Exhibit 10.4

--------------------------------------------------------------------------------

 
AGREEMENT OF DEBT EXCHANGE
 
This AGREEMENT OF DEBT EXCHANGE (this "Agreement") is made effective as of
February 28, 2011, by and between University General Hospital, LP, a Texas
limited partnership ("UGH"), Felix Spiegel, M.D., an individual resident of
Texas ("Creditor").
 
WHEREAS, UGH is obligated to pay Creditor an aggregate amount of $1,000,000 in
connection with a series of lending transactions described on Exhibit A (the
"Creditor Obligations"); and
 
WHEREAS, the parties wish to consummate a transaction whereby Creditor will
cancel and release UGH from the Cancelled Obligations and receive in exchange
for such cancellation and releases, the number of limited partner units of UGH
(the "Acquired Units") representing 5% of the outstanding partnership units of
UGH as of the date hereof.  The cancellation and release of the Cancelled
Obligations by the Creditor and the issuance and delivery of the Acquired Units
are collectively herein referred to as the "Debt Exchange";
 
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:
 
ARTICLE 1                      
 
THE DEBT EXCHANGE
 
1.1 The Debt Exchange.  At the Closing (as defined below), Creditor hereby
cancels and releases UGH from the Cancelled Obligations in accordance with
Section 1.2 below in exchange for the execution and delivery of Acquired Units,
and UGH hereby agrees to issue and deliver the Acquired Units against such
cancellation and release of the Cancelled Obligations.  Creditor will surrender
and deliver to UGH any and all promissory notes or other instruments evidencing
the Cancelled Obligations so that such instruments may be cancelled.
 
1.2 Cancellation and Release of Cancelled Obligations.  Creditor acknowledges
and agrees that the issuance of the Acquired Units pursuant to this Agreement
fully satisfies any and all of UGH's obligations to Creditor in respect of the
Cancelled Obligations.  Accordingly, Creditor, for himself, his heirs,
successors and assigns, does hereby release, remit and forever discharge UGH,
and its respective successors and assigns, and its respective employees,
officers, directors, managers, partners and affiliates, from all or any actions,
causes of action, suits, debts, contracts, agreements, controversies, promises,
claims and demands, of whatsoever nature and kind, in law or in equity, which it
ever had or may now have against it, or any of them, for any and all injuries,
harm, damages, penalties, costs, losses, expenses, attorneys fees, liabilities
or other detriments, if any, whatsoever and whenever incurred, suffered or
claimed by any Creditor arising out of or relating to the Cancelled Obligations
or any activities and undertakings in relation thereto.
 
1.3 Closing.  The closing of the Debt Exchange (the "Closing") will take place
simultaneously with the execution of this Agreement.  At the Closing, UGH will
issue and deliver the Acquired Units to Creditor.  Creditor will surrender and
deliver to UGH any and all promissory notes or other instruments evidencing the
Cancelled Obligations so that such instruments may be cancelled.  Creditor also
agrees to perform all further acts and execute,
 

 
1

--------------------------------------------------------------------------------

 

1.4 acknowledge, and deliver any documents which may be reasonably necessary,
appropriate, or desirable to carry out the provisions of this Agreement.  The
date on which the Closing occurs is referred to as the "Closing Date."
 
ARTICLE 2                      
 
REPRESENTATIONS AND WARRANTIES
 
2.1 Representations and Warranties of UGH.  UGH represents and warrants to
Creditor as follows:
 
(a) Authorization and Enforceability. The person executing this Agreement on
behalf of UGH has full power, legal capacity and authority to execute and
deliver this Agreement and the other agreements contemplated herein to be
executed by them.  The execution, delivery and performance of this Agreement and
the other agreements contemplated hereby by UGH and the consummation of the
transactions contemplated hereby and thereby, have been or will be duly executed
and delivered by UGH and constitute or will constitute legal, valid, and binding
obligations of UGH, enforceable in accordance with their respective terms,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally or the availability of equitable remedies.
 
(b) No Violation of Law, Etc. The execution, delivery, and performance by UGH of
this Agreement and the transactions contemplated hereby do not: (i) conflict
with, violate or constitute a material breach of or a material default under; or
(ii) require any authorization, consent, approval, exemption, or other action by
or notice to or filing with any governmental authority, that has not already
been obtained, under any provision of: (a) the organizational documents of UGH;
or (b) any credit or any loan agreement, mortgage, indenture, promissory note,
or other material agreement or instrument to which UGH is a party or by which it
or any of its property is bound.
 
2.2 Representations and Warranties of Creditor.
 
(a) Authorization and Enforceability. Creditor has full power, legal capacity
and authority to execute and deliver this Agreement and the other agreements
contemplated herein to be executed by them.  The execution, delivery and
performance of this Agreement and the other agreements contemplated hereby by
Creditor and the consummation of the transactions contemplated hereby and
thereby, have been or will be duly executed and delivered by Creditor and
constitute or will constitute legal, valid, and binding obligations of Creditor,
enforceable in accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally or the availability of
equitable remedies.
 
(b) No Violation of Law, Etc. The execution, delivery, and performance by
Creditor of this Agreement and the transactions contemplated hereby do not:
(i) conflict with, violate or constitute a material breach of or a material
default under; or (ii) require any authorization, consent, approval, exemption,
or other action by or notice to or filing with any governmental authority, that
has not already been obtained, under any provision
 

 
2

--------------------------------------------------------------------------------

 

(c) of any credit or any loan agreement, mortgage, indenture, promissory note,
or other material agreement or instrument to which Creditor is a party or by
which he or any of his property is bound.
 
2.3 Securities Laws Matters.  In connection with the purchase and sale of the
Acquired Units hereunder, Creditor represents and warrants to UGH that:
 
(a) The Acquired Units to be acquired by Creditor pursuant to this Agreement
will be acquired for Creditor's own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act, or any applicable
state securities laws, and the Acquired Units will not be disposed of in
contravention of the Securities Act or any applicable state securities laws.
 
(b) Creditor is an executive officer of UGH or one or more of its affiliates, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Acquired Units.
 
(c) Creditor is able to bear the economic risk of his investment in the Acquired
Units for an indefinite period of time because the Acquired Units have not been
registered under the Securities Act and, therefore, cannot be sold unless
subsequently registered under the Securities Act or an exemption from such
registration is available.
 
(d) Creditor has had an opportunity to ask questions and receive answers
concerning the terms and conditions of the offering of Acquired Units and has
had full access to such other information concerning UGH as he has requested.
 
ARTICLE 3                      
 
MISCELLANEOUS
 
3.1 Expenses.  Whether or not the transactions contemplated by this Agreement
are consummated, neither party shall have any obligation to pay any of the fees
and expenses of the other party incident to the negotiation, preparation and
execution of this Agreement, including the fees and expenses of counsel,
accountants and other experts.
 
3.2 Execution in Counterparts.  For the convenience of the parties, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
 
3.3 Notices.  Any notice, delivery or communication required or permitted to be
given under the terms of this Agreement shall be in writing, and shall be
mailed, postage prepaid, or delivered, to the addresses stated below, or sent by
facsimile transmission as follows:
 
If to UGH:                                           University General
Hospital, LP
7501 Fannin Street
Houston, Texas 77054
Attention:  CEO
Telephone No.:  713.375.7100
Telecopy No.:  713.375.7105
 

 
3

--------------------------------------------------------------------------------

 

If to Creditor:                                                      Felix
Spiegel, M.D.
 
5313 W. Alabama, Suite 121
Houston, TX  77056
 
or such other address or facsimile number as shall be furnished in writing by
any such party to the other party, and such notice shall be effective and deemed
to be given as of the date actually received.
 
3.4 Entire Agreement.  This Agreement and the documents executed at the Closing
in connection herewith constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof.  No representation, warranty, promise,
inducement or statement of intention has been made by any party hereto which is
not embodied in this Agreement or such other documents, and no party hereto
shall be bound by, or be liable for, any alleged representation, warranty,
promise, inducement or statement of intention not embodied herein or therein.
 
3.5 Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to the rules on
conflicts of laws that may give effect to the law of any jurisdiction other than
the State of Texas.
 
3.6 Binding Effect, Benefits.  This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and
assigns.  Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
 
3.7 Assignability.  Neither this Agreement nor any of the parties' rights
hereunder shall be assignable by any party hereto without the prior written
consent of the other parties hereto.
 
3.8 Invalid Provisions.  If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, rule or
regulation, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof.  The remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance here from.  Furthermore,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
 

 
4

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed effective as of the date first above written.
 

 
CREDITOR
 
 

Name:  FELIX SPIEGEL, M.D.
By: /s/ Felix Spiegel, M.D.
 

 
UGH
 
University General Hospital, LP,
a Texas limited partnership
 
By:    /s/ Kelly
Riedel                                                                   
Name:  Kelly Riedel, CEO

 
5

--------------------------------------------------------------------------------

 

EXHIBIT A
 
SCHEDULE OF CANCELLED OBLIGATIONS

Date
Description of Obligation
Amount of Obligation
                             

 
6

--------------------------------------------------------------------------------