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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 18, 2008
Integrated Healthcare Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 0-23511 87-0573331
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1301 North Tustin Avenue, Santa Ana
California 92705
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 953-3503
Not Applicable
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Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b)
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
SECURITIES PURCHASE AGREEMENT
On July 18, 2008, Integrated Healthcare Holdings, Inc. (the "Company") entered
into a Securities Purchase Agreement (the "Purchase Agreement") with Kali P.
Chaudhuri, M.D. (the "Investor") and William E. Thomas ("Thomas"). Pursuant to
the Purchase Agreement, the Investor has a right to purchase from the Company
63,347,891 shares of its common stock for consideration of $0.11 per share,
aggregating $6,968,268. A copy of the Purchase Agreement is attached hereto as
Exhibit 10.1 and incorporated by reference. Certain material terms of the
Purchase Agreement are described in the press release attached hereto as Exhibit
99.1 and incorporated herein by reference.
The Purchase Agreement provides the Investor and Thomas with certain pre-emptive
rights to maintain their respective levels of ownership of the Company's common
stock by acquiring additional equity securities concurrent with future issuances
by the Company of equity securities or securities or rights convertible into or
exercisable for equity securities and also provides them with demand
registration rights. These pre-emptive rights and registration rights superseded
and replaced their existing pre-emptive rights and registration rights. The
Purchase Agreement also contains a release, waiver and covenant not to sue the
Investor in connection with the Investor's entry into the Option and Standstill
Agreement described below and the consummation of the transactions contemplated
under that agreement. Concurrent with the execution of the Purchase Agreement,
the Investor exercised in full outstanding warrants to purchase 24,878,213
shares of common stock at an exercise price of $0.15 per share, for a total
purchase price of $3,731,732.
EARLY LOAN PAYOFF AGREEMENT
Concurrent with the execution of the Purchase Agreement, the Company, WMC-SA,
Inc., a California corporation ("WMC-SA"); WMC-A, Inc., a California corporation
("WMC-A"); Chapman Medical Center Inc., a California corporation ("CMC"); and
Costal Communities Hospital, Inc., a California corporation ("CCH" and
collectively with WMC-SA, WMC-A and CMC, the "Subsidiaries") and Medical
Provider Financial Corporation I, a Nevada corporation ("MPFC I"); Medical
Provider Financial Corporation II, a Nevada corporation ("MPFC II"); Medical
Provider Financial Corporation III, a Nevada corporation ("MPFC III");
Healthcare Financial Management & Acquisitions, Inc., a Nevada corporation
("HFMA" and collectively with MPFC I, MPFC II, MPFC III, "MCC") entered into an
Early Loan Payoff Agreement (the "Payoff Agreement"). The Company used the
proceeds from the warrant exercise described above to pay down a $10,700,000
convertible term note, dated October 9, 2007, executed by the Company and the
Subsidiaries, jointly and severally as maker, payable to the order of MPFC III.
The Company is obligated under the Payoff Agreement to use the proceeds it
receives from the future exercise, if any, of the Investor's purchase right
under the Purchase Agreement, plus additional Company funds as may then be
necessary, to pay down the remaining balance of the $10,700,000 convertible term
note under the Payoff Agreement. Under the Payoff Agreement, once the Company
has fully repaid early the entire $10,700,000 convertible term note, it has an
option to extend the maturity dates of the $80,000,000 Credit Agreement and the
$50,000,000 Revolving Credit Agreement from October 8, 2010 to October 8, 2011.
A copy of the Payoff Agreement is attached hereto as Exhibit 10.2 and
incorporated by reference.
Concurrent with the execution of the Purchase Agreement, the Investor and MCC
entered into an Option and Standstill Agreement pursuant to which MCC agreed to
sell (i) the warrant dated October 9, 2007 issued to HFMA to purchase a minimum
of 16,880,484 shares of common stock of the Company, as amended by amendment no.
1 dated July 18, 2008 (the "4.95% Warrant"), and (ii) the warrant dated December
12, 2005 issued to HFMA to purchase a minimum of 26,097,561 shares of common
stock of the Company, as amended by amendment no. 1 dated affective as of April
26, 2006, amendment no. 2 dated October 9, 2007 and amendment no. 3 dated July
18, 2008 (the "31.09% Warrant", together with the 4.95% Warrant, the
"Warrants"). The Warrants will not be sold to the Investor unless the Investor
so elects within six years after the Company pays off all remaining amounts due
to MPFC II and MPFC I pursuant to (i) the $80,000,000 Credit Agreement dated
October 9, 2007, among the Company, the Subsidiaries, MPFC II, Pacific Coast
Holdings Investment, LLC, a California limited liability company ("PCHI"); West
Coast Holdings, LLC, a California limited liability company ("WCH"); Ganesha
Realty, LLC, a California limited liability company ("Ganesha") and Orange
County Physicians Investment Network, LLC, a Nevada limited liability company
("OC-PIN", collectively with PCHI, WCH, and Ganesha, the "Credit Parties") and
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(ii) the $50,000,000 Revolving Credit Agreement, dated October 9, 2007, among
the Company, the Subsidiaries, MPFC I, and the Credit Parties. HFMA also agreed
not to exercise or transfer the Warrants unless a payment default occurs and
remains uncured for a specified period. The Option and Standstill Agreement
further provides that if the full early payoff of the $10,700,000 convertible
note does not occur by January 10, 2009, then that agreement and the Investor's
right to purchase the Warrants will terminate.
The Investor is considered an "accredited" investor as such term is promulgated
by the SEC. In reliance upon such Investor's representation as an "accredited
investor" among other representations, the issuance of the common stock
described above was exempt from the registration requirements under the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereof and in
reliance upon Rule 506 of Regulation D promulgated by the SEC. The Company did
not engage in any public advertising or general solicitation in connection with
the transaction described above.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
The disclosure in Item 1.01 of this report is incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
EXHIBITS
10.1 Securities Purchase Agreement, dated effective as of July 18, 2008,
among the Company, Kali P. Chaudhuri, M.D., and William E. Thomas.
10.2 Early Loan Payoff Agreement, dated effective as of July 18, 2008, among
the Company; WMC-SA, Inc.; WMC-A, Chapman Medical Center, Inc.; Coastal
Communities Hospital, Inc.; Medical Provider Financial Corporation I;
Medical Provider Financial Corporation II, Medical Provider Financial
Corporation III; and Healthcare Financial Management & Acquisitions,
Inc .
10.2.1 Amendment No. 1 to Common Stock Warrant, dated effective as of July 18,
2008 (4.95% Warrant), between the Company and Healthcare Financial
Management & Acquisitions, Inc
10.2.2 Amendment No. 3 to Common Stock Warrant, dated effective as of July 18,
2008 (31.09% Warrant), between the Company and Healthcare Financial
Management & Acquisitions, Inc
99.1 Press release announcing the Company's execution of the Securities
Purchase Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Integrated Healthcare Holdings, Inc.
July 21, 2008 BY: /s/ Steven R. Blake
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NAME: STEVEN R. BLAKE
TITLE: CHIEF FINANCIAL OFFICER
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