Exhibit 99.4
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REVOLVING CREDIT AGREEMENT
($50 MILLION FACILITY)
Effective Date: October 9, 2007
by and among
INTEGRATED HEALTHCARE HOLDINGS, INC.,
WMC-A, INC.,
WMC-SA, INC.,
CHAPMAN MEDICAL CENTER, INC., and
COASTAL COMMUNITIES HOSPITAL, INC.,
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
and
MEDICAL PROVIDER FINANCIAL CORPORATION I,
as Lender
INDEX OF ANNEXES, EXHIBITS AND DISCLOSURE SCHEDULES
ANNEXES
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Annex A Financial Covenants
Annex B Definitions
Annex C Cash Management System
Annex D Collateral Reports
Annex E Notice Addresses
EXHIBITS
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Exhibit "A" Form of $50,000,000 Revolving Line of Credit Note
Exhibit "B" Form of Notice of Request for Advance
Exhibit "C" Form of Deed of Trust
Exhibit "D" Form of Absolute Assignment
Exhibit "E" Form of Collateral Assignment of Contracts
Exhibit "F" Form of Deposit Account Security Agreement
Exhibit "G" Form of Control Agreement
Exhibit "H" Form of Post-Closing Agreement
Exhibit "I" Form of Intellectual Property Security Agreement
Exhibit "J" Form of Environmental Indemnity Agreement
Exhibit "K" Form of Guaranty Agreement
Exhibit "L" Form of Intercreditor Agreement
Exhibit "M" Form of Pledge Agreement
Exhibit `N" Form of Stock Power
Exhibit "O" Form of Membership Power
Exhibit "P" Form of Landlord's Consent and Estoppel Certificate (Chapman
Leases)
Exhibit "Q" Form of Landlord's Consent and Estoppel Certificate (Triple Net
Lease)
Exhibit "R" Form of Security Agreement
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DISCLOSURE SCHEDULES
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Disclosure Schedule 2.4: Disbursement Instructions
Disclosure Schedule 4.1(b): Approvals
Disclosure Schedule 4.1(c): Capital Structure
Disclosure Schedule 5.1(b): Executive Offices; Collateral Locations; FEIN
Disclosure Schedule 5.4: Ownership of Collateral; Liens
Disclosure Schedule 5.5: Labor Matters
Disclosure Schedule 5.6: Ventures, Subsidiaries and Affiliates; Outstanding
Stock
Disclosure Schedule 5.9: Taxes
Disclosure Schedule 5.10: ERISA
Disclosure Schedule 5.11: Litigation
Disclosure Schedule 5.12: Brokers
Disclosure Schedule 5.13: Intellectual Property
Disclosure Schedule 5.15: Environmental Matters
Disclosure Schedule 5.16: Insurance
Disclosure Schedule 5.17: Deposit and Disbursement Accounts
Disclosure Schedule 5.19: Bonding, Licenses and Permits
Disclosure Schedule 5.21: Other Agreements
Disclosure Schedule 7.3: Indebtedness
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REVOLVING CREDIT AGREEMENT
--------------------------
($50 MILLION FACILITY)
THIS REVOLVING CREDIT AGREEMENT (this "AGREEMENT"), dated to be effective
as of October 9, 2007 ("EFFECTIVE DATE"), is entered into by 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 referred to as
the "CREDIT PARTIES" and individually as a "CREDIT PARTY"; and West Coast,
Ganesha and OC-PIN are hereinafter together referred to as the "GUARANTORS" and
individually as a "GUARANTOR"); and MEDICAL PROVIDER FINANCIAL CORPORATION I, a
Nevada corporation ("LENDER").
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 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. Borrowers and Lender are parties to the Previous Accounts Receivable
Purchase Agreement, pursuant to which Lender (as Buyer) purchased the Accounts
of the Borrowers (as Sellers). Pursuant to this Agreement, Borrowers and the
Credit Parties have requested that Lender terminate the Previous Accounts
Receivable Purchase Agreement and replace the same with the Revolving Facility.
>From the proceeds of the Initial Advance hereunder, Borrower shall pay to
Lender the Previous Amount Owed. Pursuant to the Revolving Facility, in
consideration for acquiring Borrower's Accounts, Lender would make loan proceeds
available to Borrowers in an amount not to exceed the Facility Cap; and
Borrowers would also use the loan proceeds to provide healthcare Services and
other activities and business reasonably related, ancillary or complimentary
thereto, for general corporate purposes, payment of fees and expenses, for
working capital and for payments to Lender hereunder.
F. It is intended by Borrowers that the administration and financial
affairs relating to the Loan shall be administered for the benefit of all
Borrowers by Borrower's Representative.
G. Lender is willing to terminate the Previous Accounts Purchase Agreement
and make the Revolving Facility available to Borrowers upon the terms and
subject to the conditions set forth herein.
H. 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.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing Recitals which are hereby
incorporated into this Agreement, 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, Lender, Borrowers,
Credit Parties and Guarantors agree as follows:
I. DEFINITIONS
-----------
1.1. GENERAL TERMS
For purposes of this Agreement, in addition to the definitions above and
elsewhere in this Agreement, the terms listed in Annex A (Financial Covenants)
and Annex B (Definitions) attached hereto shall have the meanings given such
terms in Annex A and Annex B, which are incorporated herein and made apart
hereof. All initially capitalized terms used herein which are not specifically
defined shall have meanings provided in Article 9 of the Code in effect on the
date hereof to the extent the same are used or defined therein. Unless otherwise
specified herein or in Annex A (Financial Covenants), any agreement or contract
referred to herein or in Annex A Financial Covenants) shall mean such agreement
as modified, amended or supplemented from time to time. Unless otherwise
specified, as used in the Loan Documents or any certificate, report, instrument
or other document made or delivered pursuant to any of the Loan Documents, all
accounting terms not defined in Annex A (Financial Covenants) or elsewhere in
this Agreement shall have the meanings given to such terms in and shall be
interpreted in accordance with GAAP. References herein to "Pacific time" shall
mean Pacific Standard Time or Pacific Daylight Saving Time as in effect on any
date of determination in the far western United States.
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II. ADVANCES, PAYMENT AND INTEREST
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2.1. REVOLVING FACILITY
(a) Subject to the provisions of this Agreement, on the Closing Date,
Lender and Borrowers agree to and shall terminate and cancel the Previous
Accounts Purchase Agreement; and Borrower shall from the proceeds of the Initial
Advance pay to Lender the Previous Amount Owed.
(b) Subject to the provisions of this Agreement, Lender shall
thereafter make Advances to Borrowers under the Revolving Facility from time to
time during the Term, provided that, notwithstanding any other provision of this
Agreement, the aggregate amount of all Advances at any one time outstanding
under the Revolving Facility shall not exceed either of (a) the Facility Cap, or
(b) the Availability. The Revolving Facility is a revolving credit facility,
which may be drawn, repaid and redrawn, from time to time as permitted under
this Agreement. Any determination as to whether there is Availability for
Advances shall be made by Lender in its sole discretion and is final and binding
upon Borrowers. Unless otherwise permitted by Lender, each Advance shall be in
an amount of at least $1,000. Subject to the provisions of this Agreement,
Borrowers may request Advances under the Revolving Facility to the extent of any
then existing Availability. Moreover, during any Separate Borrowing Base Period,
the sum of Advances outstanding to any Borrower shall not exceed that Borrower's
separate Availability, which shall be determined without regard to the Eligible
Receivables of any other Borrower included in the Borrowing Base. Advances under
the Revolving Facility automatically shall be made for the payment of interest
on the Revolving Facility and other Obligations on the date when due to the
extent available and as provided for herein.
(c) Lender has established the ninety percent (90%) advance rate for
Availability and, in its sole credit judgment, may further adjust the
Availability and such advance rate by applying percentages (known as liquidity
factors) and other Dilution Items to Eligible Billed Receivables. Such liquidity
factors and the advance rate for Availability may be adjusted by Lender
throughout the Term as warranted by Lender's underwriting practices and
procedures in its Permitted Discretion. Lender shall have the right to establish
from time to time, in its sole judgment, reserves (without duplication of other
reserves) against the Borrowing Base, which reserves shall have the effect of
reducing the amounts otherwise eligible to be disbursed to a Borrower under the
Revolving Facility.
(d) Upon and at any time after the occurrence of a Default or Event of
Default, each Borrower agrees that Lender shall have the right to require that
any or all of the following changes be made to the Revolving Facility during any
Separate Borrowing Base Period: (i) establish a separate Borrowing Base and
separate availability for each Borrower; (ii) require Advances to be made
available on a Borrower-by-Borrower basis to each individual Borrower based on
such Borrower's separate Availability under its own separate Borrowing Base,
(iii) restrict loans and advances between Borrowers, (iv) establish separate
lockbox and dominion accounts for each Borrower, (v) establish such other
procedures as shall be deemed by Lender in its reasonable discretion to be
useful in tracking where Advances (and the benefit thereof) are made under this
Agreement and the source of payments received by Lender on such Advances and
(vi) modify such other terms and provisions hereof (including definitions set
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for herein) as Lender may deem necessary or appropriate to implement the
foregoing consistently. Each Borrower agrees that Lender shall have the right,
exercisable at any time, in its Permitted Discretion, to require that any
Borrower's cash management system be modified to have all Advances be made
solely to accounts of such Borrower (acceptable to Lender) and in such other
manner as may be reasonably requested by Lender.
2.2. MATURITY DATE
All amounts outstanding under the Revolving Facility and other Obligations
shall be due and payable in full, if not earlier in accordance with this
Agreement, on the Maturity Date.
2.3. INTEREST
Interest on outstanding Advances under the Revolving Facility shall accrue
at the Interest Rate. Interest shall be payable monthly in arrears on the first
day of each calendar month during the Term. Interest shall be calculated on the
basis of a 360-day year and for the actual number of calendar days elapsed in
each interest calculation period.
2.4. DISBURSEMENTS; NOTICE OF REQUEST FOR ADVANCE
(a) Disbursements; Notice of Request for Advance. So long as no
Default or Event of Default shall have occurred and be continuing, Borrower's
Representative may give Lender irrevocable written notice requesting an Advance
under the Revolving Facility by delivering to Lender, not later than 11:00 a.m.
(Las Vegas time) at least three (3) Business Days before the proposed Borrowing
Date, a completed and executed Notice of Request for Advance and relevant
supporting documentation satisfactory to Lender, which shall (i) specify the
proposed Borrowing Date of such Advance, which shall be a Business Day, (ii)
containing a copy of each Eligible Billed Receivable billed by Borrowers to an
Account Debtor but not previously submitted to Lender, (iii) specify the amount
of such requested Advance, (iv) certify the matters required in Section 4.2
(Further Conditions Precedent to Making Advances, etc.), and (v) specify the
amount of any Medicare or Medicaid recoupments and/or recoupments of any
third-party payor being sought, requested or claimed, or, to such Borrower's
knowledge, threatened against Borrower or Borrower's Affiliates. Each time a
request for an Advance is made, and, in any event and regardless of whether an
Advance is being requested, on Tuesday of each week during the Term (and more
frequently if Lender shall so request) until the Obligations (other than
indemnity obligations under the Loan Documents that are not then due and payable
or for which any events or claims that would give rise thereto are not then
pending) are indefeasibly paid in cash in full and this Agreement is terminated,
Borrower's Representative shall deliver to Lender a Notice of Request for
Advance accompanied by a separate detailed aging and categorizing of each
Borrower's Accounts and such other supporting documentation with respect to the
figures and information in the Notice of Request for Advance as Lender shall
reasonably request in its Permitted Discretion. On each Borrowing Date, each
Borrower irrevocably authorizes Lender to disburse the proceeds of the requested
Advance to the appropriate Borrower's account(s) as set forth on Disclosure
Schedule 2.4, in all cases for credit to the appropriate Borrower (or to such
other account as to which the appropriate Borrower shall instruct Lender) via
federal funds wire transfer no later than 1:00 p.m. (Las Vegas time).
6
(b) Initial Advance. In its Notice of Request for the Initial Advance,
Borrower's Representative shall include such amounts as are necessary or
required to pay on the Closing Date (i) the Origination Fee, (ii) all Lender's
Costs and any other amounts then due and payable by Borrowers to Lender, (iii)
the Previous Amount Owed, and (iv) all additional amounts required by Borrowers,
subject to the extent of any then existing Availability. The amounts included in
the Initial Advance for the Origination Fee, Lender's Costs and other amounts
owed to Lender, and the Previous Amount Owed, shall be charged against
Borrower's accounts as an Advance but shall not be disbursed to Borrowers at
Closing, instead said amounts shall be withheld by Lender and paid directly to
Lender or to the Person to whom said amounts are owed.
2.5. COLLECTION; REPAYMENT; BORROWING AVAILABILITY; LOCKBOXES
Each Borrower shall maintain one or more Lockbox Accounts with one or more
Lockbox Banks reasonably acceptable to Lender, and shall execute with each
Lockbox Bank one or more Lockbox Agreements reasonably acceptable to Lender, and
such other agreements related thereto as Lender may require in its Permitted
Discretion. Each Borrower shall ensure that all collections of their respective
Accounts and all other cash payments received by any Borrower are paid and
delivered directly from each Account Debtor and other Person into the
appropriate Lockbox Account. The Lockbox Agreements shall provide that the
Lockbox Banks will immediately transfer all funds paid into the Lockbox Accounts
into the Concentration Account, except that each Lockbox Agreement shall also
provide that all Accounts payable by Medicaid/Medicare Account Debtors shall be
deposited into the Lockbox Account required by the applicable Lockbox Agreement.
Notwithstanding and without limiting any other provision of any of the Loan
Documents, Lender shall apply, on a daily basis, all funds transferred into the
Concentration Account pursuant to the Lockbox Agreements and this Section 2.5
(Collection; Repayment, etc.) in such order and manner as determined by Lender.
To the extent that any Accounts are collected by any Borrower or any other cash
payments are received by any Borrower and are not sent directly to the
appropriate Lockbox Account but are received by any Borrower or any of their
Affiliates, such collections and proceeds shall be held in trust in a segregated
manner for the sole benefit of Lender and immediately remitted (and in any event
within two (2) Business Days of receipt), in the form received, to the
appropriate Lockbox Account for immediate transfer to the Concentration Account.
Each Borrower acknowledges and agrees that compliance with the terms of this
Section 2.5 (Collection; Repayment, etc.) is an essential term of this
Agreement, and that, in addition to and notwithstanding any other rights Lender
may have hereunder, under any of the other Loan Documents, under Applicable Laws
or at equity, upon each and every failure by any Borrower or any of its
Affiliates to comply with any such terms, Lender shall be entitled to assess a
non-compliance fee which shall operate to increase the Interest Rate by two
percent (2.0%) per annum during any period of non-compliance, whether or not a
Default or an Event of Default occurs or is declared, provided that nothing
shall prevent Lender from considering any failure to comply with the terms of
this Section 2.5 (Collection; Repayment, etc.)to be a Default or an Event of
Default. All funds transferred to the Concentration Account for application to
the Obligations under the Revolving Facility shall be applied to reduce the
Obligations under the Revolving Facility. If applicable, at any time prior to
the execution of all or any of the Lockbox Agreements and operation of all or
any of the Lockbox Accounts, each Borrower and their Affiliates shall direct all
collections or proceeds it receives on Accounts or from other Collateral to the
accounts(s) and in the manner specified by Lender in its Permitted Discretion.
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2.6. PROMISE TO PAY; MANNER OF PAYMENT
Each Borrower absolutely and unconditionally promises to pay principal,
interest and all other amounts payable hereunder, or under any of the other Loan
Documents, without any right of rescission and without any deduction whatsoever,
including any deduction for any set-off, counterclaim or recoupment, and
notwithstanding any damage to, defects in or destruction of the Collateral or
any other event, including obsolescence of any property or improvements. All
payments made by Borrowers (other than payments automatically paid through
Advances under the Revolving Facility as provided herein), shall be made only by
wire transfer on the date when due, without offset, deduction or counterclaim,
in U.S. Dollars, in immediately available funds to such account as may be
indicated in writing by Lender to Borrowers from time to time. Any such payment
received after 2:00 p.m. (Las Vegas time) on the date when due shall be deemed
received on the following Business Day. Whenever any payment hereunder shall be
stated to be due or shall become due and payable on a day other than a Business
Day, the due date thereof shall be extended to, and such payment shall be made
by 2:00 p.m. (Las Vegas time) on the next succeeding Business Day, and such
extension of time in such case shall be included in the computation of payment
of any interest (at the interest rate then in effect during such extension)
and/or fees, as the case may be.
2.7. REPAYMENT OF EXCESS ADVANCES
Any balance of Advances under the Revolving Facility outstanding at any
time in excess of the lesser of (a) the Facility Cap or (b) the Availability
shall be immediately due and payable by Borrower without the necessity of any
demand at the Payment Office, whether or not a Default or Event of Default has
occurred or is continuing and shall be paid in the manner specified in Section
2.6 (Promise to Pay, etc.).
2.8. PREPAYMENT
Borrowers may not voluntarily prepay the Loan below a principal balance of
$10,000 prior to March 31, 2009; thereafter, Borrowers may prepay the Loan in
whole or in part, without prepayment fee.
2.9. MANDATORY PREPAYMENTS
In addition to and without limiting any provision of any of the Loan
Documents:
(a) if a Change of Control occurs, then on the first (1st) Business
Day following the date of such Change of Control, each Borrower shall prepay the
Loan, including, without limitation, all outstanding Advances and all other
Obligations, in full in cash together with accrued interest thereon to the date
of prepayment and all other amounts owing to Lender under the Loan Documents;
and
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(b) if any Borrower sells any of its assets or properties, sells or
issues any securities (debt or equity) (other than sales of equity securities to
employees of Borrower up to $100,000 in the aggregate during any twelve (12)
consecutive months or other than stock options to employees), capital Stock or
ownership interests, receives any capital contributions, receives any property
damage insurance award which is not used to repair or replace the property
covered thereby or incurs any Indebtedness, except for Permitted Indebtedness,
then it shall apply 100% of the proceeds thereof to the prepayment of the Loan
together with accrued interest thereon and all other Obligations owing to Lender
under the Loan Documents, such payment to be applied at such time and in such
manner and order as Lender shall decide in its sole discretion.
2.10. PREPAYMENT OF $45,000,000 REAL ESTATE TERM LOAN.
If the $45,000,000 real estate term loan made by Medical Provider Financial
Corporation I (as lender) to Borrowers pursuant to the $80 Million Credit
Agreement is paid in full prior to its maturity date, then Lender agrees to and
shall subordinate the Lien of the Deeds of Trust securing repayment of the Loan
to the Lien of a deed of trust or mortgage securing repayment of a new loan, but
only if (a) 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 (b) 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.
2.11. PAYMENTS BY LENDER
Should any amount required to be paid under any Loan Document be unpaid,
such amount may in its Permitted Discretion be paid by Lender, which payment
shall be deemed an Advance under the Revolving Facility as of the date such
payment is due, and each Borrower irrevocably authorizes disbursement of any
such funds to Lender by way of direct payment of the relevant amount, interest
or Obligations. No payment or prepayment of any amount by Lender or any other
Person shall entitle any Person to be subrogated to the rights of Lender under
any of the Loan Documents unless and until the Obligations (other than indemnity
obligations under the Loan Documents that are not then due and payable or for
which any events or claims that would give rise thereto are not then pending)
have been fully performed and paid irrevocably in cash and this Agreement has
been terminated. Any sums expended by Lender as a result of any Borrower's or
any Guarantor's failure to pay, perform or comply with any Loan Document or any
of the Obligations shall be charged to such Borrower's account as an Advance
under the Revolving Facility and added to the Obligations.
2.12. GRANT OF SECURITY INTEREST; COLLATERAL
(a) To secure the payment and performance of the Obligations, each
Borrower hereby grants to Lender a continuing security interest in and Lien
upon, and pledges to Lender, all of its right, title and interest in and to, the
Collateral.
(b) Notwithstanding the foregoing provisions of this Section 2.12
(Grant of Security Interest, etc.), such grant of a Lien shall not extend to,
and the term Collateral shall not include, (i) any Intellectual Property for
which the granting of a security interest would terminate, invalidate, void or
abandon such Intellectual Property (all of which are set forth in Disclosure
9
Schedule 5.13) or (ii) any General Intangibles of any Borrower to the extent
that (1) such General Intangibles are not assignable or capable of being
encumbered as a matter of law or under the terms of any license or other
agreement applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law) without the consent of the licensor
thereof or other applicable party thereto, and (2) such consent has not been
obtained; provided, however, that the foregoing grant of a Lien shall extend to,
and the term "Collateral" shall include, each of the following: (A) any General
Intangible which is in the nature of an Account or a right to the payment of
money or a proceed of, or otherwise related to the enforcement or collection of,
any Account or right to the payment of money, or goods which are the subject of
any Account or right to the payment of money, (B) any and all proceeds of any
General Intangible or Intellectual Property that is otherwise excluded to the
extent that the assignment, pledge or encumbrance of such proceeds is not so
restricted, and (C) upon obtaining the consent of any such licensor or other
applicable party with respect to any such otherwise excluded General Intangible
or Intellectual Property, such General Intangible or Intellectual Property as
well as any and all proceeds thereof that might theretofore have been excluded
from such grant of a Lien and from the term Collateral.
(c) In addition to the foregoing, to secure the payment and
performance of the Obligations, (i) each Person who is signatory to a Pledge
Agreement has pledged to Lender all of the securities pledged by it pursuant to
the Pledge Agreement, and (ii) each Borrower shall deliver to Lender physical
possession of each of the original, executed Lockbox Agreements.
(d) Upon the execution and delivery of this Agreement, and upon the
proper filing of the necessary financing statements, recordation of the
Intellectual Property Security Agreement in the United States Patent and
Trademark Office and/or the United States Copyright Office, recordation of the
Deeds of Trust and proper delivery of the necessary stock certificates and
limited liability company certificates with endorsements thereof duly executed
in blank, without any further action, Lender will have a good, valid and
perfected first priority Lien and security interest in the Collateral, subject
to no transfer or other restrictions or Liens of any kind in favor of any other
Person except for Permitted Encumbrances. No financing statement relating to any
of the Collateral is on file in any public office except those (i) on behalf of
Lender, and/or (ii) in connection with Permitted Encumbrances.
2.13. COLLATERAL ADMINISTRATION
(a) All Collateral (except Deposit Accounts, Collateral in possession
of Lender, Equipment and Inventory in transit and Collateral out for repair,
refurbishment or finishing) will at all times be kept by the Borrowers at the
locations set forth on Disclosure Schedule 5.1(b) hereto and shall not, without
concurrent written notice to Lender, be moved therefrom (other than to another
such location set forth on Disclosure Schedule 5.1(b)), and in any case shall
not be moved outside the State of California.
(b) Each Borrower shall keep true, correct, complete and accurate
records of its Accounts and all payments and collections thereon, and shall
submit such records to Lender on such periodic basis as Lender may request. In
addition, if Accounts of Borrowers in an aggregate face amount in excess of
$50,000 become ineligible because they fall within one of the specified
categories of ineligibility set forth in the definition of Eligible Receivables
(except for subsection (c) in the definition of Eligible Receivables), such
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Borrower shall notify Lender in writing of such occurrence on the first (1st)
Business Day following such occurrence and the Borrowing Base shall thereupon be
adjusted to reflect such occurrence. If requested by Lender, each Borrower shall
execute and deliver to Lender formal written assignments of all of their
Accounts weekly or daily as Lender may request, including all Accounts created
since the date of the last assignment, together with copies of claims, invoices
and/or other information related thereto. To the extent that collections from
such assigned accounts exceed the amount of the Obligations (other than
indemnity obligations under the Loan Documents that are not then due and payable
or for which any events or claims that would give rise thereto are not then
pending), such excess amount shall not accrue interest in favor of Borrower, but
shall be available to Borrowers upon Borrowers' written request.
(c) Whether or not an Event of Default has occurred, any of Lender's
officers, employees, representatives or agents shall have the right upon one (1)
Business Day advance notice, at any time during normal business hours, in the
name of Lender or any designee of Lender, to verify the validity, amount or any
other matter relating to any Accounts of Borrowers; provided, however, no
advance notice shall be required during the continuance of a Default or Event of
Default. Each Borrower shall cooperate fully with Lender in an effort to
facilitate and promptly conclude such verification process.
(d) To expedite collection, each Borrower shall endeavor in the first
instance to make collection of its Accounts for Lender. Lender shall have the
right at all times after the occurrence and during the continuance of an Event
of Default to notify (i) Account Debtors owing Accounts to any Borrower (other
than Medicaid/Medicare Account Debtors) that their Accounts have been assigned
to Lender and to collect such Accounts directly in its own name and to charge
collection costs and expenses, including reasonable attorneys' fees, to
Borrowers, and (ii) Medicaid/Medicare Account Debtors that a Borrower has waived
any and all defenses and counterclaims it may have or could interpose in any
such action or procedure brought by Lender to obtain a court order recognizing
the collateral assignment or Lien of Lender in and to any Account or other
Collateral and that Lender is seeking or may seek to obtain a court order
recognizing the collateral assignment or Lien of Lender in and to all Accounts
and other Collateral payable by Medicaid/Medicare Account Debtors.
(e) As and when determined by Lender in its sole discretion, Lender
will perform the searches described in clauses (i) and (ii) below against
Borrowers and Guarantors, all at Borrower's expense: (i) uniform commercial code
searches with the Secretary of State of the jurisdiction of organization of each
Borrower and Credit Party and Guarantor and the Secretary of State and local
filing offices of each jurisdiction where any Borrower or Credit Party and/or
any Guarantors maintain their respective executive offices, a place of business
or assets; (ii) lien searches with the United States Patent and Trademark Office
and the United States Copyright Office; and (iii) judgment, state and federal
tax lien and corporate and partnership tax lien searches, in each jurisdiction
searched under clause (i) above.
(f) Each Borrower acknowledges that Lender has been granted a Lien
upon and to all Accounts applicable to all Account Debtors and all Account
Debtors shall make payments to the appropriate Lockbox Account, and to the
extent any such Account Debtor is not making payments to the appropriate Lockbox
Account or any Borrower's Lockbox Bank or other financial institution is not
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transferring all items, collections and remittances to the Concentration
Account, each Borrower (i) covenants that it shall provide prompt written notice
to its current bank and/or Lockbox Bank to transfer all items, collections and
remittances to the Concentration Account, (ii) shall provide prompt written
notice to each Account Debtor (other than Medicaid/Medicare Account Debtors)
that Lender has been granted a Lien upon and to all Accounts applicable to such
Account Debtor and shall direct each Account Debtor to make payments to the
appropriate Lockbox Account, and each Borrower hereby authorizes Lender, upon
any failure to send such notices and directions within ten (10) calendar days
after the date of this Agreement (or ten (10) calendar days after the Person
becomes an Account Debtor), to send any and all similar notices and directions
to such Account Debtors, and (iii) shall do anything further that may be
lawfully required by Lender to create and perfect Lender's Lien on any
collateral and effectuate the intentions of the Loan Documents. At Lender's
request, each Borrower shall promptly deliver to Lender all items for which
Lender must receive possession to obtain a perfected Lien and all notes,
certificates and documents of title, Chattel Paper, warehouse receipts,
Instruments, and any other similar instruments constituting Collateral.
2.14. POWER OF ATTORNEY
Lender is hereby irrevocably made, constituted and appointed the true and
lawful attorney-in-fact for each Borrower (without requiring Lender to act as
such) with full power of substitution to do the following: (i) endorse the name
of any such Person upon any and all checks, drafts, money orders and other
instruments for the payment of money that are payable to such Person and
constitute collections on its or their Accounts; (ii) execute in the name of
such Person any financing statements, schedules, assignments, instruments,
documents and statements that it is or they or are obligated to give Lender
under any of the Loan Documents; and (iii) do such other and further acts and
deeds in the name of such Person that Lender may reasonably deem necessary to
enforce any Account or other Collateral or to perfect Lender's Lien upon or in
any Collateral. In addition, if any such Person breaches its obligation
hereunder to direct payments of Accounts or the proceeds of any other Collateral
to the appropriate Lockbox Account, Lender, as the irrevocably made, constituted
and appointed true and lawful attorney-in-fact for such Person pursuant to this
paragraph, may, by the signature or other act of any of Lender's officers or
authorized signatories (without requiring any of them to do so), direct any
federal, state or private payor or fiscal intermediary to pay proceeds of
Accounts or any other Collateral to the appropriate Lockbox Account.
2.15. EVIDENCE OF LOAN
(a) Lender shall maintain a Register, in accordance with its usual
practice, in the form of electronic or written records evidencing the
indebtedness and obligations to such Lender resulting from each Loan made by
such Lender from time to time, including without limitation, the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.
(b) The entries made by Lender in the Register shall be prima facie
evidence of the existence and amounts of the obligations and indebtedness
therein recorded; provided, however, that the failure of the Lender to maintain
a Register or such records or any error therein shall not in any manner affect
the obligations of any Borrower to repay the Loan or Obligations in accordance
with their terms.
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(c) Lender will account to Borrowers monthly with a statement of
Advances under the Revolving Facility delivered to Borrower's Representative,
and any charges and payments made pursuant to this Agreement, and in the absence
of manifest error, such accounting rendered by Lender shall be deemed final,
binding and conclusive unless Lender is notified by Borrower's Representative in
writing to the contrary within ten (10) calendar days of receipt of each
accounting, which notice shall be deemed an objection only to items specifically
objected to therein.
(d) Each Borrower agrees that:
(i) upon receipt of written notice by Lender to the Borrower that
a promissory note or other evidence of indebtedness is requested by Lender to
evidence the Loan and other Obligations owing or payable to, or to be made by,
such Lender, such Borrower shall promptly (and in any event within three (3)
Business Days of any such request) execute and deliver to Lender an appropriate,
promissory note or notes in form and substance reasonably acceptable to the
Lender and Borrower, payable to the order of Lender or in a principal amount
equal to the amount of the Loan owing or payable to Lender;
(ii) all references to a Note in the Loan Documents shall mean
only the Note, if any, to the extent issued (and not returned to the Borrower
for cancellation) hereunder, as the same may be amended, modified, divided,
supplemented and/or restated from time to time; and
(iii) upon Lender's written request, and in any event within
three (3) Business Days of any such request, Borrower shall execute and deliver
to Lender a new Note and/or divide the Note in exchange for then existing Note
in such smaller amounts or denominations as Lender shall specify in its sole,
absolute and unfettered discretion; provided, that the aggregate principal
amount of such new notes shall not exceed the aggregate principal amount of the
Note outstanding at the time such request is made; and provided, further, that
such notes that are to be replaced shall then be deemed no longer outstanding
hereunder and replaced by such new notes and returned to the Borrower within a
reasonable period of time after Lender's receipt of the replacement notes.
III. FEES AND OTHER CHARGES
----------------------
3.1. ORIGINATION FEE
On the Closing Date, Borrowers shall pay the Origination Fee to Lender. The
Origination Fee shall be deemed fully earned by Lender in full upon the signing
and delivery of this Agreement, however, the Origination Fee shall be due and
payable on the Closing Date.
3.2. UNUSED COMMITMENT FEE
On the first day of each successive calendar month during the Term,
Borrower shall pay to Lender monthly an Unused Commitment Fee.
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3.3. LENDER'S COSTS.
On the Closing Date, Borrowers shall pay Lender's Costs to Lender. Lender's
Costs include, but are not limited to, fees and costs of it's outside legal
counsel of Lender and other closing costs. Lender's Costs shall be deemed fully
earned by Lender in full upon the signing and delivery of this Agreement,
however, Lender's Costs shall be due and payable on the Closing Date.
3.4. COMPUTATION OF INTEREST; LAWFUL LIMITS
All interest hereunder shall be computed on the basis of a year of 360 days
and for the actual number of days elapsed in each calculation period, as
applicable. In no event whatsoever, whether by reason of acceleration or
otherwise, shall the interest and other charges paid or agreed to be paid to
Lender for the use, forbearance or detention of money hereunder exceed the
Maximum Lawful Rate permissible under Applicable Laws which a court of competent
jurisdiction shall, in a final determination, deems applicable hereto. If, due
to any circumstance whatsoever, fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall exceed any such Maximum Lawful
Rate, then, the obligation to be so fulfilled shall be reduced to such Maximum
Lawful Rate, and, if Lender shall have received interest or any other charges of
any kind which might be deemed to be interest under applicable law in excess of
the Maximum Lawful Rate, then such excess shall be applied first to any unpaid
fees and charges hereunder, then to unpaid principal balance owed by Borrower
hereunder, and if the then remaining excess interest is greater than the
previously unpaid principal balance, Lender shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate. The terms and provisions of this Section 3.4
(Computation of Interest, etc.) shall control to the extent any other provision
of any Loan Document is inconsistent herewith.
3.5. DEFAULT RATE OF INTEREST
Upon the occurrence and during the continuation of an Event of Default, the
Interest Rate in effect at such time with respect to the Obligations shall be
increased to the Default Rate.
3.6. ACKNOWLEDGEMENT OF JOINT AND SEVERAL LIABILITY
Each Borrower acknowledges that it is jointly and severally liable for all
of the Obligations under the Loan Documents. Each Borrower expressly
understands, agrees and acknowledges that (i) Borrowers are all Affiliated
entities by common ownership, (ii) each Borrower desires to have the
availability of one common credit facility instead of separate credit
facilities, (iii) each Borrower has requested that Lender extend such a common
credit facility on the terms herein provided, (iv) Lender will be lending
against, and relying on a Lien upon, all of Borrowers' assets even though the
proceeds of the Loan made hereunder may not be advanced directly to a particular
Borrower, (v) each Borrower will nonetheless benefit by the making of the Loan
by Lender and the availability of a single credit facility of a size greater
than each could independently warrant, and (vi) all of the representations,
warranties, covenants, obligations, conditions, agreements and other terms
contained in the Loan Documents shall be applicable to and shall be binding upon
each Borrower.
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IV. CONDITIONS PRECEDENT
--------------------
4.1. CONDITIONS PRECEDENT TO MAKING THE INITIAL ADVANCE.
Lender shall not be obligated to take, fulfill, or perform any action
hereunder, nor shall Lender be obligated to fund any portion of the Initial
Advance, until the following conditions precedent have been satisfied or
provided for in a manner satisfactory to Lender, in its sole and absolute
discretion, or waived in writing by Lender:
(a) Agreement With Attached Disclosure Schedules. Two (2) duplicate
original counterparts of this Agreement shall have been duly executed by and
delivered by each Borrower, each Credit Party and each Guarantor to Lender,
including attached and completed Disclosure Schedules in form and substance
satisfactory to Lender.
(b) Approvals. Lender shall have received satisfactory evidence that
each Borrower has 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
4.1(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 be acceptable to Lender in its sole, absolute and unfettered discretion.
The capital structure of each Borrower and each Credit Party as of the Closing
Date is set forth in Disclosure Schedule 4.1(c) attached hereto.
(d) Charter Documents. Each Borrower and each Credit Party shall have
delivered the following documents to Lender:
(i) A copy of the Charter and Good Standing Documents for each
Borrower and each Credit Party, as applicable, certified by the Secretary of
State for the state of incorporation or organization within the most recent
thirty (30) calendar days prior to the Closing Date.
(ii) The bylaws or operating agreement for each Borrower and each
Credit Party, certified to be true and accurate by the corporate secretary or
manager of each such Borrower and Credit Party, as applicable, within thirty
(30) calendar days prior to the Closing Date.
(iii) An incumbency certificate (officers and directors, or
managers and members) for each Borrower and each Credit Party, certified to be
true and accurate by the corporate secretary or manager of each Borrower and
each Credit Party, as applicable, within thirty (30) calendar days prior to the
Closing Date .
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(iv) The unanimous written consent of the board of directors or
the managers of each Borrower and of each Credit Party, authorizing the
transactions set forth in this Agreement and the other Loan Documents, executed
by each such director or manager within most recent thirty (30) calendar days
prior to the Closing Date.
(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 Loan 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 $45,000,000 real estate term
loan and the $35,000,000 non-revolving line of credit loan (made pursuant to the
$80 Million Credit Agreement) shall not exceed seventy percent (70%) of the
Appraised Value of the Properties as set forth in the Appraisal.
(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, absolute and unfettered discretion.
(k) Note. The Borrowers shall have each executed and delivered to
Lender one (1) original of the Note.
(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 "B" attached hereto,
requesting the Initial Advance from the Loan.
(m) 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 Deed of Trust in the form of Exhibit "C" attached hereto, with the
legal description describing the fee simple interest in the Western Medical
Center - Anaheim;
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(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 Deed of Trust in the form of Exhibit "C" 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 Deed of Trust in the form of Exhibit "C" attached hereto, with the
legal description describing the fee simple interest in the Coastal Communities
Hospital;
(iv) With respect to the Chapman Medical Center:
(1) 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 "C" 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
(2) 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 "C" 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,
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 Absolute Assignment of Leases and Rents in the form of Exhibit
"D" 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, 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 Absolute Assignment of Leases and Rents in the form of
Exhibit "D" 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,
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 Absolute Assignment of Leases and Rents in the form of Exhibit
"D" attached hereto, with the legal description describing the fee simple
interest in the Coastal Communities Hospital;
(iv) With respect to the Chapman Medical Center:
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(1) 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 "D" 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
(2) 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 "D" 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) Collateral Assignment of Contracts.
(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 "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, 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 "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, 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 "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:
(1) 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 "E" 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
(2) 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 "E" 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.
(p) 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 "F" attached
hereto, with the legal description describing the fee simple interest in the
Western Medical Center - Anaheim;
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(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 "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, 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 "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:
(1) 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 "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
(2) 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 "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.
(q) Control Agreement. Borrowers and the Bank shall have executed and
delivered to Lender two (2) duplicate original counterparts of the Control
Agreement in the form of Exhibit "G" attached hereto.
(r) 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 "H" attached hereto.
(s) 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 "I" attached
hereto.
(t) 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 "J" attached hereto.
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(u) Guaranty Agreements. Each Guarantor shall have executed and
delivered to Lender two (2) duplicate original counterparts of the Guaranty
Agreement in the form of Exhibit "K" attached hereto.
(v) Intercreditor Agreement. Borrowers shall have executed and
delivered to Lender two (2) duplicate original counterparts of the Intercreditor
Agreement in the form of Exhibit "L" attached hereto.
(w) Pledge Agreement. IHHI, Ganesha and West Coast shall have executed
and delivered to Lender two (2) duplicate original counterparts of the Pledge
Agreement in the form of Exhibit "M" attached hereto.
(x) Stock Power. IHHI shall have executed and delivered to Lender two
(2) duplicate original counterparts of the Stock Power in the form of Exhibit
"N" attached hereto.
(y) 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 "O" attached hereto
(z) 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 "P" attached hereto.
(aa) 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 "P"
attached hereto.
(bb) Landlord's Consent and Estoppel Certificate (Triple Net Lease).
PCHI 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 (Triple Net Lease) in the form of Exhibit "Q" attached hereto.
(cc) 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.
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(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
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 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 the Loan is not usurious under
Nevada law; and (E) such other matters as Lender may require.
(dd) 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.
(ee) Closing and Funding Checklist - Other Documents and Instruments.
Each Borrower, each Credit Party and each Guarantor shall have executed (where
required) and delivered to Lender each of the other documents, exhibits,
disclosure schedules, certificates, instruments and other items listed in the
Closing and Funding Checklist, in form and content satisfactory to Lender.
(ff) $80 Million Credit Agreement. All conditions precedent to the
obligation of Medical Provider Financial Corporation II (as lender) under
Article 2 of the $80 Million 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.
(gg) $10.7 Million Credit Agreement. All conditions precedent to the
obligation of Medical Provider Financial Corporation III (as lender) under
Article 2 of the $10.7 Million 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.
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(hh) Documents Required by Title Commitment. Each Borrower shall have
executed (where required) and deposited into Escrow all documents and
instruments required by the Title Company and/or the Escrow Company.
4.2. FURTHER CONDITIONS PRECEDENT TO MAKING ADVANCES; FURTHER CONDITIONS
PRECEDENT TO FUNDING ADVANCES
The obligations of Lender to making the Loan to Borrowers and to funding
any Advances (including the Initial Advance) to Borrowers, shall be subject to
the following further conditions precedent:
(a) Further Conditions Precedent to Making Advances. Lender shall not
be obligated to make any of the Advances (including the Initial Advance) to
Borrowers unless and until the following additional conditions precedent have
been satisfied or provided for in a manner satisfactory to Lender in its sole
and absolute discretion, 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) Other Credit Agreements.
(1) All loan documents having been executed and delivered on
or before the closing date of the transaction contemplated by the $80 Million
Credit Agreement shall remain in full force and effect, and the lender under the
$80 Million 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 $80 Million
Credit Agreement and the loan documents referenced therein, each in form and
substance satisfactory to said lender.
(2) All loan documents having been executed and delivered on
or before the closing date of the transaction contemplated by the $10.7 Million
Credit Agreement shall remain in full force and effect, and the lender under the
$10.7 Million 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 $10.7 Million
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 that each Borrower has obtained, or in the case of necessary
Governmental Authority approvals, has 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.
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(iv) Timing. The Closing shall occur by the Closing Date.
(v) Collateral. Lender shall have approved the Collateral in its
sole, absolute and unfettered discretion.
(vi) Update to Disclosure Schedules. Borrower shall have
delivered to Lender updates to all Disclosure Schedules as required hereunder,
and Lender shall have approved in its discretion all updates to the Disclosure
Schedules.
(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 a 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.
(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) Additional Conditions Precedent to Funding Advances. Lender shall
not be obligated to fund any Advance (including the Initial Advance) 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 (1) herein, or (2) in any other Loan
Document, or (3) in the $80 Million Credit Agreement, or (4) in the $10.7
Million Credit Agreement, or (5) in any document or instrument executed or
presented in connection with the $80 Million Credit Agreement or $10.7 Million
Agreement, is untrue, incorrect, incomplete or inaccurate 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 Borrower's Representative that Lender fund an Advance under the
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 that the conditions precedent in this Section
4.2 (Further Conditions Precedent to Making Advances, etc.) to which it is a
party or to which it is a signatory have been satisfied, and (B) a reaffirmation
by each Borrower and by each Credit Party of their respective obligations under
the Loan Documents.
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4.3. 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 Borrower's
Representative and Lender in writing, 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,
each Credit Party and each Guarantor shall, not less than four (4) 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, Disclosure 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, each Credit Party and each Guarantor and with all
completed Annexes and Disclosure Schedules attached.
(ii) One (1) original of the Note, executed by Borrowers.
(iii) Two (2) duplicate original counterparts of the Notice of
Request for Advance, executed by Borrower's Representative.
(iv) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts (Western Medical Center - Anaheim), executed by IHHI and
WMC-A.
(v) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts (Western Medical Center - Santa Ana), executed by IHHI
and WMC-SA.
(vi) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts (Coastal Community Hospital), executed by IHHI and
Coastal.
(vii) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts (Chapman MOB Lease), executed by IHHI.
(viii) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts (Chapman Hospital Lease), executed by IHHI.
(ix) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement (Western Medical Center - Anaheim), executed by IHHI
and WMC-A.
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(x) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement (Western Medical Center - Santa Ana), executed by
IHHI and WMC-SA.
(xi) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement (Coastal Community Hospital), executed by IHHI and
Coastal.
(xii) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement (Chapman MOB Lease), executed by IHHI.
(xiii) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement (Chapman Hospital Lease), executed by IHHI.
(xiv) Two (2) duplicate original counterparts of the Control
Agreement, executed by Borrowers and Bank.
(xv) Two (2) duplicate original counterparts of the Post-Closing
Agreement, executed by Borrowers.
(xvi) Two (2) duplicate original counterparts of the Intellectual
Property Security Agreement, executed by Borrowers.
(xvii) Two (2) duplicate original counterparts of the
Environmental Indemnity Agreement, executed by Borrowers and by each Credit
Party (other than Ganesha).
(xviii) Two (2) duplicate original counterparts of the Guaranty
Agreement, executed by each Guarantor.
(xix) Two (2) duplicate original counterparts of the
Intercreditor Agreement, executed by Borrowers.
(xx) Two (2) duplicate original counterparts of the Pledge
Agreement, executed by IHHI, Ganesha and West Coast.
(xxi) Two (2) duplicate original counterparts of the Stock Power
executed by IHHI.
(xxii) All original Stock certificates in WMC-A, WMC-SA, Coastal
and Chapman owned, held or controlled by IHHI.
(xxiii) Two (2) duplicate original counterparts of the Membership
Power executed by Ganesha and West Coast.
(xxiv) All original Membership Certificates in PCHI owned, held
or controlled by Ganesha (if any); and all original Membership Certificates in
PCHI owned, held or controlled by West Coast (if any).
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(xxv) 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.
(xxvi) 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.
(xxvii) Two (2) duplicate original counterparts of the Landlord's
Consent and Estoppel Certificate (Triple Net Lease), executed by PCHI.
(xxviii) 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.
(xxix) Two (2) original executed first opinions of Nevada legal
counsel for IHHI and OC-PIN, executed by said Nevada counsel.
(xxx) Two (2) original executed second opinions of Nevada legal
counsel for all Borrowers, Credit Parties and Guarantors, executed by said
Nevada counsel.
(xxxi) One (1) original executed fairness opinion.
(xxxii) All other documents, instruments, agreements,
certificates, 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, Disclosure 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, by each Credit Party and by each Guarantor and with all completed
Annexes and Disclosure Schedules 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.
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(v) With respect to the Chapman Medical Center:
(1) 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
(2) 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.
(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:
(1) 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
(2) 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) With respect to all Properties, requests to reconvey or deeds
of reconveyance of all existing Liens and encumbrances, in each case executed by
the applicable beneficiary or payee or mortgagee.
(xi) Escrow Instructions executed by each Borrower.
(xii) For each Property, all UCC-1 Financing Statements (Fixture
Filing) as are required by Lender under the Loan Documents, naming the
applicable as Debtor.
(xiii) All other documents, instruments, certificates,
resolutions, charter documents, affidavits and items required by Title Company.
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(xiv) By 11:00 a.m. Los Angeles time on the Closing Date, Lender
shall deposit into Escrow the amount required by the Notice of Request for
Advance, less any amounts withheld for payment of the Origination Fee, Lender's
Costs and the Previous Amount Owed.
(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 $80
Million Credit Agreement and has complied with the escrow instructions by the
parties to the $80 Million Credit Agreement; (iv) Escrow Holder is prepared to
close and consummate the transactions contemplated by the $10.7 Million Credit
Agreement and has complied with the escrow instructions by the parties to the
$10.7 Million Credit Agreement and; 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:
(i) With respect to fee simple interest at Western Medical Center
- - Anaheim, Escrow Holder will (1) cause the Western Medical Center - Anaheim
Deed of Trust to be recorded as a third lien and encumbrance against the fee
simple title of the Western Medical Center - Anaheim, junior and subordinate
only to the Permitted Encumbrances; (2) 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, junior and subordinate only to the Permitted Encumbrances; and (3)
cause the Western Medical Center - Anaheim UCC-1 Financing Statement (Fixture
Filing) to be recorded, junior and subordinate only to the Permitted
Encumbrances.
(ii) With respect to the fee simple interest at Western Medical
Center - Santa Ana, Escrow Holder will (1) cause the Western Medical Center -
Santa Ana, Deed of Trust to be recorded as a third lien and encumbrance against
the fee simple title of the Western Medical Center - Santa Ana, junior and
subordinate only to the Permitted Encumbrances; (2) 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, junior and subordinate only to the Permitted Encumbrances; and (3)
cause the Western Medical Center - Santa Ana, UCC-1 Financing Statement (Fixture
Filing) to be recorded, junior and subordinate only to the Permitted
Encumbrances.
(iii) With respect to the fee simple interest at Coastal
Communities Hospital, Escrow Holder will (1) cause the Coastal Communities
Hospital Deed of Trust to be recorded as a third lien and encumbrance against
the fee simple title of the Coastal Communities Hospital, junior and subordinate
only to the Permitted Encumbrances; (2) 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, junior and
subordinate only to the Permitted Encumbrances; and (3) cause the Coastal
Communities Hospital UCC-1 Financing Statement (Fixture Filing) to be recorded,
junior and subordinate only to the Permitted Encumbrances.
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(iv) With respect to IHHI's interest, as MOB Tenant, in the
Chapman MOB Lease at the Chapman Medical Center, Escrow Holder will (1) cause
the Chapman Medical Center Deed of Trust (MOB Lease) to be recorded as a third
lien and encumbrance against IHHI's interest, as MOB Tenant, in the Chapman MOB
Lease, junior and subordinate only to the Permitted Encumbrances; (2) cause the
Chapman Medical Center Deed of Trust (Hospital Lease) to be recorded as a third
lien and encumbrance against IHHI's interest, as Hospital Tenant, in the Chapman
Hospital Lease, junior and subordinate only to the Permitted Encumbrances; (3)
cause the Chapman Medical Center Absolute Assignment of Leases and Rents to be
recorded as a lien and encumbrance against IHHI's interest, as MOB Tenant, in
the Chapman MOB Lease, junior and subordinate only to the Permitted
Encumbrances; (4) cause the Chapman Medical Center Absolute Assignment of Leases
and Rents to be recorded as a lien and encumbrance against IHHI's interest, as
Hospital Tenant, in the Chapman Hospital Lease, junior and subordinate only to
the Permitted Encumbrances; (5) cause the Chapman Medical Center UCC-1 Financing
Statement (Fixture Filing) (Chapman MOB Lease) to be recorded against IHHI's
interest, as MOB Tenant, in the Chapman MOB Lease, junior and subordinate only
to the Permitted Encumbrances, and (6) cause the Chapman Medical Center UCC-1
Financing Statement (Fixture Filing) (Chapman Hospital Lease) to be recorded
against IHHI's interest, as Hospital Tenant, in the Chapman Hospital Lease,
junior and subordinate only to the Permitted Encumbrances.
(e) Distribution of Funds and Documents at Closing. When Escrow Holder
is the position to close Escrow as required by Section 4.3(d) (Close of Escrow;
Recordation of Loan Documents) immediately above, but in no event later than the
Closing Date, Escrow Holder shall record the Loan Documents pursuant to the
requirements of Section 4.3(d) (Close of Escrow, Recordation of Loan Documents)
above, then shall distribute funds and documents then on deposit in Escrow to
Borrowers as set forth below:
(i) The original and one (1) copy of each Lender's Title Policy
to Lender.
(ii) A true and correct copy of each Deed of Trust to Lender
(with a copy to Borrowers) as recorded.
(iii) A true and correct copy of each 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 and listing all
credits and debits applicable to Lender and Borrowers.
(vi) To Borrowers, the net amount (if any) required by the final
settlement statement.
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(f) Distribution of Documents by Lender at Closing. When Escrow Holder
has closed each 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 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 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 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 Note; the original
executed legal opinions; the original executed fairness opinion; the original
Stock certificates; and the original Membership Certificates.
V. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Lender to make the Loan, 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 6.6 (Supplemental
Disclosure) on or before the Closing Date).
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5.1. 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,
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.
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(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 5.1(b). 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 not Guarantor has conducted business under
or used any name (whether corporate, partnership or assumed) other than as shown
on Disclosure Schedule 5.1(b). Each Borrower and each Credit Party and each
Guarantor is the sole owner of all of its names listed on Disclosures Schedule
5.1(b), 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 Disclosure Schedule
5.1(b). In addition, Disclosure Schedule 5.1(b) lists the federal employer
identification number of each Borrower and each Credit Party and each Guarantor.
32
5.2. 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 4.1(b) (Conditions Precedent, etc.), 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
5.2 (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.
5.3. 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.
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(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.
(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.
5.3A 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
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has been entered into by any Credit Party or has become binding upon Credit
Party's assets and, to the knowledge of Credit Party's, no law or regulation
applicable to Credit Party's or to Borrowers has been adopted that has had or
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.
5.4 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 5.4
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.
5.5 LABOR MATTERS.
Except as set forth on Disclosure Schedule 5.5, 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 5.5 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 5.5, 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
35
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.
5.6 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK.
Except as listed on Disclosure Schedule 5.6, the Borrowers and the Credit
Parties have no Subsidiaries. Disclosure Schedule 5.6 states the authorized and
issued capitalization of each Borrower and of each Credit Party (other than
Ganesha), the number and class of equity securities and/or ownership, voting or
partnership interests issued and outstanding of each Borrower and each Credit
Party 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 5.6 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 5.6 also
lists the directors, members, managers and/or partners of each Borrower and each
Credit Party. Except as listed on Disclosure Schedule 5.6, 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 5.6, 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 7.3 (Indebtedness) is described in Disclosure Schedule
7.2.
5.7 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 Loan by Lender to Borrowers, the application of the proceeds
thereof and repayment thereof 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.
5.8 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
36
in effect. Borrowers do not own any margin stock, and none of the proceeds of
the Loan 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 the Loan 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
5.8 (Margin Regulations) with respect to such Credit Party
5.9 TAXES.
Except as described in Disclosure Schedule 5.9, 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 7.3 (Indebtedness) 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 5.9 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 5.9, 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
5.9 (Taxes) with respect to all Charges and tax returns of such Credit Party.
5.10 ERISA.
(a) Disclosure Schedule 5.10 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
37
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 5.10: (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
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).
5.11 NO LITIGATION.
Except as set forth in Disclosure Schedule 5.11, 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 5.11, 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.
5.12 BROKERS.
Except as set forth on Disclosure Schedule 5.12, no broker or finder
brought about the obtaining, making or closing of the Loan, 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.
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5.13 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
5.13. 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 5.13, neither Borrowers nor Credit Parties are
aware of any material infringement claim by any other Person with respect to any
Intellectual Property.
5.14 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 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
5.15 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 5.15, 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;
39
(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
(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.
5.16 INSURANCE.
Disclosure Schedule 5.16 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.
5.17 DEPOSIT AND DISBURSEMENT ACCOUNTS.
Disclosure Schedule 5.17 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 5.17 shall identify which deposit accounts of each entity
are used to receive Governmental Authority payments.
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5.18 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.
5.19 BONDING; LICENSES; PERMITS.
Except as set forth on Disclosure Schedule 5.19, 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 5.19 list each permit each Borrower is required to obtain and maintain
in order to conduct its respective Business in its respective Hospital Facility.
5.20 SOLVENCY.
Both before and after giving effect to (a) the Loan 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; and (c) the payment and accrual of all transaction
costs in connection with the foregoing, Borrowers are each and will be Solvent.
5.21 OTHER AGREEMENTS.
Except as set forth on Disclosure Schedule 5.21, (a) there are no existing
or proposed agreements, arrangements, understandings or transactions between any
Borrower, any Credit Party and any of such Credit Party's officers, members,
managers, directors, shareholders, partners, other interest holders, employees
or Affiliates or any members of their respective immediate families, and (b)
none of the foregoing Persons is directly or indirectly, indebted to or have any
direct or indirect ownership, partnership or voting interest in, to Borrowers'
or Credit Parties' knowledge, any Affiliate of any Borrower or any Credit Party
or any Person that competes with Credit Parties (except that any such Persons
may own stock in (but not exceeding two (2%) percent of the outstanding capital
stock of) any publicly traded company that may compete with Credit Parties.
5.22 ACCOUNTS.
In determining which Accounts are Eligible Receivables, Lender may rely on
all statements and representations made by Borrowers with respect to any
Account: Unless otherwise indicated in writing to Lender, (a) each Account of
each Borrower is genuine and in all respects what it purports to be and is not
evidenced by a judgment, (b) each Account of each Borrower arises out of a
completed, bona fide sale and delivery of goods of rendering of Services by such
Borrower in the ordinary course of business and in accordance with the terns and
conditions of all purchase orders, contracts, certifications, participations,
certificates of need and other documents relating thereto or forming a part of
41
the contract between such Borrower and the Account Debtor, (c) each Account of
each Borrower is for a liquidated amount maturing as stated in a claim or
invoice covering such sale of goods or rendering of Services, a copy of which
has been furnished or is available to Lender, (d) each Account of each Borrower
together with Lender's security interest therein, is not and will not be in the
future (by voluntary act or omission by any Borrower), subject to any offset,
lien, deduction, defense, dispute, counterclaim or other adverse condition, is
absolutely owing to each such Borrower and is not contingent in any respect or
for any reason (except Accounts owed or owing by Medicaid/Medicare Account
Debtors that may be subject to offset or deduction under applicable law) (other
than pursuant to Permitted Encumbrances or offsets, deductions, defenses,
disputes or counterclaims arising in the ordinary course of business), (e) there
are no facts, events or occurrences which in any way impair the validity or
enforceability of any Account of any Borrower or tend to reduce the amount
payable thereunder from the face amount of the claim or invoice and statements
delivered to Lender with respect thereto (other than those arising in the
ordinary course of business), (f) to the knowledge of each Borrower (i) the
Account Debtor under each Account of each Borrower had the capacity to contract
at the time any contract or other document giving rise thereto was executed and
(ii) each such Account Debtor is solvent, (g) unless otherwise disclosed by
Borrowers to Lender in writing prior to submitting such Accounts to Lender,
there are no proceedings or actions which are threatened or pending against any
Account Debtor under any Account of any Borrower which might result in any
Material Adverse Effect on such Account Debtor's financial condition or the
collectability thereof, (h) each Account of each Borrower has been billed and
forwarded to the Account Debtor for payment in accordance with applicable laws
and is in compliance and conformance with any requisite procedures, requirements
and regulations governing payment by such Account Debtor with respect to such
Account, and, if due from a Medicaid/Medicare Account Debtor, is properly
payable directly to such Borrower, (i) each Borrower has obtained and currently
has all Permits necessary in the generation of each Account of such Borrower,
and (j) each Borrower has disclosed to Lender on each Notice of Request for
Advance the amount of all Accounts of such Borrower for which Medicare is the
Account Debtor and for which payment has been denied and subsequently appealed
pursuant to the procedure described in the definition of Eligible Receivables
hereof, and such Borrower is pursuing all available appeals in respect of such
Accounts.
5.23 HEALTHCARE.
Without limiting or being limited by any other provision of any Loan
Document, each Borrower has timely filed or caused to be filed all material cost
and other reports of every kind required by law, agreement or otherwise. Subject
to subsection (j) of Section 5.22 (Accounts), there are no claims, actions or
appeals pending (and no Borrower has filed any claims or reports which could
reasonably result in any such claims, actions or appeals) before any commission,
board or agency or other Governmental Authority, including, without limitation;
any intermediary or carrier, the Joint Commission on Accreditation of Healthcare
Organizations or other accrediting body, the Provider Reimbursement Review Board
or the Administrator of the Centers for Medicare and Medicaid Services, with
respect to any state or federal Medicare or Medicaid cost reports or claims
filed by any Borrower, or any disallowance by any commission, board or agency or
other Governmental Authority in connection with any audit of such cost reports.
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No validation review or program integrity review related to any Borrower or the
consummation of the transactions contemplated herein or to the Collateral have
been conducted by any commission, board or agency or other Governmental
Authority in connection with the Medicare or Medicaid programs, and to the
knowledge of Borrowers, no such reviews are scheduled, pending or threatened
against or affecting any of the providers, any of the Collateral or the
consummation of the transactions contemplated hereby.
5.24 SURVIVAL.
Each Borrower and, to the extent applicable, each Credit Party and each
Guarantor, makes the representations and warranties contained herein with the
knowledge and intention that Lender is relying and will rely thereon. All such
representations and warranties will survive the execution and delivery of this
Agreement and the making of the Advances hereunder.
VI. AFFIRMATIVE COVENANTS
---------------------
To induce Lender to make the Loan, 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.
6.1. 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.
6.2. PAYMENT OF CHARGES
(a) Obligation to Pay Charges. Subject to Section 6.2(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.
(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 6.2(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
43
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 6.2(b) (Right
to Contest Charges) are no longer met.
6.3. 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).
6.4. INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL.
(a) Insurance. Disclosure Schedule 5.16 lists 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 5.16. Thereafter, Borrowers shall, at its sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule 5.16 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 Loan, 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.
(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
44
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 2.9(b) (Mandatory 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.
6.5. COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS
Each Borrower shall (a) substantially comply with all laws, statutes,
rules, regulations, ordinances and tariffs of all Governmental Authorities
applicable to it or its business, assets or operations, including applicable
requirements of the Standards for Privacy of Individually Identifiable Health
Information which were promulgated pursuant to HIPAA; (b) pay all taxes,
assessments, fees, governmental charges, claims for labor, supplies, rent and
all other obligations or liabilities of any kind, except liabilities being
contested in good faith and against which adequate reserves have been
established in accordance with GAAP, (c) perform in accordance with its terms
this Agreement and each contract, agreement or other arrangement to which it is
a party or by which it or any of the Collateral is bound, except where the
failure to comply, pay or perform could not reasonably be expected to have a
Material Adverse Effect, (d) maintain and comply with all Permits necessary to
conduct its business and comply with any new or additional requirements that may
be imposed on it or its business, and (e) properly file all Medicaid/Medicare
cost reports.
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6.6. SUPPLEMENTAL DISCLOSURES
From time to time Borrowers may, or shall if reasonably requested by
Lender, 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 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 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 of the existence thereof.
6.7. INTELLECTUAL PROPERTY
Borrowers and Credit Parties (other than Ganesha) will conduct their
business and affairs without material infringement of or material interference
with any Intellectual Property of any other Person.
6.8. 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
46
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 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
6.9. 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.
6.10. 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.
6.11. 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).
47
6.12. OPERATION OF BUSINESS
Borrowers shall have and maintain at all times after 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.
6.13. 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.
6.14. OBSERVER STATUS ON BORROWER'S BOARD OF DIRECTORS.
Until the Loan is paid in full and satisfied, Borrowers 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) of Borrowers, 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 agrees to and shall deliver a copy of each such notice
and agenda to Lender.
6.15. INDEPENDENT DIRECTORS ON IHHI'S BOARD OF 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
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6.16. FINANCIAL STATEMENTS, NOTICE OF REQUEST FOR ADVANCE, FINANCIAL
REPORTS AND OTHER INFORMATION
(a) Financial Reports. In addition to providing the Notice of Request
for Advance in accordance with Section 2.4, Borrowers shall furnish to Lender
the same financial statements and reports as are required to be delivered to the
lender under the $80 Million Credit Agreement and the $10.7 Million Credit
Agreement.
(b) Other Materials. Borrowers shall furnish to Lender as soon as
available, and in any event within ten (10) calendar days after the preparation
or issuance thereof or at such other time as set forth below: (i) copies of such
financial statements (other than those required to be delivered pursuant to
Section 6.16(a) (Financial Reports) prepared by, for or on behalf of Borrowers
and any other notes, reports and other materials related thereto, including,
without limitation, any pro forma financial statements, (ii) within ten (10)
calendar days after the end of each calendar month a report of its payroll taxes
for the immediately preceding calendar month and evidence of payment thereof,
(iii) any reports, returns, information, notices and other materials that
Borrowers shall send to their shareholders, members, partners or other equity
owners at any time, (iv) all Medicare and Medicaid cost reports and other
documents and materials filed by Borrowers and any other reports, materials or
other information regarding or otherwise relating to Medicaid or Medicare
prepared by, for or on behalf of Borrowers, including, without limitation, (A)
copies of licenses and permits required by any applicable federal, state,
foreign or local law, statute ordinance or regulation or Governmental Authority
for the operation of its business, (B) Medicare and Medicaid provider numbers
and agreements, (C) state surveys pertaining to any health care facility
operated, owned or leased by any Borrower or any of its Affiliates or
Subsidiaries, and (D) participating agreements relating to medical plans, (v)
within fifteen (15) calendar days after the end of each calendar month for such
month, (A) a report of the status of all payments, denials and appeals of all
Medicare and/or Medicaid Accounts, (B) a sales and collection report and
accounts receivable and accounts payable aging schedule, including a report of
sales, credits issued and collections received, all such reports showing a
reconciliation to the amounts reported in the monthly financial statements, and
(C) a report of census and occupancy percentage by payor type, (vi) promptly
upon receipt thereof, copies of any reports submitted to a Borrower by its
independent accountants in connection with any interim audit of the books of
such Person or any of its Affiliates and copies of each management control
letter provided by such independent accountants, (vii) within fifteen (15)
calendar days after the execution thereof, a copy of any contracts with the
federal government or with a Governmental Authority in the State of California,
(viii) within 15 calendar days after the end of each month, a monthly
reconciliation of Borrower's clearing accounts for periodic interim payment
reimbursements from Medicare and uniform payment plan reimbursements from Blue
Cross, (ix) within 15 calendar days after the end of each month, a report
analyzing cash clearing accounts and patient credit balances on a monthly basis,
(x) within 15 calendar days after the end of each month (or at such more
frequent intervals as may be required by Lender, in its sole discretion, a
report specifically detailing for such month (a) monies paid out of any
Borrower's operating account to other Borrowers, together with a specific
description of the use by each such Borrower of such monies, and (b) monies in
such master operating account used by any Borrower, together with a specific
description of the specific use of such monies by any Borrower, and (xi) such
additional information, documents, statements, reports and other materials as
Lender may reasonably request in its Permitted Discretion.
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(c) Notices. Borrowers shall promptly, and in any event within 5
Business Days after any Borrower or any officer of any Borrower obtains
knowledge thereof, notify Lender in writing of (i) any pending or threatened
litigation, suit, investigation, arbitration, dispute resolution proceeding or
administrative proceeding brought or initiated by a Borrower or otherwise
affecting or involving or relating to a Borrower or any of its property or
assets to the extent (A) the mount in controversy exceeds $100,000 individually
or in the aggregate, or (B) to the extent any of the foregoing seeks injunctive
or declarative relief, (ii) any Default or Event of Default, which notice shall
specify the nature and status thereof, the period of existence thereof and what
action is proposed to be taken with respect thereto, (iii) any other
development, event, fact, circumstance or condition that would reasonably be
likely to have a Material Adverse Effect, in each case describing the nature and
status thereof and the action proposed to be taken with respect thereto, (iv)
any notice received by a Borrower from any payor of a claim, suit or other
action such payor has, claims or has filed against any Borrower for an amount in
excess of $10,000 individually or $50,000 in the aggregate, (v) any matter(s)
affecting the value, enforceability or collectability of any of the Accounts or
the Collateral, including, without limitation, claims or disputes in the amount
of $10,000 or more, singly or $50,000 in the aggregate, in existence at any one
time, (vi) any notice given by a Borrower to any other lender of a Borrower,
which notice to Lender shall be accompanied by a copy of the applicable notice
given to the other lender, (vii) receipt of any notice or request from any
Governmental Authority or governmental payor regarding any liability or claim of
liability or any material modification to any special program or the amounts
payable to a Borrower thereunder, (viii) receipt of any notice by a Borrower
regarding termination of any manager of any facility owned, operated or leased
by a Credit Party, (ix) any planned change to any Borrower's "chargemaster" or
similar database, as soon as practical and in any event prior to effecting such
change, (x) any Account becoming evidenced or secured by an Instrument or
Chattel Paper, and/or (xi) after a Borrower or any authorized officer of a
Borrower, obtains knowledge thereof, notify Lender in writing of any oral or
written communication from the Internal Revenue Service or otherwise with
respect to any tax investigations, relating to a Borrower directly, or relating
to any consolidated tax return which was filed on behalf of a Borrower, notices
of tax assessment or possible tax assessment, years that are designated open
pending tax examination or audit, and information that could give rise to an IRS
tax liability or assessment.
(d) Consents. Borrower's shall obtain and deliver to Lender from time
to all required consents, approvals and agreements from such third parties as
Lender shall determine are necessary or desirable in its sole discretion, each
of which must be satisfactory to Lender in its sole discretion, with respect to
(i) the Loan Documents and the transactions contemplated thereby, (ii) claims
against a Borrower or the Collateral, and/or (iii) any agreements, consents,
documents or instruments to which any Borrower is a party or by which any
properties or assets of any Borrower or any of the Collateral is or are bound or
subject, including, without limitation, landlord waivers and consents with
respect to leases.
(e) Operating Budget. Borrower's shall furnish to Lender on or prior
to the Closing Date and, for each Fiscal Year of Borrower's thereafter, not less
than thirty (30) calendar days prior to the commencement of such Fiscal Year,
consolidated month by month projected operating budgets, annual projections,
profit and loss statements, and cash flow reports of and for Borrowers for such
upcoming fiscal year (including an income statement for each month and a balance
sheet as of the end of the last month in each fiscal quarter).
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(f) Non-Compliance Fee. To the extent any of the foregoing items in
this Section 6.16 (Financial Statements, etc.) are not delivered to Lender on a
timely basis, Borrowers shall be obligated to pay Lender a daily fee equal to
$500 for each day until such item is delivered to Lender, whether or not a
Default or Event of Default occurs or is declared, provided that nothing shall
prevent Lender from considering any failure to comply with the terms of this
Section 6.16 (Financial Statements, etc.) to be a Default or an Event of
Default. Such fee shall be payable if the delivery obligation is not cured
within 5 Business Days from the date said delivery obligation was originally
due.
6.17. TRUE BOOKS
Each Borrower shall (a) keep true, correct, complete and accurate books of
record and account in accordance with commercially reasonable business practices
in which true and correct entries are made of all of its and their dealings and
transactions in all material respects; and (b) set up and maintain on its books
such reserves as may be required by GAAP with respect to doubtful accounts and
all taxes, assessments, charges, levies and claims and with respect to its
business, and include such reserves in its quarterly as well as year end
financial statements.
6.18. INSPECTION; PERIODIC AUDITS
Each Borrower shall permit the representatives of Lender, at the expense of
Borrowers, from time to time during normal business hours upon one (1) Business
Day notice, to (a) visit and inspect any of its offices or properties or any
other place where Collateral is located to inspect the Collateral and/or to
examine or audit all of its books of account, records, reports and other papers,
(b) make copies and extracts therefrom, and (c) discuss its business,
operations, prospects, properties, assets, liabilities, condition and/or
Accounts with its officers and independent public accountants (and by this
provision such officers and accountants are authorized to discuss the
foregoing); provided, however, in each case, no advance notice shall be required
during the continuance of a Default or Event of Default.
6.19. FURTHER ASSURANCES; POST CLOSING
At Borrower's cost and expense, each Borrower shall (a) take such further
actions, obtain such consents and approvals and duly execute and deliver such
further agreements, assignments, instructions or documents as Lender may request
in its Permitted Discretion with respect to the purposes, terms and conditions
of the Loan Documents and the consummation of the transactions contemplated
thereby, and (b) without limiting and notwithstanding any other provision of any
Loan Document, execute and deliver, or cause to be executed and delivered, such
agreements and documents, and take or cause to be taken such actions, and
otherwise perform, observe and comply with such obligations.
6.20. PAYMENT OF INDEBTEDNESS
Except as otherwise permitted by the Loan Documents, Borrowers shall pay,
discharge or otherwise satisfy at or before maturity (subject to applicable
grace periods and in the case of trade payables, to ordinary course payment
practices) all of their material obligations and liabilities, except when the
amount or validity thereof is being contested in good faith by appropriate
proceedings and such reserves as Lender may deem proper and necessary in its
sole discretion shall have been made.
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6.21. TERMINATION OF LIENS
If Liens other than Permitted Encumbrances exist, Borrowers immediately
shall take all actions, execute and deliver all documents and instruments
necessary to release and terminate such Liens.
6.22. USE OF PROCEEDS
Borrowers shall use the proceeds from the Revolving Facility only for the
purposes set forth in this Agreement.
6.23. SECURITY DOCUMENTS; LIEN ON COLLATERAL
Each Borrower shall (a) execute, obtain, deliver, file, register and/or
record any and all financing statements, continuation statements, stock powers,
instruments and other documents, or cause the execution, filing, registration,
recording or delivery of any and all of the foregoing, that are necessary or
required under law or otherwise or reasonably requested by Lender to be
executed, filed, registered, obtained, delivered or recorded to create,
maintain, perfect, preserve, validate or otherwise protect the pledge of the
Collateral to Lender and Lender's perfected first priority Lien on the
Collateral (and Borrowers irrevocably grant Lender the right, at Lender's
option, to file any or all of the foregoing), (b) immediately upon learning
thereof, report to Lender any reclamation, return or repossession of goods in
excess of $10,000 (individually or $50,000 in the aggregate), and (c) defend the
Collateral and Lender's perfected first priority Lien (or such other priority
Lien as shall be provided for by this Agreement) thereon against all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to Lender, and pay all reasonable costs and expenses (including, without
limitation, in-house documentation and diligence fees and legal expenses and
reasonable attorneys' fees and expenses) in connection with such defense, which
may at Lender's discretion be added to the Obligations. Each Borrower hereby
authorizes Lender to file such UCC-1 financing statements and amendments thereto
as Lender may deem necessary to perfect Lender's Lien on the Collateral in such
governmental offices as Lender shall deem necessary.
6.24. TAXES AND OTHER CHARGES
All payments and reimbursements to Lender made under any Loan Document
shall be free and clear of and without deduction for all taxes, levies, imposts,
deductions, assessments, charges or withholdings, and all liabilities with
respect thereto of any nature whatsoever, excluding taxes to the extent imposed
on Lender's net income. If any Borrower shall be required by law to deduct any
such amounts from or in respect of any sum payable under any Loan Document to
Lender, then the sum payable to Lender shall be increased as may be necessary so
that, after making all required deductions, Lender receives an amount equal to
the sum it would have received had no such deductions been made. Notwithstanding
any other provision of any Loan Document, if at any time after the Closing (i)
any change in any existing law, regulation, treaty or directive or in the
interpretation or application thereof, (ii) any new law, regulation, treaty or
directive enacted or any interpretation or application thereof, or (iii)
compliance by Lender with any request or directive (whether or riot having the
52
force of law) from any Governmental Authority: (A) subjects Lender to any tax,
levy, impost, deduction, assessment, charge or withholding of any kind
whatsoever with respect to any Loan Document, or changes the basis of taxation
of payments to Lender of any amount payable thereunder (except for net income
taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally
by federal, state or local taxing authorities with respect to interest or
commitment fees or other fees payable hereunder or changes in the rate of tax on
the overall net income of Lender), or (B) imposes on Lender any other condition
or increased cost in connection with the transactions contemplated thereby or
participations therein; and the result of any of the foregoing is to increase
the cost to Lender of making or continuing any Loan hereunder or to reduce any
amount receivable hereunder, then, in any such case, Borrowers shall promptly
pay to Lender any additional amounts necessary to compensate Lender, on an
after-tax basis, for such additional cost or reduced amount as determined by
Lender. If Lender becomes entitled to claim any additional amounts pursuant to
this Section 6.24 (Taxes and Other Charges) it shall promptly notify Borrowers
of the event by reason of which Lender has become so entitled, and each such
notice of additional amounts payable pursuant to this Section 6.24 (Taxes and
Other Charges) submitted by Lender to Borrowers shall, absent manifest error, be
final, conclusive and binding for all purposes.
6.25. PAYROLL TAXES
Without limiting or being limited by any other provision of any Loan
Document, each Borrower at all times shall retain and use a Person reasonably
acceptable to Lender to process, manage and pay its payroll taxes.
VII. NEGATIVE COVENANTS
------------------
To induce Lender to make the Loan, 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.
7.1. MERGERS, SUBSIDIARIES, ETC.
Borrowers shall not, directly or indirectly, by operation of law or
otherwise, (a) form or acquire any Subsidiary in addition to the existing
Subsidiaries of Borrowers; or (b) 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.
7.2. INVESTMENTS; LOANS 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
53
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.
7.3. 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 Loan 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 7.3.
(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.
7.4. EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS.
Except as set forth in Disclosure Schedule 5.21, 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.
7.5. CAPITAL STRUCTURE AND BUSINESS.
No Borrower or Credit Party shall amend its charter, articles, bylaws or
operating agreement without first receiving the prior written consent of Lender.
No Borrower or Credit Party shall engage in any business other than the
businesses currently engaged in by it, without first receiving the prior written
consent of Lender.
7.6. 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 7.3) (Indebtedness).
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7.7. LIENS.
Except as set forth in Disclosure Schedule 5.4, 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.
7.8. 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
Borrowers.
7.9. 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.
7.10. 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.
7.11. RESTRICTED PAYMENTS.
During the term of this Agreement, Borrowers shall not make any Restricted
Payment, except (a) employee loans permitted under Section 7.4 (Employee Loans,
etc.), (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.
7.12. 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
55
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.
7.13. 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.
7.14. 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) 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.
7.15. 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.
7.16. SHAREHOLDER BLOCKING RIGHTS
No Borrower shall issue any capital stock that grants or provides any
direct or indirect owner thereof any Shareholder Blocking Rights.
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7.17. FINANCIAL COVENANTS
Borrower's shall not violate the financial covenants set forth on Annex A
to this Agreement.
VIII. EVENTS OF DEFAULT
-----------------
8.1. Events of Default.
The occurrence of any one or more of the following shall constitute an
Event of Default:
(a) Any Borrower fails to make any payment of interest or of principal
on the Loan within five (5) calendar days after the same is due and payable, or
any Borrower fails to make payment of the 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 on the Loan.
(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 any Obligations (not specifically referenced in
any other subsection of this Section 8.1 (Events of Default)) 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 the Loan.
(c) Borrowers or Credit Parties fail or neglect to perform, keep or
observe any provision of this Agreement applicable to them (not specifically
referenced in any other subsection of this Section 8.1 (Events of Default)) 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 Annex A (Financial Covenants) or any provisions set forth in Annex
C (Cash Management System) or Annex D (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 6.6 (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 other 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.
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(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
on the $45,000,000 Real Estate Term Loan or on the $35,000,000 Non-Revolving
Line of Credit Loan made pursuant to the $80 Million Credit Agreement, or on the
$10,700,000 Convertible Loan made pursuant to the $10.7 Million Credit
Agreement, within five (5) calendar days after the same is due and payable,
provided, that if any Borrower fails to make any such 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 the Loan under this Agreement.
(i) Any Borrower fails or neglects to perform, keep or observe any
provision of the $80 Million Credit Agreement or $10.7 Million Credit Agreement
or other documents and instruments executed or delivered in connection therewith
(not specifically referenced in any other subsection of this Section 8.1 (Events
of Default)) and such Borrower shall fail to cure the same by expiration of the
cure period set forth in the $80 Million Credit Agreement or $10.7 Million
Credit Agreement or other document or instrument executed or delivered in
connection therewith.
(j) 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 maturity date 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 in this Agreement or in any other
Loan Document or in any written statement, report, Financial Statement or
certificate made or delivered to Lender by Borrowers or Credit Parties or
Guarantors 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.
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(m) A case or proceeding is commenced against any Borrower or any
Credit Party seeking a decree or order in respect of any Borrower or any 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
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 any Borrower or
Credit Party (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 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, perfected and attached 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.
59
(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.
(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 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.
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(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; or
(ii) IHHI for any reason terminates the sublease with WMC-SA for
the Western Medical Center - Santa Ana;
(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.
Upon the occurrence of any Event of Default, notwithstanding any other
provision of any Loan Document, Lender may, in its sole, absolute and unfettered
discretion, without notice or demand, do any of the following: (A) terminate its
obligations to make further Advances under the Loan, whereupon the same shall
immediately terminate, and/or (B) declare the Loan and the Note, all interest
thereon and all other Obligations to be due and payable immediately (except in
the case of an Event of Default under Section 8.1(m) or (n), in which event the
Loan, the Note and all Obligations shall automatically and without further act
by Lender be due and payable).
IX. RIGHTS AND REMEDIES AFTER DEFAULT
---------------------------------
9.1. RIGHTS AND REMEDIES
(a) In addition to the acceleration provisions set forth in Article
VIII (Events of Default) above, if an Event of Default has occurred and is
continuing, Lender may, at its option, without notice, accelerate the Maturity
Date of the Loan and declare all of the Obligations, including all amounts due
under the Loan, 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 and Guarantors.
(b) In addition to the acceleration provisions set forth in Article
VIII (Events of Default) above, upon the occurrence and continuation of an Event
of Default, Lender shall have the right to exercise any and all rights, options
and remedies provided for in the Loan Documents, under the Code or at law or in
equity, including, without limitation, the right to (i) apply any property of
any Borrower and any Credit Party held by Lender to reduce the Obligations, (ii)
foreclose the Liens created under the Security Documents, (iii) realize upon,
take possession of and/or sell any Collateral or securities pledged (other than
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Collateral consisting of Accounts owed or owing by Medicaid/Medicare Account
Debtors absent a court order or compliance with applicable law) with or without
judicial process, (iv) exercise all rights and powers with respect to the
Collateral as any Borrower or any Credit Party, as applicable, might exercise
(other than with respect to Collateral consisting of Accounts owed or owing by
Medicaid/Medicare Account Debtors absent a court order or compliance with
applicable law), (v) collect and send notices regarding the Collateral (other
than with respect to Collateral consisting of Accounts owed or owing by
Medicaid/Medicare Account Debtors absent a court order or compliance with
applicable law), with or without judicial process, (vi) by its own means or with
judicial assistance, enter any premises at which Collateral and/or pledged
securities are located, or render any of the foregoing unusable or dispose of
the Collateral and/or pledged securities on such premises without any liability
for rent, storage, utilities or other sums, and no Borrower or Credit Party
shall resist or interfere with such action, (vii) at Borrower's expense, require
that all or any part of the Collateral be assembled and made available to Lender
at any place designated by Lender, (viii) reduce or otherwise change the
Facility Cap and/or (ix) relinquish or abandon any Collateral or securities
pledged or any Lien thereon. Notwithstanding any provision of any Loan Document,
Lender, in its sole discretion, shall have the right, at any time that
Borrower's fail to do so, and from time to time, without prior notice, to: (i)
obtain insurance covering any of the Collateral to the extent required
hereunder; (ii) pay for the performance of any of Obligations; (iii) discharge
taxes or Liens on any of the Collateral that are in violation of any Loan
Document unless Borrower's are in good faith with due diligence by appropriate
proceedings contesting those items; and (iv) pay for the maintenance and
preservation of the Collateral. Such expenses and advances shall be added to the
Obligations until reimbursed to Lender and shall be secured by the Collateral,
and such payments by Lender shall not be construed as a waiver by Lender of any
Event of Default or any other rights or remedies of Lender. All such rights and
remedies shall be cumulative and none exclusive.
(c) If any Event of Default has occurred and is continuing, Lender
may, without notice, suspend the Revolving Facility with respect to additional
Advances, whereupon any additional Advances may be made or incurred in Lender's
sole discretion, so long as such Event of Default is continuing.
(d) If any Event of Default has occurred and is continuing, Lender
may, without notice except as otherwise expressly provided herein, increase the
Interest Rate to the Default Rate.
(e) Borrowers agree that notice received by it at least five (5)
calendar days before the time of any intended public sale, or the time after
which any private sale or other disposition of Collateral is to be made, shall
be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrowers. At any sale or
disposition of Collateral or securities pledged, Lender may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by any Borrower which right is hereby waived and released.
Borrowers covenant and agree not to, and not to permit or cause any of their
Subsidiaries to, interfere with or impose any obstacle to Lender's exercise of
its rights and remedies with respect to the Collateral. Lender, in dealing with
or disposing of the Collateral or any part thereof, shall not be required to
give priority or preference to any item of Collateral or otherwise to marshal
assets or to take possession or sell any Collateral with judicial process.
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(f) In addition to all other rights and remedies granted to it under
this Agreement and the Security Documents and under any other instrument or
agreement securing, evidencing or relating to any of the Indebtedness, if any
Event of Default shall have occurred and be continuing, the Lender may exercise
all rights and remedies of a secured party under the Code (whether or not the
Code applies to the affected Collateral). Without limiting the generality of the
foregoing, the Borrowers expressly agree that upon the occurrence and during the
continuance of an Event of Default, Lenders, without demand of performance or
other demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon the Borrowers or
any other Person (all and each of which demands, advertisements and notices are
hereby expressly waived to the maximum extent permitted by the Code and other
applicable law), may forthwith enter upon the premises of the Borrowers where
any Collateral is located through self-help in compliance with Applicable Laws,
without judicial process, without first obtaining a final judgment or giving the
Borrowers or any other Person notice and opportunity for a hearing on the
Lender's claim or action and may collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, license, assign, give an option or options to purchase,
or sell or otherwise dispose of and deliver said Collateral (or contract to do
so), or any part thereof, in one or more parcels at a public or private sale or
sales, at any exchange at such prices as it may deem acceptable, for cash or on
credit or for future delivery without assumption of any credit risk. The Lender
shall have the right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase for the
benefit of Lender, the whole or any part of said Collateral so sold, free of any
right or equity of redemption, which equity of redemption the Borrowers hereby
release. Such sales may be adjourned and continued from time to time with or
without notice. At any such sale or other disposition, Lender reserves the right
to sell for cash, on credit (whether secured or unsecured), or a combination of
both, and not to credit the Obligations unless and until any deferred portion of
the purchase has actually been paid to Lender in good funds. The Lender shall
have the right to conduct such sales on each Borrower's premises or elsewhere
and shall have the right to use each Borrower's premises without charge for such
time or times as the Lender deem necessary or advisable.
(g) If any Event of Default shall have occurred and be continuing,
Borrowers further agree, at Lender's request, to assemble the Collateral and
make it available to Lender at a place or places designated by Lender which are
reasonably convenient to Lender and Borrowers, whether at a Borrower's premises
or elsewhere. Until Lender is able to effect a sale, lease, or other disposition
of Collateral, Lender shall have the right to hold or use Collateral, or any
part thereof, to the extent that it deems appropriate for the purpose of
preserving Collateral or its value or for any other purpose deemed appropriate
by the Lender.
(h) To the extent that applicable law imposes duties on Lender to
exercise remedies in a commercially reasonable manner, the Borrowers acknowledge
and agree that it is not commercially unreasonable for Lender (i) to fail to
incur expenses reasonably deemed significant by Lender to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or
disposed of, (iii) to fail to exercise collection remedies against account
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debtors or other Persons obligated on Collateral or to remove Liens on or any
adverse claims against Collateral, (iv) to exercise collection remedies against
account debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as Borrowers, for
expressions of interest in acquiring all or any portion of such Collateral,
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature, (viii)
to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the
reasonable capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure Lender against risks
of loss, collection or disposition of Collateral or to provide to Lender a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by Lender, to obtain the services of brokers,
investment bankers, consultants and other professionals to assist Lender in the
collection or disposition of any of the Collateral. The Borrowers acknowledge
that the purpose of this Section 9.1(g) (Rights and Remedies) is to provide
non-exhaustive indications of what actions or omissions by Lender would not be
commercially unreasonable in Lender's exercise of remedies against the
Collateral and that other actions or omissions by Lender shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 9.1(g) (Rights and Remedies). Without limitation upon the foregoing,
nothing contained in this Section 9.1(g) (Rights and Remedies) shall be
construed to grant any rights to Borrowers or to impose any duties on Lender
that would not have been granted or imposed by this Security Agreement or by
applicable law in the absence of this Section 9.1(g) (Rights and Remedies).
(i) Lender shall not be required to make any demand upon, or pursue or
exhaust any of their rights or remedies against, Borrowers, Credit Parties, any
other obligor, guarantor, pledgor or any other Person with respect to the
payment of the Obligations or to pursue or exhaust any of their rights or
remedies with respect to any Collateral therefor or any direct or indirect
guarantee thereof. Lender shall not be required to marshal the Collateral or any
guarantee of the Obligations or to resort to the Collateral or any such
guarantee in any particular order, and all of its and their rights hereunder or
under any other Loan Document shall be cumulative. To the extent it may lawfully
do so, the Borrowers absolutely and irrevocably waive and relinquish the benefit
and advantage of, and covenants not to assert against Lender, any valuation,
stay, appraisement, extension, redemption or similar laws and any and all rights
or defenses it may have as a surety now or hereafter existing which, but for
this provision, might be applicable to the sale of any Collateral made under the
judgment, order or decree of any court, or privately under the power of sale
conferred by this Agreement, or otherwise.
(j) Lender may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral, and Lender's
compliance therewith will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.
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(k) Upon the exercise by Lender of any power, right, privilege, or
remedy pursuant to this Agreement which requires any consent, approval,
registration, qualification, or authorization of any Governmental Authority or
any third party, Borrowers agree to execute and deliver, or will cause the
execution and delivery of, all applications, certificates, instruments,
assignments, and other documents and papers that Lender or any purchaser of the
Collateral may be required to obtain for such consent, approval, registration,
qualification, or authorization. To the maximum extent permitted by applicable
law, Borrowers and Credit Parties waive all claims, damages, and demands against
Lender, its Affiliates, agents, and the officers and employees of any of them
arising out of the repossession, retention or sale of any Collateral except such
as are determined in a final judgment by a court of competent jurisdiction to
have arisen solely out of the gross negligence or willful misconduct of such
Person.
(l) In connection with the exercise of its remedies pursuant to
Article IX (Rights and Remedies After Default), Lender may, but shall have no
obligation to: (i) exchange, enforce, waive or release any portion of the
Collateral and any other security for the Obligations; (ii) subject to the
Agreement, apply such Collateral or security and direct the order or manner of
sale thereof as Lender may, from time to time, determine; and (iii) settle,
compromise, collect or otherwise liquidate any such Collateral or security in
any manner following the occurrence and during the continuance of an Event of
Default, without affecting or impairing Lender's right to take any other further
action with respect to any Collateral or security or any part thereof. Borrowers
and the Credit Parties waive any right they may have to require Lender to pursue
any third Person for any of the Obligations.
(m) Borrowers recognize that upon the occurrence of an Event of
Default, any remedy of law may prove to be inadequate relief to Lender;
therefore, Borrowers agree that Lender shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
(n) The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently and are not exclusive of
any rights and remedies provided by applicable law or equity.
9.2. APPLICATION OF PROCEEDS
In addition to any other rights, options and remedies Lender has under the
Loan Documents, the Code, at law or in equity, all dividends, interest, rents,
issues, profits, fees, revenues, income and other proceeds collected or received
from collecting, holding, managing, renting, selling or otherwise disposing of
all or any part of the Collateral or any proceeds thereof upon exercise of its
remedies hereunder shall be applied in the following order of priority: (a)
first, to the payment of all costs and expenses of such collection, storage,
lease, holding, operation, management, sale, disposition or delivery and of
conducting Borrower's business and of maintenance, repairs, replacements,
alterations, additions and improvements of or to the Collateral, and to the
payment of all sums which Lender may be required or may elect to pay, if any,
for taxes, assessments, insurance and other charges upon the Collateral or any
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part thereof, and all other payments that Lender may be required or authorized
to make under any provision of this Agreement (including, without limitation, in
each such case, in-house documentation and diligence fees and legal expenses,
search, audit, recording, professional and filing fees and expenses and
reasonable attorneys' fees and all expenses, liabilities and advances made or
incurred in connection therewith); (b) second, to the payment of all Obligations
as provided herein; (c) third, to the satisfaction of Indebtedness secured by
any subordinate security interest of record in the Collateral if written
notification of demand therefor is received before distribution of the proceeds
is completed, provided that if requested by Lender, the holder of a subordinate
security interest shall furnish reasonable proof of its interest and unless it
does so, Lender need not address its claims; and (d) fourth, to the payment of
any surplus then remaining to Borrowers, unless otherwise required by law or
directed by a court of competent jurisdiction, provided that Borrowers shall be
liable for any deficiency if such proceeds are insufficient to satisfy the
Obligations or any of the other items referred to in this section.
9.3. RIGHTS OF LENDER TO APPOINT RECEIVER
Without limiting and in addition to any other rights, options and remedies
Lender has under the Loan Documents, the Code, at law or in equity, upon the
occurrence and continuation of an Event of Default, Lender shall have the right
to apply for and have a receiver appointed by a court of competent jurisdiction
in any action taken by Lender to enforce its rights and remedies in order to
manage, protect, preserve, sell or dispose of the Collateral and continue the
operation of the business of Borrowers and to collect all revenues and profits
thereof and apply the same to the payment of all expenses and other charges of
such receivership including the compensation of the receiver and to the payments
as aforesaid until a sale or other disposition of such Collateral shall be
finally made and consummated.
9.4. RIGHTS AND REMEDIES NOT EXCLUSIVE
Lender shall have the right in its sole discretion to determine which
rights, Liens and/or remedies Lender may at any time pursue, relinquish,
subordinate or modify, and such determination will not in any way modify or
affect any of Lender's rights, Liens or remedies under any Loan Document,
applicable law or equity. The enumeration of any rights and remedies in any Loan
Document is not intended to be exhaustive, and all rights and remedies of Lender
described in any Loan Document are cumulative and are not alternative to or
exclusive of any other rights or remedies which Lender otherwise may have. The
partial or complete exercise of any right or remedy shall not preclude any other
further exercise of such or any other right or remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
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10.1. WAIVERS
Except as expressly provided for herein, Borrowers hereby waive set-off,
counterclaim, demand, presentment, protest, all defenses with respect to any and
all instruments and all notices and demands of any description, and the pleading
of any statute of limitations as a defense to any demand under any Loan
Document. Borrowers hereby waive any and all defenses and counterclaims they may
have or could interpose in any action or procedure brought by Lender to obtain
an order of court recognizing the assignment of, or Lien of Lender in and to,
any Collateral, whether or not payable by a Medicaid/Medicare Account Debtor.
With respect to any action hereunder, Lender conclusively may rely upon, and
shall incur no liability to Borrowers in acting upon, any request or other
communication that Lender reasonably believes to have been given or made by a
person authorized on Borrowers' behalf, whether or not such person is listed on
the incumbency certificate delivered pursuant to Section 4.1(aa) (Closing and
Funding Checklist) hereof. In each such case, Borrowers hereby waive the right
to dispute Lender's action based upon such request or other communication,
absent manifest error.
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10.2. DELAY; NO WAIVER OF DEFAULTS
No course of, action or dealing, renewal, release or extension of any
provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Lender's part in enforcing any such
provision shall affect the liability of any Borrower or Credit Party or operate
as a waiver of such provision or affect the liability of any Borrower or any
Credit Party or preclude any other or further exercise of such provision. No
waiver by any party to any Loan Document of any one or more defaults by any
other party in the performance of any of the provisions of any Loan Document
shall operate or be construed as a waiver of any future default whether of a
like or different nature, and each such waiver shall be limited solely to the
express terms and provisions of such waiver. Notwithstanding any other provision
of any Loan Document, by completing the Closing under this Agreement and/or by
making Advances, Lender does not waive any breach of any representation or
warranty under any Loan Document, and all of Lender's claims and rights
resulting from any such breach or misrepresentation are specifically reserved.
10.3. JURY WAIVER
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS OR IN ANY
WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF
THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
10.4. COOPERATION IN DISCOVERY AND LITIGATION
In any litigation, arbitration or other dispute resolution proceeding
relating to any Loan Document, each Borrower and each Credit Party waives any
and all defenses, objections and counterclaims it may have or could interpose
with respect to (a) any of its directors, officers, employees or agents being
deemed to be employees or managing agents of such Borrower or Credit Party for
purposes of all applicable law or court rules regarding the production of
witnesses by notice for testimony (whether in a deposition, at trial or
otherwise), (b) Lender's counsel examining any such individuals as if under
cross-examination and using any discovery deposition of any of them as if it
were an evidence deposition, and/or (c) using all commercially reasonable
efforts to produce in any such dispute resolution proceeding, at the time and in
the manner reasonably requested by Lender, all Persons, documents (whether in
tangible, electronic or other form) and/or other things under its control and
relating to the dispute.
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XI. CLOSING DATE AND TERMINATION
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11.1. TERMINATION AND CLOSING DATE
(a) Subject to Lender's right to terminate and cease making Advances
upon or after any Event of Default, this Agreement shall continue in full force
and effect until the full performance and indefeasible payment in cash of all
Obligations (other than indemnity obligations under the Loan Documents that are
not then due and payable or for which any events or claims that would give rise
thereto are not then pending), unless terminated sooner as provided in this
Section 11.1 (Termination and Closing Date). Borrowers may terminate this
Agreement at any time upon not less than sixty (60) calendar days' prior written
notice to Lender and upon full performance and indefeasible payment in full in
cash of all Obligations (other than indemnity obligations under the Loan
Documents that are not then due and payable or for which any events or claims
that would give rise thereto are not then pending) on or prior to such 60th
calendar day after receipt by Lender of such written notice. All of the
Obligations shall be immediately due and payable upon the Termination Date;
provided that, notwithstanding any other provision of any Loan Document, the
Termination Date shall be effective no earlier than the first Business Day of
the month following the expiration of the sixty (60) calendar days' prior
written notice period. Notwithstanding any other provision of any Loan Document,
no termination of this Agreement shall affect Lender's rights or any of the
Obligations existing as of the Closing Date of such termination, and the
provisions of the Loan Documents shall continue to be fully operative until the
Obligations (other than indemnity obligations under the Loan Documents that are
not then due and payable or for which any events or claims that would give rise
thereto are not then pending) have been fully performed and indefeasibly paid in
cash in full. The Liens granted to Lender under the Security Documents and the
financing statements filed pursuant thereto and the rights and powers of Lender
shall continue in full force and effect notwithstanding the fact that Borrower's
borrowings hereunder may from time to time be in a zero or credit position until
all of the Obligations (other than indemnity obligations under the Loan
Documents that are not then due and payable or for which any events or claims
that would give rise thereto are not then pending) have been fully performed and
indefeasibly paid in full in cash.
(b) If a Revolver Termination occurs, then upon the occurrence of such
Revolver Termination, Borrowers shall pay Lender (in addition to the then
outstanding principal, accrued interest and other Obligations relating to the
Revolving Facility pursuant to the terms of this Agreement and any other Loan
Document), to compensate Lender for the loss of bargain and not as a penalty, an
amount equal to Yield Maintenance.
11.2. SURVIVAL
All obligations, covenants, agreements, representations, warranties,
waivers and indemnities made by Borrowers and Credit Parties and Guarantors in
any Loan Document shall survive the execution and delivery of the Loan
Documents, the Closing, the making of the Advances and any termination of this
Agreement until all Obligations (other than indemnity obligations under the Loan
Documents that are not then due and payable or for which any events or claims
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that would give rise thereto are not then pending) are fully performed and
indefeasibly paid in full in cash. The obligations and provisions of Sections
3.4, 3.5, 6.5, 6.8, 10.1, 10.3, 10.4, 11.1, 11.2, 12.1, 12.4, 12.8, 12.10, and
Article XIII shall survive termination of the Loan Documents and any payment, in
full or in part, of the Obligations.
XII. MISCELLANEOUS
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12.1. 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 12.2 (Amendments and Waivers). Any 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.
12.2. 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 IV
(Conditions Precedent) to the making of the Loan 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 Loan
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 Borrowers: (i) increase
the principal amount of the Facility Cap; (ii) reduce the principal amount of or
the Interest Rate applicable to the Loan; (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. 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 12.2 (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.
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(c) Termination of Liens. Upon the indefeasible payment in full in
cash and performance of all of the 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 termination statements, Lien releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
12.3. FEES AND EXPENSES
Borrowers shall reimburse Lender for (i) Lender's Costs, (ii) all fees,
costs and expenses (including the reasonable fees and expenses of all of their
outside attorneys, advisors, consultants and auditors), and (iii) 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, incurred in connection with any amendment,
modification or waiver of, consent with respect to, or termination of, any of
the Loan Documents, or advice in connection with a breach or default under the
Loan or Lender's rights hereunder or thereunder, or in connection with any of
the following:
(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,
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 Loan 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
willful 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 Loan during the pendency of one or more Events of Default.
(c) Any workout or restructuring or forbearance of the Loan 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,
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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 fees incurred by such counsel and others in connection
with or relating to any of the events or actions described in this Section 12.3
(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, 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.
12.4. 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 subsequent
thereto and whether the same or of a different type. Subject to the provisions
of Section 12.2 (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.
12.5. 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.
12.6. 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.
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12.7. 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.
12.8. 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, statutory costs and
non-statutory costs incurred in connection with the prosecution or defense of
such action. The foregoing includes, without limitation, attorneys' fees,
statutory costs and non-statutory 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, statutory and
non-statutory 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 contemplated hereby, be made a party to any litigation instituted
by Borrowers or Credit Parties against a Person other than Lender, or any
litigation instituted against Borrowers or Credit Parties by any Person other
than Lender, Borrowers shall 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.
12.9. TIME OF THE ESSENCE
Time is of the essence in the performance of each and every term, condition
and covenant of this Agreement.
12.10. CONFIDENTIALITY
Lender agree to use commercially reasonable efforts to maintain as
confidential all confidential 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 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 so long as Lender has policies
relative to the maintenance of confidential information; (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 12.10 (Confidentiality) and
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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.
12.11. 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 PARTY'S ON THE ONE
HAND, AND LENDER ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE
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,
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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 E OF THIS AGREEMENT.
12.12. 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 and 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 other similar 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 12.12 (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 E (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 E (Notice Addresses) to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
12.13. 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.
12.14. COUNTERPARTS
This Agreement may be executed in any number of separate counterparts, each
of which shall collectively and separately constitute one agreement.
12.15. PRESS RELEASES AND RELATED MATTER.
Borrowers and Credit Parties agrees that neither it nor its 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 without at least two (2) Business Days' prior notice to Lender and
without the prior written consent of Lender (which consent will not be
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unreasonably withheld) unless (and only to the extent that) Borrowers or Credit
Parties or Affiliate is 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 Affiliate will use commercially reasonable efforts
to consult with Lender before issuing such press release or other public
disclosure. Borrowers and Credit Parties consents 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.
12.16. 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 Borrower's or 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.
12.17. ADVICE OF COUNSEL
Each of Borrowers and Credit Parties represent to Lender and Lender
represent to Borrowers and to Credit Parties, that it has discussed this
Agreement and, specifically, the provisions of Section 10.3 (Jury Waiver) and
Section 12.11 (Governing Law), with its counsel.
12.18. 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.
12.19. LIMITATION ON BORROWER'S AND 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 Borrowers or Credit Party's 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
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liabilities of Borrowers and Credit Parties, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of Borrowers or Credit Parties in respect of intercompany
indebtedness to any other Borrowers or Credit Parties or Affiliates of Borrowers
or Credit Parties).
12.20. LENDER APPROVALS
Unless expressly provided herein to the contrary, any approval, consent,
waiver, satisfaction of Lender with respect to any matter that is subject of any
Loan Document may be granted, withheld or conditioned by Lender in its sole,
unfettered and absolute discretion.
XIII. RELEASES AND WAIVERS; COVENANTS NOT TO SUE; INDEMNITY.
-----------------------------------------------------
Each Borrower, each Credit Party and each Guarantor acknowledge and agree
that the Previous Lenders 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, Previous Lenders 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:
13.1. RELEASES AND WAIVERS.
As an inducement to Lender to make the Loan 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.
(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.
(c) 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:
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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.
13.2. COVENANTS NOT TO SUE.
(a) 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.
13.3. INDEMNITY.
(a) 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: (i)
the negotiation, execution and delivery of the Term Sheet by any Lender Released
Party; (ii) the negotiation, execution and delivery of this Agreement by any
Lender Released Party; (iii) the negotiation, execution and delivery of any of
the Previous Loan Documents by any Lender Released Party; (iv) the taking,
77
implementation or enforcement by any of the Lender Released Parties of any of
their rights and remedies under the Previous Loan Documents; (v) the making of
the Loans by any of the Lender Released Parties pursuant to this Agreement; and
(vi) 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.
XIV. SURETYSHIP WAIVERS
------------------
14.1. SURETYSHIP WAIVERS
Because Credit Parties are not direct borrowers from Lender under this
Agreement, although the Loan directly and indirectly benefits each Person
comprising Borrowers and Credit Parties, it is possible that Borrowers and 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, and Guarantor, of all or
any portion of the Obligations, or other event or proceeding affecting Borrowers
or Credit Parties or Guarantor 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
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.
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(c) Authority of Lender. Credit Parties hereby authorizes 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 Guarantors; (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 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. 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 any course of
dealing with any other person or legal entity, shall release Borrower's
Obligations or Credit Party's responsibility hereunder, shall affect this
Agreement or the other Loan Documents in any way, or afford Borrowers or Credit
Parties any recourse against Lender. Without limiting the generality of the
foregoing, Borrowers agrees 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.
(d) Waiver of Rights Against Lender. Borrowers and Credit Parties
waive any right to require Lender to: (i) proceed against Borrowers under any of
the Notes, 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. Credit Parties waive all setoffs and 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,
79
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 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 and Credit Parties
represent and warrant to Lender that: (i) this Agreement is executed at
Borrower's and Credit Party's request; (ii) 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) 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 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, no Credit Party 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 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 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 Credit Parties or any other Person, or
the benefit of any other security for any Obligation which, now or hereafter,
Lender may hold or in which it may have any share or interest.
14.2. ELECTION OF REMEDIES
If Lender may, under applicable law, 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 Article XIV (Suretyship 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 any Guarantor's
obligation to pay the full amount of the Obligations applicable to it. In the
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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.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, this Revolving Credit Agreement ($50,000,000 Facility)
has been duly executed as of the date set forth next to the signature each
party; provided, however, this Revolving Credit Agreement shall for all purposes
be deemed effective as of the Effective Date first written above.
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]
1
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: 10/4/07
-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]
2
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 I, a Nevada corporation,
By: /s/ Joseph J. Lampariello Date of Execution: 10/4/07
Name: Joseph J. Lampariello
Title: COO
3
ANNEX A TO REVOLVING CREDIT AGREEMENT ($50 MILLION FACILITY)
------------------------------------------------------------
FINANCIAL COVENANTS
1) MINIMUM CENSUS
For each Test Period, the aggregate combined occupancy percentage (defined
as average daily census divided by available beds at the four Hospital
Facilities) shall not be less than 55%.
2) MINIMUM EBITDA
For each Test Period, EBITDA shall not be less than $100.
3) MINIMUM FIXED CHARGE COVERAGE RATIO
For each Test Period, the Fixed Charge Coverage Ratio shall not be less
than 1.0.
4) MINIMUM CASH VELOCITY
Collections of Borrower's Accounts shall not be less than $69,000,000
during each Test Period of this Agreement; provided, however, that upon any
violation of or failure to comply with this covenant Lender shall have the
right, in its sole discretion, to consider for all purposes under the Agreement
as though Borrower actually collected Accounts equal to such minimum required
amount.
For purposes of the covenants set forth in this Annex A, the terms listed
below shall have the following meanings:
"EBITDA" shall mean, for any period, the sum, without duplication, of the
following for each Borrower collectively on a consolidated basis: Net Income,
plus, (a) Interest Expense, (b) taxes on income, whether paid, payable or
accrued, (c) depreciation expense, (d) amortization expense, (e) all other
non-cash, non-recurring charges and expenses, excluding accruals for cash
expenses made in the ordinary course of business, and (f) loss from any sale of
assets, other than sales in the ordinary course of business, minus (a) gains
from any sale of assets, other than sales in the ordinary course of business and
(b) other extraordinary or non-recurring gains, in each case determined in
accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" shall mean, for all Borrowers collectively on
a consolidated basis, the ratio of (a) EBITDA, divided by (b) Fixed Charges.
"FIXED CHARGES" shall mean, for any Test Period, the sum of the following
for Borrowers collectively on a consolidated basis: (a) Total Debt Service
during such Test Period, (b) Capital Expenditures and management and service
fees during such Test Period, (c) income taxes paid in cash or accrued during
such Test Period, and (d) dividends and Distributions paid or accrued or
declared during such Test Period.
1
"INTEREST EXPENSE" shall mean, for any period, for Borrowers collectively
on a consolidated basis, total interest expense (including without limitation
attributable to Capital Leases in accordance with GAAP), fees with respect to
all outstanding Indebtedness including without limitation capitalized interest
but excluding commissions, discounts and other fees owed with respect to letters
of credit and bankers' acceptance financing and net costs under Interest Rate
Agreements.
"NET INCOME" shall mean; for any period, the net income (or loss) of
Borrowers collectively on a consolidated basis determined in accordance with
GAAP; provided, however, that such amount shall exclude (a) the income (or loss)
of any Person in which any other Person (other than any Credit Party) has a
joint interest, except to the extent of the amount of dividends or other
distributions actually paid to a Borrower by such Person (b) the income (or
loss) of any Person accrued prior to the date it becomes a Borrower or is merged
into or consolidated with a Borrower or that Person's assets are acquired by a
Borrower, (c) the income of any Subsidiary of any Borrower to the extent that
the declaration or payment of dividends or similar distributions of that income
by that Subsidiary is not at the time permitted by operation of the terms of the
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (d) compensation expense
resulting from the issuance of capital stock, stock options or stock
appreciation rights issued to former or current employees, including officers,
of a Borrower, or the exercise of such options or rights, in each case to the
extent the obligation (if any) associated therewith is not expected to be
settled by the payment of cash by a Borrower or any affiliate thereof, and (e)
compensation expense resulting from the repurchase of capital stock, options and
rights described in clause (d) of this definition of Net Income.
"TEST PERIOD" shall mean, as of any date of determination, the three most
recent calendar months then ended (taken as one accounting period), or such
other period as specified in the Agreement or any Annex thereto.
"TOTAL DEBT SERVICE" shall mean, for any period, the sum of the following
for Borrowers collectively on a consolidated basis: (a) payments of principal on
Indebtedness, plus (ii) Interest Expense.
2
ANNEX B TO REVOLVING CREDIT AGREEMENT ($50 MILLION FACILITY)
------------------------------------------------------------
DEFINITIONS
"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 "D" 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 "D" 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 "D" 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 "D" 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 "D" attached hereto.
"ACCOUNT DEBTOR" shall mean any Person who is obligated under an Account.
"ACCOUNT(S)" shall mean each account(s) (as defined in the Code) of the
Borrowers (or, if referring to another Person, of such other Person), including
without limitation, accounts, accounts receivables, monies due or to become due
and obligations in any form (whether arising in connection with contracts,
contract rights, Instruments, General Intangibles or Chattel Paper), in each
case whether arising out of goods sold or services rendered or from any other
transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"ADVANCE" shall mean a borrowing under the Revolving Facility. Any amounts
paid by Lender on behalf of Borrowers or any Credit Parties or any Guarantors
under any Loan Document shall be an Advance for purposes of the Agreement.
"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, spouses
3
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 Revolving 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 Annexes A through E 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 Guarantors, 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.
"AVAILABILITY" means that amount which is equal to (a) ninety percent (90%)
(or more at the sole discretion of Lender) of Eligible Billed Receivables, and
(b) fifty percent (50%) (or more at the sole discretion of Lender) of Eligible
Unbilled Receivables.
"BANK" means Wells Fargo Bank, N.A., located at 2030 Main Street, Suite
900, Irvine, California 92614
"BANKRUPTCY CODE" shall mean Chapter 11 of Title 11 of the United States
Code, as amended from time to time.
"BORROWING BASE" shall mean, as of any date of determination, the net
collectible U.S. Dollar value of Eligible Receivables, as determined by Lender
in its discretion with reference to the most recent Notice of Request for
Advance and otherwise in accordance with this Agreement; provided, however, that
if as of such date the most recent Notice of Request for Advance is of a date
more than four (4) Business Days before or after such date, the Borrowing Base
shall be determined by Lender in its sole discretion.
"BORROWERS" means IHHI, WMC-A, WMC-SA, Chapman and Coastal.
4
"BORROWER'S REPRESENTATIVE" means Bruce Mogel at the address of IHHI, or
any replacement therefor approved by Lender as required by this Agreement.
"BORROWING DATE" means the date that Borrower's Representative requests
that Lender make an Advance available to Borrowers.
"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.
"CAPITAL EXPENDITURES" shall mean, 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.
"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 5.17 (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
5
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
(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,
6
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
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).
"CHARTER AND GOOD STANDING DOCUMENTS" shall mean, for each Borrower and
each Credit Party (a) a copy of the certificate of incorporation or formation
(or other charter document) certified and dated within thirty (30) calendar days
prior to the Closing Date by the applicable Governmental Authority of the
jurisdiction of incorporation or organization of such Borrower and Credit Party,
(b) a copy of the bylaws or similar organizational documents certified and dated
within thirty (30) calendar days prior to the Closing Date by the corporate
secretary or assistant secretary of such Borrower and Credit Party, (c) an
original certificate of good standing certified and dated thirty (30) calendar
days prior to the Closing Date issued by the applicable Governmental Authority
of the jurisdiction of incorporation or organization of such Borrower and Credit
Party and of every other jurisdiction in which such Borrower and Credit Party
has an office or conducts business or is otherwise required to be in good
standing, and (d) copies of the resolutions of the Board of Directors or
managers (or other applicable governing body) and, if required, shareholders,
members or other equity owners authorizing the execution, delivery and
performance of the Loan Documents to which such Borrower and Credit Party is a
party, certified by an authorized officer of such Person as of the Closing Date.
"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.
"CLOSING" shall mean the satisfaction, or written waiver by Lender, of all
of the conditions precedent set forth in the Agreement required to be satisfied
prior to the consummation of the transactions contemplated hereby.
7
"CLOSING DATE" shall mean October 1, 2007, unless Borrower's Representative
and Lender otherwise agree in writing.
"COASTAL" means Coastal Communities Hospital, Inc., a California
corporation.
"COASTAL COMMUNITIES HOSPITAL" means the real property and 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.
"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;
8
(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:
(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 "E" 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 "E" 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 "E" 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 "E"
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
"E" attached hereto.
"COLLATERAL PATENT, TRADEMARK AND COPYRIGHT ASSIGNMENT" shall mean any
patent, trademark, or copyright assignment or acknowledgement executed by and
between Borrowers and Lender, as such may be modified, amended or supplemented
from time to time.
"CONCENTRATION ACCOUNT" means an account established by Lender with a bank
or other financial institution of its choice, into which each Lockbox Bank shall
deliver all amounts deposited into the Lockbox Accounts by Account Debtors and
other Persons.
"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 Account.
9
"CONTROL AGREEMENT" means the Control Agreement dated as of the date
hereof, by and among Lender, Borrowers and Bank in the form of Exhibit "G"
attached hereto.
"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: (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, collectively, OC-PIN, PCHI, West Coast and Ganesha,
and their respective successors and assigns; and "CREDIT PARTY" means any one of
the Credit Parties.
"DEBTOR RELIEF LAW" shall mean, collectively, the Bankruptcy Code of the
United States of America and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization
or similar debtor relief laws from time to time in effect affecting the rights
of creditors generally, as amended from time to time.
"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 "C" 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 "C" 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 "C" 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 "C" 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 "C" attached hereto.
10
"DEFAULT" shall mean any event, fact, circumstance or condition that, with
the giving of applicable notice or passage of time or both, would, unless cured
or waived in writing, constitute or be or result in 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.
"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 each of the following:
(a) the Deposit Account Security Agreement re Western Medical Center -
Anaheim, dated as of the date hereof, by and among Lender, IHHI and WMC-A in the
form of Exhibit "F" attached hereto;
(b) the Deposit Account Security Agreement 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 "F" attached hereto;
(c) the Deposit Account Security Agreement re Coastal Communities
Hospital, dated as of the date hereof, by and among Lender, IHHI and Coastal in
the form of Exhibit "F" attached hereto;
(d) the Deposit Account Security Agreement 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 Deposit Account Security Agreement re Chapman Hospital Lease,
dated as of the date hereof, by and among Lender and IHHI in the form of Exhibit
"F" attached hereto.
"DILUTION ITEMS" means the various items used by Lender in determining
whether or not to change the factors constituting a Borrower's Availability,
such items to include but not be limited to a Borrower's actual recent
collection history for each class of payors (i.e., Medicare, Medicaid,
commercial insurance, etc.); whether said history is consistent with Lender's
underwriting practices and procedures; and such Borrower's historical returns,
rebates, discounts, credits and allowances.
"DISCLOSURE SCHEDULES" means the Schedules prepared by Borrowers and
denominated as Disclosure Schedules 2.4 through 7.3 to this Agreement.
"DISTRIBUTION" shall mean any fee, payment, bonus or other remuneration of
any kind, or any distribution of cash, property or assets of any Person to the
holders of shares of such Person's capital stock or of such Person's other
equity interests.
"DOCUMENTS" means all documents, as such term is defined in the Code, now
owned or hereafter acquired by any of Borrowers, wherever located.
11
"DOLLARS" or "$" means lawful currency of the United States of America.
"$10.7 MILLION CREDIT AGREEMENT" means that certain Credit Agreement
($10,700,000 Facility) dated as of the date hereof by and among Borrowers,
Credit Parties, Guarantors and Medical Provider Financial Corporation III, a
Nevada corporation (an affiliate of Lender), pursuant to which Medical Provider
Financial Corporation III is providing to Borrowers for the benefit of Borrowers
and the Credit Parties and the Guarantors named therein a $10,700,000 term loan.
"$80 MILLION CREDIT AGREEMENT" means that certain Credit Agreement
($80,000,000 Facility) dated as of the date hereof by and among Borrowers,
Credit Parties, Guarantors and Medical Provider Financial Corporation II, a
Nevada corporation (an affiliate of Lender), pursuant to which Medical Provider
Financial Corporation II is providing to Borrowers for the benefit of Borrowers
and the Credit Parties and the Guarantors named therein, (a) a $45,000,000 real
estate term loan, and (b) a $35,000,000 non-revolving line of credit loan.
"DR. SHAH" means Anil V. Shah, M.D.
"EFFECTIVE DATE" means the date set forth in the introductory paragraph of
this Agreement.
"ELIGIBLE BILLED RECEIVABLES" shall mean the amount of each Eligible
Receivable arising in the ordinary course of business of Borrowers that is
evidenced by an invoice, statement or other documentary evidence reasonably
satisfactory to Lender that is dated and sent to the applicable Account Debtor
no later than 180 calendar days after the services covered by such Eligible
Receivable were rendered; provided however, that an Eligible Receivable that was
an Eligible Unbilled Receivable shall become an Eligible Billed Receivable upon
satisfaction of the terms of this definition of Eligible Billed Receivables; and
further provided that Lender shall have the right in its discretion to reduce
the amount of Eligible Billed Receivables based on its collection experience for
Accounts similar to those included in a particular batch of Eligible Billed
Receivables, with due consideration for the business practices of Borrower in
the documentation and processing of Accounts and Lender's experience with
similar Accounts and turn-around time.
"ELIGIBLE RECEIVABLES" shall mean each Account arising in the ordinary
course of a Borrower's business from the sale of goods or rendering of Services
which Lender, in its sole discretion, deems an Eligible Receivable. Provided,
however, an Account cannot be an Eligible Receivable if:
(a) the Account is not subject to a valid perfected first priority
security interest in favor of Lender, subject to no other Lien; or
(b) the Account or any portion thereof is payable by a beneficiary,
recipient or subscriber individually and not directly by a Medicaid/Medicare
Account Debtor or commercial medical insurance carrier acceptable to Lender; or
12
(c) the Account arises out of services rendered or a sale, made to, or
out of any transaction between any Borrower or any of its Subsidiaries and, one
or more Affiliates of any Borrower or any of its Subsidiaries; or
(d) the Account remains unpaid for longer than 150 calendar days after
the first to occur of (i) the claim date, (ii) the invoice date, or (iii) the
date Services were rendered; or
(e) with respect to all Accounts owed by any particular Account Debtor
(other than Accounts from Medicaid/Medicare Account Debtors) and/or its
Affiliates, if more than 10% of the aggregate balance of all such Accounts owing
from such Account Debtor and/or its Affiliates remain unpaid for longer than 150
calendar days after the first to occur of (i) the claim date, (ii) the invoice
date, or (iii) the date Services were rendered; or
(f) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates, 25% or more of all such Accounts are not deemed Eligible
Receivables for any reason hereunder (which percentage may, in Lender's sole
discretion, be increased or decreased); or
(g) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates (except Medicaid/Medicare Account Debtors), if such
Accounts exceed 20% of the net collectible dollar value of all Eligible
Receivables at any one time (including Accounts from Medicaid/Medicare Account
Debtors) (which percentage may, in Lender's sole discretion, be increased or
decreased); or
(h) any, covenant, agreement, representation or warranty contained in
any Loan Document with respect to such Account has been breached and remains
uncured; or
(i) the Account Debtor for such Account has commenced a voluntary case
under any Debtor Relief Law or has made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by a court having
jurisdiction in respect of such Account Debtor in an involuntary case under any
Debtor Relief Law, or any other petition or application for relief under any
Debtor Relief Law has been filed against such Account Debtor or such Account
Debtor has failed, suspended business, ceased to be solvent, called a meeting of
its creditors, or has consented to or suffered a receiver, trustee, liquidator
or custodian to be appointed for it or for all or a significant portion of its
assets or affairs, or any Borrower, in the ordinary course of business, should
have known of any of the foregoing; or
(j) the Account arises from the sale of property or Services rendered
to one or more Account Debtors outside the continental United States or that
have their principal place of business or chief executive offices outside the
continental United States; or
(k) the Account represents the sale of goods or rendering of Services
to an Account Debtor on a bill-and-hold basis, or on a guaranteed sale basis, or
on a sale-and-return basis, or on a sale-on-approval basis, or on a consignment
or any other repurchase or return basis, or is evidenced by Chattel Paper or an
Instrument of any kind or has been reduced to judgment; or
13
(l) the applicable Account Debtor for such Account is any Governmental
Authority, unless rights to payment of such Account have been assigned to Lender
pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Section
3727, ET SEQ. and 41 U.S.C. Section 15, ET SEQ.), or otherwise only if all
applicable statutes or regulations respecting the assignment of Government
Accounts have been complied with (for example, with respect to all Accounts
payable directly by a Medicaid/Medicare Account Debtor); or
(m) the Account is subject to any offset, credit (including any
resource or other income credit or offset) deduction, defense, discount,
chargeback, freight claim, allowance, adjustment, dispute or counterclaim, or is
contingent in any respect or for any reason; or
(n) there is any agreement with an Account Debtor for any deduction
from such Account, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each invoice related thereto,
such that only the discounted amount of such Account after giving effect to such
discounts and allowances shall be considered an Eligible Receivable; or
(o) any return, rejection or repossession of goods or Services related
to an Account has occurred; or
(p) the Account is not payable to a Borrower; or
(q) a Borrower has agreed to accept or have accepted any non-cash
payment for such Account; or
(r) with respect to any Account arising from the sale of goods, the
goods have not been shipped to the Account Debtor or its designee; or
(s) with respect to any Account arising from the performance of
Services, the Services have not been actually performed or the Services were
undertaken in violation of any Applicable Laws; or
(t) the Account fails to meet such other specifications and
requirements which may from time to time be established by Lender or is not
otherwise satisfactory to Lender, as determined in Lender's sole discretion.
"ELIGIBLE UNBILLED RECEIVABLE" shall mean each Eligible Receivable arising
in the ordinary course of business of Borrower that is not an Eligible Billed
Receivable and for which an invoice, statement or other billing document has not
yet been created or sent; provided that any such Eligible Receivable will cease
to be an Eligible Unbilled Receivable after 15 days following the date Services
giving rise to such Eligible Receivable were rendered and, provided further,
that any such Eligible Receivable will cease to be an Eligible Unbilled
Receivable on the date on which it becomes evidenced by an invoice, statement or
other documentary evidence of any kind acceptable to Lender.
"EMPLOYMENT AGREEMENTS" shall mean employment agreements between any
Borrower and any of its senior officers, in form and substance approved in
writing by Lender.
14
"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 Indemnitee 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
applicable Environmental Laws or to the ownership, use, occupancy or operation
thereof; (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 Claims brought,
asserted, or alleged against Lender or any of its 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 or material breach or failure to
perform any covenants or obligations pursuant to this Agreement relating to
environmental matters.
15
"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.
"ESCROW" means an escrow account established by the Escrow Company.
"ESCROW COMPANY" means Chicago Title Insurance Company, 700 South Flower
Street, Suite 800, Los Angeles, California 90017, Attn: Patricia M. Schlageck
("ESCROW OFFICER"), telephone: 213-488-4358; facsimile: 213-612-4138; email:
patricia.schlageck@ctt.com.
"ESCROW HOLDER" means Escrow Company.
16
"EVENT OF DEFAULT" shall mean the existence or occurrence of any event set
forth in Article VIII (Events of Default).
"EXHIBITS" means Exhibits "A" through "R" attached to this Agreement.
"FACILITY CAP" means the maximum aggregate amount of $50,000,000.00.
"FAIR VALUATION" shall mean the reasonable determination of the value of
the consolidated assets of a Person on the basis of the amount which may be
realized by a willing seller within a reasonable time through collection or sale
of such assets at market value on a going concern basis to an interested buyer
who is willing to purchase under ordinary selling conditions in an arm's length
transaction.
"FINANCIAL STATEMENTS" means the consolidated income statements, statements
of cash flows and balance sheets of the Borrowers delivered in accordance with
Section 6.16 (Financial Statements) 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
Medical Provider Financial Corporation II, a Nevada corporation (an affiliate of
Lender). Pursuant to the First Credit Agreement, Medical Provider Financial
Corporation II 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.
"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.
17
"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,
choses 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.
18
"GOVERNMENT ACCOUNT" shall be defined to mean all Accounts arising out of
or with respect to any Government Contract.
"GOVERNMENT CONTRACT" shall be defined to mean all contracts with the
United States Government or with any agency thereof, and all amendments thereto.
"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" shall mean, collectively and each individually, PCHI, OC-PIN
and West Coast, and each such Guarantor's successors and assigns or heirs and
personal representatives, as applicable.
"GUARANTY AGREEMENT" means a Guaranty Agreement of even date herewith,
executed by the Guarantors and Lender, in the form of Exhibit "K" 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
19
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
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.
"HEALTHCARE LAWS" shall mean all applicable statutes, laws, ordinances,
rules and regulations of any Governmental Authority with respect to regulatory
matters primarily relating to patient healthcare, healthcare providers and
healthcare services (including without limitation Section 1128B(b) of the Social
Security Act, as amended, 42 U.S.C. Section 1.320a-7(b) (Criminal Penalties
Involving Medicare or State Health Care Programs), commonly referred to as the
"Federal Anti-Kickback Statute," and the Social Security Act, as amended,
Section 1877, 42 U.S.C. Section 1395nn (Prohibition Against Certain Referrals),
commonly referred to as "Stark Statute").
"HIPAA" means the Health Insurance Portability and Accountability Act of
1996, as amended, Public Law 104-191, August 21, 1996.
20
"HOSPITAL FACILITIES" means the 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
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.
"INDEMNIFIED PERSON" means Lender and its Affiliates, the Previous Lenders
and their Affiliates, and each such Person's respective officers, directors,
members, employees, attorneys, agents, and representatives.
21
"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.
"INITIAL ADVANCE" means the first, or initial, Advance funded by Lender to
Borrowers on the Closing Date, the proceeds of which shall be applied, in whole
or in part, to pay to Lender the Previous Amount Owed.
"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.
"INSURER" shall mean a Person that insures another Person against any costs
incurred in the receipt by such other Person of Services, or that has an
agreement with any Borrower to compensate it for providing Services to such
Person.
"INTELLECTUAL PROPERTY" means any and all Licenses, Patents, Copyrights,
Trademarks, and the goodwill associated with such Trademarks.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means the Intellectual Property
Security Agreement in the form of Exhibit "I" attached hereto.
"INTERCREDITOR AGREEMENT" shall mean that certain Intercreditor Agreement
entered into by the Borrowers, the Credit Parties, Lender and Medical Provider
Financial Corporation III, a Nevada corporation, in the form of Exhibit "L"
attached hereto.
"INTEREST RATE" means simple interest at the annual rate of 24% fixed;
provided, however, if the $45,000,000 real estate term loan made by Medical
Provider Financial Corporation II to Borrowers pursuant to the $80 Million
Credit Agreement is paid in full prior to the maturity date of said loan, then
from and after the date of such payment in full the interest rate on the
Revolving Facility shall decrease to simple interest at the annual rate of 18%
fixed.
"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.
22
"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
"P" attached hereto; and
(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 "P" attached hereto.
"LANDLORD'S CONSENT AND ESTOPPEL CERTIFICATE (TRIPLE NET LEASE)" means a
Landlord's Consent and Estoppel Certificate (Triple Net Lease) executed by PCHI
in favor of Lender, in the form of Exhibit "Q" attached hereto.
"LENDER" means Medical Provider Financial Corporation I, 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
23
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
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
24
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, the Previous Lenders, 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.
"LENDER'S COSTS" means all fees and expenses of Lender in connection with
the Loan and all Loan Documents including, but not limited to, all attorneys'
fees, lockbox fees and costs of Lender, audit fees and costs of Lender, other
costs and expenses paid or incurred by Lender in connection with any application
or engagement letter, the fees and disbursements of Lender's outside counsel,
the travel expenses of Lender's personnel related to the Loan, intangible taxes,
if any, and all Closing, escrow, title insurance, recording and filing fees,
expenses and taxes.
"LENDER'S REPRESENTATIVE" means 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.
"LIABILITY EVENT" shall mean any event, fact, condition or circumstance or
series thereof (i) in or for which any Borrower becomes liable or otherwise
responsible for any amount owed or owing to any Medicaid or Medicare program by
a provider under common ownership with such Borrower or any provider owned by
such Borrower pursuant to any applicable law, ordinance, rule, decree, order or
regulation of any Governmental Authority after the failure; of any such provider
to pay any such amount when owed or owing, (ii) in which Medicaid or Medicare
payments to any Borrower are lawfully set-off against payments to such Borrower
to satisfy any liability of or for any amounts owed or owing to any Medicaid or
Medicare program by a provider under common ownership with such Borrower or any
provider owned by such Borrower pursuant to any applicable law, ordinance, rule,
decree, order or regulation of any Governmental Authority, or (iii) any of the
foregoing under clauses (i) or (ii) in each case pursuant to statutory or
regulatory provisions that are similar to any applicable law, ordinance, rule,
decree, order or regulation of any Governmental Authority referenced in clauses
(i) and (ii) above or successor provisions thereto.
25
"LICENSE" means any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by
Borrowers.
"LIEN" 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" means all amounts borrowed pursuant to the Revolving Facility and
all Advances under the Revolving Facility.
"LOAN DOCUMENTS" means, together, this Agreement, the Note, the Guaranty
Agreement, the Security Documents, the Environmental Indemnity Agreement, the
Control Agreement, the Post-Closing Agreement, the Intercreditor Agreement, 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 any employee of Borrowers or Credit Parties, 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.
"LOCKBOX(S)" means and refers to each Lockbox Account where each Account
Debtor or other Person is instructed by a Borrower to make payment of all
amounts due and owing on their Accounts, and to make all other cash payments due
and owing to a Borrower.
"LOCKBOX ACCOUNT(S)" means one or more accounts established by a Borrower
with a Lockbox Bank reasonably acceptable to Lender.
"LOCKBOX AGREEMENT" means the agreement between each Borrower and each
Lockbox Bank pursuant to which the Lockbox Accounts and Lockboxes are
established and governed.
"LOCKBOX BANK" means a bank or banks reasonably acceptable to Lender which
have established one or more Lockbox Accounts and Lockboxes for a Borrower.
26
"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, or
(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, or (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, or (ii) the occurrence or existence of an Event of Default
under any of the Loan Documents with respect to which the Maturity Date of the
Loan and other Obligations has been accelerated.
"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.
"MEDICAID/MEDICARE ACCOUNT DEBTOR" shall mean any Account Debtor which is
(i) the United States of America acting under the Medicaid or Medicare program
established pursuant to the Social Security Act or any other federal healthcare
program, (ii) any state acting pursuant to a health plan adopted pursuant to
Title XIX of the Social Security Act or any other state health care program, or
(iii) any agent, carrier, administrator or intermediary for any of the
foregoing.
"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, Ganesha and the Members of West Coast in favor
of Lender, in the form if Exhibit "O" attached hereto.
"MORTGAGED PROPERTIES" means each of the Hospital Facilities.
"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.
"NOTE" means the $50,000,000 revolving line of credit promissory note of
even date herewith, executed by Borrowers in favor of Lender, in the form of
Exhibit "A" attached hereto.
"NOTICE OF REQUEST FOR ADVANCE" means a notice delivered to Lender by
Borrower's Representative requesting an Advance, in the form of Exhibit "B"
attached hereto.
27
"OBLIGATIONS" collectively means the Loan, 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 under any Debtor Relief Law 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 under this Agreement or any of the
other Loan Documents.
"OC-PIN" means Orange County Physicians Investment Network, LLC, a Nevada
limited liability company.
"ORIGINATION FEE" means an origination fee in the amount of SEVEN HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00) (1.5% of $50,000,000).
"PAYMENT OFFICE" shall mean initially the address set forth beneath
Lender's name on the signature page of the Agreement, and thereafter, such other
office of Lender, if any, which it may designate by notice to Credit Parties to
be the Payment Office.
"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 holds or
hereafter acquires 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.
"PERMIT" shall mean collectively all licenses, leases, powers, permits,
franchises, certificates, authorizations, approvals, certificates of need,
provider numbers, accreditations, and other tights.
"PERMITTED DISCRETION" shall mean a determination or judgment made by
Lender in the exercise of its reasonable (from the perspective of a secured
lender) business judgment.
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"PERMITTED ENCUMBRANCES" means, with respect to 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 6.2(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) any Lien held by an equipment lessor in the equipment so leased;
(e) 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; (f) carriers', warehousemen's,
suppliers' or other similar possessory liens arising in the ordinary course of
business, provided, that the same are satisfied in the ordinary course of
business; (g) such other liens arising in the ordinary course of business so
long as such liens do not create a Material Adverse Effect; (h) the deeds of
trusts securing repayment of the $45,000,000 real estate term loan and the
$35,000,000 non-revolving line of credit loan due under the $80 Million Credit
Agreement; (i) the deeds of trusts securing repayment of the $10,700,000
convertible term loan due and owing under the $10.7 Million Credit Agreement;
(j) the absolute assignments of leases and rents securing repayment of the
$45,000,000 real estate term loan and the $35,000,000 non-revolving line of
credit loan under the $80 Million Credit Agreement; (k) the absolute assignment
of leases and rents securing repayment of the $10,700,000 convertible term loan
due and owing under the $10.7 Million Credit Agreement; (l) the UCC-1 Financing
Statements (Fixture Filings) securing repayment of the $45,000,000 real estate
term loan and the $35,000,000 non-revolving line of credit loan due and owing
under the $80 Million Credit Agreement; (m) the UCC-1 Financing Statements
(Fixture Filings) securing repayment of the $10,700,000 convertible term loan
due and owing under the $10.7 Million Credit Agreement; (n) currently existing
or hereafter created Liens in favor of Lender or its Affiliates; (o) all
encumbrances shown in any Title Policy issued on the Closing Date to Lender; and
(p) such endorsements to said Title Policies as Lender deems necessary or
appropriate, in its sole discretion.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, unincorporated organization, trust, business trust, association,
corporation (including Borrowers), 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).
"PERMITTED INDEBTEDNESS" means the following: (a) Indebtedness under the
Loan Documents and under the $80 Million Credit Agreement and/or $10.7 Million
Credit Agreement, (b) any Indebtedness set forth on Disclosure Schedule 7.3, (c)
Capital Lease Obligations incurred after the Closing Date and Indebtedness
incurred pursuant to purchase money Liens permitted by Section 7.3(a)
(Indebtedness), provided that the aggregate amount of such Capital Lease
Obligations and purchase money Indebtedness outstanding at any time shall not
exceed the amounts set forth in the yearly budget of the Borrowers delivered to
Lender concurrently with the operating budget delivered pursuant to Section
6.16(e) (Operating Budget) hereof and approved by Lender in writing, (d)
Indebtedness in connection with advances made by a shareholder, provided,
however, that such Indebtedness shall be on an unsecured basis, subordinated in
29
right of repayment and remedies to all of the Obligations and to all of Lender's
rights pursuant to a subordination agreement in form and substance satisfactory
to Lender, (e) accounts payable to trade creditors and current operating
expenses (other than for borrowed money) which are not aged more than 120
calendar days from the billing date or more than 30 days from the due date, in
each case incurred in the ordinary course of business and paid within such time
period, unless (i) the same are being contested in good faith and by appropriate
and lawful proceedings and such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by Borrower's independent accountants shall
have been reserved or (ii) the trade creditor with respect to a particular
account payable customarily permits such Borrower to pay invoices in the
ordinary course of business more than 30 calendar days from the due date without
any penalty, provided, that (x) such trade creditor has not taken any collection
action with respect thereto, including, without limitation the employment of, or
assignment to, a third party for purposes of the collection thereof, and (y)
such trade creditor continues to do business with such Borrower with no changes
to the terms of trade; (f) borrowings incurred in the ordinary course of
business and not exceeding $50,000 individually or in the aggregate outstanding
at any one time, provided, however, that such Indebtedness shall be on an
unsecured basis, subordinated in right of repayment and remedies to all of the
Obligations and to all of Lender's rights pursuant to a subordination agreement
in form and substance satisfactory to Lender; and (g) Permitted Subordinated
Debt. No Borrower shall make prepayments on any existing or future Indebtedness
to any Person other than to Lender or to the extent specifically permitted by
this Agreement or any subsequent agreement between such Borrower and Lender.
"PERMITTED SUBORDINATED DEBT" shall mean Indebtedness incurred by Borrowers
which is subordinated to Borrowers' Indebtedness owed to Lender pursuant to a
written agreement approved by Lender in writing.
"PLAN" means, at any time, an employee benefit plan, as defined in Section
3(3) of ERISA, that Borrowers or ERISA Affiliate maintains, contributes to or
has an obligation to contribute to or has 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 and Ganesha, as pledgors, and Lender, as pledgee, in
the form of Exhibit "M" attached hereto.
"PLEDGED ENTITY" shall mean a Person whose Stock or Membership Interests
are pledged to Lender 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).
30
"PREVIOUS AMOUNT OWED" means that amount which is owed by Borrowers to
Lender for repurchase of accounts receivable purchased by Lender pursuant to the
Previous Accounts Receivable Purchase Agreement.
"PREVIOUS $50,000,000 ACQUISITION LOAN" means the $50,000,000 acquisition
loan made by Medical Provider Financial Corporation II, a Nevada corporation, to
Borrowers 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 Medical Provider Financial Corporation II, a Nevada
corporation, to Borrowers pursuant to the First Credit Agreement.
"PREVIOUS $10,700,000 TERM LOAN" means the $10,700,000 term loan made by
Medical Provider Financial Corporation II to Borrowers pursuant to the Second
Credit Agreement.
"PREVIOUS LENDERS" means, together (a) Medical Provider Financial
Corporation II, a Nevada corporation and an affiliate of Lender with respect to
the Previous $50,000,000 Acquisition Loan and the Previous $30,000,000 Line of
Credit Loan, and (b) Medical Provider Financial Corporation III, a Nevada
corporation and an affiliate of Lender with respect to the Previous $10,700,000
Term Loan.
"PREVIOUS LOAN DOCUMENTS" means and includes, collectively, (a) the
Previous $50,000,000 Acquisition Loan and any loan documents executed in
connection therewith, (b) the Previous $30,000,000 Line of Credit Loan and any
loan documents executed in connection therewith, and (c) the Previous
$10,7,000,000 Term Loan and any loan documents executed in connection therewith.
"PREVIOUS LOANS" means and includes, collectively, (a) the Previous
$50,000,000 Acquisition Loan, (b) the Previous $30,000,000 Line of Credit Loan,
and (c) the Previous $10,7,000,000 Term Loan.
"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 or to Credit Parties 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 or to Credit Parties 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 or
Credit Parties 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 or by Credit
Parties 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.
31
"PROJECTIONS" means, for Borrowers, its forecasted consolidated and
consolidating: (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 one 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
loan, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor 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 Credit Parties 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 or by Credit Parties,
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.
32
"QUALIFIED PLAN" means a Pension Plan that is intended to be tax-qualified
under Section 401(a) of the IRC.
"REGISTER" means the entries made in the register maintained pursuant to
Section 2.13(a) of this Agreement.
"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, their respective predecessors,
successors and assigns, and their respective officers, directors, shareholders,
members, managers, 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.
"REVOLVER TERMINATION" means the occurrence of any one or more of the
following: (a) Borrowers terminate this Revolving Facility under Section 11.1
(Termination and Closing Date); or (b) Borrowers are required to make payment in
full of the Revolving Facility and/or Obligations relating to the Revolving
Facility upon the occurrence of an Event of Default; or (c) any other voluntary
or involuntary prepayment in full of the Revolving Facility and/or Obligations
relating to the Revolving Facility by Borrowers or any other Person occurs or
Borrowers voluntarily or involuntarily repay in full the Obligations, whether by
virtue of Lender's exercising its right of set off or otherwise; or (d) Lender
accelerates the Revolving Facility or makes any demand on the Revolving
Facility; or (e) any payment or reduction of the outstanding balance of the
Revolving Facility and/or the Revolving Facility is made during a bankruptcy,
reorganization or other proceeding or is made pursuant to any plan of
reorganization or liquidation or any Debtor Relief Law.
33
"REVOLVING FACILITY" means a revolving line of credit facility to be made
available by Lender to Borrowers pursuant to this Agreement in an amount not to
exceed the Facility Cap at any time.
"SECOND CREDIT AGREEMENT" means that certain Credit Agreement by and
between Medical Provider Financial Corporation III, a Nevada corporation, as
lender, and the Credit Parties and the Borrowers named therein, dated to be
effective as of December 12, 2005. Pursuant to the Second Credit Agreement,
Medical Provider Financial Corporation III made the Previous $10,700,000 Term
Loan to Borrowers.
"SECURITY AGREEMENT" means a Security Agreement executed by Borrowers and
Lender, in the form of Exhibit "R" attached hereto.
"SECURITY DOCUMENTS" means the Deeds of Trust, the Absolute Assignment, the
Collateral Assignment, the Security Agreement, the Deposit Account Security
Agreement, the Collateral Assignment of Contracts, the Intellectual Property
Security Agreement, the Pledge Agreement, the Stock Powers, the Membership
Powers, 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.
"SEPARATE BORROWING BASE PERIOD" means any period for which Lender has
notified a Borrower that Lender will require Availability to be determined for
said Borrower by reference to such Borrower's separate Borrowing Base, which
notice may be given by Lender at any time upon its sole credit judgment pursuant
to Section 2.1 (Revolving Facility).
"SERVICES" shall mean medical and health care services provided to a
Person, including, but not limited to, medical and health care services which
are covered by a policy of insurance issued by an Insurer, physician services,
nurse and therapist services, dental services, hospital services, skilled
nursing facility services, comprehensive outpatient rehabilitation services,
home health care services, residential and out-patient behavioral healthcare
services.
"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 Document 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
Document.
"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
34
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 (such as Litigation, Guaranties and Pension Plan
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.
"SPECIAL PROGRAM" shall mean any of the Medicare or Medicaid programs
relating to reimbursements, direct and/or indirect medical education programs,
and any other special funding programs from which any Borrower benefits.
"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 corporation, partnership, limited liability company or
equivalent entity 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 "N" attached hereto.
"SUBORDINATION AGREEMENT" shall mean, collectively and each individually,
any subordination agreements to which Lender and other service providers or
creditors of any Borrower or Credit Party are a party.
"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
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 an 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 may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Borrowers.
35
"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" shall mean the period commencing on the Closing Date and ending on
the Maturity Date.
"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) the Loan has 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: Karl Daly ("TITLE
OFFICER"), telephone: 213-612-4157; facsimile: 213-243-9168; email:
Karl.Daly@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
$50,000,000, 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
third Lien and encumbrance against the fee simple interest in such Property,
subject only to the applicable Permitted Encumbrances and with such endorsements
as Lender may require in its sole, absolute and unfettered 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 third Lien and encumbrance against the
fee simple interest in such Property subject only to the applicable Permitted
Encumbrances and with such endorsements as Lender may require in its sole,
absolute and unfettered discretion; (c) the fee simple interest in the Coastal
Community Hospital in PCHI and that the Deed of Trust constitutes a third Lien
and encumbrance against the fee simple interest in such Property subject only to
the applicable Permitted Encumbrances and with such endorsements as Lender may
require in its sole, absolute and unfettered discretion; (d) the tenant's
interest in the Chapman MOB Lease is vested in IHHI and that the Deed of Trust
constitutes a third Lien and encumbrance against IHHI's interest, as MOB Tenant,
in the Chapman MOB Lease, subject only to the applicable Permitted Encumbrances
36
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 third 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" means the Code.
"UCC-1 FINANCING STATEMENTS" means all UCC-1 Financing Statements (fixture
filings and personal property) required by Lender to be filed or recorded to
secure repayment of the Loan or 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.
"UNUSED COMMITMENT FEE" means that amount which is equal to 0.50% per annum
of the average daily difference between the Facility Cap minus the sum of the
outstanding principal amount of all Advances under the Revolving Facility for
the period for which the Unused Commitment Fee is being paid, taking into
account prepayments and reborrowings where applicable.
37
"WEST COAST" means West Coast Holdings, LLC, a California limited liability
company.
"WESTERN MEDICAL CENTER - ANAHEIM" means the real property and improvements
located at 1025 South Anaheim Boulevard, Anaheim, California.
"WESTERN MEDICAL CENTER - SANTA ANA" means the real property and
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.
"YIELD MAINTENANCE" shall mean an amount equal to the future value at the
last day of the Term, discounted to the present value as of the later of the
Termination Date or the date of prepayment using the most recently published
asked yield to maturity as quoted in the Wall Street Journal for the United
States Treasury Notes or Bills with a maturity date closest to the last day of
the Term of the product of: (A) the all in effective yield (measured as a
percentage per annum) on the Revolving Facility for the six months prior to the
Termination Date; (B) the Facility Cap; and (C) the quotient of (i) the number
of months remaining in the Term, and (ii) twelve.
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
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
38
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.
39
ANNEX C TO REVOLVING CREDIT AGREEMENT ($50 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
ANNEX D TO REVOLVING CREDIT AGREEMENT ($50 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 6.8 (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.
2
ANNEX E TO REVOLVING CREDIT AGREEMENT ($50 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-SA, 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-A, 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
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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. Anil V. 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
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GANESHA REALTY LLC
c/o Strategic Global Management, Inc.
6800 Indiana Avenue, Suite 130
Riverside, California 92506
Attn: Dr. Kali 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. Jacob Sweidan, Co-Manager
Ph: 714-537-6595
Fax: 949-203-6380
Email: JSweidan@aol.com
ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC
2621 South Bristol, Suite 304
Santa Ana, California 92704
Attn: Dr. Michael Sein, Manager
Ph: ___-___-____
Fax: ___-___-____
LENDER:
MEDICAL PROVIDER FINANCIAL CORPORATION I
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
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