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EXHIBIT 99.1
WILLIAM E. THOMAS, INC.
A PROFESSIONAL LAW CORPORATION
6800 Indiana Avenue, Suite 130
Riverside, California 92506
(951) 782-8812 - Telephone
(951) 782-8850 - Facsimile
September 24, 2008
Scott Schoeffel, General Counsel
Integrated Healthcare Holdings, Inc.
1301 North Tustin Avenue
Santa Ana, CA 92705
Re: Legal Representation by William E. Thomas, Inc.
Dear Mr. Schoeffel:
This letter sets forth the terms of your engagement of the services of
William E. Thomas of William E. Thomas, Inc. ("Attorney").
IDENTITY OF THE CLIENT:
The Client retaining the Attorney by this agreement is Integrated
Healthcare Holdings, Inc., a Nevada corporation ("IHHI"). The Client will be
referred to in this agreement as "You," "Your" or "Client."
SUBJECT OF REPRESENTATION
You have engaged the Attorney to represent You, as Special Counsel, in
connection with the supervision and coordination a number of pending lawsuits to
which Client is a party ("Lawsuits"). Client has identified a specific list of
Lawsuits as of the date of this agreement. Attorney understands and agrees that
Client may from time to time add to, or subtract from, the current list of
Lawsuits with Attorney's consent. The services that the Attorney will render In
connection with the Lawsuits will hereinafter be referred to as the
"Representation."
NATURE OF SERVICES
Attorney will to devote approximately twenty (20) hours per week on the
representation. Attorney intends to be onsite at Client's headquarters in Santa
Ana, and/or coordinating with defense counsel, Enterprise Counsel Group in
Irvine, or such other counsel as may be designated by Client, approximately two
(2) days per week. Attorney is under no obligation to maintain time records.
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Scott Schoeffel Page 2
September 24, 2008
COMPENSATION
Client agrees to compensate attorney at the flat rate of Twenty
Thousand Dollars ($20,000,000) per month plus reimbursement of out-of-pocket
costs. Attorney will provide appropriate documentation substantiating such
out-of-pocket costs. Said Twenty Thousand Dollars ($20,000,000) per month shall
be payable in arrears at the conclusion of each month but no later than the 10th
of such month. Although Attorney began rendering services on August 26, 2008,
the parties have agreed that Attorney's services in August and September shall
be accounted for as a single month payable in October.
BOARD FEES
Attorney is an independent contractor providing services on a special
assignment. Nothing herein shall preclude or effect attorney's participation on
Client's Board of Directors and its committees and to be receive customary
compensation for such Board and Committee service.
CONFLICTS:
Client is aware that Attorney is involved in the following
relationships:
1. Attorney is a shareholder and member of the Board of
Directors and serves on the Compensation and Legal
Affairs Committees;
2. Kall P. Chaudhuri, M.D. ("Dr. Chaudhuri") is Client's
largest shareholder. Attorney represents Dr.
Chaudhuri personally as well as most of his
affiliates;
3. Dr. Chaudhuri is the majority owner and Attorney is a
minority owner of Ganesha Realty, LLC ("Ganesha").
Ganesha is a forty-nine percent (49% member of
Pacific Coast Holdings Investment, LLC ("PCHI"). PCHI
is Client's landlord. In addition, pursuant to an
arbitration award not yet confirmed by court, PHCI
may have an obligation to advance legal fees and to
indemnify Dr. Anil Shah with respect to the IHHI v.
Shah lawsuit referenced above;
4. Ganesha is a Credit Party with respect to Your
financing with Medical Capital;
5. The Attorney, Dr. Chaudhuri and Ganesha and/or other
affiliates reserve the rights to protect their
interests in connection with the lawsuits referenced
above, including filing appropriate lawsuits or
proceedings of their own if the circumstances
require; and
6. Both Dr. Chaudhuri and Attorney may be material
witnesses in the lawsuits.
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Scott Schoeffel Page 3
September 24, 2008
Although potential conflicts exist between the interests of Attorney
and Client, Client acknowledges that it has determined that no actual conflict
exists and knowingly waives such potential conflicts in order to obtain
Attorney' services. In the event Client determines that an actual conflict has
arisen, Client agrees to immediately notify Attorney of such determination such
that Attorney may immediately terminate the representation to avoid being placed
in an actual conflict of interest. In the event an actual conflict were to
arise, Attorney reserves the right to withdraw from the representation with
Client and continue to represent Dr. Chaudhuri and his affiliates with respect
to their interests.
COOPERATION:
The Attorney will provide services to You in accordance with this
agreement and in reliance upon information and guidance provided by You. The
Attorney will keep You reasonably informed of progress and developments, and
will respond to Your inquiries, to enable the Attorney to consult with You
effectively, You agree to cooperate fully with the Attorney in all developments
and to fully and accurately disclose all facts and documents that may be
relevant to the matter or that the Attorney may otherwise request You also will
make yourself and other appropriate Client personnel reasonably available to
attend meetings, conferences, hearings and other proceedings as may be
necessary.
NO GUARANTY OF SUCCESS
Either at the commencement or during the course of the Attorney's
services, the Attorney may express opinions or beliefs concerning various
matters relating to the matters on which the Attorney is consulting on, as well
as various courses of action and the results that might be anticipated. Any such
statement is intended to be an expression of opinion only, based on information
available to the Attorney at the time, and should not be construed by you as a
promise or guaranty. Furthermore, You understand that the Attorney has made no
representation or guaranty concerning a successful outcome on the matter in
which consulting services are being provided.
TERMINATION:
You may terminate this agreement at any time by written notice to the
Attorney. Your termination of the Attorney's services will not affect Your
responsibility for payment of outstanding statements, accrued fees and expenses
incurred before termination or in connection with an orderly transition of the
matter. If such termination occurs, Your papers end property will be returned to
you promptly. The Attorney's own flies pertaining to all matters will be
retained. You may request access to the portion of the file which the Attorney
retains should you have a need or desire to do so. It is agreed that all fees
and costs accrued at the time of withdrawal will be immediately due and payable.
The Attorney may terminate this agreement and withdraw from providing
further services to You if You fall to fulfill Your obligations under this
agreement, including Your obligation to pay the Attorney's fees and expenses as
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Scott Schoeffel Page 4
September 24, 2008
they become due, or as permitted or required under any applicable standards of
professional conduct or upon the Attorney's reasonable notice to You, or if
irreconcilable differences develop between the Attorney and You which, in the
Attorney's sole discretion, would significantly impair the ability of the
Attorney to satisfactorily and effectively discharge its duties to You.
FILE STORAGE:
Attorney shall have no responsibility to store any files created in the
course of this representation.
SEVERABILITY:
If any of these provisions is stricken in an arbitration or a court
proceeding, the remainder shall be enforced to the fullest extent provided by
law.
ARBITRATION:
Should any dispute arise between You and the Attorney that is in any
way related to the performance of this Agreement by You or the Attorney or in
any way related to the Attorney's representation of You in either the matter
described above or in any other matter, including but not limited to disputes
regarding fees, or claims regarding breach of contract, professional
malpractice, breach of fiduciary duty or any other claim based on law or equity,
You agree to have any such claim(s) resolved through binding arbitration in
Riverside, California, pursuant to the Judicial Arbitration and Mediation
Services ("J.A.M.S.") Arbitration Program. Without limiting generality of the
foregoing. You and the Attorney expressly agree that any and all questions as to
whether or not an issue constitutes a dispute or other matter arbitrable under
this arbitration agreement shall themselves be settled by arbitration in
accordance with this paragraph. Any award shall be final, binding and conclusive
upon You and the Attorney and a judgment rendered thereon may be entered by the
Riverside County Superior Court that shall have jurisdiction over any such
dispute. YOU ACKNOWLEDGE THAT YOU ARE AWARE OF THE FACT THAT BY AGREEING TO
ARBITRATION, YOU WAIVE ANY RIGHT THAT YOU HAVE TO A COURT OR JURY TRIAL, FOR ANY
AND ALL DISPUTES BETWEEN YOU AND THE ATTORNEY. You further acknowledge and agree
that the arbitration shall be governed by the laws of the State of California
and that the forum for any dispute arising hereunder, including the site of the
arbitration, shall be the City of Riverside, California, County of Riverside,
State of California.
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Scott Schoeffel Page 5
September 24, 2008
LEGAL REVIEW:
You acknowledge that the Attorney has discussed the terms of this
agreement and that the Attorney has given You the opportunity to have this
agreement reviewed by an Attorney or other person of Your choosing prior to You
signing it.
Please review this letter carefully and, if the terms and conditions of
the Attorney's representation and the compensation arrangements meet with Your
approval, please sign the enclosed copy of this letter and return it to the
Attorney.
Very truly yours,
WILLIAM E. THOMAS, INC.
/s/ William E. Thomas
William E. Thomas
President
ACKNOWLEDGED AND AGREED:
The undersigned has agreed to the foregoing terms for the provision of
legal services by William E. Thomas, Inc.
The undersigned has read and understands the consent provisions set
forth above, and specifically consents to the waiver of the conflicts of
interest set forth above.
INTEGRATED HEALTHCARE HOLDINGS, INC.
DATED: 09-25-08
By: /s/ J. Scott Schoeffel
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Scott Schoeffel, General Counsel