Exhibit 10.7
ACKNOWLEDGMENT, WAIVER AND CONSENT
AND AMENDMENT TO CREDIT AGREEMENTS
A. The undersigned hereby acknowledge that the following agreements are
being entered into substantially concurrent with the execution of this
Acknowledgment, Waiver and Consent and Amendment to Credit Agreements:
(i) Settlement Agreement, General Release and Covenant Not to Sue
("First Settlement Agreement") by and among Integrated Healthcare Holdings, Inc.
("IHHI"), Anil V. Shah, M.D. ("Dr. Shah"), Orange County Physicians Investment
Network, LLC ("OC-PIN"), Bruce Mogel ("Mogel"), Pacific Coast Holdings
Investment, LLC ("PCHI"), West Coast Holdings, LLC, ("WCH"), Dr. Kali P.
Chaudhuri ("Dr. Chaudhuri"), Ganesha Realty, LLC ("Ganesha"), William E. Thomas
("Thomas"), Medical Capital Corporation ("MCC"), Medical Provider Financial
Corporation I ("MPFCI"), Medical Provider Financial Corporation II ("MPFCII")
and Medical Provider Financial Corporation III ("MPFCIII") (MCC, MPFCI, MPFCII
and MPFCIII are collectively, "MedCap"); and
(ii) Settlement Agreement No. 2 ("Second Settlement Agreement", and
together with the First Settlement Agreement, the "Settlement Agreements") by
and among Dr. Shah, OC-PIN, the members of OC-PIN (collectively, "OC-PIN
Members"), PCHI, WCH, the members of WCH (collectively, "WCH Members"), Dr.
Chaudhuri, and Ganesha.
B. The undersigned hereby acknowledge that the Settlement Agreements
require parties thereto to enter into further agreements as described therein,
including without limitation, a Voting Agreement between Dr. Chaudhuri and
OC-PIN.
C. The undersigned hereby acknowledge that the Settlement Agreements
contemplate the occurrence of various transactions and events, including without
limitation, the dissolution of WCH and restructuring of PCHI, the dissolution of
OC-PIN, the grant and exercise of an Option and Tag Along Rights (as defined in
the Settlement Agreements) that will or may result in, among other things,
changes in actual or beneficial ownership of the parties thereto and/or
affiliates of those parties, some of whom are Credit Parties under one or more
of the following credit facilities with MedCap (collectively, "Credit
Facilities"): (a) the $10,700,000 Credit Agreement dated October 9, 2007 and
related documents (the "$10,700,000 Loan Documents") among MPFCIII, IHHI, WMC-A,
Inc. ("WMC-A"), WMC-SA, Inc. ("WMC-SA"), Chapman Medical Center, Inc.
("Chapman"), Coastal Communities Hospital, Inc. ("Coastal") (IHHI, WMC-A,
WMC-SA, Chapman and Coastal are collectively, "Borrowers"), PCHI, West Coast,
Ganesha and OC-PIN (PCHI, West Coast, Ganesha and OC-PIN are collectively,
"Credit Parties"); (b) the $50,000,000 Revolving Credit Agreement dated October
9, 2007 and related documents (the "$50,000,000 Loan Documents") among MPFCI and
the Borrowers and Credit Parties; and (c) the $80,000,000 Credit Agreement dated
October 9, 2007 and related documents (the "$80,000,000 Loan Documents") among
MPFCII and the Borrowers and Credit Parties.
D. The undersigned hereby acknowledge that: (a) included in the
$10,700,000 Loan Documents are an Environmental Indemnity Agreement dated
October 9, 2007 among MPFCIII, the Borrowers, PCHI, WCH and OC-PIN; a Guaranty
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Agreement dated October 9, 2007 executed by WCH and OC-PIN; and a Pledge
Agreement dated October 9, 2007 executed by MPFCIII, IHHI, WCH and Ganesha; (b)
included in the $50,000,000 Loan Documents are an Environmental Indemnity
Agreement dated October 9, 2007 among MPFCI, the Borrowers, PCHI, WCH and
OC-PIN; a Guaranty Agreement dated October 9, 2007 executed by WCH and OC-PIN;
and a Pledge Agreement dated October 9, 2007 executed by MPFCI, IHHI, WCH and
Ganesha; and (c) included in the $80,000,000 Loan Documents are an Environmental
Indemnity Agreement dated October 9, 2007 among MPFCII, the Borrowers, PCHI, WCH
and OC-PIN; a Guaranty Agreement dated October 9, 2007 executed by WCH and
OC-PIN; and a Pledge Agreement dated October 9, 2007 executed by MPFCII, IHHI,
WCH and Ganesha.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
undersigned parties hereto agree as follows:
1. The undersigned hereby agree that if and to the extent that the
agreements, transactions and events contemplated in the Settlement Agreements
constitute, may constitute or will constitute a "Change of Control", "Default",
"Event of Default" (as those terms are defined in the Credit Facilities or the
Warrants (as defined below)) or other breach or default under any of the Credit
Facilities or the Warrants, the undersigned each hereby waive and consent to the
waiver of such event, breach or default. Without limitation of the foregoing,
the undersigned hereby further agree that if and to the extent that the
agreements, transactions and events contemplated in the Settlement Agreements
result in the termination or release of the rights and obligations of WCH
pursuant to the $10,700,000 Loan Documents, the $50,000,000 Loan Documents and
the $80,000,000 Loan Documents, the undersigned each hereby consent to such
termination and release and hereby irrevocably waive all objections thereto.
This Acknowledgment, Waiver and Consent and Amendment to Credit Agreements shall
be attached to each of the $10,700,000 Credit Agreement, $50,000,000 Revolving
Credit Agreement and the $80,000,000 Credit Agreement and constitute amendments
thereof. As used herein, "Warrants" are: (i) the warrant dated October 9, 2007
issued to Healthcare Financial Management & Acquisitions, Inc. ("HFMA") to
purchase a minimum of 16,880,484 shares of common stock of IHHI (subject to
certain adjustments described in the warrant), as amended; and (ii) the warrant
dated December 12, 2005 issued to HFMA to purchase a minimum of 26,097,561
shares of common stock of IHHI (subject to certain adjustments described in the
warrant), as amended.
2. Notwithstanding anything in the Settlement Agreements to the
contrary (including, but not limited to, anything to the contrary set forth in
the Shareholders Agreement attached as Exhibit "A" to the Second Settlement
Agreement):
a. OC-PIN and each of the OC-PIN Members covenant and agree not
to cause or permit the dissolution of OC-PIN or cause or permit OC-PIN to make a
liquidating distribution of it's stock (together a "OC-PIN Dissolution Event")
at any time prior to the date that all amounts due and owing to MedCap under
each of the Credit Facilities have been paid in full and satisfied. The
occurrence of an OC-PIN Dissolution Event will constitute an Event of Default
under each of the Credit Facilities.
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b. In substitution for the Guaranty of WCH under each of the
Credit Facilities, and on the Effective Date of this Acknowledgment, Waiver and
Consent and Amendment to Credit Agreements, PCHI hereby agrees to and shall
execute and deliver to MedCap the following Guaranty Agreements:
(i) Guaranty Agreement ($80 Million Credit Agreement)
attached hereto as EXHIBIT "A";
(ii) Guaranty Agreement ($10.7 Million Credit Agreement)
attached hereto as EXHIBIT "B"; and
(iii) Guaranty Agreement ($50 Million Revolving Credit
Agreement) attached hereto as EXHIBIT "C".
IN WITNESS WHEREOF, the parties hereto have caused this Acknowledgment,
Waiver and Consent and Amendment to Credit Agreements to be duly executed by
their respective authorized signatories as of April 2, 2009 ("Effective Date").
INTEGRATED HEALTHCARE HOLDINGS, INC., a
Nevada corporation,
By: /s/ Kenneth K. Westbrook
------------------------------------------
Name: Kenneth K. Westbrook
-------------------------------------
Title: CEO & President
------------------------------------
WMC-SA, INC., a California corporation,
By: /s/ Kenneth K. Westbrook
------------------------------------------
Name: Kenneth K. Westbrook
-------------------------------------
Title: CEO
------------------------------------
WMC-A, INC., a California corporation,
By: /s/ Kenneth K. Westbrook
------------------------------------------
Name: Kenneth K. Westbrook
-------------------------------------
Title: CEO
------------------------------------
[SIGNATURE PAGE CONTINUES]
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COASTAL COMMUNITIES HOSPITAL, INC., a
California corporation,
By: /s/ Kenneth K. Westbrook
------------------------------------------
Name: Kenneth K. Westbrook
-------------------------------------
Title: CEO
------------------------------------
CHAPMAN MEDICAL CENTER, INC., a California
corporation,
By: /s/ Kenneth K. Westbrook
------------------------------------------
Name: Kenneth K. Westbrook
-------------------------------------
Title: CEO
------------------------------------
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company,
By: /s/ Jacob Sweidan, M.D.
------------------------------------------
Jacob Sweidan, M.D., Manager
By: /s/ Kali P. Chaudhuri, M.D.
------------------------------------------
Kali P. Chaudhuri, M.D., Manager
ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK,
LLC, a Nevada limited liability company,
By: /s/ Anil V. Shah, M.D.
------------------------------------------
Anil V. Shah, M.D., Manager
GANESHA REALTY, LLC, a California limited
liability company,
By: /s/ Kali P. Chaudhuri
------------------------------------------
Name: Kali P. Chaudhuri
-------------------------------------
Title: Manager
------------------------------------
[SIGNATURE PAGE CONTINUES]
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WEST COAST HOLDINGS, LLC, a California limited
liability company,
By: /s/ Jacob Sweidan, M.D.
------------------------------------------
Name: Jacob Sweidan, M.D.
-------------------------------------
Title: Manager
------------------------------------
MEDICAL PROVIDER FINANCIAL CORPORATION I, a
Nevada corporation,
By: /s/ Joseph J. Lampariello
------------------------------------------
Joseph J. Lampariello, President and COO
MEDICAL PROVIDER FINANCIAL CORPORATION II, a
Nevada corporation,
By: /s/ Joseph J. Lampariello
------------------------------------------
Joseph J. Lampariello, President and COO
MEDICAL PROVIDER FINANCIAL CORPORATION III, a
Nevada corporation,
By: /s/ Joseph J. Lampariello
------------------------------------------
Joseph J. Lampariello, President and COO
HEALTHCARE FINANCIAL MANAGEMENT & ACQUISITIONS,
INC., a Nevada corporation,
By: /s/ Joseph J. Lampariello
------------------------------------------
Name: Joseph J. Lampariello
-------------------------------------
Title: President and COO
------------------------------------
[SIGNATURE PAGE CONTINUES]
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MEDICAL CAPITAL CORPORATION, a Nevada
corporation,
By: /s/ Joseph J. Lampariello
------------------------------------------
Name: Joseph J. Lampariello
-------------------------------------
Title: President and COO
------------------------------------
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EXHIBIT "A" TO ACKNOWLEDGEMENT, WAIVER AND CONSENT
GUARANTY AGREEMENT OF PCHI
($80 MILLION CREDIT AGREEMENT)
SEE ATTACHED
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GUARANTY AGREEMENT
($80 MILLION CREDIT AGREEMENT)
This GUARANTY AGREEMENT (as the same may be amended, modified, or
supplemented from time to time, the "Guaranty") is to be effective as of April
2, 2009 ("Effective Date"), by PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company ("Guarantor"), in favor of MEDICAL PROVIDER
FINANCIAL CORPORATION II, a Nevada corporation ("Lender"), with reference to the
following facts:
RECITALS
A. Guarantor is a party to that certain Credit Agreement ($80 Million
Facility) dated as of October 9, 2007 (including all annexes, exhibits and
schedules thereto, and as the same may be and has been amended, restated,
supplemented, or otherwise modified from time to time, the "Credit Agreement"),
by and among INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation
("IHHI"), WMC-SA, INC., a California corporation ("WMC-SA"), WMC-A, INC., a
California corporation ("WMC-A"), CHAPMAN MEDICAL CENTER, INC., a California
corporation ("Chapman"), and COASTAL COMMUNITIES HOSPITAL, INC., a California
corporation ("Coastal") (IHHI, WMC-SA, WMC-A, Chapman and Coastal are sometimes
collectively referred to herein as "Borrowers" and individually as "Borrower");
Guarantor, WEST COAST HOLDINGS, LLC, a California limited liability company
("West Coast"), GANESHA REALTY, LLC, a California limited liability company
("Ganesha") and ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada
limited liability company ("OC-PIN") (Guarantor, West Coast, Ganesha and OC-PIN
are referred to collectively in the Credit Agreement as the "Credit Parties"),
and Lender.
B. Pursuant to the Credit Agreement, Lender agreed to and did make (i)
a $45,000,000 term loan ("$45,000,000 TERM LOAN") and (ii) a $35,000,000
non-revolving line of credit loan ("$35,000,000 NON-REVOLVING LINE OF CREDIT
LOAN") (each as amended, restated, supplemented or otherwise modified from time
to time, the "LOANS") to the Borrowers. Repayment of the Loans is evidenced by
(1) that certain $45,000,000 Term Note dated as of October 9, 2007 ("$45,000,00
TERM NOTE") and (2) that certain $35,000,000 Non-Revolving Line of Credit Note
dated as of October 9, 2007 ("$35,000,000 NON-REVOLVING LINE OF CREDIT NOTE")
(the $45,000,000 Term Note and $35,000,000 Non-Revolving Line of Credit Note,
each as amended, restated, supplemented or otherwise modified from time to time,
are sometimes referred to collectively herein as the "NOTES," and individually
as a "NOTE"). The Credit Agreement, the Notes and all other agreements,
documents, and instruments evidencing and/or securing the payment or performance
of the Obligations (as defined in the Credit Agreement), including all Loan
Documents as defined in the Credit Agreement are hereinafter collectively
sometimes referred to as the "LOAN DOCUMENTS."
C. The following agreements are being entered into substantially
concurrent with the execution of this Guaranty:
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(i) Settlement Agreement, General Release and Covenant Not to Sue
("FIRST SETTLEMENT AGREEMENT") by and among IHHI, Anil V. Shah, M.D. ("Dr.
Shah"), OC-PIN, Bruce Mogel ("Mogel"), Guarantor, West Coast, Dr. Kali P.
Chaudhuri ("Dr. Chaudhuri"), Ganesha, William E. Thomas ("Thomas"), Medical
Capital Corporation ("MCC"), Medical Provider Financial Corporation I ("MPFCI"),
Lender and Medical Provider Financial Corporation III ("MPFCIII") (MCC, MPFCI,
Lender and MPFCIII are collectively, "MedCap"); and
(ii) Settlement Agreement No. 2 ("SECOND SETTLEMENT AGREEMENT", and
together with the First Settlement Agreement, the "SETTLEMENT AGREEMENTS") by
and among Dr. Shah, OC-PIN, the members of OC-PIN, Guarantor, West Coast, the
members of West Coast, Dr. Chaudhuri, and Ganesha.
D. The Settlement Agreements require the parties thereto to enter into
further agreements as described therein, including without limitation, a Voting
Agreement between Dr. Chaudhuri and OC-PIN.
E. The Settlement Agreements contemplate the occurrence of various
transactions and events, including without limitation, the dissolution of West
Coast and restructuring of Guarantor, the dissolution of OC-PIN, the grant and
exercise of an Option and Tag Along Rights (as defined in the Settlement
Agreements) that will or may result in, among other things, changes in actual or
beneficial ownership of the parties thereto and/or affiliates of those parties,
some of whom are Credit Parties under the Credit Agreement.
F. Among other conditions for entering into the First Settlement
Agreement, Lender has required that the Guarantor guaranty the payment and
performance of the Guaranty Obligations (defined below), including repayment of
the Loans.
G. The parties intend that these Recitals are made a part of this
Guaranty.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Guaranty, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Guarantor hereby
covenants, promises and agrees for the benefit of Lender as follows:
1. DEFINITIONS; CERTAIN MATTERS OF CONSTRUCTION. Unless otherwise set
forth herein, (a) initially capitalized terms or matters of construction defined
or established in the Credit Agreement shall be applied herein as defined or
established therein, (b) any reference to a "Section" shall refer to the
relevant section of this Guaranty, and (c) the following terms shall have,
unless otherwise provided elsewhere in this Guaranty, the meanings set forth
below:
"EQUITY INTEREST" means all shares of Stock, options and warrants to
purchase equity securities or other forms of equity, membership interests,
general or limited partnership 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 common 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).
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"GUARANTY OBLIGATIONS" shall mean (a) the obligations to repay the Loans
under the Notes, (b) the payment and performance obligations under the Credit
Agreement, including repayment of the Loans and the Notes, (c) payment and
performance obligations under the other Loan Documents, (d) all other
indebtedness, liabilities, and obligations of all Borrowers and the Credit
Parties to Lender whether now existing or hereafter arising under the Loan
Documents, and (e) all indebtedness, liabilities, and Obligations of Guarantors
to Lender whether now existing or hereafter arising under this Guaranty or in
any of the Loan Documents.
"MATERIAL ADVERSE EVENT" means that any one or more of the following has
occurred: (a) any representation or warranty in the Credit Agreement or in any
of the other Loan Documents or in any written statement, report, financial
statement or certificate made or delivered to Lender by any Borrower or by any
Credit Party (including Guarantors) is untrue or incorrect in any material
respect as of the date when made or deemed made; or (b) between the Effective
Date and the Termination Date, any Borrower or any Credit Party (including
Guarantors) commit any act or omit to take any act the result of which
constitutes a fraud or intentional misrepresentation as to Lender.
"OBLIGATIONS" means all obligations of Borrower under the Credit
Agreement.
2. GUARANTY.
2.1 GUARANTY OF THE OBLIGATIONS.
(a) In consideration of making the Loans to Borrowers under
the Credit Agreement, for all other financial accommodations to or for the
benefit of Borrowers and Credit Parties, for entering into the First Settlement
Agreement, and for other valuable consideration the receipt and sufficiency of
which Guarantor hereby acknowledges, Guarantor hereby unconditionally,
irrevocably and absolutely guaranties to Lender, and its respective successors,
endorsees, transferees, and assigns, the prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of the Guaranty
Obligations.
(b) This Guaranty constitutes a guaranty of payment and
performance when due and not of collection, and Guarantor specifically agrees
that it shall not be necessary or required that Lender, or any of its
successors, endorsees, transferees, or assigns assert any claim or demand or
enforce any remedy whatsoever against any Borrower, any other guarantor, or with
respect to any collateral provided by any Borrower (collectively, "Collateral"),
before or as a condition to the obligations of Guarantor under this Guaranty.
2.2 ABSOLUTE AND IRREVOCABLE GUARANTY. The Guaranty Obligations shall
remain in full force and effect without regard to, and shall not be impaired or
affected by, or be deemed to be satisfied by, and Guarantor shall not be
exonerated, discharged, revoked or released by, any of the following events:
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(a) Lender's exercise or enforcement of, or failure or delay in
exercising or enforcing, legal proceedings to collect any of the Loans or the
Guaranty Obligations or any power, right, or remedy with respect to any of the
Loans, the Guaranty Obligations, or the Collateral, including without
limitation: (i) any action or inaction of Lender to perfect, protect, or enforce
any lien upon any Collateral; or (ii) any change in the time, manner, or place
of payment of, or in any other term of, any or all of the Loans or the Guaranty
Obligations, or any other amendment to, or waiver of, any of the Notes, any
other Loan Document, or any other agreement or instrument governing or
evidencing any of the Loans or any of the Guaranty Obligations;
(b) Insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors, appointment of
a receiver or trustee for all or any part of any Borrower's or any Guarantor's
assets or of the assets of any other Guarantor of the Obligations, liquidation,
winding-up, or dissolution of any Borrower or any Guarantor, or any other
guarantor of the Obligations;
(c) Any limitation, discharge, cessation, or partial satisfaction
of any of the Loans, the Guaranty Obligations, or the obligations of any other
guarantor of the Obligations, or any invalidity, voidability, unenforceability,
in whole or in part, of the Notes, this Guaranty, any other Loan Document, or
any other document evidencing the Loans or Guaranty Obligations;
(d) Any merger, acquisition, consolidation or change in structure
of any Borrower or any Guarantor or any other guarantor of the Obligations; or
any sale, lease, transfer, or other disposition of any or all of the assets or
Equity Interests of any Borrower or any Guarantor or any other Guarantor of the
Obligations, including, without limitation, any transfer by any Borrower of all
or any part of any Collateral, or termination of any Borrower's existence for
any reason;
(e) Any assignment or other transfer, in whole or in part, of
Lender's interest in or rights in or under any of the Notes, or any other Loan
Document, including, without limitation, this Guaranty, or with respect to any
of the Loans, the Guaranty Obligations, or the Collateral;
(f) Any claim, defense, counterclaim, or setoff that any Borrower
or any Guarantor or any other Guarantor of the Obligations may have or assert,
including, without limitation, any defense of incapacity, disability, or lack of
corporate, organizational or other authority to execute any document relating to
any of the Loans, the Guaranty Obligations, the Collateral, or this Guaranty,
other than (i) upon the occurrence of the Termination Date, the defense of prior
performance, or (ii) any defense based on any applicable provision of the
Uniform Commercial Code requiring that Collateral be disposed of in a
commercially reasonable manner;
(g) Any purported revocation by any Guarantor;
(h) Any cancellation, renunciation or surrender of any pledge,
guaranty, or any debt instrument evidencing any of the Loans or the Guaranty
Obligations;
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(i) The vote, claim, distribution, election, acceptance, action,
or inaction of Lender in any bankruptcy or reorganization case related to any of
the Loans, the Guaranty Obligations, or the Collateral; or
(j) Any other action or circumstances that might otherwise
constitute a defense available to, or a legal or equitable discharge of, any
surety, any Guarantor or any other Guarantor, except as expressly provided
herein;
it being agreed that the Guaranty Obligations shall not be discharged or revoked
or released until the Termination Date.
2.3 DEMAND BY LENDER. In addition to the terms set forth herein,
and in no manner imposing any limitation on such terms, if any of the
Obligations under any of the Notes or the Credit Agreement or the other Loan
Documents are declared to be or otherwise becomes immediately due and payable
due in whole or in part to the occurrence of a Material Adverse Event(s), then
Guarantor, upon demand in writing therefor by Lender, shall promptly pay the
Guaranty Obligations to Lender. Payment by Guarantor shall be made to Lender to
be credited and applied to the Obligations, in immediately available funds in
lawful money of the United States of America to an account designated by Lender
or at the address set forth in the Credit Agreement or at any other address that
may be specified in writing from time to time by Lender as provided herein. Any
payment received by Lender with respect to any of the Loans or other Obligations
shall reduce the Guaranty Obligations by the amount of such payment.
2.4 GUARANTOR WAIVERS. In addition to any other waivers contained
herein, each Guarantor waives, agrees and acknowledges as follows and waives any
defense based upon or arising from the following:
(a) The Guaranty Obligations are the immediate, direct,
primary and absolute liabilities of each Guarantor, and are independent of, and
not co-extensive with, any of the Loans, the other Obligations or the
obligations of any other Guarantor of the Obligations. Each Guarantor expressly
waives any right it may have now or in the future to direct or affect the manner
or timing of Lender's enforcement of its rights or remedies. Each Guarantor
expressly waives any right he may have now or in the future to revoke this
Guaranty. Each Guarantor expressly waives any right it may have now or in the
future to require Lender to, and Lender shall not have any liability to, pursue
or enforce first against any Borrower, any of the properties or assets of any
Borrower, the Collateral or any other security, guaranty or pledge that may now
or hereafter be held by Lender for any of the Loans or for the Guaranty
Obligations, or to apply such security, guaranty, or pledge to any of the Loans
or to the Guaranty Obligations. Each Guarantor shall remain liable for the
Guaranty Obligations, notwithstanding any judgment Lender may obtain against any
Borrower or any Guarantor, any other Guarantor of the Obligations, or any other
Person or entity, or any modification, extension or renewal with respect
thereto. Lender shall not be under any liability to marshal any assets in favor
of each Guarantor or in payment of any or all of the Loans or the Guaranty
Obligations.
(b) Each Guarantor has entered into this Guaranty based
solely upon his/her/its independent knowledge of each Borrower's financial
condition, and each Guarantor assumes full responsibility for obtaining any
further information with respect to each Borrower or the conduct of each
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Borrower's business. Each Guarantor represents that it is now, and during the
terms of this Guaranty will be, responsible for ascertaining the financial
condition of each Borrower. Each Guarantor hereby waives any duty on the part of
Lender to disclose to any Guarantor, and agrees that it is not relying upon or
expecting Lender to disclose to it, any fact known or hereafter known by Lender
relating to the operation or condition of any Borrower or its business or
relating to the existence, liability, or financial condition of any other
Guarantor of the Obligations. Each Guarantor knowingly accepts the full range of
risk encompassed in a contract of continuing guaranty, which risk includes the
possibility that a Borrower may incur further indebtedness after such Borrower's
financial condition or its ability to pay debts as they mature has deteriorated.
(c) Except as specifically provided in this Guaranty or
applicable law, each Guarantor waives, to the fullest extent permitted by
applicable law (i) notice of the acceptance by Lender of this Guaranty, (ii)
notice of the existence, creation, payment, nonpayment, performance or
nonperformance of all or any of the Guaranty Obligations, (iii) presentment,
demand and protest and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all of the Credit Agreement or the
other Loan Documents, any of the Notes, commercial paper, accounts, contract
rights, documents, instruments, chattel paper and guaranties at any time held by
Lender on which Guarantors may be liable in any way, and hereby ratifies and
confirms whatever Lender may do in this regard, (iv) all rights to notice and a
hearing prior to Lender's taking possession or control of, or to Lender's
replevy, attachment or levy upon, the Collateral or any bond or security which
might be required by any court prior to allowing Lender to exercise any of its
remedies, (v) all rights to receive notices from Lender with respect to, or
otherwise sent to, each Guarantor or any other Guarantor of the Obligations,
(vi) the benefit of all valuation, appraisal, stay, extension, redemption and
exemption laws, (vii) the benefit of any law purporting to reduce any
Guarantor's obligation in proportion to the principal obligation hereby
guarantied, (viii) the benefit of any law purporting to exonerate any
Guarantor's obligation upon performance or an offer of performance of the
principal obligation, (ix) notice of any extension, modification, renewal, or
amendment of any of the terms of any of the Notes or the Credit Agreement or any
other Loan Document relating to any of the Loans or the Guaranty Obligations,
(x) notice of the occurrence of any Default or Event of Default with respect to
any of the Loans, the Guaranty Obligations, the Collateral or otherwise, and
(xi) notice of any exercise or non-exercise by Lender of any right, power, or
remedy with respect to any of the Loans, the Guaranty Obligations or the
Collateral.
(d) If Lender, under applicable law, may proceed to realize
its benefits under the Credit Agreement or any other Loan Document providing for
a lien upon any Collateral, whether owned by Borrower or by any other person or
entity, either by judicial foreclosure or by nonjudicial sale or enforcement,
Lender, at its sole option, may determine which of its remedies or rights it may
pursue without affecting any of its rights and remedies under this Guaranty.
(e) Each Guarantor represents that each of the Loans and
Guaranty Obligations are and shall be incurred by the Borrowers for the
permitted uses set forth in the Credit Agreement. Each Guarantor undertakes all
the risks encompassed in any of the Notes, in the Credit Agreement and the other
Loan Documents as they may be now or are hereafter agreed upon by Lender and any
of the Borrowers. Prior to the date this Guaranty terminates, Lender, in such
manner and upon such terms and at such time as it deems best, and with or
without notice to each Guarantor, may release, add, subordinate or substitute
security for the any of the Loans or other Guaranty Obligations in accordance
with the Credit Agreement.
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(f) A separate action or actions may be brought and
prosecuted against any Guarantor whether or not an action is brought against any
Borrower, or whether any Borrower or any other Guarantor is joined in any such
action or actions.
2.5 WAIVERS UNDER STATUTES. Each Guarantor makes the following
waivers:
EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF
REMEDIES BY LENDER, EVEN THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL
FORECLOSURE WITH RESPECT TO SECURITY FOR A GUARANTEED OBLIGATION, HAS DESTROYED
ANY RIGHTS GRANTED TO EACH GUARANTOR PURSUANT TO NEVADA LAW.
2.6 ADDITIONAL WAIVERS.
(a) Until the Termination Date, each Guarantor waives any
and all rights of subrogation, reimbursement, indemnification, and contribution
and any other rights and defenses that are or may become available to any
Guarantor by reason of applicable state law. This means, among other things,
that:
(i) Each Guarantor waives and will be unable to raise
any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in any other
respects more burdensome than that of a principal;
(ii) Each Guarantor waives and will be unable to raise
any defense based upon any statute or rule of law which provides that a creditor
may be required to pursue the principal obligor or the security for the
principal obligation before seeking enforcement against a guarantor or security
pledged by such guarantor;
(iii) Each Guarantor waives and will be unable to raise
any defense based upon any statute or rule of law which provides that a
guarantor's obligations may be limited or exonerated by reason of the creditor's
alteration of the principal obligation or of another guaranty, or by reason of
the impairment or suspension of the creditor's rights or remedies against the
principal, another guarantor, or any security given for the principal obligation
or given for other guaranties;
(iv) Each Guarantor waives and will be unable to claim
any right to participate in, or the benefit of, any security given for the
principal obligation now or hereafter held by Lender; and
(v) Each Guarantor waives and will be unable to claim
any right of subrogation and any right to enforce any remedy which Lender may
have against any Borrower.
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(b) Each Guarantor waives any defense based upon any lack of
authority of the officers, directors, partners, members, managers, or agents
acting or purporting to act on behalf of any Borrower or any principal of any
Borrower or any legal disability or defect in the formation of any Borrower.
(c) Each Guarantor waives any defense based upon the
application by any Borrower of the proceeds of any of the Loans for purposes
other than the purposes represented by Borrowers to Lender or intended or
understood by Lender or any Guarantor.
(d) Each Guarantor waives the benefit of any statute of
limitations affecting the liability of any Guarantor hereunder or the
enforcement hereof, and each Guarantor further agrees that any act or event
which tolls any statute of limitations applicable to the obligations of any
Borrower shall similarly operate to toll the statute of limitations applicable
to any Guarantor's liability hereunder.
(e) Each Guarantor further waives any and all defenses which
are comparable to the waivers set forth in this Guaranty which would otherwise
be available to a Guarantor under Nevada or California law (whether based on a
statute or decisional law) and any other defenses available to guarantors under
Nevada or California law, whether based on a statute or decisional law.
2.7 BENEFITS OF GUARANTY. The provisions of this Guaranty are for
the benefit of Lender and its successors, transferees, endorsees, and assigns,
and nothing herein shall impair any of the Loans or other Obligations, as
between Borrower, Guarantors and Lender. No such transfer, endorsement, or
assignment shall increase or diminish any of the Guaranty Obligations hereunder.
This Guaranty binds each Guarantor, and no Guarantor may assign, transfer or
endorse this Guaranty. In the event all or any part of any of the Loans or other
Obligations are transferred, endorsed or assigned by Lender to any Person or
Persons, any reference to "Lender" herein shall be deemed to refer equally to
such Person or Persons.
2.8 CONTINUING GUARANTY. (a) This is a continuing guaranty, (b)
this Guaranty shall remain in full force and effect until the Termination Date,
and (c) the Guaranty Obligations hereunder shall extend to each and every
extension or renewal, if any, of any of the Notes, the Credit Agreement or other
Loan Documents regardless of whether any of the Loans or other Guaranty
Obligations, in successive transactions, may be paid, repaid, advanced or
renewed from time to time.
2.9 SUBORDINATION. Except for compensation and employee benefits
due any Guarantor from time to time from any Borrower, and all dividends and
distributions permitted pursuant to the Credit Agreement and the Pledge
Agreement to be paid or issued to any Guarantor, any and all present and future
debts and obligations of each Borrower to any Guarantor are hereby fully and
absolutely subordinated to the right and time of payment in full of the Guaranty
Obligations to Lender under each of the Note, the Credit Agreement and the other
Loan Documents. Notwithstanding the foregoing, unless an Event of Default shall
have occurred, any Borrower may declare and pay dividends to its shareholders,
including Guarantors, in accordance with its organizational documents and
applicable law. Any Lien, now existing or hereafter arising, on or in any of the
assets of any Borrower in favor of Guarantors, whether created by contract,
assignment, subrogation, reimbursement, indemnity, operation of law, principles
of equity or otherwise is hereby subordinated in priority to the liens and
security interests of Lender, now existing or hereafter arising. The
subordination provisions of this Section 2.9 shall be effective regardless of
whether demand has been made by Lender and shall remain in effect until the
Termination Date.
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3. REPRESENTATIONS AND WARRANTIES. To induce Lender to provide the
consideration to each Borrower and each Guarantor described above, each
Guarantor hereby makes the following representations and warranties, and each
and all of which survive the execution and delivery of this Guaranty:
3.1 DUE AUTHORIZATION. The execution, delivery and performance by
such Guarantor of this Guaranty have been duly authorized by all necessary
action of such Guarantor.
3.2 BINDING OBLIGATION. This Guaranty constitutes the legal, valid
and binding obligations of such Guarantor, enforceable against such Guarantor in
accordance with its terms.
3.3 NO CONFLICTS. To the best of such Guarantor's knowledge, the
execution, delivery, and performance by such Guarantor of this Guaranty does not
contravene any law or any contractual restriction binding on or affecting such
Guarantor, and does not result in or require the creation of any Lien upon or
with respect to any of its properties.
3.4 CONSENTS. No authorization or approval, or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by such Guarantor of
this Guaranty.
3.5 ADDRESS AND LOCATION OF RECORDS. The address of such
Guarantor's principal place of business is accurately set forth on the signature
page to this Guaranty.
3.6 NO SETOFF, DEFENSE, OR COUNTERCLAIM. As of the date of this
Guaranty, the Guaranty Obligations are not subject to any setoff or defense of
any kind against Lender or any Borrower, and such Guarantor specifically waives
its right to assert any such defense or right of setoff. The Guaranty
Obligations shall not be subject to any counterclaims, setoffs, or defenses
against Lender or any Borrower that may arise in the future, except for (a) any
defense of prior performance or payment, or (b) any defense based on any
applicable provision of the Uniform Commercial Code requiring that Collateral be
disposed of in a commercially reasonable manner, which any Borrower, Guarantors,
or other guarantor of the Obligations may have or assert.
4. COVENANTS. Each Guarantor covenants and agrees that until the
Termination Date, each Guarantor shall give prompt written notice to Lender (in
any event not later than 10 days prior to any change described below) of (a) any
change in the location of such Guarantor's principal place of business, (b) any
change in the location of books and records pertaining to its business, (c) any
change in its name, identity, or structure in any manner which might make any
financing statement filed in connection with the Loan Documents incorrect or
misleading.
5. FURTHER ASSURANCES. Each Guarantor agrees that, at its expense, upon
the written request of Lender, it will promptly execute and deliver to Lender
any additional instruments or documents reasonably considered necessary by
Lender to cause this Guaranty to be, become, or remain valid and effective in
accordance with its terms. Each Guarantor will provide Lender in writing such
financial and other information with respect to its assets and liabilities as
Lender shall request, in form reasonably satisfactory to Lender.
9
6. REINSTATEMENT. This Guaranty shall remain in full force and effect
and continue to be effective, as the case may be, if at any time payment or
performance of any of the Loans or the Guaranty Obligations, or any part
thereof, pursuant to applicable law, is avoided, rescinded, or reduced in
amount, or must otherwise be restored or returned by Lender, or any other
obligee of any of the Loans or the Guaranty 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 avoided, rescinded, reduced, restored or returned, each of the Loans
or the Guaranty Obligations, as the case may be, shall be reinstated and deemed
reduced only by such amount paid and not so avoided, rescinded, reduced,
restored or returned.
7. DEFAULTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default under any of the Notes or the Credit
Agreement or other Loan Documents, Lender may declare any or all of the Guaranty
Obligations, immediately and without demand, notice or legal process of any
kind, to be, and such Guaranty Obligations shall immediately become, due and
payable, and then, or at any subsequent time, Lender may exercise any or all of
its rights and remedies under this Guaranty, any of the Notes, the Credit
Agreement, and any other Loan Documents, including the exercise of any rights
and remedies of Lender as a secured party against the Collateral, and under
applicable law, and in addition may make demand upon Guarantor for the payment
of the Guaranty Obligations. All Guaranty Obligations shall bear interest at the
Default Rate from and after the date an Event of Default occurs under any of the
Notes.
8. APPLICATION OF PAYMENTS. Any payment made by any Guarantor under
this Guaranty shall be applied by Lender as set forth in the Credit Agreement.
9. INDEMNIFICATION. Each Guarantor agrees to and shall indemnify and
hold Lender, and its officers, directors, employees, agents, attorneys and
representatives harmless from and against any liabilities, claims and damages,
including, without limitation, reasonable costs, attorneys' fees, disbursements
and other expenses incurred or arising by reason of the taking or the failure to
take action by Lender, in good faith, in respect of any transaction effected
under this Guaranty, including, without limitation, any action to enforce
payment of the Guaranty Obligations. The liabilities of each Guarantor under
this Section 9 shall survive the termination of this Guaranty.
10. NOTICES. All notices and other communications required or desired to
be served, given or delivered hereunder shall be in writing and shall be served,
given or delivered as provided in the Credit Agreement.
11. ENTIRE AGREEMENT. This Guaranty, together with the Credit Agreement,
each of the Notes, and the other Loan Documents constitutes the entire
agreement, and supersedes all prior and contemporaneous oral and written
communications and agreements, between the parties with respect to the subject
matter hereof.
10
12. LIMITATION OF LIABILITY. Neither Lender nor any of its officers,
directors, employees, agents, or counsel, shall be liable for any action
lawfully taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own respective gross negligence or willful
misconduct.
13. ADVICE OF COUNSEL. Each Guarantor represents and warrants that it
has either obtained the advice of counsel or has had the opportunity to obtain
such advice in connection with the terms and provisions of this Guaranty.
14. AMENDMENTS. No amendment or waiver of any provisions of this
Guaranty, or consent to any departure by any Guarantor therefrom, shall be
effective in any event unless the same shall be in writing and signed by Lender
and all Guarantors and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
15. CONSENT TO LOAN DOCUMENTS. Each Guarantor hereby acknowledges it has
received copies of, and consents to, the Credit Agreement, each of the Notes,
and all other Loan Documents.
16. NO WAIVER. No failure on the part of Lender to exercise, and no
delay in exercising, any right under the Credit Agreement of any other Loan
Document shall operate as a waiver thereof; and no single or partial exercise of
any right under the Credit Agreement or any other Loan Document shall preclude
any other or further exercise thereof or the exercise of any other right. The
remedies provided in the Credit Agreement and other Loan Documents are
cumulative and not exclusive of any remedies provided by law.
17. BINDING EFFECT. This Guaranty shall be binding upon and inure to
respective benefits of Lender and all Guarantors and their respective successors
and assigns, except that no Guarantor shall have the right to assign its rights
hereunder or any interest herein without Lender's prior written consent.
18. SEVERABILITY. In the event that any one or more of the provisions
contained in the Credit Agreement of any other Loan Documents shall be
determined to be invalid, illegal, or unenforceable in any respect for any
reason, the validity, legality, and enforceability of any such provision or
provisions in every other respect, and the remaining provisions of the Credit
Agreement and other Loan Documents shall not be in any way impaired.
19. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, OF THIS GUARANTY AND OF THE CREDIT
AGREEMENT, EACH OF THE NOTES AND THE OTHER LOAN DOCUMENTS AND THE GUARANTY
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. EACH
GUARANTOR, BY ITS ACCEPTANCE OF THIS GUARANTY, 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 ANY GUARANTOR AND LENDER PERTAINING TO THIS GUARANTY OR ANY OF
11
THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT EACH GUARANTOR
ACKNOWLEDGES 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
GUARANTY 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 GUARANTOR EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH GUARANTOR HEREBY WAIVES ANY OBJECTION THAT ANY GUARANTOR 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.
20. WAIVER OF TRIAL BY JURY. Each Guarantor each hereby irrevocably
waives all right to trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Guaranty, any other Loan Document, or any of
the transactions contemplated thereby.
21. COUNTERPARTS. This Guaranty may be executed in any number of
identical counterparts, which shall constitute an original and collectively and
separately constitute a single instrument or agreement.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
Agreement ($80 Million Credit Agreement) to and for the benefit of Lender as of
the Effective Date first above written.
GUARANTOR:
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company,
By: /s/ Kali P. Chaudhuri /s/ Jacob Sweidan
---------------------------------- Jacob Sweidan
Name: Kali P. Chaudhuri Manager PCHI
-----------------------------
Title: Manager
----------------------------
Address: 6800 Indiana Ave., Suite 130
-------------------------------
Riverside, CA 92506
-------------------------------
Attn:
-------------------------
Ph: 951-782-8812
-------------------------
Fax: 951-782-8850
-------------------------
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EXHIBIT "B" TO ACKNOWLEDGEMENT, WAIVER AND CONSENT
GUARANTY AGREEMENT OF PCHI
($10.7 MILLION CREDIT AGREEMENT)
SEE ATTACHED
1
GUARANTY AGREEMENT
------------------
($10.7 MILLION CREDIT AGREEMENT)
This GUARANTY AGREEMENT (as the same may be amended, modified, or
supplemented from time to time, the "Guaranty") is to be effective as of April
2, 2009 ("Effective Date"), by PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company ("Guarantor"), in favor of MEDICAL PROVIDER
FINANCIAL CORPORATION III, a Nevada corporation ("Lender"), with reference to
the following facts:
RECITALS
A. Guarantor is a party to that certain Credit Agreement ($10.7 Million
Facility) dated as of October 9, 2007 (including all annexes, exhibits and
schedules thereto, and as the same may be and has been amended, restated,
supplemented, or otherwise modified from time to time, the "Credit Agreement"),
by and among INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation
("IHHI"), WMC-SA, INC., a California corporation ("WMC-SA"), WMC-A, INC., a
California corporation ("WMC-A"), CHAPMAN MEDICAL CENTER, INC., a California
corporation ("Chapman"), and COASTAL COMMUNITIES HOSPITAL, INC., a California
corporation ("Coastal") (IHHI, WMC-SA, WMC-A, Chapman and Coastal are sometimes
collectively referred to herein as "Borrowers" and individually as "Borrower");
Guarantor, WEST COAST HOLDINGS, LLC, a California limited liability company
("West Coast"), GANESHA REALTY, LLC, a California limited liability company
("Ganesha") and ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada
limited liability company ("OC-PIN") (Guarantor, West Coast, Ganesha and OC-PIN
are referred to collectively in the Credit Agreement as the "Credit Parties"),
and Lender.
B. Pursuant to the Credit Agreement, Lender agreed to and did make a
$10,700,000 convertible term loan ("$10,700,000 Convertible Term Loan") (as
amended, restated, supplemented or otherwise modified from time to time, the
"Loan") to the Borrowers. Repayment of the Loan is evidenced by that certain
$10,700,000 Convertible Term Note dated as of October 9, 2007 ("$10,700,000
Convertible Term Note") (the $10,700,000 Convertible Term Note, as amended,
restated, supplemented or otherwise modified from time to time, is sometimes
referred to herein as the "Note"). The Credit Agreement, the Note and all other
agreements, documents, and instruments evidencing and/or securing the payment or
performance of the Obligations (as defined in the Credit Agreement), including
all Loan Documents as defined in the Credit Agreement are hereinafter
collectively sometimes referred to as the "Loan Documents."
C. The following agreements are being entered into substantially
concurrent with the execution of this Guaranty:
(i) Settlement Agreement, General Release and Covenant Not to Sue
("First Settlement Agreement") by and among IHHI, Anil V. Shah, M.D. ("Dr.
Shah"), OC-PIN, Bruce Mogel ("Mogel"), Guarantor, West Coast, Dr. Kali P.
Chaudhuri ("Dr. Chaudhuri"), Provider Financial Corporation I ("MPFCI"), Lender
and Medical Provider Financial Corporation II ("MPFCII") (MCC, MPFCI, Lender and
MPFCII are collectively, "MedCap"); and
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(ii) Settlement Agreement No. 2 ("Second Settlement Agreement", and
together with the First Settlement Agreement, the "Settlement Agreements") by
and among Dr. Shah, OC-PIN, the members of OC-PIN, Guarantor, West Coast, the
members of West Coast, Dr. Chaudhuri, and Ganesha.
D. The Settlement Agreements require the parties thereto to enter into
further agreements as described therein, including without limitation, a Voting
Agreement between Dr. Chaudhuri and OC-PIN.
E. The Settlement Agreements contemplate the occurrence of various
transactions and events, including without limitation, the dissolution of West
Coast and restructuring of Guarantor, the dissolution of OC-PIN, the grant and
exercise of an Option and Tag Along Rights (as defined in the Settlement
Agreements) that will or may result in, among other things, changes in actual or
beneficial ownership of the parties thereto and/or affiliates of those parties,
some of whom are Credit Parties under the Credit Agreement.
F. Among other conditions for entering into the First Settlement
Agreement, Lender has required that the Guarantor guaranty the payment and
performance of the Guaranty Obligations (defined below), including repayment of
the Loan.
G. The parties intend that these Recitals are made a part of this
Guaranty.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Guaranty, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Guarantor hereby
covenants, promises and agrees for the benefit of Lender as follows:
1. DEFINITIONS; CERTAIN MATTERS OF CONSTRUCTION. Unless otherwise set
forth herein, (a) initially capitalized terms or matters of construction defined
or established in the Credit Agreement shall be applied herein as defined or
established therein, (b) any reference to a "Section" shall refer to the
relevant section of this Guaranty, and (c) the following terms shall have,
unless otherwise provided elsewhere in this Guaranty, the meanings set forth
below:
"Equity Interest" means all shares of Stock, options and warrants to
purchase equity securities or other forms of equity, membership interests,
general or limited partnership 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 common 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).
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"Guaranty Obligations" shall mean (a) the obligations to repay the Loan
under the Note, (b) the payment and performance obligations under the Credit
Agreement, including repayment of the Loan and the Note, (c) payment and
performance obligations under the other Loan Documents, (d) all other
indebtedness, liabilities, and obligations of all Borrowers and the Credit
Parties to Lender whether now existing or hereafter arising under the Loan
Documents, and (e) all indebtedness, liabilities, and Obligations of Guarantors
to Lender whether now existing or hereafter arising under this Guaranty or in
any of the Loan Documents.
"Material Adverse Event" means that any one or more of the following has
occurred: (a) any representation or warranty in the Credit Agreement or in any
of the other Loan Documents or in any written statement, report, financial
statement or certificate made or delivered to Lender by any Borrower or by any
Credit Party (including Guarantors) is untrue or incorrect in any material
respect as of the date when made or deemed made; or (b) between the Effective
Date and the Termination Date, any Borrower or any Credit Party (including
Guarantors) commit any act or omit to take any act the result of which
constitutes a fraud or intentional misrepresentation as to Lender.
"Obligations" means all obligations of Borrower under the Credit
Agreement.
2. GUARANTY.
2.1 GUARANTY OF THE OBLIGATIONS.
(a) In consideration of making the Loan to Borrowers under
the Credit Agreement, for all other financial accommodations to or for the
benefit of Borrowers and Credit Parties, for entering into the First Settlement
Agreement, and for other valuable consideration the receipt and sufficiency of
which Guarantor hereby acknowledges, Guarantor hereby unconditionally,
irrevocably and absolutely guaranties to Lender, and its respective successors,
endorsees, transferees, and assigns, the prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of the Guaranty
Obligations.
(b) This Guaranty constitutes a guaranty of payment and
performance when due and not of collection, and Guarantor specifically agrees
that it shall not be necessary or required that Lender, or any of its
successors, endorsees, transferees, or assigns assert any claim or demand or
enforce any remedy whatsoever against any Borrower, any other guarantor, or with
respect to any collateral provided by any Borrower (collectively, "Collateral"),
before or as a condition to the obligations of Guarantor under this Guaranty.
2.2 ABSOLUTE AND IRREVOCABLE GUARANTY. The Guaranty Obligations
shall remain in full force and effect without regard to, and shall not be
impaired or affected by, or be deemed to be satisfied by, and Guarantor shall
not be exonerated, discharged, revoked or released by, any of the following
events:
(a) Lender's exercise or enforcement of, or failure or delay
in exercising or enforcing, legal proceedings to collect the Loan or the
Guaranty Obligations or any power, right, or remedy with respect to the Loan,
the Guaranty Obligations, or the Collateral, including without limitation: (i)
any action or inaction of Lender to perfect, protect, or enforce any lien upon
3
any Collateral; or (ii) any change in the time, manner, or place of payment of,
or in any other term of, the Loan or the Guaranty Obligations, or any other
amendment to, or waiver of, the Note, any other Loan Document, or any other
agreement or instrument governing or evidencing any the Loan or any of the
Guaranty Obligations;
(b) Insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors, appointment of
a receiver or trustee for all or any part of any Borrower's or any Guarantor's
assets or of the assets of any other Guarantor of the Obligations, liquidation,
winding-up, or dissolution of any Borrower or any Guarantor, or any other
guarantor of the Obligations;
(c) Any limitation, discharge, cessation, or partial
satisfaction of the Loan, the Guaranty Obligations, or the obligations of any
other guarantor of the Obligations, or any invalidity, voidability,
unenforceability, in whole or in part, of the Note, this Guaranty, any other
Loan Document, or any other document evidencing the Loan or Guaranty
Obligations;
(d) Any merger, acquisition, consolidation or change in
structure of any Borrower or any Guarantor or any other guarantor of the
Obligations; or any sale, lease, transfer, or other disposition of any or all of
the assets or Equity Interests of any Borrower or any Guarantor or any other
Guarantor of the Obligations, including, without limitation, any transfer by any
Borrower of all or any part of any Collateral, or termination of any Borrower's
existence for any reason;
(e) Any assignment or other transfer, in whole or in part,
of Lender's interest in or rights in or under the Note, or any other Loan
Document, including, without limitation, this Guaranty, or with respect to the
Loan, the Guaranty Obligations, or the Collateral;
(f) Any claim, defense, counterclaim, or setoff that any
Borrower or any Guarantor or any other Guarantor of the Obligations may have or
assert, including, without limitation, any defense of incapacity, disability, or
lack of corporate, organizational or other authority to execute any document
relating to the Loan, the Guaranty Obligations, the Collateral, or this
Guaranty, other than (i) upon the occurrence of the Termination Date, the
defense of prior performance, or (ii) any defense based on any applicable
provision of the Uniform Commercial Code requiring that Collateral be disposed
of in a commercially reasonable manner;
(g) Any purported revocation by any Guarantor;
(h) Any cancellation, renunciation or surrender of any
pledge, guaranty, or any debt instrument evidencing the Loan or the Guaranty
Obligations;
(i) The vote, claim, distribution, election, acceptance,
action, or inaction of Lender in any bankruptcy or reorganization case related
to the Loan, the Guaranty Obligations, or the Collateral; or
(j) Any other action or circumstances that might otherwise
constitute a defense available to, or a legal or equitable discharge of, any
surety, any Guarantor or any other Guarantor, except as expressly provided
herein;
4
it being agreed that the Guaranty Obligations shall not be discharged or revoked
or released until the Termination Date.
2.3 DEMAND BY LENDER. In addition to the terms set forth herein,
and in no manner imposing any limitation on such terms, if any of the
Obligations under the Note or the Credit Agreement or the other Loan Documents
are declared to be or otherwise becomes immediately due and payable due in whole
or in part to the occurrence of a Material Adverse Event(s), then Guarantor,
upon demand in writing therefor by Lender, shall promptly pay the Guaranty
Obligations to Lender. Payment by Guarantor shall be made to Lender to be
credited and applied to the Obligations, in immediately available funds in
lawful money of the United States of America to an account designated by Lender
or at the address set forth in the Credit Agreement or at any other address that
may be specified in writing from time to time by Lender as provided herein. Any
payment received by Lender with respect to the Loan or other Obligations shall
reduce the Guaranty Obligations by the amount of such payment.
2.4 GUARANTOR WAIVERS. In addition to any other waivers contained
herein, each Guarantor waives, agrees and acknowledges as follows and waives any
defense based upon or arising from the following:
(a) The Guaranty Obligations are the immediate, direct,
primary and absolute liabilities of each Guarantor, and are independent of, and
not co-extensive with, the Loan, the other Obligations or the obligations of any
other Guarantor of the Obligations. Each Guarantor expressly waives any right it
may have now or in the future to direct or affect the manner or timing of
Lender's enforcement of its rights or remedies. Each Guarantor expressly waives
any right he may have now or in the future to revoke this Guaranty. Each
Guarantor expressly waives any right it may have now or in the future to require
Lender to, and Lender shall not have any liability to, pursue or enforce first
against any Borrower, any of the properties or assets of any Borrower, the
Collateral or any other security, guaranty or pledge that may now or hereafter
be held by Lender for the Loan or for the Guaranty Obligations, or to apply such
security, guaranty, or pledge to the Loan or to the Guaranty Obligations. Each
Guarantor shall remain liable for the Guaranty Obligations, notwithstanding any
judgment Lender may obtain against any Borrower or any Guarantor, any other
Guarantor of the Obligations, or any other Person or entity, or any
modification, extension or renewal with respect thereto. Lender shall not be
under any liability to marshal any assets in favor of each Guarantor or in
payment of the Loan or the Guaranty Obligations.
(b) Each Guarantor has entered into this Guaranty based
solely upon his/her/its independent knowledge of each Borrower's financial
condition, and each Guarantor assumes full responsibility for obtaining any
further information with respect to each Borrower or the conduct of each
Borrower's business. Each Guarantor represents that it is now, and during the
terms of this Guaranty will be, responsible for ascertaining the financial
condition of each Borrower. Each Guarantor hereby waives any duty on the part of
Lender to disclose to any Guarantor, and agrees that it is not relying upon or
expecting Lender to disclose to it, any fact known or hereafter known by Lender
relating to the operation or condition of any Borrower or its business or
relating to the existence, liability, or financial condition of any other
Guarantor of the Obligations. Each Guarantor knowingly accepts the full range of
risk encompassed in a contract of continuing guaranty, which risk includes the
possibility that a Borrower may incur further indebtedness after such Borrower's
financial condition or its ability to pay debts as they mature has deteriorated.
5
(c) Except as specifically provided in this Guaranty or
applicable law, each Guarantor waives, to the fullest extent permitted by
applicable law (i) notice of the acceptance by Lender of this Guaranty, (ii)
notice of the existence, creation, payment, nonpayment, performance or
nonperformance of all or any of the Guaranty Obligations, (iii) presentment,
demand and protest and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all of the Credit Agreement or the
other Loan Documents, the Note, commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Lender
on which Guarantors may be liable in any way, and hereby ratifies and confirms
whatever Lender may do in this regard, (iv) all rights to notice and a hearing
prior to Lender's taking possession or control of, or to Lender's replevy,
attachment or levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Lender to exercise any of its remedies,
(v) all rights to receive notices from Lender with respect to, or otherwise sent
to, each Guarantor or any other Guarantor of the Obligations, (vi) the benefit
of all valuation, appraisal, stay, extension, redemption and exemption laws,
(vii) the benefit of any law purporting to reduce any Guarantor's obligation in
proportion to the principal obligation hereby guarantied, (viii) the benefit of
any law purporting to exonerate any Guarantor's obligation upon performance or
an offer of performance of the principal obligation, (ix) notice of any
extension, modification, renewal, or amendment of any of the terms of the Note
or the Credit Agreement or any other Loan Document relating to the Loan or the
Guaranty Obligations, (x) notice of the occurrence of any Default or Event of
Default with respect to the Loan, the Guaranty Obligations, the Collateral or
otherwise, and (xi) notice of any exercise or non-exercise by Lender of any
right, power, or remedy with respect to the Loan, the Guaranty Obligations or
the Collateral.
(d) If Lender, under applicable law, may proceed to realize
its benefits under the Credit Agreement or any other Loan Document providing for
a lien upon any Collateral, whether owned by Borrower or by any other person or
entity, either by judicial foreclosure or by nonjudicial sale or enforcement,
Lender, at its sole option, may determine which of its remedies or rights it may
pursue without affecting any of its rights and remedies under this Guaranty.
(e) Each Guarantor represents that the Loan and Guaranty
Obligations are and shall be incurred by the Borrowers for the permitted uses
set forth in the Credit Agreement. Each Guarantor undertakes all the risks
encompassed the Note, in the Credit Agreement and the other Loan Documents as
they may be now or are hereafter agreed upon by Lender and any of the Borrowers.
Prior to the date this Guaranty terminates, Lender, in such manner and upon such
terms and at such time as it deems best, and with or without notice to each
Guarantor, may release, add, subordinate or substitute security for the Loan or
other Guaranty Obligations in accordance with the Credit Agreement.
(f) A separate action or actions may be brought and
prosecuted against any Guarantor whether or not an action is brought against any
Borrower, or whether any Borrower or any other Guarantor is joined in any such
action or actions.
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2.5 WAIVERS UNDER STATUTES. Each Guarantor makes the following
waivers:
EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF
REMEDIES BY LENDER, EVEN THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL
FORECLOSURE WITH RESPECT TO SECURITY FOR A GUARANTEED OBLIGATION, HAS DESTROYED
ANY RIGHTS GRANTED TO EACH GUARANTOR PURSUANT TO NEVADA LAW.
2.6 ADDITIONAL WAIVERS.
(a) Until the Termination Date, each Guarantor waives any
and all rights of subrogation, reimbursement, indemnification, and contribution
and any other rights and defenses that are or may become available to any
Guarantor by reason of applicable state law. This means, among other things,
that:
(i) Each Guarantor waives and will be unable to raise
any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in any other
respects more burdensome than that of a principal;
(ii) Each Guarantor waives and will be unable to raise
any defense based upon any statute or rule of law which provides that a creditor
may be required to pursue the principal obligor or the security for the
principal obligation before seeking enforcement against a guarantor or security
pledged by such guarantor;
(iii) Each Guarantor waives and will be unable to raise
any defense based upon any statute or rule of law which provides that a
guarantor's obligations may be limited or exonerated by reason of the creditor's
alteration of the principal obligation or of another guaranty, or by reason of
the impairment or suspension of the creditor's rights or remedies against the
principal, another guarantor, or any security given for the principal obligation
or given for other guaranties;
(iv) Each Guarantor waives and will be unable to claim
any right to participate in, or the benefit of, any security given for the
principal obligation now or hereafter held by Lender; and
(v) Each Guarantor waives and will be unable to claim
any right of subrogation and any right to enforce any remedy which Lender may
have against any Borrower.
(b) Each Guarantor waives any defense based upon any lack of
authority of the officers, directors, partners, members, managers, or agents
acting or purporting to act on behalf of any Borrower or any principal of any
Borrower or any legal disability or defect in the formation of any Borrower.
(c) Each Guarantor waives any defense based upon the
application by any Borrower of the proceeds of the Loan for purposes other than
the purposes represented by Borrowers to Lender or intended or understood by
Lender or any Guarantor.
7
(d) Each Guarantor waives the benefit of any statute of
limitations affecting the liability of any Guarantor hereunder or the
enforcement hereof, and each Guarantor further agrees that any act or event
which tolls any statute of limitations applicable to the obligations of any
Borrower shall similarly operate to toll the statute of limitations applicable
to any Guarantor's liability hereunder.
(e) Each Guarantor further waives any and all defenses which
are comparable to the waivers set forth in this Guaranty which would otherwise
be available to a Guarantor under Nevada or California law (whether based on a
statute or decisional law) and any other defenses available to guarantors under
Nevada or California law, whether based on a statute or decisional law.
2.7 BENEFITS OF GUARANTY. The provisions of this Guaranty are for
the benefit of Lender and its successors, transferees, endorsees, and assigns,
and nothing herein shall impair the Loan or other Obligations, as between
Borrower, Guarantors and Lender. No such transfer, endorsement, or assignment
shall increase or diminish any of the Guaranty Obligations hereunder. This
Guaranty binds each Guarantor, and no Guarantor may assign, transfer or endorse
this Guaranty. In the event all or any part of any of the Loan or other
Obligations are transferred, endorsed or assigned by Lender to any Person or
Persons, any reference to "Lender" herein shall be deemed to refer equally to
such Person or Persons.
2.8 CONTINUING GUARANTY. (a) This is a continuing guaranty, (b)
this Guaranty shall remain in full force and effect until the Termination Date,
and (c) the Guaranty Obligations hereunder shall extend to each and every
extension or renewal, if any, of the Note, the Credit Agreement or other Loan
Documents regardless of whether the Loan or other Guaranty Obligations, in
successive transactions, may be paid, repaid, advanced or renewed from time to
time.
2.9 SUBORDINATION. Except for compensation and employee benefits
due any Guarantor from time to time from any Borrower, and all dividends and
distributions permitted pursuant to the Credit Agreement and the Pledge
Agreement to be paid or issued to any Guarantor, any and all present and future
debts and obligations of each Borrower to any Guarantor are hereby fully and
absolutely subordinated to the right and time of payment in full of the Guaranty
Obligations to Lender under each of the Note, the Credit Agreement and the other
Loan Documents. Notwithstanding the foregoing, unless an Event of Default shall
have occurred, any Borrower may declare and pay dividends to its shareholders,
including Guarantors, in accordance with its organizational documents and
applicable law. Any Lien, now existing or hereafter arising, on or in any of the
assets of any Borrower in favor of Guarantors, whether created by contract,
assignment, subrogation, reimbursement, indemnity, operation of law, principles
of equity or otherwise is hereby subordinated in priority to the liens and
security interests of Lender, now existing or hereafter arising. The
subordination provisions of this Section 2.9 shall be effective regardless of
whether demand has been made by Lender and shall remain in effect until the
Termination Date.
3. REPRESENTATIONS AND WARRANTIES. To induce Lender to provide the
consideration to each Borrower and each Guarantor described above, each
Guarantor hereby makes the following representations and warranties, and each
and all of which survive the execution and delivery of this Guaranty:
8
3.1 DUE AUTHORIZATION. The execution, delivery and performance by
such Guarantor of this Guaranty have been duly authorized by all necessary
action of such Guarantor.
3.2 BINDING OBLIGATION. This Guaranty constitutes the legal, valid
and binding obligations of such Guarantor, enforceable against such Guarantor in
accordance with its terms.
3.3 NO CONFLICTS. To the best of such Guarantor's knowledge, the
execution, delivery, and performance by such Guarantor of this Guaranty does not
contravene any law or any contractual restriction binding on or affecting such
Guarantor, and does not result in or require the creation of any Lien upon or
with respect to any of its properties.
3.4 CONSENTS. No authorization or approval, or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by such Guarantor of
this Guaranty.
3.5 ADDRESS AND LOCATION OF RECORDS. The address of such
Guarantor's principal place of business is accurately set forth on the signature
page to this Guaranty.
3.6 NO SETOFF, DEFENSE, OR COUNTERCLAIM. As of the date of this
Guaranty, the Guaranty Obligations are not subject to any setoff or defense of
any kind against Lender or any Borrower, and such Guarantor specifically waives
its right to assert any such defense or right of setoff. The Guaranty
Obligations shall not be subject to any counterclaims, setoffs, or defenses
against Lender or any Borrower that may arise in the future, except for (a) any
defense of prior performance or payment, or (b) any defense based on any
applicable provision of the Uniform Commercial Code requiring that Collateral be
disposed of in a commercially reasonable manner, which any Borrower, Guarantors,
or other guarantor of the Obligations may have or assert.
4. COVENANTS. Each Guarantor covenants and agrees that until the
Termination Date, each Guarantor shall give prompt written notice to Lender (in
any event not later than 10 days prior to any change described below) of (a) any
change in the location of such Guarantor's principal place of business, (b) any
change in the location of books and records pertaining to its business, (c) any
change in its name, identity, or structure in any manner which might make any
financing statement filed in connection with the Loan Documents incorrect or
misleading.
5. FURTHER ASSURANCES. Each Guarantor agrees that, at its expense, upon
the written request of Lender, it will promptly execute and deliver to Lender
any additional instruments or documents reasonably considered necessary by
Lender to cause this Guaranty to be, become, or remain valid and effective in
accordance with its terms. Each Guarantor will provide Lender in writing such
financial and other information with respect to its assets and liabilities as
Lender shall request, in form reasonably satisfactory to Lender.
6. REINSTATEMENT. This Guaranty shall remain in full force and effect
and continue to be effective, as the case may be, if at any time payment or
performance of the Loan or the Guaranty Obligations, or any part thereof,
pursuant to applicable law, is avoided, rescinded, or reduced in amount, or must
otherwise be restored or returned by Lender, or any other obligee of the Loan or
the Guaranty 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 avoided, rescinded,
reduced, restored or returned, the Loan or the Guaranty Obligations, as the case
may be, shall be reinstated and deemed reduced only by such amount paid and not
so avoided, rescinded, reduced, restored or returned.
9
7. DEFAULTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default under the Note or the Credit Agreement or
other Loan Documents, Lender may declare any or all of the Guaranty Obligations,
immediately and without demand, notice or legal process of any kind, to be, and
such Guaranty Obligations shall immediately become, due and payable, and then,
or at any subsequent time, Lender may exercise any or all of its rights and
remedies under this Guaranty, the Note, the Credit Agreement, and any other Loan
Documents, including the exercise of any rights and remedies of Lender as a
secured party against the Collateral, and under applicable law, and in addition
may make demand upon Guarantor for the payment of the Guaranty Obligations. All
Guaranty Obligations shall bear interest at the Default Rate from and after the
date an Event of Default occurs under the Note.
8. APPLICATION OF PAYMENTS. Any payment made by any Guarantor under
this Guaranty shall be applied by Lender as set forth in the Credit Agreement.
9. INDEMNIFICATION. Each Guarantor agrees to and shall indemnify and
hold Lender, and its officers, directors, employees, agents, attorneys and
representatives harmless from and against any liabilities, claims and damages,
including, without limitation, reasonable costs, attorneys' fees, disbursements
and other expenses incurred or arising by reason of the taking or the failure to
take action by Lender, in good faith, in respect of any transaction effected
under this Guaranty, including, without limitation, any action to enforce
payment of the Guaranty Obligations. The liabilities of each Guarantor under
this Section 9 shall survive the termination of this Guaranty.
10. NOTICES. All notices and other communications required or desired to
be served, given or delivered hereunder shall be in writing and shall be served,
given or delivered as provided in the Credit Agreement.
11. ENTIRE AGREEMENT. This Guaranty, together with the Credit Agreement,
the Note, and the other Loan Documents constitutes the entire agreement, and
supersedes all prior and contemporaneous oral and written communications and
agreements, between the parties with respect to the subject matter hereof.
12. LIMITATION OF LIABILITY. Neither Lender nor any of its officers,
directors, employees, agents, or counsel, shall be liable for any action
lawfully taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own respective gross negligence or willful
misconduct.
13. ADVICE OF COUNSEL. Each Guarantor represents and warrants that it
has either obtained the advice of counsel or has had the opportunity to obtain
such advice in connection with the terms and provisions of this Guaranty.
10
14. AMENDMENTS. No amendment or waiver of any provisions of this
Guaranty, or consent to any departure by any Guarantor therefrom, shall be
effective in any event unless the same shall be in writing and signed by Lender
and all Guarantors and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
15. CONSENT TO LOAN DOCUMENTS. Each Guarantor hereby acknowledges it has
received copies of, and consents to, the Credit Agreement, the Note, and all
other Loan Documents.
16. NO WAIVER. No failure on the part of Lender to exercise, and no
delay in exercising, any right under the Credit Agreement of any other Loan
Document shall operate as a waiver thereof; and no single or partial exercise of
any right under the Credit Agreement or any other Loan Document shall preclude
any other or further exercise thereof or the exercise of any other right. The
remedies provided in the Credit Agreement and other Loan Documents are
cumulative and not exclusive of any remedies provided by law.
17. BINDING EFFECT. This Guaranty shall be binding upon and inure to
respective benefits of Lender and all Guarantors and their respective successors
and assigns, except that no Guarantor shall have the right to assign its rights
hereunder or any interest herein without Lender's prior written consent.
18. SEVERABILITY. In the event that any one or more of the provisions
contained in the Credit Agreement of any other Loan Documents shall be
determined to be invalid, illegal, or unenforceable in any respect for any
reason, the validity, legality, and enforceability of any such provision or
provisions in every other respect, and the remaining provisions of the Credit
Agreement and other Loan Documents shall not be in any way impaired.
19. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, OF THIS GUARANTY AND OF THE CREDIT
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE GUARANTY 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. EACH GUARANTOR, BY ITS
ACCEPTANCE OF THIS GUARANTY, 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
ANY GUARANTOR AND LENDER PERTAINING TO THIS GUARANTY OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF
THE OTHER LOAN DOCUMENTS; PROVIDED, THAT EACH GUARANTOR ACKNOWLEDGES 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 GUARANTY 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 GUARANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
GUARANTOR HEREBY WAIVES ANY OBJECTION THAT ANY GUARANTOR 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.
11
20. WAIVER OF TRIAL BY JURY. Each Guarantor each hereby irrevocably
waives all right to trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Guaranty, any other Loan Document, or any of
the transactions contemplated thereby.
21. COUNTERPARTS. This Guaranty may be executed in any number of
identical counterparts, which shall constitute an original and collectively and
separately constitute a single instrument or agreement.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
Agreement ($10.7 Million Credit Agreement) to and for the benefit of Lender as
of the Effective Date first above written.
GUARANTOR:
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company,
By: /s/ Kali P. Chaudhuri /s/ Jacob Sweidan
---------------------------------- Jacob Sweidan
Name: Kali P. Chaudhuri Manager PCHI
-----------------------------
Title: Manager
----------------------------
Address: 6800 Indiana Ave., Suite 130
-------------------------------
Riverside, CA 92506
-------------------------------
Attn:
-------------------------------
Ph: 951-782-8812
-------------------------------
Fax: 951-782-8850
-------------------------------
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EXHIBIT "C" TO ACKNOWLEDGEMENT, WAIVER AND CONSENT
--------------------------------------------------
GUARANTY AGREEMENT OF PCHI
($50 MILLION REVOLVING CREDIT AGREEMENT)
SEE ATTACHED
1
EXECUTION
GUARANTY AGREEMENT
------------------
($50 MILLION REVOLVING CREDIT AGREEMENT)
This GUARANTY AGREEMENT (as the same may be amended, modified, or
supplemented from time to time, the "Guaranty") is to be effective as of April
2, 2009 ("Effective Date"), by PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company ("Guarantor"), in favor of MEDICAL PROVIDER
FINANCIAL CORPORATION I, a Nevada corporation ("Lender"), with reference to the
following facts:
RECITALS
--------
A. Guarantor is a party to that certain Revolving Credit Agreement ($50
Million Facility) dated as of October 9, 2007 (including all annexes, exhibits
and schedules thereto, and as the same may be and has been amended, restated,
supplemented, or otherwise modified from time to time, the "Revolving Credit
Agreement"), by and among INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada
corporation ("IHHI"), WMC-SA, INC., a California corporation ("WMC-SA"), WMC-A,
INC., a California corporation ("WMC-A"), CHAPMAN MEDICAL CENTER, INC., a
California corporation ("Chapman"), and COASTAL COMMUNITIES HOSPITAL, INC., a
California corporation ("Coastal") (IHHI, WMC-SA, WMC-A, Chapman and Coastal are
sometimes collectively referred to herein as "Borrowers" and individually as
"Borrower"); Guarantor, WEST COAST HOLDINGS, LLC, a California limited liability
company ("West Coast"), GANESHA REALTY, LLC, a California limited liability
company ("Ganesha") and ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a
Nevada limited liability company ("OC-PIN") (Guarantor, West Coast, Ganesha and
OC-PIN are referred to collectively in the Credit Agreement as the "Credit
Parties"), and Lender.
B. Pursuant to the Credit Agreement, Lender agreed to and did make a
$50,000,000 revolving line of credit loan (as amended, restated, supplemented or
otherwise modified from time to time, the "$50,000,000 Revolving Line of Credit
Loan") to the Borrowers. Repayment of the $50,000,000 Revolving Line of Credit
Loan is evidenced by that certain $50,000,000 Revolving Line of Credit Note
dated as of October 9, 2007 (as amended, restated, supplemented or otherwise
modified from time to time, the "$50,000,000 Revolving Line of Credit Note").
The Revolving Credit Agreement, the $50,000,000 Revolving Line of Credit Note
and all other agreements, documents, and instruments evidencing and/or securing
the payment or performance of the Obligations (as defined in the Revolving
Credit Agreement) are hereinafter collectively sometimes referred to as the
"$50,000,000 Revolving Line of Credit Loan Documents."
C. The following agreements are being entered into substantially
concurrent with the execution of this Guaranty:
(i) Settlement Agreement, General Release and Covenant Not to Sue
("First Settlement Agreement") by and among IHHI, Anil V. Shah, M.D. ("Dr.
Shah"), OC-PIN, Bruce Mogel ("Mogel"), Guarantor, West Coast, Dr. Kali P.
Chaudhuri ("Dr. Chaudhuri"), Provider Financial Corporation II ("MPFCII"),
Lender and Medical Provider Financial Corporation III ("MPFCIII") (MCC, MPFCII,
Lender and MPFCIII are collectively, "MedCap"); and
1
(ii) Settlement Agreement No. 2 ("SECOND SETTLEMENT AGREEMENT", and
together with the First Settlement Agreement, the "SETTLEMENT AGREEMENTS") by
and among Dr. Shah, OC-PIN, the members of OC-PIN, Guarantor, West Coast, the
members of West Coast, Dr. Chaudhuri, and Ganesha.
D. The Settlement Agreements require the parties thereto to enter into
further agreements as described therein, including without limitation, a Voting
Agreement between Dr. Chaudhuri and OC-PIN.
E. The Settlement Agreements contemplate the occurrence of various
transactions and events, including without limitation, the dissolution of West
Coast and restructuring of Guarantor, the dissolution of OC-PIN, the grant and
exercise of an Option and Tag Along Rights (as defined in the Settlement
Agreements) that will or may result in, among other things, changes in actual or
beneficial ownership of the parties thereto and/or affiliates of those parties,
some of whom are Credit Parties under the Revolving Credit Agreement.
F. Among other conditions for entering into the First Settlement
Agreement, Lender has required that the Guarantor guaranty the payment and
performance of the Guaranty Obligations (defined below), including repayment of
the $50,000,000 Revolving Line of Credit Loans.
G. The parties intend that these Recitals are made a part of this
Guaranty.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Guaranty, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Guarantor hereby
covenants, promises and agrees for the benefit of Lender as follows:
1. DEFINITIONS; CERTAIN MATTERS OF CONSTRUCTION. Unless otherwise set
forth herein, (a) initially capitalized terms or matters of construction defined
or established in the Revolving Credit Agreement shall be applied herein as
defined or established therein, (b) any reference to a "Section" shall refer to
the relevant section of this Guaranty, and (c) the following terms shall have,
unless otherwise provided elsewhere in this Guaranty, the meanings set forth
below:
"EQUITY INTEREST" means all shares of Stock, options and warrants to
purchase equity securities or other forms of equity, membership interests,
general or limited partnership 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 common 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).
2
"GUARANTY OBLIGATIONS" shall mean (a) the obligations to repay the
$50,000,000 Revolving Line of Credit Loan under the $50,000,000 Revolving Line
of Credit Note, (b) the payment and performance obligations under the Revolving
Credit Agreement, including repayment of the $50,000,000 Revolving Line of
Credit Loan and the $50,000,000 Revolving Line of Credit Note, (c) payment and
performance obligations under the other $50,000,000 Revolving Line of Credit
Loan Documents, (d) all other indebtedness, liabilities, and obligations of all
Borrowers and the Credit Parties to Lender whether now existing or hereafter
arising under the $50,000,000 Revolving Line of Credit Loan Documents, and (e)
all indebtedness, liabilities, and Obligations of Guarantors to Lender whether
now existing or hereafter arising under this Guaranty or in any of the
$50,000,000 Revolving Line of Credit Loan Documents.
"MATERIAL ADVERSE EVENT" means that any one or more of the following has
occurred: (a) any representation or warranty in the Revolving Credit Agreement
or in any of the other $50,000,000 Revolving Line of Credit Loan Documents or in
any written statement, report, financial statement or certificate made or
delivered to Lender by any Borrower or by any Credit Party (including
Guarantors) is untrue or incorrect in any material respect as of the date when
made or deemed made; or (b) between the Effective Date and the Termination Date,
any Borrower or any Credit Party (including Guarantors) commit any act or omit
to take any act the result of which constitutes a fraud or intentional
misrepresentation as to Lender.
"OBLIGATIONS" means all obligations of Borrower under the Revolving Credit
Agreement.
2. GUARANTY.
2.1 GUARANTY OF THE OBLIGATIONS.
(a) In consideration of making the $50,000,000 Revolving
Line of Credit Loan to Borrowers under the Revolving Credit Agreement, for all
other financial accommodations to or for the benefit of Borrowers and Credit
Parties, for entering into the First Settlement Agreement, and for other
valuable consideration the receipt and sufficiency of which Guarantor hereby
acknowledges, Guarantor hereby unconditionally, irrevocably and absolutely
guaranties to Lender, and its respective successors, endorsees, transferees, and
assigns, the prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of the Guaranty Obligations.
(b) This Guaranty constitutes a guaranty of payment and
performance when due and not of collection, and Guarantor specifically agrees
that it shall not be necessary or required that Lender, or any of its
successors, endorsees, transferees, or assigns assert any claim or demand or
enforce any remedy whatsoever against any Borrower, any other guarantor, or with
respect to any collateral provided by any Borrower (collectively, "COLLATERAL"),
before or as a condition to the obligations of Guarantor under this Guaranty.
2.2 ABSOLUTE AND IRREVOCABLE GUARANTY. The Guaranty Obligations
shall remain in full force and effect without regard to, and shall not be
impaired or affected by, or be deemed to be satisfied by, and Guarantor shall
not be exonerated, discharged, revoked or released by, any of the following
events:
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(a) Lender's exercise or enforcement of, or failure or delay
in exercising or enforcing, legal proceedings to collect the $50,000,000
Revolving Line of Credit Loan or the Guaranty Obligations or any power, right,
or remedy with respect to the $50,000,000 Revolving Line of Credit Loan, the
Guaranty Obligations, or the Collateral, including without limitation: (i) any
action or inaction of Lender to perfect, protect, or enforce any lien upon any
Collateral; or (ii) any change in the time, manner, or place of payment of, or
in any other term of, any or all of the $50,000,000 Revolving Line of Credit
Loan or the Guaranty Obligations, or any other amendment to, or waiver of, the
$50,000,000 Revolving Line of Credit Note, any other $50,000,000 Revolving Line
of Credit Loan Document, or any other agreement or instrument governing or
evidencing the $50,000,000 Revolving Line of Credit Loan or any of the Guaranty
Obligations;
(b) Insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors, appointment of
a receiver or trustee for all or any part of any Borrower's or any Guarantor's
assets or of the assets of any other guarantor of the Obligations, liquidation,
winding-up, or dissolution of any Borrower or any Guarantor, or any other
guarantor of the Obligations;
(c) Any limitation, discharge, cessation, or partial
satisfaction of the $50,000,000 Revolving Line of Credit Loan, the Guaranty
Obligations, or the obligations of any other guarantor of the Obligations, or
any invalidity, voidability, unenforceability, in whole or in part, of the
$50,000,000 Revolving Line of Credit Note, this Guaranty, any other $50,000,000
Revolving Line of Credit Loan Document, or any other document evidencing the
$50,000,000 Revolving Line of Credit Loan or Guaranty Obligations;
(d) Any merger, acquisition, consolidation or change in
structure of any Borrower or any Guarantor or any other guarantor of the
Obligations; or any sale, lease, transfer, or other disposition of any or all of
the assets or Equity Interests of any Borrower or any Guarantor or any other
Guarantor of the Obligations, including, without limitation, any transfer by any
Borrower of all or any part of any Collateral, or termination of any Borrower's
existence for any reason;
(e) Any assignment or other transfer, in whole or in part,
of Lender's interest in or rights in or under the $50,000,000 Revolving Line of
Credit Note, or any other $50,000,000 Revolving Line of Credit Loan Document,
including, without limitation, this Guaranty, or with respect to the $50,000,000
Revolving Line of Credit Loan, the Guaranty Obligations, or the Collateral;
(f) Any claim, defense, counterclaim, or setoff that any
Borrower or any Guarantor or any other Guarantor of the Obligations may have or
assert, including, without limitation, any defense of incapacity, disability, or
lack of corporate, organizational or other authority to execute any document
relating to the $50,000,000 Revolving Line of Credit Loan, the Guaranty
Obligations, the Collateral, or this Guaranty, other than (i) upon the
occurrence of the Termination Date, the defense of prior performance, or (ii)
any defense based on any applicable provision of the Uniform Commercial Code
requiring that Collateral be disposed of in a commercially reasonable manner;
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(g) Any purported revocation by any Guarantor;
(h) Any cancellation, renunciation or surrender of any
pledge, guaranty, or any debt instrument evidencing the $50,000,000 Revolving
Line of Credit Loan or the Guaranty Obligations;
(i) The vote, claim, distribution, election, acceptance,
action, or inaction of Lender in any bankruptcy or reorganization case related
to the $50,000,000 Revolving Line of Credit Loan, the Guaranty Obligations, or
the Collateral; or
(j) Any other action or circumstances that might otherwise
constitute a defense available to, or a legal or equitable discharge of, any
surety, any Guarantor or any other Guarantor, except as expressly provided
herein;
it being agreed that the Guaranty Obligations shall not be discharged or revoked
or released until the Termination Date.
2.3 DEMAND BY LENDER. In addition to the terms set forth herein,
and in no manner imposing any limitation on such terms, if any of the
Obligations under the $50,000,000 Revolving Line of Credit Note or the Revolving
Credit Agreement or the other $50,000,000 Revolving Line of Credit Loan
Documents are declared to be or otherwise becomes immediately due and payable
due in whole or in part to the occurrence of a Material Adverse Event(s), then
Guarantor, upon demand in writing therefor by Lender, shall promptly pay the
Guaranty Obligations to Lender. Payment by Guarantor shall be made to Lender to
be credited and applied to the Obligations, in immediately available funds in
lawful money of the United States of America to an account designated by Lender
or at the address set forth in the Revolving Credit Agreement or at any other
address that may be specified in writing from time to time by Lender as provided
herein. Any payment received by Lender with respect to the $50,000,000 Revolving
Line of Credit Loan or other Obligations shall reduce the Guaranty Obligations
by the amount of such payment.
2.4 GUARANTOR WAIVERS. In addition to any other waivers contained
herein, each Guarantor waives, agrees and acknowledges as follows and waives any
defense based upon or arising from the following:
(a) The Guaranty Obligations are the immediate, direct,
primary and absolute liabilities of each Guarantor, and are independent of, and
not co-extensive with, the $50,000,000 Revolving Line of Credit Loan, the other
Obligations or the obligations of any other Guarantor of the Obligations. Each
Guarantor expressly waives any right it may have now or in the future to direct
or affect the manner or timing of Lender's enforcement of its rights or
remedies. Each Guarantor expressly waives any right he may have now or in the
future to revoke this Guaranty. Each Guarantor expressly waives any right it may
have now or in the future to require Lender to, and Lender shall not have any
liability to, pursue or enforce first against any Borrower, any of the
properties or assets of any Borrower, the Collateral or any other security,
guaranty or pledge that may now or hereafter be held by Lender for the
$50,000,000 Revolving Line of Credit Loan or for the Guaranty Obligations, or to
apply such security, guaranty, or pledge to the $50,000,000 Revolving Line of
Credit Loan or to the Guaranty Obligations. Each Guarantor shall remain liable
for the Guaranty Obligations, notwithstanding any judgment Lender may obtain
against any Borrower or any Guarantor, any other Guarantor of the Obligations,
or any other Person or entity, or any modification, extension or renewal with
respect thereto. Lender shall not be under any liability to marshal any assets
in favor of each Guarantor or in payment of any or all of the $50,000,000
Revolving Line of Credit Loan or the Guaranty Obligations.
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(b) Each Guarantor has entered into this Guaranty based
solely upon his/her/its independent knowledge of each Borrower's financial
condition, and each Guarantor assumes full responsibility for obtaining any
further information with respect to each Borrower or the conduct of each
Borrower's business. Each Guarantor represents that it is now, and during the
terms of this Guaranty will be, responsible for ascertaining the financial
condition of each Borrower. Each Guarantor hereby waives any duty on the part of
Lender to disclose to any Guarantor, and agrees that it is not relying upon or
expecting Lender to disclose to it, any fact known or hereafter known by Lender
relating to the operation or condition of any Borrower or its business or
relating to the existence, liability, or financial condition of any other
Guarantor of the Obligations. Each Guarantor knowingly accepts the full range of
risk encompassed in a contract of continuing guaranty, which risk includes the
possibility that a Borrower may incur further indebtedness after such Borrower's
financial condition or its ability to pay debts as they mature has deteriorated.
(c) Except as specifically provided in this Guaranty or
applicable law, each Guarantor waives, to the fullest extent permitted by
applicable law (i) notice of the acceptance by Lender of this Guaranty, (ii)
notice of the existence, creation, payment, nonpayment, performance or
nonperformance of all or any of the Guaranty Obligations, (iii) presentment,
demand and protest and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all of the Revolving Credit Agreement
or the other $50,000,000 Revolving Line of Credit Loan Documents, the
$50,000,000 Revolving Line of Credit Note, commercial paper, accounts, contract
rights, documents, instruments, chattel paper and guaranties at any time held by
Lender on which Guarantors may be liable in any way, and hereby ratifies and
confirms whatever Lender may do in this regard, (iv) all rights to notice and a
hearing prior to Lender's taking possession or control of, or to Lender's
replevy, attachment or levy upon, the Collateral or any bond or security which
might be required by any court prior to allowing Lender to exercise any of its
remedies, (v) all rights to receive notices from Lender with respect to, or
otherwise sent to, each Guarantor or any other Guarantor of the Obligations,
(vi) the benefit of all valuation, appraisal, stay, extension, redemption and
exemption laws, (vii) the benefit of any law purporting to reduce any
Guarantor's obligation in proportion to the principal obligation hereby
guarantied, (viii) the benefit of any law purporting to exonerate any
Guarantor's obligation upon performance or an offer of performance of the
principal obligation, (ix) notice of any extension, modification, renewal, or
amendment of any of the terms of the $50,000,000 Revolving Line of Credit Note
or the Revolving Credit Agreement or any other $50,000,000 Revolving Line of
Credit Loan Document relating to the $50,000,000 Revolving Line of Credit Loan
or the Guaranty Obligations, (x) notice of the occurrence of any Default or
Event of Default with respect to the $50,000,000 Revolving Line of Credit Loan,
the Guaranty Obligations, the Collateral or otherwise, and (xi) notice of any
exercise or non-exercise by Lender of any right, power, or remedy with respect
to the $50,000,000 Revolving Line of Credit Loan, the Guaranty Obligations or
the Collateral.
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(d) If Lender, under applicable law, may proceed to realize
its benefits under the Revolving Credit Agreement or any other $50,000,000
Revolving Line of Credit Loan Document providing for a lien upon any Collateral,
whether owned by Borrower or by any other person or entity, either by judicial
foreclosure or by nonjudicial sale or enforcement, Lender, at its sole option,
may determine which of its remedies or rights it may pursue without affecting
any of its rights and remedies under this Guaranty.
(e) Each Guarantor represents that the $50,000,000 Revolving
Line of Credit Loan and Guaranty Obligations are and shall be incurred by the
Borrowers for the permitted uses set forth in the Revolving Credit Agreement.
Each Guarantor undertakes all the risks encompassed in the $50,000,000 Revolving
Line of Credit Note, in the Revolving Credit Agreement and the other $50,000,000
Revolving Line of Credit Loan Documents as they may be now or are hereafter
agreed upon by Lender and any of the Borrowers. Prior to the date this Guaranty
terminates, Lender, in such manner and upon such terms and at such time as it
deems best, and with or without notice to each Guarantor, may release, add,
subordinate or substitute security for the $50,000,000 Revolving Line of Credit
Loan or other Guaranty Obligations in accordance with the Revolving Credit
Agreement.
(f) A separate action or actions may be brought and
prosecuted against any Guarantor whether or not an action is brought against any
Borrower, or whether any Borrower or any other Guarantor is joined in any such
action or actions.
2.5 WAIVERS UNDER STATUTES. Each Guarantor makes the following
waivers:
EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF
REMEDIES BY LENDER, EVEN THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL
FORECLOSURE WITH RESPECT TO SECURITY FOR A GUARANTEED OBLIGATION, HAS DESTROYED
ANY RIGHTS GRANTED TO EACH GUARANTOR PURSUANT TO NEVADA LAW.
2.6 ADDITIONAL WAIVERS.
(a) Until the Termination Date, each Guarantor waives any
and all rights of subrogation, reimbursement, indemnification, and contribution
and any other rights and defenses that are or may become available to any
Guarantor by reason of applicable state law. This means, among other things,
that:
(i) Each Guarantor waives and will be unable to raise
any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in any other
respects more burdensome than that of a principal;
(ii) Each Guarantor waives and will be unable to raise
any defense based upon any statute or rule of law which provides that a creditor
may be required to pursue the principal obligor or the security for the
principal obligation before seeking enforcement against a guarantor or security
pledged by such guarantor;
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(iii) Each Guarantor waives and will be unable to raise
any defense based upon any statute or rule of law which provides that a
guarantor's obligations may be limited or exonerated by reason of the creditor's
alteration of the principal obligation or of another guaranty, or by reason of
the impairment or suspension of the creditor's rights or remedies against the
principal, another guarantor, or any security given for the principal obligation
or given for other guaranties;
(iv) Each Guarantor waives and will be unable to claim
any right to participate in, or the benefit of, any security given for the
principal obligation now or hereafter held by Lender; and
(v) Each Guarantor waives and will be unable to claim
any right of subrogation and any right to enforce any remedy which Lender may
have against any Borrower.
(b) Each Guarantor waives any defense based upon any lack of
authority of the officers, directors, partners, members, managers, or agents
acting or purporting to act on behalf of any Borrower or any principal of any
Borrower or any legal disability or defect in the formation of any Borrower.
(c) Each Guarantor waives any defense based upon the
application by any Borrower of the proceeds of the $50,000,000 Revolving Line of
Credit Loan for purposes other than the purposes represented by Borrowers to
Lender or intended or understood by Lender or any Guarantor.
(d) Each Guarantor waives the benefit of any statute of
limitations affecting the liability of any Guarantor hereunder or the
enforcement hereof, and each Guarantor further agrees that any act or event
which tolls any statute of limitations applicable to the obligations of any
Borrower shall similarly operate to toll the statute of limitations applicable
to any Guarantor's liability hereunder.
(e) Each Guarantor further waives any and all defenses which
are comparable to the waivers set forth in this Guaranty which would otherwise
be available to a Guarantor under Nevada or California law (whether based on a
statute or decisional law) and any other defenses available to guarantors under
Nevada or California law, whether based on a statute or decisional law.
2.7 BENEFITS OF GUARANTY. The provisions of this Guaranty are for
the benefit of Lender and its successors, transferees, endorsees, and assigns,
and nothing herein shall impair the $50,000,000 Revolving Line of Credit Loan or
other Obligations, as between Borrower, Guarantors and Lender. No such transfer,
endorsement, or assignment shall increase or diminish any of the Guaranty
Obligations hereunder. This Guaranty binds each Guarantor, and no Guarantor may
assign, transfer or endorse this Guaranty. In the event all or any part of the
$50,000,000 Revolving Line of Credit Loan or other Obligations are transferred,
endorsed or assigned by Lender to any Person or Persons, any reference to
"Lender" herein shall be deemed to refer equally to such Person or Persons.
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2.8 CONTINUING GUARANTY. (a) This is a continuing guaranty, (b)
this Guaranty shall remain in full force and effect until the Termination Date,
and (c) the Guaranty Obligations hereunder shall extend to each and every
extension or renewal, if any, of the $50,000,000 Revolving Line of Credit Note,
the Revolving Credit Agreement or other $50,000,000 Revolving Line of Credit
Loan Documents regardless of whether the $50,000,000 Revolving Line of Credit
Loan or other Guaranty Obligations, in successive transactions, may be paid,
repaid, advanced or renewed from time to time.
2.9 SUBORDINATION. Except for compensation and employee benefits
due any Guarantor from time to time from any Borrower, and all dividends and
distributions permitted pursuant to the Revolving Credit Agreement and the
Pledge Agreement to be paid or issued to any Guarantor, any and all present and
future debts and obligations of each Borrower to any Guarantor are hereby fully
and absolutely subordinated to the right and time of payment in full of the
Guaranty Obligations to Lender under each of the $50,000,000 Revolving Line of
Credit Note, the Revolving Credit Agreement and the other $50,000,000 Revolving
Line of Credit Loan Documents. Notwithstanding the foregoing, unless an Event of
Default shall have occurred, any Borrower may declare and pay dividends to its
shareholders, including Guarantors, in accordance with its organizational
documents and applicable law. Any Lien, now existing or hereafter arising, on or
in any of the assets of any Borrower in favor of Guarantors, whether created by
contract, assignment, subrogation, reimbursement, indemnity, operation of law,
principles of equity or otherwise is hereby subordinated in priority to the
liens and security interests of Lender, now existing or hereafter arising. The
subordination provisions of this Section 2.9 shall be effective regardless of
whether demand has been made by Lender and shall remain in effect until the
Termination Date.
3. REPRESENTATIONS AND WARRANTIES. To induce Lender to provide the
consideration to each Borrower and each Guarantor described above, each
Guarantor hereby makes the following representations and warranties, and each
and all of which survive the execution and delivery of this Guaranty:
3.1 DUE AUTHORIZATION. The execution, delivery and performance by
such Guarantor of this Guaranty have been duly authorized by all necessary
action of such Guarantor.
3.2 BINDING OBLIGATION. This Guaranty constitutes the legal, valid
and binding obligations of such Guarantor, enforceable against such Guarantor in
accordance with its terms.
3.3 NO CONFLICTS. To the best of such Guarantor's knowledge, the
execution, delivery, and performance by such Guarantor of this Guaranty does not
contravene any law or any contractual restriction binding on or affecting such
Guarantor, and does not result in or require the creation of any Lien upon or
with respect to any of its properties.
3.4 CONSENTS. No authorization or approval, or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by such Guarantor of
this Guaranty.
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3.5 ADDRESS AND LOCATION OF RECORDS. The address of such
Guarantor's principal place of business is accurately set forth on the signature
page to this Guaranty.
3.6 NO SETOFF, DEFENSE, OR COUNTERCLAIM. As of the date of this
Guaranty, the Guaranty Obligations are not subject to any setoff or defense of
any kind against Lender or any Borrower, and such Guarantor specifically waives
his right to assert any such defense or right of setoff. The Guaranty
Obligations shall not be subject to any counterclaims, setoffs, or defenses
against Lender or any Borrower that may arise in the future, except for (a) any
defense of prior performance or payment, or (b) any defense based on any
applicable provision of the Uniform Commercial Code requiring that Collateral be
disposed of in a commercially reasonable manner, which any Borrower, Guarantors,
or other guarantor of the Obligations may have or assert.
4. COVENANTS. Each Guarantor covenants and agrees that until the
Termination Date, each Guarantor shall give prompt written notice to Lender (in
any event not later than 10 days prior to any change described below) of (a) any
change in the location of such Guarantor's principal place of business, (b) any
change in the location of books and records pertaining to its business, (c) any
change in its name, identity, or structure in any manner which might make any
financing statement filed in connection with the $50,000,000 Line of Credit Loan
Documents.
5. FURTHER ASSURANCES. Each Guarantor agrees that, at its expense, upon
the written request of Lender, it will promptly execute and deliver to Lender
any additional instruments or documents reasonably considered necessary by
Lender to cause this Guaranty to be, become, or remain valid and effective in
accordance with its terms. Each Guarantor will provide Lender in writing such
financial and other information with respect to its assets and liabilities as
Lender shall request, in form reasonably satisfactory to Lender.
6. REINSTATEMENT. This Guaranty shall remain in full force and effect
and continue to be effective, as the case may be, if at any time payment or
performance of the $50,000,000 Revolving Line of Credit Loan or the Guaranty
Obligations, or any part thereof, pursuant to applicable law, is avoided,
rescinded, or reduced in amount, or must otherwise be restored or returned by
Lender, or any other obligee of the $50,000,000 Revolving Line of Credit Loan or
the Guaranty 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 avoided, rescinded,
reduced, restored or returned, the $50,000,000 Revolving Line of Credit Loan or
the Guaranty Obligations, as the case may be, shall be reinstated and deemed
reduced only by such amount paid and not so avoided, rescinded, reduced,
restored or returned.
7. DEFAULTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default under the $50,000,000 Revolving Line of
Credit Note or the Revolving Credit Agreement or other $50,000,000 Revolving
Line of Credit Loan Documents, Lender may declare any or all of the Guaranty
Obligations, immediately and without demand, notice or legal process of any
kind, to be, and such Guaranty Obligations shall immediately become, due and
payable, and then, or at any subsequent time, Lender may exercise any or all of
its rights and remedies under this Guaranty, the $50,000,000 Revolving Line of
Credit Note, the Revolving Credit Agreement, and any other $50,000,000 Revolving
Line of Credit Loan Documents, including the exercise of any rights and remedies
of Lender as a secured party against the Collateral, and under applicable law,
and in addition may make demand upon Guarantor for the payment of the Guaranty
Obligations. All Guaranty Obligations shall bear interest at the Default Rate
from and after the date an Event of Default occurs under the $50,000,000
Revolving Line of Credit Note.
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8. APPLICATION OF PAYMENTS. Any payment made by any Guarantor under
this Guaranty shall be applied by Lender as set forth in the Revolving Credit
Agreement.
9. INDEMNIFICATION. Each Guarantor agrees to and shall indemnify and
hold Lender, and its officers, directors, employees, agents, attorneys and
representatives harmless from and against any liabilities, claims and damages,
including, without limitation, reasonable costs, attorneys' fees, disbursements
and other expenses incurred or arising by reason of the taking or the failure to
take action by Lender, in good faith, in respect of any transaction effected
under this Guaranty, including, without limitation, any action to enforce
payment of the Guaranty Obligations. The liabilities of each Guarantor under
this Section 9 shall survive the termination of this Guaranty.
10. NOTICES. All notices and other communications required or desired to
be served, given or delivered hereunder shall be in writing and shall be served,
given or delivered as provided in the Revolving Credit Agreement.
11. ENTIRE AGREEMENT. This Guaranty, together with the Revolving Credit
Agreement, the $50,000,000 Revolving Line of Credit Note, and the other
$50,000,000 Revolving Line of Credit Loan Documents constitutes the entire
agreement, and supersedes all prior and contemporaneous oral and written
communications and agreements, between the parties with respect to the subject
matter hereof.
12. LIMITATION OF LIABILITY. Neither Lender nor any of its officers,
directors, employees, agents, or counsel, shall be liable for any action
lawfully taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own respective gross negligence or willful
misconduct.
13. ADVICE OF COUNSEL. Each Guarantor represents and warrants that it
has either obtained the advice of counsel or has had the opportunity to obtain
such advice in connection with the terms and provisions of this Guaranty.
14. AMENDMENTS. No amendment or waiver of any provisions of this
Guaranty, or consent to any departure by any Guarantor therefrom, shall be
effective in any event unless the same shall be in writing and signed by Lender
and all Guarantors and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
15. CONSENT TO $50,000,000 REVOLVING LINE OF CREDIT LOAN DOCUMENTS. Each
Guarantor hereby acknowledges he has received copies of, and consents to, the
Revolving Credit Agreement, the $50,000,000 Revolving Line of Credit Note, and
all other $50,000,000 Revolving Line of Credit Loan Documents.
16. NO WAIVER. No failure on the part of Lender to exercise, and no
delay in exercising, any right under the Revolving Credit Agreement of any other
$50,000,000 Revolving Line of Credit Loan Document shall operate as a waiver
thereof; and no single or partial exercise of any right under the Revolving
Credit Agreement or any other $50,000,000 Revolving Line of Credit Loan Document
shall preclude any other or further exercise thereof or the exercise of any
other right. The remedies provided in the Revolving Credit Agreement and other
$50,000,000 Revolving Line of Credit Loan Documents are cumulative and not
exclusive of any remedies provided by law.
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17. BINDING EFFECT. This Guaranty shall be binding upon and inure to
respective benefits of Lender and all Guarantors and their respective successors
and assigns, except that no Guarantor shall have the right to assign its rights
hereunder or any interest herein without Lender's prior written consent.
18. SEVERABILITY. In the event that any one or more of the provisions
contained in the Revolving Credit Agreement of any other $50,000,000 Revolving
Line of Credit Loan Documents shall be determined to be invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality, and
enforceability of any such provision or provisions in every other respect, and
the remaining provisions of the Revolving Credit Agreement and other $50,000,000
Revolving Line of Credit Loan Documents shall not be in any way impaired.
19. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, OF THIS GUARANTY AND OF THE REVOLVING
CREDIT AGREEMENT, THE $50,000,000 REVOLVING LINE OF CREDIT NOTE AND THE OTHER
$50,000,000 REVOLVING LINE OF CREDIT LOAN DOCUMENTS AND THE GUARANTY 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. EACH GUARANTOR HEREBY
CONSENTS AND AGREES 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 ANY GUARANTOR AND LENDER
PERTAINING TO THIS GUARANTY OR ANY OF THE OTHER $50,000,000 REVOLVING LINE OF
CREDIT LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
GUARANTY OR ANY OF THE OTHER $50,000,000 REVOLVING LINE OF CREDIT LOAN
DOCUMENTS; PROVIDED, THAT EACH GUARANTOR ACKNOWLEDGES 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 GUARANTY 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 GUARANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
GUARANTOR HEREBY WAIVES ANY OBJECTION THAT ANY GUARANTOR 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.
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20. WAIVER OF TRIAL BY JURY. Each Guarantor each hereby irrevocably
waives all rights to trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Guaranty, any other $50,000,000 Revolving
Line of Credit Loan Document, or any of the transactions contemplated thereby.
21. COUNTERPARTS. This Guaranty may be executed in any number of
identical counterparts, which shall constitute an original and collectively and
separately constitute a single instrument or agreement.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
Agreement ($50 Revolving Credit Agreement) to and for the benefit of Lender as
of the Effective Date first above written.
GUARANTOR:
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company,
By: /s/ Kali P. Chaudhuri /s/ Jacob Sweidan
---------------------------------- Jacob Sweidan
Name: Kali P. Chaudhuri Manager PCHI
-----------------------------
Title: Manager
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Address: 6800 Indiana Ave., Suite 130
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Riverside, CA 92506
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Attn:
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Ph: 951-782-8812
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Fax: 951-782-8850
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