INTEGRATED HEALTHCARE HOLDINGS, INC. COMMON STOCK WARRANT WARRANT TO PURCHASE SHARES OF COMMON STOCK
Exhibit 99.5
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.
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
THIS
COMMON STOCK WARRANT (this “Warrant”)
certifies that, for consideration received, SPCP GROUP IV, LLC, a Delaware
limited liability company, or its successors or assigns (the “Holder”
or “Holders,”
as applicable), is entitled to subscribe for and purchase SIXTEEN MILLION EIGHT
HUNDRED SEVENTEEN THOUSAND THREE HUNDRED SIXTY FIVE (16,817,365) 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 seven cents ($0.07) (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 April 13, 2010 (the “Initial
Exercise Date”) through April 13, 2013 (the “Expiration
Date”). This Warrant shall be exercisable by Holder in whole
or in part and 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 wire transfer or certified, cashier’s or other check acceptable to
the Company (or as otherwise provided pursuant to Section 1(c) hereinbelow), of
an amount equal to the aggregate Exercise Price of the Shares being
purchased.
(c) Net Issue
Exercise. In combination with or in lieu of exercising this
Warrant for cash pursuant to Section 1(b), the Holder may elect to receive
Shares of Common Stock equal to the value of this Warrant (or any portion
thereof) 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 pursuant to this Section
1(c).
|
|
|
Y
|
=
|
the
number of the Shares covered by this Warrant in respect of which the net
issuance election is made pursuant to this Section
1(c).
|
|
|
A
|
=
|
the
fair market value of one Share on the date of election under this Section
1(c), as determined in accordance with Section
3(d).
|
|
|
B
|
=
|
the
Exercise Price in effect under this Warrant on the date of election under
this Section 1(c).
|
(i) If
the class of Shares is traded on a national securities exchange or other
over-the-counter quotation system, the fair market value shall be the last
reported sale price of a Share on such exchange or other over-the-counter
quotation system on the last business day before the effective date of exercise
of the net issuance election or if no such sale is made on such day, the mean of
the closing bid and asked prices for such day on such exchange.
(ii) If
the class of Shares is not so listed and bid and ask prices are not reported,
the fair market value shall be the price per Share that the Company could obtain
from a willing buyer for Shares sold by the Company, as such price shall be
determined by either of the following (in each case, the “Appraiser”),
which determination shall be conclusive and binding on the Company and the
Holder for purposes of this Warrant: (A) the mutual agreement of the Company and
Holder, or (B) alternatively, if in good faith the Company and the Holder are
unable to reach such mutual agreement within five (5) business days, 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 and at the Company’s sole cost and
expense.
(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 if the Company’s Common Stock is publicly traded and the notice of
exercise is received after 1:30 p.m. Pacific 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.
2
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 duly authorized, validly issued, 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.
(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 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 this Warrant is 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.
3
(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) If
the Company, at any time while this Warrant is outstanding, shall issue
additional shares of Common Stock for a consideration per share less than the
Exercise Price (a “Dilutive
Issuance”), then, the Exercise Price shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) determined by
multiplying such Exercise Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such issue
plus the number of shares which the aggregate consideration received by the
Company for such issue would purchase at such Exercise Price, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such additional shares of
Common Stock so issued. For the purposes of this Section 3(d), all
shares of Common Stock issuable upon conversion of any outstanding shares of
preferred stock and the exercise and/or conversion of any other outstanding
securities or rights exercisable for or convertible into shares of Common Stock
shall be deemed to be outstanding. For the purposes of this Section
3(d), the following paragraphs shall also be applicable:
(i) If
the Company, at any time while this Warrant is outstanding, grants any rights to
subscribe for, or any rights or options to purchase, or securities convertible
into, shares of Common Stock, whether or not such rights or options or rights to
convert or exchange are immediately exercisable, and the price per share
associated with such rights or options or rights to convert or exchange is less
than the Exercise Price, then the total maximum number of shares issuable upon
the exercise of such rights or options or upon conversion or exchange of the
total maximum amount of such convertible securities issuable upon the exercise
of such rights or options shall (as of the date of grant of such rights or
options) be deemed to have been issued at such time in a Dilutive Issuance, and
the Exercise Price shall be adjusted accordingly pursuant to this Section
3(d).
4
(ii) If
the Company, at any time while this Warrant is outstanding, issues or sells any
convertible securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share associated with
such convertible securities is less than the Exercise Price, then the total
maximum number of shares issuable upon conversion or exchange of such
convertible securities shall (as of the date of the issue or sale of such
convertible securities) be deemed to have been issued at such time in a Dilutive
Issuance, and the Exercise Price shall be adjusted accordingly pursuant to this
Section 3(d); provided that if any such issuance or sale of such convertible
securities is made upon exercise of any rights to subscribe for or to purchase
or any option to purchase any such convertible securities for which adjustments
of the Exercise Price have been or are to be made pursuant to Section 3(d)(i),
then no further adjustment shall be made pursuant to this Section 3(d)(ii) by
reason of such issuance or sale.
(e) 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.
(f) 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. Except for the shares issuable pursuant to the stock
purchase agreements entered into by the Company pursuant to the Settlement
Agreement, General Release and Covenant Not to Xxx on or about April 2, 2009
(“Purchase Rights”), 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
purposes of this Section 3.
5
(iii) Exempt
Issuance. Notwithstanding anything to the contrary contained
in this Section 3, no adjustments to the number of Shares issuable upon exercise
of this Warrant or the Exercise Price shall be made upon an Exempt
Issuance. The term “Exempt Issuance” means the
issuance of (a) shares of Common Stock in an underwritten public offering with
an aggregate gross offering price of at least $50,000,000 and a minimum per
share offering price of at least double the then-current Exercise Price, (b)
shares of Common Stock or options to employees, officers or directors of the
Company primarily for compensatory purposes pursuant to any stock or option plan
or arrangement duly adopted by the Board of Directors of the Company, provided
that any shares issued to any Affiliate, existing shareholder, or other related
party of the Company (the “Related Parties”) in
connection with such plans or arrangements are not materially greater than the
shares otherwise issued to non-Related Parties for similar service under such
plans or arrangements, (c) shares of common stock or options to third-party
consultants to the Company who are not Related Parties pursuant to arrangements
duly approved by the Board of Directors of the Company, (d) securities upon the
exercise or conversion of this Warrant, the other New Warrants (defined below),
the Purchase Rights, or other securities or rights exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the
Initial Exercise Date, (e) securities issued as consideration for acquisitions
or strategic transactions duly approved by the Board of Directors of the Company
in a business synergistic with the business of the Company, but shall not
include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is
investing in securities or (f) Common Stock and/or securities convertible into
or exercisable for shares of Common Stock that may be issued to Xxxx X.
Xxxxxxxxx, M.D. or his Affiliates in connection with one or more strategic
transactions approved by the Board of Directors of the Company as being fair and
reasonable and providing consideration to the Company at least commensurate with
the shares or securities being issued, provided that the number of shares issued
or shares into which such securities are convertible pursuant to all issuances
under this clause (f) shall not exceed 55,000,000 shares in aggregate (as
appropriately adjusted for stock splits, combinations and similar
events).
(iv) For
purposes of this Warrant, the term “Affiliate” shall have the definition given
that term in Rule 12b-2 promulgated by the Securities and Exchange Commission
under the Exchange Act.
(g) The
Company shall not, by amendment of its articles of incorporation or through a
reorganization, transfer of assets, consolidation, merger, dissolution, issue,
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Company, but shall at all times in good faith assist in
carrying out all the provisions of this Section 3 and in taking all such action
as may be necessary or appropriate to protect Holder’s rights under this Section
3 against impairment.
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.
6
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. Pre-emptive
Rights. The Company hereby grants to the Holder (so long as
SPCP Group IV, LLC or an Affiliate thereof (which term shall include any
investment fund managed by SPCP Group IV, LLC or its Affiliates) is and remains
the Holder hereof) pre-emptive rights with respect to issuances, other than
Exempt Issuances, after the Initial Exercise Date, by the Company of its equity
securities or securities or rights convertible into or exercisable for equity
securities, where issuance of those securities or rights would result in
dilution of the Holder’s beneficial ownership (as calculated by the Holder for
purposes of Section 13(d) of the Exchange Act of 1934, as amended (the “Exchange Act”)) of the Common
Stock on a fully-diluted and as converted basis, taking into account all
securities of the Company held by the Holder which entitle the Holder to acquire
Common Stock at any time, including, without limitation, this Warrant,
immediately prior to the consummation of the proposed issuance (the “Pre-Transaction
Percentage”). Each time the Company proposes to issue or offer
any shares of, or securities or rights convertible into or exercisable for any
shares of, any class of the Company’s equity securities (the “New Shares”) that would reduce
the Holder’s Pre-Transaction Percentage, other than in Exempt Issuances, the
Company shall first make a written offer to the Holder of its pro rata share of
the New Shares based on the Holder’s Pre-Transaction Percentage (the “Offer Notice”). The
Offer Notice shall state (a) the Company’s bona fide intention to issue or offer
the New Shares, (b) the identity of the person(s) to whom the New shares are to
be issued or offered, (c) the number of New Shares to be issued or offered, and
(d) the price and terms upon which it proposes to issue or offer the New
Shares. The Holder may, by written notice to the Company delivered
within ten (10) days of its receipt of the Offer Notice, elect to purchase, at
the price and on the terms specified in the Offer Notice, up to its pro rata
share of the New Shares. The closing of the sale to the Holder shall
occur simultaneously with the issuance or sale of the New Shares to the other
person(s) identified in the Offer Notice, but no earlier than fifteen (15) days
following the Holder’s receipt of the Offer Notice (unless a shorter period is
mutually agreed between the Company and the Holders). The Holder’s
pro rata share of the New Shares shall be priced equal to the lowest price paid
by any of the other person(s) identified in the Offer Notice, including any such
person who may be receiving or purchasing New Shares by virtue of similar
pre-emptive or other purchase rights. If the Company does not
consummate the issuance or sale of the New Shares within sixty (60) days
following the Holder’s receipt of the Offer Notice, then the New Shares shall
not be offered, issued or sold unless again offered to the Holder in accordance
with this Section 6.
7. Representations, Warranties
and Covenants of the Company.
7
(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, except that the Company may need to obtain
stockholder approval to increase its authorized capital to ensure there are
sufficient shares of Common Stock available for issuance of the Shares pursuant
hereto. The Company covenants and agrees to promptly increase the
Company’s authorized capital as and to the extent necessary to ensure there are
sufficient authorized shares of Common Stock reserved and available for issuance
under this Warrant, subject to the Holder’s cooperation in approving by vote or
written consent from time to time resolutions approving such increases in
authorized capital. The Company will procure at its sole expense upon each such
authorization and reservation of shares the listing thereof (subject to issuance
or notice of issuance) on all stock exchanges on which the Common Stock is then
listed or inter-dealer trading systems or markets on which the Common Stock is
then traded. The Company will take all such actions as may be necessary to
assure that such shares of Common Stock may be so issued without violation of
any applicable law or regulation, or of any requirements of any national
securities exchange upon which the Common Stock may be listed or inter-dealer
trading system on which the Common Stock is then traded, free of any pre-emptive
rights except as referenced in Section 7(e) hereof. In furtherance, and not in
limitation, of the foregoing, the Company covenants and agrees to prepare and
file with the Securities and Exchange Commission preliminary and definitive
versions of a Schedule 14C Information Statement and make such other filings and
mailings to the Company’s stockholders as necessary or appropriate to cause an
increase in the Company’s authorized capital to a number that is sufficient to
accommodate exercise of this Warrant, to become effective as soon as practicable
after the Initial Exercise Date.
(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. Except as provided in favor of Xxxx X. Xxxxxxxxx, M.D. and
Xxxxxxx X. Xxxxxx in that certain Securities Purchase Agreement dated effective
as of July 18, 2008, as amended, among the Company, Xxxx X. Xxxxxxxxx, M.D. and
Xxxxxxx X. Xxxxxx (“2008
SPA”), no stockholder of the Company has preemptive rights to purchase
new issuances of the Company’s capital stock.
8
(e) Except
as provided in the 2008 SPA and in warrants (including this Warrant) to purchase
up to four hundred five million (405,000,000) shares of Common Stock, which
warrants (the “New
Warrants”) were issued by the Company on the Initial Exercise Date, 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 8
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 three (3) Trading 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.
8. Restrictive
Legend. The Shares (unless registered under the Securities
Act) shall be stamped or imprinted with a legend in substantially the following
form:
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.
9. 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, “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.
9
(b) No
opinion of counsel or “no-action” letter shall be necessary for any transfer or
assignment by any Holder.
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 and 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
(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.
10
12. Reports Under Exchange
Act. With a view to making available to the Holders the
benefits of Rule 144 promulgated by the Securities and Exchange Commission (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 Warrant 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 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.
13. Expiration of
Warrant. This Warrant shall expire and shall no longer be exercisable
after 5:00 p.m., Pacific Time, on the Expiration Date.
14. 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 0000 X. Xxxxxx Xxxxxx, Xxxxx
Xxx, Xxxxxxxxxx 00000, 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.
11
15. 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.
16. 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.
17. Replacement of
Warrant. If the certificate evidencing this Warrant 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
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.
18. 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.
19. Amendments. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.
20. Registration
Rights.
12
(a) The
Company shall file a registration statement under 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 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 herein below) 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 19(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 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 as
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
19(b)(ii), 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 held by the Holder to be included in such underwriting shall
not be reduced unless all other securities, other than securities to be
registered pursuant to the registration rights granted in the 2008 SPA (the
“Other
Shares”) and securities to be offered for the account of the Holders of
the New Warrants and the Company, are first entirely excluded from the
underwriting, and unless the number of Other Shares, on the one hand, and
Piggy-back Shares on the other hand, are cut back on a pro rata basis based on
the number of Piggy-back Shares and Other Shares requested to be included in
such offering. 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.
13
(iii) The
Company shall be obligated pursuant to this Section 19(b)(iii) 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.
(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 Exchange Act, against any Violation (as defined herein
below) 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 19(c)(i) 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.
14
(ii) Each
Holder of Shares who participates in a registration pursuant to Section 19 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 19(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 19(c)(ii)
arise.
[signature
page follows]
15
Issued
this 13th day of April, 2010.
|
Integrated Healthcare Holdings,
Inc.,
a
Nevada corporation
By: /s/
Xxxxxxx X.
Xxxxxxxxx
Xxxxxxx
X. Xxxxxxxxx, Chief Executive
Officer
|
Attachments
Exhibit A
- Notice of Exercise
Exhibit B
- Form of Transfer
16
EXHIBIT
A
NOTICE OF
EXERCISE
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(s)):
|
|
___
|
The
undersigned elects to exercise the attached Warrant by means of a cash
payment, and tenders herewith payment in full of $____________ for the
purchase price of _____________ Shares being purchased for cash, 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 Shares and a corresponding
reduction in the total number of Shares available for further exercise
from __________ Shares to _____________
Shares.
|
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)
|
17
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:
18
