EXHIBIT 99.1
AMENDMENT NO. 1 TO AGREEMENT TO FORBEAR
This AMENDMENT NO 1 TO AGREEMENT TO FORBEAR ("Amendment No. 1") is made to
be effective as of September 1, 2005 (the "Effective Date") by and among
INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation ("IHHI"), WMC-SA,
INC., a California corporation ("WMC-SA"), WMC-A, INC., a California corporation
("WMC-A"), CHAPMAN MEDICAL CENTER, INC., a California corporation ("Chapman"),
COASTAL COMMUNITIES HOSPITAL, INC., a California corporation ("Coastal"),
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a California limited liability company
("PCHI"), ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited
liability company ("OC-PIN"), GANESHA REALTY, LLC, a California limited
liability company ("Ganesha"), WEST COAST HOLDINGS, LLC, a California limited
liability company ("West Coast"), and MEDICAL PROVIDER FINANCIAL CORPORATION II,
a Nevada corporation ("Lender"). IHHI, WMC-SA, WMC-A, Coastal and Chapman are
hereinafter together sometimes referred to as the "Borrowers"; PCHI, Ganesha,
and West Coast are hereinafter together sometimes referred to as the "Credit
Parties"; and PCHI and OC-PIN are hereinafter together sometimes referred to as
the "Guarantors."
RECITALS
A. Lender, Borrowers, Credit Parties and Guarantors are parties to that
certain Agreement to Forbear dated to be effective as of June 1, 2005
("Forbearance Agreement"). B. Pursuant to this Amendment No. 1, Lender,
Borrowers, Credit Parties and Guarantors intend to amend the Forbearance
Agreement, on the terms and conditions set forth below. Capitalized terms not
defined herein shall have the same meaning as set forth in the Forbearance
Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the covenants and conditions set forth
in this Amendment No. 1, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, Lender, Borrowers,
Credit Parties and Guarantors agree as follows:
1. INCORPORATION OF RECITALS. The foregoing Recitals are incorporated by
reference as if fully set forth herein.
2. AGREEMENTS.
2.1 Extension of Forbearance Period. The Forbearance Period is hereby
extended through and including October 7, 2005 (the "Extension Period"). All
references to the Forbearance Period in the Forbearance Agreement shall
henceforth mean and include the Extension Period.
2.2 Interest Rate. During the Extension Period, Borrowers will pay
interest to Lender on all Loans made under the Credit Agreement, on each
applicable Interest Payment Date, at the rate of fourteen percent (14%) per
annum. Provided, however, Lender reserves the right, in its sole and absolute
discretion, to commence charging interest at the Default Rate on all Loans made
under the Credit Agreement (a) during the Extension Period, if a new Event of
Default occurs which is not referenced in the Forbearance Agreement, or (b)
following expiration of the Extension Period.
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2.3 Releases and Waivers. In consideration for Lender's agreement to
extend the Forbearance Period, and effective as of the Effective Date of this
Amendment No. 1:
(a) Subject to the last sentence of this Section 2.3(a), each Borrower,
each Credit Party and each Guarantor, together with their respective officers,
directors, shareholders, members, managers, employees, agents, representatives
and assigns (collectively the "Releasing Parties") hereby fully, forever and
irrevocably release, waive and relinquish their right to file or record in the
Official Records a lis pendens against any of the Hospital Facilities, or file
in any court in any venue any legal action or proceeding (including but not
limited to a complaint to enjoin foreclosure, or an order to show cause, or a
complaint to set aside foreclosure sale, or an action to quiet title, or an
action to cancel one or more of the Loan Documents) against Lender or any
trustee under any of the Deeds of Trust, the purpose of which is to directly or
indirectly procure from any court or tribunal issuance of a temporary
restraining order, or a preliminary Relief") which seeks to prohibit or prevent
Lender or any trustee under any Deed of Trust (i) from recording a Notice of
Sale with respect to any of the Deeds of Trust, or (ii) from conducting a sale
of any of the Hospital Facilities at a public auction as permitted by the power
of sale provisions in the Deeds of Trust, or (iii) from conveying title to any
one or more of the Hospital Facilities via trustee's deed to a purchaser at
foreclosure, or (iv) from conducting a sale of the personal property Collateral
pursuant to the California Uniform Commercial Code, or (v) from conducting a
"mixed-collateral" sale of any one or more of the Hospital Facilities and any or
all of the personal property Collateral, or (vi) from attaching or garnishing or
seeking any other provisional remedy against any real or personal property of
any Borrower, Credit Party or Guarantor, or (vii) from taking any other action
or pursuing any other right or remedy that Lender is permitted to pursue under
the Loan Documents, or in law or equity. Notwithstanding the foregoing, the
releases and waivers set forth in this Section 2.3(a) shall apply only to
Injunctive Relief based on alleged acts or omissions of Lender which occurred
prior to the Effective Date of this Amendment No. 1.
(b) Each of the Releasing Parties hereby fully, forever and irrevocably
release, waive and relinquish any claim or cause of action (collectively,
"Lender Liability Claims") that the Releasing Parties now have or in the future
may have against Lender to the effect that, prior to the Effective Date of this
Amendment No. 1: (i) Lender committed a breach or default under any of the Loan
Documents, or (ii) Lender conspired with the executive officers of IHHI to
deprive OC-PIN of its stock ownership in IHHI or otherwise inflicted any
actionable damage on OC-PIN, or (iii) Lender committed an act not permitted by
the Loan Documents or applicable law, or (iv) Lender omitted to take an act
required by the Loan Documents or under applicable law, or (v) any of the Loan
Documents (including, but not limited to, the PCHI Guaranty and the OC-PIN
Guaranty) or this Amendment No. 1 is/are invalid or unenforceable in whole or in
part for any reason, or (vi) Lender suggested, implied, induced, cajoled or
required that IHHI include any terms or conditions in any agreements between
IHHI and OC-PIN, or (vii) Lender suggested, implied, induced, cajoled or
required that IHHI not include any terms or conditions in any agreements between
IHHI and OC-PIN, or (viii) Lender improperly interfered with or improperly
exercised any control over the Borrowers, or (ix) that Lender breached in any
way any alleged duty of good faith or fair dealing, or any alleged duty of
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commercial reasonableness, or any quasi-duty, or any implied duty, or (x) that
Lender committed any unlawful, unfair or fraudulent business act or practice, or
(xi) that Lender engaged in any unfair, deceptive, untrue or misleading
advertising, or (xii) that Lender committed any act prohibited by California
Business and Professions Code Section 17500, or (xiii) that Lender engaged in
predatory lending practices, or (xiv) that Lender engaged in or committed any
act or omission which constitutes fraud, duress, negligence, conversion,
defamation or infliction of emotional distress, or (xv) that Lender interfered
with IHHI's and/or OC-PIN's prospective business advantage, or (xvi) that Lender
interfered with IHHI's or OC-PIN's contractual relations.
(c) In order to induce Lender to enter into this Amendment No. 1 and to
agree to extend the Forbearance Period, effective upon the Effective Date of
this Amendment No. 1, each of the Releasing Parties fully, forever and
irrevocably releases, waives, relinquishes and discharges Lender and its
successors and assigns, predecessors, related or affiliated companies or
entities, and their respective officers, directors, shareholders, agents,
employees, attorneys and representatives (collectively, the "Lender Released
Parties") from any and all claims, rights, demands, debts, causes of action,
charges, expenses, damages, attorneys' fees and costs, obligations or
liabilities of any and every kind, nature and character whatsoever, whether or
not now known, suspected or unsuspected, which any of the Releasing Parties may
have had, may now have or may in the future claim to have against the Lender
Released Parties arising out of, or related in any manner to any alleged act or
omission to act which occurred prior to the Effective Date of this Amendment No.
1.
The Releasing Parties hereto have been fully advised by their respective
attorneys of the contents and effect of Section 1542 of the Civil Code of
California and of any comparable statutes in the State of Nevada upon the rights
of each of them. By way of example, Section 1542 of the Civil Code of California
provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.
EACH OF THE RELEASING PARTIES ACKNOWLEDGES THAT THEY MAY HAVE SUSTAINED
DAMAGES, LOSSES, FEES, COSTS OR EXPENSES WHICH ARE PRESENTLY UNKNOWN AND
UNSUSPECTED, AND, NOTWITHSTANDING THE PROVISIONS OF SECTION 1542 AND OF ANY
COMPARABLE NEVADA STATUTE, AND ARE EXPRESSLY WAIVING THE SAME. EACH OF THE
RELEASING PARTIES AGREES THAT IT INTENDS TO RELEASE EVEN UNKNOWN OR UNSUSPECTED
CLAIMS. EACH OF THE RELEASING PARTIES REPRESENTS THAT IT HAS CONSULTED WITH ITS
LEGAL COUNSEL REGARDING ITS CLAIMS AND POTENTIAL CLAIMS AGAINST LENDER, AND HAS
CAREFULLY READ AND UNDERSTAND ALL THE PROVISIONS OF THIS FORBEARANCE AGREEMENT,
AND HAS VOLUNTARILY ENTERED INTO THIS FORBEARANCE AGREEMENT.
2.4 Covenants Not To Sue. Each of the Releasing Parties hereby promises,
covenants and agrees not to sue Lender, and not to bring any legal action or
proceeding of any kind against Lender, in any court or administrative
proceeding, in any venue, which legal action or proceeding directly or
indirectly seeks to (a) obtain or procure issuance of any temporary restraining
order, or a preliminary injunction, or a permanent injunction, or any other
equitable or provisional relief against Lender based on acts or omissions which
occurred prior to the Effective Date of this Amendment No. 1, or (b) impose any
Lender Liability Claims on or against Lender based on acts or omissions which
occurred prior to the Effective Date of this Amendment No. 1, or (c) obtain or
impose on Lender any Injunctive Relief based on acts or omissions which occurred
prior to the Effective Date of this Amendment No. 1, or (d) which legal action
or proceeding violates any covenant, condition, representation or warranty made
by the Releasing Parties in this Amendment No. 1.
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2.5 Indemnity. Each Borrower, each Credit Party and each Guarantor hereby
jointly and severally agrees to and shall indemnify, defend, protect and hold
Lender and each of its Affiliates and their respective officers, directors,
members, employees, attorneys, agents, and representatives (each, an
"Indemnified Person") free and harmless from and against any and all legal
actions, suits, proceedings or claims brought or asserted against any
Indemnified Person for damages, losses, liabilities and expenses (including
reasonable attorneys' fees, witness and expert witness fees, court fees and
charges, and disbursements and other costs of investigation or defense,
including those incurred upon any appeal or in any Bankruptcy Proceeding defined
below) (collectively the "Indemnified Liabilities") directly or indirectly
arising out of or relating to (a) the execution and delivery of this Amendment
No. 1 by an Indemnified Person, or (b) the execution and delivery of any Loan
Document by an Indemnified Person, or (c) the making of the Loan by an
Indemnified Person, or (d) a Lender Liability Claim brought or asserted against
an Indemnified Person; provided, that neither Borrowers nor any Credit Party nor
any Guarantor shall be liable for any Indemnified Liabilities to the extent that
such Indemnified Liability directly results from the accused Indemnified
Person's own gross negligence or willful misconduct; and the liability of the
Credit Parties for the Indemnified Liabilities shall not exceed the liability
limitations set forth in Section 1.10 in the Credit Agreement. NO INDEMNIFIED
PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO THIS AMENDMENT NO. 1
OR TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF
SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF HAVING EXECUTED THIS AMENDMENT NO. 1 OR AS A RESULT OF
ANY CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT
OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
3. FORBEARANCE AGREEMENT IN FULL FORCE AND EFFECT. Except as otherwise set
forth in this Amendment No. 1, each and every term and provision of the
Forbearance Agreement shall remain in full force and effect. In the event of any
inconsistency between any term or provision of this Amendment No. 1 and the
Forbearance Agreement, the terms and provisions set forth in this Amendment No.
1 shall govern and prevail.
4. AUTHORITY. Each of the persons signing below represent, warrant and
covenant that they each have the requisite authority to bind the entities on
whose behalf they are signing.
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IN WITNESS WHEREOF, this Amendment No. 1 will be deemed effective as of
the Effective Date first above written.
BORROWERS:
INTEGRATED HEALTHCARE HOLDINGS, INC.
a Nevada corporation
By: /s/ Larry B. Anderson
-----------------------------------------
Larry B. Anderson, President
WMC-SA, INC., a California corporation
By: /s/ Larry B. Anderson
-----------------------------------------
Larry B. Anderson, President
WMC-A, INC. a California corporation
By: /s/ Larry B. Anderson
-----------------------------------------
Larry B. Anderson, President
COASTAL COMMUNITIES HOSPITAL, INC. a California
corporation
By: /s/ Larry B. Anderson
-----------------------------------------
Larry B. Anderson, President
CHAPMAN MEDICAL CENTER, INC., a California
corporation
By: /s/ Larry B. Anderson
-----------------------------------------
Larry B. Anderson, President
CREDIT PARTIES:
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company,
By: /s/ Anil V. Shah
--------------------------------------------
Anil V. Shah, M.D., Manager
WEST COAST HOLDINGS, LLC, a California limited
liability company,
By: /s/ Anil V. Shah
--------------------------------------------
Anil V. Shah, M.D., Manager
GANESHA REALTY, LLC, a California limited
liability company
By: /s/ Kali P. Chaudhuri
--------------------------------------------
Kali P. Chaudhuri, M.D., Manager
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GUARANTORS:
PACIFIC COAST HOLDINGS INVESTMENT,
LLC, a California limited liability
company,
By: /s/ Anil V. Shah
-------------------------------------------
Anil V. Shah, M.D., Manager
By: /s/ Kali P. Chaudhuri
-------------------------------------------
Kali P. Chaudhuri, M.D., Manager
ORANGE COUNTY PHYSICIANS INVESTMENT
NETWORK, LLC, a Nevada limited
liability company,
By: /s/ Anil V. Shah
-------------------------------------------
Anil V. Shah, M.D., Manager
LENDER:
MEDICAL PROVIDER FINANCIAL
CORPORATION II, a Nevada corporation,
By: /s/ Joseph Lampariello
-------------------------------------------
Joseph J. Lampariello, President
and COO
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