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EXHIBIT 99.1
FULL AND FINAL SETTLEMENT AND MUTUAL RELEASE AGREEMENT
This Full and Final Settlement and Mutual Release Agreement ("AGREEMENT") is
made and entered into by and between Integrated Healthcare Holdings, Inc., a
Nevada Corporation ("IHHI"), on the one hand, and Ajay Meka, M.D. ("MEKA") and
Salman Naqvi, M.D. aka Syed Naqvi M.D. ("NAQVI") on the other. IHHI, MEKA and
NAQVI are collectively referred to herein as the "PARTIES".
The PARTIES are currently engaged in litigation against one another in Orange
County Superior Court Case No. 070005895 and related cross-actions
("LITIGATION"). Without admitting wrongdoing or liability, the PARTIES desire to
forever settle, discharge and release their claims in the LITIGATION against one
another. Specifically, IHHI wishes to settle, discharge and release its claims
against MEKA and NAQVI as currently pled in IHHI's first amended complaint
("FAC") filed by stipulation on April 16, 2008 (a true and correct copy of which
first amended complaint is attached hereto as Exhibit "A"); MEKA and NAQVI wish
to concurrently settle, discharge and release their claims against IHHI as pled
in their cross-complaint filed by stipulation on April 16, 2008 (a true and
correct copy of which cross-complaint is attached hereto as Exhibit "B"). The
PARTIES mutually acknowledge nothing in this AGREEMENT constitutes a waiver,
release, compromise, discharge, settlement or other resolution of their
respective pled or unpled claims, causes of action or other theories of recovery
against anyone else including, but not limited to, Dr. Anil V. Shah, Hari Lal,
William Mitchell, Berger Kahn, Dr. John L. Glavinovich or any other past or
present promoter, organizer, manager or retained professional of Orange County
Physicians Investment Network, LLC ("OC-PIN").
NOW, THEREFORE, the PARTIES agree and warrant to one another:
I. CONSIDERATION FOR SETTLEMENT
A. Upon the Court's approval of this AGREEMENT as having been made in
"good faith" under the auspices of Code of Civil Procedure section
877.6, MEKA and NAQVI shall:
1. Irrevocably assign, transfer and convey to IHHI (or to an
assignee of IHHI as hereinafter designated in accordance with
the provisions or para. H infra) all of MEKA and NAQVI's
right, title and interest in
FULL AND FINAL SETTLEMENT AND MUTUAL RELEASE AGREEMENT
IHHI, Meka and Naqvi
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and to any claim, cause of action or other theory of recovery
that they, either as individuals, OC-PIN investors, members or
managers may now have, or may hereinafter acquire, against any
of OC-PIN's other past or present promoters, organizers,
managers or retained professionals including, but not
litigated to, Dr. Anil V. Shah, Hari Lal, William Mitchell,
Berger Kahn and/or Dr. John L. Glavinovich ("ASSIGNED
CLAIMS").
a. For purposes of this AGREEMENT, it is expressly
understood such ASSIGNED CLAIMS broadly include, but
are not limited to:
i. MEKA and/or NAQVI's right to recover damages
or any other form of monetary recovery
(including sanctions, fee award(s) or
pre-judgment interest) for any loss or
diminution in the value of MEKA and/or
NAQVI's equity investments or membership
interests in OC-PIN;
ii. MEKA and/or NAQVI's right to seek any form
of interim equitable or injunctive relief
reasonably necessary or advisable to
preserve, protect or enhance the foregoing
assigned right to collect such damages or
monetary recovery;
iii. MEKA and/or NAQVI's right to bring a
derivative action against OC-PIN's other
past or present promoters, organizers,
managers or retained professionals
including, but not limited to, Dr. Anil V.
Shah, Hari Lal, William Mitchell, Berger
Kahn and/or Dr. John L. Glavinovich for
fraud, fraud in the inducement, violation of
state and federal securities laws, negligent
misrepresentation, breach of fiduciary
duties, malpractice, violation of rules of
professional ethics, misappropriation of
OC-PIN funds or assets, embezzlement or
other wrongful conduct that has caused,
threatens to cause or in the future may
cause a material adverse impact on the value
of MEKA or NAQVI's equity investments or
membership interests in OC-PIN;
iv. MEKA and/or NAQVI's right to recover damages
or any other form of monetary recovery
(including sanctions, fee award(s) or
pre-judgment interest) as a result of the
prosecution of such derivative action;
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IHHI, Meka and Naqvi
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v. MEKA and/or NAQVI's right to seek any form
of interim equitable or injunctive relief
reasonably necessary or advisable to
preserve, protect or enhance the foregoing
assigned right to collect damages or any
other form of monetary recovery as a result
of the prosecution of such derivative
action;
vi. MEKA and/or NAQVI's right to bring a direct
action against OC-PIN's other past or
present promoters, organizers, managers or
retained professionals including, but not
limited to, Dr. Anil V. Shah, Hari Lal,
William Mitchell, Berger Kahn and/or Dr.
John L. Glavinovich for defamation,
interference with contractual relations,
interference with prospective economic
advantage, intentional infliction of
emotional distress and/or any other form of
tortuous misconduct; and
vii. MEKA and/or NAQVI's right to recover damages
or any other form of monetary recovery
(including sanctions, fee award(s) or
pre-judgment interest) as a result of the
prosecution of such direct action.
b. Nothing in this AGREEMENT shall operate to transfer, sell,
hypothecate or assign to IHHI, MEKA and/or NAQVI's actual
membership interests in OC-PIN. Rather, it is the intent of
this AGREEMENT that IHHI shall receive only the ASSIGNED
CLAIMS described above, including the right to recover damages
or any other form of monetary recovery as a result of IHHI's
prosecution of such ASSIGNED CLAIMS.
2. Fully cooperate with IHHI's investigation, filing, prosecution
and ultimate enforcement of the ASSIGNED CLAIMS in whatever
manner deemed necessary or desirable by IHHI's management
and/or retained counsel including, but not limited to, signing
additional, future written consents or truthful declarations
as may from time to time be requested by IHHI.
3. In the event IHHI is for any reason contractually or legally
barred from, or materially delayed in, filing, prosecuting or
enforcing such ASSIGNED CLAIMS in its own name (or in the name
of any assignee of IHHI's choosing pursuant to the provisions
of para. H infra), MEKA and NAQVI alternatively agree to
investigate, file, prosecute and/or enforce such ASSIGNED
CLAIMS in their own names and right ("SURROGATE LITIGATION")
subject to the following terms and conditions:
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IHHI, Meka and Naqvi
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a. IHHI shall directly pay all expenses associated with
MEKA and NAQVI's investigation, filing, prosecution
and ultimate enforcement of the SURROGATE LITIGATION
including, but not limited to, all attorneys' fees,
direct and indirect litigation-related expense,
damages or other forms of monetary recovery
(including sanctions, any fee award(s) or
pre-judgment interest) incurred by MEKA and/or NAQVI
for that purpose;
b. IHHI shall defend, indemnify and hold MEKA and NAQVI
harmless from any and all complaint(s) and
cross-complaint(s) as may be filed against MEKA
and/or NAQVI by any of OC-PIN's other past or present
promoters, organizers, managers or retained
professionals including, but not limited to, Dr. Anil
V. Shah, Hari Lal, William Mitchell, Berger Kahn
and/or Dr. John L. Glavinovich relating to or arising
out of the same transaction(s) and occurrence(s)
encompassed by the ASSIGNED CLAIMS without regard to
whether such complaint(s) and cross-complaint(s) may
be filed to commence litigation or in response to an
action initiated by IHHI or in SURROGATE LITIGATION.
c. IHHI shall have the right to retain, directly oversee
and instruct counsel representing MEKA and NAQVI's
interests in the SURROGATE LITIGATION;
d. MEKA and NAQVI shall fully cooperate with such
retained counsel in the investigation, filing,
prosecution and ultimate enforcement of the SURROGATE
LITIGATION;
e. IHHI shall have the right to decide when MEKA and
NAQVI should, or should not, settle, compromise,
dismiss or otherwise continue to prosecute the
SURROGATE LITIGATION;
f. MEKA and NAQVI shall follow IHHI's instructions
regarding the filing, prosecution, settlement and/or
other disposition of the SURROGATE LITIGATION;
g. At the conclusion of the SURROGATE LITIGATION, MEKA
and NAQVI shall promptly remit, transfer or assign to
IHHI all damages or other forms of monetary recovery
(including sanctions, any fee award(s) or
pre-judgment interest) received as a result of the
SURROGATE LITIGATION;
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IHHI, Meka and Naqvi
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h. IHHI shall be deemed to have a perfected lien on any
such damages or other monetary recovery prior to the
conclusion of the SURROGATE LITIGATION; and
i. MEKA and NAQVI shall sign any necessary conflict
waivers or other consents necessary to accomplish the
foregoing.
4. Nothing in paragraph 3 shall operate to transfer, sell,
hypothecate or assign to IHHI MEKA and/or NAQVI's actual
membership interests in OCPIN. Rather, it is the intent of
this AGREEMENT that IHHI shall receive only the monetary
benefit of MEKA and NAQVI's effective prosecution of the
ASSIGNED CLAIMS via the SURROGATE LITIGATION in the event IHHI
is for any reason contractually or legally barred from, or
materially delayed in, filing, prosecuting or enforcing such
ASSIGNED CLAIMS in its own name (or in the name of any
assignee of IHHI's choosing pursuant to the provisions of
para. H infra).
5. Dismiss their cross-complaint against IHHI with prejudice.
B. In consideration for the foregoing assignments, undertakings,
agreements and performance by MEKA and NAQVI, upon the Court's approval
of this AGREEMENT as having been made in "good faith" under the
auspices of Code of Civil Procedure section 877.6 pursuant to a motion
brought by IHHI at its sole cost and expense, IHHI shall promptly file
a dismissal of all claims in its FAC against MEKA and NAQVI (and only
against MEKA and NAQVI) with prejudice.
II. RELEASE OF MEKA AND NAQVI
Conditioned on the court's favorable ruling on the motion for good
faith settlement, IHHI and any and all administrators, successors and assigns,
hereby fully and forever release and discharge MEKA and NAQVI and each of their
employees, agents and attorneys (with the exception of Mitchell and Berger
Kahn), past and present, from any and all claims, demands, liens, contracts,
covenants, actions, suits, causes of action, obligations, controversies, debts,
costs, expenses, damages, judgments, orders and liabilities of whatever kind and
nature in law, equity or otherwise, whether now known or unknown, suspected or
unsuspected, which have existed or may have existed, or which do exist, or which
hereinafter can, shall or may exist, in connection with the Litigation and any
successor or substitute Litigation including any claims therein for breach of
fiduciary duty or injunctive relief. It is specifically agreed and understood
that IHHI is not releasing MEKA and NAQVI with respect to any obligation assumed
by them pursuant to this Agreement.
FULL AND FINAL SETTLEMENT AND MUTUAL RELEASE AGREEMENT
IHHI, Meka and Naqvi
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III. RELEASE OF IHHI
Conditioned on the court's favorable ruling on the motion for good
faith settlement, MEKA and NAQVI and any and all administrators, successors and
assigns, hereby fully and forever release and discharge IHHI and each of their
principals, agents, officers, directors, subsidiaries, affiliates employees,
agents and attorneys, past and present, from any and all claims, demands, liens,
contracts, covenants, actions, suits, causes of action, obligations,
controversies, debts, costs, expenses, damages, judgments, orders and
liabilities of whatever kind and nature in law, equity or otherwise, whether now
known or unknown, suspected or unsuspected, which have existed or may have
existed, or which do exist, or which hereinafter can, shall or may exist in
connection with the Litigation and any successor or substitute Litigation
including any claims therein for express or implied indemnity It is specifically
agreed and understood that MEKA and NAQVI are not releasing IHHI with respect to
any obligation assumed by them pursuant to this Agreement.
IV. CIVIL CODE SECTION 1542
It is agreed that notwithstanding section 1542 of the California
Civil Code which provides that "a general release does not extend to claims
which the creditor does not know or suspect to exist in his or her favor at the
time of executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor", the release set forth in this
Agreement shall constitute a full release in accordance with its terms. The
Parties to this Agreement knowingly and voluntarily waive the provisions of
section 1542 and acknowledge that this waiver is an essential and material term
of this Agreement, and the settlement which led to it, and that without such
waiver the settlement would not have been entered into.
V. ADDITIONAL TERMS AND COVENANTS
A. The PARTIES agree to waive and release any claim or cause of action
against one another for reimbursement of court costs, attorney's fees
or expenses incurred in the Litigation.
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B. The PARTIES to this AGREEMENT mutually warrant that:
1. No promise or inducement has been offered except as set forth
herein;
2. This AGREEMENT is executed without reliance upon any statement
or representation by any other party or person or their
representatives concerning the nature and extent of damages,
liability or consequences;
3. They are legally competent to execute the AGREEMENT and the
PARTIES accept full responsibility therefore;
4. They have signed the AGREEMENT voluntarily, without any duress
or undue influence on the part of or on behalf of any party;
5. The terms of this AGREEMENT are contractual and not merely
recitals; and
6. No claim, cause of action, theory of recovery, demand, right,
debt, liability, obligation, cost, expense, debit, sum of
money, account, reckoning, lien or any portion thereof arising
out of or related to the transaction which is the subject of
this AGREEMENT (including the assignment, transfer and/or
conveyance of ASSIGNED CLAIMS contemplated in para. 1) has
been previously assigned, transferred, conveyed, encumbered,
pledged, liened, or purportedly assigned, transferred,
conveyed, encumbered, pledged, liened - whether voluntarily or
by operation of law - to any person or entity not bound by
this AGREEMENT.
C. The PARTIES similarly acknowledge that:
1. The terms and conditions of this AGREEMENT have been read and
that the terms and conditions of the AGREEMENT are understood;
2. The terms and conditions of the AGREEMENT and the Assignment
contemplated by this AGREEMENT have been explained by counsel
and are voluntarily accepted for the express purpose of making
a full compromise, adjustment, assignment and settlement as
set forth in this AGREEMENT;
3. They have received independent legal advice with respect to
the advisability of executing this AGREEMENT and of entering
into any Assignment contemplated by this AGREEMENT; and
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IHHI, Meka and Naqvi
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4. They have made such investigation as they deem necessary to
enter into this AGREEMENT.
D. The PARTIES agree that this AGREEMENT shall not constitute or be
construed as an admission of any liability or wrongdoing on the part of
any them, either in connection with the matters alleged in the
LITIGATION or otherwise.
E. Any provisions of Evidence Code sections 1115 through 1128
notwithstanding, this AGREEMENT may be enforced by any party by a
motion under Code of Civil Procedure section 664.6 or by any other
procedures permitted by law before the Superior Court of Orange County.
The PARTIES agree that the Orange County Superior Court shall retain
jurisdiction for purposes or enforcing this AGREEMENT. The Court shall
award the prevailing party in any enforcement proceeding that party's
actual costs associated with enforcement of the AGREEMENT including,
but not limited to, attorneys' fees, experts' fees (if any) and court
costs.
F. IHHI reserves the right to unilaterally change the recipient or
assignee of the ASSIGNED CLAIMS, or to thereafter subsequently transfer
or re-assign the ASSIGNED CLAIMS to a person or entity or IHHI's own
choosing. IHHI may exercise this right at any time, and for any reason,
by giving MEKA and NAQVI written notice or IHHI's designation or such
other recipient or assignee. Such notice shall be signed by the
Chairman or the Litigation Committee of IHHI's Board of Directors and
witnessed by IHHI's General Counsel.
G. This AGREEMENT is intended by the PARTIES as a final expression or
their AGREEMENT and is intended to be a complete and exclusive
statement or the AGREEMENT and understanding of the PARTIES with
respect to the subject matters contained in this AGREEMENT. This
AGREEMENT supersedes any and all prior promises, representations,
warranties, agreements, understandings or undertakings with respect to
such subject matters set forth or referred to in this AGREEMENT. Other
than as provided in paragraph H supra, neither this AGREEMENT, nor any
term of this AGREEMENT, may be changed, waived, discharged or
terminated, orally or in writing, other than by the PARTIES' mutual
signing of a formal written amendment hereto.
H. This AGREEMENT shall be construed according to its fair meaning and not
strictly for or against any party.
I. If any provision of this AGREEMENT shall for any reason or to any
extent be construed by a court of competent jurisdiction to be invalid
or unenforceable, the remainder of this AGREEMENT shall be interpreted
so as best to reasonably effect the intent of the PARTIES.
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IHHI, Meka and Naqvi
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J. In the event that any action or proceeding of any type whatsoever is
commenced or prosecuted by any person or entity not a party of this
AGREEMENT to invalidate, interpret, or prevent the validation,
enforcement, or carrying out of all or any of the provisions of this
AGREEMENT, the PARTIES mutually agree, represent, warrant, and covenant
to cooperate fully in opposing such action or proceedings.
K. The AGREEMENT is entered into and shall be governed, construed, and
interpreted in accordance with the substantive and procedural laws and
rules of the State of California.
L. The PARTIES, and each of them, agree to execute such additional
documents as may be reasonably required in order to carry out the
purpose and intent of this AGREEMENT, or to evidence anything contained
in this AGREEMENT.
M. This AGREEMENT may be signed by the PARTIES in counterpart, and the
signature pages may be combined to create a document binding on all of
the PARTIES and together they shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the PARTIES have executed this AGREEMENT on the dates set
forth opposite their respective signatures below.
SIGNATURES APPEAR ON NEXT PAGE
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IHHI, Meka and Naqvi
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(THIS IS A RELEASE AND BINDING LEGAL DOCUMENT,
READ CAREFULLY BEFORE SIGNING)
7/31/08 /s/ Ajay Meka, M.D.
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Date AJAY MEKA, M.D.
7/31/08 /s/ Salman Naqvi, M.D.
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Date SALMAN NAQVI, M.D. aka
SYED NAQVI, M.D.
INTEGRATED HEALTHCARE HOLDINGS,
INC., a Nevada Corporation
7/31/08 By /s/ Bruce Mogel
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Date
Its President & CEO
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By
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Date
Its
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SIGNATURES CONTINUED ON NEXT PAGE
FULL AND FINAL SETTLEMENT AND MUTUAL RELEASE AGREEMENT
IHHI, Meka and Naqvi
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APPROVED AS TO FORM AND SUBSTANCE:
ENTERPRISE COUNSEL GROUP, ALC
Counsel for INTEGRATED HEALTHCARE
HOLDINGS, INC.
7/31/08 By /s/ William F. Zulch
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Date
GARY H. BALDRIDGE, APC
Counsel for AJAY MEKA, M.D. and
SALMAN NAQVI, M.D.
7/31/08 By /s/ Gary H. Baldridge
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Date
FULL AND FINAL SETTLEMENT AND MUTUAL RELEASE AGREEMENT
IHHI, Meka and Naqvi
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