
of any management or service fee; provided, however, that absent the occurrence
and continuation of a Default of Event of Default, and if a Default or Event of
Default would not arise therefrom, (i) each Borrower may declare, pay or make
dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock; and (ii) each Borrower may redeem its capital
stock from terminated employees pursuant to, but only to the extent required
under, the terms of the related employment agreements.
6.15 Dr. Shah. Until the Loan is paid in full and satisfied, Borrowers will
not, directly or indirectly, permit Dr. Shah to be nominated, or elected, or
appointed, or directly or indirectly compensated, paid, engaged, retained or
become, an officer, or director, or employee, or manager, or supervisor, or
consultant, or agent, or representative of, IHHI, WMC-A, WMC-SA, Coastal or
Chapman.
6.16 Shareholder Blocking Rights. No Borrower shall issue any Stock that
grants or provides any direct or indirect owner thereof any Shareholder Blocking
Rights.
7. TERM
----
7.1 Termination. The financing arrangements contemplated hereby shall be in
effect until the earlier of the date when the Loans and other Obligations have
been paid in full and satisfied or the Maturity Date, and the Loans and all
other Obligations shall be automatically due and payable in full on such date
without demand by Lender.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of Borrowers or Credit Parties or the rights of Lender relating
to any unpaid portion of the Loans or any other Obligations, due or not due,
liquidated, contingent or unliquidated, or any transaction or event occurring
prior to such termination, or any transaction or event, the performance of which
is required after the Maturity Date. Except as otherwise expressly provided
herein or in any other Loan Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon Borrowers and Credit Parties,
and all rights of Lender, all as contained in the Loan Documents, shall not
terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that the provisions of Section 11 (Miscellaneous), the payment
obligations under Section 1 (Amount and Terms of Credit Facilities), and the
indemnities contained in the Loan Documents shall survive the Maturity Date.
8. EVENTS OF DEFAULT; REMEDIES
---------------------------
8.1 Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an Event of Default
hereunder:
47
(a) Any Borrower fails to make any payment of interest or of principal
on any Loan within five (5) calendar days after the same is due and payable, or
any Borrower fails to make payment of any Unused Commitment Fee within five (5)
calendar days after the same is due and payable, provided, that if any Borrower
fails to make any payment within such five (5) calendar day period, interest at
the Default Rate shall accrue from the due date for such payment on all
Obligations and all Loans.
(b) Borrowers fail to pay or reimburse Lender for any costs or
expenses reimbursable under this Agreement or under any other Loan Document, or
Borrowers fail to make payment of any Obligations (not specifically referenced
in any other subsection of this Section 8.1) within ten (10) calendar days
following Lender's demand for such reimbursement or payment thereof; provided,
that if any Borrower fails to pay such amount within said ten (10) calendar day
period, interest at the Default Rate shall accrue from the due date for such
payment on all Obligations and on all Loans.
(c) Borrowers or Credit Parties fail or neglect to perform, keep or
observe any provision of this Agreement (not specifically referenced in any
other subsection of this Section 8.1) applicable to them and the same shall
remain unremedied for ten (10) Business Days or more after the earlier of (i)
Borrower's or Credit Party's actual knowledge thereof, or (ii) Borrower's or
Credit Party's receipt of notice thereof from Lender.
(d) Borrowers fail or neglect to perform, keep or observe any of the
provisions of Section 4.1 (Reports and Notices) or any provisions set forth in
Annex B (Cash Management System) or Annex C (Collateral Reports), respectively,
and the same shall remain unremedied in whole or in part for thirty (30)
calendar days or more after the earlier of (i) said Borrower's actual knowledge
thereof, or (ii) said Borrower's receipt of notice thereof from Lender.
(e) Borrowers deliver a supplement or update to any Disclosure
Schedule as required by Section 5.6 (Supplemental Disclosures) and Lender fails
to approve of the same because such supplement or update (i) discloses the
existence of an Event of Default, or (ii) discloses a Material Adverse Effect,
or (iii) discloses any fact or circumstance which, with the passage of time or
otherwise, would constitute an Event of Default or Material Adverse Effect.
(f) Borrowers or Credit Parties or Guarantors fail or neglect to
timely perform, keep or observe any other provision of any of the Loan Documents
required to be performed by it and the same shall remain unremedied in whole or
in part for ten (10) Business Days after receipt of notice thereof from Lender.
(g) Any Guarantor fails or neglects to timely perform, keep or observe
any provision of the Guaranty Agreement and the same shall remain unremedied in
whole or in part for ten (10) Business Days after receipt of notice thereof from
Lender.
(h) Any Borrower fails to make any payment of interest or of principal
due under the $50,000,000 Revolving Facility and/or $50,000,000 Note within five
(5) calendar days after the same is due and payable, provided, that if any
Borrower fails to make any such payment under the $50,000,000 Revolving Facility
within such five (5) calendar day period, interest at the Default Rate shall
accrue from the due date for such payment on all Obligations and all Loans under
this Agreement.
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(i) Any Borrower fails or neglects to perform, keep or observe any
provision of the $50,000,000 Revolving Facility, the $50,000,000 Revolving
Credit Agreement and/or any other documents or instruments executed or delivered
in connection with the foregoing (not specifically referenced in any other
subsection of this Section 8.1) and the same shall remain unremedied for five
(5) Business Days or more after the earlier of (i) Borrower's actual knowledge
thereof, or (ii) Borrower's receipt of notice thereof from Lender under said
$50,000,000 Revolving Facility and/or $50,000,000 Revolving Credit Agreement.
(j) (i) A default or breach occurs under any other agreement, document
or instrument to which any Borrower or any Credit Party is or are a party that
is not cured within any applicable grace period therefore, such default or
breach is not waived in writing by Lender, and such default or breach involves
the failure to make any payment when due in respect of any Indebtedness or
Guaranteed Indebtedness (other than the Obligations) of Borrowers or Credit
Parties in an amount in excess of $100,000; or (ii) an event, condition or
circumstance occurs that causes, or permits any holder of Indebtedness or
Guaranteed Indebtedness or a trustee to cause, Indebtedness or Guaranteed
Indebtedness or a portion thereof to become due prior to its stated maturity or
prior to its regularly scheduled dates of payment, or the holder of such
Indebtedness or Guaranteed Indebtedness or such trustee has the right to demand
cash collateral in respect of such Indebtedness or Guaranteed Indebtedness, in
each case, regardless of whether such right is exercised, by such holder or
trustee.
(k) Any representation or warranty herein or in any Loan Document or
in any written statement, report, Financial Statement or certificate made or
delivered to Lender by Borrowers or Credit Parties is untrue or incorrect in any
material respect as of the date when made or deemed made.
(l) Assets of Borrowers or Credit Parties with a fair market value of
$100,000 or more are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or general assignee for the benefit of creditors of Borrowers or
Credit Parties and such condition continues for thirty (30) calendar days or
more.
(m) A case or proceeding is commenced against any Borrower or any
Credit Party seeking a decree or order in respect of said Borrower or Credit
Party (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 said
Borrower or Credit Party or for any substantial part of said Borrower's or
Credit Party's assets, or (iii) ordering the winding-up or liquidation of the
affairs of any Borrower or Credit Party, and such case or proceeding shall
remain undismissed or unstayed for sixty (60) calendar 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.
(n) Any Borrower or any Credit Party (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
49
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 Credit Party or for any substantial part of such
Borrower's or Credit Party'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.
(o) A final judgment or judgments for the payment of money in excess
of $100,000 in the aggregate at any time are outstanding against Borrowers or
Credit Parties (which judgments are not covered by insurance policies as to
which liability has been accepted in writing by the insurance carrier), and the
same is/are not, within thirty (30) calendar days after the entry thereof,
discharged or execution thereof stayed or bonded pending appeal, or such
judgments are not discharged prior to the expiration of any such stay.
(p) Any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (or any
Borrower or any Credit Party or any Guarantor shall challenge the enforceability
of any Loan Document or shall assert in writing, or engage in any action or
inaction based on any such assertion, that any provision of any of the Loan
Documents has ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms), or any Lien created under any Loan Document ceases
to be a valid and perfected first priority Lien (except as otherwise permitted
herein or therein) in any of the Collateral purported to be covered thereby.
(q) Any Change of Control occurs.
(r) A Material Adverse Effect shall exist as determined in the
reasonable judgment of Lender.
(s) Any Borrower fails or refuses, more than once during any
consecutive twelve (12) month period, for any reason, to grant Lender non-voting
observer status with respect to all meetings of its board of directors and all
meetings of its shareholders.
(t) Any Borrower fails or refuses, more than once during any
consecutive twelve (12) month period, for any reason to deliver to Lender,
concurrently with delivery to all shareholders, a notice and agenda of each
annual meeting, special meeting or emergency meeting of shareholders.
(u) Any Borrower fails or refuses, more than once during any
consecutive twelve (12) month period, for any reason to deliver to Lender,
concurrently with delivery to all directors, a notice and agenda of each annual
meeting, regular meeting, special meeting or emergency meeting of directors.
(v) More than once during any consecutive twelve (12) month period,
the directors or shareholders of any Borrower waive notice of a directors
meeting and fail to deliver advance notice to Lender of said waiver of directors
meeting.
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(w) More than once during any consecutive twelve (12) month period,
the directors or shareholders of any Borrower take any action without a meeting,
which action was required or permitted to be taken at a meeting, and fail to
deliver advance notice of the taking of said action to Lender.
(x) More than once during any consecutive twelve (12) month period,
the directors or shareholders of any Borrower hold a meeting by written
consensus and fail to deliver advance notice of said meeting by consensus to
Lender.
(y) Dr. Shah at any time is nominated, or elected, or appointed, or
directly or indirectly is compensated, paid, engaged, retained or becomes, an
officer, or director, or employee, or manager, or supervisor, or consultant, or
agent, or representative of, IHHI, WMC-A, WMC-SA, Coastal or Chapman.
(z) Within thirty (30) calendar days following the Closing Date, IHHI
for any reason fails to deliver to Lender a written statement identifying at
least two (2) new Independent Directors (with contact and biographical
information included) who have been approached by IHHI and who have agreed to
serve as members of IHHI's board of directors, if nominated and elected or if
appointed.
(aa) Within ninety (90) calendar days following the Closing Date, IHHI
for any reason has failed to nominate and elect, or appoint, Independent
Directors who constitute a majority of the directors serving as members of
IHHI's board of directors.
(bb) At any time after the date which is ninety (90) calendar days
following the Closing Date, Independent Directors cease to constitute a majority
of directors on IHHI's board of directors, and replacement Independent
Director(s) acceptable to Lender in its sole discretion are not appointed, or
nominated and elected, to IHHI's board of directors within thirty (30) calendar
days after the date such Independent Directors cease to constitute a majority of
directors on IHHI's board of directors.
(cc) IHHI, as tenant, commits a breach or default under the Triple Net
Lease and the same remains uncured following receipt of all required notices and
expiration of all applicable cure periods.
(dd) IHHI, as tenant, commits a breach or default under any of the
Chapman Leases and the same remains uncured following receipt of all required
notices and expiration of all applicable cure periods.
(ee) Without first receiving the prior written consent of Lender
(which consent may be granted or withheld by Lender in its sole discretion):
(i) IHHI for any reason terminates the sublease with WMC-A for
the Western Medical Center - Anaheim;
(ii) IHHI for any reason terminates the sublease with WMC-SA for
the Western Medical Center - Santa Ana;
51
(iii) IHHI for any reason terminates the sublease with Coastal
for the Coastal Communities Hospital; or
(iv) IHHI for any reason terminates any of the sub-subleases with
Chapman for any portion of the Chapman Medical Center.
(ff) PCHI ceases to own all (100%) of the fee simple title (i) in the
Western Medical Center - Anaheim, or (ii) in the Western Medical Center - Santa
Ana; or (iii) in the Coastal Communities Hospital.
(gg) Any Borrower fails to make any payment of interest or of
principal due under the $10,700,000 Convertible Term Loan and/or the $10,700,000
Convertible Term Note within five (5) calendar days after the same is due and
payable, provided, that if any Borrower fails to make any such payment under the
$10,700,000 Convertible Term Loan within such five (5) calendar day period,
interest at the Default Rate shall accrue from the due date for such payment on
all Obligations and all Loans under this Agreement.
(hh) Any Borrower fails or neglects to perform, keep or observe any
provision of the $10,700,000 Convertible Term Loan, the New $10,700,000 Credit
Agreement and/or any other documents or instruments executed or delivered in
connection with the foregoing (not specifically referenced in any other
subsection of this Section 8.1) and the same shall remain unremedied for five
(5) Business Days or more after the earlier of (i) Borrower's actual knowledge
thereof, or (ii) Borrower's receipt of notice thereof from Lender under said
$10,700,000 Convertible Term Loan and/or the New $10,700,000 Credit Agreement.
8.2 Remedies. Lender shall be entitled to enforce payment and performance
of the Indebtedness and Obligations and to exercise all rights and powers under
this Agreement and the other Loan Documents or other agreement or any laws now
or hereafter in force. No remedy herein conferred upon or reserved to Lender is
intended to be exclusive of any other remedy set forth herein or by law provided
or permitted, but each shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute. Every power or remedy given by this Agreement or any of the other
Loan Documents to Lender in any capacity or to which Lender may be otherwise
entitled, may be exercised, concurrently or independently, from time to time and
as often as may be deemed expedient by Lender and Lender may pursue inconsistent
remedies. Lender's remedies upon the occurrence and continuance of an Event of
Default include, but are not limited to, the following:
(a) Accelerate Maturity Date of Line of Credit Loan. If any Event of
Default has occurred and is continuing, Lender may, at its option, without
notice, accelerate the Maturity Date of all of the Loans and declare all of the
Obligations, including all amounts due under all of the Loans, to be forthwith
due and payable, all without presentment, demand, protest or further notice of
any kind, all of which are expressly waived by Borrowers and Credit Parties (in
their respective capacities as Credit Parties and Guarantors).
(b) Suspend Lines of Credit. If any Event of Default has occurred and
is continuing, Lender may, without notice, suspend the $35,000,000 Non-Revolving
Line of Credit Loan with respect to additional Advances, whereupon additional
Advances shall not be made except with the prior written consent of Lender,
which consent may be granted or withheld in Lender's sole and absolute
discretion, so long as such Event of Default is continuing.
52
(c) Increase Rate of Interest to Default Rate. If any Event of Default
has occurred and is continuing, Lender may, without notice except as otherwise
expressly provided herein, increase the rate of interest applicable to all Loans
to the Default Rate.
(d) Other Remedies. If any Event of Default has occurred and is
continuing, Lender may, without notice: (i) terminate the $35,000,000
Non-Revolving Line of Credit Loan with respect to further Advances; (ii) reduce
or terminate the Commitment; (iii) make application to a court of competent
jurisdiction for, and obtain from such court as a matter of strict right, the
appointment of a receiver of the Business, which receiver shall have all the
usual powers and duties of receivers in similar cases, including the full power
to maintain and otherwise operate the Business upon such terms as may be
approved by the court; (iv) exercise any other rights and remedies provided to
Lender under the Loan Documents, or at law or equity, including all remedies
provided under the Code; provided, that upon the occurrence of an Event of
Default specified in Sections 8.1(m) or (n) (Events of Default), the Commitment
shall be automatically and immediately terminated and all of the Obligations and
all of the Loans, shall become immediately due and payable without declaration,
notice or demand by any Person.
8.3 Waivers. Except as otherwise provided for in this Agreement or by
applicable law, each Borrower and each Credit Party and each Guarantor waive
(including for purposes of Section 13 (Suretyship Waivers)): (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default (unless specifically
required in this Agreement), nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lender on which Borrowers or Credit Parties or Guarantors may in
any way be liable, and hereby ratifies and confirms whatever Lender may do in
this regard, (b) all rights to notice and a hearing prior to Lender'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 to exercise any of its remedies, and (c) the benefit of all
valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF LENDER
----------------------------------------------------
9.1 Assignment and Participations.
(a) Assignment to Qualified Assignee. Subject to the terms of this
Section 9.1 (Assignment and Participations), Lender may make an assignment to a
Qualified Assignee of, or sell participations in, at any time or times, the Loan
Documents, any of the Loans, and Commitment or any portion thereof or interest
therein, including any Lender's rights, title, interests, remedies, powers or
duties thereunder. Any assignment by a Lender shall: (i) require the execution
of an assignment agreement in form and content reasonably satisfactory to, and
acknowledged by, Lender; and (ii) be conditioned on such assignee representing
to Lender that it is purchasing the applicable Loan to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof. In the case of an assignment by Lender under this Section 9.1(a)
53
(Assignment to Qualified Assignee), the assignee shall have, to the extent of
such assignment, the same rights, benefits and obligations as Lender hereunder.
The original Lender shall be relieved of its obligations hereunder with respect
to the Commitment or assigned portion thereof from and after the date of such
assignment. Borrowers and Credit Parties and Guarantors hereby acknowledge and
agree that any assignment shall give rise to a direct obligation of Borrowers to
the assignee and that the assignee shall be considered to be a "Lender." In the
event Lender assigns or otherwise transfers all or any part of the Obligations,
Lender shall so notify Borrowers and Credit Parties and Guarantors shall, upon
the request of Lender, execute one or more new notes in exchange for any of the
Notes (upon the same terms), if any, being assigned. Notwithstanding the
foregoing provisions of this Section 9.1(a) (Assignment to Qualified Assignee),
Lender may at any time pledge the Obligations held by it and Lender's rights
under this Agreement and the other Loan Documents to a financial institution.
(b) Participations. Any participations by Lender of all or any part of
the Commitment shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if Lender had not sold such
participations, and that the holder of any such participation shall not be
entitled to require Lender to take or omit to take any action hereunder except
actions directly affecting (i) any reduction in the principal amount of, or
interest rate payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Section 1.14
(Taxes), and Section 1.15 (Capital Adequacy; Increased Costs; Illegality),
Borrowers and Credit Parties and Guarantors acknowledge and agree that a
participation shall give rise to a direct obligation of Borrowers to the
participant (in each case subject to the terms and conditions in such Sections
applicable to Lender) and the participant shall be considered to be a "Lender."
(c) Cooperation to Effect Assignments and Participations. Borrowers
and Credit Parties shall assist Lender under this Section 9.1 (Assignment and
Participations) as reasonably required to enable Lender to effectuate any such
assignment or participations, including the execution and delivery of any and
all agreements, notes and other documents and instruments as shall be requested
and, if requested by Lender, the preparation of informational materials for, and
the participation of management in meetings with, potential assignees or
participants. Borrowers and Credit Parties shall certify the correctness,
completeness and accuracy, in all material respects of all descriptions of
Borrowers and Credit Parties and their respective affairs contained in any
selling materials provided by them and all other information provided by them
and included in such materials.
(d) Disclosures by Lender. Lender may furnish any information
concerning Borrowers and the Credit Parties in the possession of Lender from
time to time to assignees and participants (including prospective assignees and
participants); provided that Lender shall obtain from assignees or participants
confidentiality covenants substantially equivalent to those contained in Section
11.10 (Confidentiality).
54
9.2 Reliance, Etc. Neither Lender nor any of its Affiliates nor any of
their respective directors, officers, employees or attorneys shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Lender: (a) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts; (b) makes no
warranty or representation to Borrowers or Credit Parties and shall not be
responsible to Borrowers or Credit Parties for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (c) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of Borrowers and Credit
Parties or to inspect the Collateral (including the books and records) of
Borrowers or Credit Parties; (d) shall not be responsible to Borrowers or Credit
Parties for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; and (e) shall incur
no liability under or in respect of this Agreement or the other Loan Documents
by acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopy, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
10. SUCCESSORS AND ASSIGNS
----------------------
This Agreement and the other Loan Documents shall be binding on and shall
inure to the benefit of Borrowers, Credit Parties and Lender, and their
respective successors and assigns (including, in the case of Borrowers and
Credit Parties, a debtor-in-possession on behalf of a Borrower or a Credit
Party), except as otherwise provided herein or therein. Neither Borrowers nor
Credit Parties may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Lender, which consent may
be granted or withheld by Lender in its sole and absolute discretion. Any such
purported assignment, transfer, hypothecation or other conveyance by Borrowers
or Credit Parties without the prior express written consent of Lender shall be
void. The terms and provisions of this Agreement are for the purpose of defining
the relative rights and obligations of Borrowers, Credit Parties and Lender with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
-------------
11.1 Complete Agreement; Modification of Agreement. This Agreement and the
other Loan Documents (including all annexes, exhibits, and disclosure schedules
attached hereto or thereto) constitute the complete agreement between the
parties with respect to the subject matter thereof and may not be modified,
altered or amended except as set forth in Section 11.2 (Amendments and Waivers).
The Term Sheet and any other letter of interest, commitment letter, fee letter
or confidentiality agreement, if any, between Borrowers or Credit Parties and
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement.
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11.2 Amendments and Waivers.
(a) Signed by Representatives. No amendment, modification, termination
or waiver of or consent with respect to any provision of this Agreement that
waives compliance with the conditions precedent set forth in Article 2
(Conditions Precedent) to the making of any of the Loans shall be effective
unless the same shall be in writing and signed by Lender's and Borrower's
Representative. No waiver or consent with respect to any Default or any Event of
Default shall be effective for purposes of the conditions precedent to the
making of the Loans unless the same shall be in writing and signed by Lender and
Borrower's Representative.
(b) Must Be In Writing. No amendment, modification, termination or
waiver shall, unless in writing and signed by Lender and Borrower's
Representative: (i) increase the principal amount of the Commitment; (ii) reduce
the principal amount of or the Interest Rate applicable to any of the Loans;
(iii) extend any scheduled payment date or the Stated Maturity Date; (iv) waive,
forgive, defer, extend or postpone any payment of interest; or (v) release any
Guarantor or, except as otherwise permitted herein or in the other Loan
Documents, release, or permit Borrowers or Credit Parties to sell or otherwise
dispose of, any Collateral. Each amendment, modification, termination or waiver
shall be effective only in the specific instance and for the specific purpose
for which it was given. Notwithstanding the foregoing, no amendment,
modification, termination or waiver shall be required for Lender to take
additional Collateral pursuant to any Loan Document. No amendment, modification,
termination or waiver of any provision of any of the Notes shall be effective
without the written concurrence of the holder of that Note. No notice to or
demand on Borrowers or Credit Parties in any case shall entitle Borrowers or
Credit Parties to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 (Amendments and Waivers) shall be
binding upon each holder of the Note in question at the time outstanding and
each future holder of said Note.
(c) Termination of Liens. Upon payment of all Loans in full in cash
and performance of all Obligations (other than indemnification Obligations),
termination of the Commitment, and a release of all existing and future claims
(whether known or unknown) against Lender, and so long as no suits, actions,
proceedings or claims are pending against any Indemnified Person asserting any
damages, losses or liabilities that are Indemnified Liabilities, Lender shall
promptly upon receipt of written request from Borrowers deliver to Borrowers
such termination statements, Lien releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
11.3 Fees and Expenses. Borrowers shall reimburse Lender for (i) all fees,
costs and expenses (including the reasonable fees and expenses of all of
Lender's outside attorneys, advisors, consultants and auditors), and (ii) all
fees, costs and expenses, including the reasonable fees, costs and expenses of
other advisors (including environmental and management consultants and
appraisers), incurred in connection with the negotiation, preparation and filing
and/or recordation of the Loan Documents, or incurred in connection with any
amendment, modification or waiver of, consent with respect to, or termination
of, any of the Loan Documents or Related Transactions Documents, or advice
provided in connection with a breach or Default under the Loans or Lender's
rights hereunder or thereunder, or in connection with any of the following:
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(a) Any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, Borrowers, Credit Parties or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
this Agreement, any of the Loan Documents or any other agreement to be executed
or delivered in connection herewith or therewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against of Borrowers and/or
Credit Parties or any other Person that may be obligated to Lender by virtue of
the Loan Documents; including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring or
forbearance of the Loans during the pendency of one or more Events of Default;
provided that no Person shall be entitled to reimbursement under this clause (a)
in respect of any litigation, contest, dispute, suit, proceeding or action to
the extent any of the foregoing results from such Person's gross negligence or
wilful misconduct.
(b) Any attempt to enforce any remedies of Lender against Borrowers
and/or Credit Parties or any other Person that may be obligated to Lender by
virtue of any of the Loan Documents, including any such attempt to enforce any
such remedies in the course of any work-out or restructuring or forbearance of
the Loans during the pendency of one or more Events of Default.
(c) Any workout or restructuring or forbearance of the Loans during
the pendency of one or more Events of Default.
(d) Efforts by Lender to (i) monitor the operations, financial
condition and/or regulatory status of the Business after an Event of Default
occurs under this Agreement or under any of the other Loan Documents; (ii)
evaluate, observe or assess Borrowers or Credit Parties or their respective
business affairs after a breach or Default under this Agreement or under any of
the other Loan Documents; and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (c) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all reasonable expenses,
costs, charges and other statutory and non-statutory fees and costs incurred by
such counsel and others in connection with or relating to any of the events or
actions described in this Section 11.3 (Fees and Expenses), all of which shall
be payable, on demand, by Borrowers to Lender. Without limiting the generality
of the foregoing, such expenses, costs, charges and fees shall include: Lender's
Costs, fees, costs and reasonable expenses of attorneys, accountants,
environmental advisors, appraisers, investment bankers, management and other
consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, statutory and non-statutory costs and
expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
11.4 No Waiver. Lender's failure, at any time or from time to time, to
require strict performance by Borrowers or Credit Parties of any provision of
this Agreement or any other Loan Document shall not waive, affect or diminish
any right of Lender 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
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subsequent thereto and whether the same or of a different type. Subject to the
provisions of Section 11.2 (Amendments and Waivers), none of the undertakings,
agreements, warranties, covenants and representations of Borrowers or Credit
Parties contained in this Agreement or any of the other Loan Documents and no
Default or Event of Default by Borrowers or Credit Parties shall be deemed to
have been suspended or waived by Lender, unless such waiver or suspension is by
an instrument in writing signed by Lender and directed to Borrower's
Representative specifying such suspension or waiver.
11.5 Remedies. Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies that Lender may
have under any other agreement, including the other Loan Documents, by operation
of law or otherwise. Recourse to the Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement and
the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document 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 Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement or
any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Attorneys' Fees; Indemnification.
(a) Attorneys' Fees. If any action or proceeding is brought by any
party against any other party, the prevailing party shall be entitled to recover
from the other party reasonable attorneys' fees and statutory and non-statutory
costs incurred in connection with the prosecution or defense of such action. The
foregoing includes, without limitation, attorneys' fees and costs of
investigation incurred in appellate proceedings, costs incurred in establishing
the right to indemnification, expert or other witness fees, copy and facsimile
and telephone charges, courier and messenger charges, court costs, fees of
charges of any arbitrator or mediator or arbitration or mediator service, or in
connection with, any case or proceeding under Chapter 7, 11 or 13 of the
Bankruptcy Code, 11 U.S.C. 101 et seq., or any successor statutes. For purposes
of this Agreement, the term "attorneys' fees" or "attorneys' fees and costs"
shall also include the fees and expenses of counsel to the parties hereto, which
may include the allocable costs of in-house counsel, printing, photostating,
duplicating and other expenses, air freight charges, and fee billed for law
clerks, paralegals and other persons not admitted to the bar but performing
services under the supervision of an attorney.
(b) Indemnification. Should Lender, as a result of its relationship
with Borrowers or Credit Parties or Guarantors contemplated hereby, be made a
party to any litigation instituted by Borrowers or Credit Parties or Guarantors
against a Person other than Lender, or any litigation instituted against
Borrowers or Credit Parties or Guarantors by any Person other than Lender,
Borrowers shall jointly and severally indemnify, defend, protect and hold
harmless Lender from any and all loss, cost, liability, damage or expense
incurred by Lender, including attorneys' fees and costs, in connection with the
litigation.
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11.9 Time of the Essence. Time is of the essence in the performance of each
and every term, condition and covenant of this Agreement.
11.10 Confidentiality. Lender agree to use commercially reasonable efforts
to maintain as confidential all information provided to them by Borrowers and/or
Credit Parties which is designated in a writing delivered to Lender as
confidential (provided, that, all non-public financial information and financial
projections provided by Borrowers or Credit Parties to Lender shall be deemed
confidential whether or not so designated in writing as confidential) for a
period of one (1) year following receipt thereof, except that Lender may
disclose such information (a) to Persons employed or engaged by Lender; (b) to
any bona fide assignee or participant or potential assignee or participant that
has agreed to comply with the covenant contained in this Section 11.10
(Confidentiality) and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed (based on advice of
counsel) by Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Lender's counsel, is
required by law; (e) in connection with the exercise of any right or remedy
under this Agreement or the other Loan Documents or in connection with any
Litigation relative to this Agreement or the other Loan Documents or the
transactions related hereto or thereto to which Lender is a party; or (f) that
ceases to be confidential through no fault of Lender. If Lender is required in
any proceeding, by any court decree, subpoena or legal or administrative order
or process, to disclose any such confidential information, Lender will use
commercially reasonable efforts to give Borrowers and Credit Parties, as
applicable, prompt written notice of such request so that Borrowers or Credit
Parties may seek an appropriate protective order. If in the absence of a
protective order, Lender is compelled in a proceeding to disclose any such
confidential information, Lender may disclose such portion of such confidential
information that it is compelled to disclose; provided, however, that Lender
shall use commercially reasonable efforts to provide Borrowers and Credit
Parties, as applicable, written notice of the information to be disclosed as far
in advance of its disclosure as is practicable.
11.11 GOVERNING LAW.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT AND IN ANY OF THE
OTHER LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
AND THE OBLIGATIONS 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. BORROWERS AND CREDIT PARTIES AND LENDER EACH HEREBY CONSENT AND AGREE
THAT THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF NEVADA, CLARK COUNTY,
CITY OF LAS VEGAS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN OR AMONG BORROWERS AND CREDIT PARTIES ON THE ONE
HAND, AND LENDER ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE
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OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDER, EACH
BORROWER AND EACH CREDIT PARTY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CLARK COUNTY, NEVADA;
PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER.
EACH BORROWER AND EACH CREDIT PARTY AND LENDER EXPRESSLY SUBMIT AND CONSENT IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH BORROWER, EACH CREDIT PARTY AND LENDER HEREBY WAIVE ANY OBJECTION THAT
ANY BORROWER OR ANY CREDIT PARTY OR LENDER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENT TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH BORROWER, EACH CREDIT PARTY AND LENDER HEREBY AGREE THAT SERVICE OF
SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE AT THE ADDRESSES SET
FORTH IN ANNEX D OF THIS AGREEMENT.
11.12 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 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: (a) upon the earlier of actual receipt or three (3) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid; (b) upon transmission, when sent
by telecopy or facsimile transmission (with such telecopy or facsimile promptly
confirmed by delivery of a copy by personal delivery or United States Mail as
otherwise provided in this Section 11.12 (Notices)); (c) one (1) Business Day
after deposit with a reputable overnight courier with all charges prepaid; or
(d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or facsimile
number indicated in Annex D (Notice Addresses) 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 (other than Borrower's Representative or Lender) designated in
Annex D (Notice Addresses) to receive copies shall in no way adversely affect
the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
11.13 Section Titles. The Section titles and headings contained in this
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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11.14 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.15 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, 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 AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.16 Press Releases and Related Matters. Borrowers and Credit Parties
agree that neither they nor their respective Affiliates will in the future issue
any press releases or other public disclosure using the name of Lender or its
Affiliates or referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least two (2) Business Days' prior
written notice to Lender and without the prior written consent of Lender (which
consent will not be unreasonably withheld) unless (and only to the extent that)
Borrowers or Credit Parties or their respective Affiliate are required to do so
under law, regulation or any applicable exchange rules or OTC bulletin board
rules, then, in any event, Borrowers, Credit Parties or their respective
Affiliates will use commercially reasonable efforts to consult with Lender
before issuing such press release or other public disclosure. Borrowers and
Credit Parties consent to the publication by Lender of advertising material
relating to the financing transactions contemplated by this Agreement using
Borrower's and Credit Party's name, product photographs, logo or trademark,
without the consent of Borrowers or Credit Parties. Lender may provide to
industry trade organizations information necessary and customary for inclusion
in league table measurements unless such disclosure would violate or any
applicable exchange rules or OTC bulletin board rules applicable to Borrowers.
11.17 Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against
Borrowers or Credit Parties for liquidation or reorganization, or should
Borrowers or Credit Parties 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 assets, and shall continue to be effective or to 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.
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11.18 Advice of Counsel. Each of the Borrowers and each of the Credit
Parties represent to Lender and Lender represent to said Borrowers and to said
Credit Parties, that they have each discussed this Agreement and, specifically,
the provisions of Section 11.11 (Governing Law) and Section 11.15 (Waiver of
Jury Trial), with their legal counsel.
11.19 No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
11.20 Limitation on Each Borrower's and Each Credit Party's Liability.
Anything to the contrary notwithstanding, if any Fraudulent Transfer Law is
determined by a court of competent jurisdiction to be applicable to the
obligation of any Borrower or any Credit Party under this Agreement or under any
other Loan Documents, said obligations shall be limited to a maximum aggregate
amount equal to the largest amount that would not render its obligations
hereunder subject to avoidance as a fraudulent transfer or conveyance under said
Fraudulent Transfer Laws, in each case after giving effect to all other
liabilities of such Borrower and such Credit Party, contingent or otherwise,
that are relevant under the Fraudulent Transfer Laws (specifically excluding,
however, any liabilities of such Borrower or such Credit Party in respect of
intercompany indebtedness to any other Borrowers or Credit Parties or Affiliates
of Borrowers or Credit Parties).
12. RELEASES AND WAIVERS; COVENANTS NOT TO SUE; INDEMNITY.
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Each Borrower, each Credit Party and each Guarantor acknowledge and agree
that in March and December of 2005 Lender and/or MPFC III made the Previous
Loans to Borrowers; that Borrowers subsequently committed various events of
default under the Previous Loans; that twice during the term of the Previous
Loans, Lender and MPFC III agreed to and did forbear from foreclosing on the
Previous Loans; and that Lender has agreed to made the Loans contemplated by
this Agreement on condition that each Borrower, each Credit Party and each
Guarantor enter into and make the following releases and waivers, covenants not
to sue and indemnities for the benefit of the Lender Released Parties:
12.1 Releases and Waivers. As an inducement to Lender to make the Loans to
Borrowers:
(a) Each of the Releasing Parties hereby fully, forever and
irrevocably release, waive, relinquish and discharge any and all Lender
Liability Claims that the Releasing Parties now have or in the future may have
against any of the Lender Released Parties, which Lender Liability Claims are
based on any act or omission which allegedly occurred prior to the Effective
Date of this Agreement.
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(b) Each of the Releasing Parties hereby fully, forever and
irrevocably release, waive, relinquish and discharge each of 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 Releasing Parties may
have had, may now have or may in the future claim to have against any of the
Lender Released Parties arising out of, or directly or indirectly related in any
manner to any act or omission to act which allegedly occurred prior to the
Effective Date of this Agreement.
The Releasing Parties hereto have been fully advised by their respective
attorneys of the contents and effect of the applicable provisions under the laws
of the State of Nevada and the State of California upon the rights of each of
them, which provisions state substantially 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 ACKNOWLEDGE THAT THEY MAY HAVE SUSTAINED DAMAGES,
LOSSES, FEES, COSTS OR EXPENSES WHICH ARE PRESENTLY UNKNOWN AND UNSUSPECTED,
AND, NOTWITHSTANDING THE FOREGOING PROVISIONS OF STATE LAW, 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 THE RELEASED PARTIES, HAS CAREFULLY READ AND
UNDERSTANDS ALL THE PROVISIONS OF THIS AGREEMENT, AND HAS VOLUNTARILY ENTERED
INTO THIS AGREEMENT. THE FOREGOING RELEASES AND WAIVERS SHALL SURVIVE THE
EXPIRATION OR TERMINATION OF THIS AGREEMENT.
12.2 Covenants Not To Sue. Each of the Releasing Parties hereby promises,
covenants and agrees not to sue any of the Lender Released Parties, and not to
bring any legal action or proceeding of any kind, at any time, against any of
the Lender Released Parties, in any court or administrative proceeding, in any
venue, which legal action or proceeding (a) violates any covenant, condition,
representation or warranty made by the Releasing Parties in this Agreement, in
any other Loan Documents or in any of the Previous Loan Documents, or (b)
directly or indirectly seeks to (i) obtain or procure issuance of any temporary
restraining order, or preliminary injunction, or permanent injunction, or any
other equitable or provisional relief against any of the Lender Released Parties
based on acts or omissions which allegedly occurred prior to the Effective Date
of this Agreement, or (ii) impose or bring any Lender Liability Claims on or
against any of the Lender Released Parties based on acts or omissions which
allegedly occurred prior to the Effective Date of this Agreement, or (iii)
obtain or impose on any of the Lender Released Parties any injunctive relief
based on acts or omissions which allegedly occurred prior to the Effective Date
of this Agreement. The foregoing covenants not to sue are permanent and shall
survive the expiration or termination of this Agreement.
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12.3 Indemnity. Each of the Releasing Parties hereby jointly and severally
agree to and shall indemnify, defend, protect and hold each of the Lender
Released Parties free and harmless from and against any and all legal actions,
suits, proceedings or claims brought or asserted against any of the Lender
Released Parties for damages, losses, liabilities and expenses (including
reasonable attorneys' fees, witness and expert witness fees, court fees and
charges, statutory and non-statutory costs and expenses, 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 negotiation, execution and delivery of the Term Sheet by
any Lender Released Party; (b) the negotiation, execution and delivery of this
Agreement by any Lender Released Party; (c) the negotiation, execution and
delivery of any of the Previous Loan Documents by any Lender Released Party; (d)
the taking, implementation or enforcement by any of the Lender Released Parties
of any of their rights and remedies under the Previous Loan Documents; (e) the
making of the Loans by any of the Lender Released Parties pursuant to this
Agreement; and (f) any Lender Liability Claim brought or asserted against any of
the Lender Released Parties. NO LENDER RELEASED PARTY SHALL BE RESPONSIBLE OR
LIABLE TO ANY OF THE RELEASING PARTIES, NOR RESPONSIBLE OR LIABLE TO ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH RELEASING PARTIES, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF HAVING EXECUTED THE TERM SHEET, OR THIS AGREEMENT, OR AS A RESULT OF
EXECUTING THE PREVIOUS LOAN DOCUMENTS, OR AS A RESULT OF ANY CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY OF THE PREVIOUS LOAN DOCUMENTS, OR
AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED UNDER THE TERM SHEET, THIS
AGREEMENT OR THE PREVIOUS LOAN DOCUMENTS. THE FOREGOING INDEMNITIES SHALL
SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT.
13. SURETYSHIP WAIVERS
------------------
13.1 Suretyship Waivers. Because Credit Parties are not direct borrowers
from Lender under this Agreement, although the Loans directly and indirectly
benefit each Person comprising Borrowers and Credit Parties, it is possible that
the Credit Parties could be construed as guarantors or sureties of Borrowers and
of each other and thereby have certain rights and remedies accorded to them that
were not intended to be available to any of them. Accordingly, in order to
induce the Lender to provide the credit facilities and accommodations provided
for herein, each Person which is a Borrower or a Credit Party for itself agrees
as follows:
(a) Irrevocable Waivers. The waivers provided in this section are
intended to be irrevocable and to apply to all present and future Obligations of
Borrowers and Credit Parties to Lender, including those arising under successive
transactions which shall either continue the Obligations, increase or decrease
them, or from time to time, create new Obligations, after all or any prior
Obligations have been satisfied, and notwithstanding the dissolution,
liquidation or bankruptcy of Borrowers, Credit Parties, or Guarantors, of all or
any portion of the Obligations, or other event or proceeding affecting Borrowers
or Credit Parties or Guarantors of any portion of the Obligations.
(b) Separate and Independent Obligations of Credit Parties. The
Obligations of Credit Parties hereunder are separate and independent of (i)
Borrower's obligation to pay Lender principal and interest under the Notes and
the other Obligations hereunder, and (ii) the liabilities and obligations of
Credit Parties which are Guarantors. A separate action or actions may be brought
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and prosecuted against Credit Parties whether or not any action is brought and
prosecuted against Borrowers, and whether or not Credit Parties are joined in
any such action or actions. Borrowers and Credit Parties waive the benefit of
any statute of limitations affecting the Obligations hereunder or the
enforcement thereof.
(c) Authority of Lender. Credit Parties and Guarantors hereby
authorize Lender, without notice or demand and without affecting its liability
hereunder, from time to time to: (i) amend, alter, restate, replace, modify,
renew, extend, accelerate or otherwise change the time for payment or the terms
of the Obligations with Borrowers, including increasing or decreasing the
Interest Rate thereon or the principal amount thereof; (ii) accept partial
payments on the Obligations from Borrowers or Guarantors; (iii) accept new or
additional documents, instruments or agreements relative to the Obligations;
(iv) take and hold security or additional guaranties for the payment of the
Obligations, and amend, alter, exchange, substitute, transfer, enforce, waive,
subordinate, terminate, modify and release in any manner any such security or
guaranties; (v) apply such security and direct the order or manner of sale
thereof as Lender in its sole discretion may determine; (vi) release or
substitute any Guarantor; (vii) settle, release on terms satisfactory to Lender
(or by operation of law or otherwise), compound, compromise, collect or
otherwise liquidate any indebtedness or security in any manner, consent to the
transfer of security and bid and purchase at any sale, without affecting or
impairing the Obligations of Borrowers or Credit Parties or Guarantors
hereunder; or (viii) enforce any other right or remedy granted to Lender under
this Agreement or under any of the other Loan Documents or under any Guaranty
Agreement. No action which Lender shall take or fail to take in connection with
this Agreement or any of the Loan Documents, or any of them, or any security for
the Obligations or other undertakings of Borrowers, nor any course of dealing
with Borrowers or Credit Parties or Guarantors, or any course of dealing with
any other person or legal entity, shall release Borrower's Obligations or Credit
Party's or Guarantor's responsibilities hereunder, shall affect this Agreement
or the other Loan Documents in any way, or afford Borrowers or Credit Parties or
Guarantors any recourse against Lender. Without limiting the generality of the
foregoing, Borrowers agree that this Agreement shall extend and be applicable to
each new or replacement Note delivered by Borrowers pursuant thereto without
notice to or further consent from Credit Parties or Guarantors.
(d) Waiver of Rights Against Lender. Borrowers and Credit Parties and
Guarantors waive any right to require Lender to: (i) proceed against Borrowers,
against Guarantors, against Credit Parties, or against anyone else; (ii) proceed
against or exhaust any security for the Obligations, or to marshal assets or to
marshal assets of any Person in any particular order; (iii) except as required
by applicable law, give notice of the terms, time and place of any public or
private sale of any real or personalty securing the Obligations; or (iv) pursue
any other remedy in Lender's power whatsoever. Each Person which is a Borrower,
Guarantor, or a Credit Party waives any defense arising by reason of any
disability or other defense of Borrowers, Guarantors, or Credit Parties, or by
reason of the cessation from any cause whatsoever of the liability of Borrowers,
Guarantors, or Credit Parties, or by reason of any act or omission of Lender or
other Persons which directly or indirectly results in or aids the discharge or
release of Borrowers, Guarantors, or Credit Parties, or any of the Obligations
or any security therefor by operation of law or otherwise, or by reason of the
amendment, modification, renewal, extension or other change in any of the
Obligations. Borrowers, Credit Parties and Guarantors waive all setoffs and
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counterclaims and all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance of this Agreement and of the existence, creation, or incurring of
new or additional Obligations, and all other notices and demands of any kind and
description now or hereafter provided for by any statute or rule of law, except
for such notices and demands as specifically required by this Agreement.
Borrowers, Guarantors, and Credit Parties expressly waive any right whatsoever
to, or right whatsoever to participate in, any security now or hereafter held by
Lender, reimbursement, indemnity, exoneration, contribution or any other claim
under local, state or federal law, including, without limitation, 11 U.S.C.
?547, which it may now or hereafter have against Borrowers, Guarantors, or
Credit Parties, or any other Person directly or contingently liable for the
Obligations, or against or with respect to Borrower's or Credit Party's or
Guarantor's property (including, without limitation, any Collateral under any of
the Loan Documents) arising from the existence or performance of this Agreement
until all of the Obligations have been indefeasibly paid or satisfied in full.
(e) Representations and Warranties. Borrowers, Guarantors, and Credit
Parties represent and warrant to Lender that: (i) this Agreement is executed at
each Borrower's, each Guarantor's, and each Credit Party's request; (ii)
Guarantors, and Credit Parties have each established adequate means of obtaining
from Borrowers on a continuing basis financial and other information pertaining
to Borrower's Business and Borrower's financial condition; and (iii) Guarantors
and Credit Parties are now and will be completely familiar with the Business,
operation and financial condition of Borrowers and its assets and of its
Business. Borrowers, Guarantors and Credit Parties hereby waive and relinquish
any duty on the part of Lender to disclose to any of said parties any matter,
fact or thing relating to the Business, operation or financial condition of
Borrowers and their respective assets now known or hereafter known by Lender
during the Term of this Agreement. With respect to any present or future
Obligations of Borrowers to Lender, Lender need not inquire into the authority
of Borrowers, and any Obligations made or created in reliance upon the professed
exercise of such powers.
(f) No Set-Off, Counterclaim, Etc. So long as any of the Obligations
under this Agreement remain unpaid or undischarged, neither Guarantors nor
Credit Parties will, by paying any sum recoverable hereunder (whether or not
demanded by Lender) or by any means or on any other ground, (i) claim any
set-off or counterclaim against Borrowers, Guarantors, or Credit Parties in
respect of any Obligations or other indebtedness by virtue of the right of
subrogation, by operation of law or otherwise; (ii) in any proceedings under
federal bankruptcy law or insolvency proceedings of any nature, assert its
rights in competition with Lender in respect of any payment hereunder because of
any claims which Guarantors or Credit Parties may have against Borrowers or any
other Person; or (iii) be entitled to have the benefit of any counterclaim or
proof of claim or dividend or payment by or on behalf of Borrowers, Guarantors,
or Credit Parties or other Person, or the benefit of any of any other security
for any Obligation which, now or hereafter, Lender may hold or in which it may
have any share or interest.
13.2 Election of Remedies. If Lender may, under Applicable Laws, proceed to
realize its benefits under any of the Loan Documents granting a Lien upon any
Collateral, whether owned by Borrowers or by any other Person, either by
judicial foreclosure or by non-judicial sale or enforcement, Lender may, at its
sole option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Section 13 (Suretyship
66
Waivers). If, in the exercise of any of its rights and remedies, Lender shall
forfeit any of its rights or remedies, including its right to enter a deficiency
judgment against Borrowers or any other Person, whether because of any
applicable laws pertaining to "election of remedies" or the like, Borrowers
hereby consent to such action by Lender and waive any claim based upon such
action, even if such action by Lender shall result in a full or partial loss of
any rights of subrogation that Borrowers might otherwise have had but for such
action by Lender. Any election of remedies that results in the denial or
impairment of the right of Lender to seek a deficiency judgment against
Borrowers shall not impair Guarantor's or Credit Party's obligations to pay the
full amount of the Obligations applicable to it. In the event Lender shall bid
at any foreclosure or trustee's sale or at any private sale permitted by law or
the Loan Documents, Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Lender but shall be
credited against the Obligations.
[SIGNATURE PAGE FOLLOWS]
67
EXECUTION
IN WITNESS WHEREOF, this Credit Agreement ($80,000,000 Facility) has been
duly executed as of the date set forth next to the signature each party.
BORROWERS:
INTEGRATED HEALTHCARE
HOLDINGS, INC., a Nevada corporation,
By: /s/ Larry B. Anderson Date of Execution: October 2, 2007
---------------------------------
Larry B. Anderson, President
WMC-A, INC., a California corporation,
By: /s/ Larry B. Anderson Date of Execution: October 2, 2007
---------------------------------
Larry B. Anderson, President
WMC-SA, INC., a California corporation,
By: /s/ Larry B. Anderson Date of Execution: October 2, 2007
---------------------------------
Larry B. Anderson, President
COASTAL COMMUNITIES
HOSPITAL, INC., a California corporation,
By: /s/ Larry B. Anderson Date of Execution: October 2, 2007
---------------------------------
Larry B. Anderson, President
CHAPMAN MEDICAL CENTER, INC.,
a California corporation,
By: /s/ Larry B. Anderson Date of Execution: October 2, 2007
---------------------------------
Larry B. Anderson, President
[SIGNATURE PAGE CONTINUES]
CREDIT PARTIES:
PACIFIC COAST HOLDINGS
INVESTMENT, LLC, a California
limited liability company,
By: /s/ Anil V. Shah, MD Date of Execution:
---------------------------------
Name: Anil V. Shah, MD
Title: Co-Manager
By: /s/ Kali P. Chaudhuri Date of Execution:
-by William R. Thomas, Attny. in fact
Title: Co-Manager
GANESHA REALTY, LLC, a California
limited liability company,
By: /s/ William R. Thomas Date of Execution:
---------------------------------
Name: William R. Thomas
Title: Secretary
WEST COAST HOLDINGS, LLC,
a California limited liability company,
By: /s/ Jacob Sweidan Date of Execution: October 9, 2007
---------------------------------
Name: Jacob Sweidan, MD
Title: Manager
ORANGE COUNTY PHYSICIANS
INVESTMENT NETWORK, LLC, a
Nevada limited liability company
By: /s/ Jacob Sweidan Date of Execution: October 9, 2007
---------------------------------
Name: Jacob Sweidan, MD
Title: Manager
[SIGNATURE PAGE CONTINUES]
GUARANTORS:
WEST COAST HOLDINGS, LLC, a
California limited liability company,
By: /s/ Jacob Sweidan Date of Execution: October 9, 2007
---------------------------------
Name: Jacob Sweidan, MD
Title: Manager
ORANGE COUNTY PHYSICIANS
INVESTMENT NETWORK, LLC, a
Nevada limited liability company
By: /s/ Jacob Sweidan Date of Execution: October 9, 2007
---------------------------------
Name: Jacob Sweidan, MD
Title: Manager
LENDER:
MEDICAL PROVIDER FINANCIAL
CORPORATION II, a Nevada corporation,
By: /s/ Joseph J. Lampariello Date of Execution: 10/4/07
Name: Joseph J. Lampariello
Title: COO
ANNEX A
TO
CREDIT AGREEMENT ($80 MILLION FACILITY)
---------------------------------------
DEFINITIONS
Initially capitalized terms used in this Agreement shall (unless otherwise
provided elsewhere in the Loan Documents) have the following respective
meanings. All references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to sections, Exhibits, Schedules or Annexes of
or to this Credit Agreement:
"ABSOLUTE ASSIGNMENT" means each of the following:
(a) the Absolute Assignment of Leases and Rents With License Back re
Western Medical Center - Anaheim, dated as of the date hereof, by and among
Lender, PCHI and WMC-A in the form of Exhibit "F" attached hereto;
(b) the Absolute Assignment of Leases and Rents With License Back re
Western Medical Center - Santa Ana, dated as of the date hereof, by and among
Lender, PCHI and WMC-SA in the form of Exhibit "F" attached hereto;
(c) the Absolute Assignment of Leases and Rents With License Back re
Coastal Communities Hospital, dated as of the date hereof, by and among Lender,
PCHI and Coastal in the form of Exhibit "F" attached hereto;
(d) the Absolute Assignment of Leases and Rents With License Back re
Chapman MOB Lease, dated as of the date hereof, by and among Lender and IHHI in
the form of Exhibit "F" attached hereto; and
(e) the Absolute Assignment of Leases and Rents With License Back re
Chapman Hospital Lease, dated as of the date hereof, by and among Lender and
IHHI in the form of Exhibit "F" attached hereto.
"ACCOUNTS" means (i) the right to receive payment of rent, occupancy
payments and other similar payments due and owing by any Person using or
occupying space in any real property owned or leased by Borrowers, plus (ii) the
future right to receive payment of any monetary obligations, whether or not
earned by performance, now or hereafter existing, arising under or in relation
to each Borrower's Business.
"ADVANCE" means any advance of funds under any of the Loans.
"AFFILIATE" means, with respect to any Person (excluding Lender), (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 10% or more of the Stock having
ordinary voting power in the election of directors of such Person, (b) each
Person that controls, is controlled by or is under common control with such
Person, (c) each of such Person's officers, directors, joint venturers and
partners, and (d) in the case of Borrowers, the immediate family members,
1
spouses and lineal descendants of individuals who are Affiliates of Borrowers.
For the purposes of this definition, "CONTROL" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise.
"AGREEMENT" means this Credit Agreement by and among Borrowers, Credit
Parties, Guarantors and Lender, as the same may be amended, supplemented,
restated or otherwise modified from time to time.
"ANNEXES" means, together, Annex A (Definitions), Annex B (Cash Management
System), Annex C (Collateral Reports) and Annex D (Notice Addresses) attached to
this Agreement.
"APPLICABLE LAWS" means all federal, state and local laws, statutes, codes,
regulations, rules, acts, ordinances of all Governmental Authorities,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, including without limitation, Environmental Laws, all building,
safety, health, use laws, the Fair Labor Standards Act, 29 U.S.C. ss.ss.201 et
seq., the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C.
Section 18a, the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
2101, et seq., as amended, and the California version of the WARN Act, and any
deed restrictions or other requirements of record applicable to the Collateral
or to Borrowers or Credit Parties, or to their respective businesses.
"APPRAISAL" means an appraisal of the Properties prepared by Marshall &
Stevens, M.A.I..
"APPRAISED VALUE" means the fair market value of the Properties as set
forth in the Appraisal.
"BANK" means Wells Fargo Bank, N.A., located at 2030 Main Street, Suite
900, Irvine, California 92614.
"BANKRUPTCY CODE" means the provisions of Title 11 of the United States
Code, 11 U.S.C. ss.101 et seq.
"BORROWERS" means IHHI, WMC-A, WMC-SA, Chapman and Coastal.
"BORROWER'S REPRESENTATIVE" means Bruce Mogel at the address of IHHI, or
any replacement therefor approved by Lender as required by this Agreement.
"BUSINESS" means the business of Borrowers as defined in the Recitals set
forth above.
"BUSINESS DAY" means each day of the year that is not a Saturday or Sunday
and which day (a) is not a day on which federally-chartered banking institutions
in Las Vegas, Nevada are required to close, and (b) is a not a regularly
scheduled holiday in the state of Nevada or in the United States.
2
"CAPITAL EXPENDITURE(S)" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"CAPITAL LEASE" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease of any
Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"CASH COLLATERAL ACCOUNT" has the meaning ascribed to it Annex B (Cash
Management System).
"CASH MANAGEMENT SYSTEM" means the cash management system described in
Annex B (Cash Management System).
"CERTIFIED CASH" means the net amount of Dollars in unrestricted cash and
cash equivalents of Borrowers that is/are in Deposit Accounts or securities
accounts maintained by a branch of a bank or securities intermediary within the
United States and which are identified on Disclosure Schedule 3.18 (Deposit and
Disbursement Accounts), as updated by Borrowers from time to time, as Certified
Cash Accounts, which Certified Cash Accounts are not subject to any Liens,
statutory liens or rights of offset, any overdraft, or any other charge or
priority in favor of any Person other than Lender or, for any Deposit Account or
securities account, the rights of the applicable bank or securities intermediary
maintaining such Deposit Account or securities account with respect to customary
account charges relating thereto (provided, that any amounts subject to any such
rights in favor of any such bank or securities intermediary shall be excluded
from Certified Cash for purposes of calculation of the amount thereof). For the
avoidance of any doubt, the amount of Borrowers' marketable securities and
Qualified Cash at the time of any determination shall be deemed to constitute
Certified Cash but only to the extent they are not subject to any Liens,
statutory liens or rights of offset, any overdraft, or any other charge or
priority in favor of any Person other than Lender.
"CHANGE OF CONTROL" means that any of the following have occurred: (a) any
Person or group of Persons (within the meaning of the Securities Exchange Act of
1934) shall have acquired actual ownership, beneficial ownership or the right to
own upon the occurrence of specified events, 25% or more of the Stock of any
Borrower or any Credit Party (other than Ganesha); or (b) during any period of
twelve (12) consecutive calendar months, Persons who at the beginning of such
period constituted the majority of the board of directors of any Borrower or the
majority of the managers of any Credit Party (other than Ganesha) (together with
any new Person whose nomination or election or appointment was approved by the
required vote of the shareholders or members) cease for any reason (other than
death or personal disability) to constitute a majority of the board of directors
of any Borrower or the majority of the managers of any Credit Party (other than
Ganesha); or (c) IHHI ceases to own, directly or indirectly, and control, all
3
(100%) of the Stock of WMC-A, WMC-SA, Chapman and Coastal; or (d) Bruce Mogel
ceases to be Chief Executive Officer or Director of IHHI, or WMC-A, or WMC-SA,
or Chapman, or Coastal, and a replacement acceptable to Lender in its sole
discretion is not employed by the applicable Borrower within thirty (30)
calendar days after the date that Bruce Mogel is no longer employed as Chief
Executive Office or Director of IHHI; or WMC-A, or WMC-SA, or Chapman, or
Coastal; or (e) West Coast and Ganesha cease to own, directly or indirectly, and
control, all (100%) of the membership interests of PCHI.
"CHAPMAN" means Chapman Medical Center, Inc., a California corporation.
"CHAPMAN LEASES" means each of the following:
(a) That certain lease agreement dated December 31, 1984, by and
between Chapman Medical, L.P., a California limited partnership,
successor-in-interest to Chapman Investments Associates, a California limited
liability company, successor-in-interest to James L, Kirby, Successor Trustee of
the Taggart Land Trust dated December 29, 1977, Fred D. Pierce, Trustee of the
Stanford Land Trust dated December 29, 1977, Lawrence A. Johnson, Trustee of the
Oxford Land Trust dated December 29, 1977, James L. Kirby, Successor Co-Trustee
of the Cayuga Land Trust dated December 29, 1977, Melia Harper Long, Successor
Co-Trustee of the Cayuga Land Trust dated December 29, 1977, and Mattison James
Harper, Successor Co-Trustee of the Cayuga Land Trust dated December 29, 1977,
as tenants in common doing business under the fictitious name Chapman Investment
Associates (collectively, "HOSPITAL LANDLORD"), and Chapman General Hospital,
Inc., a California corporation, as the initial Tenant thereunder (the "HOSPITAL
TENANT"). Said lease agreement was amended by a First Amendment dated April 8,
1985, by a Second Amendment dated April 1, 1989, by a Third Amendment dated
November 5, 1990 and by a Fourth Amendment dated August 25, 1994. Said lease, as
amended by the First, Second, Third and Fourth Amendments, shall collectively
hereinafter be referred to as the "CHAPMAN HOSPITAL LEASE." The 2601 East
Chapman Hospital Lease encumbers the real property and hospital improvements
commonly described as and located at 2601 East Chapman Avenue, Orange,
California. A memorandum of the Chapman Hospital Lease was recorded on August
30, 1994 as Instrument No. 94-0533295 of the Official Records of the Office of
the County Recorder of the County of Orange, State of California. Hospital
Tenant's interest in the Chapman Hospital Lease was assigned and transferred to
IHHI on March 5, 2005.
(b) That certain lease agreement dated December 31, 1984 by and
between Chapman Medical, L.P., a California limited partnership,
successor-in-interest to Chapman Investments Associates, a California limited
liability company, successor-in-interest to James L, Kirby, Successor Trustee of
the Taggart Land Trust dated December 29, 1977, Fred D. Pierce, Trustee of the
Stanford Land Trust dated December 29, 1977, Lawrence A. Johnson, Trustee of the
Oxford Land Trust dated December 29, 1977, James L. Kirby, Successor Co-Trustee
of the Cayuga Land Trust dated December 29, 1977, Melia Harper Long, Successor
Co-Trustee of the Cayuga Land Trust dated December 29, 1977, and Mattison James
Harper, Successor Co-Trustee of the Cayuga Land Trust dated December 29, 1977,
as tenants in common doing business under the fictitious name Chapman Investment
Associates (collectively, "MOB LANDLORD") and Greatwest Medical Management,
Inc., a California corporation, as the initial Tenant (the "MOB TENANT"). Said
lease agreement was amended by a First Amendment dated April 8, 1985, and by a
Second Amendment dated August 25, 1994. Said lease agreement, as amended by the
First Amendment and Second Amendment, shall collectively hereinafter be referred
4
to as the "CHAPMAN MOB LEASE." The 2617 East Chapman MOB Lease encumbers the
medical office building premises commonly described as and located at 2617 East
Chapman Avenue, Orange, California. A memorandum of the Chapman MOB Lease was
recorded on August 30, 1994 as Instrument No. 94-0533296 of the Official Records
of the Office of the County Recorder of the County of Orange, State of
California. MOB Tenant's interest in the Chapman MOB Lease was assigned and
transferred to IHHI on March 5, 2005.
"CHAPMAN MEDICAL CENTER" means the real property and hospital improvements
located at 2601 East Chapman Avenue, Orange, California, and the real property
and medical office building improvements located at 2617 East Chapman Avenue,
Orange, California.
"CHARGES" means all federal, state, county, city, municipal, local, foreign
or other governmental taxes (including taxes owed to the PBGC at the time due
and payable), levies, assessments, charges, liens, claims or encumbrances upon
or relating to (a) the Collateral, (b) the Obligations, (c) the employees,
payroll, income or gross receipts of any of Borrowers or any of the Credit
Parties, (d) the use of any real property owned or leased by Borrowers or Credit
Parties (other than Ganesha), or (e) any other aspect of the Business of
Borrowers or the business of Credit Parties (other than Ganesha).
"CHATTEL PAPER" means any chattel paper," as such term is defined in the
Code, including electronic chattel paper, now owned or hereafter acquired by
Borrowers or Credit Parties.
"CLOSING DATE" means October 9, 2007, unless Borrower's Representative and
Lender otherwise agree in writing.
"CLOSING AND FUNDING CHECKLIST" means the closing and funding checklist
prepared by Lender listing certain documents and information to be delivered in
connection with this Agreement and the other Loan Documents and the transactions
contemplated thereunder, as described in Annex C (Collateral Reports).
"COASTAL" means Coastal Communities Hospital, Inc., a California
corporation.
"COASTAL COMMUNITIES HOSPITAL" means the real property and hospital
improvements located at 2701 South Bristol Street and 1901 and 1905 North
College Avenue, Santa Ana, California.
"CODE" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of Nevada; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in such Article or Division shall
govern; and provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Lender or any Lien on any Collateral is governed by
the Uniform Commercial Code as enacted and in effect in a jurisdiction other
than the State of Nevada, the term "CODE" shall mean the Uniform Commercial Code
as enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions.
5
"COLLATERAL" means the following:
(a) all of each Borrower's tangible personal property, including
without limitation all present and future Inventory and Equipment (including
items of equipment which are or become Fixtures), now owned or hereafter
acquired;
(b) all of each Borrower's intangible personal property and interests
in personal property, including without limitation all present and future
Accounts, contract rights, Permits, General Intangibles, Chattel Paper,
Documents, Instruments, Deposit Accounts, Investment Property, Supporting
Obligations, rights to the payment of money or other forms of consideration of
any kind, tax refunds, insurance proceeds, now owned or hereafter acquired, and
all intangible and tangible personal property relating to or arising out of any
of the foregoing;
(c) all of each Borrower's Government Contracts and rights thereunder
and the related Government Accounts and proceeds thereof, now or hereafter owned
or acquired by such Borrower; provided, however, that Lender shall not have a
Lien in any rights under any Government Contract of any Borrower or in the
related Government Account where the taking of such security interest is a
violation of an express prohibition contained in the Government Contract (for
purposes of this limitation, the fact that a Government Contract is subject to,
or otherwise refers to, Title 31, ss. 203 or Title 41, ss. 15 of the United
States Code shall not be deemed an express prohibition against assignment
thereof) or is prohibited by applicable law, unless in any case consent is
otherwise validly obtained;
(d) PCHI's fee simple interest in the Western Medical Center -
Anaheim, in the Western Medical Center - Santa Ana, and in the Coastal
Communities Hospital;
(e) IHHI's interest, as tenant, in the Triple Net Lease of the Western
Medical Center - Anaheim, the Western Medical Center - Santa Ana, and the
Coastal Communities Hospital;
(f) IHHI's interest, as sublandlord, in the sublease of the Western
Medical Center - Anaheim to WMC-A, in the sublease of the Western Medical Center
- - Santa Ana to WMC-SA, and in the sublease of the Coastal Communities Hospital
to Coastal;
(g) IHHI's interest, as MOB Tenant, in the Chapman MOB Lease;
(h) IHHI's interest, as Hospital Tenant, in the Chapman Hospital
Lease; and
(i) any and all additions and accessions to any of the foregoing, and
any and all replacements, products and proceeds (including insurance proceeds)
of any of the foregoing..
"COLLATERAL ASSIGNMENT" means each of the following:
6
(a) the Collateral Assignment of Contracts re Western Medical Center -
Anaheim, dated as of the date hereof, by and among Lender, IHHI and WMC-A in the
form of Exhibit "H" attached hereto;
(b) the Collateral Assignment of Contracts re Western Medical Center -
Santa Ana, dated as of the date hereof, by and among Lender, IHHI and WMC-SA in
the form of Exhibit "H" attached hereto;
(c) the Collateral Assignment of Contracts re Coastal Communities
Hospital, dated as of the date hereof, by and among Lender, IHHI and Coastal in
the form of Exhibit "H" attached hereto;
(d) the Collateral Assignment of Contracts re Chapman MOB Lease, dated
as of the date hereof, by and among Lender and IHHI in the form of Exhibit "H"
attached hereto; and
(e) the Collateral Assignment of Contracts re Chapman Hospital Lease,
dated as of the date hereof, by and among Lender and IHHI in the form of Exhibit
"H" attached hereto.
"COLLATERAL DOCUMENTS" means the $80,000,000 Deeds of Trust, the Absolute
Assignments, the Collateral Assignment, the Security Agreement, the Pledge
Agreement, the Stock Power, the IP Security Agreement, the UCC-1 Financing
Statements, and all similar agreements, documents and instruments entered into
guaranteeing payment of, or granting a Lien upon, real and personal property
(and interests in real and personal property), and perfecting the Liens, as
security for payment of, the Obligations.
"COLLATERAL REPORTS" means the reports with respect to the Collateral
referred to in Annex C (Collateral Reports).
"COMMITMENT" means the aggregate commitment of Lender to make Advances
under the Loans, which aggregate amount shall not exceed EIGHTY MILLION AND
NO/100 DOLLARS ($80,000,000.00), from time to time in accordance with this
Agreement.
"COMMITMENT TERMINATION DATE" means the earliest of (a) thirty (30)
calendar days prior to the Stated Maturity Date; (b) the date Lender's
obligations to make Advances under any of the Notes terminate, (c) the date of
prepayment in full of all of the Loans and the permanent reduction of the Loans
to zero dollars ($0); or (d) the Maturity Date.
"CONTRACTS" means all contracts as such term is defined in the Code, now
owned or hereafter acquired by any of Borrowers, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which any of the Borrowers may now
or hereafter have any right, title or interest, including any agreement relating
to the terms of payment or the terms of performance of any Accounts.
"CONTROL AGREEMENT" means the Control Agreement dated as of the date
hereof, by and among Lender, Borrowers and Bank in the form of Exhibit "J"
attached hereto.
7
"COPYRIGHT LICENSE" means any and all rights now owned or hereafter
acquired by any of the Borrowers under any written agreement granting any right
to use any Copyright or Copyright registration.
"COPYRIGHTS" means all of the following now owned or hereafter adopted or
acquired by any of the Borrowers or any of the Credit Parties: (a) all
copyrights and General Intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof, and (b) all reissues, extensions or renewals
thereof.
"CREDIT PARTIES" means OC-PIN, PCHI, West Coast and Ganesha, and their
respective successors and assigns.
"DEFAULT" means any event that, with the passage of time or notice or both,
would, unless cured or waived in writing by Lender, become an Event of Default.
"DEFAULT RATE" means a rate of interest which is five percent (5%) per
annum above the Interest Rate per annum otherwise applicable to the Loan in
question.
"DEPOSIT ACCOUNTS" means all deposit accounts as such term is defined in
the Code, now or hereafter held in the name of any of the Borrowers.
"DEPOSIT ACCOUNT SECURITY AGREEMENT" means that certain Deposit Account
Security Agreement dated as of the date hereof, by and among Lender and
Borrowers in the form of Exhibit "I" attached hereto.
"DISBURSEMENT ACCOUNTS" has the meaning ascribed to it in Annex B (Cash
Management System).
"DISCLOSURE SCHEDULES" means the Schedules prepared by Borrowers and
denominated as Disclosure Schedules 1.3 through 6.7 to this Agreement.
"DOCUMENTS" means all documents, as such term is defined in the Code, now
owned or hereafter acquired by any of Borrowers, wherever located.
"DOLLARS" or "$" means lawful currency of the United States of America.
"DR. SHAH" means Anil V. Shah, M.D., an individual.
"$45,000,000 REAL ESTATE TERM LOAN" means the $45,000,000 real estate term
loan made by Lender to Borrowers pursuant to this Agreement.
"$45,000,000 REAL ESTATE TERM NOTE" means the $45,000,000 real estate
promissory note of even date herewith, executed by Borrowers in favor of Lender,
in the form of Exhibit "A" attached hereto.
8
"$35,000,000 NON-REVOLVING LINE OF CREDIT LOAN" means the $35,000,000
non-revolving line of credit loan made by Lender to Borrowers pursuant to this
Agreement.
"$35,000,000 NON-REVOLVING LINE OF CREDIT NOTE" means the $35,000,000
non-revolving line of credit promissory note of even date herewith, executed by
Borrowers in favor of Lender, in the form of Exhibit "B" attached hereto.
"$10,700,000 CONVERTIBLE TERM LOAN" means the $10,700,000 convertible term
loan made by MPFC III to Borrowers pursuant to the New $10,700,000 Credit
Agreement.
"$10,700,000 CONVERTIBLE TERM NOTE" means the $10,700,000 convertible
promissory note of even date herewith, executed by Borrowers in favor of MPFC
III pursuant to the New $10,700,000 Credit Agreement.
"$80,000,000 DEED OF TRUST " means each of the following:
(a) the Deed of Trust With Assignment of Rents and Fixture Filing re
Western Medical Center - Anaheim, dated as of the date hereof, executed by PCHI
in favor of Lender in the form of Exhibit "E" attached hereto;
(b) the Deed of Trust With Assignment of Rents and Fixture Filing re
Western Medical Center - Santa Ana, dated as of the date hereof, executed by
PCHI in favor of Lender in the form of Exhibit "E" attached hereto;
(c) the Deed of Trust With Assignment of Rents and Fixture Filing re
Coastal Communities Hospital, dated as of the date hereof, executed by PCHI in
favor of Lender in the form of Exhibit "E" attached hereto;
(d) the Deed of Trust With Assignment of Rents and Fixture Filing re
Chapman MOB Lease, dated as of the date hereof, executed by IHHI in favor of
Lender in the form of Exhibit "E" attached hereto; and
(e) the Deed of Trust With Assignment of Rents and Fixture Filing re
Chapman Hospital Lease, dated as of the date hereof, executed by IHHI in favor
of Lender in the form of Exhibit "E" attached hereto.
"$50,000,000 DEEDS OF TRUST" means each of the fee and leasehold
$50,000,000 Deeds of Trust of even date herewith, executed by PCHI and/or IHHI,
as Trustors, and Medical Provider Financial Corporation I, as Beneficiary,
securing repayment of the $50,000,000 Revolving Facility.
"$50,000,000 REVOLVING CREDIT AGREEMENT" means that certain $50,000,000
Revolving Credit Agreement of even date herewith, executed by Borrowers, as
borrowers, and Medical Provider Financial Corporation I, as Lender.
"$50,000,000 REVOLVING FACILITY" means the $50,000,000 revolving line of
credit loan facility by Medical Provider Financial Corporation I, as lender, to
Borrowers, as borrowers, pursuant to the $50,000,0000 Revolving Credit
Agreement.
9
"EFFECTIVE DATE" means the date set forth in the introductory paragraph of
this Agreement.
"ENVIRONMENTAL INDEMNITY AGREEMENT" means an Environmental Indemnity
Agreement of even date herewith, by and between Borrowers, Credit Parties (other
than Ganesha) and Lender, in the form of Exhibit "M" attached hereto
"ENVIRONMENTAL LAWS" means all federal, state and local health, safety,
environmental or natural resource laws, statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, authorizations,
concessions, franchises and similar items of all federal, state, county,
municipal, or other governmental, quasi-governmental, regulatory or
administrative authority, agency, board, court, arbitrator, body,
instrumentality, commission or other judicial body exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to Governmental Authority having jurisdiction, including, without limitation all
statutes referred to by name in the definition of Hazardous Materials; and all
other state, federal, and local laws, regulations, rules, ordinances and orders
which govern: (i) the existence, cleanup and/or remedy of contamination on real
property and improvements; (ii) the emission or discharge of Hazardous Materials
into the environment; (iii) the control of Hazardous Materials; (iv) the use,
generation, transport, treatment, storage, disposal, removal, or recovery of
Hazardous Materials; as well as all applicable judicial and administrative and
regulatory decrees, judgments or orders (including without limitation the common
law) and all applicable covenants running with the land that relate to the
protection of health, safety, environment or natural resources.
"ENVIRONMENTAL LIABILITIES" means, with respect to any Person, all
environmental liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages, costs
and expenses (including all reasonable fees, disbursements and expenses of
counsel, experts and consultants), fines, penalties, sanctions and interest
incurred as a result of or related to any claim, suit, action, investigation,
proceeding or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law,
including any arising under or related to any Environmental Laws, Environmental
Permits, or in connection with any Release or threatened Release or presence of
a Hazardous Material whether on, at, in, under, from or about or in the vicinity
of any real or personal property.
"ENVIRONMENTAL LOSSES" means any and all losses (including diminution in
value of a Property), liabilities, damages, demands, claims, actions, judgments,
causes of action, assessments, penalties, costs and expenses (including sums
paid in settlement of claims), liens, interest, fines or penalties, including
without limitation, the fees and disbursements of outside counsel, paralegals
and accountants, consultant fees, expert fees, all foreseeable and unforeseeable
consequential damages, and all other costs and expenses of any kind or nature,
which are suffered or incurred by Lender with respect to a Property or adjacent
real property or improvements arising out of or as a result of (i) the
occurrence of any Hazardous Material Activity; (ii) any violation of any
Environmental Laws or Applicable Laws; (iii) any investigation, inquiry, order,
hearing, action, or other proceeding by or before any Governmental Authority in
connection with any Hazardous Material Activity; (iv) any Hazardous Material
10
Claims brought, asserted, or alleged against Lender or against any of Lender's
directors, officers, shareholders, employees, attorneys, or agents; (v) any
actions taken by Lender to enter and inspect a Property pursuant to the rights
granted Lender under this Agreement and the other Loan Documents; and (vi) any
misrepresentation or inaccuracy in any representation or warranty by any
Borrower or any Credit Party or any material breach or failure to perform any
covenants or obligations by any Borrower or any Credit Party pursuant to this
Agreement relating to environmental matters.
"ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"EQUIPMENT" means all equipment, as such term is defined in the Code, now
owned or hereafter acquired by Borrowers, wherever located.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
that, together with any other Person, are treated as a single employer within
the meaning of Sections 414(b), (c), (m) or (o) of the IRC.
"ERISA EVENT" means (a) with respect to a Title IV Plan, any event
described in Section 4043(c) of ERISA for which notice to the PBGC has not been
waived; (b) the withdrawal of Borrowers or any ERISA Affiliate from a Title IV
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2( of ERISA; (c) the
complete or partial withdrawal of Borrowers or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV
Plan in a distress termination described in Section 4041(c) of ERISA or the
treatment of a plan amendment as a termination under Section 4041 of ERISA; (e)
the institution of proceedings to terminate a Title IV Plan or Multiemployer
Plan by the PBGC; (f) with respect to a Title IV Plan, the existence of an
"accumulated funding deficiency" (as defined in Section 412 of the IRC or
Section 302 of ERISA) whether or not waived, or the failure to make by its due
date a required installment under Section 412(m) of the Code or the failure to
make any required contribution to a Multiemployer Plan; (g) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to a Title IV Plan; (h) the
making of any amendment to any Title IV Plan which could result in the
imposition of a lien or the posting of a bond or other security; (i) with
respect to a Title IV Plan an event described in Section 4062(e) of ERISA; (j)
any other event or condition that would reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (k) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; (1) the loss of a Qualified Plan's qualification or tax exempt status;
or (m) the termination of a Plan described in Section 4064 of ERISA.
11
"ESCROW" means an escrow account established by the Escrow Company.
"ESCROW COMPANY" means Chicago Title Insurance Company,
Commercial/Industrial, 700 South Flower Street, Suite 800, Los Angeles,
California 90017, Attn: Patricia M. Schlageck ("SR. COMMERCIAL ESCROW OFFICER"),
telephone: 213-488-4358; facsimile: 213-612-4138; email:
patricia.schlageck@ctt.com.
"ESCROW HOLDER" means Escrow Company.
"EVENT OF DEFAULT" means that Borrowers and/or Credit Parties have
committed one or more of the events described in Section 8.1 (Events of Default)
of this Agreement.
"EXHIBITS" means any of Exhibits "A" through "T" attached to this
Agreement.
"FEES" means any and all fees payable to Lender pursuant to this Agreement
or any of the other Loan Documents, including but not limited to the Origination
Fees, the Unused Commitment Fees and Lender's Costs.
"FINANCIAL STATEMENTS" means the consolidated income statements, statements
of cash flows and balance sheets of each of the Borrowers delivered in
accordance with Section 3.4 (Financial Statements and Projections) of this
Agreement.
"FIRST CREDIT AGREEMENT" means that certain Credit Agreement dated to be
effective as of March 3, 2005, by and between Borrowers, Credit Parties and
Lender. Pursuant to the First Credit Agreement, Lender made available to
Borrowers the Previous $50,000,000 Acquisition Loan and the Previous $30,000,000
Line of Credit Loan.
"FISCAL MONTH" means any of the monthly accounting periods of Borrowers.
"FISCAL QUARTER" means any of the quarterly accounting periods of
Borrowers, ending on March 31, June 30, September 30 and December 31 of each
year.
"FISCAL YEAR" means any of the annual accounting periods of Borrowers
ending on March 31 of each year.
"FIXTURES" means all fixtures as such term is defined in the Code, now
owned or hereafter acquired by Borrowers or Credit Parties.
"FRAUDULENT TRANSFER LAW" means Section 548 of Title 11 of the United
States Code or any applicable provisions of comparable state law.
"FUNDED DEBT" means, with respect to any Person, without duplication, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and that by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such Person's
option under a line of credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long term debt, lines of credit and short term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.
12
"GAAP" means, as to a particular Person, such accounting practice as, in
the opinion of the independent accountants regularly retained by such Person,
conforms at the time to Generally Accepted Accounting Principles, consistently
applied. "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means those principles and
practices in the United States of America (a) which are recognized as such by
the Financial Accounting Standards Board, (b) which are applied for all periods
after the date hereof in a manner consistent with the manner in which such
principles and practices were applied to the most recent Financial Statements
furnished Lender of the relevant Person, and (c) which are consistently applied
for all periods after the date hereof so as to reflect properly the financial
condition, and results of operations and changes in financial position, of such
Person. If any change in any accounting principle or practice is required by the
Financial Accounting Standards Board in order for such principle or practice to
continue as a Generally Accepted Account Principle or practice, all reports and
Financial Statements required hereunder shall be prepared in accordance with
such changes.
"GANESHA" means Ganesha Realty, LLC, a California limited liability
company.
"GENERAL INTANGIBLES" means all general intangibles, as such term is
defined in the Code, now owned or hereafter acquired by Borrowers, including all
right, title and interest that Borrowers may now or hereafter have in or under
any Contract, all payment intangibles, customer lists, Licenses, Copyrights,
Trademarks, Patents, and all applications therefore and reissues, extensions or
renewals thereof, rights in Intellectual Property, interests in partnerships,
joint ventures and other business associations, licenses, permits, copyrights,
trade secrets, proprietary or confidential information, inventions (whether or
not patented or patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill, expertise, experience,
processes, models, drawings, materials and records, goodwill (including the
goodwill associated with any Trademark or Trademark License), all rights and
claims in or under insurance policies (including insurance for fire, damage,
loss and casualty, whether covering personal property, real property, tangible
rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
choices in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged
Stock and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of Borrowers or any computer bureau or service
company from time to time acting for Borrowers.
"GOODS" means all goods as defined in the Code, now owned or hereafter
acquired by Borrowers, wherever located, including embedded software to the
extent included in goods as defined in the Code.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state, county,
city, or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
13
"GUARANTEED INDEBTEDNESS" means as to any Person, any obligation of such
Person guaranteeing, providing comfort or otherwise supporting any Indebtedness,
lease, dividend, or other obligation of any other Person in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof. The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of (x)
the stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum amount for which
such Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"GUARANTORS" means OC-PIN and West Coast, and their respective successors
and assigns.
"GUARANTY AGREEMENT" means a Guaranty Agreement of even date herewith,
executed by the Guarantors and Lender, in the form of Exhibit "N" attached
hereto.
"HAZARDOUS MATERIAL" means any (a) substance, product, waste or other
material of any nature whatsoever which is or becomes listed, regulated, or
addressed pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601, et seq. ("CERCLA"); the Hazardous
Materials Transportation Act, 49 U.S.C. Section 5101, et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. ("RCRA"); the
Toxic Substances Control Act, 15 U.S.C. Sections 2601 et seq.; the Clean Water
Act, 33 U.S.C. Sections 1251 et seq.; the Federal Water Pollution Control Act
(33 U.S.C. Section 1251, ET SEQ.) ("CLEAN WATER ACT" OR "CWA"); the Atomic
Energy Act of 1954 (42 U.S.C. Section 2011, ET SEQ.) ("AEA"); the Clean Air Act
(42 U.S.C. Section 7401, ET SEQ.); the Emergency Planning and Community Right to
Know Act (42 U.S.C. Section 11001, ET SEQ.); the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. Section 136, ET SEQ.) ("FIFRA"); the Oil Pollution
Act of 1990 (P.L. 101-380, 104 Stat. 486); the Safe Drinking Water Act (42
U.S.C. Sections 300f, ET SEQ.) ("SDWA"); the Surface Mining Control and
Reclamation Act of 1974 (30 U.S.C. Sections 1201, ET SEQ.); the Toxic Substances
Control Act (15 U.S.C. Section 2601, ET SEQ.) ("TSCA"); the Uranium Mill
Tailings Radiation Control Act of 1978 (42 U.S.C. Section 7901, ET SEQ.)
("UMTRCA"); all respective regulations promulgated thereunder; and or any other
federal, state or local statute, law, ordinance, resolution, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect, (b) any
substance, product, waste or other material of any nature whatsoever which may
14
give rise to liability under any of the above statutes or under any statutory or
common law theory based on negligence, trespass, intentional tort, nuisance or
strict liability or under any reported decisions of a state or federal court,
(c) petroleum or crude oil other than petroleum and petroleum products contained
within regularly operated motor vehicles, and (d) asbestos.
"HAZARDOUS MATERIAL ACTIVITY" means any storage, holding, existence,
release, emission, discharge, generation, processing, abatement, removal,
disposition, handling or transportation of any Hazardous Material from, under,
into, or across any Property or surrounding real property and improvements or
any other use of or operation of any Property or surrounding real property or
improvements that creates a risk of Hazardous Material contamination of said
Property; provided, however, that Hazardous Material Activity shall not include
reasonable incidental use, storage and disposal of Hazardous Materials on the
Property provided that such use, disposal and storage complies with the
following: (a) such use, disposal and storage shall be limited to customary
supplies, including supplies and materials customarily used, stored and disposed
of in the normal operations of medical facilities; (b) no such products or
supplies create any risk of harm to persons or property including any Collateral
under this Agreement and the other Loan Documents; and (c) all such products and
supplies are used, stored and disposed of in material compliance with all
applicable Environmental Laws.
"HAZARDOUS MATERIAL CLAIM" means any and all enforcement, clean-up,
removal, remedial or other governmental or regulatory actions, agreements, or
orders threatened, instituted or completed pursuant to any Environmental Laws
and any all other actions, proceedings, claims, demands or causes of action,
whether meritorious or not (including, without limitation, third party claims
for contribution, indemnity, personal injury or real or personal property
damage), which directly or indirectly relate to, arise from or are based in
whole or in part on: (i) the occurrence or alleged occurrence of any Hazardous
Material Activity, (ii) any violation or alleged violation of any applicable
Environmental Laws relating to a Property or to the ownership, use, occupation
or operation thereof; and (iii) any investigation, inquiry, order, hearing,
action or other proceeding by or before any Governmental Authority in connection
with any Hazardous Material Activity.
"HOSPITAL FACILITIES" and/or "HOSPITAL FACILITY" means Western Medical
Center-Anaheim, the Western Medical Center-Santa Ana, the Coastal Communities
Hospital and the Chapman Medical Center.
"IHHI" means Integrated Healthcare Holdings, Inc., a Nevada corporation.
"INDEBTEDNESS" means, with respect to any Person, without duplication, (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than six (6) months unless
being contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by note, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present value of future
15
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (i) the
Obligations.
"INDEMNIFIED LIABILITIES" means all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other statutory and non-statutory costs of investigation
or defense, including those incurred upon any appeal) that may be instituted or
asserted against or incurred by any Lender Released Party directly or indirectly
based on or relating to: (a) the negotiation, execution and delivery of this
Agreement by any Lender Released Party; or (b) the negotiation, execution and
delivery of any Previous Loan Document by any Lender Released Party; or (c) any
Lender Liability Claim brought or asserted against any Lender Released Party in
connection with any Previous Loan Document or in connection with the
negotiation, execution and delivery of this Agreement; or (d) as the result of
credit having been extended, suspended or terminated under any Previous Loan
Document; or (e) as a result of the administration of any credit under any
Previous Loan Document and in connection with or arising out of the transactions
contemplated hereunder and thereunder and any actions or failures to act in
connection therewith, including any and all Environmental Liabilities and legal
costs and expenses arising out of or incurred in connection with disputes
between or among any parties to any of the Previous Loan Documents.
"INDEPENDENT DIRECTOR(S)" means a Person or Persons who are or who become
members of IHHI's board of directors and who (a) are independent of all
Borrowers and all Credit Parties, (b) are not now and never have been affiliated
with any Borrower or any Credit Party, (c) are not now and never have been
employed by or have performed consulting or other services for any Borrower or
any Credit Party, (d) are not now and never have been paid or compensated, or
received consideration of any kind from, any Borrower or any Credit Party, (e)
are not now and never have been directly or indirectly engaged in the full-time
practice of clinical medicine (i.e., said Persons are not doctors), and (f) are
experienced in the administration and management of acute care hospital
facilities such as the Hospital Facilities.
"INSTRUMENTS" means all instruments, as such term is defined in the Code,
now owned or hereafter acquired by Borrowers, wherever located, and, in any
event, including all certificated securities, all certificates of deposit, and
all promissory notes and other evidences of indebtedness, other than instruments
that constitute, or are a part of a group of writings that constitute, Chattel
Paper.
"INTELLECTUAL PROPERTY" means any and all Licenses, Patents, Copyrights,
Trademarks, and the goodwill associated with such Trademarks.
16
"INTERCREDITOR AGREEMENT" means an Intercreditor Agreement of even date
herewith, executed by the Lender and Borrowers in the form of Exhibit "O"
attached hereto.
"INTEREST PAYMENT DATE" means the first Business Day of each calendar month
to occur while any Loan is outstanding, and provided further that, in addition
to the foregoing, the Maturity Date shall be deemed to be an Interest Payment
Date with respect to any interest that has then accrued under this Agreement.
"INTEREST RATE" means the following:
(a) With respect to the $45,000,000 Real Estate Term Loan, simple
interest shall be charged at the per annum fixed rate of 9.0%. Provided,
however, from and after the first anniversary of the Closing Date, simple
interest shall thereafter be increased to and charged at the per annum fixed
rate of 14.0%.
(b) With respect to the $35,000,000 Non-Revolving Line of Credit Loan,
simple interest shall be charged at the per annum fixed rate of 9.25%.
"INVENTORY" means all inventory, as such term is defined in the Code, now
owned or hereafter acquired by Borrowers, wherever located, and in any event
including inventory, merchandise, goods and other personal property that are
held by or on behalf of Borrowers for sale or lease or are furnished or are to
be furnished under a contract of service, or that constitute raw materials, work
in process, finished' goods, returned goods, or materials or supplies of any
kind, nature or description used or consumed or to be used or consumed in
Borrower's business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including all supplies and embedded software.
"INVESTMENT PROPERTY" means all investment property as such term is defined
in the Code now owned or hereafter acquired by Borrowers, wherever located,
including (a) all securities, whether certificated or uncertificated, including
stocks, bonds, interests in limited liability companies, partnership interests,
treasuries, certificates of deposit, and mutual fund shares; (b) all securities
entitlements of Borrowers, including the rights of Borrowers to any securities
account and the financial assets held by a securities intermediary in such
securities account and any free credit balance or other money owing by any
securities intermediary with respect to that account; (c) all securities
accounts of Borrowers; (d) all commodity contracts of Borrowers; and (e) all
commodity accounts held by Borrowers.
"IRC" means the Internal Revenue Code of 1986 and all regulations
promulgated thereunder.
"IRS" means the Internal Revenue Service.
"LANDLORD'S CONSENT AND ESTOPPEL CERTIFICATE (CHAPMAN LEASES)" means each
of the following:
(a) a Landlord's Consent and Estoppel Certificate (Chapman MOB Lease)
executed by the Chapman MOB Landlord in favor of Lender, in the form of Exhibit
"S" attached hereto; and
17
(b) a Landlord's Consent and Estoppel Certificate (Chapman Hospital Lease)
executed by the Chapman Hospital Landlord in favor of Lender, in the form of
Exhibit "S" attached hereto. .
"LANDLORD'S CONSENT AND ESTOPPEL CERTIFICATE (TRIPLE NET LEASE)" means that
certain Landlord's Consent and Estoppel Certificate (Triple Net Lease) executed
by PCHI, in the form of Exhibit "T" attached hereto.
"LENDER" means Medical Provider Financial Corporation II, a Nevada
corporation, and, if Lender shall decide to assign all or any portion of the
Obligations, such term shall include any assignee(s) of Lender.
"LENDER LIABILITY CLAIM(S)" means any claim or cause of action that any of
the Releasing Parties now has or in the future may have against any Lender
Released Party to the effect that, prior to the Effective Date of this
Agreement: (a) any of the Lender Released Parties committed a breach or default
under any of the Loan Documents or under any of the Previous Loan Documents or
under the Term Sheet; or (b) any of the Lender Released Parties conspired with
the executive officers, representatives or agents of IHHI to deprive OC-PIN of
its stock ownership in IHHI or otherwise inflicted any actionable damage on
OC-PIN; or (c) any of the Lender Released Parties committed an act not permitted
by any of the Previous Loan Documents or by the Term Sheet or by applicable law;
or (d) any of the Lender Released Parties omitted to take an action required by
the Previous Loan Documents or by the Term Sheet or under applicable law; or (e)
any of the Previous Loan Documents or the Term Sheet or this Agreement or the
other Loan Documents is/are invalid or unenforceable in whole or in part for any
reason; or (f) any of the Lender Released Parties suggested, implied, induced,
cajoled or required that IHHI include any terms or conditions in any agreements
between IHHI and OC-PIN in connection with the Previous Loan Documents or the
Term Sheet or this Agreement or the other Loan Documents or with respect to any
of the Borrowers, or Credit Parties or Guarantors; or (g) any of the Lender
Released Parties suggested, implied, induced, cajoled or required that IHHI not
include any terms or conditions in any agreements between IHHI and OC-PIN in
connection with the Previous Loan Documents or the Term Sheet or this Agreement
or the other Loan Documents or with respect to any of the Borrowers, or Credit
Parties or Guarantors; or (h) any of the Lender Released Parties improperly
interfered with, or improperly exercised control, or exercised excessive
control, over any of the Borrowers, or Credit Parties, or Guarantors, in
connection with the Previous Loan Documents or Term Sheet or this Agreement or
the other Loan Documents; or (i) any of the Lender Released Parties breached in
any way any alleged duty of good faith or fair dealing, any alleged fiduciary
duty, or any alleged duty of commercial reasonableness, or any quasi-duty, or
any implied duty, in connection with the Previous Loan Documents or the Term
Sheet or this Agreement or the other Loan Documents or with respect to any of
the Borrowers or Credit Parties or Guarantors; or (j) any of the Lender Released
Parties committed any unlawful, unfair or fraudulent business act or practice in
connection with the Previous Loan Documents or the Term Sheet or this Agreement
or the other Loan Documents or with respect to any of the Borrowers, or Credit
Parties or Guarantors; or (k) any of the Lender Released Parties engaged in any
unfair, deceptive, untrue or misleading advertising in connection with the
Previous Loan Documents or the Term Sheet or this Agreement or the other Loan
Documents or with respect to any of the Borrowers, or Credit Parties or
Guarantors; or (l) any of the Lender Released Parties committed any act
prohibited by California Business and Professions Code Section 17500 or its
18
State of Nevada counterpart in connection with the Previous Loan Documents or
the Term Sheet or this Agreement or the other Loan Documents or with respect to
any of the Borrowers, or Credit Parties or Guarantors; or (m) any of the Lender
Released Parties engaged in predatory lending practices in connection with the
Previous Loan Documents or the Term Sheet or this Agreement or the other Loan
Documents or with respect to any of the Borrowers, or Credit Parties or
Guarantors; or (n) any of the Lender Released Parties engaged in or committed
any act or omission which constitutes fraud, duress, negligence, conversion,
defamation or infliction of emotional distress in connection with the Previous
Loan Documents or the Term Sheet or this Agreement or the other Loan Documents
or with respect to any of the Borrowers, or Credit Parties or Guarantors; or (o)
any of the Lender Released Parties interfered with IHHI's prospective business
advantage in connection with the Previous Loan Documents or the Term Sheet or
this Agreement or the other Loan Documents or with respect to any of the
Borrowers, or Credit Parties or Guarantors; or (p) any of the Lender Released
Parties interfered with IHHI's contractual relations in connection with the
Previous Loan Documents or the Term Sheet or this Agreement or the other Loan
Documents or with respect to any of the Borrowers, or Credit Parties or
Guarantors; or (q) any of the Lender Released Parties acted or failed to act in
a manner which directly or indirectly caused or contributed to the business
decline, lost profits or other detrimental effects with respect to any of the
Borrowers, or Credit Parties or Guarantors; or (r) any of the Lender Released
Parties acted or failed to act in a manner which directly or indirectly caused
or contributed to any of the Borrowers continuing in business while insolvent or
otherwise delaying any filing of bankruptcy or similar proceedings; or (s) any
of the Lender Released Parties utilized or made threats, coercion, undue
influence or other methods of causing the Releasing Parties to voluntarily or
involuntarily agree to the releases, waivers, covenants not to sue and
indemnities set forth in this Agreement or in any of the Previous Loan
Documents; or (t) any of the Lender Released Parties was party to or acted or
failed to act in a manner which directly or indirectly gave rise to a
principal-agent relationship with any of the Releasing Parties; or (u) that
Lender's requirement, based on its past experience in connection with the
Previous Loans, that Dr. Shah resign from IHHI's board of directors as a
condition of making the Loans, improperly interfered with, or improperly
exercised control, or exercised excessive control, over IHHI; or (v) that
Lender's requirement, based on its past experience in connection with the
Previous Loans, that until the Loans are paid in full and satisfied, Borrowers
not, directly or indirectly, permit Dr. Shah to be nominated, or elected, or
appointed, or directly or indirectly compensated, paid, engaged, retained or
become, an officer, or director, or employee, or manager, or supervisor, or
consultant, or agent, or representative of, any of the Borrowers, improperly
interfered with, or improperly exercised control, or exercised excessive
control, over said Borrowers. The foregoing releases and waivers are permanent
and shall survive the expiration or termination of this Agreement and the other
Loan Documents.
"LENDER RELEASED PARTIES" and individually a "LENDER RELEASED PARTY" means
and includes Lender, Medical Provider Financial Corporation I, a Nevada
corporation, Medical Provider Financial Corporation III, a Nevada corporation,
Medical Capital Corporation, a Nevada corporation, and all of their related and
affiliated companies and entities, and their respective predecessors, successors
and assigns, and their respective officers, directors, shareholders, partners,
trustees, employees, agents, attorneys, representatives and assigns.
19
"LENDER'S COSTS" means all fees and expenses of Lender in connection with
the Loans and all Loan Documents including, but not limited to, all attorneys'
fees, costs and expenses paid or incurred by Lender in connection with any
application or engagement letter, or Term Sheet, or any Loan Documents, the fees
and disbursements of Lender's counsel, the travel expenses of Lender's personnel
and legal counsel related to the Loans, note intangible taxes, if any, and all
Closing, escrow, recording and filing fees, expenses and taxes.
"LENDER'S REPRESENTATIVE" means Medical Provider Financial Corporation II,
c/o Medical Capital Corporation, 2100 South State College Blvd., Anaheim,
California 92806, Attn: Sidney Field, CEO, or Joseph J. Lampariello, President
and COO, or Adam Field, Sr. Vice President Development, telephone: 714-935-3100,
facsimile: 714-935-3114.
"LICENSE" means any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by
Borrowers.
"LIEN(S)" means any agreement or deed of trust, mortgage, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"LITIGATION" means any action, claim, lawsuit, demand, investigation or
proceeding now pending or, to the knowledge of Borrowers or Credit Parties or
Guarantors, threatened against Borrowers or Credit Parties or Guarantors,
whether before any Governmental Authority or before any arbitrator or panel of
arbitrators, or otherwise.
"LOAN ACCOUNT" means an account maintained by Lender in its books to record
all Advances made by Lender to Borrowers, all payments made by Borrowers to
Lender, and all other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations. All entries in the Loan Account
shall be made in accordance with Lender's customary accounting practices as in
effect from time to time.
"LOAN DOCUMENTS" means, together, this Agreement, the Notes, the Guaranty
Agreement, the Collateral Documents, the Environmental Indemnity Agreement, the
Control Agreement, the Post-Closing Agreement, the Collateral Assignment of
Contracts, and all other agreements, instruments, documents and certificates
identified in the Closing and Funding Checklist executed and delivered to, or in
favor of, Lender and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, letter of credit agreements and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
Borrowers or Credit Parties or Guarantors, or any employee of Borrowers or
Credit Parties or Guarantors, and delivered to Lender in connection with this
Agreement or the transactions contemplated thereby. Any reference in this
Agreement or any other Loan Document to a Loan Document shall include all
exhibits and schedules thereto, and all amendments, restatements, supplements or
other modifications thereto, and shall refer to the Agreement or such Loan
Document as the same may be in effect at any and all times such reference
becomes operative.
20
"LOANS" means, together, the following, and "LOAN" means any one of the
following:
(a) The $45,000,000 Real Estate Term Loan.
(b) The $35,000,000 Non-Revolving Line of Credit Loan.
"LOCK BOXES" has the meaning ascribed to it in Annex B (Cash Management
System).
"MATERIAL ADVERSE EFFECT" means any circumstance or event, as determined by
Lender in the exercise of its reasonable discretion, which (a) has or may
reasonably be expected to have any material adverse effect whatsoever upon the
validity, performance, perfection or enforceability of the Loan Documents, (b)
is, or is reasonably expected to be, material and adverse to the financial
condition of the business operations of any Borrower, any Credit Party and/or
any Guarantor, (c) is, or is reasonably expected to, materially impair the
ability of any Borrower or any Credit Party or any Guarantor to fulfill their
respective obligations under the Loan Documents, or (d) would with the passage
of time or giving of notice, or both, result in or cause a Default or an Event
of Default, or (e) materially impairs or is reasonably expected to materially
impair any of the Collateral, or any of Lender's Liens on any of the Collateral,
or the priority of such Liens, or (f) materially impairs or is reasonably
expected to materially impair Lender's rights and remedies under this Agreement
and the other Loan Documents.
"MATURITY DATE" means the date which is the first to occur of (i) the
Stated Maturity Date, and (ii) the occurrence or existence of a Default or an
Event of Default under any of the Loan Documents with respect to which Lender
has exercised its option to accelerate the Maturity Date pursuant to Section
8.2(a) hereof.
"MAXIMUM AMOUNT" means, as of any date of determination, an amount equal to
the Commitment as of that date.
"MAXIMUM LAWFUL RATE" means the interest rate that a court of competent
jurisdiction determines in a final unappealable order to be the highest rate of
interest permissible under applicable law.
"MEMBERSHIP CERTIFICATES" means all certificates evidencing the ownership
of membership interests in a limited liability company.
"MEMBERSHIP POWER" means the Irrevocable Membership Power of even date
herewith, executed by West Coast and Ganesha in favor of Lender, in the form if
Exhibit "R" attached hereto
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section 3(37)
or 4001(a)(3) of ERISA, and to which any Borrower is making, is obligated to
make or has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.
"NOTES" means, together, the following:
(a) The $45,000,000 Real Estate Term Note; and
(b) The $35,000,000 Non-Revolving Line of Credit Note.
21
"NOTICE OF REQUEST FOR ADVANCE" means a notice delivered to Lender by
Borrower's Representative requesting an Advance, in the form of Exhibit "D"
attached hereto.
"OBLIGATIONS" means, collectively, the Loans, all Advances, debts,
liabilities and obligations for the performance of covenants, tasks or duties or
for payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable) owing by
Borrowers or Credit Parties or Guarantors to Lender, and all covenants and
duties regarding such amounts, of any kind or nature, present or future, whether
or not evidenced by any note, agreement, letter of credit agreement or other
instrument, arising under this Agreement or any of the other Loan Documents.
This term includes all principal, interest (including all interest that accrues
after the commencement of any case or proceeding by or against Borrowers or
Credit Parties or Guarantors in bankruptcy, whether or not allowed in such case
or proceeding), fees, expenses, attorneys' fees and any other sum chargeable to
Borrowers or Credit Parties or Guarantors under the Agreement or any of the
other Loan Documents.
"OC-PIN" means Orange County Physicians Investment Network, LLC, a Nevada
limited liability company.
"ORIGINATION FEES" means the sum of each of the following:
(a) With respect to the $45,000,000 Real Estate Term Loan, an
origination fee in the amount of SIX HUNDRED SEVENTY FIVE THOUSAND AND NO/100
DOLLARS ($675,000.00) (1.5% of $45,000,000); plus
(b) With respect to the $35,000,000 Non-Revolving Line of Credit Loan,
an origination fee in the amount of FIVE HUNDRED TWENTY FIVE THOUSAND AND NO/100
DOLLARS ($525,000.00) (1.5% of $35,000,000).
"PATENT LICENSE" means rights under any written agreement now owned or
hereafter acquired by Borrowers granting any right with respect to any invention
on which a Patent is in existence.
"PATENTS" means all of the following in which Borrowers now hold or
hereafter acquire any interest: (a) all letters patent of the United States or
of any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State, or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PCHI" means Pacific Coast Holdings Investment, LLC, a California limited
liability company.
"PENSION PLAN" means a Plan described in Section 3(2) of ERISA.
22
"PERMITTED ENCUMBRANCES" means, for each Property, the following
encumbrances relating thereto: (a) Liens for taxes or assessments or other
governmental Charges not yet due and payable or which are being contested in
accordance with Section 5.2(b) (Right to Contest Charges); (b) pledges or
deposits of money securing statutory obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) zoning restrictions, easements,
licenses, or other restrictions on the use of any real estate or other minor
irregularities in title (including leasehold title) thereto, so long as the same
do not create a Material Adverse Effect, as determined by Lender in its sole
discretion; (d) currently existing or hereafter created Liens in favor of Lender
or its Affiliates; (e) any Lien held by an equipment lessor in the equipment so
leased; (f) all encumbrances shown in any Title Policy issued on the Closing
Date to Lender; (g) inchoate and unperfected workers' compensation, mechanics'
or similar liens arising in the ordinary course of business, provided, that the
same are satisfied in the ordinary course of business; (h) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business; (i) such other liens arising in the ordinary course
of business so long as such liens do not create a Material Adverse Effect; and
(j)) such endorsements to said Title Policies as Lender deems necessary or
appropriate, in its sole discretion.
"PERSON" means any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, unincorporated organization, trust,
business trust, association, corporation, limited liability company,
institution, public benefit corporation, other entity or government (whether
federal, state, county, city, municipal, local, foreign, or otherwise, including
any instrumentality, division, agency, body or department thereof).
"PLAN" means, at any time, an employee benefit plan, as defined in Section
3(3) of ERISA, that Borrowers or any ERISA Affiliate maintain, contribute to or
have an obligation to contribute to or have maintained, contributed to or had an
obligation to contribute to at any time within the past seven (7) years on
behalf of participants who are or were employed by Borrowers or ERISA Affiliate.
"PLAN REGARDING ENGAGEMENT OF INDEPENDENT DIRECTORS" means a written
statement outlining IHHI's plan as to how it intends to identify, engage,
nominate and elect Independent Directors to IHHI's board of directors within the
time periods required by this Agreement.
"PLEDGE AGREEMENT" means the Pledge Agreement of even date herewith, by and
between IHHI, West Coast, Ganesha and Lender, in the form of Exhibit "P"
attached hereto.
"PLEDGED ENTITY" means a Person whose Stock or Membership Interests are
pledged pursuant to the Pledge Agreement.
"PREVIOUS ACCOUNTS RECEIVABLE PURCHASE AGREEMENT" means that certain
Accounts Purchase Agreement dated as of March 3, 2005, by and between Medical
Provider Financial Corporation I (as Buyer) and Borrowers (as Sellers).
"PREVIOUS $50,000,000 ACQUISITION LOAN" means the $50,000,000 acquisition
loan made by Lender to Borrowers pursuant to the First Credit Agreement.
23
"PREVIOUS $50,000,000 ACQUISITION NOTE" means the $50,000,000 acquisition
note executed by Borrowers in favor of Lender pursuant to the First Credit
Agreement.
"PREVIOUS $30,000,000 LINE OF CREDIT LOAN" means the $30,000,000 line of
credit loan made by Lender to Borrowers pursuant to the First Credit Agreement.
"PREVIOUS $30,000,000 LINE OF CREDIT NOTE" means the $30,000,000 line of
credit note executed by Borrowers in favor of Lender pursuant to the First
Credit Agreement.
"PREVIOUS $10,700,000 TERM LOAN" means the $10,700,000 term loan made by
MPFC III to Borrowers pursuant to the Second Credit Agreement.
"PREVIOUS $10,700,000 TERM NOTE" means the $10,700,000 term note executed
by Borrowers in favor of MPFC III pursuant to the Second Credit Agreement.
"PREVIOUS LOANS" means, collectively, the Previous $50,000,000 Acquisition
Loan, the Previous $30,000,000 Line of Credit Loan and the Previous $10,700,000
Term Loan.
"PREVIOUS LOAN DOCUMENTS" means and includes, collectively, (a) the
Previous $50,000,000 Acquisition Loan, the Previous $50,000,000 Acquisition
Note, and all other loan and security documents executed in connection
therewith, (b) the Previous $30,000,000 Line of Credit Loan, the Previous
$30,000,000 Line of Credit Note, and all loan and security documents executed in
connection therewith, (c) the Previous $10,700,000 Term Loan, the Previous
$10,700,000 Term Note, and all other loan and security documents executed in
connection therewith, (d) the Forbearance Agreement dated June 1, 2005, and (e)
the Forbearance Agreement (as amended) dated June 18, 2007.
"PREVIOUS UCC-1 FINANCING STATEMENTS (FIXTURE FILINGS)" means the UCC-1
Financing Statements (Fixture Filings) recorded against each of the Properties
in conjunction with the Previous $50,000,000 Acquisition Loan, the Previous
$30,000,000 Line of Credit Loan, the Previous $10,700,000 Term Loan and the
Previous Accounts Receivable Purchase Agreement.
"PROCEEDS" means proceeds, as such term is defined in the Code, including
(a) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to Borrowers from time to time with respect to any of the Collateral,
(b) any and all payments (in any form whatsoever) made or due and payable to
Borrowers from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of governmental
authority), (c) any claim of Borrowers against third parties (i) for past,
present or future infringement of any Patent or Patent License, or (ii) for
past, present or future infringement or dilution of any Copyright, Copyright
License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by
Borrowers against third parties with respect to any litigation or dispute
concerning any of the Collateral including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral, (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.
24
"PROJECTIONS" means, for Borrowers, its forecasted consolidated: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; and
(d) capitalization statements, all prepared on a cash basis, if applicable, and
otherwise consistent with the historical Financial Statements of Borrowers with
certain normalizing assumptions made by Borrowers, together with appropriate
supporting details and a statement of underlying assumptions.
"PROPERTY" means any of the Hospital Facilities, and "PROPERTIES" means
each of the Hospital Facilities taken together.
"QUALIFIED ASSIGNEE" means (a) any Lender, any Affiliate of Lender and,
with respect to a Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor or by an Affiliate of such
investment advisor of such Lender and which is not a competitor or an Affiliate
of a competitor of Borrowers, and (b) any commercial bank, savings and loan
association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Moody's at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrowers
without the imposition of any withholding or similar taxes; provided that no
Person proposed to become a Lender after the Closing Date and determined by
Lender to be acting in the capacity of a vulture fund or distressed debt
purchaser shall be a Qualified Assignee, and no Person or Affiliate of such
Person proposed to become a Lender after the Closing Date that holds
Subordinated Debt or Stock issued by Borrowers shall be a Qualified Assignee.
"QUALIFIED CASH" means, as of any date of determination, the amount of
Certified Cash that is subject to perfection in favor of Lender pursuant to any
Control Agreement in form and substance satisfactory to Lender, which Control
Agreement shall provide, among other things, that the bank or securities
intermediary executing such agreement (a) has no rights of setoff or recoupment
or any other claim against such account, as the case may be, other than for
payment of its service fees and other charges directly related to the
administration of such account and, as applicable, for returned checks or other
items of payment, and (b) agrees to follow the instructions or entitlement
orders of Lender without further consent by Borrowers, including, with respect
to funds in any such account, upon the instructions of Lender, to immediately
forward by daily sweep all such funds to the Collection Account or as otherwise
directed by Lender.
"QUALIFIED CASH ACCOUNT" means any deposit account or securities account
that is subject to a Control Agreement in form and substance satisfactory to
Lender and holds Qualified Cash.
"QUALIFIED PLAN" means a Pension Plan that is intended to be tax-qualified
under Section 401(a) of the IRC.
25
"RECITALS" means the Recitals set forth on the first page of this
Agreement.
"RELATED TRANSACTIONS" means the borrowing of the Loans on the Closing
Date, the payment of all fees, costs and expenses associated with all of the
foregoing and the execution and delivery of all of the Related Transactions
Documents.
"RELATED TRANSACTIONS DOCUMENTS" means the Loan Documents and all other
agreements or instruments executed in connection with the Related Transactions.
"RELEASE" means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property.
"RELEASING PARTIES" and individually, a "RELEASING PARTY" means each
Borrower, each Credit Party, each Guarantor, and each of their respective
predecessors, successors and assigns, and each of their respective officers,
directors, shareholders, members, managers, partners (general and limited),
employees, agents, representatives, attorneys and assigns.
"RESTRICTED PAYMENT" means (a) the declaration or payment of any dividend
or the incurrence of any liability to make any other payment or distribution of
cash or other property or assets in respect of Stock; (b) any payment on account
of the purchase, redemption, defeasance, sinking fund or other retirement of
Stock or any other payment or distribution made in respect thereof, either
directly or indirectly; (c) any payment or prepayment of principal of, premium,
if any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to, any Subordinated Debt; (d) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire Stock
now or hereafter outstanding; (e) any payment of a claim for the rescission of
the purchase or sale of, or for material damages arising from the purchase or
sale of, any shares of Stock or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for damages or
rescission; and (f) any payment of management fees (or other fees of a similar
nature).
"RETIREE WELFARE PLAN" means, at any time, a welfare plan (within the
meaning of Section 3(1) of ERISA) that provides for continuing coverage or
benefits for any participant or any beneficiary of a participant after such
participant's termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC or other similar state law and at
the sole expense of the participant or the beneficiary of the participant.
"SECOND CREDIT AGREEMENT" means that certain Credit Agreement by and
between the MPFC III, the Credit Parties and the Borrowers dated to be effective
as of December 12, 2005. Pursuant to the Second Credit Agreement, MPFC III made
the Previous $10,700,000 Term Loan to Borrowers.
"SECURITY AGREEMENT" means the Security Agreement of even date herewith, by
and between Borrowers and Lender, in the form if Exhibit "G" attached hereto.
26
"SHAREHOLDER" means, with respect to any Person, each holder of Stock of
such Person.
"SHAREHOLDER BLOCKING RIGHTS" shall mean any rights of any owner (direct or
indirect) of any Pledged Entity which, pursuant to the terms of any agreement or
organizational document, has the right to consent, or the effect of requiring
such consent, to any foreclosure by Lender under any Security Agreement or
Pledge Agreement or otherwise to the exercise of any of Lender's rights and
remedies thereunder or otherwise has the right to restrain, delay, impair or
otherwise interfere with Lender in the event of Lender's exercise of its rights
under any Security Agreement or Pledge Agreement.
"SOFTWARE" means all software as such term is defined in the Code, now
owned or hereafter acquired by Borrowers, other than software embedded in any
category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.
"SOLVENT" means, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person;
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; and (c) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay as such debts and liabilities mature. The amount of
contingent liabilities at any time shall be computed as the amount that, in
light of all the facts and circumstances existing at the time, represents the
amount that can be reasonably be expected to become an actual or matured
liability.
"STATED MATURITY DATE" means October 8, 2010.
"STOCK" means all shares, options, warrants, general or limited partnership
interests, Membership Interests or other equivalents (regardless of how
designated) of or in a Person, whether voting or nonvoting, including stock,
preferred stock or any other equity security (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"STOCK CERTIFICATES" means all certificates evidencing the ownership of
Stock in a Person.
"STOCK POWER" means the Irrevocable Stock Power of even date herewith,
executed by IHHI in favor of Lender, in the form if Exhibit "Q" attached hereto.
"SUBORDINATED DEBT" means any unsecured Indebtedness of Borrowers incurred
after the Closing Date that is subordinated to the Obligations in a manner and
form reasonably satisfactory to Lender, as to right and time of payment and as
to any other rights and remedies thereunder.
"SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
27
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have a Membership Interest (whether in the form of voting or participation
in profits or capital contribution) of more than 50% or of which any such Person
is a general partner or manager or may exercise the powers of a general partner.
"SUPPORTING OBLIGATIONS" means all supporting obligations as such term is
defined in the Code, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.
"TAXES" means taxes, levies, imposts, deductions, Charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on or measured
by the net income of Lender.
"TERM SHEET" means that certain letter agreement entitled Expression of
Interest in Providing Credit Facilities dated August 29, 2007, executed by
Lender and IHHI.
"TERMINATION DATE" means the date on which (a) all of the Loans have been
repaid in full, (b) all other Obligations due and payable under this Agreement
and the other Loan Documents have been discharged, and (c) Borrowers shall have
no further right to borrow any monies under this Agreement.
"TITLE COMMITMENT(S)" means, with respect to each Property, an irrevocable
commitment issued by the Title Company to Lender in form and content acceptable
to Lender, committing to issue the Title Policy with respect to each such
Property to Lender on the Closing Date.
"TITLE COMPANY" means Chicago Title Insurance Company, 700 South Flower
Street, Suite 800, Los Angeles, California 90017, Attn: Jeffrey L. Hurd ("SR.
TITLE OFFICER"), telephone: 213-488-4365; facsimile: 213-243-9168; email:
jeff.hurd@ctt.com; and Chicago Title Insurance Company, Division Counsel, 700
South Flower Street, Suite 3305, Los Angeles, California 90017, Attn: Scott M.
Green, Associate Counsel ("TITLE ATTORNEY"), telephone: 213-488-4342; facsimile:
213-891-0834; email: greens@ctt.com.
"TITLE POLICY" means an ALTA Loan Policy of Title Insurance issued by Title
Company to Lender on the Closing Date, with a stated liability in the amount of
$80,000,000, insuring that (a) the fee simple interest in the Western Medical
Center - Anaheim is vested in PCHI and that the Deed of Trust constitutes a
first Lien and encumbrance against the fee simple interest in such Property,
subject only to the applicable Permitted Exceptions and with such endorsements
as Lender may require in its sole and absolute discretion; (b) the fee simple
interest in the Western Medical Center - Santa Ana is vested in PCHI and that
the Deed of Trust constitutes a first Lien and encumbrance against the fee
simple interest in such Property subject only to the applicable Permitted
Exceptions and with such endorsements as Lender may require in its sole and
absolute discretion; (c) the fee simple interest in the Coastal Community
28
Hospital is vested in PCHI and that the Deed of Trust constitutes a first Lien
and encumbrance against the fee simple interest in such Property subject only to
the applicable Permitted Exceptions and with such endorsements as Lender may
require in its sole and absolute discretion; (d) the tenant's interest in the
Chapman MOB Lease is vested in IHHI and that the Deed of Trust constitutes a
first Lien and encumbrance against IHHI's interest, as MOB Tenant, in the
Chapman MOB Lease, subject only to the applicable Permitted Encumbrances and
with such endorsements as Lender may require in its sole, absolute and
unfettered discretion; and (e) the tenant's interest in the Chapman Hospital
Lease is vested in IHHI and that the Deed of Trust constitutes a first Lien and
encumbrance against IHHI's interest, as Hospital Tenant, in the Chapman Hospital
Lease, subject only to the applicable Permitted Encumbrances and with such
endorsements as Lender may require in its sole, absolute and unfettered
discretion.
"TITLE IV PLAN" means a Pension Plan (other than a Multiemployer Plan),
that is subject to Title IV of ERISA or Section 412 of the IRC, and that
Borrowers or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.
"TRADEMARK LICENSE" means rights under any written agreement now owned or
hereafter acquired by Borrowers granting any right to use any Trademark.
"TRADEMARKS" means all of the following now owned or hereafter existing or
adopted or acquired by Borrowers: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"TRIPLE NET LEASE" means that certain Triple Net Lease dated as of March 3,
2005 (as amended by that certain Amendment #1 to Triple Net Lease dated as of
March 3, 2005) by and between PCHI, as lessor, and IHHI, as lessee, pursuant to
which PCHI leased the Western Medical Center - Anaheim, the Western Medical
Center - Santa Ana, and the Coastal Community Hospital, to IHHI.
"UCC FINANCING STATEMENTS" means all UCC-1 Financing Statements (fixture
filings and personal property) required by Lender to be filed or recorded
pursuant to this Agreement to secure repayment of the Loans and performance of
the Obligations.
"UNFUNDED PENSION LIABILITY" means, at any time, the aggregate amount, if
any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by
Borrowers or any ERISA Affiliate as a result of such transaction.
29
"UNUSED COMMITMENT FEE" means, with respect to the $35,000,000
Non-Revolving Line of Credit Loan, that amount which is equal to 0.50% per annum
of the average daily difference between $35,000,000 minus the sum of the
outstanding principal amount of all Advances under the $35,000,000 Non-Revolving
Line of Credit Loan for the period for which the Unused Commitment Fee is being
paid.
"WARRANT" means the Common Stock Warrant issued by IHHI to Healthcare
Financial Management & Acquisitions, Inc., a Nevada corporation (an Affiliate of
Lender) in the form of Exhibit "U" attached hereto.
"WEST COAST" means West Coast Holdings, LLC, a California limited liability
company.
"WESTERN MEDICAL CENTER - ANAHEIM" means the real property and hospital
improvements located at 1025 South Anaheim Boulevard, Anaheim, California.
"WESTERN MEDICAL CENTER-SANTA ANA" means the real property and hospital
improvements located at 1001 North Tustin Avenue and at 1301 North Tustin in
Santa Ana, California.
"WMC-A" means WMC-A, INC., a California corporation.
"WMC-SA" means WMC-SA, INC., a California corporation.
Unless otherwise specifically provided herein, any accounting term used in
the Agreement shall have the meaning customarily given such term in accordance
with GAAP, and all financial computations hereunder shall be computed in
accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. All other undefined terms contained in any
of the Loan Documents shall, unless the context indicates otherwise, have the
meanings provided for by the Code to the extent the same are used or defined
therein; in the event that any term is defined differently in different Articles
or Divisions of the Code, the definition contained in Article or Division 9
shall control. Unless otherwise specified, references in the Agreement or any of
the Appendices to a Section, subsection or clause refer to such Section,
subsection or clause as contained in the Agreement. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular Section, subsection or clause contained in the Agreement or any such
Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
30
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of Borrowers or Credit Parties, such
words are intended to signify that such Borrowers or such Credit Parties has
actual knowledge or awareness of a particular fact or circumstance.
31
EXECUTION
ANNEX B
TO
CREDIT AGREEMENT ($80 MILLION FACILITY)
---------------------------------------
CASH MANAGEMENT SYSTEM
Borrowers agree to establish, and to maintain, until the Termination Date, the
Cash Management System described below:
1. Borrowers: (i) shall not (nor shall it permit any of its Subsidiaries to)
open or maintain any deposit, checking, operating or other bank account, or
similar money handling account, with any bank or other financial institution
except for those accounts identified in Attachment I hereto (to include a petty
cash account not to exceed $10,000.00 during any fiscal month, and a payroll
account not to exceed an amount equal to one regular payroll at any time, plus
all other payroll obligations outstanding); and (ii) shall close or permit to be
closed any of the accounts listed in Attachment I hereto, in each case without
Lender's prior written consent, and then only after Borrowers have implemented
agreements with such bank or financial institution acceptable to Lender.
2. Commencing on the Closing Date and until the Termination Date, Borrowers
shall fully comply with the terms, conditions and procedures set forth in the
Deposit Account Security Agreement and the Control Agreement.
3. Borrowers may maintain, in their name, Disbursement Accounts at a bank or
banks acceptable to Lender into which Lender shall, from time to time, deposit
proceeds of Advances made pursuant to this Agreement for use solely in
accordance with the provisions of this Agreement. All of the Disbursement
Accounts as of the Closing Date are listed in paragraph 2 of Attachment I
hereto.
1
ATTACHMENT I TO CASH MANAGEMENT SYSTEM SCHEDULE
LIST OF BANK ACCOUNTS
2
ANNEX C
TO
CREDIT AGREEMENT ($80 MILLION FACILITY)
---------------------------------------
COLLATERAL REPORTS
Collateral Reports means and includes any and all reports from time to time
delivered by Borrowers to Lender at the request of Lender during the term hereof
(as the same may be extended). Collateral Reports may include, but are not
limited to, the following:
1. Cash Reports. A report delivered by Borrowers at the request of Lender
stating, among other things: (a) the net amount of Dollars in unrestricted cash
and cash equivalents that Borrowers have in their Deposit Accounts; and (b) the
net amount of Dollars in unrestricted cash and cash equivalents that Borrowers
have in their securities accounts.
2. Report on Cash Subject to Security Agreements. A report delivered by
Borrowers at the request of Lender stating, among other things the amount of
their cash that is subject to perfection in favor of Lender pursuant to any
security agreements or other security instruments.
3. Updated Financial Statements and Projections. Updated financial
statements and projections delivered by Borrowers at the request of Lender.
4. Updated Disclosure Schedules. Updated Disclosure Schedules delivered by
Borrowers at the request of Lender.
5. Further Assurances. As required by Section 5.10 (Further Assurances) of
this Agreement, such further instruments and assurances as may be necessary or
proper in the reasonable opinion of Lender to carry out the purposes of the Loan
Documents.
1
ANNEX D
TO
CREDIT AGREEMENT ($80 MILLION FACILITY)
---------------------------------------
NOTICE ADDRESSES
BORROWERS:
INTEGRATED HEALTHCARE HOLDINGS, INC.
1301 North Tustin Avenue
Santa Ana, California 92705
Attn: Larry Anderson, President
Bruce Mogel, CEO (mobile: 602-770-3581)
Ph: 714-953-3575
Fax: 714-953-2595
WMC-A, INC.
c/o INTEGRATED HEALTHCARE HOLDINGS, INC.
1301 North Tustin Avenue
Santa Ana, California 92705
Attn: Larry Anderson, President
Bruce Mogel, CEO (mobile: 602-770-3581)
Ph: 714-953-3575
Fax: 714-953-2595
WMC-SA, INC.
1301 North Tustin Avenue
Santa Ana, California 92705
Attn: Larry Anderson, President
Bruce Mogel, CEO (mobile: 602-770-3581)
Ph: 714-953-3575
Fax: 714-953-2595
1
COASTAL COMMUNITIES HOSPITAL, INC.
c/o INTEGRATED HEALTHCARE HOLDINGS, INC.
1301 North Tustin Avenue
Santa Ana, California 92705
Attn: Larry Anderson, President
Bruce Mogel, CEO (mobile: 602-770-3581)
Ph: 714-953-3575
Fax: 714-953-2595
CHAPMAN MEDICAL CENTER, INC.
c/o INTEGRATED HEALTHCARE HOLDINGS, INC.
1301 North Tustin Avenue
Santa Ana, California 92705
Attn: Larry Anderson, President
Bruce Mogel, CEO (mobile: 602-770-3581)
Ph: 714-953-3575
Fax: 714-953-2595
CREDIT PARTIES:
PACIFIC COAST HOLDINGS INVESTMENTS, LLC
2621 S. Bristol Street Suite 108
Santa Ana, CA 92704
Attn: Dr. Shah, Co-Manager
Ph: 714-290-5322
Fax: 714-297-9588
and
PACIFIC COAST HOLDINGS INVESTMENTS, LLC
c/o Strategic Global Management, Inc.
6800 Indiana Avenue, Suite 130
Riverside, California 92506
Attn: Dr. Chaudhuri
William Thomas, Esq.
Ph: 951-782-8812
Fax: 951-766-9944
2
GANESHA REALTY LLC
c/o Strategic Global Management, Inc.
6800 Indiana Avenue, Suite 130
Riverside, California 92506
Attn: Dr. Chaudhuri
William Thomas, Esq.
Ph: 951-782-8812
Fax: 951-766-9944
WEST COAST HOLDINGS, LLC
2621 South Bristol, Suite 304
Santa Ana, California 92704
Attn: Dr. Shah, Manager
Ph: 714-290-5322
Fax: 714-297-9588
ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC
2621 South Bristol, Suite 304
Santa Ana, California 92704
Attn: Dr. Shah, Manager
Ph: 714-290-5322
Fax: 714-297-9588
LENDER:
MEDICAL PROVIDER FINANCIAL CORPORATION II
2100 South State College Blvd.
Anaheim, California 92806
Attn: Sidney Field, CEO, or
Joseph J. Lampariello, President and COO, or
Adam Field, Sr. Vice President Development
Telephone: 714-935-3100
Facsimile: 714-935-3114
3