Exhibit 10.16.1
INTEGRATED HEALTHCARE HOLDINGS INC.
AMENDMENT TO
COMMON STOCK WARRANT
APRIL 26, 2006
This Amendment to Common Stock Warrant (this "AMENDMENT") is made and
entered into as of the date set forth above (the "EFFECTIVE DATE") by and
between Integrated Healthcare Holdings, Inc., a Nevada corporation (the
"COMPANY"), and Healthcare Financial Management & Acquisitions, Inc., a Nevada
corporation (the "HOLDER").
RECITALS
A. On December 12, 2005, the Company issued a warrant to subscribe for
and purchase a minimum of 26,097,561 shares of Common Stock of the Company
subject to the provisions and upon the terms and conditions set forth therein
(the "WARRANT").
B. The Warrant, a true and correct copy of which is attached hereto as
EXHIBIT A, provides that the number of Shares issuable upon exercise of the
Warrant is subject to adjustment from time to time as set forth therein.
C. A provision of the Warrant provides for adjustment of the number of
Shares issuable upon exercise of the Warrant based on changes in the fair market
value of the Shares (the "FMV ADJUSTMENTS"). D. The Company and Holder desire to
enter into this Amendment to, among other thing's, amend the provision contained
in the Warrant regarding FMV Adjustments.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree to amend the Warrant as set forth herein and agree as
follows:
AGREEMENT
1. RECITALS. The foregoing Recitals are incorporated by reference as
though fully set forth herein.
2. DEFINITIONS. Unless otherwise defined herein, capitalized terms
shall have the meanings assigned to such terms in the Warrant.
3. AMENDMENT OF FMV ADJUSTMENTS. The first paragraph of Section 3 of
the Warrant is hereby amended to read in its entirety as follows:
"ADJUSTMENT TO THE NUMBER OF SHARES ISSUABLE AND/OR THE EXERCISE
PRICE. The number of Shares issuable upon the exercise of this Warrant
is subject to adjustment from time to time as set forth in this Section
3. Upon each adjustment
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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. Notwithstanding anything to the
contrary provided herein, the number of Shares of Common Stock issuable
upon the exercise of this Warrant and the payment of the Exercise Price
shall be automatically adjusted to be the greater of the following: (1)
26,097,561 Shares of Common Stock (as set forth on page 1 of this
Warrant), (2) Shares of Common Stock representing thirty-one and nine
one-hundredths percent (31.09%) of all Common Stock Equivalents (as
defined hereinbelow) of the Company, or (3) the number of Shares of
Common Stock equal to the Outstanding Amount (as defined hereinbelow)
divided by the then current fair market value (as determined in Section
1(d) hereof) of each Share of Common Stock; provided , however, that if
the number of Shares resulting from such calculation exceeds the
aggregate number of shares of authorized but unissued Common Stock and
authorized and issued Common Stock held in the Company's treasury then
available for issuance upon exercise of this Warrant (such excess
number of Shares is referred to herein as the "EXCESS WARRANT SHARES"),
then the Company shall pay to the Holder or Holders, upon exercise of
this Warrant for all or any portion of the Excess Warrant Shares, an
amount equal to the then current fair market value (as determined in
Section 1(d) hereof) of each Share of Common Stock multiplied by the
number of Excess Warrant Shares for which the Holder or Holders have
exercised their right(s) to purchase pursuant to this Warrant. For
avoidance of doubt and solely for example purposes, if a) the
Outstanding Amount is $5,000,000, b) the aggregate number of shares of
authorized but unissued Common Stock and authorized and issued Common
Stock held in the Company's treasury then available for issuance upon
exercise of this Warrant is 28,000,000, c) the then current fair market
value of each Share of Common Stock is $0.15, and d) the total number
of shares that the Holder or Holders would be entitled to receive upon
exercise of this Warrant in full was 33,333,333 Shares of Common Stock,
then upon exercise of this Warrant in full, the Holder or Holders shall
receive 28,000,000 Shares of Common Stock, the Excess Warrant Shares
would be 5,333,333.33 Shares of Common Stock and the Company shall be
obligated to pay the Holder or Holders an aggregate cash payment of
$800,000. As used herein, the term "OUTSTANDING AMOUNT" shall mean the
amount of that certain $10,700,000 loan (the "LOAN") made with respect
to the Credit Agreement that is not repaid at the maturity or default
of such Loan plus any accrued and unpaid interest thereon, Lender's
fees, costs and expenses, and attorneys' fees, as such Outstanding
Amount is determined in the sole and absolute discretion of the Lender.
"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
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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."
4. NET ISSUE EXERCISE. Section 1(c) of the Warrant is hereby amended to
read in its entirety as follows:
"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 divided by Y (as
adjusted to the date of such
calculation)."
5. Section 3(d)(ii) of the Warrant is hereby amended to read in its
entirety as follows:
"(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."
6. The second sentence of Section 8(a) of the Warrant which reads:
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"The Warrants 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 Warrants."
is hereby amended to read in its entirety as follows:
"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."
7. Section 9(c)(ii) of the Warrant is hereby amended to read in its
entirety as follows:
"(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 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."
8. Except as set forth herein, the Warrant shall remain unmodified and
in full force and effect.
9. This Amendment may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Common Stock Warrant as of the date and year first above written.
INTEGRATED HEALTHCARE
HOLDINGS, INC., A NEVADA CORPORATION
BY: /S/ BRUCE MOGEL
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Name: Bruce Mogel
Title: Chief Executive Officer
HEALTHCARE FINANCIAL
MANAGEMENT & ACQUISITIONS, INC.,
A NEVADA CORPORATION
By: /s/ Joseph J. Lampariello
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Name: Joseph J. Lampariello
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Title: PRESIDENT
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