8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): December 14, 2005

INTEGRATED HEALTHCARE HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada	0-23511	87-0412182
(State or Other Jurisdiction of	(Commission File Number)	(I.R.S. Employer
Incorporation or Organization)		Identification No.)

1301 North Tustin Avenue

Santa Ana, California 92705

(Address of Principal Executive Offices) (Zip Code)

(714) 953-3503

(Registrant’s telephone number,

including area code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.    Entry into a Material Definitive Agreement.

On December 14, 2005, Integrated Healthcare Holdings, Inc. (the “Company”), WMC-SA, Inc., WMC-A, Inc., Chapman Medical Center, Inc., Coastal Communities Hospital, Inc., Pacific Coast Holdings Investment, LLC (“PCHI”) West Coast Holdings, LLC, Orange County Physicians Investment Network, LLC (“OC-PIN”), Ganesha Realty, LLC (collectively, the “Credit Parties”), and Medical Provider Financial Corporation II (“Medical Provider II”), executed Amendment No.1 to Credit Agreement, dated as of December 12, 2005 (the “Amendment”), that amends that certain credit agreement, dated as of March 3, 2005 (the “March Credit Agreement”), by and between the Company, the Credit Parties and Medical Provider II.

The Amendment (i) declares cured those certain events of default set forth in the notices of default received on or about May 9, 2005, from Medical Provider II, (ii) requires the Company to pay $5,000,000 to Medical Provider Financial Corporation II for mandatory prepayment required under the March Credit Agreement, (iii) requires the Company to obtain $10,700,000 in additional new capital contributions to pay in full and retire all amounts due and owing under the new loan evidenced by the Credit Agreement (as defined below) and (iv) includes certain indemnities and releases in favor of the Lender.

On December 14, 2005, the Company also entered into a credit agreement (the “Credit Agreement”), dated as of December 12, 2005, with the Credit Parties and Medical Provider Financial Corporation III (the “Lender”). Under the Credit Agreement, the Lender loaned a total of $10,700,000 to the Company as evidenced by that certain promissory note in favor of the Lender (the “Note”) with a total principal balance of $10,700,000. In connection with the Credit Agreement, the following documents were executed and delivered on December 14, 2005, (i) a warrant in favor of the Lender (the “Warrant”) to purchase that number of shares of the Company’s common stock equal in value to the amount of the Note not repaid at maturity, (ii) a security agreement, dated as of December 12, 2005, made by the Company and the Lender (the “Security Agreement”), (iii) two guaranty agreements, both dated as of December 12, 2005, made by OC-PIN and PCHI in favor of Lender (the “Guaranties”), and (iv) a pledge agreement, dated as of December 12, 2005, made by the Company in favor of the Lender (the “Pledge Agreement”).

The Note bears interest at the rate of 12.0% per annum. Interest is payable monthly, in arrears, on the first day of each month. The entire principal amount and all accrued but unpaid interest on the Note are due and payable in full in a single payment on December 12, 2006. The Company may not prepay the Note in whole or in part.

The Warrant is exercisable from and after December 12, 2005 until the occurrence of either a termination of the Credit Agreement by the Lender or the Company’s payment in full of all obligations under the Credit Agreement. The Warrant is only exercisable in an event of default under the loan documents. The Lender’s right to purchase the Company’s common stock is based upon a percentage of all issued and outstanding common stock, warrants, options, and all other common stock equivalents as of the exercise date and shall at minimum equal the outstanding amount of the Note, including interest thereon, due and owing to Lender. The Warrant is exercisable for an aggregate payment of $1.00, regardless of the amount of shares acquired.

The Company is obligated to register the shares of common stock issuable upon exercise of the Warrant by filing a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), no later than ninety days prior to the maturity date of the loan. If the Company proposes to file a registration statement under the Securities Act on or before the expiration date of the Warrant, then the Company must offer to the holder of the Warrant the opportunity to include the number of shares of common stock as the holder may request. The Warrant holder’s rights under the Warrant also include (i) demand and piggy-back registration rights, (ii) indemnification of all holders, (iii) informational, observer, and inspection rights, and (iv) anti-dilution protection.

The Security Agreement creates in favor of the Lender a legal, valid, and enforceable security interest on substantially all of the assets of the Company in order to secure the prompt and complete payment and performance of all of the Company’s obligations under the Credit Agreement and other loan documents associated therewith.

Both of the Guaranties made by OC-PIN and PCHI, guaranty the payment of the new loan and pledge their assets as additional security for the payment and performance of the obligations under the Credit Agreement.

In the Pledge Agreement, the Company pledges, in favor of the Lender, all of the Company’s equity in WMC-SA, Inc., WMC-A, Inc., Chapman Medical Center, Inc., and Coastal Communities Hospital, Inc.

OC-PIN is a majority shareholder of the Company and is managed by Dr. Anil V. Shah. OC-PIN is owned by Dr. Shah and a number of physicians practicing at the hospitals owned and operated by the subsidiaries of the Company.

WMC-SA, Inc., WMC-A, Inc., Chapman Medical Center, Inc., and Coastal Communities Hospital, Inc. are wholly owned subsidiaries of the Company.

The forms of definitive agreements relating to the transaction are furnished as exhibits to this Report. The preceding descriptions of the definitive agreements are summary in nature and do not purport to be complete. This summary should be read in connection with the exhibits hereto.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The disclosure under Item 1.01 of this Report is hereby incorporated herein by reference.

Item 3.02. Unregistered Sales of Equity Securities

The disclosure under Item 1.01 of this Report is hereby incorporated herein by reference.

The sale of securities referenced in Item 1.01 of this Report have not been registered under the Securities Act, or any state securities laws, and were sold in a private transaction exempt from registration pursuant to Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

Item 9.01.Financial Statements and Exhibits.

(d)Exhibits. See Index to Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	INTEGRATED HEALTHCARE HOLDINGS, INC.
Date: December 20, 2005	By:	/s/ Bruce Mogel
		Name: Bruce Mogel Title: Chief Executive Officer

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Amendment No.1 to Credit Agreement, dated as of December 12, 2005, by and among the Company, WMC-SA, Inc., WMC-A, Inc., Chapman Medical Center, Inc., Coastal Communities Hospital, Inc., Pacific Coast Holdings Investment, LLC, West Coast Holdings, LLC, Orange County Physicians Investment Network, LLC, Ganesha Realty, LLC, and Medical Provider Financial Corporation II.
99.2	Credit Agreement, dated as of December 12, 2005, by and among the Company, WMC-SA, Inc., WMC-A, Inc., Chapman Medical Center, Inc., Coastal Communities Hospital, Inc., Pacific Coast Holdings Investment, LLC, West Coast Holdings, LLC, Orange County Physicians Investment Network, LLC, Ganesha Realty, LLC, and Medical Provider Financial Corporation III.
99.3	Promissory Note, dated as of December 12, 2005, made by the Company in favor of Medical Provider Financial Corporation III.
99.4	Common Stock Warrant, dated as of December 12, 2005, issued by the Company in favor of Healthcare Financial Management & Acquisitions, Inc.
99.5	Security Agreement, dated as of December 12, 2005, made by the Company and Medical Provider Financial Corporation III.
99.6	Guaranty Agreement, dated as of December 12, 2005, made by Pacific Coast Holdings Investment, LLC in favor of Medical Provider Financial Corporation III
99.7	Guaranty Agreement, dated as of December 12, 2005, made by Orange County Physicians Investment Network, LLC in favor of Medical Provider Financial Corporation III
99.8	Pledge Agreement, dated as of December 12, 2005, made by the Company in favor of Medical Provider Financial Corporation III.

EX-99.1

EXHIBIT 99.1

AMENDMENT NO. 1 TO CREDIT AGREEMENT

This AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment No. 1”), dated as of December 12, 2005 (“Effective Date”), is made by and among INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation (“IHHI”), WMC-SA, INC., a California corporation (“WMC-SA”), WMC-A, INC., a California corporation (“WMC-A”), CHAPMAN MEDICAL CENTER, INC., a California corporation (“Chapman”), COASTAL COMMUNITIES HOSPITAL, INC., a California corporation (“Coastal”), PACIFIC COAST HOLDINGS INVESTMENT, LLC, a California limited liability company (“PCHI”), ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability company (“OC-PIN”), GANESHA REALTY, LLC, a California limited liability company (“Ganesha”), WEST COAST HOLDINGS, LLC, a California limited liability company (“West Coast”), and MEDICAL PROVIDER FINANCIAL CORPORATION II, a Nevada corporation (“Lender”). IHHI, WMC-SA, WMC-A, Chapman and Coastal are sometimes collectively referred to herein as “Borrowers”;PCHI, Ganesha, and West Coast are hereinafter together sometimes referred to as the “Credit Parties”; and PCHI and OC-PIN are hereinafter together sometimes referred to as the “Guarantors.”This Amendment No. 1 amends that certain Credit Agreement dated as of March 3, 2005 (“Credit Agreement”) by and between Lender, Borrowers, the Credit Parties and the Guarantors.

RECITALS

A.Lender, Borrowers, and the Credit Parties are parties to the Credit Agreement; Lender and PCHI are parties to that certain Guaranty Agreement dated March 3, 2005 (“PCHI Guaranty”); Lender and OC-PIN are parties to that certain Guaranty Agreement dated March 3, 2005 (“OC-PIN Guaranty”); Lender and West Coast are parties to that certain Pledge Agreement dated March 3, 2005 (“West Coast Pledge Agreement”); Lender and the individual members of West Coast are parties to that certain Pledge Agreement dated March 3, 2005 (“Members of West Coast Pledge Agreement”); Lender and IHHI are parties to that certain Pledge Agreement dated March 3, 2005 (“IHHI Pledge Agreement”); and Lender and Ganesha are parties to that certain Pledge Agreement dated March 3, 2005 (“Ganesha Pledge Agreement”). The Credit Agreement, the PCHI Guaranty, the OC-PIN Guaranty, the West Coast Pledge Agreement, the Members of West Coast Pledge Agreement, the IHHI Pledge Agreement, the Ganesha Pledge Agreement, and each of the other documents and instruments executed in connection with the Credit Agreement are hereinafter collectively referred to as the “Loan Documents.” Capitalized terms not defined in this Amendment No. 1 shall have the same meaning as set forth in the Loan Documents.

B.Pursuant to the Loan Documents, Lender extended to Borrowers a loan in the amount of $50,000,000 (“Acquisition Loan”) to acquire the Hospital Facilities; and Lender extended to Borrowers a non-revolving line of credit facility of up to $30,000,000 (“Line of Credit Loan”) to be used for working capital and the other purposes permitted by the Loan Documents. The Acquisition Loan and Line of Credit Loan are hereinafter together referred to as the “Loan.”Borrowers, Credit Parties and Guarantors acknowledge and agree that the aggregate total of principal and interest due and owing under the Loan as of October 31, 2005 is $76,004,525.58.

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C.The Borrowers committed certain events of default (“Events of Default”) under the Loan Documents, as more particularly set forth (i) in that certain letter from Lender to Borrowers and others entitled Notice of Events of Default dated May 9, 2005 (the “Contract Default Notice”), and (ii) in that certain letter from Lender to Borrowers and others entitled Notice of Failure to Comply With Covenant dated May 9, 2005 (the “Covenant Failure Notice”).

D.In order to provide Borrowers and the Credit Parties time to resolve the Events of Default, Borrowers, the Credit Parties, the Guarantors and Lender executed that certain Forbearance Agreement dated June 1, 2005 (“Forbearance Agreement”).

E.Borrowers have requested, and Lender has agreed, that the Events of Default be deemed cured on the terms and conditions set forth in this Amendment No. 1, and the parties have agreed to the further agreements and amendments set forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows:

1.Recitals. The foregoing Recitals are incorporated by reference as if fully set forth herein.

2.General Agreements and Amendments to Credit Agreement. The Credit Agreement is hereby amended to provide as follows:

2.1New $4,300,000 Capital Contribution by OC-PIN. Section 2.1(s) of the Credit Agreement requires that IHHI receive capital contributions of not less than $15,000,000. Prior to the Effective Date hereof, OC-PIN has or shall have contributed to IHHI new capital in the amount of $4,300,000. When made, said $4,300,000 capital contribution shall be credited against the $15,000,000 requirement, such that IHHI’s remaining capital contribution requirement shall be $10,700,000.

2.2New $10,700,000 Loan. On condition that OC-PIN has timely contributed to IHHI the new capital required by Section 2.1 above, on the Effective Date, Medical Provider Financial Corporation III, a Nevada corporation and an Affiliate of Lender (“New Lender”) has agreed to make a new loan to IHHI (as Borrower) in the amount of $10,700,000 (“New Loan”). The New Loan shall be evidenced by a Credit Agreement (New Loan), Promissory Note (New Loan), Security Agreement (New Loan), UCC-1 Financing Statement (New Loan), Guaranty Agreement (New Loan) (PCHI), Guaranty Agreement (New Loan) (OC-PIN), Warrant (New Loan), Collateral Assignment of Contracts (New Loan) and such other documents and instruments required by New Lender (collectively the “New Loan Documents”). IHHI (as Borrower), WMC-SA, WMC-A, Coastal, Chapman, PCHI, West Coast and OC-PIN (as Credit Parties) and PCHI and OC-PIN (as Guarantors) and New Lender shall execute and deliver the New Loan Documents to one another on the Effective Date hereof.

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2.3Mandatory $10,700,000 Additional Capital Contribution. On or before the Maturity Date of the New Loan, the Borrowers covenant and agree that they will have received not less than $10,700,000 in new capital contributions. Said $10,700,000 in new capital contributions must consist of new capital contributed to IHHI by its shareholders and/or third-party investors; may not consist of funds directly or indirectly borrowed from any source by Borrowers; and may not consist of funds directly or indirectly borrowed from any source by any Credit Party or any Guarantor. Said $10,700,000 in new capital contributions shall be used to pay in full and retire all amounts due and owing under the New Loan, including but not limited to principal, interest, Lender’s Costs and all other costs, expenses, fees and charges due and owing to Lender.

2.4Mandatory $5,000,000 Prepayment. On the Effective Date hereof, from the proceeds of the New Loan, Borrowers agree to and shall pay Lender the amount of $5,000,000 in good and drawable funds, as and for the mandatory prepayment of principal against the Acquisition Loan required by Section 1.2(b)(ii) of the Credit Agreement.

2.5Termination of Events of Default; Agreements by Lender. The Events of Default set forth in the Contract Default Notice and in the Covenant Failure Notice are hereby terminated and deemed cured. Based on the foregoing, Lender agrees as of the Effective Date as follows:

a.Lender shall cease applying the Default Rate to the Loans based on the Events of Default set forth in the Contract Default Notice and in the Covenant Failure Notice. Provided, however, the Default Rate shall continue to apply to all Events of Default which occur subsequent to the Effective Date hereof, pursuant to Section 1.4(d) of the Credit Agreement;

b.Lender’s suspension of the Line of Credit facility with respect to additional Advances (as set forth in the Contract Default Notice) is rescinded and terminated; and

c.Lender’s acceleration of the Obligations (as set forth in the Contract Default Notice) is terminated.

2.6Termination of Forbearance Agreement. The Forbearance Agreement is hereby terminated.

2.7Change of Control. The definition of “Change of Control” in Annex A to the Credit Agreement is hereby deleted and the following new definition of “Change of Control” substituted in its place therefor:

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“Change of Control” means any of the following: (a) any person or group of persons (within the meaning of the Securities Exchange Act of 1934) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 25% or more of the issued and outstanding shares of capital Stock or of 25% or more of the issued and outstanding membership interests of Borrower or any Credit Party (other than Ganesha) or any Guarantor having the right to vote for the election of directors of Borrowers under ordinary circumstances; (b) other than the Lender pursuant to the Warrant, any person or group of persons (within the meaning of the Securities Exchange Act of 1934) shall have been granted a security interest in 25% or more of the issued and outstanding shares of the capital Stock or in 25% or more of the issued and outstanding membership interests of Borrower or any Credit Party (other than Ganesha) or any Guarantor having the right to vote for the election of directors of Borrowers under ordinary circumstances; (c) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the majority of the board of directors or managing members/managers of Borrower or Credit Party (other than Ganesha) or Guarantor cease for any reason (other than death or disability) to constitute a majority of the directors or majority of the managing members/managers of Borrower or Credit Party (other than Ganesha) or Guarantor then in office; (d) IHHI ceases to own, directly or indirectly, and/or ceases to control all of the economic and voting rights associated with, all of the issued and outstanding capital Stock of WMC-SA, or WMC-A, or Coastal, or Chapman; (e) after the Effective Date hereof, Dr. Anil V. Shah ceases to own, directly or indirectly, at least the same percentage of membership interests in OC-PIN, PCHI and/or West Coast that he owned on the Effective Date hereof; or (f) after the Effective Date hereof, Dr. Anil V. Shah ceases to control, directly or indirectly, the economic and voting rights associated with the membership interests in OC-PIN, PCHI and/or West Coast that he owned on the Effective Date hereof.

2.8Section 8.1 - Events of Default.Section 8.1 of the Credit Agreement is hereby amended by adding the following new “Events of Default” to the end thereof:

“8.1(y) On or before the Effective Date of this Amendment No. 1, OC-PIN for any reason fails to contribute to IHHI new capital in the amount of $4,300,000 on the terms and conditions required by this Amendment No. 1.

8.1(z) On or before the Effective Date of this Amendment No. 1, Borrowers for any reason fail to pay Lender the amount of $5,000,000 as and for the mandatory prepayment of principal against the Acquisition Loan required by this Amendment No. 1.

8.1(aa) On or before the Effective Date of this Amendment No. 1, Borrowers and the Credit Parties and the Guarantors for any reason fail to execute and deliver to New Lender each of the New Loan Documents.

8.1(bb) On or before the Maturity Date of the New Loan, Borrowers for any reason fail to receive at least $10,700,000 in new capital contributions on the terms and conditions required by this Amendment No. 1.

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8.1(cc) On or before the Maturity Date of the New Loan, Borrowers for any reason fail to pay all amounts due and owing under the New Loan, in full.

8.1(dd) Any one of IHHI, WMC-SA, WMC-A, Coastal, Chapman, PCHI, West Coast and/or OC-PIN commits an Event of Default under any of the New Loan Documents.

8.1(ee) A Change of Control occurs with respect to any of the Borrowers. or a Change of Control occurs with respect to any Credit Party (other than Ganesha), or a Change of Control occurs with respect to any Guarantor.”

2.9Consent to New Loan; Cross Default. Lender hereby consents to the making of the New Loan to IHHI and the execution of the New Loan Documents by IHHI (as Borrower), WMC-SA, WMC-A, Coastal, Chapman, PCHI, West Coast and OC-PIN (as Credit Parties) and PCHI and OC-PIN (as Guarantors). Lender agrees that no breaches or Events of Default shall be deemed to occur under the Credit Agreement or any of the other Loan Documents as a consequence of making the New Loan and the execution of the New Loan Documents. Provided, however, Borrowers, the Credit Parties and the Guarantors acknowledge and agree that the occurrence of an Event of Default under the Credit Agreement and the other Loan Documents shall constitute an Event of Default under the New Loan Documents; and that the occurrence of an Event of Default under the New Loan Documents shall constitute an Event of Default under the Credit Agreement and the other Loan Documents.

3.Injunctive Relief; Lender Liability Claims; Relinquishment of Known and Unknown Claims; Covenants Not To Sue.

3.1Injunctive Relief. Subject to the last sentence of this Section 3.1, each Borrower, each Credit Party and each Guarantor, together with their respective officers, directors, shareholders, members, managers, employees, agents, representatives and assigns (collectively the “Borrower Releasing Parties”) herebyfully, forever and irrevocably release, waive and relinquish their right to file or record in the official records of the Recorder of Orange County, California (“Official Records”) a lis pendens against any of the Hospital Facilities, or file in any court in any venue any legal action or proceeding (including but not limited to a complaint to enjoin foreclosure, or an order to show cause, or a complaint to set aside foreclosure sale, or an action to quiet title, or an action to cancel one or more of the Loan Documents) against Lender or any trustee under any of the Deeds of Trust, the purpose of which is to directly or indirectly procure from any court or tribunal issuance of a temporary restraining order, or a preliminary injunction, or a permanent injunction, or any other equitable relief (collectively, “Injunctive Relief”) which seeks to prohibit or prevent Lender or any trustee under any Deed of Trust (a) from recording a Notice of Sale with respect to any of the Deeds of Trust, or (b) from conducting a sale of any of the Hospital Facilities at a public auction as permitted by the power of sale provisions in the Deeds of Trust, or (c) from conveying title to any one or more of the Hospital Facilities via trustee’s deed to a purchaser at foreclosure, or (d) from conducting a sale of the personal property Collateral pursuant to the California Uniform Commercial Code, or (e) from conducting a “mixed-collateral” sale of any one or more of the Hospital Facilities and any or all of the personal property Collateral, or (f) from attaching or garnishing or seeking any other provisional remedy against any real or personal property of any Borrower, any Credit Party or any Guarantor, or (g) from taking any other action or pursuing any other right or remedy that Lender is permitted to pursue under the Loan Documents, or in law or equity. Notwithstanding the foregoing, the releases, waivers and relinquishments set forth in this Section 3.1 shall apply only to Injunctive Relief based on alleged acts or omissions of Lender which occurred prior to the Effective Date of this Amendment No. 1.

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3.2Lender Liability Claims. Each of the Borrower Releasing Parties hereby fully, forever and irrevocably release, waive and relinquish any claim or cause of action (collectively, “Lender Liability Claims”) that the Borrower Releasing Parties now have or in the future may have against Lender to the effect that, prior to the Effective Date of this Amendment No. 1: (a) Lender committed a breach or default under any of the Loan Documents, or (b) Lender conspired with the executive officers of IHHI to deprive OC-PIN of its stock ownership in IHHI or otherwise inflicted any actionable damage on OC-PIN, or (c) Lender committed an act not permitted by the Loan Documents or applicable law, or (d) Lender omitted to take an act required by the Loan Documents or under applicable law, or (e) any of the Loan Documents (including, but not limited to, the PCHI Guaranty and the OC-PIN Guaranty) are invalid or unenforceable in whole or in part for any reason, or (f) Lender suggested, implied, induced, cajoled or required that IHHI include any terms or conditions in any agreements between IHHI and OC-PIN, or (g) Lender suggested, implied, induced, cajoled or required that IHHI not include any terms or conditions in any agreements between IHHI and OC-PIN, or (h) Lender improperly interfered with or improperly exercised any control over the Borrowers, or (i) that Lender breached in any way any alleged duty of good faith or fair dealing, or any alleged duty of commercial reasonableness, or any quasi-duty, or any implied duty, or (j) that Lender committed any unlawful, unfair or fraudulent business act or practice, or (k) that Lender engaged in any unfair, deceptive, untrue or misleading advertising, or (l) that Lender committed any act prohibited by California Business and Professions Code Section 17500, or (m) that Lender engaged in predatory lending practices, or (n) that Lender engaged in or committed any act or omission which constitutes fraud, duress, negligence, conversion, defamation or infliction of emotional distress, or (o) that Lender interfered with the prospective business advantage of any of the Borrowers, or (p) that Lender interfered with the contractual relations of any of the Borrowers, or (q) that Lender interfered with the prospective business advantage of any of the Credit Parties or Guarantors (including, but not limited to, any prospective business advantage that OC-PIN had or might have had with KSR Medical Partners, LLC), or (r) that Lender interfered with the contractual relations of any of the Credit Parties or Guarantors (including, but not limited to, any contractual relations between OC-PIN and KSR Medical Partners, LLC).

3.3Relinquishment of Known and Unknown Claims. In order to induce Lender to enter into this Amendment No. 1, effective upon the Effective Date of this Amendment No. 1, each of the Borrower Releasing Parties fully, forever and irrevocably releases, waives, relinquishes and discharges Lender, Medical Capital Corporation, Medical Provider Financial Corporation I, Medical Provider Financial Corporation II, and each of their Affiliates and each of their respective officers, directors, members, employees, attorneys, agents, and representatives (collectively, the “Lender Released Parties”) from any and all claims, rights, demands, debts, causes of action, charges, expenses, damages, attorneys’ fees and costs, obligations or liabilities of any and every kind, nature and character whatsoever, whether or not now known, suspected or unsuspected, which any of the Borrower Releasing Parties may have had, may now have or may in the future claim to have against the Lender Released Parties arising out of, or related in any manner to any alleged act or omission to act which occurred prior to the Effective Date of this Amendment No. 1.

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The Borrower Releasing Parties hereto have been fully advised by their respective attorneys of the contents and effect of Section 1542 of the Civil Code of California (and its counterpart under Nevada law) upon the rights of each of them, which reads as follows:

A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.

EACH OF THE BORROWER RELEASING PARTIES ACKNOWLEDGES THAT THEY MAY HAVE SUSTAINED DAMAGES, LOSSES, FEES, COSTS OR EXPENSES WHICH ARE PRESENTLY UNKNOWN AND UNSUSPECTED, AND, NOTWITHSTANDING THE PROVISIONS OF SECTION 1542 (AND ITS COUNTERPART UNDER NEVADA LAW), AND ARE EXPRESSLY WAIVING THE SAME. EACH OF THE BORROWER RELEASING PARTIES AGREES THAT IT INTENDS TO RELEASE EVEN UNKNOWN OR UNSUSPECTED CLAIMS. EACH OF THE BORROWER RELEASING PARTIES REPRESENTS THAT IT HAS CONSULTED WITH ITS LEGAL COUNSEL REGARDING ITS CLAIMS AND POTENTIAL CLAIMS AGAINST LENDER, AND HAS CAREFULLY READ AND UNDERSTAND ALL THE PROVISIONS OF THIS AMENDMENT NO. 1, AND HAS VOLUNTARILY ENTERED INTO THIS AMENDMENT NO. 1.

3.4Covenants Not To Sue. Each of the Borrower Releasing Parties hereby promises, covenants and agrees not to sue any of the Lender Released Parties, and not to bring any legal action or proceeding of any kind against any of the Lender Released Parties, in any court or administrative proceeding, in any venue, which legal action or proceeding directly or indirectly seeks to (a) obtain or procure issuance of any temporary restraining order, or a preliminary injunction, or a permanent injunction, or any other equitable or provisional relief against any of the Lender Released Parties based on acts or omissions which occurred prior to the Effective Date of this Amendment No. 1, or (b) impose any Lender Liability Claims on or against any of the Lender Released Parties based on acts or omissions which occurred prior to the Effective Date of this Amendment No. 1, or (c) obtain or impose on any of the Lender Released Parties any Injunctive Relief based on acts or omissions which occurred prior to the Effective Date of this Amendment No. 1, or (d) which legal action or proceeding violates any covenant, condition, representation or warranty made by the Borrower Releasing Parties in this Amendment No. 1.

4.Indemnification; Release and Waiver; Condition Precedent; Non-Responsibility.

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4.1General Indemnification. Each Borrower, each Credit Party and each Guarantor hereby jointly and severally agrees to and shall indemnify, defend, protect and hold Lender, Medical Capital Corporation, Medical Provider Financial Corporation I, Medical Provider Financial Corporation II, and each of their Affiliates, and each of their respective officers, directors, members, employees, attorneys, agents, and representatives (each, an “Indemnified Person”) free and harmless from and against any and all legal actions, suits, proceedings or claims brought or asserted against any Indemnified Person for damages, losses, liabilities and expenses (including reasonable attorneys’ fees, witness and expert witness fees, court fees and charges, and disbursements and other costs of investigation or defense, including those incurred upon any appeal or in any Bankruptcy Proceeding) directly or indirectly arising out of or relating to (a) the execution and delivery of the Credit Agreement by an Indemnified Person, (b) the execution and delivery of this Amendment No. 1 by an Indemnified Person, (c) the execution and delivery of any Loan Document by an Indemnified Person, (d) the execution and delivery of any New Loan Document by an Indemnified Person, (e) the making of the Loan by an Indemnified Person, (f) the making of the New Loan by an Indemnified Person, or (g) any Lender Liability Claims brought or asserted against an Indemnified Person with respect to the Loan or New Loan. Notwithstanding anything to the contrary contained in this Amendment No. 1, the maximum liability of all Credit Parties as Credit Parties pursuant to this Section 4.1 in the aggregate shall be limited to One Million Dollars ($1,000,000); provided, however, that such limitation shall not be applicable to any Credit Party’s individual liability for the payment and performance of any liabilities and obligations under any other Loan Document (including any pledge agreement or guaranty) to which such Credit Party is a direct party. With respect to the liability of Credit Parties hereunder, Lender agrees to seek payment of any financial Obligations (other than principal and interest payments) from Borrowers but in the event Borrowers fail to pay within five (5) days, then Lender shall be entitled to pursue its right to such payment from Borrowers and/or Credit Parties. Lender further agrees that, with respect to any liability or obligation of a Credit Party under this Credit Agreement or any other Loan Document, Lender’s only recourse shall be against the Credit Party itself and any Collateral provided by the Credit Party. In this regard, Lender hereby acknowledges that, except for distributions actually made by a Credit Party to an Individual(s) (defined below), it is not looking to any constituent member or other equity owner who is a natural person, or any manager, officer, director, employee or other individual representative of any Credit Party (“Individuals”) for recourse, and waives any rights it may have, by virtue of alter ego, “piercing the veil,” undercapitalization, failure to observe corporate or limited liability company formalities, or any other legal theory, to pursue causes of action under this Credit Agreement or any other Loan Document against any of the Individuals.

4.2Indemnification by OC-PIN and West Coast. OC-PIN and West Coast hereby jointly and severally agree to and shall indemnify, defend, protect and hold each of the Indemnified Persons free and harmless from and against any and all claims brought or asserted against any Indemnified Person for damages, losses, liabilities and expenses (including reasonable attorneys’ fees, witness and expert witness fees, court fees and charges, and disbursements and other costs of investigation or defense, including those incurred upon any appeal or in any Bankruptcy Proceeding) directly or indirectly arising out of or relating to any agreement or contract by and between KSR Medical Partners, LLC and any of the Borrowers, Credit Parties or Guarantors, including but not limited to that certain litigation styled KSR Medical Partners, LLC v. Orange County Physicians Investment Group, LLC; West Coast Holdings, LLC, Anil V. Shah, M.D; and Does 1 through 30, Orange County Superior Court Case No. 05CC1091, or any subsequent claim, lawsuit or litigation brought by or on behalf of KSR Medical Partners, LLC.

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4.3Indemnification by Borrowers and the Credit Parties. The Borrowers and the Credit Parties each hereby jointly and severally agree to and shall indemnify, defend, protect and hold each of the Indemnified Persons free and harmless from and against any and all claims brought or asserted against any Indemnified Person for damages, losses, liabilities and expenses (including reasonable attorneys’ fees, witness and expert witness fees, court fees and charges, and disbursements and other costs of investigation or defense, including those incurred upon any appeal or in any Bankruptcy Proceeding) directly or indirectly arising out of or relating to that certain litigation styled Satchmed Plaza Owners Association vs. UWMC Hospital Corporation, et al, Orange County Superior Court Case No. 05CC04210.

4.4Indemnification by Borrowers and OC-PIN. The Borrowers and OC-PIN each hereby jointly and severally agree to and shall indemnify, defend, protect and hold each of the Indemnified Persons free and harmless from and against any and all claims brought or asserted against any Indemnified Person for damages, losses, liabilities and expenses (including reasonable attorneys’ fees, witness and expert witness fees, court fees and charges, and disbursements and other costs of investigation or defense, including those incurred upon any appeal or in any Bankruptcy Proceeding) directly or indirectly arising out of or relating to (a) the sale by IHHI of its capital stock to OC-PIN pursuant to that certain Second Amendment to Stock Purchase Agreement dated October 31, 2005 by and between IHHI and OC-PIN (“Second Amendment”), (b) any claims, allegations, lawsuits or causes of action made or brought by KSR Medical Partners, LLC against any Indemnified Person alleging that any Indemnified Person aided, abetted, encouraged, coerced, persuaded or pressured OC-PIN to breach or default under any agreement or contract it had or may have had with KSR Medical Partners, LLC, (c) any claims, allegations, lawsuits and causes of action made or brought by KSR Medical Partners, LLC against any Indemnified Person alleging that any Indemnified Person tortuously interfered with, or otherwise interfered with, an existing contract between KSR Medical Partners, LLC and OC-PIN, and (d) any claims, allegations, lawsuits and causes of action made or brought by KSR Medical Partners, LLC against any Indemnified Person alleging that any Indemnified Person committed any other act, or omitted to take any other act, which directly or indirectly caused damage or injury to KSR Medical Partners, LLC.

4.5Non-Responsibility. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO THIS AMENDMENT NO. 1 OR TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF HAVING EXECUTED THIS AMENDMENT NO. 1 OR AS A RESULT OF ANY CREDIT HAVING BEEN EXTENDED PURSUANT TO THE NEW LOAN DOCUMENTS OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

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5.Confirmation of Loan Documents; Confirmation of Guaranties; Unconditional Obligations; Waivers. Each of the Borrowers, each of the Credit Parties, and each of the Guarantors hereby reaffirms, remakes and confirms each of their respective representations and warranties made in each of the Loan Documents. In addition, each of the Guarantors reaffirms and remakes each of their obligations under its Guaranty and reaffirms and restates each and every term, condition, and provision of its Guaranty. In addition, each Guarantor hereby agrees that its obligations under its Guaranty shall be unconditional, irrespective of (a) the absence of any attempt to collect the Loan from Borrower or any other Guarantor or other action to enforce the same, (b) the waiver or consent by Lender with respect to any provision of any of the Loan Documents, the Forbearance Agreement, or any other agreement now or hereafter executed by Borrower and delivered to Lender, (c) Lender’s election, in any proceeding instituted under Chapter 11 of Title 11 of the United States Code (11 U.S.C. §101 et seq.) (the “Bankruptcy Code”), of the application of Section 1111(b)(2) of the Bankruptcy Code, (d) any borrowing or grant of a security interest by Borrower, as debtor-in-possession, under Section 364 of the Bankruptcy Code, or (e) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of Lender’s claims for repayment of the Loan. Each Guarantor further reaffirms that its obligations under its Guaranty are primary and are separate and distinct from Borrower's obligations. Each Guarantor further represents and warrants that it has no defenses or claims against Lender that would or might affect the enforceability of its Guaranty and that its Guaranty remains in full force and effect. Each Guarantor irrevocably and permanently waives any and all rights of subrogation, reimbursement, indemnity, contribution or any other claim arising from the existence of performance of its Guaranty which each Guarantor may now or hereafter have against Borrowers or any other person or entity (or their respective properties) directly or contingently liable for said obligations. Each Guarantor understands that if Lender forecloses by trustee's sale on one or more of the Deeds of Trust, each Guarantor would then have a defense preventing Lender from thereafter enforcing said Guarantor's liability for the unpaid balance of the Loan. This defense arises because the trustee's sale would eliminate Guarantor's right of subrogation, and therefore Guarantor would be unable to obtain reimbursement from Borrower. Guarantor specifically waives this defense and all rights and defenses that Guarantor may have because the Loan is secured by real property. This means, among other things: (i) Lender may collect from each Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower; and (ii) if Lender forecloses on any real property collateral pledged by Borrower: (A) the amount of the Loan may be reduced only by the price for which the collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and (B) Lender may collect from each Guarantor even if Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights and defenses each Guarantor may have because the Loan is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure or similar laws in other states. Each Guarantor waives all rights and defenses arising out of an election of remedies by the Lender, even though that election of remedies, such as non-judicial foreclosure with respect to security for a guaranteed obligation, has destroyed said Guarantor’s rights of subrogation and reimbursement against Borrower by operation of Section 580d of the California Code of Civil Procedure or otherwise.

6.No Defaults. Except for the referenced Events of Default, no other known breaches, defaults or Events of Default have occurred under the Loan Documents, the Environmental Indemnity, the PCHI Guaranty and the OC-PIN Guaranty, which have not been cured or which are continuing.

7.No Offsets. Each Borrower, each Credit Party and each Guarantor represents and warrants that it has no offset, credit, claim or setoff against any amount due or owing under the Loan Documents, including but not limited to the aggregate total of $76,004,525.58 in principal and interest due and owing on the Loan as of October 31, 2005.

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8.Authorizing Resolutions. Attached hereto as Exhibit “A” is the Unanimous Resolution of the Board of Directors of IHHI authorizing IHHI to execute this Amendment No. 1 and to agree to the terms and conditions set forth herein. Attached hereto as Exhibit “B” is the Unanimous Resolution of the Board of Directors of WMC-SA authorizing WMC-SA to execute this Amendment No. 1 and to agree to the terms and conditions set forth herein. Attached hereto as Exhibit “C” is the Unanimous Resolution of the Board of Directors of WMC-A authorizing WMC-A to execute this Amendment No. 1 and to agree to the terms and conditions set forth herein. Attached hereto as Exhibit “D” is the Unanimous Resolution of the Board of Directors of Coastal authorizing Coastal to execute this Amendment No. 1 and to agree to the terms and conditions set forth herein. Attached hereto as Exhibit “E” is the Unanimous Resolution of the Board of Directors of Chapman authorizing Chapman to execute this Amendment No. 1 and to agree to the terms and conditions set forth herein. Attached hereto as Exhibit “F” is the Unanimous Resolution of the Managers of PCHI authorizing PCHI to execute this Amendment No. 1 and to agree to the terms and conditions set forth herein. Attached hereto as Exhibit “G” is the Unanimous Resolution of the Managers of West Coast authorizing West Coast to execute this Amendment No. 1 and to agree to the terms and conditions set forth herein. Attached hereto as Exhibit “H” is the Unanimous Resolution of the Managers of Ganesha authorizing Ganesha to execute this Amendment No. 1 and to agree to the terms and conditions set forth herein. Attached hereto as Exhibit “I” is the Unanimous Resolution of the Managers of OC-PIN authorizing OC-PIN to execute this Amendment No. 1 and to agree to the terms and conditions set forth herein.

9.Advice of Legal Counsel. Each Borrower, each Credit Party and each Guarantor represents, warrants and covenants that it has consulted with and received advice from its own legal counsel, that it has read this Amendment No. 1 and/or that its legal counsel has explained the contents of this Amendment No. 1, that it understands the terms and conditions of this Amendment No. 1, that it understands the legal consequences of executing this Amendment No. 1, and agrees to execute the same.

10.Reimburse Lender for All Fees and Expenses. Borrowers hereby agree to and shall (a) on the Effective Date of this Amendment No. 1, pay to Lender all attorneys’ fees (including in-house counsel and outside counsel), costs, charges, expenses, foreclosure fees, trustee fees, recording charges, consultants fees, appraisal fees and other costs or expenses directly or indirectly paid or incurred by Lender in connection with this Amendment No. 1, and (b) following the Effective Date, within ten (10) calendar days of receipt of written demand therefore, reimburse Lender for all attorneys’ fees (including in-house counsel and outside counsel), costs, charges, expenses, foreclosure fees, trustee fees, recording charges, consultants fees, appraisal fees and other costs or expenses directly or indirectly paid or incurred by Lender in connection with this Amendment No. 1. If Borrower for any reason fails to reimburse Lender the referenced fees and costs within ten (10) calendar days of receipt of written demand therefore, Lender shall have (in addition to all other rights of Lender under the Loan Documents) the right, without further notice, to make a draw upon the Line of Credit in the name and for the benefit of Borrower in the amount of the fees and costs demanded. In said event, the amount drawn by Lender shall automatically be deemed a Line of Credit Advance made by Borrower from the Line of Credit pursuant to Section 1.1(b)(i) of the Credit Agreement and the same shall be repaid by Borrower pursuant to the terms of the Line of Credit Note.

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11.Credit Agreement To Remain In Force And Effect . Except as amended by this Amendment No. 1, the Credit Agreement shall remain in full force and effect according to its terms. In the event of an inconsistency or conflict between this Amendment No. 1 and the Credit Agreement, in each instance this Amendment No. 1 to prevail and govern.

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

BORROWERS:
INTEGRATED HEALTHCARE HOLDINGS, INC., a
Nevada corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
WMC-SA, INC., a California corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
WMC-A, INC., a California corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
COASTAL COMMUNITIES HOSPITAL, INC., a California corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
CHAPMAN MEDICAL CENTER, INC., a California corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
[SIGNATURE PAGE CONTINUES]

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GUARANTORS:
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
By:	/s/ Kali P. Chaudhuri
	Kali P. Chaudhuri, M.D., Manager
ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
CREDIT PARTIES:
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
By:	/s/ Kali P. Chaudhuri
	Kali P. Chaudhuri, M.D., Manager
ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
[SIGNATURE PAGE CONTINUES]

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GANESHA REALTY, LLC, a California limited liability company,
By:	/s/ Kali P. Chaudhuri
	Kali P. Chaudhuri, M.D., Manager
WEST COAST HOLDINGS, LLC, a California limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
LENDER:
MEDICAL PROVIDER FINANCIAL CORPORATION II, a Nevada corporation,
By:	/s/ Joseph J. Lampariello
	Joseph J. Lampariello, President and COO

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EX-99.2

EXHIBIT 99.2

CREDIT AGREEMENT

Dated as of December 12, 2005,

among

INTEGRATED HEALTHCARE HOLDINGS, INC.

as Borrower,

THE CREDIT PARTIES SIGNATORY HERETO,

as Credit Parties,

and

MEDICAL PROVIDER FINANCIAL CORPORATION III,

as Lender.

INDEX OF APPENDICES

Annex A	Definitions
Annex B	Notice Addresses
Annex C	List of Disclosure Schedules and New Loan Documents
Annex D	List of Hospital Facilities
Annex E	Unanimous Written Consent of Directors of IHHI
Annex F	Unanimous Written Consent of Directors of WMC-SA
Annex G	Unanimous Written Consent of Directors of WMC-A
Annex H	Unanimous Written Consent of Directors of Coastal
Annex I	Unanimous Written Consent of Directors of Chapman
Annex J	Unanimous Written Consent of Managers and Members of PCHI
Annex K	Unanimous Written Consent of Managers of West Coast
Annex L	Unanimous Written Consent of Managers and Members of Ganesha
Annex M	Unanimous Written Consent of Managers of OC-PIN
Exhibit “A”	Promissory Note
Exhibit “B”	Guaranty Agreement - OC-PIN
Exhibit “C”	Guaranty Agreement - PCHI
Exhibit “D”	Security Agreement
Exhibit “E”	Warrant
Exhibit “F”	Pledge Agreement - West Coast
Exhibit “G”	Pledge Agreement - Ganesha
Exhibit “H”	Pledge Agreement - Members of West Coast
Exhibit “I”	Pledge Agreement - IHHI
Exhibit “J”	Collateral Assignment of Contracts

Disclosure Schedule 3.2	Address of Executive Office, FEIN and Social Security Numbers
Disclosure Schedule 3.5	Material Adverse Effect
Disclosure Schedule 3.7	Labor Matters
Disclosure Schedule 3.8	Outstanding Stock
Disclosure Schedule 3.11	Taxes
Disclosure Schedule 3.12	Litigation
Disclosure Schedule 3.13	Brokers
Disclosure Schedule 3.15	Environmental Matters
Disclosure Schedule 3.16	Insurance
Disclosure Schedule 3.17	Bonding; Licenses
Disclosure Schedule 6.4	Indebtedness

ii

CREDIT AGREEMENT

($10,700,000 LOAN)

This CREDIT AGREEMENT (“Agreement”), dated as of December 12, 2005 (“Effective Date”), is made by and among INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation (“IHHI”), WMC-SA, INC., a California corporation (“WMC-SA”), WMC-A, INC., a California corporation (“WMC-A”), CHAPMAN MEDICAL CENTER, INC., a California corporation (“Chapman”), COASTAL COMMUNITIES HOSPITAL, INC., a California corporation (“Coastal”), PACIFIC COAST HOLDINGS INVESTMENT, LLC, a California limited liability company (“PCHI”), WEST COAST HOLDINGS, LLC., a California limited liability company (“West Coast”), ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability company (“OC-PIN”), GANESHA REALTY, LLC, a California limited liability company (“Ganesha”), and MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation (“Medical Provider”). IHHI is hereinafter referred to as the “Borrower”;WMC-SA, WMC-A, Chapman, Coastal, PCHI, West Coast, OC-PIN and Ganesha are hereinafter together sometimes referred to as the “Credit Parties”; PCHI and OC-PIN are hereinafter together sometimes referred to as the “Guarantors”; and Medical Provider is hereinafter referred to as the “Lender.”All references to the Credit Parties shall mean and include the Guarantors.

RECITALS

A.Borrower is in the business of delivering acute care services to the public through four (4) separate acute care hospital facilities located in Orange County, California (“Hospital Facilities”) identified in Annex D to this Agreement; and, along with one or more of the Credit Parties, is also in the business of owning and operating certain medical office buildings and other healthcare businesses related thereto.

B.Pursuant to that certain Credit Agreement dated as of March 3, 2005, as amended (“Original Credit Agreement”) by and between Borrower, the Credit Parties and Medical Provider Financial Corporation II, a Nevada corporation, an affiliate of Lender (“Original Lender”), Original Lender loaned $50,000,000 to IHHI, WMC-SA, WMC-A, Chapman and Coastal (the “Acquisition Loan”) for the purpose of acquiring the Hospital Facilities, and made available to IHHI, WMC-SA, WMC-A, Chapman and Coastal a $30,000,000 line of credit (the “Line of Credit Loan”) for the purpose of operating the Hospital Facilities (the Acquisition Loan and the Line of Credit Line are hereinafter referred to as the “Original Loan”).

C.Borrower under this Agreement has requested that Lender make a new loan in the amount of $10,700,000 (“New Loan”) for the purpose of operating the Hospital Facilities. Lender has agreed, on the terms and conditions set forth in this Agreement.

D.As an inducement to Lender to enter into this Agreement and to make the New Loan to Borrower, (i) PCHI and OC-PIN have each agreed to guaranty payment of the New Loan and performance of all Obligations hereunder, (ii) West Coast and Ganesha have each agreed to pledge their membership interests in PCHI as security for payment of the New Loan and performance of all Obligations hereunder, and (iii) the members of West Coast have agreed to pledge their membership interests in West Coast as security for payment of the New Loan and performance of all Obligations hereunder.

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E.Unless otherwise defined herein, capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A (Definitions). 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, Borrower, Lender and the Credit Parties agree as follows:

1.AMOUNT AND TERMS OF NEW LOAN

1.1New Loan. Subject to each of the other terms and conditions set forth in this Agreement:

(a)Lender agrees to make the New Loan to Borrower in a single advance for the purpose of enabling Borrower to operate and manage the Hospital Facilities. Lender intends to advance the proceeds of the New Loan on the Closing Date. Concurrently with the execution and delivery of this Agreement, Borrower shall execute and deliver the Note to Lender to evidence Borrower’s obligation to repay the New Loan to Lender, in the form of Exhibit “A” attached hereto. The principal amount of the New Loan shall bear simple interest at the rate of 12% per annum. Interest is payable monthly, in arrears, on the first day of each month. No payments of principal shall be due until the until Maturity Date. The entire principal amount of the New Loan and all accrued but unpaid interest thereon and all other non-contingent Obligations due thereunder, shall be due and payable in full in a single payment of immediately available funds on the Maturity Date. The New Loan may not be prepaid in whole or in part. If any payment on the New Loan becomes due and payable on a day other than a Business Day, the maturity thereof will be extended to the next succeeding Business Day.

(b)In addition, and concurrently with the execution and delivery of this Agreement:

(i)OC-PIN shall execute and deliver to Lender the Guaranty Agreement in the form of Exhibit “B” attached hereto; PCHI shall execute and deliver to Lender the Guaranty Agreement in the form of Exhibit “C” attached hereto; Borrower shall execute and deliver to Lender the Security Agreement in the form of Exhibit “D” attached hereto; Borrower shall execute and deliver to Lender the Warrant in the form of Exhibit “E” attached hereto; West Coast shall execute and deliver to Lender the Pledge Agreement in the form of Exhibit “F” attached hereto; Ganesha shall execute and deliver to Lender the Pledge Agreement in the form of Exhibit “G” attached hereto; each of the members of West Coast shall execute and deliver to Lender the Pledge Agreement in the form of Exhibit “H” attached hereto; IHHI shall execute and deliver to Lender the Pledge Agreement in the form of Exhibit “I” attached hereto; and IHHI shall execute and deliver to Lender the Collateral Assignment of Contracts in the form of Exhibit “J” attached hereto.

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(ii)Borrower and each of the Credit Parties shall execute and deliver to Lender their respective Unanimous Consents in the forms of AnnexesE through M of this Agreement, as applicable.

(iii)Borrower and each of the Credit Parties shall execute and deliver to Lender such other documents and instruments reasonably required by Lender.

1.2Use of Proceeds. Borrower shall utilize the proceeds of the New Loan for the express purposes authorized in this Agreement.

1.3Default Rate. Notwithstanding the foregoing, so long as an Event of Default has occurred and is continuing under any New Loan Document, the interest rates applicable to the New Loan 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 New Loan Documents, including interest accruing at the Default Rate, shall constitute additional Obligations hereunder and shall be secured by the Collateral.

1.4Payment to Lender’s Account. All payments by Borrower to Lender hereunder shall be made to the following deposit account by federal funds wire transfer:

Bank of America (Las Vegas, Nevada)

Medical Capital Corporation (Collection account for MPIII)

Acct# 5011129988

ABA# 026009593

Address: 6900 Westcliff Drive, 4th Floor, Las Vegas, NV 89145

Contact Person: Gin Richardson

1.5Maximum Lawful Rate of Interest. Notwithstanding anything to the contrary set forth in the Note, 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.

1.6Lender’s Costs. On the Closing Date, as a condition to the funding of the New Loan, Borrower shall pay to Lender all Lender’s Costs.

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1.7Receipt of Payments. Borrower shall make each payment under this Agreement and the Note not later than 2:00 p.m. (Las Vegas time) on the day when due in immediately available funds in Dollars to Lender’s deposit account described in Section 1.4 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.

1.8Application of Payments. So long as no Event of Default has occurred and is continuing, scheduled monthly payments of interest shall be applied first, to reimbursable expenses of Lender then due and payable pursuant to any of the New Loan Documents; then last, to interest then due and payable on the New Loan. As to any other payment, and as to all payments made when an Event of Default has occurred and is continuing, Borrower and all Credit Parties hereby irrevocably waive the right to direct the application of any and all payments received from or on behalf of Borrower, and Borrower hereby irrevocably agrees that Lender shall have the continuing exclusive right to apply any and all such payments against the Obligations as Lender may deem advisable notwithstanding any previous entry by Lender in the New Loan Account or on any of its other books and records.

1.9New Loan Account. Lender shall maintain a New Loan Account on its books to record all payments made by Borrower, and all other debits and credits as provided in this Agreement with respect to the New Loan or any other Obligations. All entries in the New Loan Account shall be made in accordance with Lender’s customary accounting practices as in effect from time to time. The balance in the New 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 Borrower; provided that any failure to so record or any error in so recording shall not limit or otherwise affect any Borrower’s duty to pay the Obligations. Lender shall render to Borrower a monthly accounting of transactions with respect to the New Loan setting forth the balance of the New Loan Account as to Borrower for the immediately preceding month. Unless Borrower notifies Lender in writing of any objection to any such accounting (specifically describing the basis for such objection) within fifteen (15) calendar days after the date of Borrower’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 Borrower.

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1.10Indemnity. Borrower and each Credit Party shall jointly and severally indemnify and hold harmless each of the Indemnified Persons from and against any and all Indemnified Liabilities; provided, that neither Borrower nor any Credit Party shall be liable for any indemnification to an Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense results from that Indemnified Person’s gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PERSON TO ANY NEW LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PERSON, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY NEW LOAN DOCUMENT. Notwithstanding anything to the contrary contained in this Agreement, the maximum liability of all Credit Parties as Credit Parties pursuant to this Section 1.10 in the aggregate shall be limited to One Million Dollars ($1,000,000); provided, however, that such limitation shall not be applicable to any Credit Party’s individual liability for the payment and performance of any liabilities and obligations under any other New Loan Document (including any pledge agreement or guaranty) to which such Credit Party is a direct party. With respect to the liability of Credit Parties hereunder, Lender agrees to seek payment of any financial Obligations (other than principal and interest payments) from Borrower but in the event Borrower fails to pay within five (5) days, then Lender shall be entitled to pursue its right to such payment from Borrower and/or Credit Parties. Lender further agrees that, with respect to any liability or obligation of a Credit Party under this Credit Agreement or any other New Loan Document, Lender’s only recourse shall be against the Credit Party itself and any Collateral provided by the Credit Party. In this regard, Lender hereby acknowledges that, except for distributions actually made by a Credit Party to an Individual(s) (defined below), it is not looking to any constituent member or other equity owner who is a natural person, or any manager, officer, director, employee or other individual representative of any Credit Party (“Individuals”) for recourse, and waives any rights it may have, by virtue of alter ego, “piercing the veil,” undercapitalization, failure to observe corporate or limited liability company formalities, or any other legal theory, to pursue causes of action under this Credit Agreement or any other New Loan Document against any of the Individuals.

1.11Access. Borrower and each Credit Party (other than Ganesha) shall, during normal business hours, from time to time upon two (2) Business Days’ 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 Borrower and each Credit Party, (b) permit Lender, and any of its officers, employees and agents, to inspect, audit and make extracts from Borrower’s and Credit Party’s respective books and records, and (c) permit Lender, and its officers, employees and agents, to inspect, review and evaluate the Collateral. Any access under this Section shall be granted and conducted only in compliance with all federal and California state patient and medical record confidentiality laws. If an Event of Default has occurred and is continuing, Borrower and each Credit Party 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, Borrower shall use commercially reasonable efforts to provide Lender with access to their suppliers and customers. Borrower and each Credit Party shall make available to Lender and its counsel reasonably promptly originals or copies of all books and records that Lender may reasonably request. Each Borrower and each Credit Party shall deliver any document or instrument necessary for Lender, as it may from time to time reasonably request, to obtain records from any service bureau or other Person that maintains records for Borrower or any Credit Party, and shall maintain duplicate records or supporting documentation on media, including computer tapes and discs owned by Borrower or any Credit Party.

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1.12No Deduction for Taxes. Any and all payments by Borrower hereunder in accordance with this Section 1.12 (No Deduction for Taxes) shall be made free and clear of and without deduction for any and all present or future Taxes. If Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under the Note, (a) 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 1.12 (No Deduction for Taxes)) Lender receives an amount equal to the sum it would have received had no such deductions been made, (b) Borrower shall make such deductions, and (c) Borrower 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 shall furnish to Lender the original or a certified copy of a receipt evidencing payment thereof.

1.13Capital 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, in each case, adopted after the Closing Date, by 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 Borrower 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 shall be presumptive evidence of the matters set forth therein.

(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 New Loan, then Borrower 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 by Lender, shall be presumptive evidence of the matters set forth therein. Lender agrees that, as promptly as practicable after it becomes 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 Borrower pursuant to this Section 1.13(b) (Increased Costs). No amounts due from Borrower under Sections 1.13(a) and (b) (Capital Adequacy; Increased Costs) shall be amounts attributable to Lender’s non-compliance with any requirement of any Governmental Authority.

1.14Post-Closing Obligation - ALTA Surveys of Hospital Facilities. Within thirty (30) calendar days of the Closing Date, Borrower agrees to and shall, at its own cost and expense, cause to be prepared and delivered to Lender an ALTA survey of each of the four (4) Hospital Facilities prepared by a licensed civil engineer since the Closing Date. Each ALTA survey shall contain such terms and conditions and such surveyor’s requirements and certifications that Lender may require in its reasonable discretion. Borrower’s failure to timely comply with this provision will constitute a material event of default under the New Loan Documents.

1.15Observer Status of Borrower’s Board of Directors. Until the New Loan is paid in full and satisfied, Borrower hereby grants Lender non-voting observer status with respect to all meetings of the board of directors and all meetings of shareholders of Borrower. Concurrently with delivery of all notices of meetings and agendas to its directors and shareholders, Borrower agrees to and shall deliver a copy of each such notice to Lender.

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2.CONDITIONS PRECEDENT

2.1Conditions Precedent to the Closing Date. Lender shall not be obligated to take, fulfill, or perform any action hereunder 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; Other New Loan Documents; Annexes E through M. This Agreement or counterparts hereof shall have been duly executed by and delivered to Lender by Borrower and each Credit Party; Lender shall have received from Borrower and each of the Credit Parties the original, executed of all other New Loan Documents, as applicable; and Lender shall have received each of the original, executed AnnexesE through M from Borrower and each Credit Party, as applicable.

(b)Payment of Fees and Costs. Borrower shall have paid Lender for all Fees (if any), and reimbursed Lender for all Lender’s Costs including but not limited to attorneys’ fees and costs and expenses of Lender, presented as of the Closing Date. Borrower hereby covenants and agrees to pay any Lender’s Costs invoiced to Borrower after the Closing Date within ten (10) calendar days of the receipt of an invoice therefor.

(c)Legal Opinions. On or before the Effective Date:

(i)Legal counsel for WMC-SA, WMC-A, Coastal and Chapman shall have executed and delivered to Lender a legal opinion regarding the transactions contemplated hereby with respect to California law (including, but not limited to, due formation, and such other matters as Lender may require), in form and content acceptable to Lender in its sole and absolute discretion.

(ii)Legal counsel for Borrower shall have executed and delivered to Lender a legal opinion regarding the transactions contemplated hereby with respect to Nevada law (including, but not limited to, due formation, compliance with law, enforceability of the New Loan Documents for Borrower and all Credit Parties, choice of law, usury opinion, compliance with law, capitalization opinion for the Borrower, and such other matters as Lender may require), in form and content acceptable to Lender in its sole and absolute discretion.

(iii)Legal counsel for Ganesha shall have executed and delivered to Lender a legal opinion regarding the Pledge Agreement (Ganesha) with respect to California law (including, but not limited to, due formation, compliance with law, enforceability of the Pledge Agreement (Ganesha), choice of law, and such other matters as Lender may require), in form and content acceptable to Lender in its sole and absolute discretion.

(iv)Legal counsel for PCHI and West Coast shall have executed and delivered to Lender a legal opinion regarding the transactions contemplated hereby with respect to California law (including, but not limited to, due formation, compliance with law, and such other matters as Lender may require), in form and content acceptable to Lender in its sole and absolute discretion.

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(v)Legal counsel for OC-PIN shall have executed and delivered to Lender a legal opinion regarding the transactions contemplated hereby with respect to Nevada law (including, but not limited to, due formation, compliance with law, enforceability of the New Loan Documents, choice of law, and such other matters as Lender may require), in form and content acceptable to Lender in its sole and absolute discretion.

(d)$4,300,000 In New Capital. Within the thirty (30) calendar day period prior to the Effective Date of this Agreement, OC-PIN agrees to and shall contribute to Borrower new capital in the amount of $4,300,000.

(e)Mandatory $5,000,000 Prepayment. On the Closing Date, from the proceeds of the New Loan, Borrower agrees to and shall pay Lender the amount of $5,000,000 in good and drawable funds, as and for the mandatory prepayment of principal against the Acquisition Loan required by Section 1.2(b)(ii) of the Original Credit Agreement.

2.2Further Conditions Precedent to Loans. The obligations of Lender to make the New Loan to Borrower shall be subject to the following additional and further conditions precedent:

(a)Occurrence of the Closing Date. The Closing Date shall occur on or before November 30, 2005.

(b)No Material Adverse Effect. No event or circumstance shall have occurred that has or reasonably could be expected to have a Material Adverse Effect.

(c)No Misrepresentations. No representation or warranty by Borrower or any Credit Party contained herein or in any other New Loan Document shall be untrue or incorrect.

(d)Amendment No. 1 to Original Credit Agreement. On the Effective Date of this Agreement, each of the Borrowers, Credit Parties and Guarantors under the Original Credit Agreement shall execute and deliver to Lender Amendment No. 1 to [Original] Credit Agreement, in form and content acceptable to Lender in its sole discretion.

3.REPRESENTATIONS AND WARRANTIES. To induce Lender to make the New Loan, Borrower and the Credit Parties (except Ganesha) make the following representations and warranties to Lender, each and all of which shall survive the execution and delivery of this Agreement:

3.1Corporate Existence; Compliance with Applicable Laws. Borrower is (a) a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada; (b) is duly qualified to conduct business and is in good standing in the State of California; (c) 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; (d) subject to specific representations regarding Environmental Laws, has or 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; (e) is in compliance with its bylaws; and (f) subject to specific representations set forth herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance with all other Applicable Laws.

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3.2Executive Offices, Collateral Locations, FEIN. As of the Closing Date, Borrower’s name as it appears in official filings in the States of Nevada and California and the current location of Borrower’s chief executive office is set forth in Disclosure Schedule 3.2. In addition, Disclosure Schedule 3.2 lists the federal employer identification number of Borrower and of each Credit Party.

3.3Corporate Power, Authorization, Enforceable Obligations. The execution, delivery and performance by each Borrower and each Credit Party of the New 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, limited liability company or limited partnership action; (c) do not contravene any provision of such Person’s bylaws or operating agreements; (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 New Loan Documents; and (g) do not require the consent or approval of any Governmental Authority or any other Person. Each of the New Loan Documents and each of AnnexesE through M shall be duly executed and delivered by Borrower and each Credit Party and each Guarantor that is a party thereto and each such New Loan Document and Annex shall constitute a legal, valid and binding obligation of Borrower and each such Credit Party and each such Guarantor enforceable against it in accordance with its terms.

3.4Financial Statements. All Financial Statements delivered to Lender by Borrower 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 Borrower as of the dates thereof and the results of their operations and cash flows for the periods then ended.

(a)Financial Statements. The Financial Statements which have been delivered by Borrower to Lender with respect to Borrower on or before the date hereof are comprised of:

(i)The consolidated, unaudited balance sheets of Borrower as of December 31, 2004, and the related statements of income and cash flows of Borrower for the Fiscal Year then ended.

(ii)The unaudited balance sheet(s) at September 30, 2005 of Borrower and the related consolidated statement(s) of income and cash flows of Borrower for the three Fiscal Quarters then ended.

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3.5Material Adverse Effect. Between the respective dates of organization or formation for Borrower and each Credit Party, and the Closing Date: (a) to the best of Borrower’s knowledge after due inquiry, and 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, in each case considered as a whole, except for the Original Loan, (b) to the best of Borrower’s knowledge after due inquiry, and to the best of each Credit Party’s knowledge, there has not been any material decrease in the assets of Borrower or any Credit Party, considered as a whole, (c) except for the Original Credit Agreement, no contract, lease or other agreement or instrument has been entered into by Borrower or any Credit Party or has become binding upon Borrower’s or any Credit Party’s assets and, to the knowledge of any Borrower or Credit Party, no law or regulation applicable to Borrower or to any Credit Party has been adopted that has had or could reasonably be expected to have a Material Adverse Effect, (d) Borrower or the Credit Parties are not in default and to the best of Borrower’s knowledge after due inquiry, and to the best of each Credit Party’s knowledge, Borrower is not 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 other than as described in Disclosure Schedule 3.5 (Material Adverse Effect). Other than as described in Disclosure Schedule 3.5, as of the date of this Agreement, to the best of Borrower’s knowledge after due inquiry, and 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.

3.6Ownership of Collateral; No Liens. As of the Closing Date, Borrower owns good and marketable title to the Collateral. Except for the Liens in favor of the Original Lender and the Permitted Encumbrances, the Collateral is not subject to any Liens and there are no facts, circumstances or conditions known to Borrower or any Credit Party that may result in any Liens.

3.7Labor Matters. Except as set forth on Disclosure Schedule 3.7, as of the Closing Date, (a) no strikes or other material labor disputes against Borrower or any Credit Party are pending or, to Borrower’s or Credit Party’s knowledge, threatened; (b) hours worked by and payment made to employees of Borrower and each Credit Party comply with the Fair Labor Standards Act and other Applicable Laws; (c) all payments due from Borrower or any Credit Party for employee health and welfare insurance have been paid or accrued as a liability on the books of such Credit Party; (d) neither Borrower nor any Credit Party is 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 3.7 have been delivered to Lender; (e) there is no organizing activity involving Borrower or any Credit Party pending or, to Borrower’s or any Credit Party’s knowledge, threatened by any labor union or group of employees; (f) except as otherwise disclosed on Disclosure Schedule 3.7, there are no representation proceedings pending or, to Borrower’s or any Credit Party’s knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of Borrower or any Credit Party has made a pending demand for recognition; and (g) there are no material complaints or charges against Borrower or any Credit Party pending or, to the knowledge of Borrower or any Credit Party, 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 Borrower or any Credit Party of any individual.

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3.8Outstanding Stock. All of the issued and outstanding Stock of Borrower will on the Closing Date be owned by the Persons in the amounts and percentages set forth in Disclosure Schedule 3.8. Except as set forth in Disclosure Schedule 3.8 and excluding the Warrant in favor of Lender in the form of Exhibit “E” attached hereto, as of the Closing Date, there are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which Borrower may be required to issue, sell, repurchase or redeem any of its Stock. All outstanding Indebtedness and Guaranteed Indebtedness of Borrower as of the Closing Date is identified in Section 6.4 (Indebtedness) as described in Disclosure Schedule 6.4.

3.9Government Regulation. Neither Borrower nor any Credit Party 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. Neither Borrower nor any Credit Party 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 New Loan by Lender to Borrower, the application of the proceeds thereof and repayment thereof will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission or other Applicable Laws binding on Borrower or on any Credit Party.

3.10Margin Regulations. Neither Borrower nor any Credit Party is engaged, nor will it 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. Neither Borrower nor any Credit Party owns any margin stock, and none of the proceeds of the New Loan will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock, for the purpose of reducing or retiring any Indebtedness that was originally incurred to purchase or carry any stock or for any other purpose that might cause the New Loan to be considered a “purpose credit” within the meaning of Regulations T, U or X of the Federal Reserve Board. Neither Borrower nor any Credit Party will take or permit to be taken any action that might cause any Loan Document to violate any regulation of the Federal Reserve Board.

3.11Taxes.

Except as described in Disclosure Schedule 3.11, all Federal and other material tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by Borrower or by any Credit Party 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 5.5(b) (Payment of 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 Borrower 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 3.11 sets forth as of the Closing Date those taxable years for which Borrower or any Credit Party’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 3.11, as of the Closing Date, neither Borrower nor any Credit Party 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. None of Borrower or the Credit Parties are liable for any Charges: (a) under any agreement (including any tax sharing agreements) or (b) to Borrower’s and each Credit Party’s knowledge, as a transferee. As of the Closing Date, neither Borrower nor any Credit Party has agreed or been requested to make any adjustment under IRC Section 481(a), by reason of a change in accounting method or otherwise.

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3.12No Litigation. Except as set forth in Disclosure Schedule 3.12, no action, claim, lawsuit, demand, investigation or proceeding is now pending or, to the knowledge of Borrower or any Credit Party, threatened against Borrower or any Credit Party, before any court or Governmental Authority or before any arbitrator or panel of arbitrators (collectively, “Litigation”), (a) that challenges the right or power of Borrower or any Credit Party to enter into or perform any of its obligations under the New 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 Borrower or any Credit Party 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 any 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, Borrower or any Credit Party.

3.13Brokers. Except as set forth on Disclosure Schedule 3.13, no broker or finder brought about the obtaining, making or closing of the New Loan, and neither Borrower nor any Credit Party or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.

3.14Full Disclosure. No information contained in this Agreement, any of the other New Loan Documents or Financial Statements or other written reports from time to time prepared by Borrower or any Credit Party and delivered hereunder or any written statement prepared by any Credit Party and furnished by or on behalf of Borrower or any Credit Party 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 misleading in light of the circumstances under which they were made.

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3.15Environmental Matters.

(a)Except as set forth in Disclosure Schedule 3.15, as of the Closing Date, to their knowledge: (i) Borrower and the Credit Parties are and have been in compliance with all Environmental Laws, except for such noncompliance that would not result in Environmental Liabilities which could reasonably be expected to exceed $100,000; (ii) Borrower and the Credit Parties have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Environmental Permits would not result in Environmental Liabilities that could reasonably be expected to exceed $100,000, and all such Environmental Permits are valid, uncontested and in good standing; (iii) neither Borrower nor any Credit Party is or will be involved in operations or knows of any facts, circumstances or conditions, including any Release of Hazardous Materials, that are likely to result in any Environmental Liabilities of Borrower or any Credit Party which could reasonably be expected to exceed $100,000; (iv) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or expenses in excess of $100,000 or injunctive relief against, or that alleges criminal misconduct by, Borrower or any Credit Party; and (v) no notice has been received by Borrower or any Credit Party identifying it as a “potentially responsible party” or requesting information under CERCLA or analogous state statutes, and to the knowledge of Borrower and the Credit Parties, there are no facts, circumstances or conditions that may result in Borrower or any Credit Party being identified as a “potentially responsible party” under CERCLA or analogous state statutes.

(b)Borrower and each Credit Party hereby acknowledge and agree that Lender (i) is not now, and has not ever been, in control of Borrower’s or such Credit Party’s assets (including its real estate) or Borrower’s or Credit Party’s affairs, and (ii) does not have the capacity through the provisions of the New Loan Documents or otherwise to influence Borrower or any Credit Party’s conduct with respect to the ownership, operation or management of any of its real estate or compliance with Environmental Laws or Environmental Permits.

3.16Insurance. Disclosure Schedule 3.16 lists all insurance policies of any nature maintained, as of the Closing Date, for current occurrences by Borrower and each Credit Party, as well as a brief description thereof.

3.17Bonding; Licenses. Except as set forth on Disclosure Schedule 3.17, as of the Closing Date, neither Borrower nor any Credit Party is a party to or bound by any material surety bond agreement or material 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.

3.18Solvency. Both before and after giving effect to (a) the New Loan to be made or incurred on the Closing Date, (b) the disbursement of the proceeds of the New Loan pursuant to the instructions of Borrower; and (c) the payment and accrual of all transaction costs in connection with the foregoing, Borrower is and will be Solvent.

3.19Operating Permits, Licenses and Consents. Immediately following the full consummation of the transactions contemplated by this Agreement, Borrower and the Credit Parties shall have sufficient Governmental Authority, operating permits, licenses and consents necessary to fully operate the Hospital Facilities in the same manner as they were operating by Borrower and the Credit Parties prior to the consummation of this Agreement.

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4.FINANCIAL STATEMENTS

4.1Reports and Notices. Borrower and each Credit Party executing this Agreement hereby agrees that from and after the Closing Date and until the Termination Date, it shall cause Borrower to deliver to Lender the Financial Statements, notices and other information at the times, to the Persons and in the manner set forth in Annex B (Notice Addresses).

4.2Communication with Accountants. Borrower and each Credit Party executing this Agreement authorizes Lender, so long as an Event of Default has occurred and is continuing, following reasonable notice to Borrower, to communicate directly with all independent certified public accountants of Borrower, and Borrower authorizes and shall instruct those accountants to communicate to Lender any and all financial statements and supporting financial documentation relating to Borrower or any Credit Party with respect to the business, results of operations and financial condition of Borrower and any Credit Party.

5.AFFIRMATIVE COVENANTS.Between the Effective Date and the Termination Date, without first receiving the prior written consent of Lender, which consent will not be unreasonably withheld, Borrower and each Credit Party (other than Ganesha) agrees as follows:

5.1ALTA Surveys of Hospital Facilities. Within thirty (30) calendar days of the Closing Date, Borrower agrees to and shall, at its own cost and expense, cause to be prepared and delivered to Lender an ALTA survey of each of the Hospital Facilities prepared by a licensed civil engineer since the Closing Date. Each ALTA survey shall contain such terms and conditions and such surveyor’s requirements and certifications that Lender may require in its reasonable discretion. Borrower’s failure to timely comply with this provision will constitute a material event of default under the New Loan Documents.

5.2Maintenance of Existence and Conduct of Business. Borrower shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate 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 its 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.

5.3Payment of Charges.

(a)Obligation to Pay Charges. Subject to Section 5.3(b) (Right to Contest Charges), Borrower shall pay and discharge or cause to be paid and discharged promptly all Charges payable by it, including (i) Charges imposed upon it, its income and profits, or any of its property (real, personal or mixed) and all Charges with respect to Taxes, social security and unemployment withholding with respect to its employees, (ii) lawful claims for labor, materials, supplies and services or otherwise, and (iii) where the failure to pay or discharge such Charges would not result in aggregate liabilities in excess of $100,000.

(b)Right to Contest Charges. Borrower may in good faith contest, by appropriate proceedings, the validity or amount of any Charges, Taxes or claims described in Section 5.3(a) (Obligation to Pay Charges); provided, that (i) adequate reserves with respect to such contest are maintained on the books of Borrower, 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) Borrower 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 Borrower or the conditions set forth in this Section 5.3(b) (Right to Contest Charges) are no longer met.

 

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5.4Books and Records. Borrower shall keep adequate books and records with respect to its business activities in which proper entries, reflecting all financial transactions, are made in accordance with GAAP (except as otherwise disclosed on the Financial Statements).

5.5Insurance; Damage to or Destruction of Collateral.

(a)Insurance. Borrower shall, at its sole cost and expense, maintain the policies of insurance described on Disclosure Schedule 3.16 as in effect on the date hereof or may obtain and maintain other policies of insurance in form and amounts and with insurers reasonably acceptable to Lender. All policies of insurance (or the loss payable and additional insured endorsements delivered to Lender) shall contain provisions pursuant to which the insurer agrees to provide thirty (30) days prior written notice to Lender in the event of any non-renewal, cancellation or amendment of any such insurance policy. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay all premiums relating thereto, Lender may at any time or times thereafter obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto that Lender deems advisable. Lender shall have no obligation to obtain insurance for Borrower or pay any premiums therefor. By doing so, Lender shall not be deemed to have waived any Default or Event of Default arising from Borrower’s failure to maintain such insurance or pay any premiums therefore. All sums so disbursed, including reasonable attorneys’ fees, court costs and other charges related thereto, shall be payable on demand by Borrower to Lender and shall be additional Obligations hereunder secured by the Collateral, and shall bear interest at the Default Rate until paid in full to Lender.

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(b)Lender’s Insurance Rights. Lender reserves the right at any time upon any change in Borrower’s risk profile (including any laws affecting the potential liability of Borrower) to require additional forms and limits of insurance to, in Lender’s reasonable opinion, adequately protect Lender’s interests and Lien in all or any portion of the Collateral and to ensure that Borrower are protected by insurance in amounts and with coverage customary for its industry. If reasonably requested by Lender, Borrower shall to deliver to Lender from time to time a report of a reputable insurance broker, reasonably satisfactory to Lender, with respect to its insurance policies.

(c)Endorsements. Borrower shall deliver to Lender, in form and substance reasonably satisfactory to Lender, endorsements to all general liability and other liability policies naming Lender, as additional insured. Borrower shall irrevocably make, constitute and appoint Lender and Lender’s Representative, so long as any Default or Event of Default has occurred and is continuing, as Borrower’s true and lawful agent and attorney-in-fact for the purpose of making, settling and adjusting claims under all policies of insurance, endorsing the name of Borrower on any check or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect to such policies of insurance. Lender shall have no duty to exercise any rights or powers granted to it pursuant to the foregoing power-of-attorney. After deducting from such proceeds (i) the expenses incurred by Lender in the collection or handling thereof, and (ii) amounts required to be paid to creditors (other than Lender), Lender may, at its option, apply such proceeds to the reduction of the Obligations in accordance with Section 1.8 (Application of Payments).

5.6Compliance with Applicable Laws. Borrower shall comply with all federal, state, local and foreign laws and regulations applicable to it, including those relating to ERISA, labor laws, and Environmental Laws and Environmental Permits, except to the extent that the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

5.7Supplemental Disclosure. From time to time as may be reasonably requested by Lender, Borrower shall supplement each Disclosure Schedule hereto, or any representation herein or in any other New Loan Document, with respect to any matter hereafter arising that, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedule or as an exception to such representation or that is necessary to correct any information in such Disclosure Schedule or representation which has been rendered inaccurate thereby (and, in the case of any supplements to any Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to show the changes made therein); provided that (a) no such supplement to any such Disclosure Schedule or representation shall amend, supplement or otherwise modify any Disclosure Schedule or representation, or be deemed a waiver of any Default or Event of Default resulting from the matters disclosed therein, except as consented to by Lender in writing, and (b) no supplement shall be required or permitted as to representations and warranties that expressly relate only to the Closing Date.

5.8Intellectual Property. Borrower and each Credit Party will conduct their business and affairs without infringement of or interference with any Intellectual Property of any other Person.

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5.9Environmental Matters. Borrower shall cause each Person within their control to: (a) conduct their operations and keep and maintain their real estate and interests in real estate in compliance with all Environmental Laws and Environmental Permits; (b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to comply with Environmental Laws and Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, under, above, to, from or about any of its real estate in all material respects; (c) notify Lender promptly after Borrower become aware of any violation of Environmental Laws or Environmental Permits or any Release on, at, in, under, above, to, from or about any of the Hospital Facilities or any other real estate that is reasonably likely to result in Environmental Liabilities of Borrower in excess of $100,000; and (d) promptly forward to Lender a copy of any order, notice, request for information or any communication or report received by Borrower or any Credit Party in connection with any such violation or Release or any other matter relating to any Environmental Laws or Environmental Permits that could reasonably be expected to result in Environmental Liabilities in excess of $100,000, in each case whether or not the Environmental Protection Agency or any Governmental Authority has taken or threatened any action in connection with any such violation, Release or other matter. If Lender at any time has a reasonable basis to believe that there may be a violation of any Environmental Laws or Environmental Permits by Borrower or any Environmental Liability of Borrower arising thereunder, or a Release of Hazardous Materials on, at, in, under, above, to, from or about any of the Hospital Facilities or any of its other real estate, that, in each case, could reasonably be expected to have a Material Adverse Effect, then Borrower shall, upon Lender’s written request (i) cause the performance of such environmental audits including subsurface sampling of soil and groundwater, and preparation of such environmental reports, at Borrower’s expense, as Lender may from time to time reasonably request, which shall be conducted by reputable environmental consulting firms reasonably acceptable to Lender and shall be in form and substance reasonably acceptable to Lender, and (ii) if Borrower shall not have timely performed such environmental audits, permit Lender or its representatives to have access to all real estate for the purpose of conducting such environmental audits and testing as Lender reasonably deems appropriate, including subsurface sampling of soil and groundwater. Borrower shall reimburse Lender for the costs of such audits and tests and the same will constitute a part of the Obligations secured hereunder.

5.10Further Assurances. Borrower and each Credit Party agrees that it shall, at Borrower’s or Credit Party’s expense and upon the reasonable request of Lender, duly execute and deliver, or cause to be duly executed and delivered, to Lender such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of Lender to carry out more effectively the provisions and purposes of this Agreement and each New Loan Document.

5.11Operation of Hospital Facilities. Borrower, WMC-SA, WMC-A, Coastal and Chapman shall have and maintain at all times from the Closing Date until the Obligations have been paid in full, sufficient approvals, consents, and permits from all necessary Governmental Authorities to fully operate each of the Hospital Facilities in accordance with Applicable Laws. Borrower, WMC-SA, WMC-A, Coastal and Chapman shall use their respective best efforts and use appropriate diligence to secure all approvals, consents and permits as and when required by Applicable Laws to fully operate the Hospital Facilities.

6.NEGATIVE COVENANTS. Between the Effective Date and the Termination Date, Borrower and each Credit Party jointly and severally covenant and agree as follows:

6.1Specific Covenants. Borrower and each Credit Party (except Ganesha) shall not, directly or indirectly, take any of the following acts, or authorize or permit any of the following acts to occur, without first receiving the prior written consent of Lender, which consent will not be unreasonably withheld:

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(a)Borrower shall not authorize issuance of additional shares of common stock or preferred stock, or issue any treasury stock, if said issuance would reduce the number of shares held as treasury stock below the number of treasury shares required by the Warrant attached hereto as Exhibit “E”.

(b)Except for the Warrant attached hereto as Exhibit “E”, the Warrants heretofore granted to Dr. Chaudhuri and Bill Thomas, and the Stock Option granted by Borrower to OC-PIN dated October 31, 2005, Borrower shall not grant preferences to holders of common stock or preferred stock or membership interests, or grant or issue warrants or options to acquire common stock or preferred stock or membership interests (except to Borrower’s employees in the ordinary and normal course of business), or issue dividends or make distributions of any kind.

(c)Increase or decrease the number of members on the board of directors of any Borrower or increase or decrease the number of managers or managing members of any Credit Party or Guarantor.

(d)Amend, modify or change any term or provision of its articles of incorporation, or bylaws, or articles of organization, or operating agreement.

(e)Excluding encumbrances in favor of the Original Lender or which constitute Permitted Encumbrances, finance, refinance or encumber any real or personal property unless the purpose for said finance or refinance is to pay in full the New Loan when due.

(f)Acquire, merge or consolidate with any other Person.

(g)Take, permit, authorize or suffer a Change or Control.

(h)Other than in favor of the Original Lender, grant a security interest in any of its shares of capital Stock or membership interests.

(i)Unless otherwise permitted by the Original Credit Agreement with respect to the 999 North Tustin Avenue medical office building in Santa Ana, California, sell, transfer, assign, convey, lease, sublease (for a period longer than five (5) years), or otherwise transfer, or agree to sell, transfer, assign, convey, lease or sublease (for a period longer than five (5) years), or otherwise transfer, any interest in any real property or improvements (together “Real Property Assets”) owned, controlled, leased or subleased by Borrower or Credit Parties as of the Effective Date hereof.

(j)Increase, decrease, change, amend, modify, expand or contract on the power or authority of any officer, director, manager, member or managing member of the entity of which any Borrower or Credit Party is comprised.

(k)Amend, modify, alter or change any shareholders agreement or voting trust existing as of the Effective Date hereof.

(l)Change its name as it appears in official filings in the state of its incorporation or other organization.

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(m)Change its chief executive office, principal place of business, corporate office or location at which the location of its business records are currently located.

(n)Change it’s type of business entity.

(o)Change its organization identification number, if any, issued by its state of incorporation or other organization.

(p)Change its state of incorporation or organization or incorporate or organize in any additional jurisdictions.

(q)Appoint a new person as an officer, director, member or manager.

(r)Terminate any person as an officer, director, member or manager.

6.2Mergers, Subsidiaries, Etc. Borrower shall not, directly or indirectly, by operation of law or otherwise, (a) form or acquire any Subsidiary in addition to the existing Subsidiaries of Borrower; or (ii) merge with, consolidate with, acquire all or substantially all of the assets or Stock of, or otherwise combine with or acquire, any Person.

6.3Investments; Loans and Advances. Except as otherwise permitted by Section 6.2 in the Original Credit Agreement, Borrower shall not make or permit to exist any investment in, or make, accrue or permit to exist loans or advances of money to, any Person, through the direct or indirect lending of money, holding of securities or otherwise.

6.4Indebtedness.

(a)Borrower shall not create, incur or assume any Indebtedness, except (without duplication) (i) the Original Loan; (ii) Indebtedness created after the date hereof by conditional sale or other title retention agreements (including Capital Leases) or in connection with purchase money Indebtedness with respect to Equipment and Fixtures or other capital assets acquired by any Borrower in the ordinary course of business; (iii) the New Loan; (iv) unsecured Indebtedness (other than Funded Debt) incurred in the ordinary course of the Borrower respective business; and (v) Indebtedness described on Disclosure Schedule 6.4.

(b)Other than as permitted under the Original Credit Agreement with respect to prepayments of the Original Loan, Borrower shall not, directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Funded Debt prior to its scheduled due date.

6.5Employee Loans and Affiliate Transactions.Borrower shall not enter into or be a party to any transaction with any Affiliate thereof except in the ordinary course of and pursuant to the reasonable requirements of Borrower business and upon fair and reasonable terms that are no less favorable to either Borrower than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate of either Borrower. Borrower shall not enter into any lending or borrowing transaction with any employees of Borrower, except loans to its respective employees in the ordinary course of business consistent with past practices for travel and entertainment expenses, relocation costs, pension plan advances, and similar purposes.

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6.6No Sale or Transfer of Collateral. Except in the ordinary course of business, Borrower shall not sell, transfer, convey, assign, license or otherwise dispose of any interest in Collateral.

6.7ERISA. Borrower shall not cause or permit any ERISA Affiliate to, cause or permit to occur (a) an event that could result in the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or (b) an ERISA Event to the extent such ERISA Event would reasonably be expected to result in taxes, penalties and other liabilities in an aggregate amount in excess of $100,000 in the aggregate.

6.8Hazardous Materials. Borrower shall not cause or permit a Release of any Hazardous Material on, at, in, under, above, to, from or about any of the Hospital Facilities or any of their other real estate where such Release would (a) violate in any respect, or form the basis for any Environmental Liabilities under, any Environmental Laws or Environmental Permits or (b) otherwise adversely impact the value or marketability of any of the Hospital Facilities or their other real estate, other than such violations or Environmental Liabilities that could not reasonably be expected to have a Material Adverse Effect.

6.9Restricted Payments. Borrower shall not make any Restricted Payment, except (a) employee loans permitted under Section 6.5 (Employee Loans and Affiliate Transactions), and (b) so long as no Event of Default shall have occurred and is continuing, dividends and distributions by Borrower to its Shareholders.

7.TERM

7.1Termination. The terms, conditions, covenants and provisions set forth in this Agreement shall be in force and effect until the date when the New Loan and other Obligations set forth in this Agreement have been paid in full and satisfied.

7.2Survival of Obligations Upon Termination of Financing Arrangements. Except as otherwise expressly provided for in the New Loan Documents, no termination or cancellation (regardless of cause or procedure) of any term, condition, covenant or provision of this Agreement shall in any way affect or impair the obligations, duties and liabilities of the Borrower or the Credit Parties or the rights of Lender relating to any unpaid portion of the New Loan or any other Obligations, due or not due, liquidated, contingent or unliquidated, or any transaction or event occurring prior to such termination, or any transaction or event, the performance of which is required after the Maturity Date. Except as otherwise expressly provided herein or in any other New Loan Document, all undertakings, agreements, covenants, warranties and representations of or binding upon the Borrower and the Credit Parties, and all rights of Lender, all as contained in the New Loan Documents, shall not terminate or expire, but rather shall survive any such termination or cancellation and shall continue in full force and effect until the Termination Date; provided, that the provisions of Section 13 (Miscellaneous), the payment obligations under Article 1 (Amount and Terms of New Loan), and the indemnities contained in the New Loan Documents shall survive the Maturity Date.

7.3Payment of Obligations. Upon payment in full in cash of the New Loan and performance of all of the Obligations (other than indemnification Obligations), and a release of all claims against Lender, and so long as no suits, actions, proceedings or claims are pending against any Indemnified Person asserting any damages, losses or liabilities that are Indemnified Liabilities, Lender shall deliver to Borrower termination statements, Lien releases and other documents necessary or appropriate to evidence the termination of the Liens securing payment of the Obligations.

 

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8.INJUNCTIVE RELIEF; LENDER LIABILITY CLAIMS; RELINQUISHMENT OF KNOWN AND UNKNOWN CLAIMS; COVENANTS NOT TO SUE.

8.1Injunctive Relief. Subject to the last sentence of this Section 8.1, Borrower and each Credit Party, together with their respective officers, directors, shareholders, members, managers, employees, agents, representatives and assigns (collectively the “Borrower Releasing Parties”) herebyfully, forever and irrevocably release, waive and relinquish their right to file or record a lis pendens against any of the Hospital Facilities, or file in any court in any venue any legal action or proceeding (including but not limited to a complaint to enjoin foreclosure, or an order to show cause, or a complaint to set aside foreclosure sale, or an action to quiet title, or an action to cancel one or more of the New Loan Documents) against Lender, the purpose of which is to directly or indirectly procure from any court or tribunal issuance of a temporary restraining order, or a preliminary injunction, or a permanent injunction, or any other equitable relief (collectively, “Injunctive Relief”) which seeks to prohibit or prevent Lender (a) from conducting a sale of the Collateral at a public auction as permitted by the power of sale provisions or the California Uniform Commercial Code, or (b) from attaching or garnishing or seeking any other provisional remedy against any real or personal property of any Borrower or Credit Party, or (c) from taking any other action or pursuing any other right or remedy that Lender is permitted to pursue under the New Loan Documents, or in law or equity. Notwithstanding the foregoing, the releases, waivers and relinquishments set forth in this Section 8.1 shall apply only to Injunctive Relief based on alleged acts or omissions of Lender which occurred prior to the Effective Date of this Agreement.

8.2Lender Liability Claims. Each of the Borrower Releasing Parties hereby fully, forever and irrevocably release, waive and relinquish any claim or cause of action (collectively, “Lender Liability Claims”) that the Borrower Releasing Parties now have or in the future may have against Lender to the effect that, prior to the Effective Date of this Agreement: (a) Lender committed a breach or default under any of the New Loan Documents, or (b) Lender conspired with the executive officers of IHHI to deprive OC-PIN of its stock ownership in IHHI or otherwise inflicted any actionable damage on OC-PIN, or (c) Lender committed an act not permitted by the New Loan Documents or applicable law, or (d) Lender omitted to take an act required by the New Loan Documents or under applicable law, or (e) any of the New Loan Documents (including, but not limited to, the PCHI Guaranty and the OC-PIN Guaranty) are invalid or unenforceable in whole or in part for any reason, or (f) Lender suggested, implied, induced, cajoled or required that IHHI include any terms or conditions in any agreements between IHHI and OC-PIN, or (g) Lender suggested, implied, induced, cajoled or required that IHHI not include any terms or conditions in any agreements between IHHI and OC-PIN, or (h) Lender improperly interfered with or improperly exercised any control over the Borrower, or (i) that Lender breached in any way any alleged duty of good faith or fair dealing, or any alleged duty of commercial reasonableness, or any quasi-duty, or any implied duty, or (j) that Lender committed any unlawful, unfair or fraudulent business act or practice, or (k) that Lender engaged in any unfair, deceptive, untrue or misleading advertising, or (l) that Lender committed any act prohibited by California Business and Professions Code Section 17500, or (m) that Lender engaged in predatory lending practices, or (n) that Lender engaged in or committed any act or omission which constitutes fraud, duress, negligence, conversion, defamation or infliction of emotional distress, or (o) that Lender interfered with the prospective business advantage of any of the Borrowers, or (p) that Lender interfered with the contractual relations of Borrower, or (q) that Lender interfered with the prospective business advantage of any of the Credit Parties, or (r) that Lender interfered with the contractual relations of any of the Credit Parties.

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8.3Relinquishment of Known and Unknown Claims. In order to induce Lender to enter into this Agreement, effective upon the Effective Date of this Agreement, each of the Borrower Releasing Parties fully, forever and irrevocably releases, waives, relinquishes and discharges Lender, Medical Capital Corporation, Medical Provider Financial Corporation I, Medical Provider Financial Corporation II, and each of their Affiliates and each of their respective officers, directors, members, employees, attorneys, agents, and representatives (collectively, the “Lender Released Parties”) from any and all claims, rights, demands, debts, causes of action, charges, expenses, damages, attorneys’ fees and costs, obligations or liabilities of any and every kind, nature and character whatsoever, whether or not now known, suspected or unsuspected, which any of the Borrower Releasing Parties may have had, may now have or may in the future claim to have against the Lender Released Parties arising out of, or related in any manner to any alleged act or omission to act which occurred prior to the Effective Date of this Agreement.

The Borrower Releasing Parties hereto have been fully advised by their respective attorneys of the contents and effect of Section 1542 of the Civil Code of California (and its counterpart under Nevada law) upon the rights of each of them, which reads as follows:

A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.

EACH OF THE BORROWER RELEASING PARTIES ACKNOWLEDGES THAT THEY MAY HAVE SUSTAINED DAMAGES, LOSSES, FEES, COSTS OR EXPENSES WHICH ARE PRESENTLY UNKNOWN AND UNSUSPECTED, AND, NOTWITHSTANDING THE PROVISIONS OF SECTION 1542 (AND ITS COUNTERPART UNDER NEVADA LAW), AND ARE EXPRESSLY WAIVING THE SAME. EACH OF THE BORROWER RELEASING PARTIES AGREES THAT IT INTENDS TO RELEASE EVEN UNKNOWN OR UNSUSPECTED CLAIMS. EACH OF THE BORROWER RELEASING PARTIES REPRESENTS THAT IT HAS CONSULTED WITH ITS LEGAL COUNSEL REGARDING ITS CLAIMS AND POTENTIAL CLAIMS AGAINST LENDER, AND HAS CAREFULLY READ AND UNDERSTAND ALL THE PROVISIONS OF THIS AGREEMENT, AND HAS VOLUNTARILY ENTERED INTO THIS AGREEMENT.

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8.4Covenants Not To Sue. Each of the Borrower Releasing Parties hereby promises, covenants and agrees not to sue any of the Lender Released Parties, and not to bring any legal action or proceeding of any kind against any of the Lender Released Parties, in any court or administrative proceeding, in any venue, which legal action or proceeding directly or indirectly seeks to (a) obtain or procure issuance of any temporary restraining order, or a preliminary injunction, or a permanent injunction, or any other equitable or provisional relief against any of the Lender Released Parties based on acts or omissions which occurred prior to the Effective Date of this Agreement, or (b) impose any Lender Liability Claims on or against any of the Lender Released Parties based on acts or omissions which occurred prior to the Effective Date of this Agreement, or (c) obtain or impose on any of the Lender Released Parties any Injunctive Relief based on acts or omissions which occurred prior to the Effective Date of this Agreement, or (d) which legal action or proceeding violates any covenant, condition, representation or warranty made by the Borrower Releasing Parties in this Agreement.

9.INDEMNIFICATION; RELEASE AND WAIVER; CONDITION PRECEDENT; NON-RESPONSIBILITY.

9.1General Indemnification. Borrower, each Credit Party and each Guarantor hereby jointly and severally agrees to and shall indemnify, defend, protect and hold Lender, Medical Capital Corporation, Medical Provider Financial Corporation I, Medical Provider Financial Corporation II, and each of their Affiliates, and each of their respective officers, directors, members, employees, attorneys, agents, and representatives (each, an “Indemnified Person”) free and harmless from and against any and all legal actions, suits, proceedings or claims brought or asserted against any Indemnified Person for damages, losses, liabilities and expenses (including reasonable attorneys’ fees, witness and expert witness fees, court fees and charges, and disbursements and other costs of investigation or defense, including those incurred upon any appeal or in any Bankruptcy Proceeding) directly or indirectly arising out of or relating to (a) the execution and delivery of the Original Credit Agreement by an Indemnified Person, (b) the execution and delivery of this Agreement by an Indemnified Person, (c) the execution and delivery of any Loan Document by an Indemnified Person, (d) the execution and delivery of any New Loan Document by an Indemnified Person, (e) the making of the Loan by an Indemnified Person, (f) the making of the New Loan by an Indemnified Person, or (g) any Lender Liability Claims brought or asserted against an Indemnified Person with respect to the Loan or New Loan. Notwithstanding anything to the contrary contained in this Agreement, the maximum liability of all Credit Parties as Credit Parties pursuant to this Section 9.1 in the aggregate shall be limited to One Million Dollars ($1,000,000); provided, however, that such limitation shall not be applicable to any Credit Party’s individual liability for the payment and performance of any liabilities and obligations under any other New Loan Document (including any pledge agreement or guaranty) to which such Credit Party is a direct party. With respect to the liability of Credit Parties hereunder, Lender agrees to seek payment of any financial Obligations (other than principal and interest payments) from Borrower but in the event Borrower fails to pay within five (5) days, then Lender shall be entitled to pursue its right to such payment from Borrower and/or Credit Parties. Lender further agrees that, with respect to any liability or obligation of a Credit Party under this Credit Agreement or any other New Loan Document, Lender’s only recourse shall be against the Credit Party itself and any Collateral provided by the Credit Party. In this regard, Lender hereby acknowledges that, except for distributions actually made by a Credit Party to an Individual(s) (defined below), it is not looking to any constituent member or other equity owner who is a natural person, or any manager, officer, director, employee or other individual representative of any Credit Party (“Individuals”) for recourse, and waives any rights it may have, by virtue of alter ego, “piercing the veil,” undercapitalization, failure to observe corporate or limited liability company formalities, or any other legal theory, to pursue causes of action under this Agreement or any other New Loan Document against any of the Individuals.

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9.2Indemnification by OC-PIN and West Coast. OC-PIN and West Coast hereby jointly and severally agree to and shall indemnify, defend, protect and hold each of the Indemnified Persons free and harmless from and against any and all claims brought or asserted against any Indemnified Person for damages, losses, liabilities and expenses (including reasonable attorneys’ fees, witness and expert witness fees, court fees and charges, and disbursements and other costs of investigation or defense, including those incurred upon any appeal or in any Bankruptcy Proceeding) directly or indirectly arising out of or relating to any agreement or contract by and between KSR Medical Partners, LLC and any of the Borrower, Credit Parties or Guarantors, including but not limited to that certain litigation styled KSR Medical Partners, LLC v. Orange County Physicians Investment Group, LLC; West Coast Holdings, LLC, Anil V. Shah, M.D; and Does 1 through 30, Orange County Superior Court Case No. 05CC1091, or any subsequent claim, lawsuit or litigation brought by or on behalf of KSR Medical Partners, LLC.

9.3Indemnification by Borrower and the Credit Parties. Borrower and the Credit Parties each hereby jointly and severally agree to and shall indemnify, defend, protect and hold each of the Indemnified Persons free and harmless from and against any and all claims brought or asserted against any Indemnified Person for damages, losses, liabilities and expenses (including reasonable attorneys’ fees, witness and expert witness fees, court fees and charges, and disbursements and other costs of investigation or defense, including those incurred upon any appeal or in any Bankruptcy Proceeding) directly or indirectly arising out of or relating to that certain litigation styled Satchmed Plaza Owners Association vs. UWMC Hospital Corporation, et al, Orange County Superior Court Case No. 05CC04210.

9.4Indemnification by Borrower and OC-PIN. Borrower and OC-PIN each hereby jointly and severally agree to and shall indemnify, defend, protect and hold each of the Indemnified Persons free and harmless from and against any and all claims brought or asserted against any Indemnified Person for damages, losses, liabilities and expenses (including reasonable attorneys’ fees, witness and expert witness fees, court fees and charges, and disbursements and other costs of investigation or defense, including those incurred upon any appeal or in any Bankruptcy Proceeding) directly or indirectly arising out of or relating to (a) the sale by IHHI of its capital stock to OC-PIN pursuant to that certain Second Amendment to Stock Purchase Agreement dated October 31, 2005 by and between IHHI and OC-PIN (“Second Amendment”), (b) any claims, allegations, lawsuits or causes of action made or brought by KSR Medical Partners, LLC against any Indemnified Person alleging that any Indemnified Person aided, abetted, encouraged, coerced, persuaded or pressured OC-PIN to breach or default under any agreement or contract it had or may have had with KSR Medical Partners, LLC, (c) any claims, allegations, lawsuits and causes of action made or brought by KSR Medical Partners, LLC against any Indemnified Person alleging that any Indemnified Person tortuously interfered with, or otherwise interfered with, an existing contract between KSR Medical Partners, LLC and OC-PIN, and (d) any claims, allegations, lawsuits and causes of action made or brought by KSR Medical Partners, LLC against any Indemnified Person alleging that any Indemnified Person committed any other act, or omitted to take any other act, which directly or indirectly caused damage or injury to KSR Medical Partners, LLC.

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9.5Non-Responsibility. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO THIS AGREEMENT OR TO ANY NEW LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF HAVING EXECUTED THIS AGREEMENT OR AS A RESULT OF ANY CREDIT HAVING BEEN EXTENDED PURSUANT TO THE NEW LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

10.EVENTS OF DEFAULT; RIGHTS AND REMEDIES

10.1Events of Default. The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an Event of Default hereunder:

(a)Borrower fails to make any payment of principal of or interest on the New Loan or any of the other Obligations within five (5) calendar days after the same is due and payable; provided, that if Borrower fails to make a payment within such five (5) calendar day period, interest at the Default Rate shall accrue from the due date for such payment.

(b)Borrower fails to pay or reimburse Lender for any expense or Lender’s Cost reimbursable hereunder or under any other New Loan Document within ten (10) calendar days following Lender’s demand for such reimbursement or payment of expenses; provided, that if Borrower fail to pay such amount within said ten (10) calendar day period, interest at the Default Rate shall accrue from the due date for such payment.

(c)Borrower fails, within thirty (30) calendar days of the Closing Date, to deliver to Lender an ALTA survey of each of the Hospital Facilities prepared by a licensed civil engineer since the Closing Date on the terms and conditions required by Section 5.3 of this Agreement.

(d)Borrower or any Credit Party fails or neglects to perform, keep or observe any of its agreements, covenants and conditions set forth in this Agreement or in any of the other New Loan Documents to be performed, kept or observed by it (other than any provision embodied in or covered by any other clause of this Section 10.1 (Events of Default)), and the same shall remain unremedied in whole or in part for fifteen (15) calendar days or more after the earlier of (i) Borrower or Credit Party’s, as applicable, actual knowledge thereof, or (ii) Borrower or Credit Party’s, as applicable, receipt of notice thereof from Lender.

(e)The Borrowers or any Credit Parties or any Guarantors under the Original Credit Agreement fail or neglect to perform, keep or observe any provision of the Original Loan Documents and the same shall remain unremedied in whole or in part for fifteen (15) calendar days or more after the earlier of (i) any of said Borrowers’ or Credit Party’s or Guarantor’s, as applicable, actual knowledge thereof, or (ii) any of said Borrowers’ or Credit Party's or Guarantors’, as applicable, receipt of notice thereof from Lender.

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(f)Borrower or any Subsidiary shall fail to have in full force and effect and in good standing each license or permit necessary to the continuing operation of all of the Hospital Facilities.

(g)Any representation or warranty herein or in any other New Loan Document or in any written statement, report, Financial Statement or certificate made or delivered to Lender by Borrower or any Credit Party is untrue or incorrect in any material respect as of the date when made or deemed made.

(h)Assets of Borrower or any Credit Party with a fair market value of $100,000 or more are attached, seized, levied upon or subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or general assignee for the benefit of creditors of Borrower or any Credit Party and such condition continues for thirty (30) days or more.

(i)A case or proceeding is commenced against Borrower or any Credit Party seeking a decree or order in respect of such Borrower or such Credit Party (i) under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for Borrower or such Credit Party or for any substantial part of any Borrower or such Credit Party’s assets, or (iii) ordering the winding-up or liquidation of the affairs of Borrower or such Credit Party, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or a decree or order granting the relief sought in such case or proceeding is granted by a court of competent jurisdiction.

(j)Any Borrower or any Credit Party (i) files a petition seeking relief under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to or fails to contest in a timely and appropriate manner the institution of proceedings thereunder or the filing of any such petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for Borrower or such Credit Party or for any substantial part of any Borrower or such Credit Party’s assets, (iii) makes a general assignment for the benefit of creditors, (iv) takes any action in furtherance of any of the foregoing; or (v) admits in writing its inability to, or is generally unable to, pay its debts as such debts become due.

(k)A final judgment or judgments for the payment of money in excess of $100,000 in the aggregate at any time are outstanding against Borrower or any of the Credit Parties (which judgments are not covered by insurance policies as to which liability has been accepted in writing by the insurance carrier), and the same are not, within thirty (30) calendar days after the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay.

(l)Any material provision of any New Loan Document for any reason ceases to be valid, binding and enforceable in accordance with its terms (or Borrower or any Credit Party shall challenge the enforceability of any New Loan Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any material provision of any of the New Loan Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms), or any Lien created under any New Loan Document ceases to be a valid and perfected first priority Lien (except as otherwise permitted herein or therein) in any of the Collateral purported to be covered thereby.

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(m)A Change of Control occurs with respect to Borrower or any of its Subsidiaries, or a Change of Control occurs with respect to any Credit Party (except Ganesha).

(n)A Material Adverse Effect shall exist as determined in the sole judgment of Lender.

(o)Larry Anderson or Bruce Mogel or Jim Ligon shall no longer be employees of IHHI and replacements acceptable to Lender in its reasonable discretion are not employed within thirty (30) calendar days of the date that either such Person is no longer employed by IHHI.

(p)Within the thirty (30) calendar day period prior to the Effective Date of this Agreement, OC-PIN shall have failed for any reason to have contributed to IHHI new capital in the amount of $4,300,000.

(q)Concurrent with the Closing Date, Borrower for any reason fails to pay Lender the amount of $5,000,000 in good and drawable funds, as and for the mandatory prepayment of principal against the Acquisition Loan required by Section 1.2(b)(ii) of the Original Credit Agreement.

(r)Between the Effective Date of this Agreement and the Maturity Date of the New Loan, Borrower for any reason fails to receive not less than $10,700,000 in new capital contributions. Said $10,700,000 in new capital contributions must consist of new capital contributed to Borrower by its shareholders and/or third-party investors; may not consist of funds directly or indirectly borrowed from any source by Borrower; and may not consist of funds directly or indirectly borrowed from any source by any Credit Party. Said $10,700,000 in new capital contributions shall be used to pay in full and retire all amounts due and owing under the New Loan, including but not limited to principal, interest and other costs, expenses, fees and charges due and owing to Lender.

(s)On or before the Effective Date of this Agreement, Borrower and the Credit Parties for any reason fail to execute and deliver to Lender each of the New Loan Documents.

(t)On or before the Maturity Date, Borrower for any reason fail to pay all amounts due and owing under the New Loan, in full.

(u)On or before the Maturity Date, Borrower for any reason fail to perform each and every of the Obligations.

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10.2Remedies.

(a)Increase Rate of Interest to Default Rate. If any Event of Default has occurred and is continuing, Lender may, without notice, increase the rate of interest applicable to the New Loan to the Default Rate.

(b)Charge Line of Credit Loan. If any Event of Default has occurred and is continuing, Lender may, without notice and without any obligation to do so, cure the Event of Default by charging all amounts due and owing hereunder to the Line of Credit Loan under the Original Loan Agreement.

(c)Exercise Warrant. If any Event of Default has occurred and is continuing, Lender and/or the Holder of the Warrant or any assignee or successor-in-interest of the Lender or Holder may exercise all of their rights under the Warrant as provided in this Section 10.2(c). If any Event of Default has occurred and is continuing, the Lender, the Holder (as defined in the Warrant) of the Warrant or any permitted successor or assign, as the case may be, may exercise its rights under the Warrant for the Shares (as such term is defined in the Warrant and subject to adjustment as provided therein). The Net Proceeds (as determined in Lender’s and/or Holder’s sole and absolute discretion) from any sale or retention of the Shares issued under the Warrant shall be applied (after payment of any sums, amounts, Lender’s Costs and Fees payable to the Lender pursuant to New Loan Documents ) to the payment of the Obligations in such order as the Lender may elect in its sole discretion. The parties hereto acknowledge and agree that the Warrant is being issued as collateral for the Obligations and any Net Proceeds derived by the Lender or Holder pursuant thereto shall constitute a credit against the Obligations as determined in Lender’s sole and absolute discretion. All of the Lender’s rights and remedies under this Section, the New Loan Documents and under applicable law, including but not limited to the foregoing, shall be cumulative and not exclusive and shall be enforceable alternatively, successively or concurrently as the Lender may deem expedient. The Lender or the Holder shall not be obligated to make any sale or other disposition unless the terms thereof shall be satisfactory to it as determined in Lender’s or Holder’s sole and absolute discretion. Upon payment in full of the Obligations, any surplus Net Proceeds, if any, thereafter remaining shall be paid to the Borrower, subject to the rights of any holder of a Lien on the Collateral of which the Lender or Holder has actual notice.

(d)Other Remedies. If any Event of Default has occurred and is continuing, Lender may, without notice: (i) declare all or any portion of the New Loan and/or the Obligations to be forthwith due and payable, all without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrower and each other Credit Party; or (ii) exercise any rights and remedies provided to Lender under any one or more of the New Loan Documents or any Guaranty, or at law or equity, including all remedies provided under the Code.

10.3Waivers by Credit Parties. Except as otherwise provided for in this Agreement or by applicable law, each Credit Party waives: (a) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default (unless specifically required in this Agreement), nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Lender on which any Credit Party may in any way be liable, and hereby ratifies and confirms whatever Lender may do in this regard, (b) all rights to notice and a hearing prior to Lender’s taking possession or control of, or to Lender’s replevy, attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing Lender to exercise any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.

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11.ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF LENDER

11.1Assignment and Participations.

(a)Assignment by Lender to Qualified Assignee. Subject to the terms of this Section 11.1 (Assignment and Participations), Lender may make an assignment to a Qualified Assignee of, or sell participations in, at any time or times, the New Loan Documents, the New Loan or any portion thereof or interest therein, including any Lender’s rights, title, interests, remedies, powers or duties thereunder. Any assignment by a Lender shall: (i) require the execution of an assignment agreement in form and content reasonably satisfactory to, and acknowledged by, Lender; and (ii) be conditioned on such assignee representing to Lender that it is purchasing the New Loan for its own account, for investment purposes and not with a view to the distribution thereof. In the case of an assignment by Lender under this Section 11.1 (Assignment by Lender to Qualified Assignee), the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as Lender hereunder. The original Lender shall be relieved of its obligations hereunder with respect to the New Loan or portion thereof from and after the date of such assignment. Borrower hereby acknowledges and agrees that any assignment shall give rise to a direct obligation of Borrower to the assignee and that the assignee shall be considered to be a “Lender.” In the event Lender assigns or otherwise transfers all or any part of the Obligations, Lender shall so notify Borrower shall, upon the request of Lender, execute a new note or notes in exchange for the Notes (upon the same terms), if any, being assigned. Notwithstanding the foregoing provisions of this Section 11.1(a) (Assignment by Lender to Qualified Assignee), Lender may at any time pledge the Obligations held by it and Lender’s rights under this Agreement and the other New Loan Documents to a financial institution.

(b)Participations. Any participations by Lender of all or any part of this Agreement or the New Loan Documents shall be made with the understanding that all amounts payable by Borrower hereunder shall be determined as if Lender had not sold such participations, and that the holder of any such participation shall not be entitled to require Lender to take or omit to take any action hereunder except actions directly affecting (i) any reduction in the principal amount of, or interest rate payable with respect to, the New Loan in which such holder participates, (ii) any extension of the scheduled amortization of the principal amount of the New Loan in which such holder participates or the final maturity date thereof, and (iii) any release of all or substantially all of the Collateral (other than in accordance with the terms of this Agreement, the Collateral Documents or the other New Loan Documents). Solely for purposes of Section 1.10 (Indemnity), Section 1.12 (Taxes), and Section 1.13 (Capital Adequacy; Increased Costs; Illegality), Borrower acknowledges and agrees that a participation shall give rise to a direct obligation of Borrower to the participant (in each case subject to the terms and conditions in such Sections applicable to Lender) and the participant shall be considered to be a “Lender.” Except as set forth in the preceding sentence neither Borrower nor any Credit Party shall have any obligation or duty to any participant.

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(c)Cooperation to Effect Assignments and Participations. Borrower and each Credit Party shall assist Lender under this Section 11.1 (Assignment and Participations) as reasonably required to enable Lender to effectuate any such assignment or participations, including the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and, if requested by Lender, the preparation of informational materials for, and the participation of management in meetings with, potential assignees or participants. Borrower and each Credit Party shall certify the correctness, completeness and accuracy, in all material respects of all descriptions of Borrower and the Credit Parties and their respective affairs contained in any selling materials provided by them and all other information provided by them and included in such materials.

(d)Disclosures by Lender. Lender may furnish any information concerning Borrower and the Credit Parties in the possession of Lender from time to time to assignees and participants (including prospective assignees and participants); provided that Lender shall obtain from assignees or participants confidentiality covenants substantially equivalent to those contained in Section 13.10 (Confidentiality).

11.2Lender’s Reliance, Etc. Neither Lender nor any of its Affiliates nor any of their respective directors, officers, employees or attorneys shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other New Loan Documents, except for damages caused by its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, Lender: (a) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or representation to Borrower or the Credit Parties and shall not be responsible to Borrower or the Credit Parties for any statements, warranties or representations made in or in connection with this Agreement or the other New Loan Documents; (c) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other New Loan Documents on the part of Borrower and any Credit Party or to inspect the Collateral (including the books and records) of Borrower or any Credit Party; (d) shall not be responsible to Borrower or any Credit Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other New Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (e) shall incur no liability under or in respect of this Agreement or the other New Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties.

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12.SUCCESSORS AND ASSIGNS. This Agreement and the other New Loan Documents shall be binding on and shall inure to the benefit of Borrower and any Credit Party, Lender, and their respective successors and assigns (including, in the case of Borrower and any Credit Party, a debtor-in-possession on behalf of Borrower and any Credit Party), except as otherwise provided herein or therein. Borrower and the Credit Parties may not assign, transfer, hypothecate or otherwise convey their rights, benefits, obligations or duties hereunder or under any of the other New Loan Documents without the prior express written consent of Lender. Any such purported assignment, transfer, hypothecation or other conveyance by Borrower and any Credit Party without the prior express written consent of Lender shall be void. The terms and provisions of this Agreement are for the purpose of defining the relative rights and obligations of Borrower and any Credit Party and Lender with respect to the transactions contemplated hereby and no person shall be a third party beneficiary of any of the terms and provisions of this Agreement or any of the other New Loan Documents.

13.MISCELLANEOUS

13.1Complete Agreement; Modification of Agreement. This Agreement and the other New Loan Documents constitute the complete agreement between the parties with respect to the subject matter thereof and may not be modified, altered or amended except as set forth in Section 13.2 (Amendments and Waivers). Any letter of interest, term sheet, commitment letter, fee letter or confidentiality agreement, if any, between Borrower or any Credit Party and Lender or any of their respective Affiliates, predating this Agreement and relating to a financing of substantially similar form, purpose or effect shall be superseded by this Agreement.

13.2Amendments and Waivers. Except for actions expressly permitted to be taken by Lender, no amendment, modification, termination or waiver of any provision of this Agreement or any other New Loan Document, or any consent to any departure by Borrower or any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed by Lender, Borrower and each Credit Party.

13.3Fees and Expenses. Borrower and each of the Credit Parties (except Ganesha) shall reimburse Lender for (i) all Lender’s Costs, Fees, costs and expenses (including the reasonable fees and expenses of all of its outside attorneys, advisors, consultants and auditors), and (ii) all fees, costs and expenses, including the reasonable fees, costs and expenses of other advisors (including environmental and management consultants and appraisers), incurred in connection with the negotiation, preparation and filing and/or recordation of the New Loan Documents, incurred in connection with any amendment, modification or waiver of, consent with respect to, or termination of, any of the New Loan Documents, or advice in connection with a breach or default under the New Loan or Lender’s rights hereunder or thereunder, or in connection with any of the following:

(a)Any litigation, contest, dispute, suit, proceeding or action (whether instituted by Lender, Borrower, any Credit Party or any other Person and whether as a party, witness or otherwise) in any way relating to the Collateral, this Agreement or any of the New Loan Documents or any other agreement to be executed or delivered in connection herewith or therewith, including any litigation, contest, dispute, suit, case, proceeding or action, and any appeal or review thereof, in connection with a case commenced by or against Borrower and/or any or all of the Credit Parties or any other Person that may be obligated to Lender by virtue of the New Loan Documents; including any such litigation, contest, dispute, suit, proceeding or action arising in connection with any work-out or restructuring of the New Loan during the pendency of one or more Events of Default; provided that no Person shall be entitled to reimbursement under this clause (a) in respect of any litigation, contest, dispute, suit, proceeding or action to the extent any of the foregoing results from such Person’s gross negligence or willful misconduct.

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(b)Any attempt to enforce any remedies of Lender against any of Borrower and/or any or all of the Credit Parties or any other Person that may be obligated to Lender by virtue of any of the New Loan Documents, including any such attempt to enforce any such remedies in the course of any work-out or restructuring of the New Loan during the pendency of one or more Events of Default.

(c)Any workout or restructuring of the New Loan during the pendency of one or more Events of Default.

(d)Efforts to (i) monitor the New Loan or any of the other Obligations if a breach or default occurs or is continuing under the New Loan, (ii) evaluate, observe or assess any of any Borrower’s or any of the Credit Parties or their respective affairs if a breach or default occurs or is continuing under the New Loan, and (iii) verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral; including, as to each of clauses (a) through (c) above, all reasonable attorneys’ and other professional and service providers’ fees arising from such services and other advice, assistance or other representation, including those in connection with any appellate proceedings, and all reasonable expenses, costs, charges and other fees incurred by such counsel and others in connection with or relating to any of the events or actions described in this Section 13.3 (Fees and Expenses), all of which shall be payable, on demand, by Borrower to Lender. Without limiting the generality of the foregoing, such expenses, costs, charges and fees may include: Lender’s Costs, fees, costs and reasonable expenses of attorneys, accountants, environmental advisors, appraisers, investment bankers, management and other consultants and paralegals; court costs and expenses; photocopying and duplication expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram or telecopy charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred in connection with the performance of such legal or other advisory services.

13.4No Waiver. Lender’s failure, at any time or times, to require strict performance by Borrower and the Credit Parties of any provision of this Agreement or any other New Loan Document shall not waive, affect or diminish any right of Lender thereafter to demand strict compliance and performance herewith or therewith. Any suspension or waiver of an Event of Default shall not suspend, waive or affect any other Event of Default whether the same is prior or subsequent thereto and whether the same or of a different type. Subject to the provisions of Section 13.2 (Amendments and Waivers), none of the undertakings, agreements, warranties, covenants and representations of Borrower or any Credit Party contained in this Agreement or any of the other New Loan Documents and no Default or Event of Default by Borrower or any Credit Party shall be deemed to have been suspended or waived by Lender, unless such waiver or suspension is by an instrument in writing signed by Lender, and directed to Borrower specifying such suspension or waiver.

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13.5Remedies. Lender’s rights and remedies under this Agreement shall be cumulative and nonexclusive of any other rights and remedies that Lender may have under any other agreement, including the other New Loan Documents, by operation of law or otherwise. Recourse to the Collateral shall not be required.

13.6Severability. Wherever possible, each provision of this Agreement and the other New Loan Documents shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement or any other New Loan Document shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement or such other New Loan Document.

13.7Conflict of Terms. Except as otherwise provided in this Agreement or any of the other New Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement conflicts with any provision in any of the other New Loan Documents, the provision contained in this Agreement shall govern and control.

13.8Attorneys’ Fees; Indemnification.

(a)Attorneys’ Fees. If any action or proceeding is brought by either party against the other party, the prevailing party shall be entitled to recover from the other party reasonable attorneys’ fees and costs incurred in connection with the prosecution or defense of such action. The foregoing includes, without limitation, attorneys’ fees and costs of investigation incurred in appellate proceedings, costs incurred in establishing the right to indemnification, expert or other witness fees, copy and facsimile and telephone charges, courier and messenger charges, court costs, fees of charges of any arbitrator or mediator or arbitration or mediator service, or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code, 11 U.S.C. 101 et seq., or any successor statutes. For purposes of this Agreement, the term “attorneys’ fees” or “attorneys’ fees and costs” shall also include the fees and expenses of counsel to the parties hereto, which may include the allocable costs of in-house counsel, printing, photostating, duplicating and other expenses, air freight charges, and fee billed for law clerks, paralegals and other persons not admitted to the bar but performing services under the supervision of an attorney.

(b)Indemnification. Should Lender be made a party to any litigation instituted by Borrower against a Person other than Lender, or any litigation instituted against Borrower by any Person other than Lender, Borrower shall indemnify, defend, protect and hold harmless Lender from any and all loss, cost, liability, damage or expense incurred by Lender, including attorneys’ fees and costs, in connection with the litigation.

13.9Time of the Essence. Time is of the essence in the performance of each and every term, condition and covenant of this Agreement.

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13.10Confidentiality. Lender agrees to use commercially reasonable efforts (equivalent to the efforts Lender applies to maintaining the confidentiality of its own confidential information) to maintain as confidential all confidential information provided to them by the Borrower and the Credit Parties and designated as confidential (provided, that, all non-public financial information and financial projections provided by Borrower or any Credit Party shall be deemed confidential whether or not so designated as confidential) for a period of one (1) year following receipt thereof, except that Lender may disclose such information (a) to Persons employed or engaged by Lender so long as Lender has policies relative to the maintenance of confidential information; (b) to any bona fide assignee or participant or potential assignee or participant that has agreed to comply with the covenant contained in this Section 13.10 (Confidentiality) and any such bona fide assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (a) above); (c) as required or requested by any Governmental Authority or reasonably believed (based on advice of counsel) by Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of Lender’s counsel, is required by law; (e) in connection with the exercise of any right or remedy under the New Loan Documents or in connection with any Litigation relative to the New Loan Documents or the transactions related thereto to which Lender is a party; or (f) that ceases to be confidential through no fault of Lender. Notwithstanding the foregoing, Lender shall not use or disclose any patient related information which is protected under any federal or California state privacy or confidentiality laws, unless such use or disclosure would be legally permissible if done by any one of the Hospital Facilities. If Lender is required in any proceeding, by any court decree, subpoena or legal or administrative order or process, to disclose any such confidential information, Lender will use commercially reasonable efforts to give Borrower and Credit Parties, as applicable, prompt written notice of such request so that any Borrower or any Credit Party may seek an appropriate protective order. If in the absence of a protective order, Lender is compelled in a proceeding to disclose any such confidential information, Lender may disclose such portion of such confidential information that it is compelled to disclose; provided, however, that Lender shall use commercially reasonable efforts to provide Borrower and to Credit Parties, as applicable, written notice of the information to be disclosed as far in advance of its disclosure as is practicable.

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13.11GOVERNING LAW.

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE NEW LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE NEW LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS MADE IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER AND EACH CREDIT PARTY AND LENDER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF NEVADA, CLARK COUNTY, CITY OF LAS VEGAS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG BORROWER AND THE CREDIT PARTIES ON THE ONE HAND, AND LENDER, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER NEW LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER NEW LOAN DOCUMENTS; PROVIDED, THAT LENDER, BORROWER AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CLARK COUNTY, NEVADA; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. BORROWER AND EACH CREDIT PARTY AND LENDER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER, EACH CREDIT PARTY AND LENDER HEREBY WAIVES ANY OBJECTION THAT ANY SUCH BORROWER OR SUCH CREDIT PARTY OR LENDER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER, EACH CREDIT PARTY AND LENDER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH BORROWER, CREDIT PARTY OR TO LENDER AT THE ADDRESS SET FORTH IN ANNEX C OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH BORROWER’S, SUCH CREDIT PARTY’S OR LENDER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

13.12Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires to give or serve upon any other parties any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be deemed to have been validly served, given or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by delivery of a copy by personal delivery or United States Mail as otherwise provided in this Section 13.12 (Notices)); (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or facsimile number indicated in Annex C (Notice Addresses) or to such other address (or facsimile number) as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to any Person (other than Borrower or Lender) designated in Annex C (Notice Addresses) to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication.

13.13Section Titles. The Section titles and Table of Contents contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

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13.14Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one agreement.

13.15WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG LENDER, BORROWER AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER NEW LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

13.16Press Releases and Related Matters. Borrower and each Credit Party agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosure using the name of Lender or its affiliates or referring to this Agreement or the other New Loan Documents without at least two (2) Business Days’ prior notice to Lender and without the prior written consent of Lender (which consent will not be unreasonably withheld) unless (and only to the extent that) Borrower or such Credit Party or Affiliate is required to do so under law, regulation or any applicable exchange rules or OTC bulletin board rules, then, in any event, Borrower, such Credit Party or Affiliate will use commercially reasonable efforts to consult with Lender before issuing such press release or other public disclosure. Borrower and each Credit Party consents to the publication by Lender of advertising material relating to the financing transactions contemplated by this Agreement using Borrower’s name, product photographs, logo or trademark, without the prior written consent of such Borrower which shall not be unreasonably withheld, delayed or conditioned. Lender may provide to industry trade organizations information necessary and customary for inclusion in league table measurements unless such disclosure would violate or any applicable exchange rules or OTC bulletin board rules applicable to Borrower.

13.17Reinstatement. This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against Borrower or any Credit Party for liquidation or reorganization, should Borrower or any Credit Party become insolvent or make a general assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of Borrower or any Credit Party’s assets, and shall continue to be effective or to be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,”“fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

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13.18Advice of Counsel. Each of the parties represents to each other party that it has discussed this Agreement and, specifically, the provisions of Section 13.11 (Governing Law) and Section 13.15 (Waiver of Jury Trial), with its counsel.

13.19No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

13.20Fraudulent Transfer Laws. Anything to the contrary notwithstanding, if any Fraudulent Transfer Law is determined by a court of competent jurisdiction to be applicable to the obligation of Borrower or Credit Party hereunder, such obligations of Borrower or other Credit Party shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under said Fraudulent Transfer Laws, in each case after giving effect to all other liabilities of Borrower or Credit Party, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws of any rights to subrogation, reimbursement, indemnification or contribution of Borrower or other Credit Party pursuant to applicable law or pursuant to the terms of any agreement (including any such right of contribution hereunder).

14.SURETYSHIP WAIVERS

14.1Suretyship Waivers. Because each Credit Party is not a direct borrower from Lender under this Agreement, although the Loan directly and indirectly benefits each Person comprising the Credit Parties, it is possible that the Credit Parties could be construed as a guarantor or surety of Borrower and of each other and thereby have certain rights and remedies accorded to them that were not intended to be available to any of them. Accordingly, in order to induce the Lender to provide the New Loan, each Person which is a Credit Party for itself agrees as follows:

(a)Irrevocable Waivers. The waivers provided in this Section are intended to be irrevocable and to apply to all present and future Obligations of Borrower to Lender, including those arising under successive transactions which shall either continue the Obligations, increase or decrease them, or from time to time, create new Obligations, after all or any prior Obligations have been satisfied, and notwithstanding the dissolution, liquidation or bankruptcy of Borrower, any Credit Party, any Guarantor of all or any portion of the Obligations, or other event or proceeding affecting any Borrower or any Guarantor of any portion of the Obligations.

(b)Separate and Independent Obligations of Credit Parties. The Obligations of the Credit Parties hereunder are separate and independent of (i) Borrower’s obligation to pay Lender principal and interest under the Notes and the other Obligations hereunder, and (ii) the liabilities and obligations of any Credit Party which is a Guarantor. A separate action or actions may be brought and prosecuted against one or more Credit Parties whether or not any action is brought and prosecuted against Borrower, all other Credit Parties, including any Credit Party which is a Guarantor, and whether or not Borrower and/or any Credit Party is or are joined in any such action or actions. Borrower and each Credit Party waives the benefit of any statute of limitations affecting the Obligations hereunder or the enforcement thereof.

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(c)Authority of Lender. Each Credit Party authorizes Lender, without notice or demand and without affecting its liability hereunder, from time to time to: (i) amend, alter, restate, replace, modify, renew, extend, accelerate or otherwise change the time for payment or the terms of the Obligations with Borrower, including increase or decrease the rate of interest thereon or the principal amount thereof; (ii) accept partial payments on the Obligations from Borrower or any Guarantor; (iii) accept new or additional documents, instruments or agreements relative to the Obligations; (iv) take and hold security or additional guaranties for the payment of the Obligations, and amend, alter, exchange, substitute, transfer, enforce, waive, subordinate, terminate, modify and release in any manner any such security or guaranties; (v) apply such security and direct the order or manner of sale thereof as Lender in its sole discretion may determine; (vi) release or substitute any one or more of any Guarantors; (vii) settle, release on terms satisfactory to Lender (or by operation of law or otherwise), compound, compromise, collect or otherwise liquidate any indebtedness or security in any manner, consent to the transfer of security and bid and purchase at any sale, without affecting or impairing the Obligations of Borrower or any Credit Party hereunder; or (viii) enforce any other right or remedy granted to Lender under this Agreement or under any of the other New Loan Documents or under any Guaranty. No such action which Lender shall take or fail to take in connection with this Agreement or any of the New Loan Documents, or any of them, or any security for the Obligations or other undertakings of Borrower, nor any course of dealing with Borrower or any Credit Party, or any course of dealing with any other person or legal entity, shall release any Borrower’s Obligations or any Credit Party’s responsibility hereunder, affect this Agreement or the other New Loan Documents in any way, or afford Borrower or any Credit Party any recourse against Lender. Without limiting the generality of the foregoing, Borrower agrees that this Agreement shall extend and be applicable to each new or replacement note delivered by Borrower pursuant thereto without notice to or further consent from any Credit Party.

(d)Waiver of Rights Against Lender. Borrower and Credit Parties waive any right to require Lender to: (i) proceed against Borrower under the Note, against any Guarantor, against any other Credit Party, or against anyone else; (ii) proceed against or exhaust any security for the Obligations, or to marshal assets or to marshal assets of any Person in any particular order; (iii) except as required by applicable law, give notice of the terms, time and place of any public or private sale of any real or personalty securing the Obligations; or (iv) pursue any other remedy in Lender’s power whatsoever. Each Person which is a Borrower, Guarantor or other Credit Party waives any defense arising by reason of any disability or other defense of Borrower, any Guarantor or any other Credit Party, or by reason of the cessation from any cause whatsoever of the liability of Borrower, any Guarantor or any other Credit Party, or by reason of any act or omission of Lender or other persons which directly or indirectly results in or aids the discharge or release of Borrower, any Guarantor or any other Credit Party, or any of the Obligations or any security therefor by operation of law or otherwise, or by reason of the amendment, modification, renewal, extension or other change in any of the Obligations. Each Credit Party waives all setoffs and counterclaims and all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of this Agreement and of the existence, creation, or incurring of new or additional Obligations, and all other notices and demands of any kind and description now or hereafter provided for by any statute or rule of law, except for such notices and demands as specifically required by this Agreement. Borrower, each Guarantor and each Credit Party expressly waives any right whatsoever to, or right whatsoever to participate in, any security now or hereafter held by Lender, reimbursement, indemnity, exoneration, contribution or any other claim under local, state or federal law, including, without limitation, 11 U.S.C. ࿙547, which it may now or hereafter have against Borrower, any Guarantor or any Credit Party, or any other Person directly or contingently liable for the Obligations, or against or with respect to each Borrower’s property (including, without limitation, any Collateral under any of the New Loan Documents) arising from the existence or performance of this Agreement until all of the Obligations have been indefeasibly paid or satisfied in full.

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(e)Representations and Warranties. Borrower, each Guarantor and each Credit Party represents and warrants to Lender that: (i) this Agreement is executed at Borrower’s, each Guarantor’s and each Credit Party’s request; (ii) Borrower, each Guarantor and each Credit Party has established adequate means of obtaining from Borrower on a continuing basis financial and other information pertaining to Borrower’s business and Borrower’s financial condition; and (iii) Borrower, each Guarantor and each Credit Party is now and will be completely familiar with the business, operation and financial condition of Borrower and its assets and of the business, operation and financial condition of the Hospital Facilities. Borrower, each Guarantor and each Credit Party hereby waives and relinquishes any duty on the part of Lender to disclose to any of said parties any matter, fact or thing relating to the business, operation or financial condition of Borrower and the Hospital Facilities now known or hereafter known by Lender during the Term of this Agreement. With respect to any present or future Obligations of Borrower to Lender, Lender need not inquire into the authority of Borrower, and any Obligations made or created in reliance upon the professed exercise of such powers.

(f)No Set-Off, Counterclaim, Etc. So long as any of the Obligations under this Agreement remain unpaid or undischarged, neither Guarantor nor any Credit Party will, by paying any sum recoverable hereunder (whether or not demanded by Lender) or by any means or on any other ground, (i) claim any set-off or counterclaim against Borrower, any Guarantor or any Credit Party in respect of any Obligations or other indebtedness by virtue of the right of subrogation, by operation of law or otherwise; (ii) in any proceedings under federal bankruptcy law or insolvency proceedings of any nature, assert its rights in competition with Lender in respect of any payment hereunder because of any claims which Borrower, each Guarantor or Credit Party may have against Borrower or any other Credit Party; or (iii) be entitled to have the benefit of any counterclaim or proof of claim or dividend or payment by or on behalf of Borrower, any Credit Party or other person, or the benefit of any of any other security for any Obligation which, now or hereafter, Lender may hold or in which it may have any share or interest.

14.2Election of Remedies.If Lender may, under applicable law, proceed to realize its benefits under any of the New Loan Documents granting a Lien upon any Collateral, whether owned by Borrower or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Article 14 (Suretyship Waivers). If, in the exercise of any of its rights and remedies, Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, Borrower hereby consent to such action by Lender and waives any claim based upon such action, even if such action by Lender shall result in a full or partial loss of any rights of subrogation that Borrower might otherwise have had but for such action by Lender. Any election of remedies that results in the denial or impairment of the right of Lender to seek a deficiency judgment against Borrower shall not impair any Guarantor’s or any Credit Party’s obligation to pay the full amount of the Obligations. In the event Lender shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or the New Loan Documents, Lender may bid all or less than the amount of the Obligations and the amount of such bid need not be paid by Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Lender, or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Article 14 (Suretyship Waivers), notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which Lender might otherwise be entitled but for such bidding at any such sale.

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14.3Joint and Several Liability. The payment and performance of all Obligations shall constitute the joint and several obligations of Borrower, each Guarantor and each Credit Party.

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

BORROWER:
INTEGRATED HEALTHCARE HOLDINGS, INC., a
Nevada corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
CREDIT PARTIES:
WMC-SA, INC., a California corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
[SIGNATURE PAGE CONTINUES]

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WMC-A, INC., a California corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
COASTAL COMMUNITIES HOSPITAL, INC., a California corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
CHAPMAN MEDICAL CENTER, INC., a California corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
By:	/s/ Kali P. Chaudhuri
	Kali P. Chaudhuri, M.D., Manager
ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
[SIGNATURE PAGE CONTINUES]

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GANESHA REALTY, LLC, a California limited liability company,
By:	/s/ Kali P. Chaudhuri
	Kali P. Chaudhuri, M.D., Manager
WEST COAST HOLDINGS, LLC, a California limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
GUARANTORS:
ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
PACIFIC COAST HOLDINGS INVESTMENT, LLC, a
California limited liability company,
By:	/s/ Anil V. Shah
	Anil V. Shah, M.D., Manager
By:	/s/ Kali P. Chaudhuri
	Kali P. Chaudhuri, M.D., Manager
[SIGNATURE PAGE CONTINUES]

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LENDER:
MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation,
By:	/s/ Joseph J. Lampariello
	Joseph J. Lampariello, President and COO

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ANNEX A

TO

CREDIT AGREEMENT

($10,700,000 LOAN)

DEFINITIONS

Initially capitalized terms used in the Agreement shall (unless otherwise provided elsewhere in the New Loan Documents) have the following respective meanings. All references to Sections, Exhibits, Schedules or Annexes in the following definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the Agreement:

“Affiliate” means, with respect to any Person (excluding Lender), (a) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary voting power in the election of directors of such Person, (b) each Person that controls, is controlled by or is under common control with such Person, (c) each of such Person’s officers, directors, joint venturers and partners and (d) in the case of Borrower, the immediate family members, spouses and lineal descendants of individuals who are Affiliates of any Borrower. For the purposes of this definition, “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” means this Credit Agreement by and among Borrower, the Credit Parties, and Lender, as the same may be amended, supplemented, restated or otherwise modified from time to time.

“Appendices” means Annex A (Definitions); Annex B (Notice Addresses); Annex C (List of Schedules of New Loan Documents); Annex E (Unanimous Written Consent of Directors of IHHI); Annex F (Unanimous Written Consent of Directors of WMC-SA);

Annex G (Unanimous Written Consent of Directors of WMC-A); Annex H (Unanimous Written Consent of Directors of Coastal); Annex I (Unanimous Written Consent of Directors of Chapman); Annex J (Unanimous Written Consent of Managers and Members of PCHI); Annex K (Unanimous Written Consent of Managers of West Coast); Annex L (Unanimous Written Consent of Managers and Members of Ganesha); Annex M (Unanimous Written Consent of Managers of OC-PIN); Disclosure Schedule 3.2 (Address of Executive Office, FEIN Numbers); Disclosure Schedule 3.5 (Material Adverse Effect); Disclosure Schedule 3.7 (Labor Matters); Disclosure Schedule 3.8 (Venturers, Subsidiaries and Affiliates); Disclosure Schedule 3.11 (Taxes); Disclosure Schedule 3.12 (Litigation); Disclosure Schedule 3.13 (Brokers); Disclosure Schedule 3.15 (Environmental Matters); Disclosure Schedule 3.16 (Insurance); Disclosure Schedule 3.17 (Bonding; Licenses); and Disclosure Schedule 6.4 (Indebtedness), all of which are incorporated by reference as if fully set forth in this Agreement.

“Applicable Laws” means all federal, state and local laws, statutes, codes, regulations, rules, acts, ordinances of all Governmental Authorities, departments, commissions, boards, courts, authorities, agencies, officials and officers, including without limitation, Environmental Laws, all building, safety, health, use laws, the Fair Labor Standards Act, 29 U.S.C. §§201 etseq., the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. Section 18a, the Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101, et seq., as amended, and the California version of the WARN Act, California Cal. Labor Code §1400 etseq., and any deed restrictions or other requirements of record applicable to the Collateral or to Borrower or any Credit Party, or to their respective businesses.

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“Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11 U.S.C. §101 etseq.

“Borrower” means IHHI.

“Business Day” means each day of the year (a) on which federally-chartered banking institutions in Las Vegas, Nevada are not required or authorized to close, and (b) which is a not a regularly scheduled holiday in the state of Nevada or in the United States.

“Capital Lease” means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.

“Capital Lease Obligation” means, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease.

“Change of Control” means any of the following: (a) any person or group of persons (within the meaning of the Securities Exchange Act of 1934) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 25% or more of the issued and outstanding shares of capital Stock or of 25% or more of the issued and outstanding membership interests of Borrower or any Credit Party (other than Ganesha) or any Guarantor having the right to vote for the election of directors of Borrowers under ordinary circumstances; (b) other than the Lender pursuant to the Warrant, any person or group of persons (within the meaning of the Securities Exchange Act of 1934) shall have been granted a security interest in 25% or more of the issued and outstanding shares of the capital Stock or in 25% or more of the issued and outstanding membership interests of Borrower or any Credit Party (other than Ganesha) or any Guarantor having the right to vote for the election of directors of Borrowers under ordinary circumstances; (c) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the majority of the board of directors or managing members/managers of Borrower or Credit Party (other than Ganesha) or Guarantor cease for any reason (other than death or disability) to constitute a majority of the directors or majority of the managing members/managers of Borrower or Credit Party (other than Ganesha) or Guarantor then in office; (d) IHHI ceases to own, directly or indirectly, and/or ceases to control all of the economic and voting rights associated with, all of the issued and outstanding capital Stock of WMC-SA, or WMC-A, or Coastal, or Chapman; (e) after the Effective Date hereof, Dr. Anil V. Shah ceases to own, directly or indirectly, at least the same percentage of membership interests in OC-PIN, PCHI and/or West Coast that he owned on the Effective Date hereof; or (f) after the Effective Date hereof, Dr. Anil V. Shah ceases to control, directly or indirectly, the economic and voting rights associated with the membership interests in OC-PIN, PCHI and/or West Coast that he owned on the Effective Date hereof.

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“Charges” means all federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to the PBGC at the time due and payable), levies, assessments, charges, liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of Borrower or any Credit Party, (d) Borrower’s or any Credit Party’s ownership or use of any properties or other assets, or (e) any other aspect of Borrower or any Credit Party’s business.

“Closing Date” means Monday, December 12, 2005, unless Borrower and Lender otherwise agreed in writing.

“Code”means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of Nevada; provided, that to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Lender’s or any Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of Nevada, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

“Collateral” means that number of fully-paid shares of Borrower’s common stock equal in value to the amount of the New Loan not repaid at Maturity plus any due and owing interest, Lender’s Costs and attorneys’ fees covered by the Warrant and all other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of Lender, to secure the Obligations.

“Collateral Assignment”means the Collateral Assignment of Contracts in the form of Exhibit “J” attached hereto, pursuant to which IHHI assigns to Lender its right, title and interest in and to certain contracts set forth right therein as security for repayment of the New Loan.

“Collateral Documents” means the Security Agreement, the UCC-1 Financing Statements, the Warrant, and all similar agreements, documents and instruments entered into guaranteeing payment of, or granting a Lien upon, real and personal property (and interests in real and personal property), and perfecting the Liens, as security for payment of, the Obligations.

“Credit Parties” means WMC-SA, WMC-A, Chapman, Coastal, PCHI, West Coast, OC-PIN and Ganesha.

“Default” means any event that, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default.

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“Default Rate” means a rate of interest which is five percentage points (5%) per annum above the rate(s) of interest otherwise applicable hereunder.

“Disclosure Schedules” means the Schedules prepared by Borrower and denominated as Disclosure Schedules 3.2 through 6.4 in the Index to the Agreement.

“Documents” means all documents, as such term is defined in the Code, now owned or hereafter acquired by Borrower or any Credit Party, wherever located.

“Dollars” or “$” means lawful currency of the United States of America.

“Effective Date” means the date set forth in the introductory paragraph of this Agreement.

“Environmental Laws” means all applicable federal, state, local and foreign laws, statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any applicable judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree, order or judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include but are not limited to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. section 9601 et seq.) (“CERCLA”); the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. section 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. section 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. section 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. section 2601 et seq.); the Clean Air Act (42 U.S.C. section 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. section 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C. section 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. section 300(f) et seq.), and any and all regulations promulgated thereunder, and all analogous state, local and foreign counterparts or equivalents and any transfer of ownership notification or approval statutes.

“Environmental Liabilities” means, with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, including any arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Material whether on, at, in, under, from or about or in the vicinity of any real or personal property.

“Environmental Permits” means all permits, licenses, authorizations, certificates, approvals or registrations required by any Governmental Authority under any Environmental Laws.

4

“Equipment” means all equipment, as such term is defined in the Code, now owned or hereafter acquired by Borrower or any Credit Party, wherever located.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulations promulgated thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any other Person, are treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.

“ERISA Event” means (a) with respect to a Title IV Plan, any event described in Section 4043(c) of ERISA for which notice to the PBGC has not been waived; (b) the withdrawal of Borrower any Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2( of ERISA; (c) the complete or partial withdrawal of Borrower or any Credit Party or any ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan in a distress termination described in Section 4041(c) of ERISA or the treatment of a plan amendment as a termination under Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) with respect to a Title IV Plan, the existence of an “accumulated funding deficiency” (as defined in Section 412 of the IRC or Section 302 of ERISA) whether or not waived, or the failure to make by its due date a required installment under Section 412(m) of the Code or the failure to make any required contribution to a Multiemployer Plan; (g) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to a Title IV Plan; (h) the making of any amendment to any Title IV Plan which could result in the imposition of a lien or the posting of a bond or other security; (i) with respect to a Title IV Plan an event described in Section 4062(e) of ERISA; (j) any other event or condition that would reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (k) the termination of a Multiemployer Plan under Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; (1) the loss of a Qualified Plan’s qualification or tax exempt status; or (m) the termination of a Plan described in Section 4064 of ERISA.

“Event of Default” means that Borrower and/or the Credit Parties have committed one or more of the events described in Section 10.1 (Events of Default) above.

“Fees” means any and all fees payable to Lender pursuant to the Agreement or any of the other New Loan Documents, including but not limited to Lender’s Costs.

“Financial Statements” means the consolidated and consolidating income statements, statements of cash flows and balance sheets of Borrower delivered in accordance with Section 3.4 (Financial Statements).

“Fixtures” means all fixtures as such term is defined in the Code, now owned or hereafter acquired by Borrower or any Credit Party.

5

“Fraudulent Transfer Laws” means Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law.

“Funded Debt” means, with respect to any Person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness and that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a line of credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capital Lease Obligations, current maturities of long term debt, and short term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrower, the Obligations and, without duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of other Persons.

“Funding Party” means any party to this Agreement which made a payment or distribution to any other parties to this Agreement pursuant to any New Loan Document.

“GAAP” means generally accepted accounting principles in the United States of America consistently applied.

“Governmental Authority” means any nation or government, any state, county, city, or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Guaranteed Indebtedness” means as to any Person, any obligation of such Person guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other obligation of any other Person in any manner, including any obligation or arrangement of such Person to (a) purchase or repurchase any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) protect the beneficiary of such arrangement from loss (other than product warranties given in the ordinary course of business) or (e) indemnify the owner of such primary obligation against loss in respect thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof.

“Guarantors” means PCHI and OC-PIN.

“Guaranty Agreements” means a Guaranty Agreement in the form of Exhibit “B” attached hereto, pursuant to which OC-PIN guaranties to Lender certain Obligations of Borrower, including but not limited to repayment of the New Loan; and a Guaranty Agreement in the form of Exhibit “C” attached hereto, pursuant to which PCHI guaranties to Lender certain Obligations of Borrower, including but not limited to repayment of the New Loan

6

“Hazardous Material” means any substance, material or waste that is regulated by, or forms the basis of liability now or hereafter under, any Environmental Laws, including any material or substance that is (a) defined as a “solid waste,”“hazardous waste,”“hazardous material,”“hazardous substance,”“extremely hazardous waste,”“restricted hazardous waste,”“pollutant,”“contaminant,”“hazardous constituent,”“special waste,”“toxic substance” or other similar term or phrase under any Environmental Laws, or (b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance.

“Hospital Facilities”means each of the Hospital Facilities more particularly identified in Annex D attached to this Agreement.

“Indebtedness” means, with respect to any Person, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property payment for which is deferred six (6) months or more, but excluding obligations to trade creditors incurred in the ordinary course of business that are unsecured and not overdue by more than six (6) months unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers’ acceptances and surety bonds, whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations and the present value of future rental payments under all synthetic leases, (f) all obligations of such Person under commodity purchase or option agreements or other commodity price hedging arrangements, in each case whether contingent or matured, (g) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, in each case whether contingent or matured, (h) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (i) the Obligations.

“Indemnified Liabilities” means all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal) that may be instituted or asserted against or incurred by any Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other New Loan Documents and the administration of such credit, and in connection with or arising out of the transactions contemplated hereunder and thereunder and any actions or failures to act in connection therewith, including any and all Environmental Liabilities and legal costs and expenses arising out of or incurred in connection with disputes between or among any parties to any of the New Loan Documents.

7

“Indemnified Person” means Lender, Medical Capital Corporation, Medical Provider Financial Corporation I, Medical Provider Financial Corporation II, and each of their Affiliates, and each of their respective officers, directors, members, employees, attorneys, agents, and representatives.

“Intellectual Property” means any and all licenses, patents, copyrights, trademarks, and the goodwill associated with such trademarks.

“IRC” means the Internal Revenue Code of 1986 and all regulations promulgated thereunder.

“IRS” means the Internal Revenue Service.

“Lender” means Medical Provider Financial Corporation III, a Nevada corporation, and, if Lender shall decide to assign all or any portion of the Obligations, such term shall include any assignee(s) of Lender.

“Lender’s Costs” means all fees and expenses of Lender in connection with the New Loan, this Agreement and all other New Loan Documents including, but not limited to, all reasonable attorneys’ fees, costs and expenses paid or incurred by Lender in connection with any application or engagement letter, or term sheet, or any of the New Loan Documents, the fees and disbursements of Lender's counsel, the travel expenses of Lender's personnel and legal counsel related to the New Loan, appraisal fees, title insurance premiums, survey charges, mortgage and documentary stamp taxes, if any, note intangible taxes, if any, and all Closing, escrow, recording and filing fees, expenses and taxes.

“Lender’s Representative” means Medical Provider Financial Corporation III, c/o Medical Capital Corporation, 2100 South State College Blvd., Anaheim, California 92806, Attn: Sidney Field, CEO, or Joseph J. Lampariello, President and COO, or Adam Field, Sr. Vice President Development, telephone: 714-935-3100, facsimile: 714-935-3114.

“Lien”means any agreement or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction).

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, or financial or other condition of Borrower, (b) Borrower’s ability to pay the New Loan or any of the other Obligations in accordance with the terms of the Agreement, (c) the Collateral, or Lender’s Liens on the Collateral, or the priority of such Liens, or (d) Lender’s rights and remedies under the Agreement and the other New Loan Documents.

“Maturity Date” means the first to occur of (i) the Stated Maturity Date, or (ii) the occurrence or existence of a continuing Event of Default under any of the New Loan Documents.

8

“Maximum Lawful Rate” means the interest rate that a court of competent jurisdiction determines in a final unappealable order to be the highest rate of interest permissible under applicable law.

“Multiemployer Plan” means a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA, and to which Borrower or any Credit Party or any ERISA Affiliate is making, is obligated to make or has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them.

“Net Proceeds” means, for purposes of Section 10.2(c) of this Agreement, the following:

(a) If the Holder of the Warrant sells Shares following exercise of the Warrant, the net proceeds from the sale of such Shares; and

(b)If the Holder of the Warrant exercises the Warrant, completes the sale of such number of Shares as the Holder determines necessary or required in its sole and absolute discretion and thereafter retains Warrants (i.e., does not place them for sale), the Fair Market Value (as said term is defined in the Warrant) of the retained Shares.

“New Loan” means the loan of $10,700,000 by Lender to Borrower pursuant to this Agreement.

“New Loan Account” means an account maintained by Lender in it’s books to record all payments made by Borrower, and all other debits and credits as provided in this Agreement with respect to the New Loan or any other Obligations. All entries in the New Loan Account shall be made in accordance with Lender’s customary accounting practices as in effect from time to time.

“New Loan Documents” means this Agreement, Exhibit “A” (Note); Exhibit “B” (Guaranty Agreement - OC-PIN); Exhibit “C” (Guaranty Agreement - PCHI); Exhibit “D” (Security Agreement); Exhibit “E” (Warrant); Exhibit “F” (Pledge Agreement - West Coast); Exhibit “G” (Pledge Agreement - Ganesha); Exhibit “H” (Pledge Agreement -Members of West Coast), Exhibit “I” (Pledge Agreement - IHHI), and Exhibit “J” (Collateral Assignment of Contracts). In addition, New Loan Documents includes all UCC-1 Financing Statements and all other agreements, instruments, documents and certificates delivered to, or in favor of, Lender and including all other pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements and all other written matter whether heretofore, now or hereafter executed by or on behalf of Borrower or any Credit Party, or any employee of Borrower or any Credit Party, and delivered to Lender in connection with the Agreement or the transactions contemplated thereby. Any reference in this Agreement or in any other New Loan Document to a New Loan Document shall include all Appendices, and all amendments, restatements, supplements or other modifications thereto, and shall refer to the Agreement or such New Loan Document as the same may be in effect at any and all times such reference becomes operative.

“Note” means the promissory note evidencing Borrower’s obligation to repay the New Loan to Lender.

9

“Obligations” collectively means all loans (including, but not limited to, the New Loan), advances, debts, liabilities and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by Borrower or any Credit Party to Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement, letter of credit agreement or other instrument, arising under the Agreement or any of the other New Loan Documents. This term includes all principal, interest (including all interest that accrues after the commencement of any case or proceeding by or against Borrower or any Credit Party in bankruptcy, whether or not allowed in such case or proceeding), Fees, expenses, attorneys’ fees and any other sum chargeable to Borrower or any Credit Party under the Agreement or any of the other New Loan Documents.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Plan” means a Plan described in Section 3(2) of ERISA.

“Permitted Encumbrances” means the following encumbrances relating to the Hospital Facilities: (a) Liens for taxes or assessments or other governmental Charges not yet due and payable or which are being contested in accordance with Section 5.2(b) of the Original Credit Agreement; (b) pledges or deposits of money securing statutory obligations under workmen’s compensation, unemployment insurance, social security or public liability laws or similar legislation (excluding Liens under ERISA); (c) zoning restrictions, easements, licenses, or other restrictions on the use of any real estate or other minor irregularities in title (including leasehold title) thereto, so long as the same do not create a Material Adverse Effect, as determined by Original Lender; (d) currently existing or hereafter created Liens in favor of Original Lender or Original Lender’s Affiliate; (e) any Lien held by an equipment lessor in the equipment so leased; (f) all encumbrances shown in any title policy issued on the Closing Date (of the Original Loan) to Original Lender; (g) inchoate and unperfected workers’ compensation, mechanics’ or similar liens arising in the ordinary course of business, provided, that the same are satisfied in the ordinary course of business; (h) carriers’, warehousemen’s, suppliers’ or other similar possessory liens arising in the ordinary course of business, provided, that the same are satisfied in the ordinary course of business; (i) such other liens arising in the ordinary course of business so long as such liens do not create a Material Adverse Effect; (j) for Coastal Communities Hospital, 2701 East Bristol Street, Santa Ana, California, the exceptions shown on Schedule B as Nos. 1- 9, 11, 12 and 13 (as may be affected by the ALTA survey to be delivered after the date hereof which shall be approved by the Original Lender), as reflected on that certain Preliminary Title Report dated as of February 2, 2005, Chicago Title Company Order No. 41026578B - X52; (k) for Coastal Communities Hospital, 1901 and 1905 North College Avenue, Santa Ana, California, the exceptions shown on Schedule B as Nos. 1- 5, 7, 9, 10, 11, 12 (as may be affected by the ALTA survey to be delivered after the date hereof which shall be approved by the Original Lender), and 13, as reflected on that certain Preliminary Title Report dated as of February 2, 2005, Chicago Title Company Order No. 41026578A - X52; (l) for Western Medical Center/A, 1025 South Anaheim Blvd., Anaheim, California, the exceptions shown on Schedule B as Nos. 1-18, 19, 22 and 23 (as may be affected by the ALTA survey to be delivered after the date hereof which shall be approved by the Original Lender), 20 and 21 as reflected on the certain Preliminary Title Report dated as of February 2, 2005, Chicago Title Company Order No. 41026587 - X52; (m) for Western Medical Center/SA, 1001 North Tustin Avenue, Santa Ana, California, the exceptions shown on Schedule B as Nos. 1-4, 27-44, 46 - 59, 61, and 65 - 70 (No. 70 as may be affected by the ALTA survey to be delivered after the date hereof which shall be approved by the Original Lender) as reflected on that certain First Amended Preliminary Title Report dated as of February 2, 2005 and revised February 26, 2005, Chicago Title Company Order No. 41026631 - X52; (n) for Chapman Medical Center, 2601 East Chapman Avenue, Orange, California, the exceptions shown on Schedule B as Nos. 1-11, 14-24 and 30 (as may be affected by the ALTA survey to be delivered after the date hereof which shall be approved by the Original Lender) as reflected on the certain Preliminary Title Report dated as of February 2, 2005, Chicago Title Company Order No. 41026576A - X52; and (o) for Chapman Medical Center, 2617 East Chapman Avenue, Orange, California, the exceptions shown on Schedule B as Nos. 1-9, 12-14, 19-21, 23, 24, 27 and 30 (as may be affected by the ALTA survey to be delivered after the date hereof which shall be approved by the Original Lender) as reflected on the certain Preliminary Title Report dated as of February 2, 2005, Chicago Title Company Order No. 41026576B - X52.

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“Person” means any individual, sole proprietorship, partnership, joint venture, unincorporated organization, trust, business trust, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).

“Plan” means, at any time, an employee benefit plan, as defined in Section 3(3) of ERISA, that Borrower or any Credit Party or any ERISA Affiliate maintains, contributes to or has an obligation to contribute to or has maintained, contributed to or had an obligation to contribute to at any time within the past seven (7) years on behalf of participants who are or were employed by Borrower or any Credit Party or any ERISA Affiliate.

“Pledge Agreement (West Coast)” means a Pledge Agreement in the form of Exhibit “F” attached hereto, pursuant to which West Coast pledges the ownership of it’s membership interests in PCHI to repayment of the New Loan.

“Pledge Agreement (Ganesha)” means a Pledge Agreement in the form of Exhibit “G” attached hereto, pursuant to which West Coast pledges the ownership of it’s membership interests in PCHI to repayment of the New Loan.

“Pledge Agreement (Members of West Coast)” means a Pledge Agreement in the form of Exhibit “H” attached hereto, pursuant to which the members of West Coast pledge their ownership of membership interests in West Coast to repayment of the New Loan.

“Pledge Agreement (IHHI)” means a Pledge Agreement in the form of Exhibit “I” attached hereto, pursuant to which IHHI pledges its ownership of the capital stock of WMC-SA, WMC-A, Coastal and Chapman to repayment of the New Loan.

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“Qualified Assignee” means (a) any Lender, any Affiliate of Lender and, with respect to a lender that is an investment fund that invests in commercial loans, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and (b) any commercial bank, savings and loan association or savings bank or any other entity which is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933) which extends credit or buys loans as one of its businesses, including insurance companies, mutual funds, lease financing companies and commercial finance companies, in each case, which has a rating of BBB or higher from S&P and a rating of Baa2 or higher from Moody’s at the date that it becomes a Lender and which, through its applicable lending office, is capable of lending to Borrower without the imposition of any withholding or similar taxes; provided that no Person proposed to become a Lender after the Closing Date and determined by Lender to be acting in the capacity of a vulture fund or distressed debt purchaser shall be a Qualified Assignee, and no Person or Affiliate of such Person proposed to become a Lender after the Closing Date that holds Subordinated Debt or Stock issued by any Credit Party shall be a Qualified Assignee.

“Qualified Plan” means a Pension Plan that is intended to be tax-qualified under Section 401(a) of the IRC.

“Release” means any release, threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material in the indoor or outdoor environment, including the movement of Hazardous Material through or in the air, soil, surface water, ground water or property.

“Restricted Payment” means (a) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of Stock; (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of Stock or any other payment or distribution made in respect thereof, either directly or indirectly; (c) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to, any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Stock now or hereafter outstanding; (e) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any shares of Stock or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; and (f) any payment of management fees (or other fees of a similar nature).

“Retiree Welfare Plan” means, at any time, a welfare plan (within the meaning of Section 3(1) of ERISA) that provides for continuing coverage or benefits for any participant or any beneficiary of a participant after such participant’s termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC or other similar state law and at the sole expense of the participant or the beneficiary of the participant.

“Security Agreement” means each Security Agreement in the form if Exhibit “D” attached hereto, entered into by and between or among Lender and Borrower.

“Solvent” means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities (such as Litigation, Guaranties and Pension Plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.

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“Stated Maturity Date” means December 12, 2006.

“Stock”means all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including Stock, preferred stock or any other equity security (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934).

“Subordinated Debt” means any unsecured Indebtedness of any Borrower incurred after the Closing Date that is subordinated to the Obligations in a manner and form reasonably satisfactory to Lender, as to right and time of payment and as to any other rights and remedies thereunder.

“Subsidiary” means, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of 50% or more of such Stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50% or of which any such Person is a general partner or may exercise the powers of a general partner. Unless the context otherwise requires, each reference to a Subsidiary shall be a reference to a Subsidiary of a Borrower.

“Taxes” means taxes, levies, imposts, deductions, Charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of Lender.

“Termination Date” means the date on which (a) the New Loan has been repaid in full, and (b) all other Obligations due and payable under the Agreement and the other New Loan Documents have been discharged.

“Title IV Plan” means a Pension Plan (other than a Multiemployer Plan), that is subject to Title IV of ERISA or Section 412 of the IRC, and that Borrower or any Credit Party or any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

13

“Unfunded Pension Liability” means, at any time, the aggregate amount, if any, of the sum of (a) the amount by which the present value of all accrued benefits under each Title IV Plan exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in accordance with Title IV of ERISA, all determined as of the most recent valuation date for each such Title IV Plan using the actuarial assumptions for funding purposes in effect under such Title IV Plan, and (b) for a period of five (5) years following a transaction which might reasonably be expected to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by Borrower or any Credit Party or any ERISA Affiliate as a result of such transaction.

“Warrant” means the Warrant granted by Borrower to Lender in the form of Exhibit “E” attached hereto.

Unless otherwise specifically provided herein, any accounting term used in the Agreement shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP consistently applied. That certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing. All other undefined terms contained in any of the New Loan Documents shall, unless the context indicates otherwise, have the meanings provided for by the Code to the extent the same are used or defined therein; in the event that any term is defined differently in different Articles or Divisions of the Code, the definition contained in Article or Division 9 shall control. Unless otherwise specified, references in the Agreement or any of the Appendices to a Section, subsection or clause refer to such Section, subsection or clause as contained in the Agreement. The words “herein,”“hereof” and “hereunder” and other words of similar import refer to the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the same may from time to time be amended, restated, modified or supplemented, and not to any particular Section, subsection or clause contained in the Agreement or any such Annex, Exhibit or Schedule.

Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter genders. The words “including,”“includes” and “include” shall be deemed to be followed by the words “without limitation”; the word “or” is not exclusive; references to Persons include their respective successors and assigns (to the extent and only to the extent permitted by the New Loan Documents) or, in the case of governmental Persons, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include any amendments of the same and any successor statutes and regulations. Whenever any provision in any New Loan Document refers to the knowledge (or an analogous phrase) of Borrower or any Credit Party, such words are intended to signify that Borrower or such Credit Party has actual knowledge or awareness of a particular fact or circumstance or that Borrower or such Credit Party, if it had exercised reasonable diligence, would have known or been aware of such fact or circumstance.

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ANNEX B

TO

CREDIT AGREEMENT

NOTICE ADDRESSES

BORROWER:
IHHI:	Integrated Healthcare Holdings, Inc.
	1301 North Tustin Avenue
	Santa Ana, California 92705
	Attn:	Larry B. Anderson, President
	Telephone:	714-953-3575
	Facsimile:	714-953-2595
CREDIT PARTIES:
WMC-SA:	WMC-SA, Inc.
	1301 North Tustin Avenue
	Santa Ana, California 92705
	Attn:	Larry B. Anderson, President
	Telephone:	714-953-3575
	Facsimile:	714-953-2595
WMC-A:	WMC-A, Inc.
	1301 North Tustin Avenue
	Santa Ana, California 92705
	Attn:	Larry B. Anderson, President
	Telephone:	714-953-3575
	Facsimile:	714-953-2595
Coastal:	Coastal Communities Hospital, Inc.
	1301 North Tustin Avenue
	Santa Ana, California 92705
	Attn:	Larry B. Anderson, President
	Telephone:	714-953-3575
	Facsimile:	714-953-2595
Chapman:	Chapman Medical Center, Inc.
	1301 North Tustin Avenue
	Santa Ana, California 92705
	Attn:	Larry B. Anderson, President
	Telephone:	714-953-3575
	Facsimile:	714-953-2595

1

PCHI:	Pacific Coast Holdings Investment, LLC
	2621 South Bristol Street, Suite 108
	Santa Ana, California 92704
	Attn:	Anil V. Shah, M.D., Manager
	Telephone:	714-290-5322
	Facsimile:	714-297-9588
West Coast:	West Coast Holdings, LLC
	2621 South Bristol Street, Suite 108
	Santa Ana, California 92704
	Attn:	Anil V. Shah, M.D., Manager/President
	Telephone:	714-290-5322
	Facsimile:	714-297-9588
Ganesha:	Ganesha Realty Holdings, LLC
	c/o Strategic Global Management, Inc.
	6800 Indiana Avenue, Suite 130
	Riverside, California 92506
	Attn:	Kali P. Chaudhuri, M.D., Manager
	Telephone:	951-782-8812
	Facsimile:	951-782-8850
OC-PIN:	Orange County Physicians Investment Network, LLC
	2621 South Bristol Street, Suite 108
	Santa Ana, California 92704
	Attn:	Anil V. Shah, M.D., Manager/President
	Telephone:	714-290-5322
	Facsimile:	714-297-9588

LENDER:
	Medical Provider Financial Corporation III
	3770 Howard Hughes Parkway
	Suite 301
	Las Vegas, Nevada 89109
	Attn:	Joseph J. Lampariello, President and COO
	Telephone:	800-818-1102
	Facsimile:	702-735-3739

[ADDRESS PAGE CONTINUED]

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With a copy to:
	Medical Provider Financial Corporation III, 2100 South State College Blvd. Anaheim, California 92806
	Attn:	Adam Field, Sr. Vice President Development
	Telephone:	714-935-3100
	Facsimile:	714-935-3114

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ANNEX C

to

CREDIT AGREEMENT

LIST OF DISCLOSURE SCHEDULES AND NEW LOAN DOCUMENTS

NEW LOAN DOCUMENTS
Credit Agreement
Promissory Note
Guaranty Agreement (OC-PIN)
Guaranty Agreement (PCHI)
Pledge Agreement (West Coast)
Pledge Agreement (Ganesha)
Pledge Agreement (Members of West Coast)
Security Agreement
Collateral Assignment of Contracts
DISCLOSURE SCHEDULES
Disclosure Schedule 3.2	Address of Executive Office, FEIN Numbers
Disclosure Schedule 3.5	Material Adverse Effect
Disclosure Schedule 3.7	Labor Matters
Disclosure Schedule 3.8	Venturers, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 3.11	Taxes
Disclosure Schedule 3.12	Litigation
Disclosure Schedule 3.13	Brokers
Disclosure Schedule 3.15	Environmental Matters
Disclosure Schedule 3.16	Insurance
Disclosure Schedule 3.17	Bonding; Licenses
Disclosure Schedule 6.4	Indebtedness

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ANNEX D

TO

CREDIT AGREEMENT

LIST OF FOUR HOSPITALS

1.Coastal Communities Hospital, 2701 South Bristol Street and 1901 North College Avenue, Santa Ana, California.

2.Chapman Medical Center, 2601 and 2617 East Chapman Avenue, Orange, California.

3.Western Medical Center/Anaheim, 1025 South Anaheim Boulevard, Anaheim, California.

4.Western Medical Center/Santa Ana, 1001 North Tustin Avenue and at 1301 North Tustin in Santa Ana, California.

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EX-99.3

EXHIBIT 99.3

PROMISSORY NOTE

$10,700,000	December 12, 2005
	Las Vegas, Nevada

FOR VALUE RECEIVED, the receipt and sufficiency of which are hereby acknowledged, INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation (“Borrower”) hereby promises to pay to the order of MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation (“Lender”), the principal amount of Ten Million Seven Hundred Thousand and No/100 Dollars ($10,700,000.00), together with interest on the unpaid balance of such amount until paid (“New Loan”). The principal amount of the New Loan evidenced by this Note shall be due and payable on the Maturity Date. This Note is the promissory note issued under the Credit Agreement among Borrower, certain Credit Parties defined therein, and Lender of even date herewith (said agreement, as the same may be amended, restated or supplemented from time to time, being herein called the “Credit Agreement”) to which a reference is made for a statement of all of the terms and conditions of the New Loan evidenced hereby. Initially capitalized terms not defined in this Note shall have the respective meanings assigned to them in the Credit Agreement. This Note is secured by, among other things, the Collateral as provided in the Credit Agreement, the Security Agreement and the other New Loan Documents, and is entitled to the benefit of the rights, remedies and security provided thereby.

Interest on the outstanding principal balance under this Note is payable at the interest rate provided in the Credit Agreement, or, under the circumstances contemplated by the Agreement, at the Default Rate, in immediately available United States Dollars at the times and in the manner specified in the Credit Agreement. The outstanding principal and interest under this Note shall be immediately due and payable on the Maturity Date. Payments received by Lender shall be applied against principal and interest as provided for in the Credit Agreement.

To the fullest extent permitted by applicable law, Borrower waives, except to the extent specifically required by the Credit Agreement or other New Loan Document: (a) presentment, demand and protest, and notice of presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all of the Obligations, the New Loan Documents or this Note; (b) all rights to notice and a hearing prior to Lender’s taking possession or control of, or to Lender’s replevin, attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing Lender to exercise any of its remedies; and (c) the benefit of all valuation, appraisal and exemption laws.

Borrower acknowledges that this Note is executed as part of a commercial transaction and that the proceeds of this Note will not be used for any personal or consumer purpose.

Upon the occurrence of any one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided therein.

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This Note shall not be deemed to have been delivered until it is received by Lender in Las Vegas, Nevada.

BORROWER ACKNOWLEDGES THAT BORROWER HAS WAIVED THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ON THIS NOTE. THIS NOTE IS GOVERNED BY THE LAW OF THE STATE OF NEVADA WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES.

INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation
By:	/s/ Larry B. Anderson
Name:	Larry B. Anderson
Title:	President

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EX-99.4

EXHIBIT 99.4

NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION OR EXCLUSION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.

INTEGRATED HEALTHCARE HOLDINGS, INC.

COMMON STOCK WARRANT

WARRANT TO PURCHASE SHARES OF COMMON STOCK

THIS COMMON STOCK WARRANT (this “Warrant”) certifies that, for consideration received, Healthcare Financial Management & Acquisitions, Inc., a Nevada corporation, or its permitted successors or assigns (the “Holder” or “Holders,” as applicable), is entitled to subscribe for and purchase a minimum of 26,097,561 fully paid and nonassessable shares (as adjusted pursuant to Section 3 hereof, the “Shares”) of the Common Stock (the “Common Stock”), of Integrated Healthcare Holdings, Inc., a Nevada corporation (the “Company”), at the price of $1.00 in the aggregate for the Shares (the “Exercise Price”), subject to the provisions and upon the terms and conditions hereinafter set forth.

1.Method of Exercise; Payment.

(a)Exercise. This Warrant shall be exercisable from and after December 12, 2005 (the “Initial Exercise Date”) until the occurrence of both of the following: (a) the written termination by Medical Provider Financial Corporation III, Inc., a Nevada corporation (“Lender”), of that certain Credit Agreement dated as of December 12, 2005 (the “Credit Agreement”) by and between the Company (as Borrower), the “Credit Parties” (as defined therein) thereto, and Lender and (b) the Company’s payment in full of all indebtedness, accrued interest, fees, expenses and all other obligations under the Credit Agreement as determined in the sole and absolute discretion of Lender (such termination date is hereinafter referred to as the “Expiration Date”). This Warrant shall be exercisable by Holder from time to time for the Shares (as adjusted pursuant to Section 3 hereof) only in accordance with Section 10.2(c) of the Credit Agreement.

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(b)Cash Exercise. The purchase rights represented by this Warrant may be exercised by the Holder, in whole or in part, by the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A duly executed) at the principal office of the Company, and by the payment to the Company, by certified, cashier’s or other check acceptable to the Company (or as otherwise provided pursuant to Section 1(c) or 1(e) hereinbelow), of an amount equal to the aggregate Exercise Price of the Shares being purchased.

(c)Net Issue Exercise. In lieu of exercising this Warrant, the Holder may elect to receive Shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election, in which event the Company shall issue to the Holder a number of Shares computed using the following formula:

X = Y (A-B)

A

Where X	=	the number of the Shares to be issued to the Holder.
Y	=	the number of the Shares purchasable under this Warrant.
A	=	the fair market value of one Share on the date of election under this Section 1(c).
B	=	the Exercise Price (as adjusted to the date of such calculation).

(d)Fair Market Value. For purposes of this Warrant, the per share fair market value of the Shares shall mean:

(i)If the Company’s Common Stock is publicly traded, the per share fair market value of the Shares shall be the closing price of such Common Stock as quoted on the Nasdaq National Market or the principal exchange on which the Common Stock is listed, or if not so listed then the fair market value shall be the average of the closing bid and asked prices of such Common Stock as published in The Wall Street Journal, in each case for the trading day immediately prior to the date of determination of fair market value; or

(ii)If the Company’s Common Stock is not so publicly traded, the per share fair market value of the Shares shall be determined by either of the foregoing, as elected by Holder in its sole and absolute discretion: (A) the mutual agreement of the Company and Holder, or (B) alternatively, a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing selected by the Holder in its sole and absolute discretion (the “Appraiser”).

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(e)Stock Certificates. Promptly upon receipt of a notice to exercise, the Company will take all necessary actions to authorize the issuance of such Common Stock under this Warrant. In the event of any exercise of the rights represented by this Warrant, certificates for the Shares so purchased shall be delivered to the Holder within three (3) Business Days (as defined in the Credit Agreement), or four (4) Trading Days (as defined hereinbelow) if the Company’s Common Stock is publicly traded and the notice of exercise is received after 4:30 p.m. Eastern Standard Time on a day in which the Company’s Common Stock is publicly traded (each a “Trading Day”) and, unless this Warrant has been fully exercised or has expired, a new Warrant representing the shares with respect to which this Warrant shall not have been exercised shall also be issued to the Holder within such time.

2.Stock Fully Paid. All of the Shares issuable upon the exercise of the rights represented by this Warrant will, upon issuance and receipt of the Exercise Price therefor, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof (except the Holder’s income taxes, if any, that are due and payable with respect to the Shares).

3.Adjustment to the Number of Shares Issuable and/or the Exercise Price. The number of Shares issuable upon the exercise of this Warrant is subject to adjustment from time to time as set forth in this Section 3. Upon each adjustment pursuant to this Section 3, the Holder shall thereafter prior to the Expiration Date be entitled to purchase the adjusted number of Shares of Common Stock at the Exercise Price. Notwithstanding any thing to the contrary provided herein, the number of Shares of Common Stock issuable upon the exercise of this Warrant and the payment of the Exercise Price shall be automatically adjusted to be the greater of the following: (1) 26,097,561 Shares of Common Stock (as set forth on page 1 of this Warrant), (2) Shares representing thirty-one and nine one hundreths percent (31.09%) of all Common Stock Equivalents (as defined hereinbelow) of the Company, and (3) the fair market value (as determined in Section 1(d) hereof) of Shares of Common Stock equal to the amount of that certain $10,700,000 loan (the “Loan”) made with respect to the Credit Agreement that is not repaid at the maturity or default of such Loan plus any accrued and unpaid interest thereon, Lender’s fees, costs and expenses, and attorneys’ fees (the “Outstanding Amount”), as such Outstanding Amount is determined in the sole and absolute discretion of the Lender. “Common Stock Equivalents” shall mean, collectively, (i) all shares of Common Stock issued and outstanding, (ii) shares of Common Stock issued or deemed issued as a dividend or distribution, including on any preferred stock, (iii) shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock, (iv) shares of Common Stock or Convertible Securities issued or issuable upon the exercise of rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities (as defined hereinbelow) (collectively, “Options”) or shares of Common Stock issued or issuable upon the conversion or exchange of any evidences of indebtedness, shares, preferred stock or other securities directly or indirectly convertible into or exchangeable for Common Stock (“Convertible Securities”), pursuant to the terms of such Option or Convertible Security, (v) shares of Common Stock or Convertible Securities issued or issuable to third parties upon the exercise of rights, options, warrants or otherwise, including, without limitation, to suppliers, banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction, and (vi) shares of Common Stock issued or issuable to employees or directors of, or consultants to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Company.

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(a)If the Company, at any time while any Warrants are outstanding, (i) shall pay a stock dividend payable in shares of its capital stock (whether payable in shares of its Common Stock, preferred stock, or securities convertible into, or exchangeable or exercisable for, Common Stock or of other capital stock of any class), or (ii) subdivide outstanding shares of Common Stock into a larger number of shares, the number of shares of Common Stock issuable upon exercise of this Warrant (or any shares of stock or other securities at the time issuable upon exercise of this Warrant) shall be proportionally increased to reflect such event. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date of a subdivision, combination or reclassification.

(b)If the Company, at any time while any Warrants are outstanding, shall distribute to all holders of Common Stock, or holders of any securities convertible into, or exchangeable or exercisable for Common Stock (and not to the Holder), evidences of its indebtedness, assets or any rights or warrants to subscribe for or purchase any security (excluding those referred to in this Section 3), the number of shares of Common Stock issuable upon exercise of this Warrant (or any shares of stock or other securities at the time issuable upon exercise of this Warrant) shall be proportionally increased to reflect such event as determined by the Appraiser. The Company shall promptly providea statement to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

(c)In case of any reclassification of the Common Stock, any consolidation or merger of the Company with or into another person, the sale or transfer of all or substantially all of the assets of the Company or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, then, subject to the terms hereof, the Holder shall have the right thereafter to exercise this Warrant into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such reclassification, consolidation, merger, sale, transfer or share exchange, and the Holder shall be entitled upon such event to receive such amount of securities or property as the shares of the Common Stock into which this Warrant could have been exercised immediately prior to such reclassification, consolidation, merger, sale, transfer or share exchange would have been entitled. The terms of any such reclassification, consolidation, merger, sale, transfer or share exchange shall include such terms so as to continue to give to the Holder the right to receive the securities or property set forth in this Section 3(c) upon any exercise following such reclassification, consolidation, merger, sale, transfer or share exchange. This provision shall similarly apply to successive reclassification, consolidations, mergers, sales, transfers or share exchanges.

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(d)For purposes of any computation respecting consideration received, the following shall apply:

(i)in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith; and

(ii)in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in by the Appraiser, whose determination shall be conclusive.

(e)For the purposes of this Section 3, the following clauses shall also be applicable:

(i)Record Date. In case the Company shall promptly take a record of the holders of its Common Stock for the purposes of entitling them (A) to receive a dividend or other distribution payable in Common Stock or in convertible securities, or (B) to subscribe for or purchase Common Stock or securities convertible into, or exchangeable or exercisable for, Common Stock, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(ii)Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock for the purposes of this Section 3.

4.Notice of Adjustments. Whenever the number of Shares purchasable hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3 hereof, the Company shall promptly provide notice to the Holder setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the number and class of Shares which may be purchased and the Exercise Price therefor after giving effect to such adjustment.

5.Fractional Shares. This Warrant may not be exercised for fractional shares. In lieu of fractional shares the Company shall promptly make a cash payment therefor based upon the per share fair market value of a Share then in effect.

6.Representations, Warranties and Covenants of the Company.

5

(a)The Company represents and warrants to the Holder that all corporate actions on the part of the Company, its officers, directors and stockholders necessary for the sale and issuance of the Shares pursuant hereto and the performance of the Company’s obligations hereunder were taken prior to and are effective as of the effective date of this Warrant. The Company will at all times reserve and keep available, free from preemptive rights (except as disclosed in the Credit Agreement or the schedules thereto), out of the aggregate of its authorized but unissued Common Stock or its authorized and issued Common Stock held in its treasury, for the purpose of enabling it to satisfy any obligation to issue Shares upon exercise of the Warrants, a number of shares of Common Stock equal to the maximum number of Shares (as adjusted from time to time pursuant to Section 3 hereof) which may then be deliverable upon the exercise of this Warrant. The Company covenants that all Shares that shall be so issuable and deliverable shall, upon issuance thereof, be duly and validly authorized and issued and fully paid, and nonassessable.

(b)The Company has made available to the Holder true, correct and complete copies of its articles of incorporation and bylaws, as amended. This Warrant is not inconsistent with the Company’s articles of incorporation or bylaws, and does not contravene any law or governmental rule, regulation or order applicable to it, does not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract, agreement or other instrument to which it is a party or by which it is bound, and constitutes the legal, valid and binding agreements of the Company, enforceable in accordance with its terms.

(c)No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Warrant, except for the filing of notices pursuant to Regulation D under the Securities Act and any filing required by applicable state securities law, which filings will be effective by the time required thereby.

(d)All issued and outstanding shares of Common Stock or any other securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of Common Stock and any other securities were issued in full compliance with all federal and state securities laws. No stockholder of the Company has preemptive rights to purchase new issuances of the Company’s capital stock.

(e)The Company is not, pursuant to the terms of any agreement currently in existence, under any obligation to register under the Securities Act any of its presently outstanding securities or any of its securities which may hereafter be issued.

(f)Assuming that the Holder is an accredited investor (as defined in Rule 501(a) of Regulation D promulgated under the Securities Act (as defined in Section 9 hereof), the issuance of the Shares upon exercise of this Warrant will constitute a transaction exempt from (i) the registration requirements of Section 5 of the Securities Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the applicable state securities laws.

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(g)At the written request of the Holder, in the event the Holder proposes to sell Shares issuable upon the exercise of this Warrant in compliance with Rule 144 promulgated under the Securities Act by the Securities and Exchange Commission, the Company shall furnish to the Holder, within ten (10) days after receipt of such request, a written statement confirming the Company’s compliance with the filing requirements of the Securities and Exchange Commission as set forth in such rule, as such rule may be amended from time to time.

7.Restrictive Legend. The Shares (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION OR EXCLUSION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.

8.Restrictions Upon Transfer and Removal of Legend.

(a)This Warrant shall not be sold, transferred, assigned or hypothecated by the Holder except (i) to a partnership, limited liability company or other entity (or one or more of the foregoing), the owners of which are the Holder and/ or affiliates of the Holder on the date of transfer; (iii) to a successor to the Holder in any merger, consolidation or other business combination; (iii) to a purchaser of all or substantially all of the Holder’s business, equity securities or assets; or (iv) any affiliate of the Holder, which shall be any person which directly or indirectly controls, is controlled by, or is under common control with such Holder; provided in each case that any transferee agrees to be bound by the terms of this Warrant. The Warrants may be divided or combined, upon request to the Company by the Holder, into one or more new warrants representing the same aggregate number of Warrants. For purposes of this Warrant, “control” of a person shall mean the power, direct or indirect, (x) to vote or direct the voting of 10% or more of the voting equity of such person or (y) to direct or cause the direction of the management and policies of such person whether by ownership or equity, by contract or otherwise, and “person” means an individual or a corporation, association, partnership, limited liability company, joint venture, organization, business, trust or any other entity or organization, including a government or any subdivision or agency thereof. The terms and conditions of this Warrant shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.

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(b)No opinion of counsel or “no-action” letter shall be necessary for any transfer by any Holder to any of the persons specified in paragraph (a) above.

9.Registration Rights.

(a)The Company shall file a registration statement under the Securities Act of 1933, as amended and the rules and regulations promulgated thereunder (the “Securities Act”), covering the resale of all Shares of the Holder no later than ninety (90) days prior to the Loan’s “Maturity Date” (as defined in the Credit Agreement governing the Loan), and use its reasonable best efforts to have the registration statement declared effective by the Securities Exchange Commission (“SEC”) as soon as practicable but no later than the Maturity Date for distribution thereof by means of an underwriting. The underwriter will be selected by the Company and shall be reasonably acceptable to the Holder. The Holder shall (together with the Company as provided hereinbelow) enter into an underwriting agreement in a customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 9(a), if the underwriter advises the Holder in writing that marketing factors require a limitation of the number of shares to be underwritten, the number of shares of Shares held by the Holder to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. The Company shall bear and pay all expenses incurred in connection with any registration, filing or qualification of the Shares with respect to the registrations pursuant to this Section for each Holder, including (without limitation) all registration, filing, and qualification fees, printers and accounting fees relating or apportionable thereto and the fees and disbursements of one counsel for the selling Holders selected by them.

(b)(i)The Company covenants and agrees with the Holder (and any subsequent Holders of this Warrant and/or Shares) that, in the event the Company proposes to file a registration statement under the Securities Act (including, without limitation, relating to an initial public offering of Company Common Stock or shall receive a request for registration on Form S-3 from any stockholder) with respect to any class of security which becomes or which the Company believes will become effective on or after the Initial Exercise Date and on or before the Expiration Date, then the Company shall in each case give prompt written notice of such proposed filing to the Holder (and any subsequent Holders of this Warrant and/or Shares) at least sixty (60) days before the proposed filing date and, by such notice, shall offer to such Holders the opportunity to include in such registration statement such number of Shares as they may request in writing.

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(ii)The Company shall permit, or shall cause the managing underwriter of a proposed offering to permit, the Holders from whom such written requests have been received to include such number of Shares (the “Piggy-back Shares”) in the proposed offering on the same terms and conditions as applicable to securities of the Company included therein or as applicable to securities of any person other than the Company and the Holders of Piggy-back Shares if the securities of any such person are included therein; provided, however, that the Company shall not be required to honor any such request that is received more than sixty (60) days after the proper giving of the Company’s notice or after the Expiration Date. Notwithstanding any other provision of this Section 9(b), if the underwriter advises the Holder in writing that marketing factors require a limitation of the number of shares to be underwritten, the number of shares of Shares held by the Holder to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. The Company shall bear and pay all expenses incurred in connection with any registration, filing or qualification of the Shares with respect to the registrations pursuant to this Section for each Holder, including (without limitation) all registration, filing, and qualification fees, printers and accounting fees relating or apportionable thereto and the fees and disbursements of one counsel for the selling Holders selected by them.

(iii)The Company shall be obligated pursuant to this Section 9(b) to include in the piggy-back offering Shares that have not yet been purchased by a Holder so long as such Holder submits an undertaking to the Company that such Holder intends to exercise the Warrant for at least the number of Shares to be included in such piggy-back offering prior to the consummation of such piggy-back offering. The Company shall use its reasonable best efforts to register or qualify the Shares for offer or sale under the state securities or Blue Sky laws of such states which the Holders of such Shares shall designate.

(iv)If the Company decides not to proceed with the piggy-back offering, the Company will have no obligation to proceed with the offering of the Piggy-back Shares.

(c)        (i) To the fullest extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, members, officers, directors and stockholders of each Holder, legal counsel and accountants for each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), against any Violation (as defined hereinbelow) and the Company will pay to each such Holder, underwriter, controlling person or other aforementioned person, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 9(c) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld, delayed or conditioned), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter, controlling person or other aforementioned person. The term “Violation” means losses, claims, damages, or liabilities (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by any other party hereto, of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law.

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(ii)Each Holder of Shares who participates in a registration pursuant to Section 9 shall indemnify and hold harmless the Company, each of its directors, each of its officers who have signed any such registration statement, and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages or liabilities to which the Company, or any such director, officer or controlling person may become subject under the Securities Act, or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of, or are based upon, any untrue or alleged untrue statement or any material fact contained in any such registration statement, or final prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any such registration statement, or final prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished by such Holder expressly for use in the preparation thereof; and will reimburse any legal or other expenses reasonably incurred by the Company, or any such director, officer or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subparagraph (ii) shall not apply to amounts paid to any claimant in settlement of any suit or claim unless such payment is first approved by such Holder.

10.Rights of Stockholders. No holder of this Warrant shall be entitled, as a Warrant holder, to vote or receive dividends or be deemed the holder of the Shares or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.

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11.Information Rights. The Company shall deliver to the Holder the following (which may be satisfied by the Company’s delivery of the Company’s public filings, if applicable, to Holder):

(a)as soon as practicable, but in any event within ninety (90) days after the end of each fiscal year of the Company, a balance sheet and income statement as of the last day of such year; a statement of cash flows for such year, such year end financial reports to be in reasonable detail, prepared in accordance with generally accepted accounting principles, and audited and certified by independent public accountants of nationally recognized standing selected by the Company;

(b)as soon as practicable, but in any event within forty five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, an unaudited income statement, schedule as to the sources and application of funds for such fiscal quarter, an unaudited balance sheet and a statement of stockholder’s equity as of the end of such fiscal quarter; and

(c)as soon as practicable, but in any event with forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, a statement showing the number of shares of each class and series of capital stock and securities convertible into or exercisable for shares of capital stock outstanding at the end of the period, the number of common shares issuable upon conversion or exercise of any outstanding securities convertible or exercisable for common shares and the exchange ratio or exercise price applicable thereto and number of shares of issued stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient detail as to permit the Holder to calculate its percentage equity ownership in the Company and certified by the Chief Financial Officer or Chief Executive Officer of the Company as being true, complete and correct.

12.Inspection and Observer Rights. The Company shall permit the Holder to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be reasonably requested by the Holder. The Company shall invite a representative of the Holder to attend all regular meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, (a) that such representative shall agree to hold in confidence and trust all information so provided, and (b) if in the good faith opinion of the Company’s legal counsel, the delivery of such information to the Holder’s representative, or the attendance of the Holder’s representative at such meeting, would breach the Company’s attorney - client privilege with its legal counsel with respect to such information, the Company may withhold such information from the Holder’s representative, or exclude the Holder’s representative from such meeting of the Company’s Board of Directors, as the case may be.

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13.Reports Under Exchange Act. With a view to making available to the Holders the benefits of Rule 144 promulgated by the SEC under the Securities Act (“SEC Rule 144”) and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:

(a)make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public so long as the Company is subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act;

(b)file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c)furnish to any Holder, so long as the Holder holds this Warrants or owns any Shares, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

14.Expiration of Warrant. This Warrant shall expire and shall no longer be exercisable after 5:00 p.m., Pacific Standard Time, on the Expiration Date.

15.Notices. All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in any event be deemed to be given upon receipt or, if earlier, (a) five (5) days after deposit with the U.S. Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one Business Day after the Business Day of deposit with Federal Express or similar overnight courier, freight prepaid or (d) one Business Day after the Business Day of facsimile transmission, if delivered by facsimile transmission with copy by first class mail, postage prepaid, and shall be addressed (i) if to the Holder, at the Holder’s address as set forth on the register maintained by the Company, and (ii) if to the Company, at the address of its principal corporate offices (Attention: President), which on the date hereof is 1301 N. Tustin Avenue, Santa Ana, California 92705, or at such other address as a party may designate by ten (10) days advance written notice to the other party pursuant to the provisions above.

16.Warrant Agent.

(a)The Company shall serve as the initial warrant agent under this Warrant. The Company and the Holder may appoint a new warrant agent as mutually agreed upon by the Company and the Holder.

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(b)Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the register maintained by the warrant agent pursuant to this Warrant.

17.Payment of Taxes. The Company will pay all documentary stamp taxes attributable to the issuance of Shares upon the exercise of the Warrants represented by this Warrant. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring the Warrants represented by this Warrant or receiving the Shares under this Warrant.

18.Replacement of Warrant. If the certificate evidencing the Warrants is mutilated, lost, stolen or destroyed, the Company shall issue in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant certificate, a new warrant certificate of like tenor, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and bond or other indemnity, if requested, reasonably satisfactory to it. A Holder of a replacement warrant certificate also shall comply with such other reasonable regulations and pay such other reasonable charges attributable to the replacement of a warrant certificate.

19.Governing Law. This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance with the laws of the State of Nevada.

Issued this 12th day of December, 2005.

	Integrated Healthcare Holdings, Inc., a Nevada corporation
Date:	By:	/s/ Bruce Mogel
		Bruce Mogel, Chief Executive Officer

Attachments

Exhibit A - Notice of Exercise

Exhibit B - Form of Transfer

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EXHIBIT A

NOTICE OF EXERCISE

TO:Integrated Healthcare Holdings, Inc.

Attention: President

1.The undersigned hereby elects to purchase __________ shares of the Common Stock of Integrated Healthcare Holdings, Inc. (the “Company”) pursuant to the terms of the attached Warrant.

2.Method of Exercise (Please initial the applicable blank):

___ The undersigned elects to exercise the attached Warrant by means of a cash payment, and tenders herewith payment in full for the purchase price of the shares being purchased, together with all applicable transfer taxes, if any.

___ The undersigned elects to exercise the attached Warrant by means of the net exercise provisions of Section 1(c) or the “easy sale” exercise provisions of Section 1(e) of this Warrant, and accordingly requests delivery of a net of ______ of such securities.

3.Please issue a certificate or certificates representing said Shares in the name of the undersigned or in such other name as is specified below:

(Name)

(Address)

4.The undersigned hereby represents and warrants that the aforesaid shares of Shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale, in connection with the distribution thereof.

		(Signature)
	Title:
(Date)

A-1

EXHIBIT B

FORM OF TRANSFER

(To be signed only upon transfer of Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _______________________________________________ the right represented by the attached Warrant to purchase ____________ shares of the Common Stock of Integrated Healthcare Holdings, Inc. (the “Company”), to which the attached Warrant relates, and appoints ______________ as their true and lawful attorney in fact to transfer such right on the books of the Company, with full power of substitution in the premises.

Dated: ____________________

	(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)
	(Address)
Signed in the presence of:

B-1

EX-99.5

EXHIBIT 99.5

SECURITY AGREEMENT

[$10,700,000 loan]

This SECURITY AGREEMENT (as the same may be amended, restated, supplemented or otherwise modified from time to time, this "Security Agreement"), dated as of December 12, 2005 (“Effective Date”), is made by INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation (“Borrower”), and MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation (“Lender”), in connection with that certain Credit Agreement dated as of the date hereof among the Borrower and Lender and certain other “Credit Parties” (as defined therein), (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"). Initially capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement.

RECITALS

A.Borrower is in the business of delivering acute care services to the public through four (4) separate acute care hospital facilities located in Orange County, California (“Hospital Facilities”) identified in Annex D to the Credit Agreement; and, along with one or more of the Credit Parties, is also in the business of owning and operating certain medical office buildings and other healthcare businesses related thereto.

B.Pursuant to that certain Credit Agreement dated as of March 3, 2005, as amended (“Original Credit Agreement”) by and between Borrower, the Credit Parties and Medical Provider Financial Corporation II, a Nevada corporation, an affiliate of Lender (“Original Lender”), Original Lender loaned $50,000,000 to IHHI, WMC-SA, WMC-A, Chapman and Coastal (the “Acquisition Loan”) for the purpose of acquiring the Hospital Facilities, and made available to IHHI, WMC-SA, WMC-A, Chapman and Coastal a $30,000,000 line of credit (the “Line of Credit Loan”) for the purpose of operating the Hospital Facilities (the Acquisition Loan and the Line of Credit Line are hereinafter referred to as the “Original Loan”).

C.Borrower under the Credit Agreement has requested that Lender make a new loan in the amount of $10,700,000 (“New Loan”) for the purpose of operating the Hospital Facilities. Lender has agreed, on the terms and conditions set forth in this Agreement.

D.As an inducement to Lender to enter into the Credit Agreement and to make the New Loan to Borrower, Borrower has agreed to grant Lender a Lien on substantially all of the assets of Borrower, including without limitation a security interest in that number of fully-paid shares of Borrower’s common stock equal in value to the amount of the New Loan not repaid at Maturity plus any due and owing interest, Lender’s Costs and attorneys’ fees.

E.In order to secure the prompt and complete payment, observance and performance of (i) all of Borrower's Obligations under the Credit Agreement, and (ii) all of Borrower's obligations and liabilities hereunder and in connection herewith (all such Obligations and such obligations and liabilities hereunder being hereinafter referred to collectively as the "Liabilities"), the Lender has required, as a condition, among others, to entering into the Credit Agreement and the other Loan Documents, that Borrower execute and deliver this Security Agreement.

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F.Unless otherwise defined herein, capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A (Definitions) of the Credit 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, Borrower and Lender agree as follows:

Section 1.Defined Terms: Construction.

(A)Certain defined terms. As used herein, the following terms shall have the following meanings:

LIEN: any mortgage, security deed or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, security title, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Uniform Commercial Code or comparable law of any jurisdiction) (collectively, a “Lien”).

LOAN: The New Loan and any other advance of monies made by Lender from time to time under the Credit Agreement or any of the other New Loan Documents (collectively, a “Loan”).

OBLIGATIONS: all “Obligations” as defined in the Credit Agreement, and all loans, advances, debts, expense reimbursement, fees, liabilities, and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or amounts are liquidated or determinable) owing by such Borrower or Credit Party to Lender, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, whether arising under any of the New Loan Documents or under any other agreement between Borrower and Lender, and all covenants and duties regarding such amounts. This term includes all principal, interest (including interest accruing at the then applicable rate provided in this Security Agreement after the maturity of the New Loan and interest accruing at the then applicable rate provided in this Security Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), expenses, attorneys’ fees and any other sum chargeable to Borrower under any of the New Loan Documents, and all principal and interest due in respect of the New Loan and all obligations and liabilities of any Guarantor under any Guaranty (collectively, “Obligations”).

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PERSON: any individual, sole proprietorship, partnership, limited liability partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, entity or government (whether Federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof), and shall include such Person’s successors and assigns (collectively, a “Person”).

REQUIREMENT OF LAW: As to Borrower, the Articles of Incorporation and By-Laws or other organizational or governing documents of Borrower, and any law, treaty, rule or regulation (including any federal and state health regulations) or determination of an arbitrator or a court or other Governmental Authority, in each case binding upon Borrower or any of its property or to which Borrower or any of its property is subject (collectively, “Requirement of Law”).

(B)Unless otherwise defined herein, all terms defined in Article 8 and Article 9 of the Nevada version of the Uniform Commercial Code (the “Uniform Commercial Code”) are used herein as defined therein.

(C)The words "hereby," "hereof," "herein" and "hereunder" and words of like import when used in this Security Agreement shall refer to this Security Agreement as a whole and not to any particular provision of this Security Agreement. Section references herein are to this Security Agreement unless otherwise specified.

(D)All terms defined in this Security Agreement in the singular shall have comparable meanings when used in the plural, and vice versa, unless otherwise specified.

(E)The parties hereto have participated jointly in the negotiation and drafting of this Security Agreement. In the event an ambiguity or question of intent or interpretation arises, this Security Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Security Agreement.

Section 2.Grant of Lien.To secure the prompt and complete payment, observance and performance of the Liabilities, Borrower hereby assigns and pledges to the Lender, and hereby grants to the Lender, a continuing Lien in all of Borrower's right, title and interest in and to all of its property and assets, whether real or personal, tangible or intangible, and whether now owned or existing or hereafter arising or acquired, or in which it now has or at any time in the future may acquire any right, title, or interest, including all of the following property and interests in property in which it now has or at any time in the future may acquire any right, title or interest and wheresoever located (collectively, the "Collateral"):

ACCOUNTS: All “accounts,” as such term is defined in the Uniform Commercial Code, now owned or hereafter acquired by Borrower, including: (i) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper or Instruments) (including any such obligations that may be characterized as an account or contract right under the Uniform Commercial Code); (ii) all of Borrower’s rights in, to and under all purchase orders or receipts for goods or services; (iii) all of Borrower’s rights to any goods represented by any of the foregoing (including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods); (iv) all rights to payment due to Borrower for Goods or other property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered by Borrower or in connection with any other transaction (whether or not yet earned by performance on the part of Borrower); (v) all health care insurance receivables; and (vi) all collateral security of any kind given by Borrower with respect to any of the foregoing (collectively, "Accounts");

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BOOKS AND RECORDS: All books and records of Borrower, including all books, records, board minutes, contracts, licenses, insurance policies, maintenance and warranty records, environmental audits, business plans, files, ledgers, computer programs, computer files, computer discs and other data and Software storage and media devices, computer runs, accounting books and records, financial statements (actual and pro forma), filings with Governmental Authorities and any and all records and instruments relating to the Collateral or Borrower’s business (collectively, "Books and Records");

CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: (i) All chattel paper (including tangible chattel paper, intangible chattel paper and electronic chattel paper), rental contracts, and leases (collectively, "Chattel Paper"); (ii) all instruments and all payments thereunder, including all certificated securities and all promissory notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute Chattel Paper (collectively, "Instruments"); and (iii) all bills of sale, bills of lading, warehouse receipts and other documents of title, whether or not negotiable, including, without limitation, all other documents which purport to be issued by a Bailee (as defined in Section 4(A) below) or agent and purport to cover goods in any Bailee's or agent's possession which are either identified or are fungible portions of an identified mass, and all documents of title made available to the Lender for the purpose of ultimate sale or exchange of goods or for the purpose of loading, unloading, storing, shipping, transshipping, manufacturing, processing or otherwise dealing with goods in a manner preliminary to their sale or exchange (collectively, "Documents");

COMMERCIAL TORT CLAIMS: All commercial tort claims set forth from time to time on Schedule 1 hereto, all other commercial tort claims pledged pursuant to a supplement to this Security Agreement pursuant to Section 5 and all payments due or made to Borrower in connection therewith (collectively, “Commercial Tort Claims”);

DEPOSIT ACCOUNTS: All deposit accounts (whether general or special), and all funds and amounts therein, whether or not restricted or designated for a particular purpose (collectively, "Deposit Accounts");

EQUIPMENT: All “equipment” as such term is defined in the Uniform Commercial Code, now owned or hereafter acquired by Borrower, wherever located, including any and all machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal property and all other goods (including Software embedded in such goods) (other than Inventory) of every kind and description that may be now or hereafter used in Borrower’s operations or that are owned by Borrower or in which Borrower may have an interest, and all parts, accessories and accessions thereto and substitutions and replacements therefor (collectively, the "Equipment");

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GENERAL INTANGIBLES: All general intangibles as defined in the Uniform Commercial Code and other intangible property of any kind (other than Accounts, Chattel Paper, commercial tort claims, Deposit Accounts, Investment Property and Letter of Credit Rights), including, without limitation, (i) Payment Intangibles, (ii) the uniform resource locators set forth on Schedule 2 and the internet websites associated therewith; (iii) all rights to payment for loans, money or funds advanced or sold and other obligations receivable (other than Accounts); (iv) customer lists, credit files, correspondence, and advertising materials; (v) contracts and contract rights; (vi) all interests in corporations (including but not limited to that number of fully-paid shares of Borrower’s common stock equal in value to the amount of the New Loan not repaid at Maturity plus any due and owing interest, Lender’s Costs and attorneys’ fees), partnerships, limited liability companies, joint ventures and other unincorporated Persons; (vii) all tax refunds and tax refund claims; (viii) all right, title and interest under leases, subleases, licenses and concessions and other agreements relating to real or personal property (but excluding any interest in the underlying real property or personal property if such personal property constitutes equipment or fixtures); (ix) all payments due or made to Borrower in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any property by any person or governmental authority; (x) all choses in action, causes of action or other claims (other than Commercial Tort Claims), and all payments due or made to Borrower in connection therewith; (xi) all credits with and other claims against carriers and shippers; (xii) all rights to indemnification; (xiii) all rights, priorities and privileges of Borrower relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including (1) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof and all applications in connection therewith, including all registrations, recordings and applications in the United States Copyright Office or in any foreign counterparts thereof; and the right to obtain all renewals thereof ("Copyrights"); (2) any written agreement naming Borrower as licensor or licensee granting any right under any Copyright, including the grant of any right to copy, publicly perform, create derivative works, manufacture, distribute, exploit or sell materials derived from any Copyright; (3) all letters patent of the United States, any other country or any political subdivision thereof and all reissues and extensions thereof, all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof and all rights to obtain any reissues or extensions of the foregoing ("Patents"), (4) all agreements, whether written or oral, providing for the grant by or to Borrower of any right to manufacture, use, import, sell or offer for sale any invention covered in whole or in part by a Patent, (5) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, brand names, labels, service marks, logos and other source or business identifiers, and, in each case, all goodwill associated therewith, all registrations and recordings thereof and all applications in connection therewith, in each case whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, all common-law rights related thereto, and the right to obtain all renewals thereof ("Trademarks"), (6) any agreement, whether written or oral, providing for the grant by or to Borrower of any right to use any Trademark (collectively, "Intellectual Property”), trade secrets, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom, advertising materials, slogans, and all goodwill associated with the foregoing; (xiv) all licenses and permits from any Governmental Authority; (xv) all license agreements and franchise agreements, (xvi) all reversionary interests in pension and profit sharing plans and reversionary, beneficial and residual interest in trusts; (xvii) all proceeds of insurance of which Borrower is beneficiary; and (xviii) all letters of credit, guaranties, liens, security interests and other supporting obligations held by or granted to Borrower (collectively, "General Intangibles”);

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INVENTORY: All inventory as defined in the Uniform Commercial Code, including, without limitation, all goods, including Software embedded in such goods, wherever located, whether in the possession of Borrower or of a Bailee and whether consisting of whole goods, spare parts, components, supplies, materials, or returned or repossessed goods), which are held for sale or lease, which are to be furnished (or have been furnished) under any contract of service or which are raw materials, work in process, finished goods or materials used or consumed in such Borrower's business (collectively, "Inventory");

INVESTMENT PROPERTY: All of Borrower's investment property, as defined in the Uniform Commercial Code (collectively, "Investment Property");

LETTER OF CREDIT RIGHTS: All of Borrower's letters of credit and letter of-credit rights, as defined in the Uniform Commercial Code, now owned or hereafter acquired, including rights to payment or performance under a letter of credit, whether or not Borrower, as beneficiary, has demanded or is entitled to demand payment or performance (collectively, "Letter of Credit Rights");

PAYMENT INTANGIBLES: All “payment intangibles” as such term is defined in the Uniform Commercial Code, now owned or hereafter acquired by Borrower (collectively, “Payment Intangibles”).

OTHER PROPERTY: All money, cash and cash equivalents; all property or interests in property now owned or hereafter acquired by Borrower (but only to the extent not excluded from the Collateral elsewhere in this Security Agreement) which now may be owned or hereafter may come into the possession, custody or control of the Lender in any way and for any purpose (whether for safekeeping, deposit, custody, pledge, transmission, collection or otherwise); and all proceeds of loans, including, without limitation, the New Loan made under the Credit Agreement (“Other Property”);

PROCEEDS: All “proceeds,” as such term is defined in the Uniform Commercial Code and, in any event, shall include: (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Borrower from time to time with respect to any Collateral; (ii) any and all payments (in any form whatsoever) made or due and payable to Borrower from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any Collateral by any governmental body, authority, bureau or agency (or any person acting under color of governmental authority); (iii) any claim of Borrower against third parties (a) for past, present or future infringement of any Intellectual Property or (b) for past, present or future infringement or dilution of any Trademark or Trademark license or for injury to the goodwill associated with any Trademark, Trademark registration or Trademark licensed under any Trademark license; (iv) any recoveries by Borrower against third parties with respect to any litigation or dispute concerning any Collateral, including claims arising out of the loss or nonconformity of, interference with the use of, defects in, or infringement of rights in, or damage to, Collateral; (v) all amounts collected on, or distributed on account of, other Collateral, including dividends, interest, distributions and Instruments with respect to Investment Property and pledged Equity Interests; and (vi) any and all other amounts , rights to payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of Collateral (collectively, “Proceeds”).

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SOFTWARE: All “software” as such term is defined in the Uniform Commercial Code, now owned or hereafter acquired by Borrower, including all computer programs and all supporting information provided in connection with a transaction related to any program (collectively, “Software”).

SUPPORTING OBLIGATIONS: All of Borrower's presently existing and hereafter acquired supporting obligations, as defined in the Uniform Commercial Code (collectively, “Supporting Obligations”); and

together, for each component of the Collateral, with all Proceeds thereof, including without limitation accessions and additions thereto, substitutions therefore, and replacements, products thereof and any other property receivable or received from or upon the sale, lease, license, collection, use, exchange or other disposition, whether voluntary or involuntary, of any of the foregoing, including "proceeds" as defined in the Uniform Commercial Code, any and all proceeds of any insurance, indemnity, warranty or guaranty payable to or for the account of any Borrower from time to time with respect to any of the of the foregoing, any and all payments (in any form whatsoever) made or due and payable to Borrower from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any Person acting under color of Governmental Authority), any and all other amounts from time to time paid or payable under or in connection with any of the foregoing or for or on account of any damage or injury to or conversion of any of the foregoing by any Person, any and all tangible or intangible property received upon the sale or disposition of the foregoing and all proceeds of proceeds.

Section 3.Borrower Remains Liable. Anything herein to the contrary notwithstanding, (A) Borrower shall remain solely liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Security Agreement and the other New Loan Documents had not been executed, (B) the exercise by the Lender of any of its rights hereunder or under the New Loan Documents shall not release any Borrower from any of its duties or obligations under the contracts and agreements included in the Collateral and (C) the Lender shall not have any responsibility, obligation or liability under the contracts and agreements included in the Collateral by reason of this Security Agreement or the other New Loan Documents, nor shall the Lender be required or obligated, in any manner, to (i) perform or fulfill any of the obligations or duties of any Borrower thereunder, (ii) make any payment, or make any inquiry as to the nature or sufficiency of any payment received by any Borrower or the sufficiency of any performance by any party under any such contract or agreement or (iii) present or file any claim, or take any action to collect or enforce any claim for payment assigned hereunder.

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Section 4.Representations and Warranties. Borrower represents and warrants, as of the date of this Security Agreement, and as of each date on which representation and warranties under the Credit Agreement shall be made (except for changes permitted or contemplated by this Security Agreement or the other New Loan Documents) until termination of this Security Agreement pursuant to Section 20:

(A)The exact legal name, jurisdiction of incorporation, type of entity and organizational identification number for Borrower is set forth on Schedule 3 hereto. The locations listed for Borrower on Schedule 4 constitute all locations at which Equipment and/or Inventory of Borrower is located and Borrower has exclusive possession and control of such Equipment and Inventory, except for such Equipment and Inventory which is (i) temporarily in transit between such locations, or (ii) temporarily stored with third parties or held by third parties for processing, storage, engineering, evaluation, repairs or sale (each, a "Bailee"), as to which all actions required by the Credit Agreement, if any, have been taken. The proper corporate names of such third parties, the location of such Equipment and Inventory, the nature of the relationship between Borrower and such Bailee, and the maximum value of Equipment and Inventory held by such Bailee, if greater than $50,000, are set forth in Schedule 5. Schedules 4 and 5 shall be amended to reflect (1) additional locations acquired or utilized from time to time or (2) new arrangements with third parties for manufacturing, processing, engineering, evaluation, repairs, storage, bailment or consignment, provided, that, in each case Borrower is in full compliance with the Credit Agreement and Sections 5 and 8 below in connection with such locations. The chief place of business and chief executive office of Borrower is located at the address of Borrower designated as such on Schedule 4. All Books and Records concerning any Collateral are located at the addresses listed on Schedule 4.

(B)This Security Agreement creates in favor of the Lender a legal, valid and enforceable security interest in the Collateral. When financing statements have been filed in the appropriate offices against Borrower in the locations listed for Borrower on Schedule 6, the Lender will have a fully perfected Lien on the Collateral in which a security interest may be perfected by such filing, subject only to Liens permitted by the definition of “Permitted Encumbrances” in the Credit Agreement and to the Lien in favor of the Original Lender. All other actions to perfect the security interests in Collateral of a type which cannot be perfected by filing have been taken.

(C)Borrower is the legal and beneficial owner of its the Collateral free and clear of all Liens except for Liens permitted by the definition of “Permitted Encumbrances” in the Credit Agreement and to the Lien in favor of the Original Lender. Borrower currently conducts business under its legal name and, in certain areas and for certain operations, the additional trade names listed on Schedule 7. Borrower has not used any trade names or fictitious names in the past five years, except as set forth on Schedule 7.

(D)The amount represented by Borrower from time to time to the Lender as the amount owing by each account debtor or by all account debtors in respect of any Accounts will, at such time, be the correct amount actually and unconditionally owing by such account debtor(s) thereunder to the best of Borrower's knowledge.

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(E)In the event that any of Borrower's Equipment and/or Inventory is in the possession of a Bailee, none of the receipts, Instruments or documents received and to be received by Borrower from such Bailee state that the Equipment and/or Inventory covered thereby is to be delivered to bearer or to the order of a named person or to a named person and such named person's assigns.

(F)Schedule 8 lists (i) all registered Copyrights, all Trademarks, and all Patents and (ii) all other Intellectual Property of Borrower which is material individually or in the aggregate to the operation of the business of Borrower or the Borrower as a whole, in each case separately identifying that owned by Borrower and that licensed to Borrower (collectively, the "Material Intellectual Property"). The Material Intellectual Property owned by Borrower is valid, subsisting, unexpired and enforceable, has not been adjudged invalid and has not been abandoned and the use thereof in the business of Borrower does not infringe the intellectual property rights of any other Person. Except as set forth in Schedule 8, none of the Material Intellectual Property owned by Borrower is the subject of any licensing agreement, dealer agreement or franchise agreement pursuant to which Borrower is the licensor or franchisor. No holding, decision or judgment has been rendered by any Governmental Authority that would limit, cancel or question the validity of, or Borrower's rights in, any Material Intellectual Property. No action or proceeding seeking to limit, cancel or question the validity of any Material Intellectual Property owned by Borrower or Borrower's ownership interest therein, is on the date hereof, pending or, to the knowledge of Borrower, threatened. There are no claims or judgments against, or settlements by, to be paid by Borrower relating to the Material Intellectual Property. Schedule 8 shall be updated from time to time, and no less frequently than quarterly, to reflect additional Material Intellectual Property created, acquired or utilized from time to time.

(G)Schedule 1 lists all Commercial Tort Claims of Borrower in existence as of the date hereof.

(H)Schedule 2 lists all uniform resource locators owned by Borrower.

Section 5.Perfection and Maintenance of Security Interests and Liens. Borrower agrees that until termination of this Security Agreement pursuant to Section 20, the Lender's Liens on and against, the Collateral shall continue in full force and effect. Borrower shall perform any and all steps reasonably requested by the Lender to ensure the attachment, perfection and priority of, and to maintain and protect, the Lender's security interests in and Liens on and against the Collateral granted or purported to be granted hereby or to enable the Lender to exercise its rights and remedies hereunder with respect to any Collateral, including, without limitation:

(A)executing, filing and authorizing the Lender to file any financing or continuation statements, or amendments thereof; in form and substance reasonably satisfactory to the Lender;

(B)unless otherwise held by the Original Lender, delivering to the Lender all certificates, notes, and other instruments representing or evidencing Collateral, which certificates, notes and other instruments have been duly endorsed in blank, including, but not limited to, note powers, all in form and substance satisfactory to the Lender;

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(C)unless otherwise held by the Original Lender, if required by the Lender, delivering to the Lender warehouse receipts or negotiable Documents covering that portion of the Collateral, if any, located with a Bailee for such receipts or Documents are issued;

(D)after the occurrence and during the continuance of an “Event of Default” (as defined in the Credit Agreement) and subject to the rights of the Original Lender, transferring Equipment and Inventory to warehouses designated by the Lender or taking such other steps as are deemed necessary by the Lender to maintain the Lender's control of the Equipment and Inventory;

(E)at the reasonable request of the Lender, appearing in and defending any action or proceeding which may affect adversely Borrower's title to, or the security interest of the Lender in, any of the Collateral;

(F)notifying the Lender in accordance with the Credit Agreement of any action concerning a Commercial Tort Claim acquired by Borrower and, unless the Lender otherwise consents, entering promptly into a supplement to this Security Agreement pledging such Commercial Tort Claim to the Lender;

(G)causing the Lender's name to be noted as secured party on any certificate of title for a titled Inventory or Equipment if such notation is a condition to attachment, perfection or priority of, or the ability of the Lender to enforce the Lien in such Collateral;

(H)(i) entering into supplemental agreements with respect to Intellectual Property, in form and substance satisfactory to the Lender, for filing with the United States Patent and Trademark Office, United States Copyright Office, or any foreign office serving substantially the same function; (ii) complying with the Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727) (or any similar Requirement of Law with respect to claims owing from Governmental Authorities); and (iii) complying with any Requirement of Law as to any Collateral if compliance therewith is a condition to attachment, perfection or priority of, or the ability of the Lender to enforce, the Lender's Lien in such Collateral or exercise any rights and remedies hereunder; and

(I)executing and delivering all further instruments and documents, and taking all further action, as the Lender may reasonably request.

Section 6.Financing Statements. Borrower hereby irrevocably authorizes the Lender to file one or more financing or continuation statements and amendments thereto, disclosing the security interest granted to the Lender under this Security Agreement without Borrower's signature appearing thereon, and the Lender agrees to notify Borrower when such a filing has been made. Borrower agrees that a carbon, photographic, photostatic, or other reproduction of this Security Agreement or of a financing statement is sufficient as a financing statement.

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Section 7.(Reserved)

Section 8.Equipment and Inventory. Borrower covenants and agrees with the Lender that from the date of this Security Agreement and until termination of this Security Agreement pursuant to Section 20, Borrower shall:

(A)Keep its Equipment and inventory (other than Equipment and Inventory sold or disposed of as permitted by the Credit Agreement) at the locations permitted under Section 4(A) (other than such locations where such Collateral was required to be removed pursuant to the provisions of Section 5), and deliver written notice to the Lender at least thirty (30) days prior to establishing any other location at which it reasonably expects to maintain Equipment and/or Inventory; and

(B)If any Equipment and/or Inventory of Borrower is in the possession or control of any Bailee or any of Borrower's agents, Borrower shall, upon the Lender's request, notify such Bailee or agent of the Lender's Lien on such Equipment and/or Inventory and, upon the Lender's request, direct such Bailee or agent to hold all such Equipment and/or Inventory for the Lender's account and subject to the Lender's instructions.

Section 9.Accounts, Chattel Paper and General Intangibles. Borrower covenants and agrees with the Lender that from and after the date of this Security Agreement and until termination of this Security Agreement pursuant to Section 20, Borrower shall:

(A)Keep its jurisdiction of incorporation, chief place of business and chief executive office and the office where it keeps its Books and Records at its address set forth on Schedule 4, and keep the offices where it keeps all originals of all Chattel Paper which evidence Accounts at the locations therefore specified in Section 4(A) or, upon thirty (30) days' prior written notice to the Lender, at such other locations within the United States in a jurisdiction where all actions required by Section 5 shall have been taken with respect to the Accounts, Chattel Paper and General Intangibles. Borrower will hold and preserve such Books and Records (in accordance with Borrower's usual document retention practices) and Chattel Paper and will permit representatives of the Lender at any time during normal business hours to inspect and make abstracts from such Books and Records and Chattel Paper; and

(B)In any suit, proceeding or action brought by the Lender under any Account, Chattel Paper or General Intangible comprising part of the Collateral, Borrower will save, indemnify and keep Lender harmless from and against all expenses, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the obligor thereunder, arising out of a breach by Borrower of any obligation or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of Lender from Borrower and all such obligations of Borrower shall be and shall remain enforceable against and only against Borrower and shall not be enforceable against Lender.

Section 10.Leased Real Property.Borrower covenants and agrees with the Lender that from and after the date of this Security Agreement and until termination of this Security Agreement pursuant to Section 20, that:

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(A)Borrower agrees that, from and after the occurrence and during the continuance of an Event of Default, the Lender may, but need not, make any payment or perform any act hereinbefore required of Borrower with respect to Borrower's leased premises in any form and manner deemed expedient. All money paid for any of the purposes herein authorized and all other moneys advanced by the Lender to protect the lien hereof shall be additional Liabilities secured hereby and shall become immediately due and payable without notice and shall bear interest thereon at the default interest rate, determined as provided in Section 1.4(d) of the Credit Agreement until paid to the Lender in full; and

(B)Borrower agrees that it will not amend any lease in respect of leased property at which Borrower shall maintain Inventory and/or Equipment owned by Borrower having an individual book value in excess of $100,000 in a manner that adversely affects the interests of Lender, without the Lender's prior written consent.

Section 12.General Covenants.Borrower covenants and agrees with the Lender that from and after the date of this Security Agreement and until termination of this Security Agreement pursuant to Section 20, Borrower shall:

(A)Keep and maintain at Borrower's own cost and expense satisfactory and complete records of Borrower's Collateral in a manner consistent with Borrower's current business practice and, where applicable, GAAP, including, without limitation, a record of all payments received and all credits granted with respect to such Collateral. Borrower shall, for the Lender's further security, deliver and turn over to the Lender or the Lender's designated representatives (unless otherwise required by the Original Lender) at any time following the occurrence and during the continuation of an Event of Default, any such Books and Records;

(B)Borrower shall, at its expense, perform and observe all of the material terms and provisions of the Accounts, General Intangibles, Instruments, Chattel Paper and insurance pertaining to any Collateral to be performed or observed by it, and maintain such Collateral in full force and effect and enforce Accounts, General Intangibles, Instruments and Chattel Paper in accordance with their terms; and

(C)Borrower will not (i) sell or otherwise dispose of, or grant any option with respect to, any of the Collateral without the prior written consent of the Lender, other than as permitted by the Credit Agreement or the Original Credit Agreement, (ii) create or permit to exist any Lien upon or with respect to any of the Collateral, except for the security interest under this Security Agreement, Liens in favor of the Original Lender, and Liens permitted by the Credit Agreement, and will defend the Collateral against, and take such other action as is necessary to remove, any Lien on such Collateral which is not so permitted, (iii) other than the Original Loan Documents, enter into any agreement or understanding that purports to or may restrict or inhibit the Lender's rights or remedies hereunder, including, without limitation, the Lender's right to sell or otherwise dispose of the Collateral, or (iv) use or permit any Collateral to be used unlawfully or in violation of any provision of this Security Agreement, any other Loan Document, any Requirement of Law or any policy of insurance covering the Collateral.

Section 13.Lender Appointed Attorney-in-Fact. Borrower hereby irrevocably appoints the Lender as Borrower's attorney-in-fact, coupled with an interest, with full authority in the place and stead of Borrower and in the name of Borrower or otherwise, from time to time in the Lender's discretion, to take any action and to execute any instrument which the Lender may deem necessary or advisable to accomplish the purposes of this Security Agreement, including, without limitation:

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(A)obtain access to records maintained for Borrower by computer services companies and other service companies or bureaus;

(B)send requests under Borrower's, the Lender's or a fictitious name to Borrower's customers or account debtors for verification of Accounts;

(C)(i) record evidence of the Lender's security interest, (ii) following notice to the relevant Borrower (which notice shall not be required following the occurrence and during the continuation of an Event of Default), give notices of the Lender's security interest to any of Borrower's customers, account debtors or suppliers, or (iii) give other notices of the Lender's security interest; and

(D)do all other things reasonably necessary to carry out this Security Agreement; provided, that the Lender may only take the following actions following the occurrence and during the continuance of an Event of Default:

(i)obtain and adjust insurance required to be paid to the Lender pursuant to the Credit Agreement;

(ii)ask, demand, collect, sue for, recover, compromise, receive and give acquaintance and receipts for claims and moneys due and to become due under or in respect of any of the Collateral;

(iii)receive, take, endorse, collect, assign and deliver any drafts or other Instruments, Documents and Chattel Paper, in connection with clause (i) or (ii) above;

(iv)file any claims or take any action or institute any proceedings which the Lender may deem necessary or desirable for the collection of any of the Collateral, or otherwise to enforce the rights of the Lender with respect to any of the Collateral; and

(v)sell, transfer, assign or otherwise deal in or with the Collateral or any part thereof.

Borrower agrees that neither the Lender, nor any of its designees or attorneys-in-fact, will be liable for any act of commission or omission, or for any error of judgment or mistake of fact or law with respect to the exercise of the power of attorney granted under this Section 13, other than as a result of its or their gross negligence or willful misconduct.

Section 14.Lender May Perform: Collection of Accounts. If Borrower fails to perform any agreement contained herein, the Lender may perform, or cause performance of, such agreement, and the expenses of the Lender incurred in connection therewith shall constitute Liabilities. Following the occurrence and during the continuance of an Event of Default, the Lender shall have the right (A) to notify all account debtors to make payments directly to the Lender for application to the Liabilities and (B) to enforce Borrower's rights against the applicable account debtors. Any payment or performance of Borrower’s obligations or liabilities hereunder shall bear interest at the Default Rate from the date incurred until the date repaid in full.

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Section 15.Lender’s Duties. The powers conferred on the Lender hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for monies actually received by it hereunder, the Lender shall not have any duty as to any Collateral. The Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Lender accords its own property, it being understood that the Lender shall be under no obligation to take any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral, but may do so at its option, and all reasonable expenses incurred in connection therewith shall be for the sole account of such Borrower and shall be added to the Liabilities and bear interest at the Default Rate from the date incurred until the date repaid in full. Borrower bear all risk of loss or damage of any of the Collateral, except to the extent such loss or damage shall arise solely from the gross negligence or willful misconduct of the Lender.

Section 16.Remedies.

(A)In addition to all other rights and remedies granted to it under this Security Agreement, the Credit Agreement, the other Loan Documents and under any other instrument or agreement securing, evidencing or relating to any of the Liabilities, if any Event of Default shall have occurred and be continuing, the Lender may exercise all rights and remedies of a secured party under the Uniform Commercial Code (whether or not the Uniform Commercial Code applies to the affected Collateral). Without limiting the generality of the foregoing, Borrower expressly agrees that in any such event the Lender, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon Borrower or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Uniform Commercial Code and other applicable law), may forthwith enter upon the premises of Borrower where any Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving Borrower or any other Person notice and opportunity for a hearing on the Lender's claim or action and may collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at a public or private sale or sales, at any exchange at such prices as it may deem acceptable, for cash or on credit or for future delivery without assumption of any credit risk. The Lender shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of the Lender, the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption each Borrower hereby releases. Such sales may be adjourned and continued from time to time with or without notice. At any such sale or other disposition, the Lender reserves the right to sell for cash, on credit (whether secured or unsecured), or a combination of both, and not to credit the Liabilities unless and until any deferred portion of the purchase has actually been paid to Lender in good funds. The Lender shall have the right to conduct such sales on Borrower's premises or elsewhere and shall have the right to use Borrower's premises without charge for such time or times as the Lender deems necessary or advisable.

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If any Event of Default shall have occurred and be continuing, Borrower further agrees, at the Lender's request, to assemble the Collateral and make it available to the Lender at a place or places designated by the Lender which are reasonably convenient to the Lender and Borrower, whether at Borrower's premises or elsewhere. Until the Lender is able to effect a sale, lease, or other disposition of Collateral, the Lender shall have the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate by the Lender. The Lender may, if it so elects, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of the Lender's remedies (for the benefit of the Lender), with respect to such appointment without prior notice or hearing as to such appointment.

(B)Except as otherwise specifically provided herein, Borrower hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law and unless notice is expressly required in the Credit Agreement) of any kind in connection with this Security Agreement or any Collateral.

(C)To the extent that applicable law imposes duties on the Lender to exercise remedies in a commercially reasonable manner, Borrower acknowledges and agrees that it is not commercially unreasonable for the Lender (i) to fail to incur expenses reasonably deemed significant by the Lender to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against account debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against account debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as the Borrower, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Lender against risks of loss, collection or disposition of Collateral or to provide to the Lender a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Lender, to obtain the services of brokers, investment bankers, consultants and other professionals to assist the Lender in the collection or disposition of any of the Collateral. Borrower acknowledges that the purpose of this Section 16(C) is to provide non-exhaustive indications of what actions or omissions by the Lender would not be commercially unreasonable in the Lender's exercise of remedies against the Collateral and that other actions or omissions by the Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 16(C). Without limitation upon the foregoing, nothing contained in this Section 16(C) shall be construed to grant any rights to Borrower or to impose any duties on the Lender that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 16(C).

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(D)The Lender shall not be required to make any demand upon, or pursue or exhaust any of their rights or remedies against, Borrower, any other obligor, guarantor, pledgor or any other Person with respect to the payment of the Liabilities or to pursue or exhaust any of their rights or remedies with respect to any Collateral therefore or any direct or indirect guarantee thereof. The Lender shall not be required to marshal the Collateral or any guarantee of the Liabilities or to resort to the Collateral or any such guarantee in any particular order, and all of its and their rights hereunder or under any other New Loan Document shall be cumulative. To the extent it may lawfully do so, Borrower absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against the Lender, any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Security Agreement, or otherwise.

(E)Borrower agrees that ten (10) days’ prior notice by Lender to Borrower of the time and place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters. Borrower and each Guarantor shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all amounts to which Lender is entitled.

(F)The Lender may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral, and the Lender's compliance therewith will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

(G)Upon the exercise by the Lender of any power, right, privilege, or remedy pursuant to this Security Agreement which requires any consent, approval, registration, qualification, or authorization of any Governmental Authority or any third party, Borrower agrees to execute and deliver, or will cause the execution and delivery of, all applications, certificates, instruments, assignments, and other documents and papers that the Lender or any purchaser of the Collateral may be required to obtain for such consent, approval, registration, qualification, or authorization. To the maximum extent permitted by applicable law, Borrower waives all claims, damages, and demands against Lender, its Affiliates, agents, and the officers and employees of any of them arising out of the repossession, retention or sale of any Collateral except such as are determined in a final judgment by a court of competent jurisdiction to have arisen solely out of the gross negligence or willful misconduct of such Person.

(H)The rights and remedies provided under this Security Agreement are cumulative and may be exercised singly or concurrently and are not exclusive of any rights and remedies provided by applicable law or equity.

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Section 17.Exercise of Remedies. In connection with the exercise of its remedies pursuant to Section 16, the Lender may, but shall have no obligation to: (A) exchange, enforce, waive or release any portion of the Collateral and any other security for the Liabilities; (B) subject to the Credit Agreement, apply such Collateral or security and direct the order or manner of sale thereof as the Lender may, from time to time, determine; and (C) settle, compromise, collect or otherwise liquidate any such Collateral or security in any manner following the occurrence of an Event of Default, without affecting or impairing the Lender's right to take any other further action with respect to any Collateral or security or any part thereof. Borrower waives any right it may have to require Lender to pursue any third Person for any of the Liabilities.

Section 19.Injunctive Relief. Borrower recognizes that upon the occurrence of an Event of Default, any remedy of law may prove to be inadequate relief to Lender; therefore, Borrower agrees that Lender shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

Section 20.Termination of this Security Agreement: Release of Collateral.

(A)The security interest granted by Borrower under this Security Agreement shall terminate against all the Collateral when all of the Liabilities have been fully paid and satisfied. Upon such termination and at the written request of Borrower or its successors or assigns, and at the cost and expense of Borrower or its successors or assigns, the Lender shall execute in a timely manner such instruments, documents or agreements as are reasonably necessary or reasonably desirable to terminate the Lender's security interest in the Collateral, subject to any disposition made by the Lender pursuant to this Security Agreement.

(B)Borrower acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of the Lender and agrees that it will not do so without the prior written consent of the Lender, subject to Borrower's rights under Section 9-509(d)(2) of the Uniform Commercial Code. Any such filing made by Borrower without Lender’s prior written consent shall constitute an immediate Event of Default under the Credit Agreement, this Security Agreement and all of the other New Loan Documents for which there shall be no grace nor cure period.

Section 21.Successors and Assigns. This Security Agreement shall be binding upon Borrower and its successors and assigns , and shall inure to the benefit of Lender and their respective successors and permitted assigns. Nothing set forth herein or in any other New Loan Document is intended or shall be construed to give any other Person any right, remedy or claim under, to or in respect of this Security Agreement, the Credit Agreement or any other New Loan Document or any Collateral. Borrower's successors shall include, without limitation, a receiver, trustee or debtor-in-possession of or for Borrower.

Section 22.APPLICABLE LAW.THIS SECURITY AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA.

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Section 23.Consent to Jurisdiction and Service of Process. Borrower agrees that the terms of the Credit Agreement and any Guaranty to which Borrower is a party with respect to consent to jurisdiction and service of process shall apply equally to this Security Agreement.

Section 24.WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE LENDER AND ANY BORROWER ARISING OUT OF, OR RELATED TO, THE TRANSACTIONS CONTEMPLATED BY THIS SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. ANY OF BORROWER OR LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 25.Waiver of Bond. Borrower waives the posting of any bond otherwise required of the Lender in connection with any judicial process or proceeding to realize on the Collateral or any other security for the Liabilities, to enforce any judgment or other court order entered in favor of the Lender, or to enforce by specific performance, temporary restraining order, or preliminary or permanent injunction, this Security Agreement or any other agreement or document between the Lender and Borrower.

Section 26.Advice of Counsel. Borrower and Lender understands that the Lender's counsel represents only the Lender's and its Affiliates' interests and that Borrower is advised to obtain its own counsel. Borrower represents and warrants to Lender that it has discussed this Security Agreement and, specifically, the provisions of Sections 22 through 25 hereof, with Borrower's attorneys.

Section 27.Expenses. Borrower agrees to pay or reimburse Lender for all costs and expenses (including the reasonable fees and expenses of all counsel, advisors, consultants (including environmental and management consultants) and auditors retained in connection therewith), incurred in connection with: (a) the preparation, negotiation, execution, delivery, performance and enforcement of the Loan Documents and the preservation of any rights thereunder; (b) collection, including deficiency collections; (c) any amendment, waiver or other modification with respect to any Loan Document or advice in connection with the administration of the Loans or the rights thereunder; (d) any litigation, contest, dispute, suit, proceeding or action (whether instituted by or between any combination of Lender, Borrower or any other Credit Party or other Person), and an appeal or review thereof, in any way relating to the Collateral, any New Loan Document, or any action taken or any other agreements to be executed or delivered in connection therewith, whether as a party, witness or otherwise; and (e) any effort (i) to monitor the Loan, (ii) to evaluate, observe or assess Borrower or any other Credit Party or the affairs of such Person, and (iii) to verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of the Collateral.

Section 28.Severability. Whenever possible, each provision of this Security Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but, if any provision of this Security Agreement shall be held to be prohibited or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Security Agreement.

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Section 29.Notices. All notices and other communications required or desired to be served, given or delivered hereunder shall be in writing and shall be served, given or delivered as provided with respect to the Borrower in the Credit Agreement.

Section 30.Amendments, Waivers and Consents. None of the terms or provisions of this Security Agreement may be waived, altered, modified or amended, and no consent to any departure by Borrower herefrom shall be effective, except by or pursuant to an instrument in writing which (A) is duly executed by Borrower and the Lender and (B) complies with the requirements of the Credit Agreement. Any such waiver shall be valid only to the extent set forth therein. A waiver by the Lender of any right or remedy under this Security Agreement on any one occasion shall not be construed as a waiver of any right or remedy which the Lender would otherwise have on any future occasion. No failure to exercise or delay in exercising any right, power or privilege under this Security Agreement on the part of the Lender shall operate as a waiver thereof; and no single or partial exercise of any right, power or privilege under this Security Agreement shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 31.Section Titles. The section titles herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.

Section 32.Execution in Counterparts. This Security Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

Section 33.(Reserved)

Section 34.(Reserved)

Section 35.Time of the Essence. Time is of the essence for the payment and performance of the Liabilities hereunder.

Section 36.Reinstatement. This Security Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time payment of all or any part of the Liabilities are rescinded or must otherwise be returned or restored by Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Borrower or any other Credit Party, or otherwise, all as though such payments had not been made.

Section 37.Entire Agreement. This Security Agreement represents the final agreement of Borrower with respect to the matters contained herein and may not be contradicted by evidence of prior or contemporaneous agreements, or subsequent oral agreements, between Borrower and Lender.

Section 38.Compliance With Original Loan Documents. Lender agrees that Borrower shall not be deemed to be in breach of any provisions of this Security Agreement based on Borrower’s compliance with the terms of the Original Loan Documents or requests of the Original Lender pursuant thereto.

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IN WITNESS WHEREOF, Borrower and Lender have executed this Security Agreement as of the date set forth above.

BORROWER:
INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation,
By:	/s/ Larry B. Anderson
	Larry B. Anderson, President

LENDER:
MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation,
By:	/s/ Joseph J. Lampariello
	Joseph J. Lampariello, President and COO

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List of Schedules To Be Attached

Schedule No.	Information on Schedule
1.	Schedule of Commercial Tort Claims
2.	Schedule of Uniform Resource Locators
3.	Schedule of Borrower Organizational Information
4.	Schedule of Borrower Location
5.	Schedule of Equipment and Inventory Information
6.	Schedule of Filing Offices for Borrower
7.	Schedule of Trade Names
8.	Schedule of Intellectual Property

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SCHEDULE 1

Schedule of Commercial Tort Claims

1.Integrated Healthcare Holdings, Inc. v. Michael Fitzgibbons, M.D., and Does 1-50, inclusive.

SCHEDULE 2

UNIFORM RESOURCE LOCATORS

www.chapmanmedicalcenter.com

www.coastalcommhospital.com

www.westernmedicalcenter.com

www.westernmedanaheim.com

www.ihhioc.com

SCHEDULE 3

BORROWER ORGANIZATION INFORMATION

Legal Name	Type of Entity	State of Incorporation	Organizational Identification Number
Integrated Healthcare Holdings, Inc.	Corporation	Nevada	C10133-1988

SCHEDULE 4

BORROWER LOCATION

Borrower	Chief Place of Business	Chief Executive Office	Other Locations
Integrated Healthcare Holdings, Inc.	1301 N. Tustin Avenue Santa Ana, CA 92705	1301 N. Tustin Avenue Santa Ana, CA 92705	None

SCHEDULE 5

EQUIPMENT AND INVENTORY INFORMATION

None.

SCHEDULE 6

FILING OFFICES FOR BORROWER

IHHI:

Main Office - Capital Building

101 North Carson Street, Suite 3

Carson City

Nevada 89701-3714

SCHEDULE 7

TRADE NAMES

See Section 1.9(m) and Schedule 1.9(m) of that certain Asset Sales Agreement, dated September 29, 2004, as amended by and among certain subsidiaries of Tenet Healthcare Corporation and Integrated Healthcare Holdings, Inc.

SCHEDULE 8

INTELLECTUAL PROPERTY

See Sections 1.9(m) and 1.9(n) as well as Schedule 1.9(m) of that certain Asset Sales Agreement, dated September 29, 2004, as amended by and among certain subsidiaries of Tenet Healthcare Corporation and Integrated Healthcare Holdings, Inc.

EX-99.6

EXHIBIT 99.6

GUARANTY AGREEMENT

(PCHI)

[$10,700,000 NEW LOAN]

This Guaranty Agreement (as the same may be amended, modified, or supplemented from time to time, the “Guaranty”) is made as of December 12, 2005, by PACIFIC COAST HOLDINGS INVESTMENT, LLC, a California limited liability company (“Guarantor”), in favor of MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation (“Lender”), with reference to the following facts:

RECITALS:

A.This Guaranty is made in connection with a certain Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Lender, Borrower and certain other Credit Parties defined in the Credit Agreement.

B.Integrated Healthcare Holdings, Inc., a Nevada corporation (“Borrower”) is in the business of delivering acute care services to the public through four (4) separate acute care hospital facilities located in Orange County, California (“Hospital Facilities”) identified in Annex D to the Credit Agreement; and, along with one or more of the Credit Parties, is also in the business of owning and operating certain medical office buildings and other healthcare businesses related thereto.

C.Pursuant to that certain Credit Agreement dated as of March 3, 2005, as amended (“Original Credit Agreement”) by and between Borrower, the Credit Parties and Medical Provider Financial Corporation II, a Nevada corporation, an affiliate of Lender (“Original Lender”), Original Lender loaned $50,000,000 to IHHI, WMC-SA, WMC-A, Chapman and Coastal (the “Acquisition Loan”) for the purpose of acquiring the Hospital Facilities, and made available to IHHI, WMC-SA, WMC-A, Chapman and Coastal a $30,000,000 line of credit (the “Line of Credit Loan”) for the purpose of operating the Hospital Facilities (the Acquisition Loan and the Line of Credit Loan are hereinafter referred to as the “Original Loan”).

D.Borrower under the Credit Agreement has requested that Lender make a new loan in the amount of $10,700,000 (“New Loan”) for the purpose of operating the Hospital Facilities. Lender has agreed, on the terms and conditions set forth in this Agreement and in the other documents and instruments evidencing the New Loan (the “New Loan Documents”).

E.For the purposes set forth above, Lender is willing to make the New Loan and other extensions of credit to or for the benefit of Borrower of up to such amount upon the terms and conditions set forth in the Credit Agreement.

F.Among other conditions for making the New Loan, Lender has required, among other conditions, that the Guarantor guaranty the payment of the New Loan and pledge its assets as additional security for the payment and performance of the Obligations, including the New Loan, under the Credit Agreement.

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G.Guarantor will derive substantial direct and indirect economic benefits from the New Loan.

H.The parties intend that these Recitals are made a part of this Guaranty.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Guaranty, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Lender and Guarantor agree as follows:

1.Definitions; Certain Matters of Construction.

Unless otherwise set forth herein, (a) initially capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A (Definitions) of the Credit Agreement, (b) any reference to a “Section” shall refer to the relevant section of this Guaranty, and (c) the following terms shall have, unless otherwise provided elsewhere in this Guaranty, the meanings set forth below:

“Equity Interest” means all shares of capital stock, options and warrants to purchase equity securities or other forms of equity, membership interests, general or limited partnership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act).

“Guaranty Obligations” shall mean (a) the Obligations under the Credit Agreement, including the New Loan and (b) all indebtedness, liabilities, and obligations of Guarantor to Lender whether now existing or hereafter arising under this Guaranty.

“Guaranty Termination Date”shall mean the date on which Borrower shall have no further right to receive any financial accommodations under the Credit Agreement and all Obligations under the Credit Agreement and the Guaranty Obligations shall have been completely satisfied.

“Obligations” has the meaning assigned to it in the Credit Agreement.

“Solvent” shall mean, with respect to Guarantor on a particular date, that on such date (a) the fair value of the property of Guarantor is greater than the total amount of its liabilities, including contingent liabilities; (b) the present fair salable value of the assets of Guarantor is not less than the amount that will be required to pay the probable liability of Guarantor on its debts as they become absolute and matured; (c) Guarantor does not intend to, and does not reasonably believe that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature; and (d) Guarantor is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which its property would constitute an unreasonably small capital. The amount of contingent liabilities (such as litigation, guarantees and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.

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2.Guaranty.

2.1Guaranty of the Obligations.

(a)In consideration of the New Loan, all other financial accommodations to or for the benefit of Borrower and Guarantor, and for other valuable consideration, the receipt and sufficiency of which Guarantor hereby acknowledges, Guarantor hereby unconditionally, irrevocably and absolutely guarantees to Lender, and its respective successors, endorsees, transferees, and assigns, the prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of the New Loan, together with all other Obligations, whether now or hereafter existing, and whether for principal, interest, fees, expenses, or otherwise, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent or now or hereafter existing or due or to become due (including in all cases all such amounts which would become due but for the operation of the provisions of Title 11 of the United States Code or any other similar statutes).

(b)This Guaranty constitutes a guaranty of payment and performance when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that Lender, or any of its successors, endorsees, transferees, or assigns assert any claim or demand or enforce any remedy whatsoever against Borrower, any Credit Party, or any other Person, or with respect to any collateral (provided by Borrower or any Credit Party) (collectively, “Collateral”), before or as a condition to the obligations of Guarantor under this Guaranty.

2.2Absolute Guaranty. The Guaranty Obligations shall remain in full force and effect without regard to, and shall not be impaired or affected by, or be deemed to be satisfied by, and Guarantor shall not be exonerated, discharged or released by, any of the following events:

(a)Lender's exercise or enforcement of, or failure or delay in exercising or enforcing, legal proceedings to collect the New Loan or the Guaranty Obligations or any power, right, or remedy with respect to any of the New Loan, the Guaranty Obligations, or the Collateral, including without limitation: (i) any action or inaction of Lender to perfect, protect, or enforce any lien upon any Collateral; or (ii) any change in the time, manner, or place of payment of, or in any other term of, any or all of the New Loan or the Guaranty Obligations, or any other amendment to, or waiver of, the Credit Agreement, any other New Loan Document, or any other agreement or instrument governing or evidencing the New Loan or any of the Guaranty Obligations;

(b)insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, assignment for the benefit of creditors, appointment of a receiver or trustee for all or any part of Borrower's or Guarantor's assets or of the assets of any other guarantor of the Obligations, liquidation, winding-up, or dissolution of Borrower or Guarantor, or any other guarantor of the Obligations;

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(c)any limitation, discharge, cessation, or partial satisfaction of the New Loan, the Guaranty Obligations, or the obligations of any other guarantor of the Obligations, or any invalidity, voidability, unenforceability, in whole or in part, of the Credit Agreement, this Guaranty, any other New Loan Document, or any other document evidencing the New Loan or Guaranty Obligations;

(d)any merger, acquisition, consolidation or change in structure of Borrower or Guarantor or any other guarantor of the Obligations; or any sale, lease, transfer, or other disposition of any or all of the assets or Equity Interests of Borrowers or Guarantor or any other guarantor of the Obligations, including, without limitation, any transfer by Borrower of all or any part of any Collateral, or termination of Borrower's existence for any reason;

(e)any assignment or other transfer, in whole or in part, of Lender's interest in or rights in or under the Credit Agreement, or any other New Loan Document, including, without limitation, this Guaranty, or with respect to the New Loan, the Guaranty Obligations, or the Collateral;

(f)any claim, defense, counterclaim, or setoff that Borrower or Guarantor or any other guarantor of the Obligations may have or assert, including, without limitation, any defense of incapacity, disability, or lack of corporate, organizational or other authority to execute any document relating to the New Loan, the Guaranty Obligations, the Collateral, or any other Guaranty, other than (i) upon the occurrence of the Guaranty Termination Date, the defense of prior performance, or (ii) any defense based on any applicable provision of the Uniform Commercial Code requiring that Collateral be disposed of in a commercially reasonable manner;

(g)any cancellation, renunciation or surrender of any pledge, guaranty, or any debt instrument evidencing the New Loan or the Guaranty Obligations;

(h)the vote, claim, distribution, election, acceptance, action, or inaction of Lender in any bankruptcy or reorganization case related to the New Loan, the Guaranty Obligations, or the Collateral; or

(i)any other action or circumstances that might otherwise constitute a defense available to, or a legal or equitable discharge of, any surety, guarantor or Guarantor;

it being agreed that the Guaranty Obligations shall not be discharged until the Guaranty Termination Date.

2.3Demand by Lender. In addition to the terms set forth herein, and in no manner imposing any limitation on such terms, if any of the Obligations under the Credit Agreement are declared to be or otherwise becomes immediately due and payable, then Guarantor, upon demand in writing therefor by Lender, shall immediately pay the Guaranty Obligations to Lender. Payment by Guarantor shall be made to Lender to be credited and applied to the Obligations, in immediately available funds in lawful money of the United States of America to an account designated by Lender or at the address set forth below the signature of Lender hereto or at any other address that may be specified in writing from time to time by Lender as provided herein. Any payment received by Lender with respect to the New Loan or other Obligations shall reduce the Guaranty Obligations by the amount of such payment.

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2.4Guarantor Waivers. In addition to any other waivers contained herein, Guarantor waives, agrees and acknowledges as follows and waives any defense based upon or arising from the following:

(a)The Guaranty Obligations are the immediate, direct, primary and absolute liabilities of Guarantor, and are independent of, and not co-extensive with, the New Loan, the other Obligations or the obligations of any other guarantor of the Obligations. Guarantor expressly waives any right it may have now or in the future to direct or affect the manner or timing of Lender's enforcement of its rights or remedies. Guarantor expressly waives any right it may have now or in the future to require Lender to, and Lender shall not have any liability to, pursue or enforce first against Borrower, any of the properties or assets of Borrower, the Collateral or any other security, guaranty or pledge that may now or hereafter be held by Lender for the New Loan or for the Guaranty Obligations, or to apply such security, guaranty, or pledge to the New Loan or to the Guaranty Obligations. Guarantor shall remain liable for the Guaranty Obligations, notwithstanding any judgment Lender may obtain against Borrower or Guarantor, any other guarantor of the Obligations, or any other person or entity, or any modification, extension or renewal with respect thereto. Lender shall not be under any liability to marshal any assets in favor of Guarantor or in payment of any or all of the New Loan or the Guaranty Obligations.

(b)Guarantor has entered into this Guaranty based solely upon its independent knowledge of Borrower's financial condition, and Guarantor assumes full responsibility for obtaining any further information with respect to Borrower or the conduct of its business. Guarantor represents that it is now, and during the terms of this Guaranty will be, responsible for ascertaining the financial condition of Borrower. Guarantor hereby waives any duty on the part of Lender to disclose to Guarantor, and agrees that it is not relying upon or expecting Lender to disclose to it, any fact known or hereafter known by Lender relating to the operation or condition of Borrower or its business or relating to the existence, liability, or financial condition of any other guarantor of the Obligations. Guarantor knowingly accepts the full range of risk encompassed in a contract of continuing guaranty, which risk includes the possibility that Borrower may incur further indebtedness after Borrower's financial condition or its ability to pay debts as they mature has deteriorated.

(c)Except as specifically provided in this Guaranty or applicable law, Guarantor waives, to the fullest extent permitted by applicable law: (i) notice of the acceptance by Lender of this Guaranty, (ii) notice of the existence, creation, payment, nonpayment, performance or nonperformance of all or any of the Guaranty Obligations, (iii) presentment, demand and protest and notice of presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all of the New Loan Documents, notes, commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Lender on which Guarantor may be liable in any way, and hereby ratifies and confirms whatever Lender may do in this regard; (iv) all rights to notice and a hearing prior to Lender's taking possession or control of, or to Lender's replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Lender to exercise any of its remedies; (v) all rights to receive notices from Lender with respect to, or otherwise sent to, Guarantor or any other guarantor of the Obligations, (vi) the benefit of all valuation, appraisal, stay, extension, redemption and exemption laws, (vii) the benefit of any law purporting to reduce Guarantor's obligation in proportion to the principal obligation hereby guarantied, (viii) the benefit of any law purporting to exonerate Guarantor's obligation upon performance or an offer of performance of the principal obligation, (ix) notice of any extension, modification, renewal, or amendment of any of the terms of the Credit Agreement or any other New Loan Document relating to the New Loan or the Guaranty Obligations; (x) notice of the occurrence of any Default or Event of Default with respect to the New Loan, the Guaranty Obligations, the Collateral or otherwise; and (xi) notice of any exercise or non-exercise by Lender of any right, power, or remedy with respect to the New Loan, the Guaranty Obligations or the Collateral; provided, however, that the Lender shall provide Guarantor with written notice of an Event of Default when and if Lender is required to provide such notice to Borrower under the Credit Agreement.

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(d)If Lender, under applicable law, may proceed to realize its benefits under any New Loan Document providing for a lien upon any Collateral, whether owned by Borrower or by any other person or entity, either by judicial foreclosure or by nonjudicial sale or enforcement, Lender, at its sole option, may determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Guaranty.

(e)Guarantor represents that the New Loan and Guaranty Obligations are and shall be incurred by Borrower for business and commercial purposes only. Any claim of Lender against Guarantor arising out of this Guaranty arises out of the conduct by Guarantor of its trade, business, or profession. Guarantor undertakes all the risks encompassed in the Credit Agreement and the other New Loan Documents as they may be now or are hereafter agreed upon by Lender and Borrower. Prior to the Guaranty Termination Date, Lender, in such manner and upon such terms and at such time as it deems best, and with or without notice to Guarantor, may release, add, subordinate or substitute security for the New Loan or other Obligations.

(f)A separate action or actions may be brought and prosecuted against Guarantor whether or not an action is brought against Borrower, or whether Borrower is joined in any such action or actions.

2.5Waivers.

(a)Guarantor waives any and all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available to Guarantor by reason of California Civil Code Sections 2787 to 2855, inclusive, Sections 2899 and 3433, or other statutory or decisional law. This means, among other things, that:

(i)Guarantor waives and will be unable to raise any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal;

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(ii)Guarantor waives and will be unable to raise any defense based upon any statute or rule of law which provides that a creditor may be required to pursue the principal obligor or the security for the principal obligation before seeking enforcement against a guarantor or security pledged by the guarantor;

(iii)Guarantor waives and will be unable to raise any defense based upon any statute or rule of law which provides that a guarantor's obligations may be limited or exonerated by reason of the creditor's alteration of the principal obligation or of another guaranty, or by reason of the impairment or suspension of the creditor's rights or remedies against the principal, another guarantor, or any security given for the principal obligation or given for other guaranties;

(iv)Guarantor waives and will be unable to claim any right to participate in, or the benefit of, any security given for the principal obligation now or hereafter held by Lender; and

(v)Guarantor waives and will be unable to claim any right of subrogation and any right to enforce any remedy which Lender may have against Borrower.

(b)Guarantor waives any defense based upon any lack of authority of the officers, directors, partners, members, managers, or agents acting or purporting to act on behalf of Borrower or any principal of Borrower or any legal disability or defect in the formation of Borrower.

(c)Guarantor waives any defense based upon the application by Borrower of the proceeds of the New Loan for purposes other than the purposes represented by Borrower to Lender or intended or understood by Lender or Guarantor.

(d)Guarantor waives the benefit of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof, and Guarantor further agrees that any act or event which tolls any statute of limitations applicable to the obligations of Borrower shall similarly operate to toll the statute of limitations applicable to Guarantor's liability hereunder.

(e)Guarantor further waives any and all defenses which are comparable to the waivers set forth in this Guaranty which would otherwise be available to Guarantor under Nevada law (whether based on a statute or decisional law) and any other defenses available to guarantors under Nevada law, whether based on a statute or decisional law.

2.6Benefits of Guaranty. The provisions of this Guaranty are for the benefit of Lender and its successors, transferees, endorsees, and assigns, and nothing herein shall impair the New Loan or other Obligations, as between Borrower, Guarantor and Lender. No such transfer, endorsement, or assignment shall increase or diminish any of the Guaranty Obligations hereunder. This Guaranty binds Guarantor, and Guarantor may not assign, transfer or endorse this Guaranty. In the event all or any part of the New Loan or other Obligations are transferred, endorsed or assigned by Lender to any Person or Persons, any reference to “Lender” herein shall be deemed to refer equally to such Person or Persons.

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2.7Continuing Guaranty. (a) This is a continuing guaranty, (b) this Guaranty shall remain in full force and effect until the Guaranty Termination Date, and (c) the Guaranty Obligations hereunder shall extend to each and every extension or renewal, if any, of the Credit Agreement, regardless of whether the New Loan or other Obligations, in successive transactions, may be paid, repaid, advanced or renewed from time to time.

2.8Subordination. Any and all present and future debts and obligations of Borrower to Guarantor are hereby fully and absolutely subordinated to the right and time of payment in full of the Obligations to Lender under the Credit Agreement and the other New Loan Documents. Any Lien, now existing or hereafter arising, on or in any of the assets of Borrower in favor of Guarantor, whether created by contract, assignment, subrogation, reimbursement, indemnity, operation of law, principles of equity or otherwise is hereby subordinated in priority to the liens and security interests of Lender, now existing or hereafter arising. The subordination provisions of this Section 2.9 shall be effective regardless of whether demand has been made by Lender and shall remain in effect until the Guaranty Termination Date.

3.Representations and Warranties. To induce Lender to provide the consideration to Borrower and Guarantor described above, Guarantor hereby makes the following representations and warranties, and each and all of which survive the execution and delivery of this Guaranty:

3.1Organization. Guarantor is duly formed and validly existing under the laws of the state of its organization and has full power and authority to enter into and perform its obligations under this Guaranty. Guarantor’s jurisdiction of organization and exact legal name are as set forth in the first paragraph of this Guaranty.

3.2Due Authorization. The execution, delivery and performance by Guarantor of this Guaranty have been duly authorized by all necessary action of Guarantor.

3.3Binding Obligation. This Guaranty constitutes the legal, valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with its terms.

3.4No Conflicts. The execution, delivery, and performance by Guarantor of this Guaranty does not contravene any law, organizational documents of Guarantor or any contractual restriction binding on or affecting Guarantor, and does not result in or require the creation of any Lien upon or with respect to any of its properties.

3.5Consents. No authorization or approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by Guarantor of this Guaranty.

3.6Articles of Organization and Operating Agreement. Guarantor has furnished to Lender a true and correct copy of the Articles of Organization and the Operating Agreement and all amendments thereto, and the Operating Agreement constitutes the valid, binding and enforceable obligation of all parties thereto, sets froth the entire agreement of the parties thereto with respect to the subject matter thereof, has not been further amended or modified, and remains in full force and effect.

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3.7Address and Location of Records. The address of Guarantor’s principal place of business and chief executive office (or residence, if Guarantor is an individual) is accurately set forth on the signature page to this Guaranty.

3.8Solvency. Guarantor is now, and will be upon the consummation of the transactions contemplated by this Guaranty and the other New Loan Documents, Solvent.

3.9No Setoff, Defense, or Counterclaim. As of the date of this Guaranty, the Guaranty Obligations are not subject to any setoff or defense of any kind against Lender or any Borrower, and Guarantor specifically waives its right to assert any such defense or right of setoff. The Guaranty Obligations shall not be subject to any counterclaims, setoffs, or defenses against Lender or any Borrower that may arise in the future, except for (a) any defense of prior performance or payment, or (b) any defense based on any applicable provision of the Uniform Commercial Code requiring that Collateral be disposed of in a commercially reasonable manner, which any Borrower, Guarantor, or other guarantor of the Obligations may have or assert.

4.Covenants. Guarantor covenants and agrees that until the Guaranty Termination Date, Guarantor shall give prompt written notice to Lender (in any event not later than 10 days prior to any change described below) of (a) any change in the location of Guarantor’s principal place of business, (b) any change in the location of books and records pertaining to its business, (c) any change in its jurisdiction of organization, (d) any change in its name, identity, or structure in any manner which might make any financing statement filed hereunder incorrect or misleading.

5.Further Assurances. Guarantor agrees that, at its expense, upon the written request of Lender, it will promptly execute and deliver to Lender any additional instruments or documents reasonably considered necessary by Lender to cause this Guaranty to be, become, or remain valid and effective in accordance with its terms. Guarantor will provide Lender in writing such financial and other information with respect to its assets and liabilities as Lender shall request, in form reasonably satisfactory to Lender.

6.Reinstatement. This Guaranty shall remain in full force and effect and continue to be effective, as the case may be, if at any time payment or performance of the New Loan or the Guaranty Obligations, or any part thereof, pursuant to applicable law, is avoided, rescinded, or reduced in amount, or must otherwise be restored or returned by Lender, or any other obligee of the New Loan or the Guaranty Obligations, whether as a “voidable preference,”“fraudulent conveyance” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is avoided, rescinded, reduced, restored or returned, the New Loan or the Guaranty Obligations, as the case may be, shall be reinstated and deemed reduced only by such amount paid and not so avoided, rescinded, reduced, restored or returned.

7.Defaults and Remedies. Upon the occurrence and during the continuance of an Event of Default under the Credit Agreement, Lender may declare any or all of the Guaranty Obligations, immediately and without demand, notice or legal process of any kind, to be, and such Guaranty Obligations shall immediately become, due and payable, and then, or at any subsequent time, Lender may exercise any or all of its rights and remedies under this Guaranty, the Credit Agreement, and any other New Loan Documents, including the exercise of any rights and remedies of Lender as a secured party against the Collateral, and under applicable law, and in addition may make demand upon Guarantor for the payment of the Guaranty Obligations; provided, that upon the occurrence of an Event of Default specified in Sections 10.1(a) and (b) of the Credit Agreement, the Guaranty Obligations shall become immediately due and payable without declaration, notice or demand by Lender. All Guaranty Obligations shall bear interest at the Default Rate from and after the date an Event of Default occurs under the Credit Agreement.

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8.Application of Payments. Any payment made by Guarantor under this Guaranty shall be applied by Lender first, to the satisfaction of the indemnification liabilities pursuant to Section 9 of this Guaranty and then, as set forth in the Credit Agreement.

9.Indemnification. Guarantor shall indemnify and hold Lender, and its respective officers, directors, employees, agents and representatives harmless from and against any liabilities, claims and damages, including, without limitation, reasonable costs, attorneys' fees, disbursements and other expenses incurred or arising by reason of the taking or the failure to take action by Lender, in good faith, in respect of any transaction effected under this Guaranty, including, without limitation, any action to enforce payment of the Guaranty Obligations. The liabilities of Guarantor under this Section 9 shall survive the termination of this Guaranty.

10.Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires to give or serve upon any other parties any communication with respect to this Guaranty, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be deemed to have been validly served, given or delivered (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the United States Mail registered or certified mail, return receipt requested, with proper postage prepaid, (b) upon confirmation of transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by delivery of a copy by personal delivery or United States Mail as otherwise provided in this Section 10), (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or facsimile number indicated below such party's signature to this Guaranty or to such other address (or facsimile number) as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice.

11.Entire Agreement. This Guaranty, together with the other New Loan Documents constitutes the entire agreement, and supersedes all prior and contemporaneous oral and written communications and agreements, between the parties with respect to the subject matter hereof.

12.Limitation of Liability. Neither Lender nor any of its officers, directors, employees, agents, or counsel, shall be liable for any action lawfully taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own respective gross negligence or willful misconduct.

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13.Advice of Counsel. Guarantor represents and warrants that it has either obtained the advice of counsel or has had the opportunity to obtain such advice in connection with the terms and provisions of this Guaranty.

14.Amendments. No amendment or waiver of any provisions of this Guaranty, or consent to any departure by Guarantor therefrom, shall be effective in any event unless the same shall be in writing and signed by Lender and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

15.Consent to New Loan Documents. Guarantor hereby acknowledges it has received copies of, and consents to, the Credit Agreement and all of the New Loan Documents.

16.No Waiver. No failure on the part of Lender or Lender to exercise, and no delay in exercising, any right under any New Loan Document shall operate as a waiver thereof; and no single or partial exercise of any right under any New Loan Document shall preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in the New Loan Documents are cumulative and not exclusive of any remedies provided by law.

17.Binding Effect. This Guaranty shall be binding upon and inure to respective benefits of Lender and Guarantor and their respective successors and assigns, except that Guarantor shall not have the right to assign its rights hereunder or any interest herein without Lender's prior written consent.

18.Severability. In the event that any one or more of the provisions contained in any of the New Loan Documents shall be determined to be invalid, illegal, or unenforceable in any respect for any reason, the validity, legality, and enforceability of any such provision or provisions in every other respect, and the remaining provisions of such New Loan Document, shall not be in any way impaired.

19.Governing Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE NEW LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. GUARANTOR AND LENDER HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF NEVADA, CLARK COUNTY, CITY OF LAS VEGAS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GUARANTOR AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER NEW LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER NEW LOAN DOCUMENTS; PROVIDED, THAT LENDER AND GUARANTOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CLARK COUNTY, NEVADA; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. GUARANTOR AND LENDER EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND GUARANTOR AND LENDER HEREBY WAIVE ANY OBJECTION THAT SUCH GUARANTOR OR LENDER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. GUARANTOR AND LENDER HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO GUARANTOR OR TO LENDER AT THE ADDRESS SET FORTH BELOW AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF GUARANTOR’S OR LENDER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

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20.Waiver of Trial By Jury. Guarantor and Lender each hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Guaranty, any other New Loan Document, or any of the transactions contemplated thereby.

21.Counterparts. This Guaranty may be executed in any number of identical counterparts, which shall constitute an original and collectively and separately constitute a single instrument or agreement.

22.Compliance With Original Loan Documents. Lender agrees that Guarantor shall not be deemed to be in breach of any provisions of this Guaranty based on Guarantor’s compliance with the terms of the Original Loan Documents or requests of the Original Lender pursuant thereto.

IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of the date first above written.

PACIFIC COAST HOLDINGS INVESTMENT, LLC a California limited liability company
/s/ Anil V. Shah	/s/ Kali P. Chaudhuri
Anil V. Shah, M.D [Printed Name]	Kali P. Chaudhuri, M.D., [Printed Name]
Manager [Title]	Manager [Title]

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EX-99.7

EXHIBIT 99.7

GUARANTY AGREEMENT

(OC-PIN)

[$10,700,000 NEW LOAN]

This Guaranty Agreement (as the same may be amended, modified, or supplemented from time to time, the “Guaranty”) is made as of December 12, 2005, by ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC, a Nevada limited liability company (“Guarantor”), in favor of MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation (“Lender”), with reference to the following facts:

RECITALS:

A.This Guaranty is made in connection with a certain Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Lender, Borrower and certain other Credit Parties defined in the Credit Agreement.

B.Integrated Healthcare Holdings, Inc., a Nevada corporation (“Borrower”) is in the business of delivering acute care services to the public through four (4) separate acute care hospital facilities located in Orange County, California (“Hospital Facilities”) identified in Annex D to the Credit Agreement; and, along with one or more of the Credit Parties, is also in the business of owning and operating certain medical office buildings and other healthcare businesses related thereto.

C.Pursuant to that certain Credit Agreement dated as of March 3, 2005, as amended (“Original Credit Agreement”) by and between Borrower, the Credit Parties and Medical Provider Financial Corporation II, a Nevada corporation, an affiliate of Lender (“Original Lender”), Original Lender loaned $50,000,000 to IHHI, WMC-SA, WMC-A, Chapman and Coastal (the “Acquisition Loan”) for the purpose of acquiring the Hospital Facilities, and made available to IHHI, WMC-SA, WMC-A, Chapman and Coastal a $30,000,000 line of credit (the “Line of Credit Loan”) for the purpose of operating the Hospital Facilities (the Acquisition Loan and the Line of Credit Loan are hereinafter referred to as the “Original Loan”).

D.Borrower under the Credit Agreement has requested that Lender make a new loan in the amount of $10,700,000 (“New Loan”) for the purpose of operating the Hospital Facilities. Lender has agreed, on the terms and conditions set forth in this Agreement and in the other documents and instruments evidencing the New Loan (the “New Loan Documents”).

E.For the purposes set forth above, Lender is willing to make the New Loan and other extensions of credit to or for the benefit of Borrower of up to such amount upon the terms and conditions set forth in the Credit Agreement.

F.Among other conditions for making the New Loan, Lender has required, among other conditions, that the Guarantor guaranty the payment of the New Loan and pledge its assets as additional security for the payment and performance of the Obligations, including the New Loan, under the Credit Agreement.

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G.Guarantor will derive substantial direct and indirect economic benefits from the New Loan.

H.The parties intend that these Recitals are made a part of this Guaranty.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Guaranty, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Lender and Guarantor agree as follows:

1.Definitions; Certain Matters of Construction.

Unless otherwise set forth herein, (a) initially capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A (Definitions) of the Credit Agreement, (b) any reference to a “Section” shall refer to the relevant section of this Guaranty, and (c) the following terms shall have, unless otherwise provided elsewhere in this Guaranty, the meanings set forth below:

“Equity Interest” means all shares of capital stock, options and warrants to purchase equity securities or other forms of equity, membership interests, general or limited partnership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act).

“Guaranty Obligations” shall mean (a) the Obligations under the Credit Agreement, including the New Loan and (b) all indebtedness, liabilities, and obligations of Guarantor to Lender whether now existing or hereafter arising under this Guaranty.

“Guaranty Termination Date”shall mean the date on which Borrower shall have no further right to receive any financial accommodations under the Credit Agreement and all Obligations under the Credit Agreement and the Guaranty Obligations shall have been completely satisfied.

“Obligations” has the meaning assigned to it in the Credit Agreement.

“Solvent” shall mean, with respect to Guarantor on a particular date, that on such date (a) the fair value of the property of Guarantor is greater than the total amount of its liabilities, including contingent liabilities; (b) the present fair salable value of the assets of Guarantor is not less than the amount that will be required to pay the probable liability of Guarantor on its debts as they become absolute and matured; (c) Guarantor does not intend to, and does not reasonably believe that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature; and (d) Guarantor is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which its property would constitute an unreasonably small capital. The amount of contingent liabilities (such as litigation, guarantees and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.

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2.Guaranty.

2.1Guaranty of the Obligations.

(a)In consideration of the New Loan, all other financial accommodations to or for the benefit of Borrower and Guarantor, and for other valuable consideration, the receipt and sufficiency of which Guarantor hereby acknowledges, Guarantor hereby unconditionally, irrevocably and absolutely guarantees to Lender, and its respective successors, endorsees, transferees, and assigns, the prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of the New Loan, together with all other Obligations, whether now or hereafter existing, and whether for principal, interest, fees, expenses, or otherwise, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent or now or hereafter existing or due or to become due (including in all cases all such amounts which would become due but for the operation of the provisions of Title 11 of the United States Code or any other similar statutes).

(b)This Guaranty constitutes a guaranty of payment and performance when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that Lender, or any of its successors, endorsees, transferees, or assigns assert any claim or demand or enforce any remedy whatsoever against Borrower, any Credit Party, or any other Person, or with respect to any collateral (provided by Borrower or any Credit Party) (collectively, “Collateral”), before or as a condition to the obligations of Guarantor under this Guaranty.

2.2Absolute Guaranty. The Guaranty Obligations shall remain in full force and effect without regard to, and shall not be impaired or affected by, or be deemed to be satisfied by, and Guarantor shall not be exonerated, discharged or released by, any of the following events:

(a)Lender's exercise or enforcement of, or failure or delay in exercising or enforcing, legal proceedings to collect the New Loan or the Guaranty Obligations or any power, right, or remedy with respect to any of the New Loan, the Guaranty Obligations, or the Collateral, including without limitation: (i) any action or inaction of Lender to perfect, protect, or enforce any lien upon any Collateral; or (ii) any change in the time, manner, or place of payment of, or in any other term of, any or all of the New Loan or the Guaranty Obligations, or any other amendment to, or waiver of, the Credit Agreement, any other New Loan Document, or any other agreement or instrument governing or evidencing the New Loan or any of the Guaranty Obligations;

(b)insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, assignment for the benefit of creditors, appointment of a receiver or trustee for all or any part of Borrower's or Guarantor's assets or of the assets of any other guarantor of the Obligations, liquidation, winding-up, or dissolution of Borrower or Guarantor, or any other guarantor of the Obligations;

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(c)any limitation, discharge, cessation, or partial satisfaction of the New Loan, the Guaranty Obligations, or the obligations of any other guarantor of the Obligations, or any invalidity, voidability, unenforceability, in whole or in part, of the Credit Agreement, this Guaranty, any other New Loan Document, or any other document evidencing the New Loan or Guaranty Obligations;

(d)any merger, acquisition, consolidation or change in structure of Borrower or Guarantor or any other guarantor of the Obligations; or any sale, lease, transfer, or other disposition of any or all of the assets or Equity Interests of Borrowers or Guarantor or any other guarantor of the Obligations, including, without limitation, any transfer by Borrower of all or any part of any Collateral, or termination of Borrower's existence for any reason;

(e)any assignment or other transfer, in whole or in part, of Lender's interest in or rights in or under the Credit Agreement, or any other New Loan Document, including, without limitation, this Guaranty, or with respect to the New Loan, the Guaranty Obligations, or the Collateral;

(f)any claim, defense, counterclaim, or setoff that Borrower or Guarantor or any other guarantor of the Obligations may have or assert, including, without limitation, any defense of incapacity, disability, or lack of corporate, organizational or other authority to execute any document relating to the New Loan, the Guaranty Obligations, the Collateral, or any other Guaranty, other than (i) upon the occurrence of the Guaranty Termination Date, the defense of prior performance, or (ii) any defense based on any applicable provision of the Uniform Commercial Code requiring that Collateral be disposed of in a commercially reasonable manner;

(g)any cancellation, renunciation or surrender of any pledge, guaranty, or any debt instrument evidencing the New Loan or the Guaranty Obligations;

(h)the vote, claim, distribution, election, acceptance, action, or inaction of Lender in any bankruptcy or reorganization case related to the New Loan, the Guaranty Obligations, or the Collateral; or

(i)any other action or circumstances that might otherwise constitute a defense available to, or a legal or equitable discharge of, any surety, guarantor or Guarantor;

it being agreed that the Guaranty Obligations shall not be discharged until the Guaranty Termination Date.

2.3Demand by Lender; Exhaust Warrant Shares.

a.Demand by Lender. Subject to compliance with the provisions of Section 2.3(b) below, in addition to the terms set forth herein, and in no manner imposing any limitation on such terms, if any of the Obligations under the Credit Agreement are declared to be or otherwise becomes immediately due and payable, then Guarantor, upon demand in writing therefor by Lender, shall immediately pay the Guaranty Obligations to Lender. Payment by Guarantor shall be made to Lender to be credited and applied to the Obligations, in immediately available funds in lawful money of the United States of America to an account designated by Lender or at the address set forth below the signature of Lender hereto or at any other address that may be specified in writing from time to time by Lender as provided herein. Any payment received by Lender with respect to the New Loan or other Obligations shall reduce the Guaranty Obligations by the amount of such payment.

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b.Warrant; Exhaust Warrant Shares. Notwithstanding the foregoing:

(i)Healthcare Financial Management & Acquisitions, Inc., a Nevada corporation and an affiliate of Lender (“HFMA”) and Borrower are parties to that certain Warrant To Purchase Shares of Common Stock of even date herewith (“Warrant”). Pursuant to the Warrant: (A) Borrower granted HFMA the right to purchase the number of fully paid and nonassessable shares of Borrower’s common stock (“Common Stock”) necessary or required to pay in full all indebtedness, accrued interest, fees, expenses and all other obligations of Borrower and the other Credit Parties under the Credit Agreement and the other New Loan Documents; and (B) Borrower covenanted and agreed to file a registration statement under the Securities Act of 1933, covering the resale of the Common Stock by HFMA, no later than ninety (90) days prior to the Maturity Date of the New Loan (as defined in the Credit Agreement), and to use its reasonable best efforts to have such registration statement declared effective by the Securities Exchange Commission as soon as practicable but no later than the Maturity Date for distribution of the Common Stock by means of an underwriting.

(b)If, by the Maturity Date of the New Loan, a registration statement under the Securities Act of 1933 has been filed and declared effective by the Securities Exchange Commission which permits the immediate sale of the Common Stock by HFMA, then prior to Lender making a demand upon Guarantor to pay the Guaranty Obligations pursuant to this Guaranty, Lender shall first cause HFMA to: (i) exercise its right under the Warrant to purchase all of the Common Stock necessary or required to pay the indebtedness, accrued interest, fees, expenses and all other obligations of Borrower and the other Credit Parties under the Credit Agreement and the other New Loan Documents; (ii) sell said Common Stock by means of an underwriting or as otherwise allowed by law; and (iii) deliver the proceeds of the sale of said Common Stock to Lender in reduction of the indebtedness, accrued interest, fees, expenses and all other obligations of Borrower and the other Credit Parties under the Credit Agreement and the other New Loan Documents.

(c)If, after the sale of Common Stock and payment of proceeds to Lender, any portion of the indebtedness, accrued interest, fees, expenses and all other obligations of Borrower and the other Credit Parties under the Credit Agreement and the other New Loan Documents remains unpaid, then in said event Lender shall have the right to demand in writing that Guaranty immediately pay the Guaranty Obligations (or remaining balance thereof, as applicable) to Lender as provided by Section 2.3(a) above.

2.4Guarantor Waivers. Subject to compliance with the provisions of Section 2.3 above, in addition to any other waivers contained herein, Guarantor waives, agrees and acknowledges as follows and waives any defense based upon or arising from the following:

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(a)The Guaranty Obligations are the immediate, direct, primary and absolute liabilities of Guarantor, and are independent of, and not co-extensive with, the New Loan, the other Obligations or the obligations of any other guarantor of the Obligations. Guarantor expressly waives any right it may have now or in the future to direct or affect the manner or timing of Lender's enforcement of its rights or remedies. Guarantor expressly waives any right it may have now or in the future to require Lender to, and Lender shall not have any liability to, pursue or enforce first against Borrower, any of the properties or assets of Borrower, the Collateral or any other security, guaranty or pledge that may now or hereafter be held by Lender for the New Loan or for the Guaranty Obligations, or to apply such security, guaranty, or pledge to the New Loan or to the Guaranty Obligations. Guarantor shall remain liable for the Guaranty Obligations, notwithstanding any judgment Lender may obtain against Borrower or Guarantor, any other guarantor of the Obligations, or any other person or entity, or any modification, extension or renewal with respect thereto. Lender shall not be under any liability to marshal any assets in favor of Guarantor or in payment of any or all of the New Loan or the Guaranty Obligations.

(b)Guarantor has entered into this Guaranty based solely upon its independent knowledge of Borrower's financial condition, and Guarantor assumes full responsibility for obtaining any further information with respect to Borrower or the conduct of its business. Guarantor represents that it is now, and during the terms of this Guaranty will be, responsible for ascertaining the financial condition of Borrower. Guarantor hereby waives any duty on the part of Lender to disclose to Guarantor, and agrees that it is not relying upon or expecting Lender to disclose to it, any fact known or hereafter known by Lender relating to the operation or condition of Borrower or its business or relating to the existence, liability, or financial condition of any other guarantor of the Obligations. Guarantor knowingly accepts the full range of risk encompassed in a contract of continuing guaranty, which risk includes the possibility that Borrower may incur further indebtedness after Borrower's financial condition or its ability to pay debts as they mature has deteriorated.

(c)Except as specifically provided in this Guaranty or applicable law, Guarantor waives, to the fullest extent permitted by applicable law: (i) notice of the acceptance by Lender of this Guaranty, (ii) notice of the existence, creation, payment, nonpayment, performance or nonperformance of all or any of the Guaranty Obligations, (iii) presentment, demand and protest and notice of presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all of the New Loan Documents, notes, commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Lender on which Guarantor may be liable in any way, and hereby ratifies and confirms whatever Lender may do in this regard; (iv) all rights to notice and a hearing prior to Lender's taking possession or control of, or to Lender's replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Lender to exercise any of its remedies; (v) all rights to receive notices from Lender with respect to, or otherwise sent to, Guarantor or any other guarantor of the Obligations, (vi) the benefit of all valuation, appraisal, stay, extension, redemption and exemption laws, (vii) the benefit of any law purporting to reduce Guarantor's obligation in proportion to the principal obligation hereby guarantied, (viii) the benefit of any law purporting to exonerate Guarantor's obligation upon performance or an offer of performance of the principal obligation, (ix) notice of any extension, modification, renewal, or amendment of any of the terms of the Credit Agreement or any other New Loan Document relating to the New Loan or the Guaranty Obligations; (x) notice of the occurrence of any Default or Event of Default with respect to the New Loan, the Guaranty Obligations, the Collateral or otherwise; and (xi) notice of any exercise or non-exercise by Lender of any right, power, or remedy with respect to the New Loan, the Guaranty Obligations or the Collateral; provided, however, that the Lender shall provide Guarantor with written notice of an Event of Default when and if Lender is required to provide such notice to Borrower under the Credit Agreement.

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(d)If Lender, under applicable law, may proceed to realize its benefits under any New Loan Document providing for a lien upon any Collateral, whether owned by Borrower or by any other person or entity, either by judicial foreclosure or by nonjudicial sale or enforcement, Lender, at its sole option, may determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Guaranty.

(e)Guarantor represents that the New Loan and Guaranty Obligations are and shall be incurred by Borrower for business and commercial purposes only. Any claim of Lender against Guarantor arising out of this Guaranty arises out of the conduct by Guarantor of its trade, business, or profession. Guarantor undertakes all the risks encompassed in the Credit Agreement and the other New Loan Documents as they may be now or are hereafter agreed upon by Lender and Borrower. Prior to the Guaranty Termination Date, Lender, in such manner and upon such terms and at such time as it deems best, and with or without notice to Guarantor, may release, add, subordinate or substitute security for the New Loan or other Obligations.

(f)A separate action or actions may be brought and prosecuted against Guarantor whether or not an action is brought against Borrower, or whether Borrower is joined in any such action or actions.

2.5Waivers.

(a)Guarantor waives any and all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available to Guarantor by reason of California Civil Code Sections 2787 to 2855, inclusive, Sections 2899 and 3433, or other statutory or decisional law. This means, among other things, that:

(i)Guarantor waives and will be unable to raise any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal;

(ii)Guarantor waives and will be unable to raise any defense based upon any statute or rule of law which provides that a creditor may be required to pursue the principal obligor or the security for the principal obligation before seeking enforcement against a guarantor or security pledged by the guarantor;

(iii)Guarantor waives and will be unable to raise any defense based upon any statute or rule of law which provides that a guarantor's obligations may be limited or exonerated by reason of the creditor's alteration of the principal obligation or of another guaranty, or by reason of the impairment or suspension of the creditor's rights or remedies against the principal, another guarantor, or any security given for the principal obligation or given for other guaranties;

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(iv)Guarantor waives and will be unable to claim any right to participate in, or the benefit of, any security given for the principal obligation now or hereafter held by Lender; and

(v)Guarantor waives and will be unable to claim any right of subrogation and any right to enforce any remedy which Lender may have against Borrower.

(b)Guarantor waives any defense based upon any lack of authority of the officers, directors, partners, members, managers, or agents acting or purporting to act on behalf of Borrower or any principal of Borrower or any legal disability or defect in the formation of Borrower.

(c)Guarantor waives any defense based upon the application by Borrower of the proceeds of the New Loan for purposes other than the purposes represented by Borrower to Lender or intended or understood by Lender or Guarantor.

(d)Guarantor waives the benefit of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof, and Guarantor further agrees that any act or event which tolls any statute of limitations applicable to the obligations of Borrower shall similarly operate to toll the statute of limitations applicable to Guarantor's liability hereunder.

(e)Guarantor further waives any and all defenses which are comparable to the waivers set forth in this Guaranty which would otherwise be available to Guarantor under Nevada law (whether based on a statute or decisional law) and any other defenses available to guarantors under Nevada law, whether based on a statute or decisional law.

2.6Benefits of Guaranty. The provisions of this Guaranty are for the benefit of Lender and its successors, transferees, endorsees, and assigns, and nothing herein shall impair the New Loan or other Obligations, as between Borrower, Guarantor and Lender. No such transfer, endorsement, or assignment shall increase or diminish any of the Guaranty Obligations hereunder. This Guaranty binds Guarantor, and Guarantor may not assign, transfer or endorse this Guaranty. In the event all or any part of the New Loan or other Obligations are transferred, endorsed or assigned by Lender to any Person or Persons, any reference to “Lender” herein shall be deemed to refer equally to such Person or Persons.

2.7Continuing Guaranty. (a) This is a continuing guaranty, (b) this Guaranty shall remain in full force and effect until the Guaranty Termination Date, and (c) the Guaranty Obligations hereunder shall extend to each and every extension or renewal, if any, of the Credit Agreement, regardless of whether the New Loan or other Obligations, in successive transactions, may be paid, repaid, advanced or renewed from time to time.

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2.8Subordination. Any and all present and future debts and obligations of Borrower to Guarantor are hereby fully and absolutely subordinated to the right and time of payment in full of the Obligations to Lender under the Credit Agreement and the other New Loan Documents. Any Lien, now existing or hereafter arising, on or in any of the assets of Borrower in favor of Guarantor, whether created by contract, assignment, subrogation, reimbursement, indemnity, operation of law, principles of equity or otherwise is hereby subordinated in priority to the liens and security interests of Lender, now existing or hereafter arising. The subordination provisions of this Section 2.9 shall be effective regardless of whether demand has been made by Lender and shall remain in effect until the Guaranty Termination Date.

3.Representations and Warranties. To induce Lender to provide the consideration to Borrower and Guarantor described above, Guarantor hereby makes the following representations and warranties, and each and all of which survive the execution and delivery of this Guaranty:

3.1Organization. Guarantor is duly formed and validly existing under the laws of the state of its organization and has full power and authority to enter into and perform its obligations under this Guaranty. Guarantor’s jurisdiction of organization and exact legal name are as set forth in the first paragraph of this Guaranty.

3.2Due Authorization. The execution, delivery and performance by Guarantor of this Guaranty have been duly authorized by all necessary action of Guarantor.

3.3Binding Obligation. This Guaranty constitutes the legal, valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with its terms.

3.4No Conflicts. The execution, delivery, and performance by Guarantor of this Guaranty does not contravene any law, organizational documents of Guarantor or any contractual restriction binding on or affecting Guarantor, and does not result in or require the creation of any Lien upon or with respect to any of its properties.

3.5Consents. No authorization or approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by Guarantor of this Guaranty.

3.6Articles of Organization and Operating Agreement. Guarantor has furnished to Lender a true and correct copy of the Articles of Organization and the Operating Agreement and all amendments thereto, and the Operating Agreement constitutes the valid, binding and enforceable obligation of all parties thereto, sets froth the entire agreement of the parties thereto with respect to the subject matter thereof, has not been further amended or modified, and remains in full force and effect.

3.7Address and Location of Records. The address of Guarantor’s principal place of business and chief executive office (or residence, if Guarantor is an individual) is accurately set forth on the signature page to this Guaranty.

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3.8Solvency. Guarantor is now, and will be upon the consummation of the transactions contemplated by this Guaranty and the other New Loan Documents, Solvent.

3.9No Setoff, Defense, or Counterclaim. As of the date of this Guaranty, the Guaranty Obligations are not subject to any setoff or defense of any kind against Lender or any Borrower, and Guarantor specifically waives its right to assert any such defense or right of setoff. The Guaranty Obligations shall not be subject to any counterclaims, setoffs, or defenses against Lender or any Borrower that may arise in the future, except for (a) any defense of prior performance or payment, or (b) any defense based on any applicable provision of the Uniform Commercial Code requiring that Collateral be disposed of in a commercially reasonable manner, which any Borrower, Guarantor, or other guarantor of the Obligations may have or assert.

4.Covenants. Guarantor covenants and agrees that until the Guaranty Termination Date, Guarantor shall give prompt written notice to Lender (in any event not later than 10 days prior to any change described below) of (a) any change in the location of Guarantor’s principal place of business, (b) any change in the location of books and records pertaining to its business, (c) any change in its jurisdiction of organization, (d) any change in its name, identity, or structure in any manner which might make any financing statement filed hereunder incorrect or misleading.

5.Further Assurances. Guarantor agrees that, at its expense, upon the written request of Lender, it will promptly execute and deliver to Lender any additional instruments or documents reasonably considered necessary by Lender to cause this Guaranty to be, become, or remain valid and effective in accordance with its terms. Guarantor will provide Lender in writing such financial and other information with respect to its assets and liabilities as Lender shall request, in form reasonably satisfactory to Lender.

6.Reinstatement. This Guaranty shall remain in full force and effect and continue to be effective, as the case may be, if at any time payment or performance of the New Loan or the Guaranty Obligations, or any part thereof, pursuant to applicable law, is avoided, rescinded, or reduced in amount, or must otherwise be restored or returned by Lender, or any other obligee of the New Loan or the Guaranty Obligations, whether as a “voidable preference,”“fraudulent conveyance” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is avoided, rescinded, reduced, restored or returned, the New Loan or the Guaranty Obligations, as the case may be, shall be reinstated and deemed reduced only by such amount paid and not so avoided, rescinded, reduced, restored or returned.

7.Defaults and Remedies. Upon the occurrence and during the continuance of an Event of Default under the Credit Agreement, Lender may declare any or all of the Guaranty Obligations, immediately and without demand, notice or legal process of any kind, to be, and such Guaranty Obligations shall immediately become, due and payable, and then, or at any subsequent time, Lender may exercise any or all of its rights and remedies under this Guaranty, the Credit Agreement, and any other New Loan Documents, including the exercise of any rights and remedies of Lender as a secured party against the Collateral, and under applicable law, and in addition may make demand upon Guarantor for the payment of the Guaranty Obligations; provided, that upon the occurrence of an Event of Default specified in Sections 10.1(a) and (b) of the Credit Agreement, the Guaranty Obligations shall become immediately due and payable without declaration, notice or demand by Lender. All Guaranty Obligations shall bear interest at the Default Rate from and after the date an Event of Default occurs under the Credit Agreement.

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8.Application of Payments. Any payment made by Guarantor under this Guaranty shall be applied by Lender first, to the satisfaction of the indemnification liabilities pursuant to Section 9 of this Guaranty and then, as set forth in the Credit Agreement.

9.Indemnification. Guarantor shall indemnify and hold Lender, and its respective officers, directors, employees, agents and representatives harmless from and against any liabilities, claims and damages, including, without limitation, reasonable costs, attorneys' fees, disbursements and other expenses incurred or arising by reason of the taking or the failure to take action by Lender, in good faith, in respect of any transaction effected under this Guaranty, including, without limitation, any action to enforce payment of the Guaranty Obligations. The liabilities of Guarantor under this Section 9 shall survive the termination of this Guaranty.

10.Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires to give or serve upon any other parties any communication with respect to this Guaranty, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be deemed to have been validly served, given or delivered (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the United States Mail registered or certified mail, return receipt requested, with proper postage prepaid, (b) upon confirmation of transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by delivery of a copy by personal delivery or United States Mail as otherwise provided in this Section 10), (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or facsimile number indicated below such party's signature to this Guaranty or to such other address (or facsimile number) as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice.

11.Entire Agreement. This Guaranty, together with the other New Loan Documents constitutes the entire agreement, and supersedes all prior and contemporaneous oral and written communications and agreements, between the parties with respect to the subject matter hereof.

12.Limitation of Liability. Neither Lender nor any of its officers, directors, employees, agents, or counsel, shall be liable for any action lawfully taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own respective gross negligence or willful misconduct.

13.Advice of Counsel. Guarantor represents and warrants that it has either obtained the advice of counsel or has had the opportunity to obtain such advice in connection with the terms and provisions of this Guaranty.

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14.Amendments. No amendment or waiver of any provisions of this Guaranty, or consent to any departure by Guarantor therefrom, shall be effective in any event unless the same shall be in writing and signed by Lender and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

15.Consent to New Loan Documents. Guarantor hereby acknowledges it has received copies of, and consents to, the Credit Agreement and all of the New Loan Documents.

16.No Waiver. No failure on the part of Lender or Lender to exercise, and no delay in exercising, any right under any New Loan Document shall operate as a waiver thereof; and no single or partial exercise of any right under any New Loan Document shall preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in the New Loan Documents are cumulative and not exclusive of any remedies provided by law.

17.Binding Effect. This Guaranty shall be binding upon and inure to respective benefits of Lender and Guarantor and their respective successors and assigns, except that Guarantor shall not have the right to assign its rights hereunder or any interest herein without Lender's prior written consent.

18.Severability. In the event that any one or more of the provisions contained in any of the New Loan Documents shall be determined to be invalid, illegal, or unenforceable in any respect for any reason, the validity, legality, and enforceability of any such provision or provisions in every other respect, and the remaining provisions of such New Loan Document, shall not be in any way impaired.

19.Governing Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE NEW LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. GUARANTOR AND LENDER HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF NEVADA, CLARK COUNTY, CITY OF LAS VEGAS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GUARANTOR AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER NEW LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER NEW LOAN DOCUMENTS; PROVIDED, THAT LENDER AND GUARANTOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CLARK COUNTY, NEVADA; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. GUARANTOR AND LENDER EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND GUARANTOR AND LENDER HEREBY WAIVE ANY OBJECTION THAT SUCH GUARANTOR OR LENDER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. GUARANTOR AND LENDER HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO GUARANTOR OR TO LENDER AT THE ADDRESS SET FORTH BELOW AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF GUARANTOR’S OR LENDER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

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20.Waiver of Trial By Jury. Guarantor and Lender each hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Guaranty, any other New Loan Document, or any of the transactions contemplated thereby.

21.Counterparts. This Guaranty may be executed in any number of identical counterparts, which shall constitute an original and collectively and separately constitute a single instrument or agreement.

22.Compliance With Original Loan Documents. Lender agrees that Guarantor shall not be deemed to be in breach of any provisions of this Guaranty based on Guarantor’s compliance with the terms of the Original Loan Documents or requests of the Original Lender pursuant thereto.

IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of the date first above written.

ORANGE COUNTY PHYSICIANS INVESTMENT NETWORK, LLC a Nevada limited liability company
By:	/s/ Anil V. Shah
	Anil V. Shah [Printed Name]
	Manager [Title]

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EX-99.8

EXHIBIT 99.8

PLEDGE AGREEMENT

[$10,700,000 LOAN]

(Integrated Healthcare Holdings, Inc.)

THIS PLEDGE AGREEMENT (the “Pledge Agreement”) is dated as of December 12, 2005 and is made by and among INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation, with its chief executive office located at 1301 North Tustin Avenue, Santa Ana, California 92705, as pledgor (“Pledgor””), and MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation, as lender (the “Lender”).

RECITALS:

A.This Pledge Agreement is made in connection with a certain Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Lender, Pledgor (as Borrower) and certain other Credit Parties defined in the Credit Agreement.

B.Pledgor owns one hundred percent (100%) of the authorized, issued and outstanding equity interests (the “Pledged Interests”) in WMC-SA, INC., a California corporation (“WMC-SA”), WMC-A, INC., a California corporation (“WMC-A”), CHAPMAN MEDICAL CENTER, INC., a California corporation (“Chapman”), and COASTAL COMMUNITIES HOSPITAL, INC., a California corporation (“Coastal”) (WMC-SA, WMC-A, Chapman and Coastal are hereinafter together referred to as “the Companies”).

C.Pledgor is in the business of delivering acute care services to the public through four (4) separate acute care hospital facilities located in Orange County, California (“Hospital Facilities”) identified in Annex D to the Credit Agreement; and, along with one or more of the Credit Parties, is also in the business of owning and operating certain medical office buildings and other healthcare businesses related thereto.

D.Pursuant to that certain Credit Agreement dated as of March 3, 2005, as amended (“Original Credit Agreement”) by and between Pledgor and the Companies (together as Borrowers), the Credit Parties named therein and Medical Provider Financial Corporation II, a Nevada corporation, an affiliate of Lender (“Original Lender”), Original Lender loaned $50,000,000 to IHHI, WMC-SA, WMC-A, Chapman and Coastal (the “Acquisition Loan”) for the purpose of acquiring the Hospital Facilities, and made available to IHHI, WMC-SA, WMC-A, Chapman and Coastal a $30,000,000 line of credit (the “Line of Credit Loan”) for the purpose of operating the Hospital Facilities (the Acquisition Loan and the Line of Credit Loan are hereinafter referred to as the “Original Loan”).

E.Pledgor (as Borrower under the Credit Agreement) has requested that Lender make a new loan in the amount of $10,700,000 (“New Loan”) for the purpose of operating the Hospital Facilities. Lender has agreed, on the terms and conditions set forth in this Agreement

and in the other documents and instruments evidencing the New Loan (the “New Loan Documents”).

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F.For the purposes set forth above, Lender is willing to make the New Loan and other extensions of credit to or for the benefit of Borrower of up to such amount upon the terms and conditions set forth in the Credit Agreement.

G.Among other conditions for making the New Loan, Lender has required that Pledgor pledge to Lender its ownership interest in the Companies as additional collateral for the payment and performance of the New Loan and the other Obligations as defined in the Credit Agreement.

H.Pledgor will derive substantial direct and indirect economic benefits from the Loan.

I.The parties intend that these Recitals are made a part of this Agreement.

NOW, THEREFORE, for and in consideration of the foregoing and of any financial accommodations or extensions of credit (including, without limitation, any loan or advance by renewal, refinancing or extension of the agreements described hereinabove or otherwise) heretofore, now or hereafter made to or for the benefit of any Borrower pursuant to the Credit Agreement or any other agreement, instrument or document executed pursuant to or in connection therewith, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor and Lender hereby agree as follows:

SECTION 1.Definitions.

(a) Except as otherwise defined herein, all initially capitalized terms shall have the respective meanings given to such terms in the Credit Agreement.

(b) As used herein, the term “Articles of Incorporation” collectively means the Articles of Incorporation of WMC-SA, WMC-A, Chapman and Coastal filed with the California Secretary of State (i) by WMC-SA on October 5, 2004, (ii) by WMC-A on October 5, 2004, (iii) by Chapman on October 23, 2004, and (iv) by Coastal on October 5, 2004.

(c)As used herein, the term “Bylaws” collectively means the Bylaws of each of the Companies duly adopted (i) by WMC-SA on October 13, 2004, (ii) by WMC-A on October 13, 2004, (iii) by Chapman on October 13, 2004, and (iv) by Coastal on October 13, 2004.

(d)As used herein, the term “Equity Interests” means all shares of capital stock, options and warrants to purchase equity securities or other forms of equity, membership interests, general or limited partnership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act).

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(e)As used herein, the term “Lien”means any mortgage, security deed or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, security title, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Uniform Commercial Code or comparable law of any jurisdiction).

SECTION 2.Security Interest. As security for the payment and performance of the Obligations, Pledgor hereby pledges, grants and assigns to the Lender, and creates in the Lender a security interest in and Lien on, all of its right, title and interest in, to and under the Pledged Interests, whether now existing or hereafter acquired or arising, including, without limitation, (i) all of Pledgor's interest in the capital of the Companies and Pledgor's interest in all undistributed profits and distributions to which Pledgor shall at any time be entitled in respect of such Pledged Interests; (ii) all other payments, if any, due or to become due to Pledgor in respect of the Pledged Interests pursuant to the Articles of Incorporation or Bylaws, as applicable, whether as contractual obligations, damages, insurance proceeds or otherwise; (iii) all of Pledgor's rights, powers and remedies under the Articles of Incorporation or Bylaws, as applicable, as a member thereunder or arising from its ownership of the Pledged Interests pursuant thereto, whether now existing or hereafter arising or acquired, in, to and under the Articles of Incorporation or Bylaws, as applicable, including, without limitation, Pledgor’s rights to receive from time to time its share of profits, income, surplus, compensation, return of capital, distributions and other reimbursements and payments from the Companies (including, without limitation, specific properties of the Companies upon dissolution and otherwise); (iv) all of Pledgor's rights under the Articles of Incorporation or Bylaws, as applicable, as a member thereunder to manage the affairs of the Companies (including, without limitation, the power to sell, mortgage or otherwise deal with the property of the Companies), to make determinations, to exercise any election or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, execute, endorse or cash any checks or other payments, or other instruments or orders, to file any claims and to take any action that (in the opinion of Lender) may be necessary or advisable in connection with any of the foregoing; (v) any certificates representing the Pledged Interests, and all undistributed dividends, distributions, cash, instruments and other property or proceeds from time to time receivable in respect of or in exchange for any or all of the Pledged Interests; (vi) any additional Equity Interests of or in the Companies from time to time acquired by Pledgor in any manner (which Equity Interests shall be deemed to be part of the Pledged Equity), and the certificates representing such additional Equity Interests, and all undistributed dividends, distributions, cash, instruments and other property or proceeds from time to time receivable in respect of or in exchange for any or all of such Equity Interests; and (vii) any and all rents, issues, profits, returns, income, allocations, distributions and proceeds of and from any and all of the foregoing (collectively, the “Collateral”).

(b) All certificates and all promissory notes and instruments evidencing the Collateral shall be delivered to and held by or on behalf of Lender or Original Lender pursuant hereto or that certain Membership Pledge Agreement (“Original Pledge Agreement”) by and between Pledgor and Medical Provider Financial Corporation II (“Original Lender”) dated as of March 3, 2005. All Collateral shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Lender.

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(c)Pledgor hereby irrevocably authorizes the Lender to file one or more financing or continuation statements and amendments thereto, disclosing and perfecting the Lien granted to the Lender under this Agreement without Pledgor’s signatures appearing thereon, and the Lender agrees to notify Pledgor when such a filing has been made. Pledgor agrees that a carbon, photographic, photostatic, or other reproduction of this Pledge Agreement or of a financing statement is sufficient as a financing statement. Pledgor agrees that such authorization includes a ratification and authorization with respect to any initial financing statements filed prior to the date hereof.

SECTION 3.Distributions. Prior to the full payment and performance of the Obligations, the Lender or the Original Lender shall receive, as Collateral, any and all additional membership interests, partnership interests, membership interests, capital stock, options, warrants, or other property of any kind received, receivable, distributed or distributable on or by reason of the Collateral pledged hereunder, whether in the form of cash, securities or property or by way of liquidation, conversion, merger, consolidation, redemption or otherwise. Subject to Pledgor’s right to receive and retain Distributions so long as an Event of Default under the Loan Documents has not occurred or is continuing, Pledgor shall deliver to the Lender or Original Lender, or cause the Companies to deliver directly to the Lender or Original Lender, all property, including any cash distributions representing or constituting any Collateral received or receivable by Pledgor after the date of this Pledge Agreement. Any such property received by Pledgor shall be held by Pledgor in trust for the Lender and shall forthwith be delivered by Pledgor to the Lender or Original Lender as aforesaid.

SECTION 4.Registration of Pledge. The Pledgor hereby represents and warrants that as of the date hereof the Pledged Interests are not represented by any instruments or certificates and hereby instructs the Companies to register on the books and records of the Companies the pledge of the Pledged Interests in the Companies by the Pledgor to the Lender. In the event that at any time after the date hereof any Collateral shall be evidenced by an instrument or a certificate, the Pledgor shall or shall cause the Companies to promptly deliver any such instruments or certificates representing one hundred percent (100%) of the Pledged Interests of the Companies, duly endorsed or subscribed by the Pledgor or accompanied by appropriate instruments of transfer or assignment duly executed in blank by the Pledgor, to the Lender or Original Lender as additional Collateral. Any additional instruments or certificates received by the Pledgor shall be held by the Pledgor in trust, as agent for the Lender, and Pledgor shall immediately advise Lender in writing that Pledgor is holding the same..

SECTION 5.Power of Attorney. The Pledgor hereby constitutes and irrevocably appoints the Lender, with full power of substitution and revocation by the Lender, as each Pledgor's true and lawful attorney-in-fact, for the purpose from time to time upon the occurrence and during the continuance of an Event of Default of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Lender deems necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to affix to certificates and documents representing any Collateral the endorsements or other instruments of transfer or assignment delivered with respect thereto and to transfer or cause the transfer of the Collateral, or any part thereof, on the books of the Companies. The power of attorney granted pursuant to this Pledge Agreement and all authority hereby conferred are granted and conferred solely to protect the Lender's interest in the Collateral and shall not impose any duty upon the Lender to exercise any power. This power of attorney shall be irrevocable as one coupled with an interest until the Obligations have been paid in full and the commitments of Lender under the Credit Agreement have been terminated.

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SECTION 6.Representations of Pledgor. Pledgor represents and warrants to the Lender that:

(a)Pledgor has the power and authority and the legal right to execute, deliver and perform this Pledge Agreement and to grant the Lien on the Collateral contemplated hereby in favor of the Lender;

(b)The execution, delivery and performance of this Pledge Agreement by Pledgor and the granting of the Lien on the Collateral contemplated hereby has been duly authorized by all necessary action and does not and will not (i) violate any applicable law, rule or regulation or any provision of the organizational documents of the Companies, (ii) conflict with, result in a breach of, or constitute a default under any provision of the Articles of Incorporation, Bylaws, or any partnership agreement, indenture, mortgage or other agreement or instrument to which Pledgor or any of its Affiliates is a party or by which any of them or their respective properties or assets is bound or subject or any license, judgment order or decree of any Governmental Authority having jurisdiction over Pledgor or any of its Affiliates or their respective activities, properties or assets or (iii) result in or require the creation or imposition of any Lien upon or with respect to any properties or assets now or hereafter owned by Pledgor or any of its Affiliates (other than the Liens created hereunder).

(c)This Pledge Agreement has been duly executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor enforceable against Pledgor in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles.

(d)No consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority and no consent of any other Person is required (i) for the execution, delivery and performance of this Pledge Agreement by Pledgor, (ii) for the pledge by Pledgor of the Collateral to the Lender pursuant to this Pledge Agreement, or (iii) for the exercise by the Lender of the rights provided for in this Pledge Agreement or the remedies in respect of the Collateral pursuant to this Pledge Agreement, except such as (A) have been obtained, made or taken and are in full force and effect or (B) may be required under federal or state securities laws in connection with any sale of the Collateral, or (C) in connection with the ownership, as may be required by Governmental Authorities, relating to the operation of acute general care hospitals;

(e)Pledgor is the sole legal and beneficial owner of, and has valid and transferable title to, its Collateral, free and clear of all Liens, other than the Lien in favor of the Lender created by this Pledge Agreement and the Lien in favor of the Original Lender created by the Original Pledge Agreement;

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(f)There are no outstanding options, warrants or other agreements with respect to the Collateral;

(g)The Pledged Interests has been duly authorized and validly issued, and is fully paid and non-assessable, and is not subject to, nor will Pledgor at any time permit it to become subject to, any restrictions governing its issuance, transfer, ownership or control except those limitations described on Schedule I hereto, all of which have been waived;

(h)The information set forth in Schedule I is true, correct, complete and accurate;

(i)All actions (including, without limitation, registration of the Lien created hereby on the Pledged Interests on the books and records of the Companies and consent to the filing of UCC-1 financing statements by Lender in all appropriate jurisdictions) required to create and perfect the Lien of the Lender in the Collateral have been taken and the Lien on the Collateral in favor of the Lender is superior in right to any rights or claims of any other Person other than the rights of the Original Lender;

(j)The Bylaws and Articles of Incorporation delivered to Lender is a true, correct, complete and accurate copy of the complete and entire Bylaws and Articles of Incorporation in effect on the date hereof and the same has not, as of the date hereof, been further amended, modified, terminated, nor cancelled or superseded;

(k)There are no unpaid expenses, capital contributions, costs, fees, charges, interest payments or other payments of any kind required to be funded or contributed a Pledgor pursuant to the Articles of Incorporation or Bylaws that accrued prior to the date hereof;

(l)There are no actions, suits, proceedings or investigations pending or, to the best knowledge of Pledgor, threatened, against or affecting Pledgor that are likely to have a Material Adverse Effect on the validity or enforceability of this Pledge Agreement, or on the validity or priority of the Liens and security interests granted by Pledgor as provided for herein, before or by any court, arbitrator or Governmental Authority;

(m)Pledgor is not insolvent; and

(n)Pledgor has been given a true, correct, complete and accurate set of the Credit Agreement and the other New Loan Documents and the opportunity to review them with counsel.

SECTION 7.Obligations of Pledgor. Pledgor further represents, warrants, and covenants to the Lender that:

(a)Pledgor will not sell, transfer, convey or otherwise dispose of any interest in the Collateral.

(b)Pledgor will not suffer or permit any Lien to exist on or with respect to the Collateral except the Lien created under this Pledge Agreement and the Lien created by that certain Pledge Agreement by and between Pledgor and the Original Lender dated as of March 3, 2005.

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(c)Pledgor will, at its own expense, at any time and from time to time at the request of the Lender, do, make, procure, execute and deliver all acts, things, writings, assurances and other documents as may be reasonably requested by the Lender to further enhance, preserve, establish, demonstrate, perfect or enforce the Lender's rights, interests and remedies created by, provided in or emanating from this Pledge Agreement.

(d) Pledgor shall not permit the Companies to issue any additional Equity Interests.

(e)Pledgor will defend the Lender's right, title and interest in, to and under the Collateral against the claims and demands of all Persons whomsoever.

(f)Pledgor hereby authorizes the Lender to file one or more financing or continuation statements and amendments thereto relating to all or part of the Collateral without such Pledgor's signature. A photocopy or other reproduction of this Pledge Agreement shall be sufficient as a financing statement.

(g)Pledgor will cause the Companies to execute and deliver to the Lender on the date hereof a letter in substantially the form attached hereto as Exhibit A.

(h)Pledgor shall use all reasonable efforts to cause the Companies to perform and observe all of the terms, covenants, conditions and obligations required to be performed and observed by the Companies under (i) the New Loan Documents and (ii) any other contract or agreement with any Person, which, if not performed and observed, would materially and adversely affect the value of the Collateral or the security interest of Pledgee in the Collateral.

(i)Pledgor shall, at its sole cost and expense, perform and observe all of the terms, covenants, conditions and obligations required to be performed or observed by Pledgor under the Bylaws or Articles of Incorporation.

(j)Upon an Event of Default, Pledgor shall not waive any right or remedy under the Bylaws or Articles of Incorporation without the prior written consent of Lender; provided that no waiver occurring prior to an Event of Default shall have a Material Adverse Effect upon the Liens granted to Lender in the Loan Documents or upon any of Lender’s rights and remedies.

(k)Pledgor shall, at its sole cost and expense (i) use reasonable efforts to enforce the Bylaws and Articles of Incorporation in accordance with its terms in such a manner so as to preserve, and not to materially and adversely affect (A) the value of the Collateral or (B) the security interest of Lender in the Collateral, and (iii) appear in and defend any action or proceeding to which Pledgor is made a party arising under the Bylaws or Articles of Incorporation and take all additional action to these ends as from time to time may be reasonably requested in writing by Lender.

(l)Pledgor shall not amend or modify the Articles of Incorporation or Bylaws in any way that adversely affects the Liens granted to Lender in the New Loan Documents or upon any of Lender’s rights or remedies, without the prior written consent of Lender.

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(m)Pledgor shall not authorize or enter into any transaction for the termination, dissolution or winding up of, or the merger or consolidation with another entity or entities by, the admission of additional members to, or the elimination of members from, or otherwise effect or change the structure or organization of the Companies without the prior written consent of the Lender.

SECTION 8.Rights of Pledgor. (a) So long as no Event of Default has occurred and is continuing, Pledgor shall be entitled to vote or consent with respect to the Collateral in any manner not inconsistent with this Pledge Agreement, the Credit Agreement or any other New Loan Document. Upon the occurrence and during the continuance of an Event of Default, the Lender shall have the exclusive right to vote or give consents with respect to the Collateral. Pledgor hereby grants to the Lender an irrevocable proxy to vote the Collateral, which proxy shall be effective immediately upon the occurrence of and during the continuance of an Event of Default, and upon request of the Lender, Pledgor agrees to deliver to the Lender such further evidence of such irrevocable proxy or such further irrevocable proxy to vote the Collateral as the Lender may request.

(b) Subject to Pledgor’s right to receive and retain Distributions so long as an Event of Default under the New Loan Documents has not occurred or is continuing, any and all (i) distributions paid or payable in cash in respect of any Collateral whether in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital or otherwise, and (ii) cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for Collateral, shall be forthwith delivered to the Lender or Original Lender in accordance with Section 3 hereof, to be held as Collateral and shall, if received by the Pledgor, be received in trust for the benefit of the Lender, be segregated from the other property or funds of the Pledgor and be forthwith delivered to the Lender or Original Lender as Collateral in the same form as so received (with any necessary endorsement or assignment).

SECTION 9. --Rights of the Lender. (a) If Pledgor fails to perform any agreement contained herein, the Lender may (but shall not be obligated or required to) perform, or cause the performance, of such agreement.

(b)At any time upon and during the continuance of an Event of Default, the Lender may (but shall not be obligated or required to):

(i)Cause the Collateral to be transferred to its name or to the name of its nominee or nominees and thereafter exercise as to such Collateral all of the rights, powers and remedies of an owner;

(ii)Ask for, demand, collect, sue for, recover, compromise, receive and give acquittances and receipts for monies due or to-become due under or in respect of any of the Collateral and hold the same as part of the Collateral, or apply the same to any of the Obligations in such manner as the Lender may direct in its sole discretion;

(iii)Receive, endorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (ii) above (including, without limitation, all instruments representing dividends, interest payments or other distributions in respect of the Collateral or any part thereof and give full discharge for the same);

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(iv)File any claims or take any actions or institute any proceedings that the Lender may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce compliance with the rights of the Lender with respect to any of the Collateral;

(v)Enter into any extension, subordination, reorganization, deposit, merger, or consolidation agreement, or any other agreement relating to or affecting the Collateral, and in connection therewith deposit or surrender control of such Collateral thereunder, and accept other property in exchange therefor and hold and apply such property or money so received in accordance with the provisions hereof; and

(vi)Discharge any taxes or Liens levied on the Collateral or pay for the maintenance and preservation of the Collateral; the amount of such payments, plus any and all fees, costs and expenses of the Lender (including reasonable attorneys' fees and disbursements) in connection therewith, shall, at the Lender's option, be reimbursed by the Pledgor on demand.

SECTION 10.Event of Default; Remedies. Upon and during the continuance of an Event of Default under the Credit Agreement or under any of the other New Loan Documents:

(a)The Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code. In addition, the Lender shall have the right, without demand of performance or other demand, advertisement or notice of any kind, except as specified below, to or upon the Pledgor or any other Person (all and each of which demands, advertisements and/or notices are hereby expressly waived to the extent permitted by law), to proceed forthwith to collect, receive, appropriate and realize upon the Collateral, or any part thereof and to proceed forthwith to sell, assign, give an option or options to purchase, contract to sell, or otherwise dispose of and deliver the Collateral or any part thereof in one or more parcels at public or private sale or sales at any stock exchange, broker's board or at any of the Lender's offices or elsewhere at such prices and on such terms and restrictions (including, without limitation, a requirement that any purchaser of all or any part of the Collateral shall be required to purchase any securities constituting the Collateral solely for investment and without any intention to make a distribution thereof) as the Lender may deem appropriate without any liability for any loss due to decrease in the market value of the Collateral during the period held. If any notification to the Pledgor of the intended disposition of the Collateral is required by law, such notification shall be deemed reasonable and properly given if hand delivered or made by telecopy at least five Business Days' prior to such disposition to the address of the Pledgor indicated below. Any disposition of the Collateral or any part thereof may be for cash or on credit or for future delivery without assumption of any credit risk, with the right to the Lender to purchase all or any part of the Collateral so sold at any such sale or sales, free of any equity or right of redemption, which right or equity is, to the extent permitted by applicable law, hereby expressly waived and released by the Pledgor. At any such sale or other disposition, the Lender reserves the right to sell for cash, on credit (whether secured or unsecured), or a combination of both, and not to credit the Obligations unless and until any deferred portion of the purchase has actually been paid to Lender in good funds.

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(b)All of the Lender's rights and remedies under this Pledge Agreement and under applicable law, including but not limited to the foregoing, shall be cumulative and not exclusive and shall be enforceable alternatively, successively or concurrently as the Lender may deem expedient.

(c)The Lender may elect to obtain the advice of any independent nationally-known investment banking firm, including any such firm affiliated with Lender, with respect to the method and manner of sale or other disposition of any of the Collateral, the best price reasonably obtainable therefor, the consideration of cash and/or credit terms, or any other details concerning such sale or disposition.

(d)Pledgor recognizes that the Lender may be unable to effect a public sale of all or a part of the Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the “Securities Act”), or other relevant securities laws in any jurisdiction, but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be required to qualify as “Accredited Investors” (as such term is defined in Regulation D promulgated under the Securities Act) or under other exemption, and who will be obligated to agree, among other things, to acquire the Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor agrees that private sales so made may be at prices and on other terms less favorable to the seller than if the Collateral were sold at public sale, and that the Lender has no obligation to delay the sale of any Collateral for the period of time necessary to permit the registration of the Collateral for public sale under the Securities Act or other relevant securities laws in any jurisdictions. Pledgor agrees that a private sale or sales made under the foregoing circumstances shall not be deemed to be commercially unreasonable by virtue of such circumstances.

(e)If any consent, approval or authorization of, or filing with, any Governmental Authority or any other Person shall be necessary to effectuate any sale or other disposition of the Collateral, or any partial disposition of the Collateral, including, without limitation, under any federal or state securities laws, Pledgor agrees to execute all such applications, registrations and other documents and instruments as may be required in connection with securing any such consent, approval or authorization, and will otherwise use their best efforts to secure the same. Pledgor further agrees to use its best efforts to effectuate such sale or other disposition of the Collateral as the Lender may deem necessary pursuant to the terms of this Pledge Agreement.

(f)Upon any sale or other disposition; the Lender shall have the right to deliver, endorse, assign and transfer to the purchaser thereof the Collateral so sold or disposed of. Each purchaser at any such sale or other disposition, including the Lender, shall hold the Collateral free from any claim or right of whatever kind, including any equity or right of redemption. Pledgor specifically waives, to the extent permitted by applicable law, all rights of stay or appraisal which Pledgor has or may have under any rule of law or statute now existing or hereafter adopted.

(g)The Lender shall not be obligated to make any sale or other disposition unless the terms thereof shall be satisfactory to it. The Lender may, without notice or publication, adjourn any private or public sale, and, upon five Business Days' prior notice to Pledgor, hold such sale at any time or place to which the same may be so adjourned. In case of any sale of all or any part of the Collateral, on credit or future delivery, the Collateral so sold may be retained by the Lender until the selling price is paid by the purchaser thereof, but the Lender shall incur no liability in case of the failure of such purchaser to take up and pay for the property so sold and, in case of any such failure, such property may again be sold as herein provided.

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SECTION 11.Disposition of Proceeds. The proceeds of any sale or disposition of all or any part of the Collateral shall be applied (after payment of any amounts payable to the Lender pursuant to Section 13 hereof) by the Lender to the payment of the Obligations in such order as the Lender may elect in its sole discretion. Any surplus thereafter remaining shall be paid to the Pledgor, subject to the rights of any holder of a Lien on the Collateral of which the Lender has actual notice.

SECTION 12.Termination. This Agreement shall:

(a)Create a continuing security interest in the Collateral.

(b)Remain in full force and effect for so long as any of the Obligations are outstanding or the Lender has any obligation under the Credit Agreement or other New Loan Documents.

(c)Be binding upon Pledgor and its permitted successors and assigns.

(d)Inure to the benefit of the Lender and its successors, transferees and assigns.

Without limiting the foregoing, the Lender may assign or otherwise transfer the New Loan, or any portion thereof, held by it to any other Person in accordance with the terms of the New Loan Documents, and such other Person shall thereupon become vested with all the benefits in respect thereof granted herein or otherwise. Lender shall promptly give Pledgor notice of such assignment or transfer. Pledgor may not assign its rights or delegate its obligations under this Agreement without the prior written consent of the Lender.

SECTION 13.Expenses of the Lender. All expenses (including, without limitation, reasonable attorneys' fees and disbursements) actually incurred by the Lender in connection with the failure by Pledgor to perform or observe any provision of this Pledge Agreement, the exercise or enforcement of any rights of the Lender under this Pledge Agreement and the custody or preservation of any of the Collateral and any actual or attempted sale or exchange of, or any enforcement, collection, compromise or settlement respecting, the Collateral, or any other action taken by the Lender hereunder whether directly or as attorney-in-fact pursuant to a power of attorney or other authorization herein conferred, shall be deemed an obligation of Pledgor and shall be deemed an Obligation for all purposes of this Pledge Agreement and the Lender may apply the Collateral to payment of or reimbursement of itself for such liability.

SECTION 14.Lender's Duty. The Lender shall not be required to take any action hereunder in respect of an Event of Default. The Lender shall not be liable for any acts, omissions, errors of judgment or mistakes of fact or law including, without limitation, acts, omissions, errors or mistakes with respect to the Collateral, except for those arising out of or in connection with the Lender's gross negligence or willful misconduct. The Lender shall be under no obligation to take any steps necessary to preserve rights in the Collateral against any prior parties but may do so at its option, and all expenses incurred in connection therewith shall be for the account of Pledgor, and shall be added to the obligations secured hereby.

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SECTION 15.General Provisions. (a) No failure on the part of the Lender to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Lender of any right, power or remedy hereunder preclude any other or future exercise thereof, or the exercise of any other right, power or remedy. The representations, covenants and agreements of Pledgor herein contained shall survive the date hereof.

(b) No amendment or waiver of any provision of this Agreement nor consent to any departure by Pledgor herefrom nor release of all or any part of the Collateral shall in any event be effective unless the same shall be in writing, signed by the Lender and Pledgor. Any such waiver or consent or release shall be effective only in the specific instance and for the specific purpose for which it is given.

(c) The obligations of Pledgor under this Pledge Agreement shall remain in full force and effect without regard to, and shall not be impaired or affected by:

(i)any amendment or modification or addition or supplement to the Credit Agreement or any New Loan Document, any document or instrument delivered in connection therewith or any assignment or transfer thereof;

(ii)any exercise, non-exercise or waiver by the Lender of any right, remedy, power or privilege under or in respect of, or any release of any guaranty or collateral provided pursuant to, the Credit Agreement or any New Loan Document;

(iii)any waiver, consent, extension, indulgence or other action or inaction in respect of the Credit Agreement or any New Loan Document or any assignment or transfer of any thereof; or

(iv)any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like, of the Companies or any other Person;

in all cases, whether or not the Pledgor shall have notice or knowledge of any of the foregoing.

(d)Except as expressly otherwise provided herein, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy or telex), and shall be deemed to have been duly given or made when delivered by hand, or one Business Day after being sent by overnight mail, or five Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when acknowledged as received, addressed as follows, or to such other address as may be hereafter notified by the respective parties hereto:

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Lender:	Medical Provider Financial Corporation III 3770 Howard Hughes Parkway Suite 301 Las Vegas, Nevada 89109 Attn: Joseph J. Lampariello Tel: 800-818-1102 Fax: 702-735-3739 with a copy of each such notice to: Sedgwick, Detert, Moran & Arnold LLP One Market Plaza, Steuart Tower Suite 800 San Francisco, California 94105 Attn: Gary C. Sheppard, Esq. Tel.:(415) 781-7900 Fax:(415) 781-2635
Pledgor:	Integrated Healthcare Holdings, Inc. 1301 North Tustin Avenue Santa Ana, California 92705 Attn : Bruce Mogel, CEO Ph : (714) 953-3575 Fax: (714) 953-2595 with a copy of each such notice to: Morrison & Foerster, LLP 555 West Fifth Street, Suite 3500 Los Angeles, California 900113 Attn: Alan Sussman, Esq. Ph: (213) 892-5290 Fax: (213) 892-5454

provided that any notice, request or demand to or upon the Lender shall not be effective until actually received. Any notice, request or demand received on a day which is not a Business Day shall be deemed to have been received on the next following Business Day.

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(e)IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. PLEDGOR AND LENDER HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF NEVADA, CLARK COUNTY, CITY OF NEVADA, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN PLEDGOR AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDER AND PLEDGOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CLARK COUNTY, NEVADA; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. PLEDGOR AND LENDER EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND PLEDGOR AND LENDER HEREBY WAIVE ANY OBJECTION THAT SUCH PLEDGOR OR LENDER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. PLEDGOR AND LENDER HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO PLEDGOR OR TO LENDER AT THE ADDRESS SET FORTH ABOVE AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF PLEDGOR’S OR LENDER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

(f)Pledgor and Lender each hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Pledge Agreement, any other New Loan Document, or any of the transactions contemplated thereby.

(g)If any provision of this Pledge Agreement is determined by a court of competent jurisdiction to be unenforceable, such provision shall be automatically reformed and construed so as to be valid, operative and enforceable to the maximum extent permitted by the law while most nearly preserving its original intent. The invalidity of any part of this Pledge Agreement shall not render invalid the remainder of the Pledge Agreement.

(h)This Pledge Agreement may be executed in counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts taken together shall constitute but one and the same instrument.

(i)The section headings in this Pledge Agreement are for convenience of reference only and shall not affect the interpretation hereof.

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SECTION 16.Consents. (a) Pledgor consents to the transfer of management rights to Lender following the occurrence and continuance of an Event of Default under the Credit Agreement, if so declared by Lender in writing to Pledgor, and consents to the pledge of Collateral as defined herein and therein and, to the extent necessary to give effect thereto, the Articles of Incorporation and Bylaws are hereby deemed amended mutatis mutandis.

(b)Pledgor consents and agrees to the terms of the Credit Agreement and other New Loan Documents.

SECTION 17. Reinstatement. This Pledge Agreement shall remain in full force and effect and continue to be effective, as the case may be, if at any time payment or performance of the Obligations or any part thereof, pursuant to applicable law, is avoided, rescinded, or reduced in amount, or must otherwise be restored or returned by Lender, or any other obligee of the Obligations, whether as a "voidable preference," "fraudulent conveyance" or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is avoided, rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so avoided, rescinded, reduced, restored or returned.

SECTION 18. Rights of Lender. Nothing contained herein shall (i) release or impair the validity of the principal indebtedness secured hereby, (ii) in any way affect or impair any Lien granted pursuant hereto or pursuant to the other New Loan Documents, or (iii) in any way affect or impair the right of Lender to foreclose any Liens created under or to enforce any other New Loan Documents pursuant to the terms thereof.

SECTION 19. Compliance With Original Loan Documents. Lender agrees that Pledgor shall not be deemed to be in breach of any provisions of this Pledge Agreement based on Pledgor’s compliance with the terms of the Original Loan Documents or requests of the Original Lender pursuant thereto.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

“Pledgor”
INTEGRATED HEALTHCARE HOLDINGS, INC.
By:	/s/ Bruce Mogel
	Bruce Mogel
	[Printed Name]
	Chief Executive Officer
	[Title]

FEIN Number: _________________
“Lender”
MEDICAL PROVIDER FINANCIAL CORPORATION III,
By:	/s/ Joseph J. Lampariello
	Joseph J. Lampariello, President and COO

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SCHEDULE I

Pledged Interests

Name of Company	Percentage of Ownership Interests	Percentage of Economic Interests	Restrictions on Transfer
WMC-SA, Inc.	100%	100%	No transfers permitted
WMC-A, Inc.	100%	100%	No transfers permitted
Chapman Medical Center, Inc.	100%	100%	No transfers permitted
Coastal Communities Hospital, Inc.	100%	100%	No transfers permitted

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Exhibit A-1

WMC-SA, INC.

December 12, 2005

Medical Financial Provider Corporation III

c/o Medical Capital Corporation

2100 South State College Boulevard

Anaheim, California 92806

Gentlemen:

Reference is made to the Pledge Agreement dated as of the date hereof (the “Pledge Agreement”) between Integrated Healthcare Holdings, Inc., as pledgor (the “Pledgor”), and you, as lender. Initially capitalized terms used but not defined herein have the meanings provided in the Pledge Agreement.

In connection with the pledge of the Collateral to you by Pledgor, the undersigned hereby represents, warrants and agrees with you as follows:

(i)In accordance with Pledgor's instructions; the undersigned has registered on its books and records your security interest in the Pledged Interests; no other Lien on such Pledged Interests is registered on the books and records of the undersigned except for the Lien of that certain Pledge Agreement (“Original Pledge Agreement”) by and between Pledgor and Medical Capital Provider Corporation II (“Original Lender”) dated as of March 3, 2005;

(ii)The undersigned shall deliver directly to you at your or Original Lender address set forth in the Pledge Agreement, any and all instruments and/or certificates evidencing any right, option or warrant, and all new, additional or substituted securities issued to, or to be received by, Pledgor by virtue of its ownership of the Pledged Interests issued by the undersigned or upon exercise by Pledgor of any option, warrant or right attached to such Pledged Interests;

(iii)Subject to the Credit Agreement, the undersigned shall pay directly to you or Original Lender any and all cash distributions which might be declared and payable (including any unpaid distributions accrued prior to the date hereof) on any of the Pledged Interests or any of the other Collateral issued by the undersigned;

(iv)At any time upon and during the continuance of an Event of Default, upon your written instructions, the undersigned shall register the transfer of such Pledged Interests to you or your nominee, as applicable; and

(v)If the location where the undersigned keeps its business and organizational records changes from 1301 North Tustin Avenue, Santa Ana, California 92705, without giving you not less than thirty (30) days prior written notice thereof, it shall constitute an Event of Default under the Credit Agreement and the other New Loan Documents, including the Pledge Agreement.

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In addition, the undersigned agrees that, if at any time you shall determine to exercise your right to sell all or any of the Collateral issued by the undersigned, the undersigned will, upon your request and at Pledgor's expense:

(a) provide you with such other information and projections as may be necessary or, in your opinion, advisable to enable you to effect the sale of such Collateral;

(b) do or cause to be done all such other acts and things as may be necessary to make the sale of such Collateral or any part thereof valid and binding and in compliance with applicable law;

(c) do or cause to be done all such other acts and things as may be necessary to constitute you or your designees or transferees a shareholder of the undersigned; and

(d) recognize the validity and enforceability of any action taken by you under the power of attorney granted by Pledgor in the Pledge Agreement, and promptly follow the instructions given by you pursuant to such authority.

You are hereby authorized, in connection with any sale of the Collateral issued by the undersigned, to deliver or otherwise disclose to any prospective purchaser of such Collateral (i) any information and projections provided to you pursuant to subsection (a) above and (ii) any other information in your possession relating to the undersigned or such Collateral, so long as such prospective purchaser agrees to the provisions of the Credit Agreement.

Very truly yours,

WMC-SA, INC.

By: _________________________

_________________________

[Printed Name]

_________________________

[Title]

ACKNOWLEDGED, CONSENTED AND AGREED TO:

INTEGRATED HEALTHCARE HOLDINGS, INC.

By: _________________________

_________________________

[Printed Name]

_________________________

[Title]

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Exhibit A-2

WMC-A, INC.

December 12, 2005

Medical Financial Provider Corporation III

c/o Medical Capital Corporation

2100 South State College Boulevard

Anaheim, California 92806

Gentlemen:

Reference is made to the Pledge Agreement dated as of the date hereof (the “Pledge Agreement”) between Integrated Healthcare Holdings, Inc., as pledgor (the “Pledgor”), and you, as lender. Initially capitalized terms used but not defined herein have the meanings provided in the Pledge Agreement.

In connection with the pledge of the Collateral to you by Pledgor, the undersigned hereby represents, warrants and agrees with you as follows:

(i)In accordance with Pledgor's instructions; the undersigned has registered on its books and records your security interest in the Pledged Interests; no other Lien on such Pledged Interests is registered on the books and records of the undersigned except for the Lien of that certain Pledge Agreement (“Original Pledge Agreement”) by and between Pledgor and Medical Capital Provider Corporation II (“Original Lender”) dated as of March 3, 2005;

(ii)The undersigned shall deliver directly to you or Original Lender at your address set forth in the Pledge Agreement, any and all instruments and/or certificates evidencing any right, option or warrant, and all new, additional or substituted securities issued to, or to be received by, Pledgor by virtue of its ownership of the Pledged Interests issued by the undersigned or upon exercise by Pledgor of any option, warrant or right attached to such Pledged Interests;

(iii)Subject to the Credit Agreement, the undersigned shall pay directly to you or Original Lender any and all cash distributions which might be declared and payable (including any unpaid distributions accrued prior to the date hereof) on any of the Pledged Interests or any of the other Collateral issued by the undersigned;

(iv)At any time upon and during the continuance of an Event of Default, upon your written instructions, the undersigned shall register the transfer of such Pledged Interests to you or your nominee, as applicable; and

(v)If the location where the undersigned keeps its business and organizational records changes from 1301 North Tustin Avenue, Santa Ana, California 92705, without giving you not less than thirty (30) days prior written notice thereof, it shall constitute an Event of Default under the Credit Agreement and the other New Loan Documents, including the Pledge Agreement.

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In addition, the undersigned agrees that, if at any time you shall determine to exercise your right to sell all or any of the Collateral issued by the undersigned, the undersigned will, upon your request and at Pledgor's expense:

(a) provide you with such other information and projections as may be necessary or, in your opinion, advisable to enable you to effect the sale of such Collateral;

(b) do or cause to be done all such other acts and things as may be necessary to make the sale of such Collateral or any part thereof valid and binding and in compliance with applicable law;

(c) do or cause to be done all such other acts and things as may be necessary to constitute you or your designees or transferees a shareholder of the undersigned; and

(d) recognize the validity and enforceability of any action taken by you under the power of attorney granted by Pledgor in the Pledge Agreement, and promptly follow the instructions given by you pursuant to such authority.

You are hereby authorized, in connection with any sale of the Collateral issued by the undersigned, to deliver or otherwise disclose to any prospective purchaser of such Collateral (i) any information and projections provided to you pursuant to subsection (a) above and (ii) any other information in your possession relating to the undersigned or such Collateral, so long as such prospective purchaser agrees to the provisions of the Credit Agreement.

Very truly yours,

WMC-A, INC.

By: _________________________

_________________________

[Printed Name]

_________________________

[Title]

ACKNOWLEDGED, CONSENTED AND AGREED TO:

INTEGRATED HEALTHCARE HOLDINGS, INC.

By: _________________________

_________________________

[Printed Name]

_________________________

[Title]

5

Exhibit A-3

CHAPMAN MEDICAL CENTER, LLC

December 12, 2005

Medical Financial Provider Corporation III

c/o Medical Capital Corporation

2100 South State College Boulevard

Anaheim, California 92806

Gentlemen:

Reference is made to the Pledge Agreement dated as of the date hereof (the “Pledge Agreement”) between Integrated Healthcare Holdings, Inc., as pledgor (the “Pledgor”), and you, as lender. Initially capitalized terms used but not defined herein have the meanings provided in the Pledge Agreement.

In connection with the pledge of the Collateral to you by Pledgor, the undersigned hereby represents, warrants and agrees with you as follows:

(i)In accordance with Pledgor's instructions; the undersigned has registered on its books and records your security interest in the Pledged Interests; no other Lien on such Pledged Interests is registered on the books and records of the undersigned except for the Lien of that certain Pledge Agreement (“Original Pledge Agreement”) by and between Pledgor and Medical Capital Provider Corporation II (“Original Lender”) dated as of March 3, 2005;

(ii)The undersigned shall deliver directly to you or Original Lender at your address set forth in the Pledge Agreement, any and all instruments and/or certificates evidencing any right, option or warrant, and all new, additional or substituted securities issued to, or to be received by, Pledgor by virtue of its ownership of the Pledged Interests issued by the undersigned or upon exercise by Pledgor of any option, warrant or right attached to such Pledged Interests;

(iii)Subject to the Credit Agreement, the undersigned shall pay directly to you or Original Lender any and all cash distributions which might be declared and payable (including any unpaid distributions accrued prior to the date hereof) on any of the Pledged Interests or any of the other Collateral issued by the undersigned;

(iv)At any time upon and during the continuance of an Event of Default, upon your written instructions, the undersigned shall register the transfer of such Pledged Interests to you or your nominee, as applicable; and

(v)If the location where the undersigned keeps its business and organizational records changes from 1301 North Tustin Avenue, Santa Ana, California 92705, without giving you not less than thirty (30) days prior written notice thereof, it shall constitute an Event of Default under the Credit Agreement and the other New Loan Documents, including the Pledge Agreement.

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In addition, the undersigned agrees that, if at any time you shall determine to exercise your right to sell all or any of the Collateral issued by the undersigned, the undersigned will, upon your request and at Pledgor's expense:

(a) provide you with such other information and projections as may be necessary or, in your opinion, advisable to enable you to effect the sale of such Collateral;

(b) do or cause to be done all such other acts and things as may be necessary to make the sale of such Collateral or any part thereof valid and binding and in compliance with applicable law;

(c) do or cause to be done all such other acts and things as may be necessary to constitute you or your designees or transferees a shareholder of the undersigned; and

(d) recognize the validity and enforceability of any action taken by you under the power of attorney granted by Pledgor in the Pledge Agreement, and promptly follow the instructions given by you pursuant to such authority.

You are hereby authorized, in connection with any sale of the Collateral issued by the undersigned, to deliver or otherwise disclose to any prospective purchaser of such Collateral (i) any information and projections provided to you pursuant to subsection (a) above and (ii) any other information in your possession relating to the undersigned or such Collateral, so long as such prospective purchaser agrees to the provisions of the Credit Agreement.

Very truly yours,

CHAPMAN MEDICAL CENTER, INC.

By: _________________________

_________________________

[Printed Name]

_________________________

[Title]

ACKNOWLEDGED, CONSENTED AND AGREED TO:

INTEGRATED HEALTHCARE HOLDINGS, INC.

By: _________________________

_________________________

[Printed Name]

_________________________

[Title]

7

Exhibit A-4

COASTAL COMMUNITIES HOSPITAL, INC.

December 12, 2005

Medical Financial Provider Corporation III

c/o Medical Capital Corporation

2100 South State College Boulevard

Anaheim, California 92806

Gentlemen:

Reference is made to the Pledge Agreement dated as of the date hereof (the “Pledge Agreement”) between Integrated Healthcare Holdings, Inc., as pledgor (the “Pledgor”), and you, as lender. Initially capitalized terms used but not defined herein have the meanings provided in the Pledge Agreement.

In connection with the pledge of the Collateral to you by Pledgor, the undersigned hereby represents, warrants and agrees with you as follows:

(i)In accordance with Pledgor's instructions; the undersigned has registered on its books and records your security interest in the Pledged Interests; no other Lien on such Pledged Interests is registered on the books and records of the undersigned except for the Lien of that certain Pledge Agreement (“Original Pledge Agreement”) by and between Pledgor and Medical Capital Provider Corporation II (“Original Lender”) dated as of March 3, 2005;

(ii)The undersigned shall deliver directly to you or Original Lender at your address set forth in the Pledge Agreement, any and all instruments and/or certificates evidencing any right, option or warrant, and all new, additional or substituted securities issued to, or to be received by, Pledgor by virtue of its ownership of the Pledged Interests issued by the undersigned or upon exercise by Pledgor of any option, warrant or right attached to such Pledged Interests;

(iii)Subject to the Credit Agreement,, the undersigned shall pay directly to you or Original Lender any and all cash distributions which might be declared and payable (including any unpaid distributions accrued prior to the date hereof) on any of the Pledged Interests or any of the other Collateral issued by the undersigned;

(iv)At any time upon and during the continuance of an Event of Default, upon your written instructions, the undersigned shall register the transfer of such Pledged Interests to you or your nominee, as applicable; and

(v)If the location where the undersigned keeps its business and organizational records changes from 1301 North Tustin Avenue, Santa Ana, California 92705, without giving you not less than thirty (30) days prior written notice thereof, it shall constitute an Event of Default under the Credit Agreement and the other New Loan Documents, including the Pledge Agreement.

8

In addition, the undersigned agrees that, if at any time you shall determine to exercise your right to sell all or any of the Collateral issued by the undersigned, the undersigned will, upon your request and at Pledgor's expense:

(a) provide you with such other information and projections as may be necessary or, in your opinion, advisable to enable you to effect the sale of such Collateral;

(b) do or cause to be done all such other acts and things as may be necessary to make the sale of such Collateral or any part thereof valid and binding and in compliance with applicable law;

(c) do or cause to be done all such other acts and things as may be necessary to constitute you or your designees or transferees a shareholder of the undersigned; and

(d) recognize the validity and enforceability of any action taken by you under the power of attorney granted by Pledgor in the Pledge Agreement, and promptly follow the instructions given by you pursuant to such authority.

You are hereby authorized, in connection with any sale of the Collateral issued by the undersigned, to deliver or otherwise disclose to any prospective purchaser of such Collateral (i) any information and projections provided to you pursuant to subsection (a) above and (ii) any other information in your possession relating to the undersigned or such Collateral, so long as such prospective purchaser agrees to the provisions of the Credit Agreement.

Very truly yours,

COASTAL COMMUNITIES, INC.

By: _________________________

_________________________

[Printed Name]

_________________________

[Title]

ACKNOWLEDGED, CONSENTED AND AGREED TO:

INTEGRATED HEALTHCARE HOLDINGS, INC.

By: _________________________

_________________________

[Printed Name]

_________________________

[Title]

9