8-K

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):  October 29, 2010

Integrated Healthcare Holdings, Inc.
	(Exact Name of Registrant as Specified in Charter)
Nevada		0-23511	87-0573331
(State or Other Jurisdiction  of Incorporation)		(Commission File Number)	(IRS Employer Identification No.)

1301 North Tustin Avenue, Santa Ana, California	92705
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (714) 953-3503

(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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.  Entry Into a Material Definitive Agreement.

Amendment No. 1 to Revolving Loan Facility

On October 29, 2010, Integrated Healthcare Holdings, Inc. (“IHHI”) and its subsidiaries, WMC-A, Inc., WMC-SA, Inc., Chapman Medical Center, Inc. and Coastal Communities Hospital, Inc. (together with IHHI, the “Company”) entered into Amendment No. 1 (the “Amendment”) to the Credit and Security Agreement, dated as of August 30, 2010 (the “Credit Agreement”), by and among the Company, MidCap Funding IV, LLC, as assigned to it from MidCap Financial, LLC, as administrative agent and a lender, and Silicon Valley Bank, as a lender (collectively, the “Lenders”).

Under the Amendment, the Lenders committed to increase the total revolving loan commitment amount under the Credit Agreement from $40.0 million to $45.0 million, and the Company agreed to pay to the Lenders a non-refundable origination fee of 1.0% of the Lenders’ increased commitment under the Amendment, or $50,000.

Also under the Amendment, the Lenders agreed to allow the inclusion in Eligible Accounts that are used to determine the Company’s Borrowing Base of up to $33,623,315 in aggregate federal or state matching payments to the Company related to California Assembly Bill 1383, which amount was increased from $11,765,000 for the first matching payment.

In addition, the optional prepayment and permanent commitment reductionprovisions of the Credit Agreement were amended to change the minimum Revolving Loan Commitment Amount to $20,000,000 from $5,000,000.  In addition, the prepayment fee calculation under Section 2.2(d) of the Credit Agreement was changed so that the prepayment fee is based on $40,000,000 rather than the amount of the permanent revolving loan commitment reduction amount.

Lastly, under the Amendment, in the event the Company permanently reduces its Revolving Loan Commitment Amount to $20,000,000 (and assuming there is no Event of Default at the time), the Company would be permitted to transfer funds that are swept into the Lenders’ account from the Company’s Lockbox Accounts to a different bank account designated by the Company.

The foregoing description of the Amendment is not complete and is qualified in its entirety by reference to a copy of the Amendment, which is attached as an exhibit to this Current Report on Form 8-K.  The foregoing summary should be read in connection with such exhibit.  Capitalized terms used but not defined in this Report have the meanings that are used or set forth in the Amendment.

Item 2.03.Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure under Item 1.01 of this Report is incorporated under this Item by reference.

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ITEM 9.01 Financial Statements and Exhibits.

(d) Exhibits.

EXHIBIT NUMBER	DESCRIPTION
99.1	Amendment No. 1 to the Credit and Security Agreement, dated October 29, 2010, by and among the Company, MidCap Funding IV, LLC, as Administrative Agent and Lender, and Silicon Valley Bank as Lender.

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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.
Date:  November 4, 2010	By:	/s/ Steven R. Blake
		Steven R. Blake
		Chief Financial Officer

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EX-99.1

Exhibit 99.1

AMENDMENT NO. 1 TO CREDIT AND SECURITY AGREEMENT

THIS AMENDMENT NO. 1 TO CREDIT AND SECURITY AGREEMENT (this “Amendment”) is made as of this 29th day of October, 2010, by and among INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation, WMC-SA, INC., a California corporation, WMC-A, INC., a California corporation, CHAPMAN MEDICAL CENTER, INC., a California corporation, COASTAL COMMUNITIES HOSPITAL, INC., a California corporation (each individually as a “Borrower”, and collectively as “Borrowers”), and MIDCAP FUNDING IV, LLC, a Delaware limited liability company, as assigned to it from MidCap Financial, LLC (as Administrative Agent for Lenders, “Agent”, and individually as a Lender), SILICON VALLEY BANK, a California corporation, and the other financial institutions or other entities parties hereto, each as a Lender. Capitalized terms used but not defined in this Amendment shall have the meanings that are set forth in the Credit Agreement (defined below).

RECITALS

A.           Pursuant to that certain Credit and Security Agreement dated as of August 30, 2010 by and among Borrowers, other borrowers party thereto, Agent and Lenders (the “Credit Agreement”), Lenders agreed to make available to Borrowers a revolving credit facilityin the initial principal amount of up to $40,000,000.

B.           Pursuant to Section 2.1(b)(vi) of the Credit Agreement, Borrowers have requested Agent and Lenders to amend the Credit Agreement to increase the Revolving Loan Commitment from $40,000,000 to $45,000,000.  Agent and Lenders have agreed to such amendment and to certain other amendments to the Credit Agreement, in accordance with and subject to the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and Borrowers hereby agree as follows:

1.           Amendments to Credit Agreement.

(a)           Section 1.1.

(i)           Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of “Revolving Loan Commitment Reduction Amount” in its entirety.

(ii)           The definition of “Eligible Accounts” set forth in Section 1.1 of the Credit Agreement is hereby amended by amending and restating the introductory sentences thereof in their entirety as follows:

“Eligible Accounts” means, subject to the criteria below, an Account Receivable of a Borrower, which was generated in the Ordinary Course of Business, which was generated originally in the name of a Borrower and not acquired via assignment or otherwise, and which Agent, in its Permitted Discretion, deems to be an Eligible Account.  Subject to Agent’s standard underwriting practices and due diligence review, and in the exercise of Agent’s Permitted Discretion such other reasonable conditions as Agent may require, Eligible Accounts may include an aggregate amount of up to $33,623,315 in Accounts Receivable related to Borrowers’ federal or state matching payments related to California Assembly Bill 1383.The net amount of Eligible Accounts (other than the matching payments referred to in the immediately preceding sentence, which shall be the amount of expected estimated payments as reasonably determined by Agent in its Permitted Discretion in accordance with the documentation provided by Borrowers to Agent (it being understood that as of October 29, 2010, such matching payments are expected to be in three installments of $11,179,105 each, as any such installment may be increased by an aggregate amount of up to $86,000)), at any time (a) shall be the face amount of such Eligible Accounts as originally billed minus all cash collections and other proceeds of such Account received from or on behalf of the Account Debtor thereunder as of such date and any and all returns, rebates, discounts (which may, at Agent’s option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Deb tors, granted, outstanding or payable in connection with such Accounts at such time, and (b) may be adjusted by applying percentages (known as “liquidity factors”) by payor and/or payor class based upon the applicable Borrower’s actual recent collection history for each such payor and/or payor class in a manner consistent with Agent’s underwriting practices and procedures.  No Accounts shall be excluded from Eligible Accounts solely due to deductibles and/or coinsurance; provided that such deductibles and/or coinsurance amounts shall be excluded pursuant to subsection (q) below.  Such liquidity factors may be adjusted by Agent from time to time as warranted by Agent’s Permitted Discretion. Without limiting the generality of the foregoing, no Account shall be an Eligible Account if:”

(b)           Section 2.1.Subsection 2.1(b)(iii) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(iii)           Optional Prepayments; Reduction in Revolving Loan Commitment.

(A)          Borrowers may from time to time prepay the Revolving Loans in whole or in part; provided, however, that any such partial prepayment shall be in an amount equal to $100,000 or a higher integral multiple of $25,000.

(B)           At Borrower’s election, with prior written notice to Agent, Borrowers may reduce the aggregate Revolving Loan Commitment Amounts in $5,000,000 increments and no Prepayment Fee shall be payable with respect to any such reductions, provided, that in no event shall the aggregate Revolving Loan Commitment Amounts be reduced to less than $20,000,000 in connection with any such reduction.”

(c)           Section 2.1.  Subsection 2.1(b) of the Credit Agreement is hereby amended by deleting subsections (v) and (vi) contained therein in their entirety.

(d)           Section 2.2.  Subsection 2.2(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:

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“(a)           Interest.  From and following the Closing Date, except as expressly set forth in this Agreement, Loans and the other Obligations shall bear interest at the sum of the LIBOR Rate plus the Applicable Margin.  If a Loan is made or continued on a day that is other than the first day of a calendar month or it would otherwise appear that an Interest Period would commence on a day other than the first day of a calendar month, interest shall be charged from and after such date at the then-current rate applicable to the Interest Period that would otherwise have commenced on the first day of the calendar month in which such event occurs, and the last day of such cal endar month shall be deemed to be the last day of such Interest Period (such that no breakage costs are due and payable as of such date).  Interest on the Loans shall be paid in arrears on the first (1st) day of each month and on the maturity of such Loans, whether by acceleration or otherwise.  Interest on all other Obligations shall be payable upon demand.  Solely for purposes of calculating interest (and not for any other purpose, including as to actual transfer of funds and application thereof as set forth in Section 2.11), all funds transferred from the Payment Account for application to any Revolving Loans shall be subject to a six (6) Business Day clearance period and all interest accruing on such funds during such clearance period shall accrue for the benefit of Agent, and not for the benefit of the Lenders.  In addition, if the conditions of Section 2.11(i) shall have been satisfied and instead of the Payment Account, Borrower elects to transfer funds that wer e received by Borrower (whether in the Lockbox Accounts or otherwise) to a different account identified by Borrower as described in Section 2.11(i) (collectively, the “Retained Funds”), and as a result, such collections are not received by Agent and are not applied to reduce the outstanding Revolving Loans as contemplated in Section 2.11(d), Borrower shall nevertheless pay to Agent, for itself and not for the benefit of Lenders, interest accruing on the Retained Funds during such six (6) Business Day clearance period as if such collections were transferred to the Payment Account, and Borrower shall provide Agent with all bank statements and other supporting documentation necessary for Agent to make such calculations of interest owed hereunder.”

(e)           Section 2.2.  Subsection 2.2(d) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(d)           Prepayment Fee.  If, at any time prior to the Commitment Expiry Date, (i) except to the extent permitted in Section 2.1(b)(iii)(B), any portion of the Revolving Loan is prepaid at any time, in whole or in part, for any reason other than pursuant to the mandatory repayment provisions set forth in Section 2.1(b)(ii), and such prepayment is accompanied by a corresponding permanent reduction of the Revolving Loan Commitment, whether by voluntary prepayment and/or termination by Borrowers, by reason of the occurrence of an Event of Default, or otherwise, or (ii) the Revolving Loans shall become accelerated and due and payable in full, or (iii) except to the extent permit ted in Section 2.1(b)(iii)(B) and Section 2.11(d), the Lenders’ funding obligations in respect of any unfunded portion of the Revolving Loan shall terminate, then in any such event, Borrowers shall pay to Agent, for the benefit of all Lenders committed to make Revolving Loans, as compensation for the costs of such Lenders making funds available to Borrowers under this Agreement, a prepayment fee (the “Prepayment Fee”) calculated in accordance with this subsection.  The Prepayment Fee shall be equal to the product of (y) $40,000,000, multiplied by (z) the following percentage: (i) two percent (2.0%) if such prepayment occurs prior to the first anniversary of the Closing Date, (ii) one and one-half percent (1.5%) if such prepayment occurs on or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, and (iii) one percent (1.0%) if such prepayment occurs on or after the second anniversary of the Closing Date but prior to the third anniversary of the Closing Date.  All fees payable pursuant to this paragraph shall be deemed fully earned and non-refundable as of the Closing Date.”

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(f)           Section 2.11.  Section 2.11 shall be amended by adding the following new subsection 2.11(i):