Settlement agreement

On March 25, 2009, Integrated Healthcare Holdings, Inc. ("IHHI"), Anil V. Shah, M.D. ("Dr. Shah"), Orange County Physicians Investment Network, LLC ("OC-PIN"), Bruce Mogel ("Mogel"), Pacific Coast Holdings Investment, LLC ("PCHI"), West Coast Holdings, LLC, ("WCH"), Dr. Kali P. Chaudhuri ("Dr. Chaudhuri"), Ganesha Realty, LLC ("Ganesha"), William E. Thomas ("Thomas"), Medical Capital Corporation ("MCC"), Medical Provider Financial Corporation I ("MPFCI"), Medical Provider Financial Corporation II ("MPFCII") and Medical Provider Financial Corporation III ("MPFCIII", together MCC, MPFCI, and MPFCIII, "MedCap", and MedCap together with all of the above entities and individuals sometimes hereinafter collectively referred to as the "Parties" or individually as the "Party") entered into a Settlement Agreement, General Release and Covenant Not to Sue (the "Settlement Agreement") in connection with the settlement of pending and threatened litigation, arbitration, appellate, and other legal proceedings (the "Actions") among certain of the parties. The following descriptions of the Settlement Agreement and the other material definitive agreements within this Item 1.01 is not complete and is qualified in its entirety by reference to the full texts of each of those agreements, certain of which are filed as Exhibits 10.1 through 10.8 hereto and are incorporated herein by reference.

Pursuant to the Settlement Agreement and effective on or before March 27, 2009 (the "Closing"), IHHI agreed to pay the Callahan & Blaine Trust Account, as the jointly designated representative of OC-PIN and Dr. Shah (the "Trust Account"), a total sum of $1,500,000 in two installments of $750,000; the first payable at the Closing and the second, together with interest thereon at 8%, payable on September 25, 2009 (the "Second $750,000"). IHHI also agreed to pay to the Trust Account the sum of $15,000 as satisfaction of Dr. Shah's individual claims. Additionally, IHHI and Mogel agreed to stipulate to the release and return of a $50,000 bond which was posted in connection with a shareholder derivative suit filed by OC-PIN against both Mogel and IHHI.

In addition, Dr. Shah covenanted and agreed, that for a period of 2 years after the Closing, Dr. Shah will not accept any nomination, appointment or will not serve in the capacity as a director, officer, or employee of IHHI, so long as IHHI keeps the PCHI and Chapman leases current by making payments within 45 days of when payment is due.

Also pursuant to the Settlement Agreement, Dr. Shah and OC-PIN covenant not to sue or to assist anyone else in suing, directly or derivatively on behalf of IHHI, Dr. Chaudhuri or MedCap, and Dr. Chaudhuri and MedCap covenant not to sue or to assist anyone else in suing, directly or derivatively on behalf of IHHI, Dr. Shah and OC-PIN. Dr. Shah and OC-PIN also agreed to sign and deliver dismissals with prejudice of all Dr. Shah and OC-PIN's claims in the Actions, and IHHI, PCHI, and Dr. Chaudhuri agreed to sign and deliver dismissals with prejudice of all of IHHI, PCHI and Dr. Chaudhuri claims against Dr. Shah and/or OC-PIN in the Actions. Furthermore, all of the parties agreed to general releases discharging each and all of the other parties from, among other things, any and all rights, suits, claims or actions arising out of or otherwise related to the Actions.

Second Settlement Agreement

Dr. Shah, OC-PIN, the members of OC-PIN ("OC-PIN Members"), PCHI, WCH, the members of WCH, Dr. Chaudhuri and Ganesha, have entered into a Second Settlement Agreement dated as of March 25, 2009, which is not in conflict with any of the terms or provisions of the Settlement Agreement and is not incorporated by reference herein. Pursuant to the Second Settlement Agreement, certain of these parties also agreed to enter into a Shareholders Agreement. IHHI is not a party to the Second Settlement Agreement.

Shareholders Agreement

Pursuant to the Shareholders Agreement, dated as of March 25, 2009, Dr. Chaudhuri and OC-PIN agreed to nominate and Dr. Chaudhuri, OC-PIN and Dr. Shah agreed to vote in favor of or in a manner to ensure election of up to 4 individuals designated by Dr. Chaudhuri, up to 2 individuals designated by OC-PIN, and one individual who shall at all times be the then-current Chief Executive Officer of the Company. Pursuant to the Tag Along Rights provision within the Shareholders Agreement, in the event that Dr. Chaudhuri, on the one hand, or OC-PIN or any OC-PIN Member (each a "Purchasing Shareholder"), proposes to buy or otherwise acquire from IHHI or any other person or entity beneficial ownership of any additional shares of capital stock of the Company, then the Purchasing Shareholder shall first offer for sale to the other party the right to buy such portion of the Tag Shares available after ensuring that Dr. Chaudhuri owns at least 51% of the issued and outstanding voting shares of the Company. IHHI is not a party to the Shareholders Agreement.

Bylaws of IHHI as Amended and Restated effective April 2, 2009

Pursuant to the Settlement Agreement and effective no later than Closing, IHHI agreed to amend the IHHI Bylaws to provide (i) that the number of members of IHHI's Board of Directors shall be fixed at 7 and (ii) that, effective immediately after IHHI's 2009 Annual Meeting of Shareholders, a shareholder who owns 15% or more of the voting stock of IHHI is entitled to call one special shareholders meeting per year. IHHI also agreed to appoint an OC-PIN representative to fill the seat to be vacated by Ken Westbrook at Closing until the September 2009 annual meeting of shareholders.

Stock Purchase Agreements

Also pursuant to the Settlement Agreement and effective as of April 2, 2009, IHHI entered into Stock Purchase Agreements with Dr. Shah, Dr. Chaudhuri and OC-PIN respectively. Pursuant to these Stock Purchase Agreements, Dr. Shah and OC-PIN will receive an aggregate of 14,700,000 shares of IHHI common stock each and Dr. Chaudhuri will receive an aggregate of 30,600,000 shares of IHHI common stock, for a price of $0.03 per share (the "Stock Purchase Shares"). The purchase and sale of IHHI common stock under these agreements will take place 45 days after the Closing.

Pursuant to the Settlement Agreement, if either OC-PIN or Dr. Shah chooses not to purchase all of their respective Stock Purchase Shares, those Stock Purchase Shares which either party elects not to purchase may be purchased by the other party. In the event that OC-PIN and Dr. Shah purchase, in the aggregate, fewer Stock Purchase Shares than the maximum they were entitled to purchase under the terms of their Stock Purchase Agreements, Dr. Chaudhuri agreed that the number of Stock Purchase Shares that he is entitled to purchase . . .

The sale of securities referenced in Item 1.01 under the heading "Stock Purchase Agreements" have not been registered under the Securities Act of 1933, as amended (the "Act"), or any state securities laws, and were sold in a transaction exempt from registration pursuant to Section 4(2) of the Act and Regulation D promulgated thereunder. The aforementioned disclosures under Item 1.01 are hereby incorporated into this Item 3.02 by reference.

The disclosure regarding the amendment to the IHHI bylaws referenced in Item 1.01 under the heading "Bylaws of IHHI as Amended and Restated effective April 2, 2009" is incorporated herein by reference.

(d) Exhibits

EXHIBIT
NUMBER   DESCRIPTION
------   -----------

3.01     Bylaws of Integrated Healthcare Holdings, Inc., as amended and restated
         effective April 2, 2009.

10.1     Settlement Agreement, General Release and Covenant Not to Sue, dated
         March 25, 2009, by and among the Registrant, Anil V. Shah, M.D., Orange
         County Physicians Investment Network, LLC, Bruce Mogel, Pacific Coast
         Holdings Investment, LLC, West Coast Holdings, LLC, Dr. Kali P.
         Chaudhuri, Ganesha Realty, LLC, William E. Thomas, Medical Capital
         Corporation, Medical Provider Financial Corporation I, Medical Provider
         Financial Corporation II and Medical Provider Financial Corporation
         III.

10.2     Stock Purchase Agreement, dated as of April 2, 2009, by and between
         Integrated Healthcare Holdings, Inc. and Dr. Kali P. Chaudhuri.

10.3     Stock Purchase Agreement, dated as of April 2, 2009, by and between
         Integrated Healthcare Holdings, Inc. and Dr. Anil V. Shah.

10.4     Stock Purchase Agreement, dated as of April 2, 2009, by and between
         Integrated Healthcare Holdings, Inc. and Orange County Physicians
         Investment Network, LLC.

10.5     Amendment No. 1 to Revolving Credit Agreement, dated as of April 2,
         2009, by and among Integrated Healthcare Holdings, Inc., WMC-SA, Inc.,
         WMC-A, Inc., Chapman Medical Center, Inc., Coastal Communities
         Hospital, Inc., Pacific Coast Holdings Investment, LLC, Orange County
         Physicians Investment Network, LLC, Ganesha Realty, LLC, West Coast
         Holdings, LLC, and Medical Provider Financial Corporation I.

10.6     Amendment No. 1 to Credit Agreement, dated as of April 2, 2009, by and
         among Integrated Healthcare Holdings, Inc., WMC-SA, Inc., WMC-A, Inc.,
         Chapman Medical Center, Inc., Coastal Communities Hospital, Inc.,
         Pacific Coast Holdings Investment, LLC, Orange County Physicians
         Investment Network, LLC, Ganesha Realty, LLC, West Coast Holdings, LLC,
         and Medical Provider Financial Corporation II.

10.7     Acknowledgement, Waiver and Consent and Amendment to Credit Agreements,
         dated as of April 2, 2009, by and among Integrated Healthcare Holdings,
         Inc., Anil V. Shah, M.D., Orange County Physicians Investment Network,
         LLC, Bruce Mogel, Pacific Coast Holdings Investment, LLC, West Coast
         Holdings, LLC, Dr. Kali P. Chaudhuri, Ganesha Realty, LLC, William E.
         Thomas, Medical Capital Corporation, Medical Provider Financial
         Corporation I, Medical Provider Financial Corporation II and Medical
         Provider Financial Corporation III.

                                       6

10.8     Amendment to Amended and Restated Triple New Hospital Building Lease,
         dated as of March 27, 2009, by and between Pacific Coast Holdings
         Investment, LLC, and Integrated Healthcare Holdings, Inc.

99.1     Press Release, dated April 2, 2009, announcing the Settlement
         Agreement, General Release and Covenant Not to Sue.