EXHIBIT 99.11
PAYMENT AGREEMENT
This Payment Agreement (this "AGREEMENT") is entered into as of January
31, 2005, by and among Integrated Healthcare Holdings, Inc., a Nevada
corporation (the "COMPANY"), Xxxx X. Xxxxxxxxx, M.D. ("XX. XXXXXXXXX"), Xxxxxxx
X. Xxxxxx ("XXXXXX"), Xxxx X. Xxxx, M.D. ("XX. XXXX"), and Orange County
Physicians Investment Network, LLC, a Nevada limited liability company
("OC-PIN").
R E C I T A L S
---------------
A. The parties are parties to a Rescission, Restructuring and
Assignment Agreement dated as of January 27, 2005 ("RESTRUCTURING AGREEMENT"),
pursuant to which OC-PIN is obligated to pay, or cause the payment of,
$10,000,000 plus accrued interest to Xx. Xxxxxxxxx, and Xx. Xxxxxxxxx is
obligated to pay $2,450,000 to the Company for a 49% interest in the LLC upon
the closing of the Xxxxx Transaction.
B. OC-PIN will pay, or cause the payment of, $7,500,000 in immediately
available funds to Xx. Xxxxxxxxx at this time.
C. Xx. Xxxxxxxxx has agreed to accept certain promissory notes for the
balance, provided that Xx. Xxxx, an authorized representative and affiliate of
OC-PIN, provides a personal guarantee thereof.
A G R E E M E N T
-----------------
In consideration of the foregoing premises, the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, unless otherwise
set forth herein, capitalized terms or matters of construction deemed or
established in the Restructuring Agreement shall be applied herein as defined or
established therein.
2. REDUCED CASH PAYMENT; NOTES. OC-PIN'S obligation under Section 6 of
the Restructuring Agreement shall be modified so that OC-PIN shall be required
to pay, or cause the payment of, $7,500,000 in immediately available funds to
Xx. Xxxxxxxxx, and deliver to Xx. Xxxxxxxxx two promissory notes, substantially
in the forms of Exhibits A-1 and A-2 (the "OC-PIN NOTES"), on the terms and
subject to the conditions otherwise set forth in the Restructuring Agreement. In
addition, the Company shall deliver to Xx. Xxxxxxxxx its promissory note,
substantially in the form of Exhibit A-3 (the "COMPANY NOTE"), in a principal
amount equal to the accrued interest (calculated as of January 31, 2005)
referred to in Section 6 of the Restructuring Agreement. Repayment of the OC-PIN
Notes and the Company Note shall be guaranteed by Xx. Xxxx pursuant to a General
Continuing Guaranty substantially in the form of Exhibit B. In addition, Xx.
Xxxx shall become a co-guarantor (jointly and severally) with OC-PIN of the New
Notes pursuant to the same General Continuing Guaranty.
3. PAYMENT BY XX. XXXXXXXXX RELATED TO AMENDED AND RESTATED REAL ESTATE
PURCHASE OPTION. Pursuant to Section 7 of the Restructuring Agreement, Xx.
Xxxxxxxxx is currently obligated to place the $2,450,000 exercise price for a
49% interest in the LLC into escrow. Xx. Xxxxxxxxx is hereby relieved of that
obligation so long as the $2,450,000 OC-PIN Note remains unpaid. If the
$2,450,000 OC-PIN Note has not been paid by the time of closing of the Xxxxx
Transaction, Xx. Xxxxxxxxx shall be permitted and entitled to pay in full the
exercise price for his LLC membership interest by endorsing over to the Company
the $2,450,000 OC-PIN Note in consideration of the receipt of LLC membership
interests representing his (or his affiliate's) 49% membership interest, in
which case no escrow shall be required for such purpose.
1
4. CERTAIN ACKNOWLEDGMENTS. The Company and OC-PIN ratify and confirm
to Xx. Xxxxxxxxx that they shall faithfully perform all acts required of them
under Section 7 of the Restructuring Agreement including, without limitation,
(i) causing the real estate owned in fee in the Xxxxx Transaction to be deeded
into the name of the LLC (which shall be owned 49% by Xx. Xxxxxxxxx or his
affiliate) at closing, (ii) executing the Lease in the form set forth in Exhibit
D to the Restructuring Agreement, and (iii) executing the LLC Operating
Agreement in the form attached hereto as Exhibit C. The parties have also agreed
that the principal amounts of the New Notes to be issued under Section 3 of the
Restructuring Agreement shall be $963,185.94 for the Chaudhuri Note and
$240,796.49 for the Xxxxxx Note for an aggregate total of $1,203,982.43.
5. MISCELLANEOUS.
5.1 AMENDMENT. This Agreement may be modified or amended only
by mutual written agreement of the parties. Any such modification or amendment
must be in writing, dated and signed by the parties and attached to this
Agreement.
5.2 BINDING EFFECT. This Agreement shall be binding on and
shall inure to the benefit of the parties and their respective successors and
assigns.
5.3 ATTORNEYS' FEES. In any action or dispute, at law or in
equity, that may arise under or otherwise relate to this Agreement, the
prevailing party shall be entitled to the award of reasonable attorneys' fees
and costs, in addition to whatever relief the prevailing party may be awarded;
provided, however, that so long as the present Company Board of Directors
remains in place, the parties agree to bear their own fees and costs in the
event of any dispute.
5.4 VENUE. The parties agree that Orange County, California
shall be the only proper venue for disputes related to this Agreement.
5.5 ENTIRE AGREEMENT. This Agreement, along with the OC-PIN
Notes, the Company Note, the General Continuing Guaranty, and the Restructuring
Agreement, represents the entire understanding and agreement of the parties
regarding its subject matter, and supersedes any prior oral or written
agreements, representations, understandings or discussions between the parties.
No other understanding between the parties shall be binding on them unless set
forth in writing and signed by the party against whom the understanding is to be
enforced.
5.6 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of California, except the
conflicts of laws provisions that would require the application of the laws of
any other jurisdiction.
5.7 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
5.8 MEANING OF CERTAIN WORDS. Wherever the context may
require, any pronouns used in this Agreement shall include the corresponding
masculine, feminine, or neuter forms, and the singular form of nouns shall
include the plural and vice versa.
2
5.9 NO THIRD-PARTY BENEFICIARY RIGHTS. The parties do not
intend to confer and this Agreement shall not be construed to confer any rights
or benefits to any person, firm, corporation or entity other than the parties.
5.10 NOTICES. All notices or communications required or
permitted under this Agreement shall be given in writing and delivered
personally or sent by United States registered or certified mail with postage
prepaid and return receipt requested or by overnight delivery service (e.g.,
Federal Express, DHL). Notice shall be deemed given when sent, if sent as
specified in this Section, or otherwise deemed given when received. In each
case, notice shall be delivered or sent to:
IF TO COMPANY, ADDRESSED TO:
Integrated Healthcare Holdings, Inc.
000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Chief Executive Officer
IF TO XX. XXXXXXXXX OR TO XXXXXX, ADDRESSED TO:
c/o Strategic Global Management, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
IF TO XX. XXXX OR TO OC-PIN, ADDRESSED TO:
c/o Orange County Physicians Investment Network, LLC
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, XX 00000
Attention: Xxxx X. Xxxx, Manager
5.11 SEVERABILITY. If any provision of this Agreement is
determined to be illegal or unenforceable, that provision shall be severed from
this Agreement, and such severance shall have no effect upon the enforceability
of the remainder of this Agreement.
5.12 WAIVER. No delay or failure to require performance of any
provision of this Agreement shall constitute a waiver of that provision as to
that or any other instance. Any waiver granted by a party must be in writing to
be effective, and shall apply solely to the specific instance expressly stated.
5.13 CONFIDENTIALITY. Neither party shall disclose any of the
terms of this Agreement to any person or entity (other than its attorneys or
accountants) without the prior written consent of the other party, unless and
only to the extent such disclosure is required by law, including the 1933 Act.
5.14 DISPUTE RESOLUTION. In the event of any dispute arising
out of or relating to this Agreement, such dispute shall be resolved solely and
exclusively by confidential binding arbitration with the Orange County branch of
JAMS ("JAMS") to be governed by JAMS' Commercial Rules of Arbitration in effect
at the time of the commencement of the arbitration (the "JAMS RULES") and heard
before one arbitrator. The parties shall attempt to mutually select the
arbitrator. In the event they are unable to mutually agree, the arbitrator shall
be selected by the procedures prescribed by the JAMS Rules.
5.15 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first written above.
THE COMPANY: INTEGRATED HEALTHCARE HOLDINGS, INC.,
a Nevada corporation
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxxx, President
XX. XXXXXXXXX: /s/ Xxxx X. Xxxxxxxxx
---------------------------------------------
XXXX X. XXXXXXXXX, M.D.
OC-PIN: ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK,
LLC, a Nevada limited liability company
By: /s/ Xxxx X. Xxxx
-----------------------------------------
Xxxx X. Xxxx, M.D., Manager
XXXXXX: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
XXXXXXX X. XXXXXX
XX. XXXX /s/ Xxxx X. Xxxx
---------------------------------------------
XXXX X. XXXX, M.D.
4
EXHIBIT A-1
FORM OF
$2,450,000 NOTE
---------------
$2,450,000 Costa Mesa, California
January 31, 2005
PROMISSORY NOTE
---------------
FOR VALUE RECEIVED, the undersigned, ORANGE COUNTY PHYSICIANS
INVESTMENT NETWORK, LLC, a Nevada limited liability company ("OC-PIN"), promises
to pay to the order of Xxxx X. Xxxxxxxxx, M.D. ("HOLDER"), at c/o Strategic
Global Management, 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx 00000,
or at such other location as is designated by Holder in writing hereunder, the
aggregate sum of Two Million, Four Hundred Fifty Thousand Dollars ($2,450,000),
bearing simple interest on the unpaid principal balance of this Note, from the
date of this Note until this Note is paid in full at a rate of five percent
(5.0%) per annum. Accrued interest shall be computed based on the actual number
of days elapsed. Interest only shall be payable on the first Business Day of
each calendar month beginning February 1, 2005. All principal and accrued but
unpaid interest will be due and payable in full at the Closing of the Xxxxx
Transaction, or on demand at any time after February 28, 2005 if the Xxxxx
Transaction has not closed by that date (the "DUE DATE"). All payments shall be
made in lawful money of the United States, without offset, deduction, or
counterclaim of any kind.
1. TERMS. Capitalized terms used herein without definition have the
meanings ascribed to them in the Payment Agreement of even date herewith by and
among OC-PIN, Holder and certain other parties thereto.
2. PAYMENTS AND COMPUTATIONS. All payments on account of indebtedness
evidenced by this Note shall be made not later than 11:00 A.M. (California time)
on the day when due in lawful money of the United States and shall be first
applied to interest due on the unpaid principal balance and the remainder to any
principal due. Payments are to be made at such place as Holder or any legal
holder of this Note may, from time to time, in writing specify, and in the
absence of a specification, at the principal place of business of Holder as set
forth in the first paragraph of this Note. OC-PIN may pre-pay the full amount of
all principal of and accrued interest under this Note at any time without
premium or penalty.
3. GUARANTY. Repayment of this Note is guarantied by a Continuing
General Guaranty dated January 31, 2005 by Xxxx X. Xxxx, M.D.
4. ATTORNEYS' FEES. If any action is instituted on this Note, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which the party or parties may be
entitled. Diligence, demand, presentment, notice of dishonor, and protest are
waived by OC-PIN, and any and all makers, sureties, guarantors, and endorsers of
this Note, and their successors and assigns. Time is of the essence for every
obligation under this Note.
6. LAW. This Note shall be construed under the laws of the State of
California, as such laws are applied to contracts entered into and performed
entirely within that state by residents thereof.
1
7. RULES OF CONSTRUCTION/REPRESENTATION. The parties agree that they
are sophisticated business persons or entities who have had the opportunity to
be represented by counsel during the negotiation and execution of this Note and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8. DISPUTE RESOLUTION. In the event of any dispute arising out of or
relating to this Note, such dispute shall be resolved solely and exclusively by
confidential binding arbitration with the Orange County branch of JAMS ("JAMS")
to be governed by JAMS' Commercial Rules of Arbitration in effect at the time of
the commencement of the arbitration (the "JAMS RULES") and heard before one
arbitrator. The parties shall attempt to mutually select the arbitrator. In the
event they are unable to mutually agree, the arbitrator shall be selected by the
procedures prescribed by the JAMS Rules.
IN WITNESS WHEREOF, OC-PIN has executed and delivered this Note as of
the day and year and at the place first above written.
ORANGE COUNTY PHYSICIANS INVESTMENT
NETWORK, LLC
By: /s/ Xxxx X. Xxxx
------------------------------------
Xxxx X. Xxxx, M.D., Manager
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EXHIBIT A-2
FORM OF
$50,000 NOTE
------------
$50,000 Costa Mesa, California
January 31, 2005
PROMISSORY NOTE
---------------
FOR VALUE RECEIVED, the undersigned, ORANGE COUNTY PHYSICIANS
INVESTMENT NETWORK, LLC, a Nevada limited liability company ("OC-PIN"), promises
to pay to the order of Xxxx X. Xxxxxxxxx, M.D. ("HOLDER"), at c/o Strategic
Global Management, 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx 00000,
or at such other location as is designated by Holder in writing hereunder, the
aggregate sum of Fifty Thousand Dollars ($50,000), bearing simple interest on
the unpaid principal balance of this Note, from the date of this Note until this
Note is paid in full at a rate of five percent (5.0%) per annum. Accrued
interest shall be computed based on the actual number of days elapsed. Interest
only shall be payable on the first Business Day of each calendar month beginning
February 1, 2005. All principal and accrued but unpaid interest will be due and
payable in full at the Closing of the Xxxxx Transaction, or on demand at any
time after February 28, 2005 if the Xxxxx Transaction has not closed by that
date (the "DUE DATE"). All payments shall be made in lawful money of the United
States, without offset, deduction, or counterclaim of any kind.
1. TERMS. Capitalized terms used herein without definition have the
meanings ascribed to them in the Payment Agreement of even date herewith by and
among OC-PIN, Holder and certain other parties thereto.
2. PAYMENTS AND COMPUTATIONS. All payments on account of indebtedness
evidenced by this Note shall be made not later than 11:00 A.M. (California time)
on the day when due in lawful money of the United States and shall be first
applied to interest due on the unpaid principal balance and the remainder to any
principal due. Payments are to be made at such place as Holder or any legal
holder of this Note may, from time to time, in writing specify, and in the
absence of a specification, at the principal place of business of Holder as set
forth in the first paragraph of this Note. OC-PIN may pre-pay the full amount of
all principal of and accrued interest under this Note at any time without
premium or penalty.
3. GUARANTY. Repayment of this Note is guarantied by a Continuing
General Guaranty dated January 31, 2005 by Xxxx X. Xxxx, M.D.
4. ATTORNEYS' FEES. If any action is instituted on this Note, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which the party or parties may be
entitled. Diligence, demand, presentment, notice of dishonor, and protest are
waived by OC-PIN, and any and all makers, sureties, guarantors, and endorsers of
this Note, and their successors and assigns. Time is of the essence for every
obligation under this Note.
6. LAW. This Note shall be construed under the laws of the State of
California, as such laws are applied to contracts entered into and performed
entirely within that state by residents thereof.
1
7. RULES OF CONSTRUCTION/REPRESENTATION. The parties agree that they
are sophisticated business persons or entities who have had the opportunity to
be represented by counsel during the negotiation and execution of this Note and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8. DISPUTE RESOLUTION. In the event of any dispute arising out of or
relating to this Note, such dispute shall be resolved solely and exclusively by
confidential binding arbitration with the Orange County branch of JAMS ("JAMS")
to be governed by JAMS' Commercial Rules of Arbitration in effect at the time of
the commencement of the arbitration (the "JAMS RULES") and heard before one
arbitrator. The parties shall attempt to mutually select the arbitrator. In the
event they are unable to mutually agree, the arbitrator shall be selected by the
procedures prescribed by the JAMS Rules.
IN WITNESS WHEREOF, OC-PIN has executed and delivered this Note as of
the day and year and at the place first above written.
ORANGE COUNTY PHYSICIANS INVESTMENT
NETWORK, LLC
By: /s/ Xxxx X. Xxxx
------------------------------------
Xxxx X. Xxxx, M.D., Manager
2
EXHIBIT A-3
FORM OF
INTEREST NOTE
-------------
$__________ Costa Mesa, California
January 31, 2005
PROMISSORY NOTE
---------------
FOR VALUE RECEIVED, the undersigned, INTEGRATED HEALTHCARE HOLDINGS,
INC., a Nevada corporation (the "COMPANY"), promises to pay to the order of Xxxx
X. Xxxxxxxxx, M.D. ("HOLDER"), at c/o Strategic Global Management, 0000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other location as is
designated by Holder in writing hereunder, the aggregate sum of
_________________ Dollars ($_______), bearing simple interest on the unpaid
principal balance of this Note, from the date of this Note until this Note is
paid in full at a rate of five percent (5.0%) per annum. Accrued interest shall
be computed based on the actual number of days elapsed. Interest only shall be
payable on the first Business Day of each calendar month beginning February 1,
2005. All principal and accrued but unpaid interest will be due and payable in
full at the Closing of the Xxxxx Transaction, or on demand at any time after
February 28, 2005 if the Xxxxx Transaction has not closed by that date (the "DUE
Date"). All payments shall be made in lawful money of the United States, without
offset, deduction, or counterclaim of any kind.
1. TERMS. Capitalized terms used herein without definition have the
meanings ascribed to them in the Payment Agreement of even date herewith by and
among the Company, Holder and certain other parties thereto.
2. PAYMENTS AND COMPUTATIONS. All payments on account of indebtedness
evidenced by this Note shall be made not later than 11:00 A.M. (California time)
on the day when due in lawful money of the United States and shall be first
applied to interest due on the unpaid principal balance and the remainder to any
principal due. Payments are to be made at such place as Holder or any legal
holder of this Note may, from time to time, in writing specify, and in the
absence of a specification, at the principal place of business of Holder as set
forth in the first paragraph of this Note. The Company may pre-pay the full
amount of all principal of and accrued interest under this Note at any time
without premium or penalty.
3. GUARANTY. Repayment of this Note is guarantied by a Continuing
General Guaranty dated January 31, 2005 by Xxxx X. Xxxx, M.D.
4. ATTORNEYS' FEES. If any action is instituted on this Note, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which the party or parties may be
entitled. Diligence, demand, presentment, notice of dishonor, and protest are
waived by the Company, and any and all makers, sureties, guarantors, and
endorsers of this Note, and their successors and assigns. Time is of the essence
for every obligation under this Note.
6. LAW. This Note shall be construed under the laws of the State of
California, as such laws are applied to contracts entered into and performed
entirely within that state by residents thereof.
1
7. RULES OF CONSTRUCTION/REPRESENTATION. The parties agree that they
are sophisticated business persons or entities who have had the opportunity to
be represented by counsel during the negotiation and execution of this Note and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8. DISPUTE RESOLUTION. In the event of any dispute arising out of or
relating to this Note, such dispute shall be resolved solely and exclusively by
confidential binding arbitration with the Orange County branch of JAMS ("JAMS")
to be governed by JAMS' Commercial Rules of Arbitration in effect at the time of
the commencement of the arbitration (the "JAMS RULES") and heard before one
arbitrator. The parties shall attempt to mutually select the arbitrator. In the
event they are unable to mutually agree, the arbitrator shall be selected by the
procedures prescribed by the JAMS Rules.
IN WITNESS WHEREOF, the Company has executed and delivered this Note as
of the day and year and at the place first above written.
INTEGRATED HEALTHCARE HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx, President
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EXHIBIT B
FORM OF
GENERAL CONTINUING GUARANTY
---------------------------
THIS GENERAL CONTINUING GUARANTY ("GUARANTY"), dated as of January 31,
2005, is executed and delivered by Xxxx X. Xxxx, M.D. ("GUARANTOR") in favor of
Xxxx X. Xxxxxxxxx, M.D. and Xxxxxxx X. Xxxxxx (collectively, the "HOLDERS"), in
light of the following:
WHEREAS, OC-PIN, the Company, Guarantor, and the Holders have entered
into a Payment Agreement dated as of January 31, 2005 ("PAYMENT AGREEMENT"),
pursuant to which, among other things, OC-PIN is issuing to Xx. Xxxxxxxxx
promissory notes in the aggregate principal amount of $2,450,000 (the "OCPIN
NOTES");
WHEREAS, pursuant to the Payment Agreement, the Company is issuing to
Xx. Xxxxxxxxx a promissory note in the principal amount of $_________ (the
"INTEREST NOTE");
WHEREAS, pursuant to a Rescission, Restructuring and Assignment
Agreement dated as of January 27, 2005 (the "RESTRUCTURING AGREEMENT"), the
Company is issuing to the Holders secured promissory notes in the aggregate
principal amount of $1,203,982.43 (the "COMPANY NOTES");
WHEREAS, in order to induce the Holders to enter into the Payment
Agreement, and in consideration thereof, and in consideration of financial
accommodations heretofore or hereafter extended by the Holders to OC-PIN and the
Company, whether pursuant to the Payment Agreement, the Restructuring Agreement,
the OC-PIN Notes, the Interest Note or the Company Notes or otherwise, Guarantor
has agreed to guaranty the Guarantied Obligations (as defined below); and
WHEREAS, Guarantor has a financial stake in OC-PIN and, through OC-PIN,
the Company, and derives substantial economic benefits from the accommodations
made by the Holders to OC-PIN in the Payment Agreement and to the Company in the
Restructuring Agreement.
NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby
agrees, in favor of the Holder, as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Payment
Agreement or the Restructuring Agreement. The term "AGREEMENTS", as used in this
Guaranty, means, collectively, the Payment Agreement and the Restructuring
Agreement. The term "NOTES", as used in this Guaranty, means, collectively, the
OC-PIN Notes, the Company Notes and the Interest Note. The term "GUARANTIED
OBLIGATIONS", as used in this Guaranty, means: (a) the due and punctual payment
of the principal of, and interest (including, any and all interest which, but
for the application of the provisions of the United States Bankruptcy Code,
would have accrued on such amounts) on, and premium, if any, on, and the
performance of, the Notes; and (b) the due and punctual payment of all other
present or future obligations owing by OC-PIN to the Holders.
1.2 CONSTRUCTION. Unless the context of this Guaranty clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the part includes the whole, the terms
"include" and "including" are not limiting, and the term "or" has the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and other similar terms refer to this Guaranty as a whole
and not to any particular provision of this Guaranty. Any reference in this
Guaranty to any of the following documents includes any and all alterations,
amendments, restatements, extensions, modifications, renewals, joinders, or
supplements thereto or thereof, as applicable: the Agreements; this Guaranty;
and the Notes. Neither this Guaranty nor any uncertainty or ambiguity herein
shall be construed or resolved against the Holders or Guarantor whether under
any rule of construction or otherwise. On the contrary, this Guaranty has been
reviewed by Guarantor, the Holders, and their respective counsel, and shall be
construed and interpreted according to the ordinary meaning of the words used so
as to fairly accomplish the purposes and intentions of the Holders and
Guarantor.
2. GUARANTIED OBLIGATIONS. Guarantor hereby irrevocably and
unconditionally guaranties to the Holders, as and for his own debt, until final
and indefeasible payment thereof has been made, (a) the payment of the
Guarantied Obligations, in each case when and as they become due and payable,
whether at maturity, pursuant to a mandatory prepayment requirement, by
acceleration, or otherwise; it being the intent of Guarantor that the guaranty
set forth herein shall be a guaranty of payment and not a guaranty of
collection; and (b) the punctual and faithful performance, keeping, observance,
and fulfillment by the Company of all of the agreements, conditions, covenants,
and obligations of the Company contained in the Agreements, and under each of
the Notes.
3. CONTINUING GUARANTY. This Guaranty includes Guarantied Obligations
arising under successive transactions continuing, compromising, extending,
increasing, modifying, releasing, or renewing the Guarantied Obligations,
changing the interest rate, payment terms, or other terms and conditions
thereof, or creating new or additional Guarantied Obligations after prior
Guarantied Obligations have been satisfied in whole or in part. To the maximum
extent permitted by law, Guarantor hereby waives any right to revoke this
Guaranty as to future Indebtedness. If such a revocation is effective
notwithstanding the foregoing waiver, Guarantor acknowledges and agrees that (a)
no such revocation shall be effective until written notice thereof has been
received by the Holders, (b) no such revocation shall apply to any Guarantied
Obligations in existence on such date (including any subsequent continuation,
extension, or renewal thereof, or change in the interest rate, payment terms, or
other terms and conditions thereof), (c) no such revocation shall apply to any
Guarantied Obligations made or created after such date to the extent made or
created pursuant to a legally binding commitment of the Holders in existence on
the date of such revocation, (d) no payment by Guarantor, the Company, OC-PIN,
or from any other source, prior to the date of such revocation shall reduce the
maximum obligation of Guarantor hereunder, and (e) any payment by the Company,
OC-PIN, or from any source other than Guarantor subsequent to the date of such
revocation shall first be applied to that portion of the Guarantied Obligations
as to which the revocation is effective and which are not, therefore, guarantied
hereunder, and to the extent so applied shall not reduce the maximum obligation
of Guarantor hereunder.
4. PERFORMANCE UNDER THIS GUARANTY. If the Company or OC-PIN fails to
make any payment of any Guarantied Obligations, on or before the due date
thereof, or if the Company or OC-PIN fails to perform, keep, observe, or fulfill
any other material obligation to the Holders in the manner provided in the
Agreements or the Notes, as applicable, Guarantor immediately shall cause the
payment to be made or each of the obligations to be performed, kept, observed,
or fulfilled.
5. PRIMARY OBLIGATIONS. This Guaranty is a primary and original
obligation of Guarantor, is not merely the creation of a surety relationship,
and is an absolute, unconditional, and continuing guaranty of payment and
performance which shall remain in full force and effect without respect to
future changes in conditions. Guarantor agrees that it is directly, jointly and
severally with any other guarantor of the Guarantied Obligations, liable to the
Holders, that the obligations of Guarantor hereunder are independent of the
obligations of the Company and OC-PIN or any other guarantor, and that a
separate action may be brought against Guarantor, whether the action is brought
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against the Company or OC-PIN or any other guarantor or whether the Company or
OC-PIN or any other guarantor is joined in the action. Guarantor agrees that his
liability hereunder shall be immediate and shall not be contingent upon the
exercise or enforcement by the Holders of whatever remedies they may have
against the Company or OC-PIN or any other guarantor, or the enforcement of any
lien or realization upon any security the Holders may at any time possess.
Guarantor agrees that any release which may be given by the Holders to the
Company or OC-PIN or any other guarantor shall not release Guarantor. Guarantor
consents and agrees that the Holders shall be under no obligation to marshal any
property or assets of the Company or OC-PIN or any other guarantor in favor of
Guarantor, or against or in payment of any or all of the Guarantied Obligations.
6. WAIVERS. Guarantor hereby waives: (i) notice of acceptance hereof;
(ii) notice of any loans or other financial accommodations made or extended
under the Agreements, or the creation or existence of any Guarantied
Obligations; (iii) notice of the amount of the Guarantied Obligations, subject,
however, to Guarantor's right to make inquiry of the Holder to ascertain the
amount of the Guarantied Obligations at any reasonable time; (iv) notice of any
adverse change in the financial condition of the Company or OC-PIN or of any
other fact that might increase Guarantor's risk hereunder; (v) notice of
presentment for payment, demand, protest, and notice thereof as to the Notes;
(vi) notice of any unmatured event of default or event of default under the
Notes; and (vii) all other notices (except if the notice is specifically
required to be given to Guarantor under this Guaranty or the Notes) and demands
to which Guarantor might otherwise be entitled. To the fullest extent permitted
by applicable law, Guarantor waives the right by statute or otherwise to require
the Holders to institute suit against the Company or OC-PIN or to exhaust any
rights and remedies which the Holders have or may have against the Company or
OC-PIN. In this regard, Guarantor agrees that he is bound to the payment of each
and all Guarantied Obligations, whether now existing or hereafter arising, as
fully as if such Guarantied Obligations were directly owing to the Holders by
Guarantor. Guarantor further waives any defense arising by reason of any
disability or other defense (other than the defense that the Guarantied
Obligations shall have been fully and finally performed and indefeasibly paid)
of the Company or OC-PIN or by reason of the cessation from any cause whatsoever
of the liability of the Company or OC-PIN in respect thereof. To the maximum
extent permitted by law, Guarantor hereby waives: (i) any rights to assert
against the Holders any defense (legal or equitable), set off, counterclaim, or
claim which Guarantor may now or at any time hereafter have against the Company
OC-PIN or any other party liable to the Holders; (ii) any defense, set-off,
counterclaim, or claim, of any kind or nature, arising directly or indirectly
from the present or future lack of perfection, sufficiency, validity, or
enforceability of the Guarantied Obligations or any security therefor; (iii) any
defense arising by reason of any claim or defense based upon an election of
remedies by the Holders; (iv) the benefit of any statute of limitations
affecting Guarantor's liability hereunder or the enforcement thereof, and any
act which shall defer or delay the operation of any statute of limitations
applicable to the Guarantied Obligations shall similarly operate to defer or
delay the operation of such statute of limitations applicable to Guarantor's
liability hereunder.
Until such time as all of the Guarantied Obligations have been fully, finally,
and indefeasibly paid in full in cash: (i) Guarantor hereby waives and postpones
any right of subrogation Guarantor has or may have as against the Company or
OC-PIN with respect to the Guarantied Obligations; (ii) in addition, Guarantor
hereby waives and postpones any right to proceed against the Company or OC-PIN
or any other Person, now or hereafter, for contribution, indemnity,
reimbursement, or any other suretyship rights and claims (irrespective of
whether direct or indirect, liquidated or contingent), with respect to the
Guarantied Obligations; and (iii) in addition, Guarantor also hereby waives and
postpones any right to proceed or to seek recourse against or with respect to
any property or asset of the Company or OC-PIN. If any of the Guarantied
Obligations at any time are secured by a mortgage or deed of trust upon real
property, the Holders may elect, in their sole discretion, upon a default with
respect to the Guarantied Obligations, to foreclose such mortgage or deed of
trust judicially or nonjudicially in any manner permitted by law, before or
after enforcing this Guaranty, without diminishing or affecting the liability of
Guarantor hereunder except to the extent the Guarantied Obligations are repaid
with the proceeds of the foreclosure.
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WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH
IN THIS GUARANTY, GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN
ELECTION OF REMEDIES BY THE CREDITOR, EVEN THOUGH THAT ELECTION OF REMEDIES HAS
DESTROYED GUARANTOR'S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST THE
PRINCIPAL.
Guarantor agrees that all of the foregoing waivers shall be effective even
though any rights or defenses which Guarantor might otherwise have, by
subrogation, reimbursement, indemnification or otherwise, against the Company,
OC-PIN, the Holders or any other person may be diminished, destroyed or
otherwise adversely affected, all to the end that Guarantor shall not be
exonerated, released or discharged (by virtue of the provisions of any statute,
case law or any other law, rule, arrangement or relationship) from its absolute,
unconditional and independent liabilities under this Guaranty.
7. RELEASES. Guarantor consents and agrees that, without notice to or
by Guarantor and without affecting or impairing the obligations of Guarantor
hereunder, the Holders may, by action or inaction, compromise or settle, extend
the period of duration or the time for the payment, or discharge the performance
of, or may refuse to, or otherwise not enforce, or may, by action or inaction,
release all or any one or more parties to, any one or more of the terms and
provisions of the Agreements or the Notes or may grant other indulgences to the
Company or OC-PIN in respect thereof, or may amend or modify in any manner and
at any time (or from time to time) any one or more of the Agreements or any of
the Notes, or may, by action or inaction, release or substitute any other
guarantor, if any, of the Guarantied Obligations, or may enforce, exchange,
release, or waive, by action or inaction, any security for the Guarantied
Obligations or any other guaranty of the Guarantied Obligations, or any portion
thereof.
8. NO ELECTION. The Holders shall have the right to seek recourse
against Guarantor to the fullest extent provided for herein and no election by
the Holders to proceed in one form of action or proceeding, or against any
party, or on any obligation, shall constitute a waiver of the Holders' right to
proceed in any other form of action or proceeding or against other parties
unless the Holders have expressly waived that right in writing. Specifically,
but without limiting the generality of the foregoing, no action or proceeding by
the Holders under any document or instrument evidencing the Guarantied
Obligations shall serve to diminish the liability of Guarantor under this
Guaranty except to the extent that the Holders finally and unconditionally shall
have realized indefeasible payment by the action or proceeding.
9. INDEFEASIBLE PAYMENT. The Guarantied Obligations shall not be
considered indefeasibly paid for purposes of this Guaranty unless and until all
payments to the Holders are no longer subject to any right on the part of any
person whomsoever, including the Company or OC-PIN, the Company or OC-PIN as a
debtor in possession, or any trustee (whether appointed under the United States
Bankruptcy Code or otherwise) of the Company's or OC-PIN's assets to invalidate
or set aside such payments or to seek to recoup the amount of such payments or
any portion thereof, or to declare same to be fraudulent or preferential. If,
for any reason, all or any portion of the payments to the Holders is set aside
or restored, whether voluntarily or involuntarily, after the making thereof, the
obligation or part thereof intended to be satisfied thereby shall be revived and
continued in full force and effect as if said payment or payments had not been
made and Guarantor shall be liable for the full amount the Holders are required
to repay plus any and all costs and expenses (including attorneys fees) paid by
the Holders in connection therewith.
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10. FINANCIAL CONDITIONS OF THE COMPANY AND OC-PIN, AND OF GUARANTOR.
Guarantor represents and warrants to the Holders that he is currently informed
of the financial condition of the Company and OC-PIN and of all other
circumstances which a diligent inquiry would reveal and which bear upon the risk
of nonpayment of the Guarantied Obligations. Guarantor further represents and
warrants to the Holders that he has read and understands the terms and
conditions of the Agreements and the Notes. Guarantor hereby covenants that he
will continue to keep himself informed of the Company's and OC-PIN's financial
conditions, the financial condition of other guarantors, if any, and of all
other circumstances which bear upon the risk of nonpayment or nonperformance of
the Guarantied Obligations. Guarantor further represents and warrants to the
Holders that, as of the execution of this Guaranty, and after giving effect to
this Guaranty, he is solvent.
11. SUBORDINATION. Guarantor hereby agrees that any and all present and
future indebtedness of the Company or OC-PIN owing to Guarantor is postponed in
favor of and subordinated to payment, in full, in cash, of the Guarantied
Obligations. In this regard, no payment of any kind whatsoever shall be made
with respect to any future indebtedness to Guarantor until the Guarantied
Obligations have been indefeasibly paid in full.
12. PAYMENTS; APPLICATION. All payments to be made hereunder by
Guarantor shall be made in lawful money of the United States of America at the
time of payment, shall be made in immediately available funds, and shall be made
without deduction (whether for taxes or otherwise) or offset. All payments made
by Guarantor hereunder shall be applied as follows: first, to all reasonable
costs and expenses (including attorneys fees) incurred by the Holders in
enforcing this Guaranty or in collecting the Guarantied Obligations; second, to
all accrued and unpaid interest, premium, if any, and fees owing to the Holders
constituting Guarantied Obligations; and third, to the balance of the Guarantied
Obligations.
13. ATTORNEYS' FEES AND COSTS. Guarantor agree to pay, on demand, all
reasonable attorneys fees and all other reasonable costs and expenses which may
be incurred by the Holders in the enforcement of this Guaranty or in any way
arising out of, or consequential to the protection, assertion, or enforcement of
the Guarantied Obligations (or any security therefor), irrespective of whether
suit is brought; provided, however, that so long as the present Company Board of
Directors remains in place, the parties agree to bear their own fees and costs
in the event of any dispute.
14. NOTICES. Unless otherwise specifically provided in this Guaranty,
any notice or other communication relating to this Guaranty shall be delivered
as set forth in the Restructuring Agreement. All notices or demands sent in
accordance with this Section 14, other than notices by the Holders in connection
with Sections 9-611 or 9-621 of the Uniform Commercial Code, shall be deemed
received on the earlier of the date of actual receipt or three calendar days
after the deposit thereof in the mail. Guarantor acknowledges and agrees that
notices sent by the Holders in connection with Section 9-611 or 9-621 of the
Uniform Commercial Code shall be deemed sent when deposited in the mail or
transmitted by telefacsimile or other similar method set forth above.
15. CUMULATIVE REMEDIES. No remedy under this Guaranty, under the
Agreements, or under the Notes is intended to be exclusive of any other remedy,
but each and every remedy shall be cumulative and in addition to any and every
other remedy given under this Guaranty, under the Agreements, or under the
Notes, and those provided by law. No delay or omission by the Holders to
exercise any right under this Guaranty shall impair any such right nor be
construed to be a waiver thereof. No failure on the part of the Holders to
exercise, and no delay in exercising, any right under this Guaranty shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right under this Guaranty preclude any other or further exercise thereof or the
exercise of any other right.
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16. SEVERABILITY. Any provision of this Guaranty which is prohibited or
unenforceable under applicable law shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.
17. AMENDMENTS. This Guaranty may not be altered, amended, or modified,
nor may any provision hereof be waived or noncompliance therewith consented to,
except by means of a writing executed by both Guarantor and the Holders. Any
such alteration, amendment, modification, waiver, or consent shall be effective
only to the extent specified therein and for the specific purpose for which
given. No course of dealing and no delay or waiver of any right or default under
this Guaranty shall be deemed a waiver of any other, similar or dissimilar,
right or default or otherwise prejudice the rights and remedies hereunder.
18. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon
Guarantor and his successors and assigns and shall inure to the benefit of the
successors and assigns of the Holders; provided, however, that Guarantor shall
not assign this Guaranty or delegate any of his duties hereunder without the
Holders' prior written consent and any unconsented to assignment shall be
absolutely void. In the event of any assignment or other transfer of rights by
the Holders, the rights and benefits herein conferred upon the Holders shall
automatically extend to and be vested in such assignee or other transferee.
19. NO THIRD PARTY BENEFICIARY. This Guaranty is solely for the benefit
of the Holders and their successors and assigns and may not be relied on by any
other person or entity.
20. DISPUTE RESOLUTION. In the event of any dispute arising out of or
relating to this Guaranty, such dispute shall be resolved solely and exclusively
by confidential binding arbitration with the Orange County branch of JAMS
("JAMS") to be governed by JAMS' Commercial Rules of Arbitration in effect at
the time of the commencement of the arbitration (the "JAMS RULES") and heard
before one arbitrator. The parties shall attempt to mutually select the
arbitrator. In the event they are unable to mutually agree, the arbitrator shall
be selected by the procedures prescribed by the JAMS Rules.
21. COUNTERPARTS; EFFECTIVENESS. This Guaranty may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become effective
as to Guarantor upon the execution of a counterpart hereof by Guarantor and
receipt by the Holders of written or telephonic notification of such execution
and authorization of delivery thereof.
IN WITNESS WHEREOF, the undersigned Guarantor has executed and
delivered this Guaranty as of the date first written above.
/s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, M.D.
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