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EXHIBIT 99.11
SETTLEMENT AGREEMENT
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AND MUTUAL RELEASE
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This
Settlement Agreement and Mutual Release (the "Agreement"),
effective
as of October 1, 2007, by and between Pacific Coast Holdings
Investment, LLC, a
California limited liability company ("PCHI"), Integrated
Healthcare Holdings,
Inc., a Nevada corporation ("IHHI"), Ganesha Realty, LLC, a
California limited
liability company ("Ganesha"), and West Coast Holdings, LLC, a
California
limited liability company ("West Coast") is based upon the
following recitals of
facts:
A.
PCHI and IHHI are parties to a Triple Net Hospital and Medical
Office
Building Lease dated March 3, 2005, as amended by Amendment No. 1
of the same
date (together "Lease"). The parties agree PCHI purchased the
property
encumbered by the Lease ("Property") from IHHI for a payment to
IHHI of $5
million cash plus PCHI's assumption of $50 million of IHHI's debt
(now reduced
to $45 million) associated with the Property.
B.
PCHI and IHHI have engaged in discussions concerning the
respective
rights and duties under the Lease, which included the execution of
an Interim
Agreement Regarding Lease Performance dated August 30, 2006 (the
"Interim
Agreement"). The Interim Agreement was terminated by its terms on
December 31,
2006.
C.
PCHI and IHHI have discussed the amount and payment of rent due
under
the Lease from February 1, 2006 through September 1, 2007,
including rent paid
by the tenants of a medical office building located at 1901/1905 N.
College
Ave., Santa Ana, California, and commonly referred to as the
"Kindred Property."
Solely for the purposes of this Agreement, all unpaid rent due
under the Lease
through September 30, 2007 shall be referred to as "Unpaid
Rent."
D.
Pursuant to the Interim Agreement, the parties retained legal
counsel
who engaged a valuation consultant to evaluate the Lease. The
parties met and
conferred concerning the findings and reports resulting from the
engagement,
including recommendations to address any potential compliance
issues.
E.
PCHI, IHHI, Ganesha and West Coast entered into an Agreement
For
Compensation Related to the Medical Office Building related to a
building
located at 999 N. Tustin Ave., Santa Ana, California (the "999
Agreement").
Pursuant to the 999 Agreement, compensation was payable to West
Coast and
Ganesha in the event certain conditions occurred ("999 Agreement
Compensation").
F.
West Coast and Ganesha assert that conditions have occurred that
require
the payment of the 999 Agreement Compensation by IHHI to Ganesha
and West Coast.
G.
It is the mutual wish and desire of all of the parties hereto that
a
lull and final settlement of all their rights, duties. interests
and claims, if
any, regarding acquisition of the Property, formation of the Lease,
the Unpaid
Rent and the 999 Agreement Compensation, which may exist now or in
the future,
he had on the terms and conditions set forth herein.
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NOW,
THEREFORE, IN CONSIDERATION OF THE PROMISES AND COVENANTS SET
FORTH
HEREIN BELOW, THE PARTIES HERETO MUTUALLY AGREE AS FOLLOWS:
1. Incorporation of Recitals: The foregoing recitals are
incorporated by
reference herein, and by this reference expressly made a part of
this Agreement.
2. Amended and Restated Lease. Concurrently herewith, the parties
agree to
execute and deliver the Amended and Restated Triple Net Hospital
Lease ("Amended
Lease") attached hereto as Exhibit "A." Among other things, the
parties have
agreed that the Kindred Property shall not be included in the
Amended Lease but
rather shall be the sole property of PCHI uencumbered by any claims
by or
tenancy of IHHI. IHHI agrees to cooperate in all respects in
providing proper
notice to the tenants of Kindred Property. All rental receipts
derived from the
Kindred Property commencing October 1, 2007, shall be directed to
and be the
sole property of PCHI. IHHI further assigns and quitclaims to PCHI
any and all
rights it may have, if any, to claims against any and all
subtenants of the
Kindred Property. The Amended Lease further provides for an
adjustment of rental
rates and periodic review of the base rental rate to insure
conformance with
fair market value. The parties acknowledge that they have reviewed
the Amended
Lease and this Settlement Agreement with regulatory counsel and
acknowledge that
to the best of their knowledge, these arrangements are in
compliance with law.
All parties stipulate that the Amended Lease is fully enforceble in
accordance
with its terms.
3. Unpaid Rent: In full and final settlement of the Unpaid Rent and
the 999
Agreement Compensation, IHHI will pay PCHI the sum of Two Million
Five Hundred
Thousand Dollars ($2,500,000.00) (the "Settlement Payment"). The
Settlement
Payment shall be made in two installments: (a) One Million Five
Hundred Thousand
Dollars ($1,500,000.00) ("First Installment") upon the execution of
the Amended
Restated Lease by all parties ("Lease Closing") and (b) On
