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 under Rule 14a-12
INTEGRATED HEALTHCARE HOLDINGS, INC.
-------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
------------------------------------------------------------------------
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1
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 Stockholders of Integrated Healthcare Holdings, Inc.
(the "Company") will be held at 1:00 p.m. Pacific time on Tuesday, September 2,
2008, for the following purposes:
1. To elect six (6) directors to our Board of Directors to serve until
the 2009 Annual Meeting of Stockholders and until their successors are
elected and have qualified. A seventh director, Hon. C. Robert
Jameson, is appointed to the Board by court order and will remain a
director following the Annual Meeting. The following individuals are
the nominees for election as director:
Maurice J. DeWald Ajay G. Meka, M.D. Bruce Mogel
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
ending March 31, 2009.
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 5, 2008 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 PROXY CARD EVEN IF YOU WILL BE ATTENDING
THE ANNUAL MEETING IN PERSON.
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, 2008
2
INTEGRATED HEALTHCARE HOLDINGS, INC.
1301 N. TUSTIN AVENUE
SANTA ANA, CALIFORNIA 92705
(714) 953-3503
----------------------------
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 1:00 p.m. Pacific time on Tuesday, September 2, 2008,
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 5, 2008 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 161,973,929 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.
3
MAILING OF PROXY STATEMENT AND PROXY CARD
Our Annual Report on Form 10-K for the year ended March 31, 2008 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 11, 2008.
PROPOSAL ONE
ELECTION OF DIRECTORS
In accordance with our Articles of Incorporation and Bylaws, as amended,
the Board of Directors consists of not less than three or more than seven
members. The size of the Board is currently fixed at seven members. However, by
order of the Orange County Superior Court dated June 11, 2007, the Company is
obligated to fill a Board seat with Hon. C. Robert Jameson until the conclusion
of the consolidated Case No. 07CC05895 (which remains pending), and Judge
Jameson has served as a director of the Company since such date. As a result,
there are only six Board seats open for election at the Annual Meeting. We
expect that Judge Jameson will remain a director and continue to serve as a
seventh director of the Company at and following the Annual Meeting, in
accordance with the terms of the court order.
Other than with respect to Judge Jameson, 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, as amended, 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.
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 or nominated by stockholders in accordance with the procedures in
the Bylaws described below under "NOMINATIONS OF DIRECTORS". When considering a
potential candidate for membership, the Board of Directors considers the matters
set forth in the Company's Bylaws as described below under "NOMINATIONS OF
DIRECTORS."
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 six nominees
as members of the Board of Directors. If elected, the nominees are expected to
serve until the 2009 Annual Meeting of Stockholders and until their successors
are elected and have qualified. A seventh director, Hon. C. Robert Jameson, is
appointed to the Board by court order and is expected to remain a director at
and following the Annual Meeting.
Maurice J. DeWald Ajay G. Meka, M.D. Bruce Mogel
Michael Metzler J. Fernando Niebla William E. Thomas
4
INFORMATION WITH RESPECT TO EACH DIRECTOR, NOMINEE AND EXECUTIVE OFFICER
The following table sets forth certain information with respect to each
current director, director nominee and executive officer of the Company as of
March 31, 2008.
----------------------- ------ ------------------------------------- --------------------
DATE FIRST
NAME AGE POSITION(S) WITH COMPANY ELECTED DIRECTOR
----------------------- ------ ------------------------------------- --------------------
Maurice J. DeWald 68 Director August 1, 2005
----------------------- ------ ------------------------------------- --------------------
Hon. C. Robert Jameson 68 Director July 11, 2007
----------------------- ------ ------------------------------------- --------------------
Ajay G. Meka, M.D. 57 Chairman of the Board September 28, 2006
----------------------- ------ ------------------------------------- --------------------
Michael Metzler 62 Director September 5, 2007
----------------------- ------ ------------------------------------- --------------------
Bruce Mogel 50 Director, Chief Executive November 18, 2003
Officer and President
----------------------- ------ ------------------------------------- --------------------
J. Fernando Niebla 68 Director August 1, 2005
----------------------- ------ ------------------------------------- --------------------
William E. Thomas 59 Director September 5, 2007
----------------------- ------ ------------------------------------- --------------------
Steven R. Blake 55 Chief Financial Officer &
Executive Vice President, Finance
----------------------- ------ ------------------------------------- --------------------
Daniel J. Brothman 53 Chief Operating Officer &
Executive Vice President, Operations
----------------------- ------ ------------------------------------- --------------------
Jeremiah R. Kanaly 61 Chief Accounting Officer &
Treasurer
----------------------- ------ ------------------------------------- --------------------
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 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 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.
AJAY G. MEKA, M.D has been 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 postgraduate training at
Brooklyn Jewish Hospital and Coney Island Hospital, both in Brooklyn, New York.
5
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
as 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.
BRUCE MOGEL has served as Chief Executive Officer and director of the
Company since November 18, 2003, and was appointed President as of December 31,
2007. 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.
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 on 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 Boards 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 is the Chairman of the California Advisory Committee to
Nacional Financiera, a Mexican Government agency similar to the U.S. Government
Small Business Administration office. 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.
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 the University of California, Hastings
College of the Law, and a Master of Laws degree from New York University. He is
a member of the California Bar Association.
STEVEN R. BLAKE has served as Chief Financial Officer of the Company since
July 1, 2005 and Executive Vice President, Finance since March 21, 2008. He is a
California licensed Certified Public Accountant. 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 has served as Chief Operating Officer and Executive Vice
President, Operations since May 6, 2008 and as Chief Executive Officer of
Western Medical Center - Santa Ana since March 8, 2005. Mr. Brothman also served
as Senior Vice President, Operations of the Company from March 8, 2005 to May 6,
2008. Mr. Brothman is an experienced single and multi-hospital operations
executive. Since 1999, prior to the acquisition of the Hospitals by the Company
he helped build the Western Medical Center in Santa Ana for Tenet. Mr. Brothman
also ran Columbia Healthcare's Utah Division from 1996 to 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.
6
JEREMIAH R. KANALY has served as Chief Accounting Officer and Treasurer of
the Company since September 2007. Mr. Kanaly has over 30 years experience in
financial management. Mr. Kanaly is a former partner with KPMG LLP and has
served as Chief Financial Officer of several companies including ViewSonic
Corporation and Saleen Inc., and as a consultant with Resources Global. Mr.
Kanaly is a graduate of the Anderson School of Management at the University of
California at Los Angeles and California State University at Northridge. He is a
California licensed Certified Public Accountant.
REQUIRED VOTE
The six 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. A seventh director, Hon. C. Robert
Jameson, is appointed to the Board by court order and will remain a director
following the Annual Meeting.
PROPOSAL TWO
RATIFICATION OF INDEPENDENT PUBLIC 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,
2009.
FEES OF INDEPENDENT PUBLIC ACCOUNTANTS
BDO Seidman, LLP ("BDO Seidman") served as the independent auditors of the
Company for the fiscal years ended March 31, 2008 and 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 for the years ended
March 31, 2008 and 2007. 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, 2008 and 2007, respectively. Fees
incurred from BDO Seidman, LLP consisted of the following:
FOR THE FOR THE
YEAR ENDED YEAR ENDED
NATURE OF FEES MARCH 31, 2008 MARCH 31, 2007
- ---------------------------- -------------- --------------
Audit fees (financial) $ 1,293,000 $ 1,400,000
Audit related fees 0 0
Tax fees 0 0
All other fees 0 0
TOTAL FEES $ 1,293,000 $ 1,400,000
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.
7
CHANGE 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.
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, 2009 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.
8
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS MATTERS
DIRECTOR INDEPENDENCE
The Company has determined that of the nominees standing for election to
the Board of Directors, each of Maurice DeWald, Hon. C. Robert Jameson, Ajay G.
Meka, M.D., Michael Metzler, J. Fernando Niebla, and William E. Thomas is an
"independent director" as defined in the Marketplace Rules of The Nasdaq Stock
Market, Inc.
BOARD OF DIRECTORS STRUCTURE AND COMMITTEE COMPOSITION
During fiscal year 2008, the Board of Directors consisted of seven
directors and had the following standing committees: Audit Committee,
Compensation Committee, Finance Committee, Legal Affairs Committee and
Nominations and Governance Committee.
During fiscal year 2008, the Board of Directors held 15 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 2007 Annual Meeting of Stockholders.
The AUDIT COMMITTEE of the Board of Directors was formed in August 2005 and
consists of three independent directors, Maurice DeWald, J. Fernando Niebla, and
Michael Metzler, who joined the Board of Directors in September 2007. 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 2008, the Audit
Committee held seven meetings. The Audit Committee Charter was previously filed
as Appendix A to the Company's Proxy Statement dated November 14, 2006.
The COMPENSATION COMMITTEE of the Board of Directors was formed in October
2005 and consists of three independent directors, Maurice DeWald, J. Fernando
Niebla, and William Thomas. In fiscal year 2008, the Compensation Committee held
12 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 Compensation Committee of the Board has not yet adopted a charter.
The FINANCE COMMITTEE of the Board of Directors consists of three
independent directors, Maurice DeWald, J. Fernando Niebla, and Michael Metzler.
The LEGAL AFFAIRS COMMITTEE of the Board of Directors (formerly known as
the Litigation Committee) was formed in September 2007 and consists of three
independent directors, Hon. C. Robert Jameson ("Judge Jameson"), J. Fernando
Niebla and William Thomas, Esq. The Legal Affairs Committee oversees all
significant legal matters affecting the Company's interests including, but not
limited to, the filing, prosecution, defense and/or settlement of litigation
involving the Company, its Board, employees and/or business. In this capacity,
the Legal Affairs Committee directly monitors and oversees the activities of the
Company's general counsel, J. Scott Schoeffel, as well as regularly consults
with the Company's general counsel in overseeing the activities of the Company's
retained outside counsel. The Legal Affairs Committee additionally is charged
with exercising independent good faith judgment in deciding, among other things,
whether the maintenance of pending or proposed legal actions by or on behalf of
the Company is, and/or remains, in the best interests of the Company's health
care business and shareholders. The Board of Directors has determined Judge
Jameson, given his extensive legal background and distinguished past service as
presiding judge of the Orange County Superior Court, is aptly suited to chair
the Legal Affairs Committee. The Board of Directors has further determined J.
Fernando Niebla and William Thomas (the latter being a licensed and practicing
California attorney) are likewise each in a position to exercise independent
judgment regarding the merits of legal issues rather than being governed by
extraneous considerations or influences, hence both are exceptionally well
suited to serve on the Legal Affairs Committee.
9
The NOMINATIONS AND GOVERNANCE COMMITTEE consists of independent directors
Michael Metzler (Chairman), Maurice DeWald, and Hon. C. Robert Jameson. The
Committee's duties include (1) considering and recommending the adoption of
corporate governance policies to the Board of Directors and (2) the nomination
of candidates for election to the Board of Directors.
NOMINATIONS OF DIRECTORS
In June 2008, the Board of Directors adopted formal standards and
qualifications for nomination of persons for election to the Board of Directors
by adopting a new Section 16 of Article II of the Company's bylaws. Section 16
provides that to be eligible to be a nominee for election or reelection as a
director of the Company, a person must deliver to the Company a written
questionnaire with respect to his or her background and qualifications and the
background of any other person or entity on whose behalf the nomination is being
made, and a written representation and agreement that such person (A) is not and
will not become a party to (1) any agreement, arrangement or understanding with,
and has not given any commitment or assurance to, any person or entity as to how
such person, if elected as a director of the Company, will act or vote on any
issue or question (a "Voting Commitment") that has not been disclosed to the
Company or (2) any Voting Commitment that could limit or interfere with such
person's ability to comply, if elected as a director of the Company, with such
person's fiduciary duties under applicable law, (B) is not and will not become a
party to any agreement, arrangement or understanding with any person or entity
other than the Company with respect to any direct or indirect compensation,
reimbursement or indemnification in connection with service or action as a
director that has not been disclosed therein and (C) in such person's individual
capacity and on behalf of any person or entity on whose behalf the nomination is
being made, would be in compliance, if elected as a director of the Company, and
will comply with all applicable publicly disclosed corporate governance,
conflict of interest, confidentiality and stock ownership and trading policies
and guidelines of the Company.
In addition, such nominations, other than those made by or at the direction
of the Board of Directors, must be made pursuant to timely notice in writing to
the Secretary of the Company. To be timely, a shareholder's notice must be
delivered to or mailed and received at 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 (or the date on
which the Company mails its proxy materials for the current year if during the
prior year the Company did not hold an annual meeting or if the date of the
annual meeting was changed more than 30 days from the prior year). Such
shareholder's notice must set forth (a) as to each person whom the shareholder
proposes to nominate for election or re-election as a director, (i) the name,
age, business address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class and number of shares of
the Company which are beneficially owned by the person, and (iv) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Rule 14a under
the Securities Exchange Act of 1934; and (b) as to the shareholder giving the
notice, (i) the name and record address of the shareholder, and (ii) the class
and number of shares of the Company which are beneficially owned by the
shareholder. The Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a director of the Company.
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 2008. The Audit Committee also
discussed with BDO Seidman the matters required to be discussed by SAS 114
(successor to Statement on Auditing Standards No. 61) (Communication with Audit
Committees), as may be modified or supplemented, including the auditors'
judgment about the quality, as well as the acceptability, of our accounting
principles as applied in the financial statements. The Audit Committee has
received the written disclosures and the letter from BDO Seidman as required by
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 2008.
10
The report is submitted on behalf of the Audit Committee.
Maurice J. DeWald
J. Fernando Niebla
Michael Metzler
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.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders may communicate with the Board of Directors or any of the
directors by sending a letter addressed 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.
CODE OF ETHICS
The Company adopted a Code of Business Conduct and Ethics that applies to
our employees (including our principal executive officer, principal financial
officer, principal accounting officer, and corporate 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: J. Scott Schoeffel, 1301 N. Tustin
Avenue, Santa Ana, California 92705.
DIRECTOR COMPENSATION
The following table provides information concerning the compensation of our
non-employee directors during the fiscal year ended March 31, 2008:
Fees earned or Stock
paid in cash options Total
Name ($) ($) ($)
- --------------------------- ---------- ---------- ----------
Ajay G. Meka, M.D. 15,125 8,000 23,125
Maurice J. DeWald 112,750 13,033 125,783
Hon. C. Robert Jameson 17,750 3,100 20,850
Michael Metzler 17,250 3,100 20,350
J. Fernando Niebla 106,500 13,033 119,533
William E. Thomas 23,000 3,100 26,100
Our current compensation and reimbursement policy for Directors is as
follows:
(I) CASH - Each non-employee Director receives an annual 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.
(II) STOCK - A director who is not an employee or an owner of the company
may receive options to purchase shares of Company stock at the direction of the
Board. Options were granted to directors during the year ended March 31, 2008.
Values in the table for stock options represent the amounts expensed by the
Company in 2008. These amounts do not represent the intrinsic or market value of
the awards on the date of grant, at year end or at present.
(III) TRAVEL REIMBURSEMENT - All travel and related expenses incurred by
Directors to attend Board meetings, committee meetings and other Company
activities are reimbursed by the Company.
Employee directors receive no compensation for Board service and the
Company does not provide any retirement benefits to non-employee directors.
Director Mogel is not included in the table above, as all compensation paid to
him is included in the Summary Compensation Table below.
11
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 18, 2008, unless otherwise
noted, by:
o each shareholder known to us to own beneficially more than 5% of our
common stock;
o each of our directors and each of our executive officers at March 31,
2008; 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.
BENEFICIAL PERCENTAGE OF
NAME OWNERSHIP (1) TOTAL (2)
- --------------------------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS
Ajay G. Meka, M.D. 166,666 (3) *
Maurice J. DeWald 283,332 (4) *
Hon. C. Robert Jameson 50,000 (5) *
Michael Metzler 50,000 (6) *
Bruce Mogel 79,781,999 (7) 49.3%
J. Fernando Niebla 283,332 (8) *
William E. Thomas 9,798,498 (9) 6.0%
Steven R. Blake 100,000 (10) *
Daniel J. Brothman 1,000,000 (11) *
Jerry Kanaly -- --
------------ ------------
All current directors and executive 81,765,329 50.5%
officers as a group (10 persons)
PRINCIPAL STOCKHOLDERS (OTHER THAN THOSE NAMED ABOVE)
Orange County Physicians Investment
Network, LLC 59,098,430 36.5%
Kali P. Chaudhuri, M.D. 128,015,892 (12) 56.8%
Healthcare Financial Management
& Acquisitions, Inc. 114,161,128 (13) 41.3%
Medical Provider Financial
Corporation III 33,182,229 (14) 17.0%
- ---------------------
* Less than 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,
warrants and convertible instruments that are exercisable or convertible
currently or within 60 days of July 18, 2008 are deemed outstanding for
computing the percentage of the person holding such option, warrant or
convertible instrument, but are not deemed outstanding for computing the
percentage of any other person. Except as reflected in the footnotes or 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.
(2) Percentages are based on 161,973,929 shares of Common Stock outstanding as
of July 18, 2008, 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) Consists of a portion of a stock option award approved by the Board of
Directors which is exercisable within 60 days of July 18, 2008, pursuant to the
Company's 2006 Stock Incentive Plan. Dr. Meka is a member of Orange County
Physicians Investment Network, LLC ("OC-PIN") and disclaims beneficial ownership
of shares held by OC-PIN except to the extent of his pecuniary interest therein.
(4) Consists of a portion of a stock option award approved by the Board of
Directors which is exercisable within 60 days of July 18, 2008 pursuant to the
Company's 2006 Stock Incentive Plan.
(5) Consists of a portion of a stock option award approved by the Board of
Directors which is exercisable within 60 days of July 18, 2008 pursuant to the
Company's 2006 Stock Incentive Plan.
(6) Consists of a portion of a stock option award approved by the Board of
Directors which is exercisable within 60 days of July 18, 2008 pursuant to the
Company's 2006 Stock Incentive Plan.
12
(7) Includes shares held by Dr. Kali P. Chaudhuri (64,668,001) and William E
Thomas (9,748,498), each of whom has entered into separate irrevocable proxies
expiring in July 2009 providing Mr. Mogel with limited voting rights over all of
their shares with respect to certain matters that may be voted on by
stockholders. 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 any such shares. Mr. Mogel holds 5,365,500 shares in
his name or affiliated entity.
(8) Consists of a stock option award approved by the Board of Directors which is
exercisable within 60 days of July 18, 2008 pursuant to the Company's 2006 Stock
Incentive Plan.
(9) Consists of 9,748,498 issued and 50,000 shares representing a portion of a
stock option award approved by the Board of Directors which is exercisable
within 60 days of July 18, 2008 pursuant to the Company's 2006 Stock Incentive
Plan.
(10) Consists of a portion of a stock option award approved by the Board of
Directors which is exercisable within 60 days of July 18, 2008 pursuant to the
Company's 2006 Stock Incentive Plan.
(11) Consists of a portion of a stock option award approved by the Board of
Directors which is exercisable within 60 days of July 18, 2008 pursuant to the
Company's 2006 Stock Incentive Plan.
(12) Consists of 64,668,001 issued and outstanding shares plus 63,347,891 shares
which may be acquired upon exercise of a purchase right which expires in January
2009 pursuant to the Securities Purchase Agreement dated July 18, 2008.
(13) Healthcare Financial Management & Acquisitions, Inc., which is affiliated
with the Company's principal lender, Medical Capital Corporation, holds two
warrants to acquire 31.09% and 4.95% of the outstanding shares of Common Stock
of the Company.
(14) Medical Provider Financial Corporation III, which is affiliated with the
Company's principal lender, Medical Capital Corporation, holds a convertible
term note in the principal amount of $10.7 million convertible into Common Stock
of the Company at the rate of $0.21 per share. On July 18, 2008, the Company
paid down the principal of the $10.7 million note by $3,731,732.
13
EXECUTIVE COMPENSATION
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.
The following table sets forth summary information regarding compensation
to (i) our Chief Executive Officer and our Chief Financial Officer during the
fiscal year ended March 31, 2008; (ii) each of our other most highly compensated
executive officers employed by us as of March 31, 2008 whose salary and bonus
for the fiscal year ended March 31, 2008 was in excess of $100,000 for their
services rendered in all capacities to us; and (iii) one additional individual
for whom disclosure would be required to be provided but for the fact that the
individual was not serving as an executive officer at March 31, 2008. The listed
individuals are referred to as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
Option All other
Name and Salary Bonus awards compensation Total
Principal Position Year ($) ($)(6) ($)(7) ($) ($)
- ----------------------------------------- ------ ---------- --------- --------- -------- ---------
Bruce Mogel 2008 438,154 70,000 - 67,578 575,732
Chief Executive Officer (1) 2007 360,050 - - 17,244 377,294
Steven R. Blake 2008 350,000 46,375 - 46,206 442,581
Chief Financial Officer & 2007 284,519 - - 18,978 303,497
Executive Vice President, Finance (2)
Daniel J. Brothman 2008 377,692 46,375 21,000 19,248 464,315
Chief Operating Officer & 2007 351,089 - - 23,169 374,258
Executive Vice President, Operations (3)
Jeremiah R. Kanaly 2008 142,788 18,188 - 9,341 170,317
Chief Accounting Officer & 2007 - - - - -
Treasurer (4)
Larry B. Anderson 2008 525,231 30,000 - 145,102 700,333
President (5) 2007 360,000 - - 23,892 383,892
(Former)
- --------------------------
(1) All other compensation for 2008 includes auto allowance of $16,000,
Manager's Time Off (MTO) pay out of $40,385 for accrued and untaken vacation
hours and the balance is Company contribution to the 401(k) plan.
(2) All other compensation for 2008 includes auto allowance of $12,000, MTO pay
out of $25,375 for accrued and untaken vacation hours and the balance is Company
contribution to the 401(k) plan.
(3) All other compensation for 2008 includes auto allowance of $12,000 and the
balance is Company contribution to the 401(k) plan.
(4) Salary commenced on September 10, 2007. All other compensation includes auto
allowance of $7,000 and the balance is Company contribution to the 401(k) plan.
(5) All other compensation for 2008 includes auto allowance of $17,000, a MTO
pay out of $55,385 for accrued and untaken vacation hours, and $60,000 in
consulting fees paid to Mr. Anderson under the Consulting Agreement executed
between Mr. Anderson and the Company on December 31, 2007.
14
(6) During the year ended March 31, 2008, the Company implemented the Corporate
Team Bonus Plan for 2007/2008. Under this discretionary plan, eligible employees
could receive bonuses based on the Company's performance and individual
performances. For the year ended March 31, 2008, in June 2008, the Company
awarded eligible employees an aggregate of $494,669 in discretionary bonuses,
which was approved by the Company's Board of Directors. Of such amount, the
Named Executive Officers, Bruce Mogel, Steven Blake, Daniel Brothman, and
Jeremiah Kanaly received $30,000, $26,375, $26,375, and $17,188, respectively.
All bonuses under the plan were paid on June 6, 2008. Remaining amounts relate
to discretionary bonuses for calendar year 2007 that were paid in December 2007.
(7) Values in this column represent the amounts expensed by the Company in 2008
for portions of awards granted in 2008. These amounts do not represent the
intrinsic or market value of the awards on the date of grant, at year end or at
present. For grant date values of all outstanding options at March 31, 2008,
please see table entitled "Outstanding Equity Awards at Fiscal Year-End."
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth summary information regarding stock options
the Company has granted to the Named Executive Officers as of March 31, 2008
under the Company's 2006 Stock Incentive Plan.
Equity
incentive
plan awards:
Number of Number of Number of
securities securities securities
underlying underlying underlying Option Grant date
unexercised unexercised unexercised exercise Option fair value
Grant options options unearned price expiration per share
Name date exercisable unexercisable options ($) date ($)
- ----------------------- ---------------- ----------- ------------- ----------- -------- ---------------- ----------
Bruce Mogel - - - - - - -
Steven R. Blake (1) August 6, 2007 - 300,000 300,000 0.26 August 6, 2014 0.03
Daniel J. Brothman (2) August 6, 2007 1,000,000 - - 0.26 August 6, 2014 0.02
Jeremiah R. Kanaly (1) December 13, 2007 - 200,000 200,000 0.30 December 13, 2014 0.09
- ----------------------------
(1) 1/3 of the shares vest on the twelve month anniversary of the grant date,
and an additional 1/12 of the shares vest on each subsequent fiscal
quarter-end of the Company following such twelve month anniversary.
(2) Vesting retroactively commenced on March 8, 2005, all options were fully
vested as of March 31, 2008.
EMPLOYMENT CONTRACTS, SEVERANCE AGREEMENTS AND
CHANGE OF CONTROL ARRANGEMENTS
During the fiscal year ended March 31, 2008, we amended employment
agreements with Messrs. Mogel, Brothman, and Blake, and entered into an
employment agreement with Mr. Kanaly.
On November 15, 2007, the Company amended the employment agreement with its
CEO, Bruce Mogel, to increase his base salary from $360,000 per year to $525,000
per year. The agreement also specifies that he is eligible to receive
performance based incentive compensation up to $97,500 for the year ended March
31, 2008 and $195,000 each year thereafter. Mr. Mogel's auto allowance was
increased from $1,000 to $2,000 per month. Mr. Mogel's agreement also provides
for stock options (none of which were granted as of March 31, 2008), medical and
dental insurance, and up to four weeks vacation annually.
Effective March 21, 2008, the Company amended the employment agreement with
its CFO, Steven Blake, to increase his base salary from $350,000 per year to
$422,000 per year. The agreement also specifies that he is eligible to receive
performance based incentive compensation during each fiscal year as determined
by the Company's Board of Directors and CEO. Mr. Blake's agreement also provides
for stock options (300,000 options were granted as of March 31, 2008), auto
allowance ($1,000 per month), medical and dental insurance, and up to four weeks
vacation annually.
Effective May 6, 2008, the Company amended the employment agreement with
its COO, Daniel Brothman, to increase his base salary from $350,000 per year to
$422,000 per year. The agreement also specifies that he is eligible to receive
performance based incentive compensation during each fiscal year as determined
by the Company's Board of Directors and CEO. Mr. Brothman's agreement also
provides for stock options (1,000,000 options were granted as of March 31,
2008), auto allowance ($1,000 per month), medical and dental insurance, and up
to four weeks vacation annually.
15
Effective September 10, 2007, the Company entered into an employment
agreement with its CAO & Treasurer, Jeremiah Kanaly. The agreement specifies
that Mr. Kanaly's base salary is $275,000 per year and that he is eligible to
receive performance based incentive compensation during each fiscal year as
determined by the Company's Board of Directors and CEO. Mr. Kanaly's agreement
also provides for stock options (200,000 options were granted as of March 31,
2008), auto allowance ($1,000 per month), medical and dental insurance, and up
to four weeks vacation annually.
On December 31, 2007, the Company entered into a Severance Agreement With
Mutual Releases ("Severance Agreement") and a Consulting Agreement with Larry B.
Anderson. Under the Severance Agreement, Mr. Anderson terminated his employment
as President of the Company by mutual agreement, effective December 31, 2007.
Under the Severance Agreement, Mr. Anderson could receive consideration
currently valued at approximately $465,000. The Company will pay Mr. Anderson
compensation equivalent to fourteen equal monthly installments. The amount of
each monthly installment shall be the sum of Mr. Anderson's base monthly salary,
net of required deductions, plus the monthly value of his health and dental
insurance, plus the monthly value of his automobile allowance. The schedule of
payments is as follows: (i) one lump sum upfront payment equivalent to eight
monthly installments, and (ii) the remaining six equal installments shall be
paid to him on or before the first business day of each month, commencing on
September 1, 2008. In addition, the Company paid a year end (December 31, 2007)
bonus of $30,000 to Mr. Anderson. The Severance Agreement also includes mutual
releases, specific waivers and releases, nondisclosure of confidential
information, return of property, future cooperation, non disparagement, and
general provisions customary in such agreements.
Under the terms of the Consulting Agreement, which is effective from
January 1, 2008 through June 30, 2008, the Company will pay Mr. Anderson
$180,000 consisting of one upfront payment of $60,000 and four equal monthly
installments of $30,000 each, commencing April 1, 2008, with the last payment
due on July 1, 2008. As additional compensation for special projects, such as
his services relating to the then-proposed acquisition of a specifically
identified hospital by the Company, Mr. Anderson would be entitled to receive
0.5% of the total value of the purchase, minus $30,000, or an estimated $310,000
if the acquisition was consummated at the then-proposed price. Such acquisition
was not consummated by the Company. The Consulting Agreement contains other
provisions customary to such agreements.
Pension benefits and Nonqualified Deferred Compensation tables are not
included as there are no items to report.
POTENTIAL PAYMENTS UPON TERMINATION
Each of the Company's Named 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. Each Named 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
2008 (March 31, 2008), and the price per share of the Company's common stock is
the closing price on the OTCBB as of that date ($0.12). 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.
16
Name
and Employee
Principal health Car Other
Position Salary insurance allowance benefits Total
-------- --------- ----------- --------- --------- -----------
Bruce Mogel $ 787,500 $ 24,612 $ 36,000 - $ 848,112
Chief Executive Officer (1)
Steven R. Blake $ 422,000 $ 16,408 $ 12,000 - $ 450,408
Chief Financial Officer &
Executive Vice President,
Finance (2)
Daniel J. Brothman $ 350,000 $ 16,408 $ 12,000 - $ 378,408
Senior Vice President,
Operations (2)
Jeremiah R. Kanaly $ 275,000 $ 8,704 $ 12,000 - $ 295,704
Chief Accounting Officer &
Treasurer (2)
- ---------------------
(1) Represents payments for 18 months per employment agreement.
(2) Represents payments for 12 months per employment agreement.
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 fiscal year ended
March 31, 2008, all such forms were filed in a timely fashion.
CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PARTIES
Exercise of Warrants
- --------------------
On July 2, 2007, the Company issued an aggregate of 49,538,286 shares of
its common stock upon exercise of outstanding warrants of the Company. The
Company issued 39,789,788 shares of common stock to Kali P. Chaudhuri, M.D. and
9,748,498 shares of common stock to William E. Thomas pursuant to the exercise
of warrants, dated January 31, 2005, held by each of them. Of these shares, an
aggregate of 28,746,857 shares of common stock were issued to Dr. Chaudhuri and
Mr. Thomas pursuant to the "net exercise" provisions of their warrants,
effective February 6, 2007. An aggregate of 20,791,429 shares were issued
pursuant to the cash exercise provisions of their warrants effective July 2,
2007. Payment for the "net exercise" shares consisted of cancellation of
warrants to acquire an aggregate of 283,499 shares of common stock. Payment for
the cash exercise shares consisted of an aggregate of $575,755 in cash received
by the Company from Dr. Chaudhuri and Mr. Thomas.
Refinance of Credit Facilities
- ------------------------------
Effective October 9, 2007, the Company and affiliates of Medical Capital
Corporation, which owns beneficially more than 5% of our outstanding stock,
executed agreements to refinance their credit facilities with the Company
aggregating up to $140.7 million in principal amount (the "New Credit
Facilities"). The New Credit Facilities replaced the Company's previous credit
facilities with affiliates of Medical Capital Corporation (the "Prior Debt"),
which matured on March 2, 2007. The Company had been operating under an
Agreement to Forbear with respect to the Prior Debt.
17
Each of the following Credit Agreements and Notes (i) required a 1.5%
origination fee due at funding, (ii) matures in three years, (iii) requires
monthly payments of interest and repayment of principal upon maturity, (iv) are
collateralized by all of the assets of the Company and its subsidiaries and the
real estate underlying the Company's hospital facilities (which are owned by
Pacific Coast Holdings Investment, LLC ("PCHI"), a company owned indirectly by
two of the Company's largest shareholders, and leased to the Company), and (v)
are guaranteed by Orange County Physicians Investment Network, LLC ("OC-PIN")
and West Coast Holdings LLC ("WCH") pursuant to separate Guaranty Agreements in
favor of the lender. WCH is a member of PCHI, and PCHI, and WCH, Ganesha Realty,
LLC ("Ganesha"), and OC-PIN are credit parties to the New Credit Facilities.
The New Credit Facilities consist of the following instruments:
o An $80.0 million Credit Agreement, under which the Company issued a
$45.0 million Term Note bearing a fixed interest rate of 9% in the
first year and 14% after the first year, which was used to repay
amounts owing under the Company's existing $50.0 million real estate
term loan.
o A $35.0 million Non-Revolving Line of Credit Note issued under the
$80.0 million Credit Agreement, bearing a fixed interest rate of 9.25%
per year, which was used to repay amounts owing under the Company's
existing $30.0 million line of credit, pay the origination fees on the
other credit facilities and for working capital.
o A $10.7 million Credit Agreement, under which the Company issued a
$10.7 million Convertible Term Note bearing a fixed interest rate of
9.25% per year, which was used to repay amounts owing under the
Company's existing $10.7 million loan. The $10.7 million Convertible
Term Note is convertible into common stock of the Company at $0.21 per
share during the term of the Note.
o A $50.0 million Revolving Credit Agreement, under which the Company
issued a $50.0 million Revolving Line of Credit Note bearing a fixed
interest rate of 24% per year (subject to reduction to 18% if the
$45.0 million Real Estate Term Loan is repaid prior to its maturity)
and an unused commitment fee of 0.50% per year, which was used to
finance the Company's accounts receivable. The $50.0 million Revolving
Line of Credit did not modify or exchange any Prior Debt.
From October 9, 2007, the date of refinancing, through March 31, 2008, the
Company incurred interest expense related to the New Credit Facilities of
approximately $5.0 million. For the period from April 1, 2007 through October 8,
2007, the Company incurred interest expense on the Prior Debt of approximately
$5.8 million. The highest aggregate amount of outstanding principal during the
year ended March 31, 2008 was approximately $100.9 million on January 31, 2008
(approximately $95.8 million was outstanding on May 31, 2008). With the
exception of recurring principal payments (and advances) on the $50.0 million
Revolving Line of Credit and the refinancing on October 9, 2007, the Company did
not make any principal payments during the year ended March 31, 2008. Debt
issuance costs of approximately $2.9 million were incurred in connection with
the New Credit Facilities, of which $1.6 million was expensed as of March 31,
2008, and approximately $1.3 million will be amortized over the remaining term
of the New Credit Facilities.
Concurrently with the execution of the New Credit Facilities, the Company
issued to MCC a five-year warrant to purchase the greater of 16,880,484 shares
of the Company's common stock or up to 4.95% of the Company's common stock
equivalents, as defined, at $0.21 per share (the "4.95% Warrant"). In addition,
the Company and MCC entered into Amendment No. 2 to Common Stock Warrant,
originally dated December 12, 2005, which entitles MCC to purchase the greater
of 26,097,561 shares of the Company's common stock or up to 31.09% of the
Company's common stock equivalents (the "31.09% Warrant"). Amendment No. 2 to
the 31.09% Warrant extended the expiration date of the Warrant to October 9,
2012, removed the condition that it only be exercised if the Company is in
default of its previous credit agreements, and increased the exercise price to
$0.21 per share unless the Company's stock ceases to be registered under the
Securities Exchange Act of 1934, as amended.
18
As a condition of the New Credit Facilities, the Company entered into an
Amended and Restated Triple Net Hospital Building Lease with PCHI (the "Amended
Lease"). The Amended Lease terminates on the 25-year anniversary of the original
lease (March 8, 2005) (and grants the Company the right to renew for one
additional 25-year period) and requires annual base rental payments of $8.3
million (but until the Company refinances its $50.0 million Revolving Line of
Credit Loan with a stated interest rate less than 14% per annum or PCHI
refinances the Real Estate Loan, the annual base rental payments are reduced to
$7.1 million). In addition, the Company may offset against its rental payments
owed to PCHI interest payments that it makes to MCC under certain of its
indebtedness discussed above. The Amended Lease also gives PCHI sole possession
of the medical office buildings located at 1901/1905 North College Avenue, Santa
Ana, California (the "Kindred Property") that are unencumbered by any claims by
or tenancy of the Company.
Concurrently with the execution of the Amended Lease, the Company, PCHI,
Ganesha, and West Coast entered into a Settlement Agreement and Mutual Release
(the "Settlement Agreement") whereby the Company agreed to pay to PCHI $2.5
million as settlement for unpaid rents specified in the Settlement Agreement,
relating to the Kindred Property, and for compensation relating to the medical
office buildings located at 999 North Tustin Avenue in Santa Ana, California,
under a previously executed Agreement to Compensation.
Securities Purchase Agreement
- -----------------------------
On July 18, 2008, the Company entered into a Securities Purchase Agreement
(the "Purchase Agreement") with Dr. Chaudhuri and Mr. Thomas. Pursuant to the
Purchase Agreement, Dr. Chaudhuri has a right to purchase from the Company
63,347,891 shares of its common stock for consideration of $0.11 per share,
aggregating $6,968,268.
The Purchase Agreement provides Dr. Chaudhuri and Mr. Thomas with certain
pre-emptive rights to maintain their respective levels of ownership of the
Company's common stock by acquiring additional equity securities concurrent with
future issuances by the Company of equity securities or securities or rights
convertible into or exercisable for equity securities and also provides them
with demand registration rights. These pre-emptive rights and registration
rights superseded and replaced their existing pre-emptive rights and
registration rights. The Purchase Agreement also contains a release, waiver and
covenant not to sue Dr. Chaudhuri in connection with his entry into the Option
and Standstill Agreement described below and the consummation of the
transactions contemplated under that agreement. Concurrent with the execution of
the Purchase Agreement, Dr. Chaudhuri exercised in full outstanding warrants to
purchase 24,878,213 shares of common stock at an exercise price of $0.15 per
share, for a total purchase price of $3,731,732.
Concurrent with the execution of the Purchase Agreement, the Company, its
subsidiaries (the "Subsidiaries"), Medical Provider Financial Corporation I, a
Nevada corporation ("MPFC I"), Medical Provider Financial Corporation II, a
Nevada corporation ("MPFC II"), Medical Provider Financial Corporation III, a
Nevada corporation ("MPFC III"), Healthcare Financial Management & Acquisitions,
Inc. ("HFMA", and together with MPFC I, MPFC II, MPFC III, referred to as "MCC")
entered into an Early Loan Payoff Agreement (the "Payoff Agreement"). The
Company used the proceeds from the warrant exercise described above to pay down
a $10,700,000 convertible term note, dated October 9, 2007, executed by the
Company and the Subsidiaries, jointly and severally as maker, payable to the
order of MPFC III. The Company is obligated under the Payoff Agreement to use
the proceeds it receives from the future exercise, if any, of the Investor's
purchase right under the Purchase Agreement, plus additional Company funds as
may then be necessary, to pay down the remaining balance of the $10,700,000
convertible term note under the Payoff Agreement. Under the Payoff Agreement,
once the Company has fully repaid early the entire $10,700,000 convertible term
note, it has an option to extend the maturity dates of the $80,000,000 Credit
Agreement and the $50,000,000 Revolving Credit Agreement from October 8, 2010 to
October 8, 2011.
Concurrently with the execution of the Purchase Agreement, Dr. Chaudhuri
and MCC entered into an Option and Standstill Agreement pursuant to which MCC
agreed to sell (i) the warrant dated October 9, 2007 issued to HFMA to purchase
a minimum of 16,880,484 shares of common stock of the Company, as amended by
amendment no. 1 dated July 18, 2008 (the "4.95% Warrant"), and (ii) the warrant
dated December 12, 2005 issued to HFMA to purchase a minimum of 26,097,561
shares of common stock of the Company, as amended by amendment no. 1 dated
affective as of April 26, 2006, amendment no. 2 dated October 9, 2007 and
amendment no. 3 dated July 18, 2008 (the "31.09% Warrant", together with the
4.95% Warrant, the "Warrants"). The Warrants will not be sold to Dr. Chaudhuri
unless he so elects within six years after the Company pays off all remaining
amounts due to MPFC II and MPFC I pursuant to (i) the $80,000,000 Credit
Agreement dated October 9, 2007, among the Company, the Subsidiaries, MPFC II,
PCHI, WCH, Ganesha and OC-PIN (OC-PIN, PCHI, WCH, and Ganesha, are collectively
referred to herein as the "Credit Parties") and (ii) the $50,000,000 Revolving
Credit Agreement, dated October 9, 2007, among the Company, the Subsidiaries,
MPFC I, and the Credit Parties. HFMA also agreed not to exercise or transfer the
Warrants unless a payment default occurs and remains uncured for a specified
period. The Option and Standstill Agreement further provides that if the full
early payoff of the $10,700,000 convertible note does not occur by January 10,
2009, then that agreement and Dr. Chaudhuri's right to purchase the Warrants
will terminate.
19
The issuances of common stock and other securities described above were
exempt from the registration requirements under the Securities Act of 1933, as
amended, pursuant to Section 4(2) thereof and in reliance upon Rule 506 of
Regulation D promulgated by the SEC.
Litigation with Affiliates
- --------------------------
The Company is a party to various litigation and adversarial matters
involving its affiliate, Orange County Physicians Investment Network, LLC, and
certain of its OC-PIN's members. A description of this litigation is contained
in the Annual Report on Form 10-K included with this proxy statement under the
caption "Item 3. Legal Proceedings." In addition to such items, on May 2, 2008,
the Company received correspondence from OC-PIN demanding an inspection of
various broad categories of Company documents. In turn, the Company filed a
complaint for declaratory relief in the Orange County Superior Court seeking
instructions as to how and/or whether the Company should comply with the
inspection demand. In response, OC-PIN filed a petition for writ of mandate
seeking to compel its inspection demand. No hearing dates have yet been set,
however the Company does not believe that the Company's compliance with any
resulting court order will have a material effect on the Company.
On April 3, 2008, the Company received correspondence from OC-PIN demanding
that the Company's Board of Directors investigate and terminate the employment
agreement of the Company's Chief Executive Officer, Bruce Mogel. Without waiting
for the Company to complete its investigations of the allegations in OC-PIN's
letter, on July 15, 2008 OC-PIN filed a derivative lawsuit naming Mr. Mogel and
the Company as defendants. The complaint seeks no affirmative relief against the
Company specifically, but at this early stage in the proceedings, the Company is
unable to determine the impact, if any, the suit may have on the Company or its
operations or financial position.
On June 19, 2008, the Company received correspondence from OC-PIN demanding
that the Company notice a special shareholders' meeting no later than June 26,
2008, to occur during the week of July 21 - 25, 2008. The stated purpose of the
meeting was to (1) repeal a bylaws provision setting forth a procedure for
nomination of director candidates by shareholders, (2) remove the Company's
entire Board of Directors, and (3) elect a new Board of Directors. The Company
denied this request based on, among other reasons, failure to comply with the
appropriate bylaws and SEC procedures and failure to comply with certain
requirements under the Company's credit agreements with its primary lender.
OC-PIN repeated its request on July 29, 2008, and on July 30, 2008, filed a
petition for writ of mandate in the Orange County Superior Court seeking a court
order to compel the Company to hold a special shareholders' meeting. At this
early stage in the proceedings, the Company is unable to determine the impact,
if any, the suit may have on the Company or its operations or financial
position.
On July 8, 2008, OC-PIN filed a complaint against the Company alleging
causes of action for breach of contract, specific performance, reformation,
fraud, negligent misrepresentation and declaratory relief. The suit arises out
of a stock purchase agreement entered into around the time of the Company's
inception. At this early stage in the proceedings, the Company is unable to
determine the impact, if any, the suit may have on the Company or its operations
or financial position.
Policies Regarding Approval or Ratification of Transactions with Related Parties
- --------------------------------------------------------------------------------
The Company's human resource written policies and procedures 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.
20
As part of the quarterly disclosure control procedures, the Chief Financial
Officer and Chief Executive Officer for each hospital owned by the Company
disclose or certify that employees or officers have not acted in a manner
inconsistent with the Company policy related to Conflict of Interest. The CFO
and Director of Internal Audit monitor certifications for potential disclosure
events.
Company policy requires the General Counsel to review and approve 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 its hospital facilities in 2005, the Company
entered into agreements with the Medical Executive Committee ("MEC") at the
largest hospital, Western Medical Center- Santa Ana ("WMC-SA"), requiring 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.
STOCKHOLDER PROPOSALS
Under Securities Exchange Act Rule 14a-8, any stockholder desiring to
submit a proposal for inclusion in our proxy materials for our 2009 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 2008 Annual Meeting. However, if the date of our Annual Meeting in 2009
changes by more than 30 days from the date on which our 2008 Annual Meeting is
held, then the deadline would be a reasonable time before we begin to print and
mail our proxy materials for our 2009 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 Article II, Section 15(b) of the Company's Bylaws, as amended,
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 2009 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, 2009, then the persons named in the
proxies solicited by the Company's Board of Directors for its 2009 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, 2008 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, 2008
21
PROXY
INTEGRATED HEALTHCARE HOLDINGS, INC.
2008 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 Tuesday,
September 2, 2008 at 1:00 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)
22
PROXY
INTEGRATED HEALTHCARE HOLDINGS, INC.
2008 ANNUAL MEETING OF STOCKHOLDERS
(CONTINUED FROM REVERSE SIDE)
1. ELECTION OF DIRECTORS. To elect six (6) directors to our Board of Directors
to serve until the 2009 Annual Meeting of Stockholders and until their
successors are elected and have qualified. A seventh director, Hon. C. Robert
Jameson, is appointed to the Board by court order and is expected to remain a
director following the Annual Meeting. The following individuals are the
nominees for election as director:
Maurice J. DeWald Ajay G. Meka, M.D. Bruce Mogel
Michael Metzler J. Fernando Niebla William E. Thomas
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] WITHHOLD AUTHORITY TO VOTE
EXCEPT AS MARKED TO THE CONTRARY FOR ALL NOMINEES LISTED 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 or required 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 ending March 31, 2009.
[ ] 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:______________________, 2008
__________________________________
(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
23