<PAGE>
Exhibit 99.1
CREDIT AGREEMENT
($80,000,000 FACILITY)
Effective Date: October 9, 2007
among
INTEGRATED HEALTHCARE HOLDINGS, INC.,
WMC-A, INC.,
WMC-SA, INC.,
CHAPMAN MEDICAL CENTER, INC., and
COASTAL COMMUNITIES
HOSPITAL, INC.,
as Borrowers,
THE CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE GUARANTORS SIGNATORY HERETO,
as Guarantors,
and
MEDICAL PROVIDER FINANCIAL CORPORATION II,
as Lender.
<PAGE>
INDEX OF ANNEXES, EXHIBITS AND DISCLOSURE SCHEDULES
ANNEXES
-------
Annex A
Definitions
Annex B Cash
Management System
Annex C Collateral
Reports
Annex D Notice
Addresses
EXHIBITS
--------
Exhibit "A" Form of $45,000,000
Real Estate Term Note
Exhibit "B" Form of $35,000,000
Non-Revolving Line of Credit Note
Exhibit "C" [Intentionally
Omitted]
Exhibit "D" Form of Notice of
Request for Advance
Exhibit "E" Form of $80,000,000
Deed of Trust
Exhibit "F" Form of Absolute
Assignment
Exhibit "G" Form of Security
Agreement
Exhibit "H" Form of Collateral
Assignment of Contracts
Exhibit "I" Form of Deposit
Account Security Agreement
Exhibit "J" Form of Control
Agreement
Exhibit "K" Form of Post-Closing
Agreement
Exhibit "L" Form of Intellectual
Property Security Agreement
Exhibit "M" Form of Environmental
Indemnity Agreement
Exhibit "N" Form of Guaranty
Agreement
Exhibit "O" Form of Intercreditor
Agreement
Exhibit "P" Form of Pledge
Agreement
Exhibit `Q" Form of Stock
Power
Exhibit "R" Form of Membership
Power
Exhibit "S" Form of Landlord's
Consent and Estoppel Certificate (Chapman
Leases)
Exhibit "T" Form of Landlord's
Consent and Estoppel Certificate (Triple
Net Lease)
Exhibit "U" Form of Warrant
<PAGE>
DISCLOSURE SCHEDULES
--------------------
Disclosure Schedule 1.3 Sources and Uses of
Funds
Disclosure Schedule 2.1(b) Required Consents and Approvals
Disclosure Schedule 2.1(c) Capital Structure of Each Borrower
Disclosure Schedule 3.1 Executive Office,
Collateral Locations, FEIN
Disclosure Schedule 3.5 Schedule of Real
Estate Owned and Leased
Disclosure Schedule 3.6 Labor Matters
Disclosure Schedule 3.7 Ventures, Subsidiaries
and Affiliates; Outstanding
Stock
Disclosure Schedule 3.10 Taxes
Disclosure Schedule 3.11 ERISA Plans
Disclosure Schedule 3.12 Litigation
Disclosure Schedule 3.13 Brokers
Disclosure Schedule 3.14 Intellectual Property
Disclosure Schedule 3.16 Environmental Matters
Disclosure Schedule 3.17 Insurance (With Copies of
All Certificates of
Insurance)
Disclosure Schedule 3.18 Deposit and Disbursement
Accounts
Disclosure Schedule 3.20 Bonding; Licenses;
Permits
Disclosure Schedule 6.3 Indebtedness
Disclosure Schedule 6.4 Transactions with
Affiliates and Employees
Disclosure Schedule 6.7 Existing Liens.
<PAGE>
CREDIT AGREEMENT
----------------
($80,000,000 FACILITY)
This
CREDIT AGREEMENT ($80,000,000 Facility) ("AGREEMENT"), dated to
be
effective as of October 9, 2007 ("EFFECTIVE DATE"), is made by and
among
INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation
("IHHI"), WMC-A,
INC., a California corporation ("WMC-A"), WMC-SA, INC., a
California corporation
("WMC-SA"), CHAPMAN MEDICAL CENTER, INC., a California corporation
("CHAPMAN"),
and COASTAL COMMUNITIES HOSPITAL, INC., a California corporation
("COASTAL")
(IHHI, WMC-A, WMC-SA, Chapman and Coastal are hereinafter together
referred to
as "BORROWERS" and individually as a "BORROWER"); PACIFIC COAST
HOLDINGS
INVESTMENT, LLC, a California limited liability company ("PCHI");
WEST COAST
HOLDINGS, LLC, a California limited liability company ("WEST
COAST"); GANESHA
REALTY, LLC, a California limited liability company ("GANESHA");
ORANGE COUNTY
PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability
company
("OC-PIN") (PCHI, West Coast, Ganesha and OC-PIN are hereinafter
together
referred to as the "CREDIT PARTIES" and individually as a "CREDIT
PARTY," and
West Coast and OC-PIN are hereinafter together referred to as the
"GUARANTORS"
and individually as a "GUARANTOR"); and MEDICAL PROVIDER FINANCIAL
CORPORATION
II, a Nevada corporation ("LENDER"). Initially capitalized terms
used in this
Agreement but not otherwise defined herein shall have the meanings
ascribed to
them in Annex A.
RECITALS
--------
A.
PCHI owns the fee simple title in the Western Medical Center -
Anaheim,
in the Western Medical Center - Santa Ana, and in the Coastal
Communities
Hospital (including the medical office buildings located thereon).
PCHI leases
the Western Medical Center - Anaheim, the Western Medical Center -
Santa Ana,
and the Coastal Communities Hospital (including the medical office
buildings
located thereon) to IHHI pursuant to the Triple Net Lease. IHHI
subleased the
Western Medical Center - Anaheim to SMC-A; IHHI subleased the
Western Medical
Center - Santa Ana to WMC-SA; and IHHI subleased the Coastal
Communities
Hospital (including the medical office buildings located thereon)
to Coastal.
IHHI owns all (100%) of the Stock of WMC-A, WMC-SA and Coastal.
B.
IHHI leases the Hospital Facility and the related medical
office
buildings located at the Chapman Medical Center from the Hospital
Landlord and
from the MOB Landlord pursuant to the Chapman Leases. IHHI
subleased the
Hospital Facility and the related medical office buildings to
Chapman. IHHI owns
all (100%) of the Stock of Chapman.
C.
PCHI, OC-PIN and West Coast are Shareholders of IHHI. West Coast
and
Ganesha own all (100%) of the Membership Interests in PCHI.
D.
IHHI, WMC-A, WMC-SA, Coastal and Chapman are in the business of
delivering acute care services to the public through the acute care
Hospital
Facilities; incident thereto, IHHI, WMC-A, WMC-SA, Coastal and
Chapman are in
the business of owning, operating and/or leasing medical office
buildings and
other healthcare businesses related thereto.
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E.
Lender, the Credit Parties and Borrowers are parties to the First
Credit
Agreement, pursuant to which Lender made available to Borrowers the
Previous
$50,000,000 Acquisition Loan and the Previous $30,000,000 Line of
Credit Loan.
In addition, Lender, the Credit Parties and Borrowers are parties
to the certain
Second Credit Agreement, pursuant to which Medical Provider
Financial
Corporation III, a Nevada corporation, ("MPFC III") made available
to Borrowers
the Previous $10,700,000 Term Loan.
F.
The loans referenced in the First and Second Credit Agreements have
each
matured and are now due and owing in full.
G.
Borrowers have requested that Lender make available to them a
credit
facility in the aggregate amount of $80,000,000, and that MPFC III
make
available to Borrowers a separate credit facility in the aggregate
amount of
$10,700,000 for the purposes of (i) paying in full all amounts due
and owing
under the First Credit Agreement, (ii) paying in full all amounts
due and owing
under the Second Credit Agreement, (iii) providing working capital
financing for
Borrowers, and (iv) providing funds for other purposes permitted
hereunder.
H.
Lender is willing to make an $80,000,000 credit facility available
to
Borrowers on the terms and conditions set forth herein below. MPFC
III is
willing to make a $10,700,000 credit facility available to
Borrowers on the
terms and conditions set forth in a separate credit agreement
between MPFC III,
Borrowers and Credit Parties of even date herewith (the "NEW
$10,700,000 CREDIT
AGREEMENT").
I.
All Annexes, Disclosure Schedules, Exhibits and other attachments,
or
expressly identified to this Agreement, are incorporated herein by
reference,
and taken together with this Agreement, shall constitute but a
single agreement.
These Recitals shall be construed as part of the Agreement.
AGREEMENT
---------
NOW,
THEREFORE, in consideration of the covenants and conditions
hereinafter contained, and for other good and valuable
consideration the receipt
and sufficiency of which is hereby acknowledged, Borrowers, Lender,
Credit
Parties and Guarantors agree as follows:
1. AMOUNT AND
TERMS OF CREDIT FACILITIES
-------------------------------------
1.1
$45,000,000 Real
Estate Term Loan.
(a) Subject to the terms and conditions hereof, on the Closing
Date,
Lender agrees to and shall make the $45,000,000 Real Estate Term
Loan available
to Borrowers for the sole purpose of repaying all amounts due
Lender under the
Previous $50,000,000 Acquisition Note referenced in the First
Credit Agreement.
The $45,000,000 Real Estate Term Loan shall be charged as a single
Advance to
Borrowers on the Closing Date but shall not be disbursed to
Borrowers on the
Closing Date; instead said Advance shall be withheld by Lender and
paid directly
to Lender to repay all amounts due and owing on the Previous
$50,000,000
Acquisition Note. As of August 31, 2007, (i) the amount of unpaid
principal due
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under the Previous $50,000,000 Acquisition Note is $45,000,000;
(ii) the amount
of accrued but unpaid interest due under the Previous $50,000,000
Acquisition
Note was $542,500; and (iii) after August 31, 2007, interest has
and will accrue
at the daily rate of $17,500 under the Previous $50,000,000
Acquisition Note. If
the single Advance from the $45,000,000 Real Estate Term Loan is
not sufficient
to pay in full and retire the entire amount due under the Previous
$50,000,000
Acquisition Note, the shortfall shall be paid from the first
Advance from the
$35,000,000 Non-Revolving Line of Credit.
(b) On the Closing Date, Borrowers agree to and shall execute
and
deliver to Lender the $45,000,000 Real Estate Term Note in the form
of Exhibit
"A" attached hereto. The $45,000,000 Real Estate Term Note
represents the
obligation of Borrowers, jointly and severally, individually and
collectively,
to repay the $45,000,000 Real Estate Term Loan to Lender. During
the term of the
$45,000,000 Real Estate Term Note, Borrowers shall not be required
to make any
payments of principal, however, Borrowers shall pay interest to
Lender on the
entire principal balance outstanding from time to time, in arrears,
on each
applicable Interest Payment Date, at the Interest Rate applicable
to the
$45,000,000 Real Estate Term Loan, and the entire balance of unpaid
principal,
plus all accrued but unpaid interest thereon and all other
non-contingent
Obligations due and owing thereunder, shall be due and payable in
full in a
single payment in immediately available funds, on the Maturity
Date.
1.2
$35,000,000
Non-Revolving Line of Credit Loan.
(a) Subject to the terms and conditions hereof, Lender agrees to
make
available to Borrowers from time to time until the Commitment
Termination Date,
Advances under the $35,000,000 Non-Revolving Line of Credit Loan.
Advances under
the $35,000,000 Non-Revolving Line of Credit Loan may only be used
for the
following purposes: (i) to repay in full all amounts due and owing
under the
Previous $30,000,000 Line of Credit Note; (ii) to pay any shortfall
necessary to
pay in full all amounts due and owing under the Previous
$50,000,000 Acquisition
Note; (iii) to pay any shortfall necessary to pay in full all
amounts due and
owing under the Previous $10,700,000 Term Note; (iv) to pay all
Origination Fees
(as defined herein or in the New $10,700,000 Credit Agreement, as
applicable)
due and owing pursuant to this Agreement and the New $10,700,000
Credit
Agreement; (v) to pay all Unused Commitment Fees due and owing
under this
Agreement; (vi) to pay all Lender's Costs (as defined herein or in
the New
$10,700,000 Credit Agreement, as applicable) due and owing under
this Agreement
and the New $10,700,000 Credit Agreement; and (vii) for working
capital as
approved by Lender in its sole and absolute discretion. As of
August 31, 2007,
(i) the amount of unpaid principal due under the Previous
$30,000,000 Line of
Credit Note was $27,341,458.61; (ii) the amount of accrued but
unpaid interest
due under the Previous $30,000,000 Line of Credit Note was
$329,616.47; and
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(iii) after August 31, 2007, interest has and will accrue at the
daily rate of
$10,632.79 under the Previous $30,000,000 Line of Credit Note.
Except for
Advances approved by Lender for working capital (which shall be
funded as
directed by Borrowers), all Advances from the $35,000,000
Non-Revolving Line of
Credit Loan shall be charged to Borrowers on the date said Advances
are made but
shall not be disbursed to Borrowers; instead said Advances shall be
withheld by
Lender and paid directly to Lender and/or MPFC III, as applicable,
to repay all
amounts due and owing under the Previous $30,000,000 Line of Credit
Note; or to
pay any shortfall amounts required to pay in full the Previous
$50,000,000
Acquisition Note; or to pay any shortfall amounts required to pay
in full to
MPFC III the Previous $10,700,000 Term Note; or disbursed directly
to Lender to
pay the Origination Fee (as defined herein or in the New
$10,700,000 Credit
Agreement, as applicable) or to pay Unused Commitment Fees due and
owing from
time to time under this Agreement; or disbursed directly to Lender
and/or MPFC
III to pay Lender's Costs (as defined herein or in the New
$10,700,000 Credit
Agreement, as applicable) due and owing from time to time under
this Agreement
and/or the New $10,700,000 Credit Agreement.
(b) Advances from the $35,000,000 Non-Revolving Line of Credit
Loan
may not be used to make or pay principal payments due under any
other Loan made
available by Lender to Borrowers under this Agreement or any Loan
(as defined in
the New $10,700,000 Credit Agreement) made available by MPFC III to
Borrowers
under the New $10,700,000 Credit Agreement. Borrowers may borrow,
but may not
repay and reborrow, from the $35,000,000 Non-Revolving Line of
Credit Loan. Each
Advance under the $35,000,000 Non-Revolving Line of Credit Loan
must be made on
written notice, in the form of a Notice of Request for Advance in
the form of
Exhibit "D" attached hereto, signed and delivered by Borrower's
Representative
to Lender's Representative. Each such Notice of Request for Advance
must be
delivered to Lender no later than (1) 2:00 p.m. (Nevada local time)
on the date
which is at least three (3) Business Days prior to the date the
proposed Advance
is to be made. Only one request for an Advance from the
$35,000,000
Non-Revolving Line of Credit Loan may be made during any calendar
week. Each
Notice of Request for Advance must separately identify the amount
of the
requested Advance, the specific Loan from which said Advance is to
be made, and
shall include the information required in the Notice for Request
for Advance and
such other information as may be required by Lender. In no event
shall Borrowers
be permitted to request further Advances from the $35,000,000
Non-Revolving Line
of Credit Loan at any time during the thirty (30) day period prior
to the
Maturity Date.
(c) On the Closing Date hereof, Borrowers agree to and shall
execute
and deliver to Lender the $35,000,000 Non-Revolving Line of Credit
Note in the
form of Exhibit "B" attached hereto. The $35,000,000 Non-Revolving
Line of
Credit Note represents the obligation of Borrowers, jointly and
severally,
individually and collectively, to repay the $35,000,000
Non-Revolving Line of
Credit Loan to Lender. During the term of the $35,000,000
Non-Revolving Line of
Credit Note, Borrowers shall not be required to make any payments
of principal,
however, Borrowers shall pay interest to Lender on the entire
principal balance
outstanding from time to time, in arrears, on each applicable
Interest Payment
Date, at the Interest Rate applicable to the $35,000,000
Non-Revolving Line of
Credit Loan, and the entire balance of unpaid principal, plus all
accrued but
unpaid interest thereon and all other non-contingent Obligations
due and owing
thereunder, shall be due and payable in full in a single payment in
immediately
available funds, on the Maturity Date.
1.3
[Intentionally Omitted]
1.4
Prepayments.
(a) Voluntary Prepayments.
(i) $45,000,000 Real Estate Term Loan; Subordination.
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(A) Borrowers may prepay all, but not less than all, of the
$45,000,000 Real Estate Term Loan at any time without fee, charge
or penalty.
(B) If the $45,000,000 Real Estate Term Loan is paid in full
prior to the Maturity Date, then Lender agrees to and shall
subordinate the
Liens of the Deeds of Trust securing repayment of the remaining
Loan (i.e., the
$35,000,000 Non-Revolving Line of Credit Loan) to the Lien of a
deed of trust or
mortgage securing repayment of a new loan, but only if (1) the
proceeds of the
new loan to which subordination is requested were used to repay the
$45,000,000
Real Estate Term Loan in full, and (2) the new lender and Lender
execute and
deliver to one another a subordination agreement on commercially
reasonable
terms and conditions approved by Lender in its discretion.
(ii) $35,000,000 Non-Revolving Line of Credit Loan. Borrowers
may
prepay all or any part of the $35,000,000 Non-Revolving Line of
Credit Loan at
any time without fee, charge or penalty. Notwithstanding the
foregoing, the
unused portion of the $35,000,000 Non-Revolving Line of Credit Loan
as the same
may be determined from time to time (inclusive of amounts prepaid)
shall remain
subject to the Unused Commitment Fee.
(b) Mandatory Prepayments. Notwithstanding the foregoing,
immediately
upon receipt by Borrowers or Credit Parties of any cash proceeds of
any sale or
other disposition of any Collateral, Borrowers shall prepay the
Loans in an
amount equal to all such proceeds, net of (i) commissions and other
reasonable
and customary transaction costs, fees and expenses properly
attributable to such
transaction and payable by Borrowers in connection therewith (in
each case, paid
to non-Affiliates), (ii) transfer taxes, and (iii) an appropriate
reserve for
income taxes. Any such prepayment shall be applied in accordance
with Section
1.4(c) (Application of Prepayments). The following shall not be
subject to
mandatory prepayment under this subsection: (1) proceeds of sales
of Inventory
in the ordinary course of business; (2) proceeds of collection of
Accounts in
the ordinary course of business; and (3) proceeds of sales of
Equipment and
other personal property in the ordinary course of business so long
as such
Equipment and other personal property is replaced (if necessary in
the exercise
of prudent business judgment) by Equipment and other personal
property of equal
or greater value or utility.
(c) Application of Prepayments. Any prepayments made pursuant
to
Section 1.4 (a) or (b) (Prepayments) above shall be applied as
follows: first,
to reimbursable expenses of Lender then due and payable pursuant to
any of the
Loan Documents; second, to interest then due and payable on any of
the Loans;
third, and last, in such order as Lender shall determine in its
sole and
absolute discretion, to the principal balance of the Loans until
the same has
been paid in full. If an Event of Default has occurred and is
continuing, Lender
shall have the absolute right, in its sole discretion, to determine
which of the
Obligations shall be paid and in what order and amounts.
(d) Application of Prepayments from Insurance and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in
accordance with
Section 5.4 (Insurance) shall be applied to the Loans in the manner
described in
Section 1.4(c) (Application of Prepayments) above.
5
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(e) No Implied Consent. Nothing in this Section 1.4
(Prepayments)
shall be construed to constitute Lender's consent to any
transaction that is not
permitted by other provisions of this Agreement or the other Loan
Documents.
(f) Use of Proceeds.
Borrowers shall utilize the proceeds of the Loans
solely for the express purposes authorized in Sections 1.1 through
1.3 in this
Agreement. Disclosure Schedule 1.3 (Sources and Uses of Funds)
contains a
description of Borrower's sources and uses of funds as of the
Closing Date,
including the Loans to be made or incurred on that date.
(g) Reliance on Notices; Appointment of Borrower's
Representative.
Lender shall be entitled to rely upon, and shall be fully protected
in relying
upon, any Notice of Request for Advance or other notice believed by
Lender to be
genuine. Lender may assume that each Person executing and
delivering any notice
in accordance herewith, including without limitation the Notice of
Request for
Advance, was duly authorized, unless the responsible individual
acting thereon
for Lender has actual knowledge to the contrary. Borrowers hereby
designate
Bruce Mogel as Borrower's Representative for the purposes of
issuing Notices of
Request for Advances, giving instructions with respect to the
disbursement of
the proceeds of the applicable Loan, giving and receiving all other
notices and
consents hereunder or under any of the other Loan Documents and
taking all other
actions (including in respect of compliance with covenants) on
behalf of
Borrowers under the Loan Documents. Borrower's Representative
hereby accepts
such appointment. Lender may regard any notice or other
communication pursuant
to any Loan Document from Borrower's Representative as a notice or
communication
from Borrowers, and may give any notice or communication required
or permitted
to be given to Borrowers hereunder to Borrower's Representative on
behalf of
Borrowers. Borrowers agree that each notice, election,
representation and
warranty, covenant, agreement and undertaking made on its behalf by
Borrower's
Representative shall be deemed for all purposes to have been made
by Borrowers
and shall be binding upon and enforceable against Borrowers to the
same extent
as if the same had been made directly by Borrowers. Borrowers may,
by written
notice to Lender, seek to terminate the appointment of Bruce Mogel
as Borrower's
Representative and propose appointment of replacement Borrower's
Representative;
provided, however, said proposed replacement Borrower's
Representative (i) must
be an officer or director of IHHI, and (ii) must be acceptable to
Lender in its
sole discretion. Lender shall within ten (10) Business Days from
receipt of said
notice deliver a written notice to Borrowers either approving, or
disapproving,
of said proposed replacement. If Lender timely delivers a notice to
Borrowers
disapproving the proposed replacement(s), or fails to timely
deliver any notice
to Borrowers, then Bruce Mogel shall remain as Borrower's
Representative until
an acceptable replacement(s) is proposed by Borrowers and approved
by Lender. If
Lender timely approves said proposed replacement, then from and
after the date
Lender delivers written notice of approval of said proposed
replacement to
Borrowers, Bruce Mogel shall cease to be Borrower's Representative
and the
proposed replacement shall become Borrower's Representative.
1.5
Interest; Payments.
(a) Interest on Loans. During the term of the Loans, Borrowers
shall
pay interest to Lender on all outstanding Advances, in arrears, on
each
applicable Interest Payment Date, at the Interest Rate applicable
to the Loan in
question.
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<PAGE>
(b) Principal on the Loans. During the term of the Loans, no
payments
of principal shall be due or owing until the Maturity Date.
(c) Payment Date. If any payment on any Loan becomes due and
payable
on a day other than a Business Day, the due date thereof will be
extended to the
next succeeding Business Day, and, with respect to payments of
principal,
interest thereon shall be payable at the then applicable Interest
Rate during
such extension.
(d) Computation of Interest. All computations of interest shall
be
made by Lender at the applicable Interest Rate and calculated on
the basis of a
three hundred sixty (360) day year comprised of twelve (12) months
of thirty
(30) days each.
(e) Default Rate. Notwithstanding the foregoing, so long as an
Event
of Default has occurred and is continuing under any Loan Document,
the Interest
Rate applicable to all of the Loans shall be increased to the
Default Rate, and
all outstanding Obligations shall bear interest at the Default Rate
applicable
to such Obligations. Interest at the Default Rate shall accrue from
the initial
date of such Event of Default until that Event of Default is cured
or waived and
shall be payable upon demand. All interest payments owing hereunder
or under any
of the other Loan Documents, including interest accruing at the
Default Rate,
shall constitute additional Obligations hereunder and shall be
secured by the
Collateral.
(f) Payment to Lender's Account. All payments by Borrowers to
Lender
hereunder shall be made to the following deposit account:
Bank of America (Las Vegas, Nevada)
Medical Capital Corporation (Collection account for Medical
Provider Financial Corporation II)
Acct# 4966876714
ABA# 026009593
Address: 6900 West Cliff Drive, 4th Floor, Las Vegas, Nevada
89145
Contact Person: Gin Richardson
1.6
Maximum Lawful Rate of Interest. Notwithstanding anything to
the
contrary set forth in Section 1.5 (Interest; Payments), if a court
of competent
jurisdiction determines in a final unappealable order that the rate
of interest
payable hereunder exceeds the Maximum Lawful Rate, then so long as
the Maximum
Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall
be equal to the Maximum Lawful Rate. In no event shall the total
interest
received by Lender pursuant to the terms hereof exceed the amount
that such
Lender could lawfully have received had the interest due hereunder
been
calculated for the full term hereof at the Maximum Lawful Rate. Any
payments
made by Borrowers in excess of the Maximum Lawful Rate shall be
considered
voluntary prepayments of the Loans under Section 1.4(a) (Voluntary
Prepayments).
1.7
Cash Management System. On or prior to the Closing Date, Borrowers
will
establish and will maintain until the Termination Date, the Cash
Management
System described in Annex B (Cash Management System) attached
hereto, including
but not limited to the provisions of the Deposit Account Security
Agreement and
related Control Agreements.
7
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1.8
Unused Commitment Fees. Borrowers agree to and shall pay Lender
an
Unused Commitment Fee on the $35,000,000 Non-Revolving Line of
Credit Loan,
which shall be non-refundable. The Unused Commitment Fee shall be
due and
payable in arrears, in installments, at the expiration of each one
hundred
eighty (180) calendar day period between the Closing Date and the
Termination
Date, without notice. If any installment of the Unused Commitment
Fee is not
paid to Lender within ten (10) Business Days following the due date
of said
installment, then Lender shall have the right, without further
notice, to charge
such payment of the Unused Commitment Fee against the $35,000,000
Non-Revolving
Line of Credit Loan as an approved Advance. If, however, at the
time said
installment becomes delinquent either (i) Borrowers have drawn the
maximum
amount available under both the $35,000,000 Non-Revolving Line of
Credit Loan
and no further funds are available to borrow, or (ii) Borrowers
have committed
one or more other Events of Default under this Agreement which
remain uncured,
then said failure to timely pay the Unused Commitment Fee
installment shall
itself constitute an Event of Default hereunder, entitling Lender
to all rights
and remedies available to it under this Agreement, at law or in
equity.
1.9
Origination Fees. For each Loan, Borrowers agree to and shall
pay
Lender an Origination Fee applicable to said Loan, which shall be
nonrefundable.
Each Origination Fee shall be deemed fully earned by Lender as of
the Effective
Date of this Agreement, however, the Origination Fee shall be due
and payable on
the Closing Date.
1.10
Closing Date; Notice of Request for Advance. At least three (3)
Business Days prior to the Closing Date, Borrowers shall execute
and deliver to
Lender a Notice of Request for Advance requesting that Lender make
initial
Advances under the Loans which at a minimum are sufficient to pay
each of the
following:
(a) Previous $50,000,000 Acquisition Loan. From the $45,000,000
Real
Estate Term Loan, the amount necessary to pay in full all principal
and interest
due and owing on the Previous $50,000,000 Acquisition Loan. The
Advance from the
$45,000,000 Real Estate Term Loan shall not be disbursed to
Borrowers at Closing
but shall be withheld by Lender and paid directly to Lender to pay
in full and
satisfy the Previous $50,000,000 Acquisition Loan.
(b) Previous $30,000,000 Non-Revolving Line of Credit Loan.
>From the
$35,000,000 Non-Revolving Line of Credit Loan, the amount necessary
to pay in
full all principal and interest due and owing on the Previous
$30,000,000 Line
of Credit Loan. The Advance from the $35,000,000 Non-Revolving Line
of Credit
Loan shall not be disbursed to Borrowers at Closing but shall be
withheld by
Lender and paid directly to Lender to pay in full and satisfy the
Previous
$30,000,000 Line of Credit Loan.
(c) [Intentionally Omitted]
(d) Shortfall Amounts. From the $35,000,000 Non-Revolving Line
of
Credit Loan: (i) the amount necessary (if any) to pay in full any
shortfall
amounts that remain due and owing on the Previous $50,000,000
Acquisition Loan
after the Advance is made under Section 1.10(a) above; (ii) the
amount necessary
(if any) to pay in full any shortfall amounts that remain due and
owing on the
Previous $30,000,000 Line of Credit Loan after the Advance is made
under Section
1.10(b) above; and (iii) the amount necessary (if any) to pay in
full any
shortfall amounts that remain due and owing on the Previous
$10,700,000 Term
8
<PAGE>
Loan to MPFC III after the initial Advance (as such term is defined
in the New
$10,700,000 Credit Agreement) is made pursuant to the New
$10,700,000 Credit
Agreement. The foregoing Advances (if any) from the $35,000,000
Non-Revolving
Line of Credit Loan shall not be disbursed to Borrowers at Closing
but shall be
withheld by Lender and paid directly to Lender and/or MPFC III to
satisfy the
referenced shortfall amounts (if any).
(e) Origination Fees. From the $35,000,000 Non-Revolving Line
of
Credit Loan, the amounts necessary to pay (i) to Lender each
Origination Fee on
each Loan, and (ii) to MPFC III each Origination Fee on each Loan
(as such terms
are defined in the New $10,700,000 Credit Agreement). The
Origination Fees shall
not be disbursed to Borrowers at Closing but shall be withheld by
Lender and
paid directly to Lender and/or MPFC III from the Advance from the
$35,000,000
Non-Revolving Line of Credit Loan.
(f) Lender's Costs. From the $35,000,000 Non-Revolving Line of
Credit
Loan, the amount necessary to pay (i) Lender's Costs, which shall
be deemed
fully earned as of the Effective Date of this Agreement, and (ii)
Lender's Costs
(as defined in the New $10,700,000 Credit Agreement), which shall
be deemed
fully earned as of the Effective Date of the New $10,700,000 Credit
Agreement.
Lender's Costs include, but are not limited to, outside legal
counsel of Lender
and/or MPFC III and other closing costs. Lender's Costs shall not
be disbursed
to Borrowers at Closing but shall be withheld by Lender and paid
directly to
Lender, MPFC III and/or to any other parties entitled thereto from
the initial
Advance from the $35,000,000 Non-Revolving Line of Credit Loan.
1.11
Receipt of Payments. Borrowers shall make each payment under
this
Agreement and the Notes not later than 2:00 p.m. (Las Vegas time)
on the day
when due in immediately available funds in Dollars to Lender's
account described
in Section 1.5(f) (Payment to Lender's Account) above. For purposes
of computing
interest as of any date, all payments shall be deemed received on
the Business
Day on which immediately available funds therefore are received in
Lender's
deposit account prior to 2:00 p.m. (Las Vegas time). Payments
received in good
and immediate funds after 2:00 p.m. (Las Vegas time) on any
Business Day or on a
day that is not a Business Day shall be deemed to have been
received on the
following Business Day.
(a)
Application and Allocation of Payments.
(i) Application of Payments. So long as no Event of Default has
occurred and is continuing, for each Loan, (1) scheduled monthly
payments shall
be applied first, to reimbursable expenses of Lender then due and
payable
pursuant to any of the Loan Documents; second, to interest then due
and payable
on Loan in question; third, and last, to the principal balance of
the Loan in
question until the same has been paid in full; and (2) voluntary
prepayments and
mandatory prepayments shall be applied as set forth in Section
1.4(c)
(Application of Prepayments). As to any other payment, and as to
all payments
made when an Event of Default has occurred and is continuing or
following the
Commitment Termination Date, Borrowers and the Credit Parties
hereby irrevocably
waive the right to direct the application of any and all payments
received from
or on behalf of Borrowers, and Borrowers hereby irrevocably agree
that Lender
shall have the continuing exclusive right to apply any and all such
payments
against the Obligations of Borrowers as Lender may deem
advisable
notwithstanding any previous entry by Lender in the Loan Account or
any other
books and records.
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<PAGE>
(ii) Charges to the Loans. Lender is authorized to, and in its
sole and absolute discretion may, charge to its respective Loans
(which charges
shall be deemed to be Advances requested by Borrowers) on behalf of
Borrowers
and cause to be paid all expenses, Charges, costs (including
insurance premiums
in accordance with Section 5.4 (Insurance)) and interest and
principal, other
than principal of the Loan in question, if and to the extent
Borrowers fail to
pay promptly any such amounts as and when due. Such charges to the
Loan in
question shall not waive any Event of Default due to Borrower's
non-payment,
unless Lender in its sole and absolute discretion, agrees in
writing. At
Lender's option and to the extent permitted by law, any charges so
made shall
constitute part of the Loan in question and shall reduce the
aggregate amount of
the Commitment remaining available to Borrowers, and shall be
secured by the
Collateral.
1.12
Loan Account. Lender shall maintain a Loan Account on its books
to
record all Advances, all payments made by Borrowers, and all other
debits and
credits as provided in this Agreement with respect to the Loan in
question or
any other Obligations. All entries in the Loan Account shall be
made in
accordance with Lender's customary accounting practices as in
effect from time
to time. The balance in the Loan Account, as recorded on Lender's
most recent
printout or other written statement, shall, absent demonstrable
error, be
presumptive evidence of the amounts due and owing to Lender by
Borrowers;
provided that any failure to so record or any error in so recording
shall not
limit or otherwise affect Borrower's duty to pay the Obligations.
Lender shall
render to Borrower's Representative a monthly accounting of
transactions with
respect to the Loans setting forth the balance of the Loan Account
as to
Borrowers for the immediately preceding month. Unless Borrower's
Representative
notifies Lender in writing of any objection to any such accounting
(specifically
describing the basis for such objection), within thirty (30)
calendar days after
the date of Borrower's Representative's receipt thereof, each and
every such
accounting shall be presumptive evidence of all matters reflected
therein. Only
those items expressly objected to in such notice and explaining the
basis for
such objection(s) shall be deemed to be disputed by Borrowers.
1.13
Access. Borrowers and Credit Parties (other than Ganesha)
shall,
during normal business hours, from time to time upon 24 hours prior
notice as
frequently as Lender reasonably determines to be appropriate: (a)
provide Lender
and any of its officers, employees and agents access to its
properties,
facilities, advisors, officers and employees of Borrowers and
Credit Parties
(other than Ganesha) and to the Collateral for purposes of
exercising and
enforcing Lender's rights and remedies under the Loan Documents,
(b) permit
Lender and any of its officers, employees and agents, to inspect,
audit and make
extracts from Borrower's and Credit Party's (other than Ganesha's)
respective
books and records pertaining to the Loans and the Collateral, and
(c) permit
Lender and its officers, employees and agents, to inspect, review,
evaluate and
make test verifications and counts of the Collateral of Borrowers
and Credit
Parties. If an Event of Default has occurred and is continuing,
Borrowers and
Credit Parties (other than Ganesha) shall provide such access to
Lender at all
times and without advance notice. Furthermore, so long as any Event
of Default
has occurred and is continuing, Borrowers shall use commercially
reasonable
efforts to provide Lender with access to their suppliers and
customers.
Borrowers and Credit Parties (other than Ganesha) shall make
available to Lender
10
<PAGE>
and its counsel reasonably promptly originals or copies of all
books and records
that Lender may reasonably request. Borrowers and Credit Parties
(other than
Ganesha) shall deliver any document or instrument necessary for
Lender as it may
from time to time request, to obtain records from any service
bureau or other
Person that maintains records for Borrowers and Credit Parties
pertaining to the
Loans or the Collateral.
1.14
Taxes.
(a) No Deduction for Taxes. Any and all payments by Borrowers
hereunder (including any payments made pursuant to Section 13
(Suretyship
Waivers) or under the Notes shall be made, in accordance with this
Section 1.14
(Taxes), free and clear of and without deduction for any and all
present or
future Taxes. If Borrowers shall be required by law to deduct any
Taxes from or
in respect of any sum payable hereunder (including any sum payable
pursuant to
Section 13 (Suretyship Waivers)) or under such Notes, (i) the sum
payable shall
be increased as much as shall be necessary so that after making all
required
deductions (including deductions applicable to additional sums
payable under
this Section 1.14 (Taxes)) Lender receives an amount equal to the
sum it would
have received had no such deductions been made, (ii) Borrowers
shall make such
deductions, and (iii) Borrowers shall pay the full amount deducted
to the
relevant taxing or other authority in accordance with applicable
law. Within
thirty (30) days after the date of any payment of Taxes,
Borrower's
Representative shall furnish to Lender the original or a certified
copy of a
receipt evidencing payment thereof.
(b) Indemnity for Taxes. Borrowers hereby agree to indemnify,
defend,
protect and hold Lender free and harmless from any claim or demand
for payment
of, and within ten (10) calendar days of receipt of demand therefor
agrees to
pay to Lender, (i) any and all Taxes that Borrowers are obligated
to pay
pursuant to this Section 1.14 (Taxes) (including any Taxes imposed
by any
jurisdiction on amounts payable under this Section 1.14 (Taxes)),
plus (ii) the
full amount of any additional liability (including penalties,
interest and
expenses) payable or paid by Lender arising therefrom or with
respect thereto,
whether or not the same were correctly or legally asserted.
Notwithstanding the
foregoing, Lender remains ultimately responsible for paying any and
all income
taxes measured by Lender's own gross income.
1.15
Capital Adequacy; Increased Costs; Illegality.
(a) Capital Adequacy. If any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding
capital
adequacy, reserve requirements or similar requirements or
compliance by Lender
with any request or directive compliance regarding capital
adequacy, reserve
requirements or similar requirements (whether or not having the
force of law),
in each case, adopted after the Closing Date, from any Governmental
Authority
increases or would have the effect of increasing the amount of
capital, reserves
or other funds required to be maintained by Lender and thereby
reducing the rate
of return on Lender's capital as a consequence of its obligations
hereunder,
then Borrowers shall from time to time upon demand by Lender pay to
Lender
additional amounts sufficient to compensate Lender for such
reduction. A
certificate as to the amount of that reduction and showing the
basis of the
computation thereof submitted by Lender to Borrower's
Representative shall be
presumptive evidence of the matters set forth therein.
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<PAGE>
(b) Increased Costs. If, due to either (i) the introduction of or
any
change in any law or regulation (or any change in the
interpretation thereof) or
(ii) the compliance with any guideline or request from any
Governmental
Authority (whether or not having the force of law), in each case
adopted after
the Closing Date, there shall be any increase in the cost to Lender
of agreeing
to make or making, funding or maintaining the Loans, then Borrowers
shall from
time to time, upon demand by Lender pay to Lender additional
amounts sufficient
to compensate Lender for such increased cost. A certificate as to
the amount of
such increased cost, submitted to Borrower's Representative by
Lender, shall be
presumptive evidence of the matters set forth therein. Lender
agrees that, as
promptly as practicable after they become aware of any
circumstances referred to
above which would result in any such increased cost, Lender shall,
to the extent
not inconsistent with Lender's internal policies of general
application, use
reasonable commercial efforts to minimize costs and expenses
incurred by it and
payable to it by Borrowers pursuant to this Section 1.15(b)
(Increased Costs).
Provided, however, the amounts due from Borrowers under Sections
1.15(a) and (b)
(Capital Adequacy; Increased Costs) shall not include amounts
attributable to
Lender's non-compliance with any requirement of any Governmental
Authority or to
Lender's non-payment of its own income taxes or to any increase in
Lender's
income taxes.
1.16
Single Loan. The Loans to Borrowers and all of the other
Obligations
of Borrowers arising under this Agreement and the other Loan
Documents shall
constitute one general obligation of Borrowers secured by the Liens
on all of
the Collateral.
2. CONDITIONS PRECEDENT
--------------------
2.1
Conditions Precedent to the Closing Date. Lender shall not be
obligated
to take, fulfill, or perform any action hereunder, nor shall Lender
be obligated
to fund any portion of the Loans, until the following conditions
precedent have
been satisfied or provided for in a manner satisfactory to Lender,
in its sole
discretion, or waived in writing by Lender:
(a) Credit Agreement; Disclosure Schedules. Two (2) duplicate
original
counterparts of this Agreement shall have been duly executed by and
delivered by
each Borrower and each Credit Party and each Guarantor to Lender;
and Lender
shall have received original updated two (2) sets of Disclosure
Schedules in
form and substance satisfactory to Lender, each dated and executed
by each
Borrower.
(b) Approvals. Lender shall have received satisfactory evidence
that
each Borrower and each Credit Party have obtained, or in the case
of necessary
Governmental Authority approvals, have applied for, all required
consents and
approvals of all Persons including all requisite Governmental
Authorities, to
the execution, delivery and performance of this Agreement and the
other Loan
Documents. Disclosure Schedule 2.1(b) attached hereto lists all
required
consents and approvals of all Governmental Authorities and all
other Persons.
(c) Capital Structure: Other Indebtedness. The capital structure
of
each Borrower and each Credit Party (other than Ganesha) as of the
Closing Date,
the ownership of each Borrower and each Credit Party (other than
Ganesha) as of
the Closing Date, and the terms and conditions of all Indebtedness
of each
Borrower and each Credit Party (other than Ganesha) as of the
Closing Date,
shall certified by each applicable Person to Lender and must be
acceptable to
Lender in its sole and absolute discretion. The capital structure
of each
Borrower as of the Effective Date is set forth in Disclosure
Schedule 2.1(c)
attached hereto.
12
<PAGE>
(d) Charter Documents. Each Borrower and each Credit Party
(including
each Guarantor) shall have delivered the following documents to
Lender:
(i) A copy of the articles of incorporation for each Borrower
and
a copy of the or articles of organization for each Credit Party,
certified by
the Secretary of State for the state of incorporation or
organization within the
most recent 30 day period prior to the Closing Date of this
Agreement.
(ii) A certificate of good standing issued by the applicable
state of incorporation or organization for each Borrower and each
Credit Party,
certified by the Secretary of State for the state or incorporation
or
organization within the most recent 30 day period prior to the
Closing Date of
this Agreement.
(iii) The bylaws or operating agreement for each Borrower and
each Credit Party, certified to be true and accurate by the
corporate secretary
of each Borrower and by the manager of each Credit Party within the
most recent
30 day period prior to the Closing Date of this Agreement.
(iv) An incumbency certificate (officers and directors, or
managers and members) for each Borrower and each Credit Party
(including each
Guarantor), certified to be true and accurate by the corporate
secretary of each
Borrower and by the manager of each Credit Party within the most
recent 30 day
period prior to the Closing Date of this Agreement.
(v) The unanimous written consent of the board of directors of
each Borrower and the unanimous written consent of all managers of
each Credit
Party (including each Guarantor), authorizing the transactions set
forth in this
Agreement and the other Loan Documents, executed by each such
director or
manager within most recent 30 day period prior to the Closing Date
of this
Agreement.
(e) Voluntary Resignation of Dr. Shah. Based on Lender's prior
experience in connection with the Previous Loans, Lender has
determined in the
exercise of its discretion that it is unable to work with Dr. Shah
and that it
will not make the Loans available to Borrowers unless Dr. Shah
shall have
voluntarily resigned as a director of and from all other management
positions
with or in IHHI prior to the Closing Date.
(f) Plan Regarding Engagement of Independent Directors. Lender
shall
have received from IHHI and approved, in its sole discretion, a
Plan Regarding
Engagement of Independent Directors.
(g) Appraisal. Lender shall have received from IHHI and approved,
in
its sole discretion, the Appraisal.
(h) Loan to Value Ratio. The sum of the $45 Million Real Estate
Term
Loan and the $35 Million Non-Revolving Line of Credit Loan shall
not exceed
seventy percent (70%) of the Appraised Value of the Properties as
set forth in
the Appraisal.
13
<PAGE>
(i) Due Diligence. Lender shall have completed its business and
legal
due diligence and shall have waived all objections thereto.
(j) Title Commitment. For each of the Properties, the Title
Company
shall have delivered a Title Commitment to Lender in form and
content acceptable
to Lender in its sole and absolute discretion.
(k) Notes. The Borrowers shall have each executed and delivered
to
Lender one (1) original of each of the following Notes:
(i) To Lender, the $45,000,000 Real Estate Term Note in the
form
of Exhibit "A" attached hereto; and
(ii) To Lender, the $35,000,000 Non-Revolving Line of Credit
Note
in the form of Exhibit "B" attached hereto.
(l) Notices of Request for Advance. Borrower's Representative
shall
have executed and delivered to Lender two (2) duplicate original
counterparts of
the Notice of Request for Advance in the form of Exhibit "D"
attached hereto,
requesting initial Advances from each of the Loans in the minimum
amounts
required by this Agreement.
(m) $80,000,000 Deeds of Trust.
(i) With respect to the Western Medical Center - Anaheim, PCHI
shall have executed, acknowledged and delivered to Lender (or shall
have
deposited the same into Escrow as, when and if required by Lender)
one (1)
original $80,000,000 Deed of Trust in the form of Exhibit "E"
attached hereto,
with the legal description describing the fee simple interest in
the Western
Medical Center - Anaheim;
(ii) With respect to the Western Medical Center - Santa Ana,
PCHI
shall have executed, acknowledged and delivered to Lender (or shall
have
deposited the same into Escrow as, when and if required by Lender)
one (1)
original $80,000,000 Deed of Trust in the form of Exhibit "E"
attached hereto,
with the legal description describing the fee simple interest in
the Western
Medical Center - Santa Ana;
(iii) With respect to the Coastal Communities Hospital (and
medical office buildings), PCHI shall have executed, acknowledged
and delivered
to Lender (or shall have deposited the same into Escrow as, when
and if required
by Lender) one (1) original $80,000,000 Deed of Trust in the form
of Exhibit "E"
attached hereto, with the legal description describing the fee
simple interest
in the Coastal Communities Hospital;
(iv) With respect to the Chapman Medical Center:
(A) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and
if required by
Lender) one (1) original Deed of Trust in the form of Exhibit "E"
attached
hereto, with the legal description describing (1) the fee simple
interest in the
Chapman Medical Center, and (2) IHHI's interest, as MOB Tenant, in
the Chapman
MOB Lease; and
14
<PAGE>
(B) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and
if required by
Lender) one (1) original Deed of Trust in the form of Exhibit "E"
attached
hereto, with the legal description describing (1) the fee simple
interest in the
Chapman Medical Center, and (2) IHHI's interest, as Hospital
Tenant, in the
Chapman Hospital Lease.
(n) Absolute Assignment of Leases and Rents.
(i) With respect to the Western Medical Center - Anaheim, PCHI
shall have executed, acknowledged and delivered to Lender (or shall
have
deposited the same into Escrow as, when and if required by Lender)
one (1)
original Absolute Assignment of Leases and Rents in the form of
Exhibit "F"
attached hereto, with the legal description describing the fee
simple interest
in the Western Medical Center - Anaheim;
(ii) With respect to the Western Medical Center - Santa Ana,
PCHI
shall have executed, acknowledged and delivered to Lender (or shall
have
deposited the same into Escrow as, when and if required by Lender)
one (1)
original Absolute Assignment of Leases and Rents in the form of
Exhibit "F"
attached hereto, with the legal description describing the fee
simple interest
in the Western Medical Center - Santa Ana;
(iii) With respect to the Coastal Communities Hospital, PCHI
shall have executed, acknowledged and delivered to Lender (or shall
have
deposited the same into Escrow as, when and if required by Lender)
one (1)
original Absolute Assignment of Leases and Rents in the form of
Exhibit "F"
attached hereto, with the legal description describing the fee
simple interest
in the Coastal Communities Hospital;
(iv) With respect to the Chapman Medical Center:
(A) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and
if required by
Lender) one (1) original Absolute Assignment of Leases and Rents in
the form of
Exhibit "F" attached hereto, with the legal description describing
(1) the fee
simple interest Chapman Medical Center, and (2) IHHI's interest, as
MOB Tenant,
in the Chapman MOB Lease; and
(B) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and
if required by
Lender) one (1) original Absolute Assignment of Leases and Rents in
the form of
Exhibit "F" attached hereto, with the legal description describing
(1) the fee
simple interest Chapman Medical Center, and (2) IHHI's interest, as
Hospital
Tenant, in the Chapman Hospital Lease.
(o) Security Agreement. Borrowers shall have executed and delivered
to
Lender two (2) duplicate original counterparts of the Security
Agreement in the
form of Exhibit "G" attached hereto.
(p) Collateral Assignment of Contracts.
15
<PAGE>
(i) With respect to the Western Medical Center - Anaheim, IHHI
and WMC-A shall have executed, acknowledged and delivered to Lender
(or shall
have deposited the same into Escrow as, when and if required by
Lender) one (1)
original Collateral Assignment of Contracts in the form of Exhibit
"H" attached
hereto, with the legal description describing the fee simple
interest in the
Western Medical Center - Anaheim;
(ii) With respect to the Western Medical Center - Santa Ana,
IHHI
and WMC-SA shall have executed, acknowledged and delivered to
Lender (or shall
have deposited the same into Escrow as, when and if required by
Lender) one (1)
original Collateral Assignment of Contracts in the form of Exhibit
"H" attached
hereto, with the legal description describing the fee simple
interest in the
Western Medical Center - Santa Ana;
(iii) With respect to the Coastal Communities Hospital (and
medical office buildings), IHHI and Coastal shall have executed,
acknowledged
and delivered to Lender (or shall have deposited the same into
Escrow as, when
and if required by Lender) one (1) original Collateral Assignment
of Contracts
in the form of Exhibit "H" attached hereto, with the legal
description
describing the fee simple interest in the Coastal Communities
Hospital;
(iv) With respect to the Chapman Medical Center:
(A) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and
if required by
Lender) one (1) original Collateral Assignment of Contracts in the
form of
Exhibit "H" attached hereto, with the legal description describing
(1) the fee
simple interest in the Chapman Medical Center, and (2) IHHI's
interest, as MOB
Tenant, in the Chapman MOB Lease; and
(B) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and
if required by
Lender) one (1) original Collateral Assignment of Contracts in the
form of
Exhibit "H" attached hereto, with the legal description describing
(1) the fee
simple interest in the Chapman Medical Center, and (2) IHHI's
interest, as
Hospital Tenant, in the Chapman Hospital Lease.
(q) Deposit Account Security Agreement.
(i) With respect to the Western Medical Center - Anaheim, IHHI
and WMC-A shall have executed, acknowledged and delivered to Lender
(or shall
have deposited the same into Escrow as, when and if required by
Lender) one (1)
original Deposit Account Security Agreement in the form of Exhibit
"I" attached
hereto, with the legal description describing the fee simple
interest in the
Western Medical Center - Anaheim;
(ii) With respect to the Western Medical Center - Santa Ana,
IHHI
and WMC-SA shall have executed, acknowledged and delivered to
Lender (or shall
have deposited the same into Escrow as, when and if required by
Lender) one (1)
original Deposit Account Security Agreement in the form of Exhibit
"I" attached
hereto, with the legal description describing the fee simple
interest in the
Western Medical Center - Santa Ana;
(iii) With respect to the Coastal Communities Hospital (and
medical office buildings), IHHI and Coastal shall have executed,
acknowledged
and delivered to Lender (or shall have deposited the same into
Escrow as, when
and if required by Lender) one (1) original Deposit Account
Security Agreement
in the form of Exhibit "I" attached hereto, with the legal
description
describing the fee simple interest in the Coastal Communities
Hospital;
16
<PAGE>
(iv) With respect to the Chapman Medical Center:
(A) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and
if required by
Lender) one (1) original Deposit Account Security Agreement in the
form of
Exhibit "I" attached hereto, with the legal description describing
(1) the fee
simple interest in the Chapman Medical Center, and (2) IHHI's
interest, as MOB
Tenant, in the Chapman MOB Lease; and
(B) IHHI shall have executed, acknowledged and delivered to
Lender (or shall have deposited the same into Escrow as, when and
if required by
Lender) one (1) original Deposit Account Security Agreement in the
form of
Exhibit "I" attached hereto, with the legal description describing
(1) the fee
simple interest in the Chapman Medical Center, and (2) IHHI's
interest, as
Hospital Tenant, in the Chapman Hospital Lease
(r) Control Agreement. Borrowers and Bank shall have executed
and
delivered to Lender two (2) duplicate original counterparts of the
Control
Agreement in the form of Exhibit "J" attached hereto.
(s) Post-Closing Agreement. Borrowers shall have executed and
delivered to Lender two (2) duplicate original counterparts of the
Post-Closing
Agreement in the form of Exhibit "K" attached hereto.
(t) Intellectual Property Security Agreement. Borrowers shall
have
executed and delivered to Lender two (2) duplicate original
counterparts of the
Intellectual Property Security Agreement in the form of Exhibit "L"
attached
hereto.
(u) Environmental Indemnity Agreement. Borrowers and the Credit
Parties (other than Ganesha) shall have executed and delivered to
Lender two (2)
duplicate original counterparts of the Environmental Indemnity
Agreement in the
form of Exhibit "M" attached hereto.
(v) Guaranty Agreement. Guarantors shall have executed and
delivered
to Lender two (2) duplicate original counterparts of the Guaranty
Agreement in
the form of Exhibit "N" attached hereto.
(w) Intercreditor Agreement. Borrowers shall have executed and
delivered to Lender two (2) duplicate original counterparts of the
Intercreditor
Agreement in the form of Exhibit "O" attached hereto.
(x) Pledge Agreement. IHHI, Ganesha and West Coast shall have
executed
and delivered to Lender two (2) duplicate original counterparts of
the Pledge
Agreement (IHHI) in the form of Exhibit "P" attached hereto.
(y) Stock Power. IHHI shall have executed and delivered to Lender
two
(2) duplicate original counterparts of the Stock Power in the form
of Exhibit
"Q" attached hereto.
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<PAGE>
(z) Membership Power. Ganesha and West Coast shall have executed
and
delivered to Lender two (2) duplicate original counterparts of the
Membership
Power in the form of Exhibit "R" attached hereto
(aa) Landlord's Consent and Estoppel Certificate (Chapman
Hospital
Lease). The Landlord under the Chapman Hospital Lease shall have
executed and
delivered to Lender, for the benefit of Lender, two (2) duplicate
original
counterparts of the Landlord's Consent and Estoppel Certificate in
the form of
Exhibit "S" attached hereto.
(bb) Landlord's Consent and Estoppel Certificate (Chapman MOB
Lease).
The Landlord under the Chapman MOB Lease shall have executed and
delivered to
Lender, for the benefit of Lender, two (2) duplicate original
counterparts of
the Landlord's Consent and Estoppel Certificate in the form of
Exhibit "S"
attached hereto
(cc) Landlord's Consent and Estoppel Certificate (Triple Net
Lease).
PCHI, landlord under the Triple Net Lease, shall have executed and
delivered to
Lender, for the benefit of Lender, two (2) duplicate original
counterparts of
the Landlord's Consent and Estoppel Certificate in the form of
Exhibit "T"
attached hereto.
(dd)
Warrant. IHHI shall have executed and delivered to Lender one
(1)
original Warrant in the form of Exhibit "U" attached hereto.
(ee) Legal Opinions.
(i) Legal Opinion of California Counsel. An original legal
opinion (from counsel licensed to practice law and in good standing
in the State
of California) for PCHI, West Coast, Ganesha, WMC-A, WMC-SA,
Coastal and Chapman
regarding the transactions contemplated by this Agreement and the
other Loan
Documents shall be delivered to Lender, containing among other
things legal
opinions with respect to the following: (A) the valid existence of
PCHI, West
Coast, Ganesha, WMC-A, WMC-SA, Coastal and Chapman in the State of
California;
(B) the good standing of PCHI, West Coast, Ganesha, WMC-A, WMC-SA,
Coastal and
Chapman in the State of California; (C) the requisite power of
PCHI, West Coast,
Ganesha, WMC-A, WMC-SA, Coastal and Chapman to execute this
Agreement and the
other Loan Documents; (D) that the execution of this Agreement and
the other
Loan Documents by PCHI, West Coast, Ganesha, WMC-A, WMC-SA, Coastal
and Chapman
will not constitute a breach or default under any contracts or
agreements
executed by or to which PCHI, West Coast, Ganesha, WMC-A, WMC-SA,
Coastal and
Chapman is a party; (E) ) that the choice of law provisions set
forth in this
Agreement and the other Loan Documents are enforceable; and (F)
such other
opinions that Lender may require.
(ii) First Legal Opinion of Nevada Counsel. A first original
legal opinion (from counsel licensed to practice law and in good
standing in the
State of Nevada) for IHHI and OC-PIN regarding the transactions
contemplated by
this Agreement and the other Loan Documents shall be delivered to
Lender,
containing among other things legal opinions with respect to the
following: (A)
the valid existence of IHHI and OC-PIN in the State of Nevada; (B)
the good
standing of IHHI and OC-PIN in the State of Nevada; (C) the
requisite power of
IHHI and OC-PIN to execute this Agreement and the other Loan
Documents; (D) that
18
<PAGE>
the execution of this Agreement and the other Loan Documents by
IHHI and OC-PIN
will not constitute a breach or default under any contracts or
agreements
executed by or to which IHHI and OC-PIN is a party; (E) ) that the
choice of law
provisions set forth in this Agreement and the other Loan Documents
are
enforceable; and (F) such other opinions that Lender may
require.
(iii) Second Legal Opinion of Nevada Counsel. A second original
legal opinion from counsel (licensed to practice law and in good
standing in the
State of Nevada) for all Borrowers and all Credit Parties and all
Guarantors
regarding the transactions contemplated by this Agreement and the
other Loan
Documents shall be delivered to Lender, containing among other
things legal
opinions with respect to the following: (A) that this Agreement and
the other
Loan Documents comply with Nevada law; (B) that this Agreement and
the other
Loan Documents are enforceable under Nevada law; (C) that the
choice of Nevada
law under this Agreement and the other Loan Documents is valid and
enforceable
under Nevada law; (D) that the Interest Rate applicable to each of
the Loans is
not usurious under Nevada law; and (E) such other matters as Lender
may require.
(ff) Fairness Opinion. A fairness opinion executed by a
qualified,
independent, third-party professional financial advisor or
investment bank
opining as to (i) the fairness of the transactions contemplated by
this
Agreement as between the Borrowers and Credit Parties and
Guarantors, and (ii)
an allocation of fair value to each Hospital Facility, in form and
substance
satisfactory to Lender.
(gg) Closing and Funding Checklist - Other Documents and
Instruments.
Each Borrower and each Credit Party and each Guarantor shall have
executed
(where required) and delivered to Lender each of the other
documents, exhibits,
disclosure schedules, instruments and other items listed in the
Closing and
Funding Checklist, in form and content satisfactory to Lender.
(hh) $50,000,000 Revolving Credit Agreement. All conditions
precedent
to the obligation of Medical Provider Financial Corporation I (as
lender) under
Article 4 of the $50,000,000 Revolving Credit Agreement shall have
been
satisfied or provided for in a manner satisfactory to said lender,
in its sole
discretion, or waived in writing by said lender.
(ii) Documents Required by Title Commitment. Each Borrower shall
have
executed (where required) and deposited into Escrow all documents
and
instruments required by the Title Commitment and/or the Escrow
Company.
(jj) New $10,700,000 Credit Agreement. All conditions precedent to
the
obligation of MPFC III under Article 2 of the New $10,700,000
Credit Agreement
shall have been satisfied or provided for in a manner satisfactory
to said MPFC
III, in its sole discretion, or waived in writing by MPFC III.
2.2
Further Conditions Precedent to Making Loans; Further
Conditions
Precedent to Funding Advances. The obligations of Lender to making
the Loans to
Borrowers and to funding any Advances under the Loans to Borrowers,
shall be
subject to the following further conditions precedent:
19
<PAGE>
(a) Further Conditions Precedent to Making Loans. Lender shall not
be
obligated to make any of the Loans to Borrowers unless and until
the following
additional conditions precedent have been satisfied or provided for
in a manner
reasonably satisfactory to Lender, or waived in writing by Lender,
on or before
the Closing Date:
(i) Loan Documents. All Loan Documents having been executed and
delivered on or before the Closing Date shall remain in full force
and effect,
and Lender shall have received such further documents, instruments,
agreements
and legal opinions as Lender shall reasonably request in connection
with the
transactions contemplated by this Agreement and the other Loan
Documents, each
in form and substance satisfactory to Lender.
(ii) $50,000,000 Revolving Credit Agreement. All loan documents
having been executed and delivered on or before the closing date of
the
transaction contemplated by the $50,000,000 Revolving Credit
Agreement shall
remain in full force and effect, and the lender under the
$50,000,000 Revolving
Credit Agreement shall have received such further documents,
instruments,
agreements and legal opinions as such lender shall reasonably
request in
connection with the transactions contemplated by the $50,000,000
Revolving
Credit Agreement and the loan documents referenced therein, each in
form and
substance satisfactory to said lender.
(iii) Approvals. Lender shall have received (A) satisfactory
evidence (or, shall, in its reasonable discretion, continue to be
satisfied with
such evidence received under Section 2.1(b) (Required Consents and
Approvals)),
that each Borrower and each Credit Party have obtained, or in the
case of
necessary Governmental Authority approvals, have applied for, all
required
consents and approvals of all Persons including all requisite
Governmental
Authorities, to the execution, delivery and performance of this
Agreement and
the other Loan Documents to which they are parties or a signatory,
or (B) an
officer's certificate signed by an executive officer of each
Borrower in form
and substance satisfactory to Lender affirming that no such
consents or
approvals are required.
(iv) Timing. The Closing must occur by the Closing Date.
(v)
Collateral. Lender shall have approved of the Collateral in
its sole and absolute discretion.
(vi) Changes to Disclosure Schedules. Borrower shall have
delivered to Lender updates to all Disclosure Schedules as required
by Section
5.6 (Supplemental Disclosures), and Lender shall have approved in
their
discretion all updates to the Disclosure Schedules as have been
delivered to
Lender on or before the Closing Date.
(vii) No Material Adverse Effect. No event or circumstance
shall
have occurred that has or reasonably could be expected by Lender to
have a
Material Adverse Effect.
(viii) Title Policies. Title Company shall irrevocably be
committed to issue the Title Policy to Lender on the Closing Date
for each
Property, at Borrower's sole cost and expense, in form and content
acceptable to
Lender in its sole discretion.
20
<PAGE>
(ix) Escrow. Borrowers shall have opened Escrow at the offices
of
the Title Company and the escrow officer shall be prepared to close
Escrow on
the terms and conditions set forth in the Escrow Instructions on
deposit
therein.
(b) Conditions to Funding Advances. Lender shall not be obligated
to
fund any Advance under any of the Loans to Borrowers on the Closing
Date or on
any other date if:
(i) Any representation or warranty by any Borrower or by any
Credit Party or by any Guarantor contained herein or in any other
Loan Document
is untrue or incorrect in any material respect as of such date;
(ii) Any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance;
or
(iii) Any event or circumstance shall have occurred that has or
reasonably could be expected by Lender to have a Material Adverse
Effect.
The
request by any Borrower or Borrower's Representative that Lender
fund
an Advance under any Loan on the Closing Date or on any other date
shall in each
event be deemed to constitute, as of the date thereof, (A) a
representation and
warranty by all Borrowers and all Credit Parties and all Guarantors
that the
conditions precedent in this Section 2.2 (Further Conditions
Precedent to Making
Loans; Further Conditions Precedent to Funding Advances) to which
it is a party
or a signatory have been satisfied, and (B) a reaffirmation by each
Borrower and
by each Credit Party and by each Guarantor of their respective
obligations under
the Loan Documents.
2.3
Place of Closing; Delivery of Loan Documents to Lender; Deposits
Into
Escrow; Close of Escrow; Distribution of Funds and Documents. The
transactions
contemplated by this Agreement and the other Loan Documents will
close on the
Closing Date, as follows:
(a) Place Of Closing. Unless otherwise agreed in writing by
Borrowers
and Lender, the Closing will take place on the Closing Date at the
offices of
the Lender at c/o Medical Capital Corporation, 2100 South State
College Blvd.,
Anaheim, California 92806, Attn: Joseph J. Lampariello, President
and COO,
telephone: 714-935-3100.
(b) Delivery of Loan Documents to Lender's Counsel. Each
Borrower
shall, not less than three (3) Business Days prior to the Closing
Date, deliver
or cause to be delivered to legal counsel for Lender the following
Loan
Documents, each duly executed by each Borrower, each Credit Party
(where
applicable), each Guarantor (where applicable), any other Person
required by
this Agreement, and, where required, witnessed, acknowledged and in
recordable
form, with all exhibits, schedules and annexes (each pre-approved
by Lender)
attached and executed as required:
(i) Two (2) duplicate original counterparts of this Agreement,
executed by each Borrower and each Credit Party and each Guarantor
and with all
completed Annexes and Disclosure Schedules attached.
21
<PAGE>
(ii) One (1) original of the $45,000,000 Real Estate Term Note,
executed by Borrowers.
(iii) One (1) original of the $35,000,000 Non-Revolving Line of
Credit Note, executed by Borrowers.
(iv) [Intentionally Omitted]
(v) Two (2) duplicate original counterparts of the Notice of
Request for Advance, executed by Borrower's Representative.
(vi) Two (2) duplicate original counterparts of the Security
Agreement, executed by Borrowers.
(vii) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts re Western Medical Center - Anaheim,
executed by IHHI
and WMC-A.
(viii) Two (2) duplicate original counterparts of the
Collateral
Assignment of Contracts re Western Medical Center - Santa Ana,
executed by IHHI
and WMC-SA.
(ix) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts re Coastal Community Hospital, executed by
IHHI and
Coastal.
(x) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts re Chapman MOB Lease, , executed by
IHHI.
(xi) Two (2) duplicate original counterparts of the Collateral
Assignment of Contracts re Chapman Hospital Lease, executed by
IHHI.
(xii) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Western Medical Center - Anaheim,
executed by IHHI
and WMC-A.
(xiii) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Western Medical Center - Santa Ana,
executed by
IHHI and WMC-SA.
(xiv) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Coastal Community Hospital, executed
by IHHI and
Coastal.
(xv) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Chapman MOB Lease, executed by
IHHI.
(xvi) Two (2) duplicate original counterparts of the Deposit
Account Security Agreement re Chapman Hospital Lease, executed by
IHHI.
(xvii) Two (2) duplicate original counterparts of the Control
Agreement, executed by Borrowers and Bank.
22
<PAGE>
(xviii) Two (2) duplicate original counterparts of the
Post-Closing Agreement, executed by Borrowers.
(xix) Two (2) duplicate original counterparts of the
Intellectual
Property Security Agreement, executed by Borrowers.
(xx) Two (2) duplicate original counterparts of the
Environmental
Indemnity Agreement, executed by Borrowers and by each Credit Party
(other than
Ganesha).
(xxi) Two (2) duplicate original counterparts of the Guaranty
Agreement, executed by each Guarantor.
(xxii) Two (2) duplicate original counterparts of the
Intercreditor Agreement, executed by Borrowers.
(xxiii) Two (2) duplicate original counterparts of the Pledge
Agreement, executed by IHHI, Ganesha and West Coast.
(xxiv) Two (2) duplicate original counterparts of the Stock
Power
executed by IHHI.
(xxv) All original Stock certificates in WMC-A, WMC-SA, Coastal
and Chapman owned, held or controlled by IHHI.
(xxvi) Two (2) duplicate original counterparts of the
Membership
Power executed by Ganesha and West Coast.
(xxvii) All original Membership Certificates in PCHI owned,
held
or controlled by Ganesha; and all Membership Certificates in PCHI
owned, held or
controlled by West Coast.
(xxviii) Two (2) duplicate original counterparts of the
Landlord's Consent and Estoppel Certificate (Chapman MOB Lease),
executed by the
Landlord under the Chapman MOB Lease.
(xxix) Two (2) duplicate original counterparts of the
Landlord's
Consent and Estoppel Certificate (Chapman Hospital Lease), executed
by the
Landlord under the Chapman Hospital Lease.
(xxx) Two (2) duplicate original counterparts of the Landlord's
Consent and Estoppel Certificate (Triple Net Lease), executed by
PCHI.
(xxxi) One (1) original Warrant, executed by IHHI.
(xxxii) Two (2) original executed opinions of California legal
counsel for PCHI, West Coast, Ganesha, WMC-A, WMC-SA, Coastal and
Chapman,
executed by said counsel.
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<PAGE>
(xxxiii) Two (2) original executed first opinions of Nevada
legal
counsel for IHHI and OC-PIN, executed by said Nevada counsel.
(xxxiv) Two (2) original executed second opinions of Nevada
legal
counsel for all Borrowers and Credit Parties and Guarantors,
executed by said
Nevada counsel.
(xxxv) One (1) original executed fairness opinion, in form and
content acceptable to Lender.
(xxxvi) All other documents, instruments, agreements, Annexes,
Schedules, Exhibits not set forth above but required by the Closing
and Funding
Checklist.
(c) Deposits Into Escrow. Unless otherwise set forth below,
Borrowers
and Lender shall, not less than two (2) Business Days prior to the
Closing Date,
deposit the following documents, instruments and other items into
Escrow, each
duly executed and, where appropriate, witnessed, acknowledged and
in recordable
form, with all exhibits, schedules and annexes (each pre-approved
by Lender)
attached and executed as required:
(i) One (1) copy of this Agreement, executed by Lender, by each
Borrower and by each Credit Party and by each Guarantor and with
all completed
Annexes and Disclosure Schedules and Exhibits attached.
(ii) With respect to the Western Medical Center - Anaheim, one
(1) original Deed of Trust executed and acknowledged by PCHI with
the legal
description describing the fee simple interest in the Western
Medical Center -
Anaheim.
(iii) With respect to the Western Medical Center - Santa Ana,
one
(1) original Deed of Trust executed and acknowledged by PCHI with
the legal
description describing the fee simple interest in the Western
Medical Center -
Santa Ana.
(iv) With respect to the Coastal Communities Hospital, one (1)
original Deed of Trust executed and acknowledged by PCHI with the
legal
description describing the fee simple interest in the Coastal
Communities
Hospital.
(v) With respect to the Chapman Medical Center:
(A) one (1) original Deed of Trust executed and acknowledged
by IHHI with the legal description describing (1) the fee simple
interest in the
Chapman Medical Center, and (2) IHHI's interest, as MOB Tenant, in
the Chapman
MOB Lease; and
(B) one (1) original Deed of Trust executed and acknowledged
by IHHI with the legal description describing (1) the fee simple
interest in the
Chapman Medical Center, and (2) IHHI's interest, as Hospital
Tenant, in the
Chapman Hospital Lease
(vi) With respect to the Western Medical Center - Anaheim, one
(1) original Absolute Assignment of Leases and Rents executed and
acknowledged
by PCHI, IHHI and WMC-A with the legal description describing the
fee simple
interest in the Western Medical Center - Anaheim.
24
<PAGE>
(vii) With respect to the Western Medical Center - Santa Ana,
one
(1) original Absolute Assignment of Leases and Rents executed and
acknowledged
by PCHI, IHHI and WMC-SA with the legal description describing the
fee simple
interest in the Western Medical Center - Santa Ana.
(viii) With respect to the Coastal Communities Hospital, one
(1)
original Absolute Assignment of Leases and Rents executed and
acknowledged by
PCHI, IHHI and Coastal with the legal description describing the
fee simple
interest in the Coastal Communities Hospital.
(ix) With respect to the Chapman Western Medical Center:
(A) one (1) original Absolute Assignment of Leases and Rents
executed and acknowledged by IHHI with the legal description
describing (1) the
fee simple interest in the Chapman Medical Center, and (2) IHHI's
interest, as
Hospital Tenant, in the Chapman Hospital Lease; and.
(B) one (1) original Absolute Assignment of Leases and Rents
executed and acknowledged by IHHI with the legal description
describing (1) the
fee simple interest in the Chapman Medical Center, and (2) IHHI's
interest, as
MOB Tenant, in the Chapman MOB Lease.
(x) Escrow Instructions executed by each Borrower and each
Credit
Party and each Guarantor.
(xi) For each Property, all UCC-1 Financing Statements (Fixture
Filing) as are required by Lender under the Loan Documents, naming
the
applicable Person's as Debtor.
(xii) All other documents, resolutions, charter documents,
affidavits and items required by any Title Company pursuant to and
as set forth
in any Title Commitment.
(xiii) By 11:00 a.m. Los Angeles time on the Closing Date,
Lender
and Borrowers shall deposit into Escrow any funds required by this
Agreement.
(d) Close of Escrow; Recordation of Loan Documents. At such time
as
(i) Escrow Holder holds for the account of Lender each of the
documents,
instruments and funds set forth above; (ii) each Borrower, each
Credit Party,
each Guarantor and Lender have complied with their respective
obligations under
this Agreement and their respective Escrow Instructions; (iii)
Escrow Holder is
prepared to close and consummate the transactions contemplated by
the
$50,000,000 Revolving Credit Agreement and has complied with the
escrow
instructions by the parties to the $50,000,000 Revolving Credit
Agreement; (iv)
Escrow Holder is prepared to close and consummate the transactions
contemplated
by the New $10,700,000 Credit Agreement and has complied with the
escrow
instructions by the parties to the New $10,700,000 Credit
Agreement; and (v) the
Title Company is irrevocably prepared to issue and deliver each
Title Policy to
Lender at Closing, then Escrow Holder shall close Escrow as
follows:
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<PAGE>
(i) With respect to fee simple interest at Western Medical
Center
- Anaheim, Escrow Holder will (1) release from record all existing
Lender Liens
re the Previous $50,000,000 Acquisition Loan, the Previous
$30,000,000 Line of
Credit Loan, the Previous Accounts Receivable Purchase Agreement,
and all
Previous UCC-1 Financing Statements (Fixture Filings) except any
Previous UCC-1
Financing Statements (Fixture Filings) recorded against each of the
Properties
in conjunction with the Previous $10,700,000 Term Loan; (2) cause
the Western
Medical Center - Anaheim $80,000,000 Deed of Trust to be recorded
as a first
Lien and encumbrance against the fee simple title of the Western
Medical Center
- Santa Ana; (3) cause the Western Medical Center - Anaheim
Absolute Assignment
of Leases and Rents to be recorded as a Lien and encumbrance
against the fee
simple title of the Western Medical Center - Anaheim; and (4) cause
the Western
Medical Center - Anaheim UCC-1 Financing Statement (Fixture Filing)
to be
recorded, in each case subject only to the applicable Permitted
Exceptions.
(ii) With respect to the fee simple interest at Western Medical
Center - Santa Ana, Escrow Holder will (1) release from record all
existing
Lender Liens re the Previous $50,000,000 Acquisition Loan, the
Previous
$30,000,000 Line of Credit Loan, the Previous Accounts Receivable
Purchase
Agreement, and all Previous UCC-1 Financing Statements (Fixture
Filings) except
any Previous UCC-1 Financing Statements (Fixture Filings) recorded
against each
of the Properties in conjunction with the Previous $10,700,000 Term
Loan; (2)
cause the Western Medical Center - Santa Ana $80,000,000 Deed of
Trust to be
recorded as a first Lien and encumbrance against the fee simple
title of the
Western Medical Center - Santa Ana; (3) cause the Western Medical
Center - Santa
Ana Absolute Assignment of Leases and Rents to be recorded as a
Lien and
encumbrance against the fee simple title of the Western Medical
Center - Santa
Ana; and (4) cause the Western Medical Center - Santa Ana UCC-1
Financing
Statement (Fixture Filing) to be recorded, in each case subject
only to the
applicable Permitted Exceptions.
(iii) With respect to the fee simple interest at Coastal
Communities Hospital, Escrow Holder will (1) release from record
all existing
Lender Liens re the Previous $50,000,000 Acquisition Loan, the
Previous
$30,000,000 Line of Credit Loan, the Previous Accounts Receivable
Purchase
Agreement, and all Previous UCC-1 Financing Statements (Fixture
Filings) except
any Previous UCC-1 Financing Statements (Fixture Filings) recorded
against each
of the Properties in conjunction with the Previous $10,700,000 Term
Loan; (2)
cause the Coastal Communities Hospital $80,000,000 Deed of Trust to
be recorded
as a first Lien and encumbrance against the fee simple title of the
Coastal
Communities Hospital; (3) cause the Coastal Communities Hospital
Absolute
Assignment of Leases and Rents to be recorded as a Lien and
encumbrance against
the fee simple title of the Coastal Communities Hospital; and (4)
cause the
Coastal Communities Hospital UCC-1 Financing Statement (Fixture
Filing) to be
recorded, in each case subject only to the applicable Permitted
Exceptions.
(iv) With respect to IHHI's interest, as MOB Tenant, in the
Chapman MOB Lease at the Chapman Medical Center, Escrow Holder will
(1) release
from record all existing Lender Liens re the Previous $50,000,000
Acquisition
Loan, the Previous $30,000,000 Line of Credit Loan, the Previous
Accounts
Receivable Purchase Agreement, and all Previous UCC-1 Financing
Statements
(Fixture Filings) except any Previous UCC-1 Financing Statements
(Fixture
Filings) recorded against each of the Properties in conjunction
with the
26
<PAGE>
Previous $10,700,000 Term Loan; (2) cause the Chapman Medical
Center $80,000,000
Deed of Trust (Chapman MOB Lease) to be recorded as a first Lien
and encumbrance
against IHHI's interest, as MOB Tenant, in the Chapman MOB Lease;
(3) cause the
Chapman Medical Center Absolute Assignment of Leases and Rents
(Chapman MOB
Lease) to be recorded as a Lien and encumbrance against IHHI's
interest, as MOB
tenant, in the Chapman MOB Lease; and (4) cause the Chapman Medical
Center UCC-1
Financing Statement (Fixture Filing) (Chapman MOB Lease) to be
recorded against
Chapman's interest, as MOB Tenant, in the Chapman MOB Lease, in
each case
subject only to the applicable Permitted Exceptions.
(v) With respect to IHHI's interest, as Hospital Tenant, in the
Chapman Hospital Lease at the Chapman Medical Center, Escrow Holder
will (1)
release from record all existing Lender Liens re the Previous
$50,000,000
Acquisition Loan, the Previous $30,000,000 Line of Credit Loan, the
Previous
Accounts Receivable Purchase Agreement, and all Previous UCC-1
Financing
Statements (Fixture Filings) except any Previous UCC-1 Financing
Statements
(Fixture Filings) recorded against each of the Properties in
conjunction with
the Previous $10,700,000 Term Loan; (2) cause the Chapman Medical
Center
$80,000,000 Deed of Trust (Chapman Hospital Lease) to be recorded
as a first
Lien and encumbrance against IHHI's interest, as Hospital Tenant,
in the Chapman
Hospital Lease; (3) cause the Chapman Medical Center Absolute
Assignment of
Leases and Rents (Chapman Hospital Lease) to be recorded as a Lien
and
encumbrance against IHHI's interest, as Hospital tenant, in the
Chapman Hospital
Lease; and (4) cause the Chapman Medical Center UCC-1 Financing
Statement
(Fixture Filing) (Chapman Hospital Lease) to be recorded against
Chapman's
interest, as Hospital Tenant, in the Chapman Hospital Lease, in
each case
subject only to the applicable Permitted Exceptions
(e) Distribution of Funds and Documents by Escrow Holder at
Closing.
When Escrow Holder is in the position to close Escrow as required
by Section
2.3(d) (Close of Escrow; Recordation of Loan Documents) immediately
above, but
in no event later than the Closing Date, Escrow Holder shall
distribute funds
and documents then on deposit in Escrow to Borrowers as set forth
in Lender's
separate escrow instructions.
(f) Distribution of Documents by Escrow Holder.
(i) The original and one (1) copy of each Lender's Title Policy
to Lender.
(ii) A true and correct copy of each of the $80,000,000 Deeds
of
Trust to Lender (with a copy to Borrowers) as recorded.
(iii) A true and correct copy of each of the Absolute
Assignment
of Leases and Rents to Lender (with a copy to Borrowers) as
recorded.
(iv) A true and correct copy of each UCC-1 Financing Statement
(Fixture Filing) (with a copy to Borrowers) as recorded.
(v) Final settlement statement to Lender and to Borrowers with
respect to distribution of amounts deposited into this Escrow. Even
though the
following amounts were not deposited into Escrow, said final
settlement
statement shall list the total amount of the Advances made by
Lender to
Borrowers pursuant to this Agreement but which were withheld by
Lender to pay in
full the Previous $50,000,000 Acquisition Loan, the Previous
$30,000,000 Line of
Credit Loan, the Origination Fees and Lender's Costs.
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(g) Distribution of Documents by Lender at Closing. When Escrow
Holder
has closed Escrow and distributed the documents and funds as and
when required
by this Agreement, Lender shall cause the documents then in its
possession to be
distributed as follows:
(i) To Borrower's Representative: one (1) duplicate original
counterpart of the Absolute Assignments of Leases and Rents; the
Security
Agreement; the Collateral Assignments of Contracts; the Deposit
Account Security
Agreements; the Control Agreement; the Post-Closing Agreement; the
Intellectual
Property Security Agreement; the Environmental Indemnity Agreement;
the Guaranty
Agreement; the Intercreditor Agreement; the Pledge Agreement; the
Stock Power;
the Membership Power; the Landlord's Consent and Estoppel
Certificate (Chapman
MOB Lease); the Landlord's Consent and Estoppel Certificate
(Chapman Hospital
Lease)and the Landlord's Consent and Estoppel Certificate (Triple
Net Lease).
(ii) To Borrower's Representative: one (1) copy of the
$45,000,000 Real Estate Term Note; one (1) copy of the $35,000,000
Non-Revolving
Line of Credit Note; and one (1) copy of the fairness opinion.
(iii) To Lender: one (1) duplicate original counterpart of the
Absolute Assignments of Leases and Rents; the Security Agreement;
the Collateral
Assignments of Contracts; the Deposit Account Security Agreements;
the Control
Agreement; the Post-Closing Agreement; the Intellectual Property
Security
Agreement; the Environmental Indemnity Agreement; the Guaranty
Agreement; the
Intercreditor Agreement; the Pledge Agreement; the Stock Power; the
Membership
Power; the Landlord's Consent and Estoppel Certificate (Chapman MOB
Lease); the
Landlord's Consent and Estoppel Certificate (Chapman Hospital
Lease); and the
Landlord's Consent and Estoppel Certificate (Triple Net Lease).
(iv) To Lender: the original executed $45,000,000 Real Estate
Term Note; the original executed $35,000,000 Non-Revolving Line of
Credit Note;
the original, executed Warrant; the original of each of the
executed legal
opinions; and the original executed fairness opinion.
3.
REPRESENTATIONS AND WARRANTIES
------------------------------
To
induce Lender to make the Loans, Borrowers make the following
representations and warranties to Lender with respect to Borrowers;
each Credit
Party makes the following representations and warranties to Lender
with respect
to itself; and each Guarantor makes the following representations
and warranties
to Lender with respect to itself. Each and all of said
representations and
warranties (i) shall be true, correct, complete and accurate on the
Closing Date
and on each subsequent funding date (unless expressly limited to a
particular
date), and (ii) shall survive the execution and delivery of this
Agreement (it
being understood, that, for purposes of any representation and
warranty
expressly made as of the Closing Date and each subsequent funding
date with
reference to, or qualified by, a Disclosure Schedule, such
reference shall
include such updated version, if any, of such Disclosure Schedule
as may be made
effective (including by consent of Lender) pursuant to Section 5.6
(Supplemental
Disclosure) on or before the Closing Date).
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3.1
Borrowers and Credit Parties.
(a) Corporate Existence; Compliance with Applicable Laws.
(i) IHHI (1) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada; (2) is
registered as
a foreign corporation in the State of California and is qualified
to do business
in and is doing business in the State of California; (3) is duly
qualified to
conduct business and is in good standing in each other jurisdiction
where its
ownership or lease of property or the conduct of its business
requires such
qualification, except where the failure to be so qualified would
not result in
exposure to losses or liabilities which could reasonably be
expected to have a
Material Adverse Effect; (4) has the requisite power and authority
and the legal
right to own, pledge, mortgage, or otherwise encumber and operate
its
properties, to lease the property it operates under lease and to
conduct its
business as now conducted or proposed to be conducted; (5) has
applied for all
licenses, permits, consents or approvals from or by, and has made
all material
filings with, and has given all notices to, all Governmental
Authorities having
jurisdiction, to the extent required for such ownership, operation
and conduct;
(6) is in compliance with its bylaws; and (7) is in compliance in
all material
respects with all other Applicable Laws.
(ii) WMC-A, WMC-SA, Coastal and Chapman are each (1)
corporations
duly organized, validly existing and in good standing under the
laws of the
State of California; (2) doing business in the State of California;
(3) duly
qualified to conduct business and is in good standing in each other
jurisdiction
where its ownership or lease of property or the conduct of its
business requires
such qualification, except where the failure to be so qualified
would not result
in exposure to losses or liabilities which could reasonably be
expected to have
a Material Adverse Effect; (4) has the requisite power and
authority and the
legal right to own, pledge, mortgage, or otherwise encumber and
operate its
properties, to lease the property it operates under lease and to
conduct its
business as now conducted or proposed to be conducted; (5) has
applied for all
licenses, permits, consents or approvals from or by, and has made
all material
filings with, and has given all notices to, all Governmental
Authorities having
jurisdiction, to the extent required for such ownership, operation
and conduct;
(6) is in compliance with its bylaws; and (7) is in compliance in
all material
respects with all other Applicable Laws.
(iii) PCHI, Ganesha and West Coast are each (1) limited
liability
companies duly organized, validly existing and in good standing
under the laws
of the State of California; (2) doing business in the State of
California; (3)
duly qualified to conduct business and is in good standing in each
other
jurisdiction where its ownership or lease of property or the
conduct of its
business requires such qualification, except where the failure to
be so
qualified would not result in exposure to losses or liabilities
which could
reasonably be expected to have a Material Adverse Effect; (4) have
the requisite
power and authority and the legal right to own, pledge, mortgage,
or otherwise
encumber and operate its properties, to lease the property it
operates under
lease and to conduct its business as now conducted or proposed to
be conducted;
(5) have applied for all licenses, permits, consents or approvals
from or by,
29
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and has made all material filings with, and has given all notices
to, all
Governmental Authorities having jurisdiction, to the extent
required for such
ownership, operation and conduct; (6) is in compliance with its
operating
agreement; and (7) is in compliance in all material respects with
all other
Applicable Laws.
(iv) OC-PIN is a limited liability company duly organized,
validly existing and in good standing under the laws of the State
of Nevada; (2)
is registered as a foreign limited liability company in the State
of California
and is qualified to do business in and is doing business in the
State of
California; (3) is duly qualified to conduct business and is in
good standing in
each other jurisdiction where its ownership or lease of property or
the conduct
of its business requires such qualification, except where the
failure to be so
qualified would not result in exposure to losses or liabilities
which could
reasonably be expected to have a Material Adverse Effect; (4) has
the requisite
power and authority and the legal right to own, pledge, mortgage,
or otherwise
encumber and operate its properties, to lease the property it
operates under
lease and to conduct its business as now conducted or proposed to
be conducted;
(5) has applied for all licenses, permits, consents or approvals
from or by, and
has made all material filings with, and has given all notices to,
all
Governmental Authorities having jurisdiction, to the extent
required for such
ownership, operation and conduct; (6) is in compliance with its
operating
agreement; and (7) is in compliance in all material respects with
all other
Applicable Laws.
(b) Executive Office, Collateral Locations, FEIN. As of the
Closing
Date, the name of each Borrower and each Credit Party and each
Guarantor, as its
name appears in official filings in the States of Nevada and
California (as
applicable), and the current location of each Borrower's and each
Credit Party's
and each Guarantor's chief executive office and the premises at
which any
Collateral is located are set forth in Disclosure Schedule 3.1.
None of such
locations has changed within the four (4) months preceding the
Closing Date
(except that Collateral may have been transferred from one Hospital
Facility to
another during said period) and each Borrower and Credit Party and
each
Guarantor has only one state of incorporation or organization and
has not
changed the state of incorporation or organization at any time
within the five
(5) year period prior to the Closing Date. During the preceding
five (5) years,
no Borrower and no Credit Party and no Guarantor has conducted
business under or
used any name (whether corporate, partnership or assumed) other
than as shown on
Schedule 3.1. Each Borrower and each Credit Party and each
Guarantor is the sole
owner of all of its names listed on Schedule 3.1, and any and all
business done
and invoices issued in such names are such Borrower's and/or such
Credit Party's
and such Guarantor's sales, business and invoices. Each trade name
of each
Borrower and each Credit Party and each Guarantor represents a
division or
trading style of such Borrower and/or such Credit Party and/or such
Guarantor.
All Accounts of each Borrower and each Credit Party (other than
Ganesha) and
each Guarantor (other than Ganesha) arise, originate and are
located, and all of
the Collateral and all books and records in connection therewith or
in any way
relating thereto or evidencing the Collateral are located and shall
only be
located, in and at such locations other than goods in transit and
immaterial
amounts of property. All of the Collateral is located only in the
continental
United States. Each Borrower's and each Credit Party's (other than
Ganesha) and
each Guarantor's (other than Ganesha) Medicare and Medicaid
Provider Numbers are
set forth on Schedule 3.1. In addition, Disclosure Schedule 3.1
lists the
federal employer identification number of each Borrower and each
Credit Party
and each Guarantor.
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<PAGE>
3.2
Power, Authorization, Enforceable Obligations. The execution,
delivery
and performance by Borrowers of the Loan Documents to which it is a
party and
the creation of all Liens provided for therein: (a) are within such
Person's
power; (b) have been duly authorized by all necessary corporate or
limited
liability company action; (c) do not contravene any provision of
such Person's
bylaws or operating agreement; (d) do not violate any law or
regulation, or any
order or decree of any court or Governmental Authority; (e) do not
conflict with
or result in the breach or termination of, constitute a default
under or
accelerate or permit the acceleration of any performance required
by, any
indenture, mortgage, deed of trust, lease, agreement or other
instrument to
which such Person is a party or by which such Person or any of its
property is
bound; (f) do not result in the creation or imposition of any Lien
upon any of
the property of such Person other than those in favor of Lender
pursuant to the
Loan Documents; and (g) do not require the consent or approval of
any
Governmental Authority or any other Person, except those referred
to in Section
2.1(b) (Required Consents and Approvals), all of which will have
been duly
obtained, made or complied with prior to the Closing Date. Each of
the Loan
Documents shall be duly executed and delivered by Borrowers and
Credit Parties
and each such Loan Document shall constitute a legal, valid and
binding
obligation of Borrowers and Credit Parties enforceable against it
in accordance
with its terms. Credit Parties hereby make the foregoing
representations and
warranties in clauses (d), (e), (f) and (g) of this Section 3.2
(Power,
Authorization, Enforceable Obligations) with respect to the
execution, delivery
and performance by Credit Parties of the Loan Documents to which
Credit Parties
are a party and the creation of all Liens provided for therein.
3.3
Financial Statements and Projections. Except for the Projections,
all
Financial Statements delivered to Lender by Borrowers that are
referred to below
have been prepared in accordance with GAAP consistently applied
throughout the
periods covered (except as disclosed therein and except, with
respect to
unaudited Financial Statements, for the absence of footnotes and
normal year-end
audit adjustments) and present fairly in all material respects the
financial
position of Borrowers as of the dates thereof and the results of
their
operations and cash flows for the periods then ended. Credit
Parties (other than
Ganesha) hereby represent and warrant to Lender that all financial
statements
delivered to Lender by Credit Parties present fairly in all
material respects
the financial position of the Credit Parties as of the dates
thereof, and since
the date of the most recent financial statements submitted to
Lender, there has
not occurred any Material Adverse Effect or, to Credit Parties'
knowledge, any
other event or condition that would reasonably be likely to have a
Material
Adverse Effect.
(a) Financial Statements. The Financial Statements which have
been
delivered by Borrowers to Lender on or before the date hereof are
comprised of:
(i) The consolidated, unaudited balance sheets of Borrowers as
of
December 31, 2006, and the related statements of income and cash
flows of
Borrowers for the nine (9) month period then ended.
(ii) The unaudited balance sheet(s) at June 30, 2007 of
Borrowers
and the related consolidated statement(s) of income and cash flows
of Borrowers
for the Fiscal Quarter then ended.
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<PAGE>
(b) Pro Forma. The pro forma financial statements which have
been
delivered by Borrowers to Lender on or before the date hereof were
prepared by
Borrowers giving pro forma effect to the Related Transactions, was
based on the
unaudited consolidated and consolidating balance sheets of
Borrowers and its
Subsidiaries, and were prepared in accordance with GAAP (to the
extent
applicable), with only such adjustments thereto as would be
required in
accordance with GAAP.
(c) Projections. All Projections which have been delivered by
Borrowers to Lender on the date hereof were prepared by Borrowers
in light of
Borrower's past experience, but including reasonably estimated
future payments
of known contingent liabilities, and reflect projections on a
quarterly basis
for the 2007/2008 Fiscal Year and on an annual basis for all
periods thereafter
through 2009/2010. The Projections are based upon the same
accounting principles
as those used in the preparation of the financial statements
described above
with certain normalizing assumptions made by Borrowers, and the
estimates and
assumptions stated therein, all of which Borrowers believe to be
reasonable and
fair in light of current conditions and current facts known to
Borrowers and, as
of the Closing Date, reflect Borrower's good faith and reasonable
estimates of
the future financial performance of Borrowers for the period set
forth therein.
3.4
Material Adverse Effect.
(a) Borrowers. The Borrowers hereby represent to Lender that,
between
the Effective Date of this Agreement and the Closing Date: (i) to
the best of
Borrower's knowledge, after due inquiry, there has not been any
material
increase in contingent or noncontingent liabilities, liabilities
for Charges, or
obligations with respect to long-term leases or unusual forward or
long-term
commitments of Borrowers, (ii) to the best of Borrower's knowledge,
after due
inquiry, there has not been any material decrease in the assets of
Borrowers,
(iii) no contract, lease or other agreement or instrument has been
entered into
by Borrowers or has become binding upon Borrower's assets and, to
the knowledge
of Borrowers, no law or regulation applicable to Borrowers has been
adopted that
has had or could reasonably be expected to have a Material Adverse
Effect with
respect to Borrowers or the Collateral, (iv) to the best of
Borrower's
knowledge, after due inquiry, neither Borrowers nor any of the
Credit Parties is
in default under any material contract, lease or other agreement or
instrument,
that alone or in the aggregate could reasonably be expected to have
a Material
Adverse Effect with respect to Borrowers or the Collateral, and (v)
to the best
of Borrower's knowledge, after due inquiry, no event has occurred,
that alone or
together with other events, has had, or could reasonably be
expected to have, a
Material Adverse Effect with respect to Borrowers or the
Collateral.
(b) Credit Parties. The Credit Parties (other than Ganesha)
hereby
represent to Lender that, between the Effective Date of this
Agreement and the
Closing Date: (i) to the best of each Credit Party's knowledge,
there has not
been any material increase in contingent or noncontingent
liabilities,
liabilities for Charges, or obligations with respect to long-term
leases or
unusual forward or long-term commitments of Borrowers, (ii) to the
best of each
Credit Party's knowledge, there has not been any material decrease
in the assets
of any Credit Party, (iii) no contract, lease or other agreement or
instrument
has been entered into by any Credit Party or has become binding
upon Credit
Parties assets and, to the knowledge of Credit Parties, no law or
regulation
applicable to Credit Parties or to Borrowers has been adopted that
has had or
32
<PAGE>
could reasonably be expected to have a Material Adverse Effect with
respect to
Credit Party's or Borrowers or the Collateral, (iv) to the best of
each Credit
Party's knowledge, neither Borrowers nor any of the Credit Parties
is in default
under any material contract, lease or other agreement or
instrument, that alone
or in the aggregate could reasonably be expected to have a Material
Adverse
Effect with respect to Borrowers or the Credit Parties or the
Collateral, and
(v) to the best of each Credit Party's knowledge, no event has
occurred, that
alone or together with other events, has had, or could reasonably
be expected to
have, a Material Adverse Effect with respect to Borrowers or the
Credit Parties
or the Collateral.
3.5
Ownership of Collateral; Liens. Borrowers and Credit Parties
(other
than Ganesha) (a) each separately own good, valid and marketable
title to or a
valid leasehold interest in, all of its properties and assets,
including all of
its Collateral whether personal or real, subject to no transfer
restrictions or
Liens of any kind except for Permitted Encumbrances, and (b) is in
compliance in
all material respects with each lease to which it is a party or
otherwise bound.
None of the Collateral is subject to any Liens other than
Permitted
Encumbrances, and there are no facts, circumstances or conditions
known to
Borrowers or to Credit Parties that may result in any Liens
(including Liens
arising under Environmental Laws or other Applicable Laws) other
than Permitted
Encumbrances. Disclosure Schedule 3.5 attached hereto sets forth a
list of all
real estate and leases to be owned or held by Borrowers immediately
after the
Closing Date. Each Borrower enjoys peaceful and undisturbed
possession under all
such leases and such leases are all the leases necessary for the
operation of
such properties and assets are valid and subsisting and are in full
force and
effect.
3.6
Labor Matters. Except as set forth on Disclosure Schedule 3.6, as
of
the Closing Date, (a) no strikes or other material labor disputes
against
Borrowers are pending or, to any Borrower's or to any Credit
Party's knowledge,
threatened; (b) hours worked by and payment made to employees of
Borrowers
comply in all material respects with the Fair Labor Standards Act
and other
Applicable Laws; (c) all payments due from Borrowers for employee
health and
welfare insurance have been paid or accrued as a liability on the
books of
Borrowers; (d) Borrowers are not a party to or bound by any
collective
bargaining agreement, management agreement, consulting agreement,
employment
agreement, bonus, restricted stock, stock option, or stock
appreciation plan or
agreement or any similar plan, agreement or arrangement unless true
and complete
copies of any agreements described on Disclosure Schedule 3.6 have
been
delivered to Lender; (e) there is no organizing activity involving
Borrowers
pending or, to Borrower's or Credit Party's knowledge, threatened
by any labor
union or group of employees of Borrowers; (f) except as otherwise
disclosed on
Disclosure Schedule 3.6, there are no representation proceedings
pending or, to
Borrower's or Credit Party's knowledge, threatened with the
National Labor
Relations Board, and no labor organization or group of employees of
any Borrower
has made a pending demand for recognition; and (g) there are no
material
complaints or charges against any Borrower pending or, to the
knowledge of
Borrowers or Credit Parties, threatened to be filed with any
Governmental
Authority or arbitrator based on, arising out of, in connection
with, or
otherwise relating to the employment or termination of employment
by any
Borrower of any individual.
3.7
Ventures, Subsidiaries and Affiliates; Outstanding Stock. Except
as
listed on Disclosure Schedule 3.7, the Borrowers and the Credit
Parties have no
Subsidiaries. Disclosure Schedule 3.7 states the authorized and
issued
capitalization of each Borrower and of each Credit Party (other
than Ganesha),
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the number and class of equity securities and/or ownership, voting
or
partnership interests issued and outstanding of each Borrower and
each Credit
Party (other than Ganesha) and the record and beneficial owners
thereof
(including options, warrants and other rights to acquire any of the
foregoing).
The ownership or partnership interests of each Credit Party are
not
certificated, the documents relating to such interests do not
expressly state
that the interests are governed by Article 8 of the Uniform
Commercial Code, and
the interests are not held in a securities account. The outstanding
equity
securities and/or ownership, voting or partnership interests of
each Borrower
and each Credit Party (other than Ganesha) have been duly
authorized and validly
issued and are fully paid and non-assessable, and each Person
listed on
Disclosure Schedule 3.7 owns beneficially and of record all the
equity
securities and/or ownership, voting or partnership interests it is
listed as
owning free and clear of any Liens other than Liens created by the
Collateral
Documents. Disclosure Schedule 3.7 also lists the directors,
members, managers
and/or partners of each Borrower and each Credit Party (other than
Ganesha).
Except as listed on Disclosure Schedule 3.7, no Credit Party (other
than
Ganesha) owns an interest in, participates in or engages in any
joint venture,
partnership or similar arrangements with any Person. Except as set
forth in
Disclosure Schedule 3.7, as of the Closing Date, there are no
outstanding rights
to purchase, options, warrants or similar rights or agreements
pursuant to which
any Borrower or any Credit Party (other than Ganesha) has issued or
may be
required to issue, sell, repurchase or redeem any of its Stock. All
outstanding
Indebtedness and Guaranteed Indebtedness of Borrowers and Credit
Parties (other
than Ganesha) as of the Closing Date identified in Section 6.3
(Indebtedness) is
described in Disclosure Schedule 6.3.
3.8
Government Regulation. No Borrower is an "investment company" or
an
"affiliated person" of, or "promoter" or "principal underwriter"
for, an
"investment company," as such terms are defined in the Investment
Company Act of
1940. No Borrower is subject to regulation under the Public Utility
Holding
Company Act of 1935, the Federal Power Act, or any other federal or
state
statute that restricts or limits its ability to incur Indebtedness
or to perform
its obligations hereunder. The making of the Loans by Lender to
Borrowers, the
application of the proceeds thereof and repayment thereof and the
consummation
of the Related Transactions will not violate any provision of any
such statute
or any rule, regulation or order issued by the Securities and
Exchange
Commission or other Applicable Laws binding on Borrowers.
3.9
Margin Regulations. Borrowers are not engaged, nor will they
engage,
principally or as one of its important activities, in the business
of extending
credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such
terms are defined in Regulation U of the Federal Reserve Board as
now and from
time to time hereafter in effect. Borrowers do not own any margin
stock, and
none of the proceeds of the Loans or other extensions of credit
under this
Agreement will be used, directly or indirectly, for the purpose of
purchasing or
carrying any margin stock, for the purpose of reducing or retiring
any
Indebtedness that was originally incurred to purchase or carry any
stock or for
any other purpose that might cause any of the Loans or other
extensions of
credit under this Agreement to be considered a "purpose credit"
within the
meaning of Regulations T, U or X of the Federal Reserve Board.
Borrowers will
not take or permit to be taken any action that might cause any Loan
Document to
violate any regulation of the Federal Reserve Board. Each Credit
Party (other
than Ganesha) hereby makes the foregoing representations,
warranties and
covenants to Lender set forth in this Section 3.9 (Margin
Regulations) with
respect to such Credit Party.
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3.10
Taxes. Except as described in Disclosure Schedule 3.10, all
Federal
and other material tax returns, reports and statements, including
information
returns, required by any Governmental Authority to be filed by
Borrowers have
been filed with the appropriate Governmental Authority, and all
Charges have
been paid prior to the date on which any fine, penalty, interest or
late charge
may be added thereto for nonpayment thereof excluding Charges or
other amounts
being contested in accordance with Section 5.2(b) (Right to Contest
Charges) and
unless the failure to so file or pay would not reasonably be
expected to result
in fines, penalties or interest in excess of $100,000 in the
aggregate. Proper
and accurate amounts have been withheld by Borrowers for all
periods in full and
complete compliance with all applicable federal, state, local and
foreign laws
and such withholdings have been timely paid to the respective
Governmental
Authorities. Disclosure Schedule 3.10 sets forth as of the Closing
Date and the
Closing Date those taxable years for which each Borrower's tax
returns are
currently being audited by the IRS or any other applicable
Governmental
Authority, and any assessments or threatened assessments in
connection with such
audit, or otherwise currently outstanding. Except as described in
Disclosure
Schedule 3.10, as of the Closing Date, no Borrower has executed or
filed with
the IRS or any other Governmental Authority any agreement or other
document
extending, or having the effect of extending, the period for
assessment or
collection of any Charges. Borrowers are not liable for any
Charges: (a) under
any agreement (including any tax sharing agreements) or (b) to
Borrower's and
Credit Party's knowledge, as a transferee. As of the Closing Date,
Borrowers
have not agreed or been requested to make any adjustment under IRC
Section
481(a), by reason of a change in accounting method or otherwise.
Each Credit
Party (other than Ganesha) hereby make the foregoing
representations, warranties
and covenants to Lender set forth in this Section 3.10 (Taxes) with
respect to
all Charges and tax returns of such Credit Party.
3.11
ERISA.
(a) Disclosure Schedule 3.11 lists, as of the Closing Date, for
each
Borrower (i) all ERISA Affiliates and (ii) all Plans and separately
identifies
all Pension Plans, including Title IV Plans, Multiemployer Plans,
and all
Retiree Welfare Plans. Copies of all such listed Plans have been
delivered to
Lender. Except with respect to Multiemployer Plans, each Qualified
Plan has been
determined by the IRS to qualify under Section 401 of the IRC, the
trusts
created thereunder have been determined to be exempt from tax under
the
provisions of Section 501 of the IRC, and nothing has occurred that
would cause
the loss of such qualification or tax-exempt status. Each Plan is
in compliance
in all material respects with the applicable provisions of ERISA,
the IRC and
its terms, including the timely filing of all reports required
under the IRC or
ERISA. Neither any Borrower nor any ERISA Affiliate has failed to
make any
material contribution or pay any material amount due as required by
either
Section 412 of the IRC or Section 302 of ERISA or the terms of any
such Plan. No
"prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of
the IRC, has occurred with respect to any Plan, that would subject
any Borrower
to a material tax on prohibited transactions imposed by Section
502(i) of ERISA
or Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule 3.11: (i) no Title
IV
Plan has any material Unfunded Pension Liability; (ii) no ERISA
Event has
occurred or is reasonably expected to occur; (iii) there are no
pending, or to
the knowledge of Borrowers, threatened material claims (other than
claims for
benefits in the normal course), sanctions, actions or lawsuits,
asserted or
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instituted against any Plan or any Person as fiduciary or sponsor
of any Plan;
(iv) neither any Borrower nor any ERISA Affiliate has incurred or
reasonably
expects to incur any material liability as a result of a complete
or partial
withdrawal from a Multiemployer Plan; and (v) within the last five
years no
Title IV Plan of any Borrower or any ERISA Affiliate has been
terminated,
whether or not in a "standard termination" as that term is used in
Section 4041
of ERISA, nor has any Title IV Plan of any Borrower or any ERISA
Affiliate
(determined at any time within the last five years) with material
Unfunded
Pension Liabilities been transferred outside of the "controlled
group" (within
the meaning of Section 4001(a)(14( of ERISA) of any Borrower or any
ERISA
Affiliate (determined at such time).
3.12
No Litigation. Except as set forth in Disclosure Schedule 3.12,
no
Litigation, action, claim, lawsuit, demand, investigation or
proceeding is now
pending or, to the knowledge of Borrowers or Credit Parties,
threatened against
Borrowers, before any Governmental Authority or before any
arbitrator or panel
of arbitrators, (a) that challenges the execution, delivery and
performance of
Borrower's or Credit Party's right or power to enter into or
perform any of its
obligations under the Loan Documents to which it is a party, or the
validity or
enforceability of any Loan Document or any action taken thereunder,
or (b) that
has a reasonable risk of being determined adversely to Borrowers or
Credit
Parties and that, if so determined, could reasonably be expected to
have a
Material Adverse Effect. Except as set forth on Disclosure Schedule
3.12, as of
the Closing Date there is no Litigation pending or, to Borrower's
or Credit
Party's knowledge, threatened, that seeks damages in excess of One
Hundred
Thousand Dollars ($100,000) or injunctive relief against, or
alleges criminal
misconduct of, Borrowers.
3.13
Brokers. Except as set forth on Disclosure Schedule 3.13, no broker
or
finder brought about the obtaining, making or closing of the Loans
or the
Related Transactions, and neither Borrowers nor any Affiliates
thereof has any
obligation to any Person in respect of any finder's or brokerage
fees in
connection therewith.
3.14
Intellectual Property. As of the Closing Date, Borrowers own or
will
own, and have or will have, rights to use all Intellectual Property
necessary to
continue to conduct its business as now conducted by it or
presently proposed to
be conducted by it, and each Patent, Trademark, registered
Copyright and License
is listed, together with application or registration numbers, as
applicable, in
Disclosure Schedule 3.14. Borrowers conduct their businesses and
affairs without
knowingly infringing or interfering with any Intellectual Property
of any other
Person which could reasonably be expected to have a Material
Adverse Effect.
Except as set forth in Disclosure Schedule 3.14, neither Borrowers
nor Credit
Parties is aware of any material infringement claim by any other
Person with
respect to any Intellectual Property.
3.15
Full Disclosure. All representations and warranties made in any of
the
Loan Documents by Borrowers or Credit Parties or Guarantors shall
be made after
giving full effect to the transactions contemplated in this
Agreement. No
information contained in this Agreement, any of the other Loan
Documents,
Financial Statements or Collateral Reports or other written reports
from time to
time prepared by Borrowers or Credit Parties or Guarantors and
delivered
hereunder or any written statement prepared by Borrowers or Credit
Parties or
Guarantors and furnished by or on behalf of Borrowers or Credit
Parties or
Guarantors to Lender pursuant to the terms of this Agreement
contains or will
contain any untrue statement of a material fact or omits or will
omit to state a
material fact necessary to make the statements contained herein or
therein not
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materially misleading in light of the circumstances under which
they were made.
Projections from time to time delivered hereunder are or will be
based upon the
estimates and assumptions stated therein, all of which Borrowers
and Credit
Parties (other than Ganesha) and Guarantors (other than Ganesha),
as applicable,
believed at the time of delivery to be reasonable and fair in light
of current
conditions and current facts known to Borrowers and Credit Parties
(other than
Ganesha) and Guarantors (other than Ganesha), as applicable, as of
such delivery
date, and reflect Borrower's and Credit Party's (other than
Ganesha's) and
Guarantor's (other than Ganesha's) good faith and reasonable
estimates of the
future financial performance of Borrowers and of the other
information projected
therein for the period set forth therein. The Liens granted to
Lender pursuant
to the Collateral Documents will at all times be fully perfected
first priority
Liens in and to the Collateral described therein, subject, as to
priority, only
to Permitted Encumbrances.
3.16
Environmental Matters. Each Borrower and each Credit Party (other
than
Ganesha) and each Guarantor represent and warrant to Lender as
follows:
(a) Except as set forth in Disclosure Schedule 3.16, as of the
date
hereof, no Borrower and no Credit Party and no Guarantor knows of
any Hazardous
Material which is present, used, manufactured, handled, generated,
transported,
stored, treated, discharged, released, buried or disposed of on,
in, under or
about any Property in violation of applicable Environmental
Laws;
(b) To the best of each Borrower's and each Credit Party's and
each
Guarantor's knowledge, following diligent inquiry, there has not
been any use,
generation, manufacture, storage, treatment, disposal, release or
threatened
release of any Hazardous Material by any prior owners of prior
occupants of any
Property or by any third parties on, in, under or about any
Property;
(c) As of the date hereof there is no pending or, to each
Borrower's
and each Credit Party's and each Guarantor's knowledge, threatened
litigation or
proceedings before any administrative agency in which any person or
entity
alleges the release, threat of release, placement on, under or
about any
Property by any Borrower or any Credit Party or any Guarantor, or
the
manufacture, handling, generation, transportation, storage,
treatment,
discharge, burial or disposal on, in, under or about any Property
by any
Borrower or any Credit Party or any Guarantor, or the
transportation to or from
any Property by any Borrower or any Credit Party or any Guarantor,
of any
Hazardous Material, in violation of Environmental Laws;
(d) As of the date hereof, no Borrower and no Credit Party and
no
Guarantor has received any notice and no Borrower and no Credit
Party and no
Guarantor has any actual knowledge that any Governmental Authority
or any
employee or agent thereof been determined, or threatens to
determine, that there
is a presence, release, threat of release, placement on, in, under
or about any
Property caused by any Borrower or by any Credit Party or by any
Guarantor, or
the manufacture, handling, generation, transportation, storage,
treatment,
discharge, burial or disposal on, in, under or about any Property
caused by any
Borrower or any Credit Party or any Guarantor, or the
transportation to or from
any Property by any Borrower or any Credit Party or any Guarantor,
of any
Hazardous Material, in violation of Environmental Laws; and
37
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(e) To each Borrower's and each Credit Party's and each
Guarantor's
knowledge, there have been no communications or agreements with any
Governmental
Authority or any private entity indicating that there has occurred,
a release,
threat of release, placement on, in, under or about any Property by
any Borrower
or any Credit Party or any Guarantor, or the manufacture, handling,
generation,
transportation, storage, treatment, discharge, burial or disposal
on, in, under
or about any Property by any Borrower or any Credit Party or any
Guarantor, or
the transportation to or from any Property by any Borrower or by
any Credit
Party or by any Guarantor, of any Hazardous Material in violation
of any
Environmental Laws.
3.17
Insurance. Disclosure Schedule 3.17 lists all insurance policies
of
any nature maintained, as of the Closing Date, for current
occurrences by
Borrowers, as well as a brief description thereof; and a copy of
each current
certificate of insurance naming Lender as an additional
co-insured.
3.18
Deposit and Disbursement Accounts. Disclosure Schedule 3.18 lists
all
banks and other financial institutions at which Borrowers maintain
or will
maintain deposit, commodities, investment or other accounts as of
each of the
Closing Date, including any Disbursement Accounts, and such
Schedule correctly
identifies the name, address and telephone number of each
depository, the name
in which the account is held, a description of the purpose of the
account, and
the complete account number therefor. Disclosure Schedule 3.18
shall identify
which deposit accounts of each entity are used to receive
Governmental Authority
payments.
3.19
Vendor Relations. As of the Closing Date, there exists no actual
or,
to the knowledge of Borrowers or Credit Parties or Guarantors,
threatened
termination or cancellation of, or any material adverse
modification or change
in the business relationship of Borrowers with any supplier
essential to its
operations.
3.20
Bonding; Licenses; Permits. Except as set forth on Disclosure
Schedule
3.20, as of the Closing Date, no Borrower is a party to or bound by
any surety
bond agreement or bonding requirement with respect to products or
services sold
by it or any trademark or patent license agreement with respect to
products sold
by it. Disclosure Schedule 3.20 list each permit each Borrower is
required to
obtain and maintain in order to conduct its respective Business in
its
respective Hospital Facility.
3.21
Solvency. Both before and after giving effect to (a) the Loans to
be
made or incurred on the Closing Date or such other date as Advances
are made or
incurred, (b) the disbursement of the proceeds of such Advances
pursuant to the
instructions of Borrower's Representative; (c) the consummation of
the other
Related Transactions; and (d) the payment and accrual of all
transaction costs
in connection with the foregoing, Borrowers are each and will be
Solvent.
4. FINANCIAL
STATEMENTS AND INFORMATION
------------------------------------
4.1
Reports and Notices.
(a) Lender have received from Borrowers and Credit Parties (other
than
Ganesha), and have approved, certain Financial Statements and
Projections of
Borrowers and the Credit Parties (other than Ganesha). Borrowers
hereby agree
38
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that they shall, between the Closing Date and the Termination Date,
deliver to
Lender updated Financial Statements and Projections (and, if
requested by
Lender, components thereof or statistical information related
thereto not later
than the 30th calendar day following expiration of each Fiscal
Quarter to the
address of Lender set forth in Annex D (Notice Addresses). Further,
Lender shall
have the right but not the obligation to require Borrowers to
deliver updated
Financial Statements and Projections (with all requested additional
information)
to Lender on a monthly basis, in Lender's sole discretion.
(b) Borrowers hereby agree that, from and after the Closing Date
and
until the Termination Date, they shall deliver to Lender, the
various Collateral
Reports and other reports at the times, to the Persons and in the
manner set
forth in Annex D (Notice Addresses) including all certifications
required with
respect to Certified Cash balances.
4.2
Communication with Accountants. Borrowers and Credit Parties
authorize
Lender to communicate and/or meet directly with all independent
certified public
accountants of Borrowers, and Borrowers shall authorize and shall
instruct those
accountants to communicate and/or meet with Lender with regard to
any and all
financial statements and supporting financial documentation
relating to
Borrowers with respect to the business, results of operations and
financial
condition of Borrowers. Prior to communicating with the independent
public
accounts of Borrowers, Lender shall deliver a reasonable advance
written notice
to Borrowers stating the purpose and scope of the communication
and/or meeting.
5. AFFIRMATIVE
COVENANTS
---------------------
To
induce Lender to make the Loans, Borrowers and Credit Parties
and
Guarantors, as applicable, make the following affirmative covenants
in favor of
Lender, each of which shall survive the execution and delivery of
this
Agreement.
5.1
Maintenance of Existence and Conduct of Business. Borrowers and
Credit
Parties and Guarantors shall do or cause to be done all things
necessary to
preserve and keep in full force and effect its corporate and/or
limited
liability company existence and its material rights; continue to
conduct its
business substantially as conducted prior to the Closing Date,
anticipated to be
conducted, or as otherwise permitted hereunder; at all times
maintain, preserve
and protect all of their assets and properties necessary to the
conduct of its
business, and keep the same in good repair, working order and
condition in all
material respects (taking into consideration ordinary wear and
tear) and from
time to time make, or cause to be made, all necessary or
appropriate repairs,
replacements and improvements thereto consistent with industry
practices.
5.2
Payment of Charges.
(a) Obligation to Pay Charges. Subject to Section 5.2(b) (Right
to
Contest Charges), Borrowers shall pay and discharge or cause to be
paid and
discharged promptly all Charges payable by them, including (i)
Charges imposed
upon them, their income and profits, or any of their property
(real, personal or
mixed) and all Charges with respect to Taxes, social security and
unemployment
withholding with respect to their employees, (ii) lawful claims for
labor,
materials, supplies and services or otherwise, and (iii) all
storage or rental
charges payable to warehousemen or bailees in possession of any
Collateral, in
each case, before any thereof shall become past due, except in the
case of
clauses (ii) and (iii) where the failure to pay or discharge such
Charges would
not result in aggregate liabilities in excess of $100,000.
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(b) Right to Contest Charges. Borrowers may in good faith contest,
by
appropriate proceedings, the validity or amount of any Charges,
Taxes or claims
described in Section 5.2(a) (Obligation to Pay Charges); provided,
that (i)
adequate reserves with respect to such contest are maintained on
the books of
Borrowers, in accordance with GAAP; (ii) no Lien shall be imposed
to secure
payment of such Charges (other than payments to warehousemen and/or
bailees)
that is superior to any of the Liens securing the Obligations and
such contest
is maintained and prosecuted continuously and with diligence and
operates to
suspend collection or enforcement of such Charges; (iii) none of
the Collateral
becomes subject to forfeiture or loss as a result of such contest;
and (iv)
Borrowers shall promptly pay or discharge such contested Charges,
Taxes or
claims and all additional charges, interest, penalties and
expenses, if any, and
shall deliver to Lender evidence reasonably acceptable to Lender of
such
compliance, payment or discharge, if such contest is terminated or
discontinued
adversely to Borrowers or the conditions set forth in this Section
5.2(b) (Right
to Contest Charges) are no longer met.
5.3
Books and Records. Borrowers shall keep adequate books and records
with
respect to their business activities in which proper entries,
reflecting all
financial transactions, are made in accordance with GAAP (except as
otherwise
disclosed on the Financial Statements).
5.4
Insurance; Damage to or Destruction of Collateral.
(a) Insurance. Borrowers shall, in Disclosure Schedule 3.17, list
all
existing policies of insurance that they carry and maintain, along
with the
names and contact information for each existing insurance carrier,
which
policies and carriers shall be subject to the prior written consent
of Lender,
which consent shall not be unreasonably withheld. If Lender fails
or refuses to
approve Borrower's existing policies of insurance or existing
insurance
carriers, then Borrowers agrees to increase or change its insurance
coverage or
change its insurance carrier as required by Lender, and the same
shall be listed
in Disclosure Schedule 3.17. Thereafter, Borrowers shall, at its
sole cost and
expense, maintain the policies of insurance described on Disclosure
Schedule
3.17 as approved by Lender or may obtain and maintain other
policies of
insurance in form and amounts and with insurers reasonably
acceptable to Lender.
All policies of insurance (or the loss
