EXHIBIT 99.8
NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION OR EXCLUSION FROM THE REGISTRATION
REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.
INTEGRATED HEALTHCARE HOLDINGS, INC.
COMMON STOCK WARRANT
--------------------
WARRANT TO PURCHASE SHARES OF COMMON STOCK
THIS COMMON STOCK WARRANT (this "WARRANT") certifies that, for
consideration received, Healthcare Financial Management & Acquisitions, Inc., a
Nevada corporation, or its permitted successors or assigns (the "HOLDER" or
"HOLDERS," as applicable), is entitled to subscribe for and purchase a minimum
of 16,880,484 fully paid and nonassessable shares (as adjusted pursuant to
Section 3 hereof, the "SHARES") of the Common Stock (the "COMMON STOCK") of
Integrated Healthcare Holdings, Inc., a Nevada corporation, (the "COMPANY") at a
price per Share equal to $0.21, which is equal to the per share fair market
value of the Common Stock on the Initial Exercise Date (as defined below)
determined in accordance with Section 1(d) hereof (as adjusted pursuant to
Section 3 hereof, the "EXERCISE PRICE"), subject to the provisions and upon the
terms and conditions hereinafter set forth.
1. Method of Exercise; Payment.
(a) Exercise. This Warrant shall be exercisable from and after October
9, 2007 (the "INITIAL EXERCISE DATE") until October 9, 2017 (the
"EXPIRATION DATE"). This Warrant shall be exercisable by Holder from time
to time for the Shares (as adjusted pursuant to Section 3 hereof).
(b) Cash Exercise. The purchase rights represented by this Warrant may
be exercised by the Holder, in whole or in part, by the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit A duly
executed) at the principal office of the Company, and by the payment to the
Company, by certified, cashier's or other check acceptable to the Company
(or as otherwise provided pursuant to Section 1(c) or 1(e) hereinbelow), of
an amount equal to the aggregate Exercise Price of the Shares being
purchased.
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(c) Net Issue Exercise. In lieu of exercising this Warrant, the Holder
may elect to receive Shares of Common Stock equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the Holder a number of
Shares computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of the Shares to be issued to the Holder.
Y = the number of the Shares purchasable under this Warrant.
A = the fair market value of one Share on the date of election under
this Section 1(c).
B = the Exercise Price (as adjusted to the date of such calculation).
(d) Fair Market Value. For purposes of this Warrant, the per share
fair market value of the Shares shall mean:
(i) If the Company's Common Stock is publicly traded, the per
share fair market value of the Shares shall be the closing price of such
Common Stock as quoted on the Nasdaq National Market or the principal
exchange on which the Common Stock is listed, or if not so listed then the
fair market value shall be the average of the closing bid and asked prices
of such Common Stock as published in The Wall Street Journal, in each case
for the trading day immediately prior to the date of determination of fair
market value; or
(ii) If the Company's Common Stock is not so publicly traded, the
per share fair market value of the Shares shall be determined by either of
the foregoing, as elected by Holder in its sole and absolute discretion:
(A) the mutual agreement of the Company and Holder, or (B) alternatively, a
nationally recognized or major regional investment banking firm or firm of
independent certified public accountants of recognized standing selected by
the Holder in its sole and absolute discretion (the "APPRAISER").
(e) Stock Certificates. Promptly upon receipt of a notice to exercise,
the Company will take all necessary actions to authorize the issuance of
such Common Stock under this Warrant. In the event of any exercise of the
rights represented by this Warrant, certificates for the Shares so
purchased shall be delivered to the Holder within three (3) business days,
or four (4) Trading Days (as defined hereinbelow) if the Company's Common
Stock is publicly traded and the notice of exercise is received after 4:30
p.m. Eastern Standard Time on a day in which the Company's Common Stock is
publicly traded (each a "TRADING DAY") and, unless this Warrant has been
fully exercised or has expired, a new Warrant representing the shares with
respect to which this Warrant shall not have been exercised shall also be
issued to the Holder within such time.
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2. Stock Fully Paid. All of the Shares issuable upon the exercise of the
rights represented by this Warrant will, upon issuance and receipt of the
Exercise Price therefor, be fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof (except the Holder's
income taxes, if any, that are due and payable with respect to the Shares).
3. Adjustment to the Number of Shares Issuable and/or the Exercise Price.
The number of Shares issuable upon the exercise of this Warrant and the Exercise
Price are subject to adjustment from time to time as set forth in this Section
3. Upon each adjustment pursuant to this Section 3, the Holder shall thereafter
prior to the Expiration Date be entitled to purchase the adjusted number of
Shares of Common Stock at the Exercise Price as adjusted hereby. Subject to the
other provisions of this Section 3, the number of Shares of Common Stock
issuable upon the exercise of this Warrant shall be automatically adjusted to be
the greater of the following: (1) 16,880,484 Shares of Common Stock (as set
forth on page 1 of this Warrant), or (2) Shares of Common Stock representing
four and ninety five one-hundredths percent (4.95%) of all Common Stock
Equivalents (as defined hereinbelow) of the Company on the date of exercise of
this Warrant. "COMMON STOCK EQUIVALENTS" shall mean, collectively, (i) all
shares of Common Stock issued and outstanding, (ii) shares of Common Stock
issued or deemed issued as a dividend or distribution, including on any
preferred stock, (iii) shares of Common Stock issued or issuable by reason of a
dividend, stock split, split-up or other distribution on shares of Common Stock,
(iv) shares of Common Stock or Convertible Securities issued or issuable upon
the exercise of rights, options or warrants to subscribe for, purchase or
otherwise acquire Common Stock or Convertible Securities (as defined
hereinbelow) (collectively, "OPTIONS") or shares of Common Stock issued or
issuable upon the conversion or exchange of any evidences of indebtedness,
shares, preferred stock or other securities directly or indirectly convertible
into or exchangeable for Common Stock ("CONVERTIBLE SECURITIES"), pursuant to
the terms of such Option or Convertible Security, (v) shares of Common Stock or
Convertible Securities issued or issuable to third parties upon the exercise of
rights, options, warrants or otherwise, including, without limitation, to
suppliers, banks, equipment lessors or other financial institutions, or to real
property lessors, pursuant to a debt financing, equipment leasing or real
property leasing transaction, and (vi) shares of Common Stock issued or issuable
to employees or directors of, or consultants to, the Corporation or any of its
subsidiaries pursuant to a plan, agreement or arrangement approved by the Board
of Directors of the Company.
(a) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend payable in shares of its capital stock (whether
payable in shares of its Common Stock, preferred stock, or securities
convertible into, or exchangeable or exercisable for, Common Stock or of
other capital stock of any class), (ii) shall subdivide outstanding shares
of Common Stock into a larger number of shares, or (iii) combine
outstanding shares of Common Stock into a smaller number of shares, then
(x) the number of shares of Common Stock issuable upon exercise of this
Warrant (or any shares of stock or other securities at the time issuable
upon exercise of this Warrant) shall be proportionally increased or
decreased to reflect such event, and (y) the Exercise Price shall be
adjusted to an amount obtained by multiplying the Exercise Price in effect
immediately prior to such event by a fraction equal to the number of Shares
for which this Warrant is exercisable immediately prior to such event
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divided by the number of Shares for which this Warrant is exercisable
immediately after such event. Any adjustment made pursuant to this Section
3(a) shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective
date of a subdivision, combination or reclassification.
(b) If the Company, at any time while any Warrants are outstanding,
shall distribute to all holders of Common Stock, or holders of any
securities convertible into, or exchangeable or exercisable for Common
Stock (and not to the Holder), evidences of its indebtedness, assets or any
rights or warrants to subscribe for or purchase any security (excluding
those referred to in this Section 3), the number of shares of Common Stock
issuable upon exercise of this Warrant (or any shares of stock or other
securities at the time issuable upon exercise of this Warrant) shall be
proportionally increased to reflect such event as determined by the
Appraiser. The Company shall promptly provide a statement to the Holder of
the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
(c) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the
sale or transfer of all or substantially all of the assets of the Company
or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, then, subject to the
terms hereof, the Holder shall have the right thereafter to exercise this
Warrant into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock following
such reclassification, consolidation, merger, sale, transfer or share
exchange, and the Holder shall be entitled upon such event to receive such
amount of securities or property as the shares of the Common Stock into
which this Warrant could have been exercised immediately prior to such
reclassification, consolidation, merger, sale, transfer or share exchange
would have been entitled. The terms of any such reclassification,
consolidation, merger, sale, transfer or share exchange shall include such
terms so as to continue to give to the Holder the right to receive the
securities or property set forth in this Section 3(c) upon any exercise
following such reclassification, consolidation, merger, sale, transfer or
share exchange. This provision shall similarly apply to successive
reclassification, consolidations, mergers, sales, transfers or share
exchanges.
(d) For purposes of any computation respecting consideration received,
the following shall apply:
(i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith; and
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as determined
by the Appraiser, whose determination shall be conclusive.
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(e) For the purposes of this Section 3, the following clauses shall
also be applicable:
(i) Record Date. In case the Company shall promptly take a record
of the holders of its Common Stock for the purposes of entitling them (A)
to receive a dividend or other distribution payable in Common Stock or in
convertible securities, or (B) to subscribe for or purchase Common Stock or
securities convertible into, or exchangeable or exercisable for, Common
Stock, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as
the case may be.
(ii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any such shares
shall be considered an issue or sale of Common Stock for the purposes of
this Section 3.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall promptly provide notice to the Holder setting forth,
in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the number
and class of Shares which may be purchased and the Exercise Price therefor after
giving effect to such adjustment.
5. Fractional Shares. This Warrant may not be exercised for fractional
shares. In lieu of fractional shares the Company shall promptly make a cash
payment therefor based upon the per share fair market value of a Share then in
effect.
6. Representations, Warranties and Covenants of the Company.
(a) The Company represents and warrants to the Holder that all
corporate actions on the part of the Company, its officers, directors and
stockholders necessary for the sale and issuance of the Shares pursuant
hereto and the performance of the Company's obligations hereunder were
taken prior to and are effective as of the effective date of this Warrant.
The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued
Common Stock or its authorized and issued Common Stock held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Shares upon exercise of the Warrants, a number of shares of Common Stock
equal to the maximum number of Shares (as adjusted from time to time
pursuant to Section 3 hereof) which may then be deliverable upon the
exercise of this Warrant. The Company covenants that all Shares that shall
be so issuable and deliverable shall, upon issuance thereof, be duly and
validly authorized and issued and fully paid, and nonassessable.
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(b) The Company has made available to the Holder true, correct and
complete copies of its articles of incorporation and bylaws, as amended.
This Warrant is not inconsistent with the Company's articles of
incorporation or bylaws, and does not contravene any law or governmental
rule, regulation or order applicable to it, does not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract, agreement or other instrument to which it is a party or
by which it is bound, and constitutes the legal, valid and binding
agreements of the Company, enforceable in accordance with its terms.
(c) No consent or approval of, giving of notice to, registration with,
or taking of any other action in respect of any state, federal or other
governmental authority or agency is required with respect to the execution,
delivery and performance by the Company of its obligations under this
Warrant, except for the filing of notices pursuant to Regulation D under
the Securities Act and any filing required by applicable state securities
law, which filings will be effective by the time required thereby.
(d) All issued and outstanding shares of Common Stock or any other
securities of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. All outstanding shares of Common Stock
and any other securities were issued in full compliance with all federal
and state securities laws. No stockholder of the Company has preemptive
rights to purchase new issuances of the Company's capital stock.
(e) The Company is not, pursuant to the terms of any agreement
currently in existence, under any obligation to register under the
Securities Act any of its presently outstanding securities or any of its
securities which may hereafter be issued.
(f) Assuming that the Holder is an accredited investor (as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act (as
defined in Section 9 hereof), the issuance of the Shares upon exercise of
this Warrant will constitute a transaction exempt from (i) the registration
requirements of Section 5 of the Securities Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the applicable
state securities laws.
(g) At the written request of the Holder, in the event the Holder
proposes to sell Shares issuable upon the exercise of this Warrant in
compliance with Rule 144 promulgated under the Securities Act by the
Securities and Exchange Commission, the Company shall furnish to the
Holder, within ten (10) days after receipt of such request, a written
statement confirming the Company's compliance with the filing requirements
of the Securities and Exchange Commission as set forth in such rule, as
such rule may be amended from time to time.
7. Restrictive Legend. The Shares (unless registered under the Securities
Act) shall be stamped or imprinted with a legend in substantially the following
form:
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THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION OR EXCLUSION FROM THE REGISTRATION
REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS.
8. Transfer of Warrant.
(a) This Warrant may be sold, transferred, assigned or hypothecated,
in whole or in part, by the Holder without the consent of the Company;
provided, in each case that any transferee or assignee agrees to be bound
by the terms of this Warrant, and such transfer or assignment is in
compliance with the Securities Act and the securities law of any applicable
jurisdiction. The Warrant may be divided or combined, upon request to the
Company by the Holder, into one or more new warrants representing the same
aggregate number of Shares. For purposes of this Warrant, "CONTROL" of a
person shall mean the power, direct or indirect, (x) to vote or direct the
voting of 10% or more of the voting equity of such person or (y) to direct
or cause the direction of the management and policies of such person
whether by ownership or equity, by contract or otherwise, and "PERSON"
means an individual or a corporation, association, partnership, limited
liability company, joint venture, organization, business, trust or any
other entity or organization, including a government or any subdivision or
agency thereof. The terms and conditions of this Warrant shall inure to the
benefit of and be binding upon the respective permitted successors and
assigns of the parties.
(b) No opinion of counsel or "no-action" letter shall be necessary for
any transfer or assignment by any Holder.
9. Registration Rights.
(a) The Company shall file a registration statement under the
Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder (the "SECURITIES ACT"), covering the resale of all
Shares of the Holder as soon as practicable following the Holder's written
request to do so, and use its reasonable best efforts to have the
registration statement declared effective by the Securities Exchange
Commission ("SEC") for distribution thereof by means of an underwriting.
The underwriter will be selected by the Company and shall be reasonably
acceptable to the Holder. The Holder shall (together with the Company as
provided hereinbelow) enter into an underwriting agreement in a customary
form with the underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of this Section 9(a), if the
underwriter advises the Holder in writing that marketing factors require a
limitation of the number of shares to be underwritten, the number of shares
of Shares held by the Holder to be included in such underwriting shall not
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be reduced unless all other securities are first entirely excluded from the
underwriting. The Company shall bear and pay all expenses incurred in
connection with any registration, filing or qualification of the Shares
with respect to the registrations pursuant to this Section for each Holder,
including (without limitation) all registration, filing, and qualification
fees, printers and accounting fees relating or apportionable thereto and
the fees and disbursements of one counsel for the selling Holders selected
by them.
(b) (i) The Company covenants and agrees with the Holder (and any
subsequent Holders of this Warrant and/or Shares) that, in the event the
Company proposes to file a registration statement under the Securities Act
(including, without limitation, relating to an initial public offering of
Company Common Stock or shall receive a request for registration on Form
S-3 from any stockholder) with respect to any class of security which
becomes or which the Company believes will become effective on or after the
Initial Exercise Date and on or before the Expiration Date, then the
Company shall in each case give prompt written notice of such proposed
filing to the Holder (and any subsequent Holders of this Warrant and/or
Shares) at least sixty (60) days before the proposed filing date and, by
such notice, shall offer to such Holders the opportunity to include in such
registration statement such number of Shares as they may request in
writing.
(ii) The Company shall permit, or shall cause the managing
underwriter of a proposed offering to permit, the Holders from whom such
written requests have been received to include such number of Shares (the
"PIGGY-BACK SHARES") in the proposed offering on terms and conditions no
less favorable to the Holders as the terms and conditions applicable to
securities of the Company included therein or as applicable to securities
of any person other than the Company and the Holders of Piggy-back Shares
if the securities of any such person are included therein; provided,
however, that the Company shall not be required to honor any such request
that is received more than sixty (60) days after the proper giving of the
Company's notice or after the Expiration Date. Notwithstanding any other
provision of this Section 9(b), if the underwriter advises the Holder in
writing that marketing factors require a limitation of the number of shares
to be underwritten, the number of shares of Shares held by the Holder to be
included in such underwriting shall not be reduced unless all other
securities are first entirely excluded from the underwriting. The Company
shall bear and pay all expenses incurred in connection with any
registration, filing or qualification of the Shares with respect to the
registrations pursuant to this Section for each Holder, including (without
limitation) all registration, filing, and qualification fees, printers and
accounting fees relating or apportionable thereto and the fees and
disbursements of one counsel for the selling Holders selected by them.
(iii) The Company shall be obligated pursuant to this Section
9(b) to include in the piggy-back offering Shares that have not yet been
purchased by a Holder so long as such Holder submits an undertaking to the
Company that such Holder intends to exercise the Warrant for at least the
number of Shares to be included in such piggy-back offering prior to the
consummation of such piggy-back offering. The Company shall use its
reasonable best efforts to register or qualify the Shares for offer or sale
under the state securities or Blue Sky laws of such states which the
Holders of such Shares shall designate.
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(iv) If the Company decides not to proceed with the piggy-back
offering, the Company will have no obligation to proceed with the offering
of the Piggy-back Shares.
(c) (i) To the fullest extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, members, officers,
directors and stockholders of each Holder, legal counsel and accountants
for each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "EXCHANGE ACT"), against any Violation (as defined
hereinbelow) and the Company will pay to each such Holder, underwriter,
controlling person or other aforementioned person, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action as such
expenses are incurred; provided, however, that the indemnity agreement
contained in this Section 9(c) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld, delayed or conditioned), nor shall the
Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by any such Holder, underwriter, controlling person or other
aforementioned person. The term "VIOLATION" means losses, claims, damages,
or liabilities (joint or several) to which a party hereto may become
subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations: (i) any untrue statement or
alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to
be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by any other party
hereto, of the Securities Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any state securities law.
(ii) Each Holder of Shares who participates in a registration
pursuant to Section 9 shall indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed any such
registration statement, and each person, if any, who controls the Company
within the meaning of the Securities Act, against any losses, claims,
damages or liabilities to which the Company, or any such director, officer
or controlling person may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of, or are
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based upon, any untrue or alleged untrue statement of any material fact
contained in any such registration statement, or final prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in any such registration statement, or final prospectus,
or any amendment or supplement thereto, in reliance upon and in conformity
with written information furnished by such Holder expressly for use in the
preparation thereof; and will reimburse any legal or other expenses
reasonably incurred by the Company, or any such director, officer or
controlling person in connection with investigating or defending against
any such loss, claim, damage, liability or action; provided, however, that
the indemnity agreement contained in this subparagraph (ii) shall not apply
to amounts paid to any claimant in settlement of any suit or claim unless
such payment is first approved by such Holder; and, provided further, that
the aggregate amount payable by a Holder pursuant to this Section 9(c)(ii)
shall not exceed the net proceeds received by such Holder in the registered
offering out of which its obligations pursuant to this Section 9(c)(ii)
arise.
10. Rights of Stockholders. No holder of this Warrant shall be entitled, as
a Warrant holder, to vote or receive dividends or be deemed the holder of the
Shares or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
11. Information Rights. The Company shall deliver to the Holder the
following (which may be satisfied by the Company's delivery of the Company's
public filings, if applicable, to Holder):
(a) as soon as practicable, but in any event within ninety (90) days
after the end of each fiscal year of the Company, a balance sheet and
income statement as of the last day of such year; a statement of cash flows
for such year, such year end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles, and
audited and certified by independent public accountants of nationally
recognized standing selected by the Company;
(b) as soon as practicable, but in any event within forty five (45)
days after the end of each of the first three (3) quarters of each fiscal
year of the Company, an unaudited income statement, schedule as to the
sources and application of funds for such fiscal quarter, an unaudited
balance sheet and a statement of stockholder's equity as of the end of such
fiscal quarter; and
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(c) as soon as practicable, but in any event with forty-five (45) days
after the end of each of the first three (3) quarters of each fiscal year
of the Company, a statement showing the number of shares of each class and
series of capital stock and securities convertible into or exercisable for
shares of capital stock outstanding at the end of the period, the number of
common shares issuable upon conversion or exercise of any outstanding
securities convertible or exercisable for common shares and the exchange
ratio or exercise price applicable thereto and number of shares of issued
stock options and stock options not yet issued but reserved for issuance,
if any, all in sufficient detail as to permit the Holder to calculate its
percentage equity ownership in the Company and certified by the Chief
Financial Officer or Chief Executive Officer of the Company as being true,
complete and correct.
12. Inspection and Observer Rights. The Company shall permit the Holder to
visit and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be reasonably requested by the
Holder. The Company shall invite a representative of the Holder to attend all
regular meetings of its Board of Directors in a nonvoting observer capacity and,
in this respect, shall give such representative copies of all notices, minutes,
consents, and other materials that it provides to its directors at the same time
and in the same manner as provided to such directors; provided, however, (a)
that such representative shall agree to hold in confidence and trust all
information so provided, and (b) if in the good faith opinion of the Company's
legal counsel, the delivery of such information to the Holder's representative,
or the attendance of the Holder's representative at such meeting, would breach
the Company's attorney - client privilege with its legal counsel with respect to
such information, the Company may withhold such information from the Holder's
representative, or exclude the Holder's representative from such meeting of the
Company's Board of Directors, as the case may be.
13. Reports Under Exchange Act. With a view to making available to the
Holders the benefits of Rule 144 promulgated by the SEC under the Securities Act
("SEC RULE 144") and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after the effective
date of the first registration statement filed by the Company for the
offering of its securities to the general public so long as the Company is
subject to the periodic reporting requirements under Sections 13 or 15(d)
of the Exchange Act;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(c) furnish to any Holder, so long as the Holder holds this Warrants
or owns any Shares, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule
144, the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
11
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such
form.
14. Expiration of Warrant. This Warrant shall expire and shall no longer be
exercisable after 5:00 p.m., Pacific Standard Time, on the Expiration Date.
15. Notices. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given upon receipt or, if earlier, (a) five (5) days after
deposit with the U.S. Postal Service or other applicable postal service, if
delivered by first class mail, postage prepaid, (b) upon delivery, if delivered
by hand, (c) one business day after the business day of deposit with Federal
Express or similar overnight courier, freight prepaid or (d) one business day
after the business day of facsimile transmission, if delivered by facsimile
transmission with copy by first class mail, postage prepaid, and shall be
addressed (i) if to the Holder, at the Holder's address as set forth on the
register maintained by the Company, and (ii) if to the Company, at the address
of its principal corporate offices (Attention: President), which on the date
hereof is 1301 N. Tustin Avenue, Santa Ana, California 92705, or at such other
address as a party may designate by ten (10) days advance written notice to the
other party pursuant to the provisions above.
16. Warrant Agent.
(a) The Company shall serve as the initial warrant agent under this
Warrant. The Company and the Holder may appoint a new warrant agent as
mutually agreed upon by the Company and the Holder.
(b) Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of
its corporate trust or stockholders services business shall be a successor
warrant agent under this Warrant without any further act. Any such
successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the
Holder at the Holder's last address as shown on the register maintained by
the warrant agent pursuant to this Warrant.
17. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Shares upon the exercise of the Warrants
represented by this Warrant. The Holder shall be responsible for all other tax
liability that may arise as a result of holding or transferring the Warrants
represented by this Warrant or receiving the Shares under this Warrant.
18. Replacement of Warrant. If the certificate evidencing the Warrants is
mutilated, lost, stolen or destroyed, the Company shall issue in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant certificate, a new warrant certificate of like tenor, but only
12
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and bond or other indemnity, if requested, reasonably
satisfactory to it. A Holder of a replacement warrant certificate also shall
comply with such other reasonable regulations and pay such other reasonable
charges attributable to the replacement of a warrant certificate.
19. Governing Law. This Warrant and all actions arising out of or in
connection with this Warrant shall be governed by and construed in accordance
with the laws of the State of Nevada.
Issued this 9th day of October, 2007.
INTEGRATED HEALTHCARE HOLDINGS, INC.,
A NEVADA CORPORATION
By: /s/ Bruce Mogel
---------------------------------------
Bruce Mogel, Chief Executive Officer
Attachments
- -----------
Exhibit A - Notice of Exercise
Exhibit B - Form of Transfer
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EXHIBIT A
---------
NOTICE OF EXERCISE
------------------
TO: INTEGRATED HEALTHCARE HOLDINGS, INC.
Attention: President
1. The undersigned hereby elects to purchase __________ shares of the
Common Stock of Integrated Healthcare Holdings, Inc. (the "COMPANY") pursuant to
the terms of the attached Warrant.
2. Method of Exercise (Please initial the applicable blank):
___ The undersigned elects to exercise the attached Warrant by means
of a cash payment, and tenders herewith payment in full for the
purchase price of the shares being purchased, together with all
applicable transfer taxes, if any.
___ The undersigned elects to exercise the attached Warrant by means
of the net exercise provisions of Section 1(c) of this Warrant,
and accordingly requests delivery of a net of ______ of such
securities.
3. Please issue a certificate or certificates representing said Shares in
the name of the undersigned or in such other name as is specified below:
____________________________
(Name)
____________________________
____________________________
(Address)
4. The undersigned hereby represents and warrants that the aforesaid shares
of Shares are being acquired for the account of the undersigned for investment
and not with a view to, or for resale, in connection with the distribution
thereof.
____________________________
(Signature)
Title:______________________
____________________________
(Date)
EXHIBIT B
---------
FORM OF TRANSFER
----------------
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________ the right represented by
the attached Warrant to purchase ____________ shares of the Common Stock of
INTEGRATED HEALTHCARE HOLDINGS, INC. (the "COMPANY"), to which the attached
Warrant relates, and appoints ______________ as their true and lawful attorney
in fact to transfer such right on the books of the Company, with full power of
substitution in the premises.
Dated: ____________________
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant)
________________________________
________________________________
(Address)
Signed in the presence of:
________________________________