INTEGRATED HEALTHCARE HOLDINGS, INC.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("AGREEMENT") is made this 28th day of
January, 2005 (the "EFFECTIVE Date") by and between INTEGRATED HEALTHCARE
HOLDINGS, INC., a Nevada corporation ("IHHI"), and The Orange County Physicians
Investment Network, LLC, a Nevada limited liability company) (the "PURCHASER").
R E C I T A L S:
A. IHHI is a party to that certain Asset Sale Agreement, dated September
29, 2004 (the "XXXXX AGREEMENT"), by and among IHHI and certain subsidiaries of
Xxxxx Healthcare Corporation (collectively, "XXXXX").
B. In connection with the Xxxxx Agreement, each of IHHI and Purchaser has
entered into various financing agreements with Xxxx X. Xxxxxxxxx M.D. ("XX.
XXXXXXXXX"), which agreements are being amended concurrently with the execution
of this Agreement.
C. The parties now desire to terminate their respective obligations under
that certain Purchase Option Agreement, dated November 16, 2004, between IHHI
and Purchaser (the "PURCHASE OPTION AGREEMENT"), and instead enter into this
Agreement by which Purchaser will invest an aggregate of $30,000,000 and other
consideration through the purchase of 108,000,000 shares of common stock of
IHHI.
NOW, THEREFORE, in consideration of the promises and mutual covenants set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE OF SHARES; OTHER AGREEMENTS
1.1 TERMINATION OF PURCHASE OPTION AGREEMENT. The Purchase Option
Agreement, dated November 16, 2004, between the parties is hereby terminated
effective immediately, and shall be of no further force or effect.
1.2 PAYMENTS BY PURCHASER. IHHI shall issue and sell to the Purchaser, and
the Purchaser agrees to purchase from IHHI, an aggregate of One Hundred Eight
Million (108,000,000) shares of common stock, $0.0001 par value per share, of
IHHI (the "SHARES"), for a total of Thirty Million Dollars ($30,000,000) and the
other consideration recited below. The payments for the Shares shall occur as
follow:
(a) On or prior to February 4, 2005, Purchaser shall pay an
aggregate of $10,000,000 on behalf of IHHI by depositing such amount with
Xxxxx on behalf of the Company in connection with the Xxxxx Agreement
and/or by reimbursing Xx. Xxxxxxxxx for his $10,000,000 on deposit with
Xxxxx (upon which Xx. Xxxxxxxxx will assign to Purchaser or IHHI his
rights to the deposit).
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(b) The payment may be provided from the following sources:
(i) The $5,000,000 deposit made by Purchaser and currently
held in escrow under the Purchase Option Agreement; and
(ii) An additional deposit of $5,000,000 to be made
according to the terms of IHHI's escrow commitment with
Xxxxx, by February 4, 2005.
(c) Purchaser shall agree with Xxxxx to make up to $5,000,000,
a "non-refundable" good faith deposit, which amount shall be forfeited in
the event that IHHI fails to obtain its acute care licenses from the
Department of Health Services (the "LICENSES") by the date required by
Xxxxx. In the event the licenses are not approved by Department of Health
Services or if IHHI fails to meet the licensing deadline agreed to by the
parties, IHHI will refund to Purchaser any remaining portion of the
deposit returned to it from escrow.
(d) The Purchaser shall enter into and satisfy all of its
obligations under the Rescission Agreement, including the "General
Continuing Guaranty" contemplated thereby.
(e) No later than six (6) calendar days before the closing of
the transactions under the Xxxxx Agreement (currently contemplated to be
February 28, 2005 or another date agreed to by Xxxxx and IHHI), the
Purchaser shall deliver to IHHI one or more wire transfers of immediately
available funds (or such other form of payment as may be acceptable to
IHHI) totaling $20,000,000.
1.3 ISSUANCES OF STOCK TO PURCHASER.
(a) Upon satisfactory completion of Purchaser's obligations
under Sections 1.2(b)(i) herein, IHHI shall issue to Purchaser a
certificate for 90,700,000 Shares (as adjusted for any stock splits,
dividends, combinations or the like). An additional 6,500,000 shares shall
be issued to Xxxx X. Xxx/and/or the Lal law Firm, for the same
consideration.
(b) If the Licenses are issued and the remainder of the
$10,000,000 deposit with Xxxxx becomes non-refundable, IHHI shall issue to
Purchaser a certificate for an additional 5,400,000 Shares (as adjusted
for any stock splits, dividends, combinations or the like).
(c) Upon receipt of the $20,000,000 under Section 1.2(e)
herein, IHHI shall issue to Purchaser a certificate for an additional
5,400,000 Shares (as adjusted for any stock splits, dividends,
combinations or the like).
(d) IHHI AGREEMENTS WITH XX. XXXXXXXXX. Purchaser agrees to
honor the terms of all agreements executed between IHHI and Xx. Xxxxxxxxx.
IHHI shall provide to Purchaser copies of all such documents promptly.
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ARTICLE II
REPRESENTATIONS OF PURCHASER
The Purchaser hereby makes the following representations and warranties to
IHHI, upon which representations and warranties IHHI has relied in entering into
this Agreement
2.1 AUTHORIZATION AND POWER. The Purchaser has the requisite power and
authority to enter into and perform this Agreement and to purchase the Shares
being sold hereunder. The execution, delivery and performance of this Agreement
by Purchaser shall constitute the valid and binding obligations of the Purchaser
enforceable against the Purchaser in accordance with their terms.
2.2 PURCHASE FOR OWN ACCOUNT. The Purchaser is acquiring the Shares solely
for investment for Purchaser's own account not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same. The acquisition by the Purchaser of any of the
Shares shall constitute confirmation of the representation by the Purchaser that
the Purchaser does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Shares.
2.3 FINANCIAL RISKS; DISCLOSURE OF INFORMATION. The Purchaser acknowledges
that it is able to bear the financial risks associated with an investment in the
Shares. The Purchaser has received all the information that it considers
necessary or appropriate (to the best of Purchaser's knowledge) for deciding
whether to acquire the Shares. The Purchaser further represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Shares and the business,
properties, prospects and financial condition of the Company. The Purchaser is
capable of evaluating the risks and merits of an investment in the Shares by
virtue of its experience and that of its advisors as investors in securities,
and their knowledge, experience, and sophistication in financial and business
matters.
2.4 ACCREDITED INVESTOR. The Purchaser is an "accredited investor" as
defined in Regulation D promulgated under the Shares Act of 1933, as amended.
2.5 CALIFORNIA RESIDENT. The Purchaser is a bona fide resident of, is
domiciled in and received the offer and made the decision to invest in the
Shares in the State of California.
2.6 LIMITATIONS ON DISPOSITION; LEGEND. The Purchaser understands and
agrees that the Shares may not be sold except in accordance with applicable law.
The certificates evidencing the Shares may bear substantially the following
legend:
"These securities have not been registered under the Shares Act of 1933,
as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with
respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or
unless sold pursuant to Rule 144 of such Act."
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2.7 RELIANCE. The Purchaser understands and agrees that IHHI is relying
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine the suitability of the Purchaser to acquire the Shares.
ARTICLE III
MISCELLANEOUS
3.1 CONDITIONS PRECEDENT. This Agreement is expressly conditioned upon
Xxxxx'x written acceptance of the restructuring of the Xxxxx Agreement
contemplated in the Rescission Agreement and this Agreement.
3.2 AMENDMENT. This Agreement may be modified or amended only by mutual
written agreement of the parties. Any such modification or amendment must be in
writing, dated and signed by the parties and attached to this Agreement.
3.3 ASSIGNMENT. The parties may not assign any interest or obligation
under this Agreement without the other party's prior written consent, except
that the Purchaser may assign this Agreement to Orange County Physicians
Investment Network, LLC. Subject to the foregoing, this Agreement shall be
binding on and shall inure to the benefit of the parties and their respective
successors and assigns.
3.4 DISPUTE RESOLUTION. In the event of any dispute arising out of or
relating to this Agreement, then such dispute shall be resolved solely and
exclusively by confidential binding arbitration with the Orange County branch of
JAMS ("JAMS") to be governed by JAMS' Commercial Rules of Arbitration in effect
at the time of the commencement of the arbitration (the "JAMS Rules") and heard
before one arbitrator. The parties shall attempt to mutually select the
arbitrator. In the event they are unable to mutually agree, the arbitrator shall
be selected by the procedures prescribed by the JAMS Rules. Each party shall
bear its own attorneys' fees, expert witness fees, and costs incurred in
connection with any arbitration.
3.5 ENTIRE AGREEMENT. This Agreement is the entire understanding and
agreement of the parties regarding its subject matter, and supersedes any prior
oral or written agreements, representations, understandings or discussions
between the parties. No other understanding between the parties shall be binding
on them unless set forth in writing, signed and attached to this Agreement.
3.6 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of California, except the conflicts of
laws provisions which would require the application of the laws of any other
jurisdiction.
3.7 HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
3.8 NO THIRD-PARTY BENEFICIARY RIGHTS. The parties do not intend to confer
and this Agreement shall not be construed to confer any rights or benefits to
any person, firm, corporation or entity other than the parties.
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3.9 NOTICES. All notices or communications required or permitted under
this Agreement shall be given in writing and delivered personally or sent by
United States registered or certified mail with postage prepaid and return
receipt requested or by overnight delivery service (e.g., Federal Express, DHL).
Notice shall be deemed given when sent, if sent as specified in this Section, or
otherwise deemed given when received. In each case, notice shall be delivered or
sent to:
IF TO IHHI, ADDRESSED TO:
Integrated Healthcare Holdings, Inc.
000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Chief Executive Officer
IF TO PURCHASER, ADDRESSED TO:
Xxxx X. Xxxx, M.D.
0000 Xxxxx Xxxxxxx Xxxxxx, #000
Xxxxx Xxx, Xxxxxxxxxx 00000
3.10 SEVERABILITY. If any provision of this Agreement is determined to be
illegal or unenforceable, that provision shall be severed from this Agreement,
and such severance shall have no effect upon the enforceability of the remainder
of this Agreement.
3.11 WAIVER. No delay or failure to require performance of any provision
of this Agreement shall constitute a waiver of that provision as to that or any
other instance. Any waiver granted by a party must be in writing to be
effective, and shall apply solely to the specific instance expressly stated.
3.12 CONFIDENTIALITY. Neither party shall disclose any of the terms of
this Agreement to any person or entity (other than its attorneys or accountants)
without the prior written consent of the other party, unless and only to the
extent such disclosure is required by law, including applicable securities laws.
Purchaser acknowledges that IHHI may be required to file publicly this Agreement
as it is a public company.
3.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
IHHI
Integrated Healthcare Holdings, Inc.,
a Nevada corporation
/s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxxx, President
PURCHASER
/s/ Xxxx X. Xxxx, M.D.
----------------------------------------
Xxxx X. Xxxx, M.D.
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