UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
INTEGRATED HEALTHCARE HOLDINGS, INC.
-------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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(1) Title of each class of securities to which transaction applies: _______
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the filing fee is calculated and state how it was determined):
_______________________________________________________________________
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previously. Identify the previous filing by registration number, or the Form
or Schedule and date of filing.
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INTEGRATED HEALTHCARE HOLDINGS, INC.
1301 N. Tustin Avenue
Santa Ana, California 92705
(714) 953-3503
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of the Stockholders of Integrated Healthcare
Holdings, Inc. (the "Company") will be held at 6:00 p.m. Pacific time on
Wednesday, September 5, 2007, for the following purposes:
1. To elect seven (7) directors to our Board of Directors to serve
until the 2008 Annual Meeting of Stockholders and until their
successors are elected and have qualified. The following
individuals are the nominees for election as director:
Maurice J. DeWald Ajay G. Meka, M.D. Bruce Mogel
Hon. C. Robert Jameson Michael Metzler J. Fernando Niebla
William E. Thomas
2. To ratify the appointment of BDO Seidman, LLP as the independent
registered public accounting firm of the Company for the fiscal
year ended March 31, 2008.
3. To transact such other business as may properly be brought before
the meeting or any adjournments thereof.
The Annual Meeting will be held in the Bash Auditorium on the first
floor of the Western Medical Center-- Santa Ana located at 1001 N. Tustin Ave.,
Santa Ana, California, 92705.
Only stockholders of record at the close of business on August 15, 2007
are entitled to notice of, and to vote at, the meeting and any adjournments
thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
PLEASE COMPLETE AND RETURN THE ENCLOSED RSVP CARD IF YOU WILL BE
ATTENDING THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON, YOU ARE URGED TO FILL IN
THE ENCLOSED PROXY AND TO SIGN AND FORWARD IT IN THE ENCLOSED BUSINESS REPLY
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. ANY STOCKHOLDER WHO SIGNS AND SENDS IN A
PROXY MAY REVOKE IT BY EXECUTING A NEW PROXY WITH A LATER DATE, BY WRITTEN
NOTICE OF REVOCATION TO THE SECRETARY OF THE COMPANY AT ANY TIME BEFORE IT IS
VOTED, OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF STOCK THAT
YOU HOLD. YOUR COOPERATION IN PROMPTLY RETURNING YOUR PROXY WILL HELP LIMIT
EXPENSES INCIDENT TO PROXY SOLICITATION.
By Order of the Board of Directors
Ajay G. Meka, M.D.
Chairman of the Board of Directors
Santa Ana, California
August 15, 2007
INTEGRATED HEALTHCARE HOLDINGS, INC.
1301 N. Tustin Avenue
Santa Ana, California 92705
(714) 953-3503
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PROXY STATEMENT
----------------------------
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Integrated Healthcare Holdings, Inc., a
Nevada corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held at 6:00 p.m. Pacific time on Wednesday, September 5,
2007, and at any and all adjournments thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
The Annual Meeting will be held in the Bash Auditorium on the first floor of the
Western Medical Center--Santa Ana located at 1001 N. Tustin Ave., Santa Ana,
California, 92705. Accompanying this Proxy Statement is the Board of Directors'
Proxy for the Annual Meeting, which you may use to indicate your vote as to the
proposals described in this Proxy Statement. In addition to solicitation by use
of the mail, certain of our officers and employees may, without receiving
additional compensation therefore, solicit the return of proxies by telephone,
telegram or personal interview. We have requested that brokerage houses and
custodians, nominees and fiduciaries forward soliciting materials to their
principals, the beneficial owners of common stock, and have agreed to reimburse
them for reasonable out-of-pocket expenses in connection therewith.
REVOCATION OF PROXIES
All Proxies which are properly completed, signed and returned to us
prior to the Annual Meeting, and which have not been revoked, will be voted in
favor of the proposals described in this Proxy Statement unless otherwise
directed. A stockholder may revoke his or her proxy at any time before it is
voted either by filing with the Secretary of the Company, at its principal
executive offices, a written notice of revocation or a duly executed proxy
bearing a later date or by attending the Annual Meeting and expressing a desire
to vote his or her shares in person.
RECORD DATE AND VOTING PROCEDURES
The close of business on August 15, 2007 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and any adjournment of the Annual Meeting. As of the record
date, we had outstanding 137,095,716 shares of common stock, par value $.001 per
share ("Common Stock").
Each stockholder of record is entitled to one vote for each share held
on all matters to come before the meeting. All proxies which are returned will
be counted by the Inspector of Elections in determining the presence of a quorum
and on each issue to be voted on for which a vote was cast. An abstention from
voting or a broker non-vote will not be counted in the voting process. The
Bylaws of the Company do not permit stockholders to cumulate votes for election
of directors.
Stockholders may revoke any proxy before it is voted by attendance at
the meeting and voting in person, by executing a new proxy with a later date, or
by giving written notice of revocation to the Secretary of the Company.
The shares represented by proxies that are returned properly signed
will be voted in accordance with each stockholder's directions. If the proxy
card is signed and returned without direction as to how they are to be voted,
the shares will be voted as recommended by the Board of Directors.
1
MAILING OF PROXY STATEMENT AND PROXY CARD
Our Annual Report on Form 10-K for the year ended March 31, 2007 is
enclosed for your convenience but is not to be considered part of the
solicitation material. We will pay the cost for preparing, printing, assembling
and mailing this Proxy Statement and the Proxy Card and all of the costs of the
solicitation of the proxies.
Our principal executive offices are located at 1301 N. Tustin Avenue,
Santa Ana, California 92705. This Proxy Statement and the accompanying Proxy
Card is first being mailed to stockholders on or about August 15, 2007.
2
PROPOSAL ONE
ELECTION OF DIRECTORS
In accordance with our Articles of Incorporation and Bylaws, the Board
of Directors consists of not less than three nor more than seven members. At
each annual meeting of stockholders of the Company, directors are elected until
the next annual meeting of stockholders and until their successors are elected
and have qualified. Our Bylaws provide for the election of directors at our
Annual Meeting of Stockholders. The Board of Directors proposes the election of
the nominees named below.
Unless marked otherwise, proxies received will be voted FOR the
election of each of the nominees named below, unless authority is withheld. If
any such person is unable or unwilling to serve as a nominee for the office of
director at the date of the Annual Meeting or any postponement or adjournment
thereof, the proxies may be voted for a substitute nominee, designated by the
proxy holders or by the present Board of Directors to fill such vacancy. The
Board of Directors has no reason to believe that any such nominee will be
unwilling or unable to serve if elected a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE ELECTION OF ALL OF THE DIRECTORS NOMINATED HEREIN.
The Board of Directors proposes the election of the following nominees
as members of the Board of Directors. If elected, the nominees are expected to
serve until the 2008 Annual Meeting of Stockholders and until their successors
are elected and have qualified.
Maurice J. DeWald Ajay G. Meka, M.D. Bruce Mogel
Hon. C. Robert Jameson Michael Metzler J. Fernando Niebla
William E. Thomas
INFORMATION WITH RESPECT TO EACH NOMINEE AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each
nominee and executive officer of the Company as of July 31, 2007.
NAME AGE POSITION
- ---- --- --------
Ajay G. Meka, M.D. 56 Chairman of the Board of Directors
Bruce Mogel 49 Director, Chief Executive Officer
Maurice J. DeWald 67 Director
Hon. C. Robert Jameson 67 Director
Michael Metzler 61 Director Nominee
J. Fernando Niebla 67 Director
William E. Thomas 58 Director Nominee
Larry B. Anderson 58 President
Steven R. Blake 54 Chief Financial Officer
Daniel J. Brothman 51 Senior Vice President, Operations
Milan Mehta 48 Senior Vice President, Contacts and
Special Projects
AJAY G. MEKA, M.D. has served as Chairman of the Board of Directors of
the Company since September 28, 2006. Dr. Meka has been a licensed physician in
California for the past 23 years. He is a board certified physician practicing
in Orange County, California. Dr. Meka received his medical degree from Guntur
Medical College in Gunter, India. He performed his post-graduate training at
Brooklyn Jewish Hospital and Coney Island Hospital, both in Brooklyn, New York.
3
BRUCE MOGEL has served as Chief Executive Officer and director of the
Company since November 18, 2003. Mr. Mogel has over 25 years of experience in
operational management and has held several lead executive roles in the
healthcare field. Most recently, from 1999-2002, Mr. Mogel served as Executive
Vice President of Operations for Doctors' Community Healthcare Corp, where he
was responsible for the operations and profitability of five acute care
hospitals and one psychiatric hospital, and managed a team of six hospital CEOs
and other senior management members. Mr. Mogel earned his Bachelor's degree from
The State University of New York at Buffalo with a degree in English.
MAURICE J. DEWALD has served as a member of the Board of Directors of
the Company since August 1, 2005 and sits on the Audit Committee, Compensation
Committee, Finance Committee and Special Committee. Mr. DeWald is Chairman and
Chief Executive Officer of Verity Financial Group, Inc., a private investment
firm that he founded in 1992. From 1962-1991, Mr. DeWald was with KPMG, LLP, one
of the world's largest international accounting and tax consulting firms, where
he served at various times as director and as the Managing Partner of the
Chicago, Orange County and Los Angeles Offices. Mr. DeWald is a director of
Mizuho Corporate Bank of California, Advanced Materials Group, Inc, NNN
Healthcare/Office REIT, Inc. and fileScan, Inc., and is a former director of
Tenet Healthcare Corporation and Quality Systems, Inc. He also sits on the
Advisory Council of the University of Notre Dame Mendoza School of Business. Mr.
DeWald is a past Chairman and director of United Way of Greater Los Angeles. Mr.
DeWald received a B.B.A. from the University of Notre Dame in 1962. He is also a
Certified Public Accountant.
HON C. ROBERT JAMESON has been a director of the Company since July 11,
2007. Judge Jameson is a retired Orange County Superior Court judge now
affiliated with Judicate West, handling complex alternative dispute resolution
matters. Before leaving the bench, he was Presiding Judge of the Orange County
Superior Court, Supervising Judge of the Complex Civil Litigation Panel and
Presiding Judge of the Superior Court Appellate Division. Judge Jameson obtained
his B.A. degree in Political Science from the University of Southern California
in 1963 and his Juris Doctor degree at the University of California, Hastings
College of The Law in 1966. He served as a judge from 1984-2005 and also was
President of the Banyard Inn of Court and an Adjunct Professor of Law at
Whittier Law School during his tenure. Judge Jameson was awarded "Judge of the
Year" nine times over the course of his career by organizations such as: the
Orange County Bar Association Business Litigation section, Orange County Trial
Lawyers, the American Board of Trial Advocates and the Consumer Attorneys of
California.
MICHAEL METZLER has served as President and Chief Executive Officer of
the Santa Ana Chamber of Commerce since January 1983. Mr. Metzler directs and
controls all activities of this multi-million dollar organization and its
subsidiaries, including SACPAC, the chamber's political action committee, and
the Greater Santa Ana Vitality Foundation, the chamber's charitable foundation.
He has led numerous community initiatives and campaigns that have grown the
local economy and advanced the prosperity of business, including a $145 million
local school bond campaign in 1999, a $100+ million private development
initiative in 2005, and a new career-oriented technical high school in 2006. He
also founded the Chamber's nationally award-winning 73,000-circulation
newspaper, CityLine, in 1996, for which he serves as its publisher. Mr. Metzler
has served on numerous community boards, city commissions and county, regional,
state and national task forces, and currently serves as chairman of the Board of
Trustees of Coastal Communities Hospital. Metzler also was a founder of the
Santa Ana Business Bank and sits on its Board of Directors. Mr. Metzler is a
graduate of California State University, Fullerton, and attended Loyola
University School of Law and the Peter F. Drucker Graduate School of Management
at Claremont University.
J. FERNANDO NIEBLA has served as a member of the Board of Directors of
the Company since August 1, 2005 and sits on the Audit Committee, Compensation
Committee, Finance Committee and Special Committee. He has served as President
of International Technology Partners, LLC, an information technology and
business consulting services company based in Orange County, California since
August 1998. He is also a founder of Infotec Development Inc. and Infotec
Commercial Systems, two national information technology firms. He currently
serves on the Board of Directors of Union Bank of California, Pacific Life Corp.
and Granite Construction Corp., the Board of Trustees of the Orange County
Health Foundation, and on the Advisory Board to the University of Southern
California Integrated Media Systems Center. Mr. Niebla holds a B.S. degree in
Electrical Engineering from the University of Arizona and an M.S. QBA from the
University of Southern California.
4
WILLIAM E. THOMAS is the Executive Vice President and General Counsel
of Strategic Global Management, Inc., a healthcare ventures firm in Riverside,
California. Mr. Thomas has served in such capacity since October of 1998. Prior
to that Mr. Thomas was a founding and managing partner of a law firm in
Riverside, California specializing in business, real estate and other
transactional matters. Mr. Thomas graduated from the University of California at
Santa Barbara with a Bachelor of Arts degree in History and Political Science.
He holds a Juris Doctor degree from Hastings College of the Law and a Master of
Laws degree from New York University. He is a member of the California Bar
Association.
LARRY B. ANDERSON has served as President of the Company since November
2003 and served as a director of the Company from November 2003 until August 1,
2005. Mr. Anderson has over 20 years of senior level executive experience in an
enterprise with over $65 billion per year in sales. A California licensed
attorney since 1975, Mr. Anderson specializes in employment and business law
matters, including collective bargaining, arbitrations, unfair labor practices
and court cases as well as transactional work in contracts and due diligence.
>From 2002-2003, as the Executive Vice President, Human Resources and General
Counsel, Litigation, Mr. Anderson managed all litigation for a seven hospital
chain in Southern California. Mr. Anderson earned his Bachelor of Arts degree in
Political Science from California State University, Long Beach, and his law
degree from Loyola University.
STEVEN R. BLAKE has served as Chief Financial Officer of the Company
since July 1, 2005 and is a California licensed Certified Public Accountant
(CPA). Mr. Blake came to the Company with over 20 years of experience in
multi-hospital financial management. He also has extensive experience serving in
financial roles with public companies. Most recently, he served as Regional Vice
President of Finance for Tenet Healthcare Corporation ("Tenet"), a position he
held for over 17 years. In this position, Mr. Blake was responsible for the
financial management of numerous Tenet assets covering five western states
(California, Arizona, Washington, Nebraska and Texas). Mr. Blake's strong
hospital financial background combined with his knowledge of public company
requirements made him a strong addition to the Company's corporate team.
DANIEL J. BROTHMAN is Senior Vice President, Operations of the Company
and Chief Executive Officer of Western Medical Center Santa Ana. Mr. Brothman is
an experienced single and multi-hospital operations executive. Since 1999 he
helped build the Western Medical Center in Santa Ana for Tenet Healthcare
Corporation. Mr. Brothman also ran Columbia Healthcare's Utah Division from
1996-1998. Mr. Brothman has in excess of 30 years experience in hospital
administration. Mr. Brothman earned his Bachelor of Arts degree from Washington
University at St. Louis, and his Master's in Health Care Administration from the
University of Colorado at Denver.
MILAN MEHTA is Senior Vice President, Contracts & Special Projects of
the Company since March 2005. Mr. Mehta has over 21 years experience in
healthcare. Prior to joining IHHI, he was Vice President for managed care
contracting for HealthSouth Corp's western division comprising of several
states. Mr. Mehta has over 15 years experience in negotiating with commercial
healthcare payors. Prior to joining HealthSouth Corp, Mr. Mehta was employed by
OrNda Healthcorp for 11 years. Mr. Mehta has an MBA from California Lutheran
University, Thousand Oaks, Ca and a Bachelors in Accounting from Calcutta
University.
REQUIRED VOTE
The seven nominees for director receiving the highest number of
affirmative votes of shares shall be elected as directors. Votes withheld from
any director are counted for purposes of determining the presence or absence of
a quorum, but have no other legal effect under Nevada law.
5
PROPOSAL TWO
INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors has selected BDO Seidman,
LLP as the Company's independent accountant for the fiscal year ending March 31,
2008.
FEES OF INDEPENDENT PUBLIC ACCOUNTANTS
BDO Seidman, LLP ("BDO Seidman") served as the independent auditors of
the Company for the fiscal year ended March 31, 2007. Representatives of BDO
Seidman are expected to be present at the Annual Meeting. They will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate stockholder questions.
The following table sets forth the aggregate fees that we incurred for
audit and non-audit services provided by BDO Seidman, LLP and by Ramirez
International, which acted as independent auditors for the years ended March 31,
2007 and December 31, 2005, respectively and performed audit services for us
during those periods. The audit fees include only fees that are customary under
generally accepted auditing standards and are the aggregate fees that we
incurred for professional services rendered for the audit of our financial
statements for the years ended March 31, 2007 and December 31, 2005,
respectively.
Fees incurred from BDO Seidman, LLP consisted of the following:
FOR THE FOR THE THREE
YEAR ENDED MONTHS ENDED
NATURE OF FEES MARCH 31, 2007 MARCH 31, 2006
- ------------------------------------ ------------ ------------
Audit fees (financial) $ 1,400,000 $ 0
Audit related fees $ 1,400,000 0
Tax fees 0 0
All other fees 0 0
TOTAL FEES $ 1,400,000 $ 0
Fees incurred from Ramirez International consisted of the following:
FOR THE FOR THE NINE
YEAR ENDED MONTHS ENDED
NATURE OF FEES DECEMBER 31, 2005 SEPTEMBER 30, 2006
- ------------------------------------ ------------ ------------
Audit fees (financial) $ 1,237,194 $ 199,726
Audit related fees 26,011 0
Tax fees 1,593,270 0
All other fees 0 0
TOTAL FEES $ 2,856,475 $ 0
The Audit Committee of the Board of Directors pre-approves all audit
and permissible non-audit services to be performed by the independent auditors.
The Board of Directors of the Company considered that the provision of
the services and the payment of the fees described above are compatible with
maintaining the auditors' independence.
CHANGES IN ACCOUNTANTS
On November 30, 2006, the Audit Committee of the Board of Directors of
the Company dismissed Ramirez International Financial and Accounting Services,
Inc. ("Ramirez International") as its independent registered public accounting
firm and engaged BDO Seidman, LLP to serve as the Company's independent
registered public accounting firm for the fiscal year ended March 31, 2007. The
audit reports of Ramirez International on the consolidated financial statements
of the Company as of and for the years ended December 31, 2005 and 2004 did not
contain an adverse opinion or a disclaimer of opinion and were not qualified or
modified as to audit scope or accounting principles, except that the report
dated July 11, 2006 was modified to include an explanatory paragraph concerning
the uncertainty as to the Company's ability to continue as a going concern.
6
During the two fiscal years ended December 31, 2005 and 2004, and from
December 31, 2005 through the effective date of Ramirez International's
dismissal (the "Relevant Period"), there were no disagreements between the
Company and Ramirez International on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to their satisfaction, would have caused Ramirez
International to make reference to the subject matter of such disagreements in
connection with its reports.
During the Relevant Period, neither the Company nor (to the Company's
knowledge) anyone acting on behalf of the Company consulted with BDO Seidman,
LLP. with respect to the application of accounting principles to a specific
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements, or any other matters or
reportable events described in Items 304(a)(2)(i) and (ii) of Regulation S-K.
In addition, during the Relevant Period, there were no reportable
events as defined in Item 304(a)(1)(v) of Regulation S-K, except as described
below:
As previously disclosed by the Company in its Annual Report on Form
10-K for the year ended December 31, 2005, Ramirez International
advised that the Company did not maintain effective internal control
over financial reporting. It was determined that the Company's system
of disclosure controls and procedures was not effective as of March 31,
June 30, September 30 and December 31, 2005, and the Company's systems
of internal control over financial reporting was not effective as of
December 31, 2005, due to the presence of certain material weaknesses.
These weaknesses contributed to the need for restatements of our
financial statements for the quarterly periods ended March 31, June 30
and September 30, 2005. Management identified that the Company's
research and analysis of complex accounting issues was inadequate.
Further, as previously disclosed by the Company in its filings on Forms
10-Q and 10Q/A for the quarters ended March 31, June 30 and September
30, 2006, the Company's management determined that restatements were
necessary as a result of errors that resulted from a material weakness
in the Company's internal controls over the timely preparation and
review of account reconciliations.
Although the types of complex transactions giving rise to the
restatements are expected to occur very infrequently, management
concluded that its process of analyzing and accounting for complex
financial transactions required improvement. In addition to inadequate
expertise, due to business exigencies there was a lack of complete
accounting analysis of these transactions until after they were
completed, which contributed to an incomplete accounting analysis.
The subject matter of the material weaknesses described above was
discussed with Ramirez International by the Company's management and the Audit
Committee of the Board of Directors of the Company.
REQUIRED VOTE
Ratification of the appointment of BDO Seidman, LLP as our independent
registered public accounting firm for the year ending March 31, 2008 requires
the affirmative "FOR" vote of a majority of the votes cast on the proposal.
Unless marked to the contrary, proxies received will be voted "FOR" ratification
of the appointment of BDO Seidman, LLP.
7
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS MATTERS
DIRECTOR INDEPENDENCE
The Company has determined that of the nominees standing for election,
each of Maurice DeWald, Hon. C. Robert Jameson, Ajay G. Meka, M.D., Michael
Metzler, J. Fernando Niebla, and William E. Thomas is or will be upon their
election, as applicable, an "independent director" as defined in the Marketplace
Rules of The Nasdaq Stock Market.
BOARD OF DIRECTORS STRUCTURE AND COMMITTEE COMPOSITION
During fiscal year 2007, the Board of Directors consisted of six
directors and had the following standing committees: Audit Committee,
Compensation Committee, Finance Committee and Special Committee.
During fiscal year 2007, the Board of Directors held 11 meetings. Each
director attended over 75% of the board meetings and meetings of the Audit
Committee or the Compensation Committee in which he served, if applicable. The
directors are invited and encouraged to attend the Company's Annual Meeting of
Stockholders. All directors attended the 2006 Annual Meeting of Stockholders.
The Audit Committee of the Board of Directors was formed in August 2005
and consists of our two independent directors, Maurice DeWald and J. Fernando
Niebla, who joined the Board of Directors in August 2005. The Board of Directors
has determined that Maurice DeWald is an "audit committee financial expert" as
defined in the rules and regulations of the Securities and Exchange Commission
("SEC"). The Audit Committee of the Board of Directors pre-approves all audit
and permissible non-audit services to be performed by the independent auditors.
The Audit Committee will also advise management on the engagement of experts
with sufficient expertise to advise on accounting and financial reporting of
complex financial transactions. In fiscal year 2007, the Audit Committee held 14
meetings.
The Compensation Committee of the Board of Directors was formed in
October 2005 and consists of two directors, Maurice DeWald, and J. Fernando
Niebla. In fiscal year 2007, the Compensation Committee held six meetings. The
Compensation Committee is responsible for overseeing the administration of the
Company's executive compensation programs, establishing and interpreting the
Company's compensation policies and approving all compensation paid to executive
officers, including the named executive officers listed in the Summary
Compensation Table of this Proxy Statement. The Compensation Committee also
administers the Company's 2006 Stock Incentive Plan.
The Finance Committee of the Board of Directors was formed in early
2006 and consists of our two independent directors, Maurice DeWald and J.
Fernando Niebla, who joined the Board of Directors in August 2005.
The Special Committee of the Board of Directors was formed in August
2005 and consists of our two independent directors, Maurice DeWald and J.
Fernando Niebla, who joined the Board of Directors in August 2005. The Special
Committee will be responsible for overseeing a variety of matters as required.
The Company does not currently have a Nominating Committee of the Board
of Directors. The entire Board of Directors performs the functions of a
nominating committee. The Board of Directors has not formed a Nominating
Committee since the Board of Directors has determined that it is not necessary
and would have no direct benefit at this time because of the small size of the
Company, the size of the current Board of Directors and the presence of a
majority stockholder of the Company.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders may communicate with the Board of Directors, including the
management directors, by sending a letter to Board of Directors, c/o Corporate
Secretary, Integrated Healthcare Holdings, Inc., 1301 N. Tustin Avenue, Santa
Ana, California 92705. All communications directed to the Board of Directors
will be transmitted promptly to all of the directors without any editing or
screening by the Corporate Secretary.
8
STOCKHOLDER RECOMMENDATION OF NOMINEES
While there are no formal procedures for stockholders to recommend
nominations, the Board of Directors will consider stockholder recommendations.
Such recommendations should be addressed to the Corporate Secretary at the
address listed above.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited financial
statements with management and BDO Seidman, LLP ("BDO Seidman"), which acted as
our independent auditors for the fiscal year 2007. The Audit Committee also
discussed with BDO Seidman the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU ss. 380), as may be
modified or supplemented. The Audit Committee has received the written
disclosures and the letter from BDO Seidman as required by Independence
Standards Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as may be modified or
supplemented, and has discussed with BDO Seidman, BDO Seidman's independence.
Based on the foregoing review and discussions, the Audit Committee recommended
to the Board of Directors that the audited financial statements be included in
the Company's Annual Report on Form 10-K for fiscal year 2007.
The report is submitted on behalf of the Audit Committee.
Maurice J. DeWald
J. Fernando Niebla
The above Audit Committee report is not deemed to be "soliciting
material," is not "filed" with the SEC and is not to be incorporated by
reference in any filings that the Company files with the SEC.
CODE OF ETHICS
The Company adopted a Code of Business Conduct and Ethics that applies
to our employees (including our principal executive officer, chief financial
officer and controller) and directors. Our Code of Business Conduct and Ethics
can be obtained free of charge by sending a request to our Corporate Secretary
to the following address: Integrated Healthcare Holdings, Inc., Attn: Larry
Anderson, 1301 N. Tustin Avenue, Santa Ana, California 92705.
DIRECTOR COMPENSATION
During the fiscal year ended March 31, 2007, the members of the Board
of Directors received compensation as follows:
FEES EARNED OR
NAME AND PRINCIPAL POSITION PAID IN CASH ($) TOTAL ($)
- ------------------------------------------- ---------------- -------------
Ajay Meka, M.D......................
Director 32,000 32,000
Maurice J. DeWald...................
Director 128,000 128,000
Syed Salman J. Naqvi, M.D...........
Director 48,500 48,500
J. Fernando Niebla..................
Director 127,750 127,750
Our current compensation policy for Directors is as follows:
(i) Cash - Each non-employee Director receives an annual retainer
fee of $30,000 and an attendance fee of $1,500 for each Board meeting attended,
and a separate $1,000 fee for each committee meeting attended. Committee
Chairmen receive an additional annual retainer of $5,000;
9
(ii) Stock - A director who is not an employee or an owner of the
company may receive options to purchase shares of IHHI stock at the direction of
the Board. To date, none have been granted by the Board.
(iii) Travel Reimbursement - All travel and related expenses
incurred by Directors to attend Board meetings, committee meetings and other
IHHI activities are reimbursed by IHHI.
(iv) Mr. DeWald and Mr. Niebla are members of the Finance Committee,
which has met extensively.
Employee directors receive no compensation for Board service and the
Company does not provide any retirement benefits to non-employee directors.
Directors Shah and Mogel are not included above as all compensation paid to them
is included in the Summary Compensation Table below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to us with respect
to the beneficial ownership of our Common Stock as of July 3, 2007 by:
o each stockholder known to us to own beneficially more than 5% of
our Common Stock;
o each of our directors and director nominees, and each of our
executive officers who served at March 31, 2007; and
o all of our current directors and executive officers as a group.
Except as otherwise noted below, the address of each person or
entity listed on the table is 1301 North Tustin Avenue, Santa Ana, California
92705. The address of Dr. Kali Chaudhuri and William E. Thomas is 6800 Indiana
Avenue, Suite 130, Riverside, CA 92506.
Amount and Nature of
Name Beneficial Ownership(1) Percentage of Total (2)
- --------------------------------------------------------------------------------------------------------------------
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
Ajay G. Meka, M.D. (3) 0 0
Anil V. Shah, M.D. (3) 59,098,430 43.1%
Maurice J. DeWald 0 0
Michael Metzler 0 0
Bruce Mogel (4) 54,903,786 40.0%
Syed Salman Naqvi, M.D. (3) 0 0
J. Fernando Niebla 0 0
William E. Thomas (4) 9,748,498 7.1%
Larry B. Anderson 5,112,000 3.7%
Steven R. Blake 0 0
Daniel J. Brothman 0 0
Milan Mehta 0 0
All current directors and executive officers as a group (10 persons) 119,114,216 86.9%
PRINCIPAL STOCKHOLDERS (other than those named above)
Orange County Physicians Investment Network, LLC (3) 59,098,430 43.1%
Kali P. Chaudhuri, M.D. (4) 39,789,788 29.0%
Healthcare Financial Management & Acquisitions, Inc. ((5)) 61,853,226 31.1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to options and
warrants currently exercisable or convertible, or exercisable or convertible
within 60 days of July 3, 2007, are deemed outstanding for computing the
percentage of the person holding such option or warrant but are not deemed
outstanding for computing the percentage of any other person. Except as pursuant
to applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock
beneficially owned.
10
(2) Percentages are based on 137,095,716 shares of Common Stock outstanding as
of July 3, 2007, which does not include up to 12,000,000 shares of Common Stock
which may be issued under the Company's 2006 Stock Incentive Plan.
(3) Dr. Anil Shah, Dr. Ajay Meka and Dr. Syed Salman Naqvi are part owners of
Orange County Physicians Investment Network, LLC ("OC-PIN"). Dr. Shah is a
co-manager of OC-PIN and may be deemed to be part of a "group" with OC-PIN for
purposes of Section 13(d)(3) of the Securities Exchange Act. Each of Dr. Shah,
Dr. Meka and Dr. Naqvi disclaims beneficial ownership of all shares held by
OC-PIN except to the extent of his respective pecuniary interest therein.
(4) Dr. Kali P. Chaudhuri and William E Thomas have entered into separate
irrevocable proxies providing Bruce Mogel with limited voting rights over all of
their shares. Accordingly, all shares held by Dr. Kali P. Chaudhuri and William
E Thomas are deemed beneficially owned by Bruce Mogel, although Mr. Mogel has no
pecuniary interest in such shares. Dr. Chaudhuri and Mr. Thomas continue to own
warrants that may be exercised for a maximum of 20% and 4.9%, respectively, of
the fully-diluted outstanding shares of the Company (including past exercises
under the warrants). These warrants may be exercised for additional shares if
the fully-diluted outstanding shares of the Company increases prior to
expiration of the warrants in July 2008. Any such additional shares will be
covered by the irrevocable proxies provided to Bruce Mogel by Dr. Chaudhuri and
Mr. Thomas during the term of the proxies.
(5) Healthcare Financial Management & Acquisitions, Inc., which is affiliated
with the Company's principal lender, Medical Provider Financial Corporation III,
owns a warrant to acquire shares of Common Stock of the Company. This warrant
became exercisable on or about June 13, 2007 due to the Company's default under
its $10.7 million Credit Agreement dated December 12, 2005. For more information
please refer to the Company's Form 8-K filed with the SEC as of June 19, 2007.
11
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee of the Board of Directors has established a
compensation program for our executive officers. The objectives of this program
are to attract and retain highly qualified individuals to enable the Company to
achieve the business plan approved by the Board. This program provides for total
compensation for the executive officers consisting of three components, salary,
discretionary bonus and stock options. The Committee is in the process of
implementing the stock option portion of the program. These elements have been
chosen to remain competitive in the current health care environment. The
Committee has not recommended any bonuses for fiscal 2007. The total
compensation for each named executive is recommended to the Compensation
Committee by the Chief Executive Officer ("CEO") after considering the local
healthcare market, with the final compensation decisions being made by the
Compensation Committee. The CEO also consults with the Chief Financial Officer
on salary decisions and informs the Chair of the Compensation Committee about
any adjustments from time to time.
During the year ended March 31, 2007, the Chief Financial Officer was
given a salary increase after review and approval by the Compensation Committee,
based on an evaluation of remuneration offered by competing companies for
positions of similar complexity.
COMPENSATION COMMITTEE REPORT
THE INFORMATION CONTAINED IN THIS REPORT SHALL NOT BE DEEMED TO BE
"SOLICITING MATERIAL" OR "FILED" WITH THE SEC OR SUBJECT TO THE LIABILITIES OF
SECTION 18 OF THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES IT BY REFERENCE INTO A DOCUMENT FILED UNDER THE
SECURITIES ACT OR THE EXCHANGE ACT.
The Compensation Committee of the Board of Directors has reviewed and
discussed the Compensation Discussion and Analysis required by item 402(b) of
Regulation S-K with management and based on such review and discussion, has
recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in this Form 10-K for the year ended March 31, 2007. The
members of the Compensation Committee making this recommendation are Mr. Niebla,
Chair, and Mr. DeWald and Dr. Naqvi.
THE COMPENSATION COMMITTEE
Maurice J. DeWald
Syed Salman J. Naqvi, M.D.
J. Fernando Niebla
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee consists of three of the Company's
independent directors, Mr. Niebla, Mr. DeWald and Dr. Naqvi. There are no
interlocks between our executive officers and the members of the Compensation
Committee.
SUMMARY COMPENSATION TABLE
The following table sets forth summary information regarding
compensation earned by (i) our Principal Executive Officer and our Principal
Financial Officer during fiscal year 2007; (ii) each of our three other most
highly compensated executive officers employed by us as of March 31, 2007 whose
salary and bonus for the fiscal year ended March 31, 2007 was in excess of
$100,000 for their services rendered in all capacities to us; and (iii) two
additional individuals for whom disclosure would be required to be provided but
for the fact that the individual was not serving as an executive officer at
March 31, 2007. The listed individuals are referred to as the "Named Executive
Officers".
12
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) TOTAL ($)
- ----------------------------------- -------- ---------- --------- ---------------- ---------
Bruce Mogel (1)...................
Principal Executive Officer 2007 360,050 - 17,244 377,294
Steven R. Blake (2)...............
Principal Financial Officer 2007 284,519 - 18,978 303,497
Larry B. Anderson (2).............
President 2007 360,000 - 23,892 383,892
Daniel J. Brothman (2)............
Senior Vice President
Operations 2007 351,089 - 23,169 374,258
Milan Mehta (3)(4)................
Senior Vice President
Contracts and Special Projects 2007 259,854 - 14,071 273,925
Anil V. Shah, M.D.................
Executive Chairman (former) 2007 567,692 - 567,692
(1) All other compensation includes auto allowance of $20,518 and the balance is
Company contribution to the 401K plan.
(2) All other compensation includes auto allowance of $12,000 and the balance is
Company contribution to the 401K plan.
(3) All other compensation includes auto allowance of $9,600 and the balance is
Company contribution to the 401K plan.
(4) Mr. Mehta is the brother in law of the Director, Anil V. Shah.
During the periods covered by this table, none of the Company's executive
officers were granted any stock option or stock appreciation right. Accordingly,
no tables relating to such items have been included in this Proxy Statement.
EMPLOYMENT CONTRACTS, SEVERANCE AGREEMENTS AND
CHANGE OF CONTROL ARRANGEMENTS
In February 2005, we entered into three-year employment agreements
with Messrs. Mogel and Anderson, with each agreement on the following terms:
o Base salary of $360,000 per year;
o Bonus as determined by the Board of Directors;
o Stock options for 1,000,000 shares, vesting annually in three
equal installments; (which options have not been issued).
o Standard medical and dental insurance;
o Up to four weeks vacation annually;
o Monthly auto allowance of $1,000, and use of cellular telephone;
and
o Twelve months severance pay upon termination without cause or
resignation for cause.
In February 2005, the Company entered into a three-year employment
agreement with Daniel J. Brothman on substantially the same terms as those
described above, except with a base salary of $350,000 per year and stock
options for two million shares (which have not been granted).
In February 2005, the Company entered into a three-year employment
agreement with Milan Mehta on substantially the same terms as those described
above, except with a base salary of $250,000 per year and stock options for five
hundred thousand shares (which have not been granted).
In March 2005, the Company entered into a three-year employment
agreement with Steven R. Blake on substantially the same terms as those
described above, except with a base salary that is currently set at $275,000
(reflecting Mr. Blake's role as Chief Financial Officer of the Company beginning
in July 2005) and stock options for 150,000 shares (which have not been
granted). This agreement was modified In February 2007 to increase the annual
salary to $350,000.
13
In April 2005, the Company entered into a three-year employment
agreement with Anil V. Shah as Executive Chairman on substantially the same
terms as above, except with a base salary of $500,000 per year and stock options
for one million shares (which have not been granted).
In July and August 2006, Messrs. Anderson, Mogel and Dr. Shah entered
into a letter agreement surrendering any rights to stock options.
The Outstanding Equity Awards at Year end, Option Exercises and Stock
Vested, Pension benefits, and Nonqualified Deferred Compensation tables are not
included as there are no items to report.
POTENTIAL PAYMENTS UPON TERMINATION
The Company's executive officers have employment agreements which
provide, generally, for payments in the event of resignation for cause. Cause
includes, among other items, changes in job duties, reporting relationships,
bankruptcy of the Company or change in shareholders of over 50% of the stock.
The executive officer would be entitled to twelve months salary, benefits and
health insurance, but not any additional accruals of paid time off, vacation or
sick pay.
The following table provides information concerning the estimated
payments and benefits that would be provided in the circumstances described
above for each of the named executive officers. Payments and benefits are
estimated assuming that the triggering event took place on the last business day
of fiscal 2007 (March 31, 2007), and the price per share of the Company's Common
Stock is the closing price on the OTCBB as of that date ($0.32). There can be no
assurance that a triggering event would produce the same or similar results as
those estimated below if such event occurs on any other date or at any other
price, of if any other assumption used to estimate potential payments and
benefits is not correct. The amounts which would be due the named executive
officers as of year end, if they resigned for cause is as follows:
EMPLOYEE
12 MONTHS HEALTH CAR OTHER
NAME AND PRINCIPAL POSITION SALARY ($) INSURANCE ($) ALLOWANCE ($) BENEFITS ($) TOTAL ($)
--------------------------- ---------- ------------- ------------- ------------ ---------
Bruce Mogel.......................
Principal Executive Officer 360,000 16,286 12,000 388,286
Steven R. Blake...................
Principal Financial Officer 350,000 16,286 12,000 378,286
Larry B. Anderson.................
President 360,000 12,235 12,000 384,235
Daniel J. Brothman................
Senio Vice President
Operations 350,000 16,286 12,000 378,286
Milan Mehta.......................
Senior Vice President
Contracts and Special Projects 250,000 16,286 9,600 275,886
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
officers and directors, and persons who own more than 10% of a registered class
of our equity securities, to file reports of ownership and changes in ownership
with the SEC. Officers, directors and greater than 10% stockholders are required
by SEC regulation to furnish us with copies of all Section 16(a) reports they
file.
Based solely upon the copies of Section 16(a) reports which we received
from such persons or written representations from them regarding their
transactions in our Common Stock, we believe that, during the year ended March
31, 2007, no such forms were filed in other than a timely fashion.
14
CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PARTIES
CERTAIN RELATIONSHIPS
Milan Mehta, senior vice president contracts and special pricing, is
the brother in law of Director Anil V. Shah.
TRANSACTIONS WITH RELATED PARTIES
The following is a summary of certain transactions occurring since the
beginning of the Company's last fiscal year between the Company and its
directors, director nominees, officers and 5% or greater stockholders (other
than compensatory arrangements which are described above).
On July 2, 2007, the Company issued 9,748,498 shares of Common Stock to
William E. Thomas pursuant to the exercise of a warrant, dated January 31, 2005,
held by him. Of these shares, an aggregate of 5,657,011shares were issued to Mr.
Thomas pursuant to the "net exercise" provisions of his warrant, effective
February 6, 2007. An aggregate of 4,091,487 shares were issued pursuant to the
cash exercise provisions of his warrant effective July 2, 2007. Payment for the
"net exercise" shares consisted of cancellation of warrants to acquire an
aggregate of 55,789 shares of Common Stock. Payment for the cash exercise shares
consisted of an aggregate of $113,301.17 in cash received by the Company from
Mr. Thomas.
William E. Thomas also owns a 7.5% interest in Ganesha Realty, LLC
which is a 49% member of Pacific Coast Holdings Investment, LLC, which is a
landlord to the Company.
On June 18, 2007, the Company entered into an Agreement to Forbear (the
"Forbearance Agreement") with Medical Provider Financial Corporation III (the
"Lender"), which is affiliated with Healthcare Financial Management &
Acquisitions, Inc., a principal stockholder of the Company. Under the
Forbearance Agreement, the Lender agreed to forbear from declaring a default,
filing a judicial foreclosure action and charging default interest on the $10.7
million Credit Agreement, dated as of December 12, 2005, with the Company
(including loans drawn on this Credit Agreement), among other things. Also under
the Forbearance Agreement, the Company and the other borrowers and guarantors
under the Credit Agreements granted certain releases and waivers in favor of the
Lenders and agreed not to sue the Lenders.
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PARTIES
The Company's Human Resource policies provide guidance for Conflicts of
Interest and their relation to the standards of ethical behavior expected of
employees. The policies specifically require immediate written disclosure of any
business, financial, or other relationship that either creates, or is perceived
to create a conflict of interest. The Corporate Compliance Officer is
responsible for monitoring compliance with this policy.
As part of the quarterly disclosure control procedures, the Chief
Financial Officer and Chief Executive Officer for each hospital disclose or
certify that employees or officers have not acted in a manner inconsistent the
Company policy related to Conflict of Interest. The Corporate CFO and Director
of Internal Audit monitor certifications for potential disclosure events.
Company policy requires the General Counsel review and approval of all
contracts involving related parties, including contracts with related parties
who are considered potential referral sources. The Audit Committee has requested
that the General Counsel provide periodic updates of such transactions to the
Committee.
During the acquisition of the Company's hospitals, the Company entered
into agreements with the Medical Executive staff (MEC) at the largest hospital,
Western Medical Center - Santa Ana (WMC-SA) requiring the MEC's' advance consent
for all agreements involving hospital operations with related parties, excluding
the lease arrangements between the company and PCHI. The same agreement was
subsequently offered to each of the other hospitals' Medical Staffs, but not
ultimately executed by them. Notwithstanding this fact, the Company applies the
disclosure provisions applicable to WMC-SA to all of its facilities. LITIGATION
15
The Company is involved in litigation filed on May 14, 2007 in Orange
County Superior Court involving three of the six members of its Board of
Directors and Orange County Physicians Investment Network, LLC. A description of
the litigation is contained in the Annual Report on Form 10-K enclosed with this
proxy statement under the caption "Item 3. Legal Proceedings".
STOCKHOLDER PROPOSALS
Under Securities Exchange Act Rule 14a-8, any stockholder desiring to
submit a proposal for inclusion in our proxy materials for our 2008 Annual
Meeting of Stockholders must provide the Company at our principal offices in
Santa Ana, California with a written copy of that proposal by no later than 120
days before the first anniversary of the release of Company's proxy materials
for the 2007 Annual Meeting. However, if the date of our Annual Meeting in 2008
changes by more than 30 days from the date on which our 2007 Annual Meeting is
held, then the deadline would be a reasonable time before we begin to print and
mail our proxy materials for our 2008 Annual Meeting. Matters pertaining to such
proposals, including the number and length thereof, eligibility of persons
entitled to have such proposals included and other aspects are governed by the
Securities Exchange Act, the rules of the SEC thereunder and other laws and
regulations to which interested stockholders should refer.
According to Section 15(b) of the Company's Bylaws, to be timely a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than 45 days nor more than
75 days prior to the date on which the Company first mailed its proxy materials
for the previous year's annual meeting of stockholders. If a stockholder who
intends to present a proposal at the Company's 2008 Annual Meeting of
Stockholders and who has not sought inclusion of the proposal in our proxy
materials pursuant to Rule 14a-8, fails to provide the Company with notice of
such proposal between June 1 and July 1, 2008, then the persons named in the
proxies solicited by the Company's Board of Directors for its 2008 Annual
Meeting of Stockholders may exercise discretionary voting power with respect to
such proposal.
ANNUAL REPORT OF THE COMPANY
We are currently required to file an Annual Report on Form 10-K and
quarterly reports on Form 10-Q with the Securities and Exchange Commission. A
copy of the Company's Annual Report on Form 10-K for the fiscal year ended March
31, 2007 is being mailed to stockholders along with this Proxy Statement. The
Annual Report shall be deemed to be incorporated by reference herein and be made
a part hereof, but should not be considered part of the soliciting material.
OTHER MATTERS
The directors of the Company know of no other matters to be brought
before the meeting. If any other matters properly come before the meeting,
including any adjournment or adjournments thereof, it is intended that proxies
received in response to this solicitation will be voted on such matters in the
discretion of the person or persons named in the accompanying proxy form.
By Order of the Board of Directors
Ajay G. Meka, M.D.
Chairman of the Board of Directors
Santa Ana, California
August 15, 2007
16
CONSIDERATION OF DIRECTOR NOMINEES
The Board of Directors has selected all of the current nominees for
election at the Annual Meeting. The Board of Directors selects nominees for
election to the Board by first evaluating the composition of the Board which
would result from re-electing current directors willing to continue serving on
the Board. If the Board wants to consider additional candidates, members of the
Board may suggest potential nominees. The Board would also consider nominations
recommended by stockholders in the same manner as it does all other candidates.
When considering a potential candidate for membership, the Board of
Directors considers the candidate's relevant business, professional, and
industry experience, demonstrated character and judgment, and prior experience
serving as a director. The Board may also consider other factors as it may deem
appropriate in the evaluation of potential nominees. The Board members meet with
each new candidate and determine the actual nominees after considering each
candidate.
AUDIT COMMITTEE
The Audit Committee Charter was previously filed as Appendix A to the
Company's Proxy Statement dated November 14, 2006.
COMPENSATION COMMITTEE
The Compensation Committee of the Board has not yet adopted a charter.
CORRECTIONS TO THE PROXY STATEMENT
----------------------------------
The following table amends and supersedes the fee table under Proposal
Two, "Independent Accountants" on page 6 of this Proxy Statement. The purpose of
the amendment is to correct typographical errors only. As such, the information
contained in the table on page 6 of this Proxy Statement shall not be relied
upon by our Stockholders. No other information in this section is being amended.
Fees incurred from BDO Seidman, LLP consisted of the following:
FOR THE THREE
FOR THE YEAR ENDED MONTHS ENDED
NATURE OF FEES MARCH 31, 2007 MARCH 31, 2006
- -------------------------------- ---------------- ----------------
Audit fees (financial) $ 1,400,000 $ 0
Audit related fees 0 0
Tax fees 0 0
All other fees 0 0
TOTAL FEES $ 1,400,000 $ 0
Fees incurred from Ramirez International consisted of the following:
FOR THE NINE
FOR THE YEAR ENDED MONTHS ENDED
NATURE OF FEES DECEMBER 31, 2005 SEPTEMBER 30, 2006
- -------------------------------- ---------------- ----------------
Audit fees (financial) $ 1,237,194 $ 199,726
Audit related fees 26,011 0
Tax fees 1,593,270 0
All other fees 0 0
TOTAL FEES $ 2,856,475 $ 199,726
17
PROXY
INTEGRATED HEALTHCARE HOLDINGS, INC.
2007 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Ajay G. Meka, M.D. and Bruce Mogel, or either
one of them, with full power of substitution and resubstitution, as proxy or
proxies of the undersigned to attend the Annual Meeting of Stockholders of
Integrated Healthcare Holdings, Inc. (the "Company") to be held on Wednesday,
September 5, 2007 at 6:00 p.m. Pacific time, at the Bash Auditorium on the first
floor of the Western Medical Center--Santa Ana located at 1001 N. Tustin Avenue,
Santa Ana, California 92705, and at any adjournments thereof, to vote all shares
of common stock which the undersigned would be entitled to vote if personally
present as specified upon the following matters and in their discretion upon
such other matters as may properly come before the meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and accompanying Proxy Statement, ratifies all that said proxies or
their substitutes may lawfully do by virtue hereof, and revokes all former
proxies.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF ALL OF THE NOMINEES FOR DIRECTOR, FOR
RATIFICATION OF BDO SEIDMAN, LLP, AND AS RECOMMENDED BY THE BOARD OF DIRECTORS
ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF OR, IN THE ABSENCE OF A BOARD
RECOMMENDATION ON ANY SUCH OTHER PROPER MATTERS, IN THE PROXY HOLDERS'
DISCRETION. STOCKHOLDERS WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXY
AND VOTE IN PERSON IF THEY SO DESIRE.
Your vote is important.
Please mark, sign, date and return this proxy in the envelope provided.
(CONTINUED ON REVERSE SIDE)
PROXY
INTEGRATED HEALTHCARE HOLDINGS, INC.
2007 ANNUAL MEETING OF STOCKHOLDERS
(CONTINUED FROM REVERSE SIDE)
1. ELECTION OF DIRECTORS. To elect seven (7) directors to our Board of Directors
to serve until the 2008 Annual Meeting of Stockholders and until their
successors are elected and have qualified. The following individuals are the
nominees for election as director:
Maurice J. DeWald Ajay G. Meka, M.D. Bruce Mogel
Hon. C. Robert Jameson Michael Metzler J. Fernando Niebla
William E. Thomas
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] WITHHOLD AUTHORITY TO VOTE
EXCEPT AS MARKED TO THE FOR ALL NOMINEES LISTED
CONTRARY ABOVE
A Stockholder may withhold authority to vote for any nominee(s) by drawing a
line through or otherwise striking out the name of such nominee(s). If no
specification is made, the votes represented by this proxy will be cast for the
election of all of the nominees listed above. This proxy vests discretionary
authority to cumulate votes for directors as may be permitted by applicable law.
2. RATIFICATION OF ACCOUNTANTS. To ratify the appointment of BDO Seidman, LLP as
the independent registered public accounting firm of the Company for the fiscal
year ended March 31, 2008.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT(S) THEREOF.
Please sign exactly as your name appears
hereon, date and return this Proxy. When
shares are held by joint tenants, both
should sign. When signing as executor,
administrator, attorney, trustee or
guardian, please give full title as such.
If a corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Dated: ________________________, 2007
-----------------------------------------
(Signature)
-----------------------------------------
(Signature, if held jointly)
Printed Name(s): ________________________
I (We) [ ] will, [ ] will not, attend the
Annual Meeting in person.
If your address has changed, please
provide your correct address in
the space above.
NO POSTAGE IS REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS