COMPREHENSIVE CARE CORP, DEF 14A, 1994-09-28

COMPREHENSIVE CARE CORP
DEF 14A, 1994-09-28
HOSPITALS

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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 (Amendment No. )

Filed by the registrant [ X ]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement

[X ] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Comprehensive Care Corporation
(Name of Registrant as Specified in Its Charter)

Comprehensive Care Corporation
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):

[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
(previously paid)

[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.

(1) Title of each class of securities to which transaction
applies:

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(2) Aggregate number of securities to which transactions
applies:

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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:

------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

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[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.

<PAGE>
(1) Amount previously paid:

-------------------------------------------------------

(2) Form, schedule or registration statement no.:

-------------------------------------------------------

(3) Filing party:

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(4) Date filed:
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[COMPCARE LOGO]

October 7 , 1994

Dear CompCare Stockholder:

On behalf of the Board of Directors and management of your Company,
I cordially invite you to attend our annual meeting of stockholders on
Monday, November 14, 1994 at 9:00 a.m., Pacific Standard Time, at Starting
Point Hospital, 350 West Bay Street, Costa Mesa, California.

I urge you to attend the meeting to give us an opportunity to
meet you personally and to answer questions you may have.

I hope that you will be able to attend the meeting in person.
Whether or not you plan to attend the meeting, please sign and return the
enclosed proxy card promptly in the return envelope provided.

I look forward to seeing you at the Annual Meeting of Stockholders.

Sincerely,

Chriss W. Street
Chairman of the Board
and Chief Executive Officer <PAGE>
<PAGE>

COMPREHENSIVE CARE CORPORATION

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held Monday, November 14, 1994

The annual meeting of stockholders of Comprehensive Care
Corporation (the "Company") will be held at Starting Point Hospital,
350 West Bay Street, Costa Mesa, California on Monday, November 14, 1994
at 9:00 a.m., Pacific Standard Time, for the following purposes:

1. To act upon a proposed amendment to the Company's
Bylaws regarding the number of directors;

2. To act upon a proposed amendment to the Company's
Certificate of Incorporation to establish a
classified Board of Directors;

3. To elect directors;

4. To act upon a proposal to adopt the Comprehensive
Care Corporation Directors' Stock Option Plan;

5. To act upon a proposal to increase the number of
shares authorized for issuance under the Company's
1988 Incentive Stock Option Plan to 500,000 (after
giving effect to the reverse stock split
described under the heading "Reverse Stock Split" in
this proxy statement);

6. To act upon a proposal to increase the number of
shares authorized for issuance under the Company's
1988 Nonstatutory Stock Option Plan to 200,000 (after
giving effect to the aforementioned reverse stock
split); and

7. To consider and transact such other business as may
properly come before the meeting or any adjournment
thereof.

Stockholders of record at the close of business on September 28,
1994 are entitled to vote at the meeting. A list of stockholders entitled
to vote at the meeting will be available for inspection at the principal
office of the Company.

By Order of the Board of Directors,

Kerri Ruppert
Secretary

October 7 , 1994

YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN THE ACCOMPANYING PROXY
AND MAIL IT IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. YOUR PROMPT
RESPONSE WILL SAVE THE EXPENSE OF A FOLLOW-UP MAILING.
<PAGE>
<PAGE>
COMPREHENSIVE CARE CORPORATION
16305 Swingley Ridge Drive, Suite 100
Chesterfield, Missouri 63017
(314) 537-1288

PROXY STATEMENT

The Board of Directors of Comprehensive Care Corporation (the
"Company") solicits your proxy for use at the annual meeting of
stockholders to be held on Monday, November 14, 1994 at 9:00 a.m., Pacific
Standard Time, at Starting Point Hospital, 350 West Bay Street, Costa
Mesa, California. This proxy statement and the accompanying form of proxy
are first being mailed on or about October 7 , 1994. Following this
mailing, certain officers and employees of the Company may solicit proxies
by mail, telephone, telecopy or in person, without additional
compensation. In addition, the Company has engaged Continental Stock
Transfer Company to assist in this proxy solicitation for a fee of
$ 5,000 plus expenses. Upon request, the Company will reimburse
brokers and other persons holding shares for others for their expenses in
forwarding copies of the proxy soliciting material to the beneficial
owners of such shares. All costs of solicitation will be paid by the
Company.

The shares held by each person giving a proxy in the accompanying
form will be voted at the meeting in accordance with any instructions
specified in the proxy. If no instructions are specified, the shares will
be voted FOR the proposed amendment to the Company's Bylaws regarding the
number of directors; FOR the proposed amendment to the Company's
Certificate of Incorporation establishing a classified Board of Directors;
FOR the election as directors of the nominees specified herein; FOR the
adoption of the Comprehensive Care Corporation Directors' Stock Option
Plan; FOR the amendment of the 1988 Incentive Stock Option Plan; and FOR
the amendment of the 1988 Nonstatutory Stock Option Plan. The person
voting the proxy may vote the proxy cumulatively for the election of one
or more directors as described under "Cumulative Voting Rights" below. A
proxy may be revoked by the person giving it any time before its exercise
by sending a written notice of such revocation or a later-dated proxy to
the Secretary of the Company at the above address or by attending the
meeting and voting in person. Attendance at the meeting will not by
itself revoke a proxy.

Only stockholders of record at the close of business on September
28, 1994 are entitled to notice of, and to vote at, the annual meeting.
As of that date, 21,986,916 shares of common stock, $.10 par value per
share ("Common Stock"), were outstanding. Stockholders are entitled to
one vote for each share of Common Stock held.

The presence in person or by proxy of the holders of a majority of
the outstanding shares of Common Stock will constitute a quorum for the
transaction of business at the annual meeting. Directors are elected by a
plurality of the votes present in person or by proxy and entitled to vote
and amendments to the Bylaws or Certificate of Incorporation must
be approved by a majority of the outstanding shares entitled to vote.
Approval of any other matter that may properly come before the meeting
requires the affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote. Abstentions will therefore have
the effect of negative votes with respect to any matter presented at the
meeting, while broker non-votes will have no effect on any
matter presented. If authority to vote for one or more
nominees is withheld on a proxy card, no vote will be cast with respect to
the shares represented thereby and the outcome of the election will not be
affected.

<PAGE>
CUMULATIVE VOTING RIGHTS

In voting for the election of directors, stockholders are entitled
to vote cumulatively. Each stockholder is entitled to cast in each
election the number of votes equal to (i) the number of shares held of
record by such person, multiplied by (ii) the number of directors to be
elected in such election. Stockholders may (but need not) cumulate their
votes in the election of directors by indicating the distribution of their
votes among the nominees in the space provided on the enclosed proxy card.
If votes are not so distributed on the proxy as to the election of
directors, the persons appointed as proxies may exercise the right to vote
the shares represented by such proxy cumulatively in such election and may
distribute the votes represented by such proxy among one or more of the
nominees (or any substitute candidates) in any manner they see fit.

REVERSE STOCK SPLIT

On May 16, 1994, the stockholders of the Company approved an
amendment to the Company's Certificate of Incorporation to effect a
reverse stock split of one share for each ten or fewer shares of the
Company's Common Stock, with the specific ratio to be selected by the
Board of Directors. The stockholders also approved amendments to the
Certificate of Incorporation reducing the par value of the Company's
Common Stock to $.01 per share and reducing the number of authorized
shares of Common Stock to five times the number of shares outstanding,
reserved or otherwise committed for future issuance but not less than 12.5
million. The reverse stock split and amendments to the Certificate of
Incorporation were to become effective on any date selected by the Board
of Directors prior to February 16, 1995.

The Board of Directors has decided to effect a one-for-ten reverse
stock split effective October 17, 1994 subject to postponement or
withdrawal. On the effective date of the reverse stock split, the
Certificate of Incorporation will be amended to reduce the par value of
the Common Stock to $.01 per share and to reduce the number of authorized
shares of Common Stock to 12.5 million. Unless otherwise indicated, the
share figures contained in this proxy statement do not reflect the effect
of the reverse stock split, which would be to reduce the number of shares
set forth by a factor of ten, with each stockholder's proportionate
ownership interest remaining constant.

PRINCIPAL STOCKHOLDERS

The following table sets forth information concerning the
beneficial ownership of Common Stock by the directors of the Company, the
executive officers named in the Summary Compensation Table included
elsewhere herein and all directors and executive officers as a group.
Such information is given as of September 28, 1994, the record date.
According to rules adopted by the Securities and Exchange Commission, a
person is the "beneficial owner" of securities if he or she has, or
shares, the power to vote them or to direct their investment. Except as
otherwise noted, the indicated owners have sole voting and investment
power with respect to shares beneficially owned. An asterisk in the
percent of class column indicates beneficial ownership of less than 1% of
the outstanding Common Stock.

<PAGE>

AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS

William H. Boucher 0 0
J. Marvin Feigenbaum 0 0
Harvey G. Felsen 179,200 (1) *
Fred C. Follmer 150,000 (2) *
Howard S. Groth 41,000 (3) *
Rudy R. Miller 0 0
W. James Nicol 40,564 (4) *
Robert H. Osburn 100,000 (5) *
Richard C. Perry(6)2,000,000 9.1
Richard C. Peters(7) 43,600 *
Kerri Ruppert 40,000 (8) *
Chriss W. Street 310,600 (9) 1.4
Stephen J. Toth 2,549(10) *
All executive officers
and directors as
a group (9 persons)761,364 (11) 3.3
</TABLE>

(1) Includes 139,200 shares held directly and 40,000 shares subject
to options that are presently exercisable or exercisable within
60 days of the date of this proxy statement.

(2) Consists of 150,000 shares subject to options that are presently
exercisable or exercisable within 60 days of the date of this
proxy statement.

(3) Includes 1,000 shares held indirectly by Stan Groth & Associates
and 40,000 shares subject to options that are presently
exercisable or exercisable within 60 days of the date of this
proxy statement.

(4) Includes 564 shares held by Mr. Nicol's spouse as custodian for
his three minor children, all of whom reside with Mr. Nicol, and
40,000 shares subject to options that are presently exercisable
or exercisable within 60 days of the date of this Proxy
Statement.

(5) Includes 80,000 shares held directly and 20,000 shares subject to
options that are presently exercisable or exercisable prior to
November 17, 1994. Mr. Osburn was removed as an executive
officer on March 24, 1994 and he resigned from all positions on
August 19, 1994.

(6) Mr. Perry is President of Perry & Co., 2635 Century Parkway,
N.E., Suite 1000, Atlanta, Georgia 30345.

(7) Mr. Peters, the former President and Chief Executive Officer of
the Company, resigned on May 6, 1994.

(8) Consists of 40,000 shares subject to options that are presently
exercisable or exercisable within 60 days of the date of this
Proxy Statement.

(9) Includes 250,000 shares subject to options that are presently
exercisable or exercisable within 60 days of the date of this
Proxy Statement.

(10) Includes 1,873 shares held by the trustee of the Company's 401(k)
Plan. Mr. Toth, a former executive officer of the Company,
resigned effective July 8, 1993.

(11)
Includes a total of 560,000 shares subject to outstanding options that
are presently exercisable or exercisable within 60 days of the date of
this Proxy Statement.

<PAGE>
PROPOSAL 1 - AMENDMENT OF BYLAWS OF THE COMPANY
REGARDING THE NUMBER OF DIRECTORS

The Board of Directors has unanimously approved for submission to a
vote of the stockholders of the Company an amendment to Section 3.2 of the
Company's Bylaws to set the number of directors of the Company at five (5)
as of the date of the 1994 Annual Meeting of Stockholders, with the number
of directors thereafter to be fixed by the affirmative vote of either two-
thirds of the directors then in office or 80% of the votes entitled to be
cast by the holders of all outstanding voting shares of the Company,
voting together as a single class.

Section 3.2 of the Company's Bylaws presently provides that the number
of directors shall be not less than three (3) and not more than eleven
(11), with the exact number within such minimum and maximum limits to be
fixed and determined from time to time by stockholder vote at the Annual
Meeting of Stockholders. The Board of Directors is presently composed of
seven (7) directors, two of whom are not standing for re-election except
to the extent their service may be required in the event this proposal is
not approved by the Company's stockholders.

The Board of Directors has determined that it is in the best interests
of the Company and its stockholders to have a Board composed of five (5)
directors. Retaining an odd number of directors will prevent deadlock
with respect to matters voted upon by the Board and a reduction in its
size will reduce the number of directors necessary for a quorum and action
at a meeting. In the Board's judgment, this will enhance the Board's, and
therefore the Company's, efficiency and productivity. If the proposed
amendment is adopted, the number of directors can be altered or amended
(i) by two-thirds of the directors then in office, though less than a
quorum, or by the sole remaining director, or (ii) at any Annual Meeting
of Stockholders by the affirmative vote of 80% of all outstanding shares
entitled to be voted at such meeting.

If the proposed amendment to Section 3.2 of the Bylaws is approved by
the stockholders, the Board will consist of the five primary nominees who
are elected at the 1994 Annual Meeting of Stockholders. Primary nominees
for election to the Board are listed in "Proposal 3 - Election of
Directors." If the proposed amendment to Section 3.2 is not approved, the
nominees will also include the two additional directors listed as
secondary nominees in "Proposal 3 - Election of Directors."

The Board of Directors believes that in order to preserve the
independence and authority of the Board of Directors and to ensure that
the intent of the provisions contained in the proposed amendment is
implemented, it is necessary that any change in the number of directors
will require the supermajority vote described above. The proposed
amendment may therefore discourage an individual or entity from acquiring
a significant position in the Company with the intention of obtaining
immediate control of the Board of Directors by amending the Bylaws to
increase the number of directors and proposing his or her own slate of
nominees to fill the vacancies by majority vote.

The Board of Directors is not aware of any present effort to obtain
control of the Company or to organize a proxy contest. However, the Board
of Directors believes that it is prudent and in the interest of the
Company's stockholders to encourage continuity and stability in the Board.
The Board believes such advantage outweighs any disadvantage of
discouraging potential acquir o rs from making an effort to obtain
control of the Company.

The foregoing summary description is not intended to be complete and
is qualified in its entirety by reference to Appendix A, which contains
the complete text of the proposed amendment to Section 3.2 of the
Company's Bylaws. The proposed amendment must be adopted by a majority of
the outstanding shares entitled to vote.

The Board of Directors recommends that the stockholders vote
FOR the proposed amendment to the Company's Bylaws
<PAGE>

PROPOSAL 2 - AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF THE COMPANY
TO ESTABLISH A CLASSIFIED BOARD OF DIRECTORS

The Board of Directors has unanimously approved for submission to a
vote of the stockholders of the Company an amendment to the Company's
Certificate of Incorporation to add a new Article Nine that would classify
the Board into three classes, with one class being elected each year at
the Annual Meeting of Stockholders to serve a staggered three-year term
(after the transitional arrangement discussed below). Proposed Article
Nine would also require that any amendment to the Company's Certificate of
Incorporation or Bylaws designed to circumvent the purposes of proposed
Article Nine would require the affirmative vote of 80% of the votes
entitled to be cast by the holders of all outstanding shares of voting
stock of the Company, voting together as a single class, unless such
amendment is recommended by not less than two-thirds of the members of the
Board of Directors.

If Proposals 1 and 2 are adopted, the slate of five directors proposed
as primary nominees in "Proposal 3 - Election of Directors" will be
elected into three separate classes as follows: two directors
constituting "Class I Directors" will be elected for a term expiring at
the 1997 Annual Meeting of Stockholders; two directors constituting
"Class II Directors" will be elected for a term expiring at the 1996
Annual Meeting of Stockholders; and one director constituting a "Class III
Director" will be elected for a term expiring at the 1995 Annual Meeting
of Stockholders. If Proposal 1 is not adopted, however, the slate of
primary and secondary nominees listed in "Proposal 3 - Election of
Directors" will be elected into the classes as described above, except
that three Class III directors will be elected. At each annual meeting
beginning in 1995, successors to the class of directors whose term expires
at that meeting will be elected for a three-year term. If Proposal 2 is
not approved, all directors will be elected to serve until the next Annual
Meeting of Stockholders and then until the election and qualification of
their successors. See "Election of Directors" regarding the
classification of the current nominees to the Board of Directors.

The Board of Directors believes that classification of the Board of
Directors as provided in the proposed amendment will promote continuity
and stability in the Company's management and policies and permit it to
represent effectively the interests of all stockholders and to respond
prudently to circumstances created by the demand or actions of a minority
stockholder or group. Absent the removal or resignation of directors, two
annual elections would be required to replace a majority of a classified
Board of Directors and effect a forced change in the business and affairs
of the Company. The proposed amendment may therefore discourage an
individual or entity from acquiring a significant position in the Company
with the intention of obtaining immediate control of the Board of
Directors. The acquiror could, however, immediately effect a change in
control of the Board of Directors by garnering the affirmative vote of 80%
of the votes necessary to amend or repeal the Bylaws or Certificate of
Incorporation of the Company to eliminate classification of the Board.

The Board of Directors believes that in order to ensure the integrity
of Article Nine, a supermajority vote should be required to alter or amend
any provision in the Bylaws or Certificate of Incorporation in a manner
inconsistent with the purposes of Article Nine. The Bylaws of the Company
currently provide that they may be altered or amended and new Bylaws
adopted by the stockholders at any annual or special meeting of
stockholders or by the Board of Directors at any regular or special
meeting of the Board of Directors. The vote of a majority of the Board or
of a majority of the votes entitled to be cast by the stockholders is
presently required to alter or amend the Bylaws, and a majority of the
votes entitled to be cast by the stockholders is required to amend the
Certificate of Incorporation.

If the proposed amendment is adopted, changes to either the
Certificate of Incorporation or the Bylaws in a manner inconsistent with
Article Nine may be made only by the affirmative vote of the holders of
not less than 80% of the votes entitled to be cast by the holders of the
then outstanding shares of voting stock; provided, however, that this
supermajority vote will not be required if the change is recommended by
not less than two-thirds of the members of the Board of Directors. Thus,
if the proposed amendment is adopted and the approval of two-thirds of the
Board is not obtained, the holders of more than 20% of the total voting
stock would be able to prevent an amendment to the Bylaws or the
Certificate of Incorporation that is inconsistent with the purpose of
Article Nine even if such change were desired by the holders of a majority
of the outstanding voting stock of the Company.

The Board of Directors is not aware of any present effort to obtain
control of the Company or to organize a proxy contest. However,
the Board of Directors believes that it is prudent and in the interest of
the Company's stockholders to encourage continuity and stability in the
Board. The Board believes such advantage outweighs any disadvantage of
discouraging potential acquirers from making an effort to obtain control
of the Company.

The foregoing summary description is not intended to be complete and
is qualified in its entirety by reference to Appendix B, which contains
the complete text of proposed Article Nine of the Company's Certificate of
Incorporation. The proposed amendment must be adopted by a majority of
the outstanding shares entitled to vote.

The Board of Directors recommends that the stockholders vote
FOR the proposed amendment to the Company's Certificate of Incorporation.

<PAGE>
PROPOSAL 3 - ELECTION OF DIRECTORS

On August 25, 1994, the Board of Directors voted to fix the size of
the Board of Directors at five members, subject to stockholder approval.
The change in the size of the Board is subject to stockholder approval of
Proposal 1 and, if approved, will become effective on the date of the
upcoming Annual Meeting of Stockholders.

If Proposal 1 is approved, the five persons listed as "Primary
Nominees" below will be nominated for election to the Board. If
Proposal 1 is not approved, the Board will continue to be composed of
seven members and the two individuals listed as "Secondary Nominees" below
will be nominated in addition to the five persons listed as "Primary
Nominees."

The current terms of all existing directors expire on the election
and qualification of the directors to be elected at this annual meeting.
If the proposal to amend the Certificate of Incorporation to classify the
Board of Directors is approved by the stockholders' effective upon the
filing with the Delaware Secretary of State of the amendment to the
Certificate of Incorporation reflecting the adoption of Proposal 2, each
director elected will be deemed to have been elected to one of the three
classes of directors established by the Certificate of Incorporation as
shown below or until a successor is duly elected and qualified. In the
event the classified Board proposal is not approved by the stockholders,
all directors will be elected to serve until the next Annual Meeting of
Stockholders and then until the election and qualification of their
successors.

It is the intention of the persons named as proxies to vote their
proxies for the election as directors of the persons as named below, each
of whom is currently a director. Each nominee has consented to serve as
the director if elected.

The Board of Directors recommends that the stockholders vote
FOR the election as directors of the nominees listed below.

PRIMARY NOMINEES

CLASS I: NOMINEES FOR A THREE-YEAR TERM EXPIRING IN 1997

WILLIAM H. BOUCHER (Age 62)

Mr. Boucher is currently a self-employed consultant providing
services to the dental, behavioral medicine and pharmaceutical industries.
From February 1994 to September 1994, he served as Vice President - Sales
for Foundation Health Pharmaceutical Services, a Health Maintenance
Organization ("HMO"), and was Vice President - Sales for Diagnostek, Inc.,
a mail-order pharmacy company, from June 1991 to January 1994.
Mr. Boucher was also Vice President - Sales for Qual-Med, an HMO, from May
1990 to June 1991 and was Vice President - Sales and Marketing for PCS,
Inc., a pharmacy processing company, from April 1980 to September 1989.
Mr. Boucher has served as a director of the Company since January 1994.

J. MARVIN FEIGENBAUM (Age 44)

Mr. Feigenbaum has served as the Chairman and Chief Executive
Officer of Applied DNA Systems, Inc., a chemo-sensitivity testing company,
since June 1994. For the five years prior thereto, Mr. Feigenbaum acted
as an independent consultant in the medical and health care industry
generally. Mr. Feigenbaum has over 20 years experience in the health care
industry. Prior to being an independent consultant, Mr. Feigenbaum served
as Chairman and Chief Executive Officer of Temco Home Health Care
Products, Inc. Mr. Feigenbaum is a member of the Entrepreneurship
Advisory Council Small Business Research Institute at the University of
Albany's School of Business. He has served as a director of the Company
since March 1994.

CLASS II: NOMINEES FOR A TWO-YEAR TERM EXPIRING IN 1996

RUDY R. MILLER (Age 47)

Mr. Miller has served as Chairman, President and Chief Executive
Officer of Miller Management Corp., a financial consulting firm, since
1972 and of Miller Capital Corp., a venture capital, financial services
and investor relations firm, since 1993. Mr. Miller was Chairman,
President and Chief Executive Officer of StatesWest Airlines, Inc. from
1986 to 1993. That company petitioned for protection under Chapter 11 of
the U.S. Bankruptcy Code in December 1992. Mr. Miller was also a member
of the Board of Directors of America West Airlines from 1982 to 1986. He
has served as a director since August 1994.

CHRISS W. STREET (Age 44)

Mr. Street has been employed by the Company since May 1994.
Mr. Street was named interim Chief Executive Officer on May 4, 1994 and in
June 1994, he was appointed Chief Executive Officer of the Company. In
August 1994, Mr. Street was also appointed President of the Company.
Mr. Street is founder and principal of Chriss Street & Company, a
corporation specializing in investment banking, financial advisory
services, securities trading and factoring. Mr. Street commenced
operations of Chriss Street & Company in February 1992 and was Managing
Director for Seidler-Amdec Securities, Inc. from 1988 to 1992. Mr. Street
also serves as Chairman of the Board of Directors of the Company and has
been a director since November 1993.

CLASS III: NOMINEE FOR ONE-YEAR TERM EXPIRING IN 1995

W. JAMES NICOL (Age 51)

Mr. Nicol has served since October 1990 as Senior Vice
President/Chief Financial Officer and Treasurer of Quantum Health
Resources, Inc., a provider of long-term therapies and support services
for chronic disorders. From October 1989 until August 1990, he served as
President of the Company, and he served as an Executive Vice President of
the Company and in other positions from 1973 through June 1989. Mr. Nicol
has served as a director of the Company since 1988 and also served as a
director from 1985 to 1987.

SECONDARY NOMINEES

In the event Proposal 1 is not approved by the stockholders and the
size of the Board remains at seven members, the following additional
nominees are submitted for election as Class III directors:

HARVEY G. FELSEN (Age 55)

Mr. Felsen is Chairman of Enseco Incorporated, which provides
environmental analytical services and is headquartered in Somerset, New
Jersey. Enseco was founded by Mr. Felsen in 1984 and was acquired by
Corning Glass Works in 1989. He has served as a director of the Company
since August 1990.

HOWARD S. GROTH (Age 53)

Since June 1985, Mr. Groth has been the owner of Stan Groth &
Associates of West Linn, Oregon, which provides hospital management
engineering services. Since January 1992, he has also served as
Administrator, Morton General Hospital, and as Superintendent, Lewis
County Hospital District, both of Morton, Washington. He has served as a
director of the Company since August 1990.

Board Meetings and Directors' Compensation

During the fiscal year ended May 31, 1994, the Board of Directors
of the Company held 10 meetings. Each director attended more than 75% of
the meetings of the Board of Directors and the committees on which he
served during his period of service.

Non-employee directors receive a $5,000 annual retainer plus $2,250
for each Board meeting attended in person. Directors are not compensated
for attendance at committee meetings or meetings conducted telephonically.

Effective as of the date of the 1994 annual meeting, directors will
no longer receive a retainer. Instead, non-employee directors will be
paid $1,000 per month of service, with committee chairmen receiving an
additional $500 per month. Directors will be required to attend at least
three of the five regular Board meetings in order to remain on the Board.
Beginning on the date of the 1994 Annual Meeting of Stockholders, and
subject to shareholder approval, directors will also receive options to
purchase shares of the Company's common stock under the proposed
Directors' Stock Option Plan. See "Proposal 4 -- Adoption of the
Comprehensive Care Corporation Directors' Stock Option Plan."

Howard S. Groth, a current director of the Company, is a principal
of Stan Groth & Associates, a management consulting firm. The Company has
engaged Stan Groth & Associates to advise the Compensation Committee of
the Board of Directors on a variety of compensation issues, including the
establishment of base salaries and incentive criteria for the Company's
executives. The terms of the engagement provide that Stan Groth &
Associates will bill the Company at an hourly rate, with total fees
(exclusive of out-of-pocket expenses) not to exceed $10,000.

Board Committees

Executive Committee. The Board dissolved the executive committee
on August 25, 1994. From May 31, 1993 to January 12, 1994, the executive
committee of the Company's Board of Directors consisted of Mr. Felsen and
former director Norman L. Perry. From January 12, 1994 to March 7, 1994,
the executive committee consisted of Mr. Felsen and former director
Michael K. O'Toole. From March 7, 1994 until August 25, 1994, the
committee consisted of Messrs. Boucher, Feigenbaum, Felsen, Nicol, Street
and Groth. The executive committee was authorized to exercise all the
power and authority of the Board of Directors in the management of the
business and affairs of the Company, including without limitation, the
power and authority to declare a dividend and to authorize the issuance of
stock. The committee did not hold regularly scheduled meetings, but met
when necessary. The executive committee met once during fiscal 1994.

Audit Committee. The audit committee of the Board of Directors
consists of Messrs. Felsen, Nicol and Groth. The committee reviews the
report of the auditors' findings following the close of the audit and
thereafter submits a report of such findings to the Board of Directors.
It also makes a recommendation to the Board of Directors on the selection
of independent public accountants for the subsequent year. The audit
committee met once during fiscal 1994.

Compensation Committee. From May 31, 1993 to March 7, 1994, the
compensation committee of the Board of Directors consisted of Mr. Groth
and former directors Michael K. O'Toole and Charles Moore. Since March 7,
1994, the committee has consisted of Messrs. Nicol, Boucher and
Feigenbaum. Mr. Groth has continued to advise the compensation committee
as a paid consultant. See "Board Meetings and Directors' Compensation"
for a description of Mr. Groth's consulting arrangement. The compensation
committee recommends compensation for executives and the issuance of stock
options under existing plans and the modification of any such plans. The
compensation committee met three times during fiscal 1994.

The entire Board serves as the nominating committee and
stockholders wishing to recommend candidates for Board membership should
submit, in accordance with the Company's Restated Bylaws, timely written
notice containing the required information including the name of the
candidate and his or her background and qualifications to the Board of
Directors, c/o Secretary of the Company, 16305 Swingley Ridge Drive,
Suite 100, Chesterfield, Missouri 63017.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own more than 10%
of the Company's Common Stock to file reports of ownership and changes in
ownership of such securities with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange, Inc. Such persons are also
required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of
such forms furnished to the Company or written representations that no
Forms 5 were required, Management believes that from June 1, 1993 through
May 31, 1994, all of the Company's directors, officers and 10%
shareholders complied with all Section 16(a) filing requirements.

REPORT OF THE COMPENSATION COMMITTEE
REGARDING COMPENSATION OF
EXECUTIVE OFFICERS OF
COMPREHENSIVE CARE CORPORATION

The Company maintains a three-member Compensation Committee (the
"Committee") composed of non-employee directors. The Committee made all
decisions and recommendations regarding the compensation of the Company's
executives during fiscal 1994. Until March 7, 1994, the Committee was
composed of Howard S. Groth and former directors Michael K. O'Toole and
Charles Moore. Since March 7, 1994, the Committee has been composed of
W. James Nicol, William H. Boucher and J. Marvin Feigenbaum. The
Committee met once prior to March 7, 1994 and twice thereafter.

Executive Compensation Philosophy

The Committee believes that a compensation program that enables the
Company to attract and retain outstanding executives in the health care
industry will assist the Company in meeting its long-range objectives,
thereby serving the interest of the Company's stockholders. The Company's
adverse financial performance, as well as the resignation or removal of
three of its executive officers during fiscal 1994, constrained the
Committee's flexibility in terms of the range of compensatory alternatives
available. In the Committee's judgment, the Company's financial
performance was not sufficient to justify the award of incentive-based
compensation. In addition, the Company had to replace several of its
executive officers during the fiscal year, and as a result, the Committee
found itself making compensation decisions under difficult circumstances.
For these reasons, the Committee's compensation-related decisions in
fiscal 1994 primarily involved awarding its executives base salaries
designed to compensate those executives fairly (but not handsomely)
relative to the executives of the Company's competitors. See the
discussion under "Base Salaries" below. The Committee does not intend to
maintain this salary-based approach in future years, intending instead
that the Company's long-term executive compensation program have three
components: base salaries which will attract highly competent executives
and annual and long-term incentives which will tie the individual
executive's total compensation to individual performance and the financial
success of the Company.

Base Salaries

The Company's executive officers receive base salaries as
compensation for the skills, knowledge and experience that they bring to
their positions. Base salaries paid to the Company's executive officers
are subjectively established by the Committee and are not linked to
Company or individual performance objectives. Rather, they are intended
to be maintained at or slightly above the median of the range of salaries
for similar positions at public companies that are in the same line of
business as the Company and are of similar size. Such companies include
those listed in the Comparable Company Index in the Performance Graph
that appears below , but also include two other companies that would
be included in that index, but for the fact that they have less than five
years of operating history as public companies. The Committee also
considers salaries paid in the health care industry generally, but only as
a matter of establishing a general framework for its deliberations.

Over time, the Committee intends to place more emphasis on the
incentive portions of the executive's compensation package and expects
that the base salary portion will therefore gradually move closer to the
average "market rate" for executives employed at similar positions by
similarly-sized health care companies. By placing a greater portion of an
executive's annual pay "at risk," the Committee believes that compensation
will be more directly related to performance and will more closely link
the financial interests of the executives with those of the stockholders.

Executive salary increases may be made from time to time to reflect
changes in an executive's skills, knowledge and experience, as well as to
keep base salaries competitive, within the above parameters. The
Committee increased the salary of one executive officer (Mr. Follmer)
during fiscal 1994 in connection with his promotion to Chief Operating
Officer of the Company. No other salary increases were granted to any of
the Company's executive officers during fiscal 1994.

Annual Incentive Bonuses

In past years, annual incentive bonuses have been provided in
addition to base salaries to create total annual cash compensation. Due
to the Company's adverse financial performance, no such bonuses were
awarded in or with respect to fiscal 1994. The Committee has considered
from time to time an annual incentive plan that would increase total cash
compensation for executives based on objective improvements in the
Company's results of operations. The Committee has not yet adopted such a
plan pending further review of the Company's recent financial performance
and its ongoing examination of various strategic options for re-
establishing the Company's competitiveness in the marketplace.

Long-Term Incentives

The Company may provide long-term incentives to its executives
through programs designed to encourage executives to acquire and hold
shares of Common Stock of the Company. In past years, this objective was
achieved through grants of stock options. The timing and number of
options granted under the Company's stock option plans is a matter within
the discretion of the Committee, which typically takes into account the
Company's performance, the executive's perceived opportunity to contribute
to such performance and the total long-term compensation previously
granted to each executive. Based primarily on the Company's performance,
and also in view of the number of options already held by the Company's
executives, the Committee did not award any options or other long-term
incentives to any of the Company's executive officers during fiscal 1994.

Other Compensation Plans

The Company maintains several broad-based employee benefit plans,
including the Company's 401(k) Plan, in which the executive officers are
permitted to participate on the same terms as other employees.

Fiscal 1994 CEO Compensation

The Company had two different Chief Executive Officers during
fiscal 1994. Richard C. Peters served as President and CEO until his
resignation on May 6, 1994. Chriss W. Street was appointed Interim CEO on
May 6, 1994 and was appointed CEO on June 21, 1994. On August 25, 1994,
Mr. Street was also appointed President of the Company. In view of Mr.
Street's prior and continuing commitment to his investment banking firm,
the Board has allowed him to divide his time between the Company and his
firm. This report discusses the principles applicable to CEO compensation
generally as well as specific considerations relating to the compensation
awarded to each of Mr. Peters and Mr. Street.

The description of the Committee's past practice and future plans
regarding the components of executive compensation set forth in the
section of this report entitled "Executive Compensation Philosophy" apply
equally to CEO compensation. As presently structured, CEO compensation is
not tied to any particular measures of Company or individual performance.
The Committee also evaluates the CEO's skills, knowledge and experience
and subjectively relates these factors to his or her compensation.

In establishing Mr. Peters' compensation, the Committee considered
his experience and background in key managerial positions with various
health maintenance and managed care organizations and the development of
the Company's business in an environment in which managed care appears to
be a very important element of the Company's future strategic direction.
Subjective factors relating to Mr. Street's compensation include
his leadership and management skills as evidenced by his successful
operation of his own investment banking and financial services company and
his related expertise in financial management and planning. During his
service as a director of the Company since November 1993, Mr. Street
implemented various changes at the Company and demonstrated a superior
degree of leadership, initiative and commitment to the Company that also
served as a basis for the compensation awarded.

Limitations on the Deductibility of Compensation

Pursuant to the 1993 Omnibus Budget Reconciliation Act, a portion
of annual compensation payable after 1993 to any of the Company's five
highest paid executive officers would not be deductible by the Company for
federal income tax purposes to the extent such officer's overall
compensation exceeds $1 million. Qualifying performance-based incentive
compensation, however, would be both deductible and excluded for purposes
of calculating the $1 million base. The Board of Directors has determined
that no portion of anticipated compensation payable to any executive
officer in 1994 would be non-deductible. The Board of Directors will
continue to address this issue when formulating compensation arrangements
for executive officers, but believes that the deductibility of officer
compensation in excess of the $1 million threshold is not likely to be an
issue for the Company to address in the foreseeable future.

SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS COMPREHENSIVE CARE CORPORATION

William H. Boucher W. James Nicol J. Marvin
Feigenbaum

COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 1994, decisions and recommendations regarding the
compensation of the Company's executives were made by the Compensation
Committee of the Board of Directors, which is currently comprised entirely
of persons who are not officers or employees of the Company. Mr. Nicol,
who served as a director of the Company and a member of the Compensation
Committee during fiscal 1994, served as President of the Company from
October 1989 until August 1990 and as an Executive Vice President of the
Company and in other positions from 1973 through June 1989.

During fiscal 1994, the Company and certain persons who formerly
served as directors of the Company, including Mr. Nicol (who is still a
director of the Company), were defendants in various legal actions
resulting from the terminated reorganization of First Hospital
Corporation. Among other things, the complaints alleged violations of
federal and state securities laws, common law fraud and breaches of
fiduciary duty. (See Note 15 of Notes to Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1993.) Under the terms of the Company's Bylaws
and individual indemnity agreements with the former directors (including
Mr. Nicol) who are parties to this litigation, the Company bore certain
costs associated with defending and settling these lawsuits.
Approximately $318,000 in legal expenses related to this litigation were
charged to the Company during fiscal 1994. In order to settle certain of
these cases, on October 18, 1993, the Company paid $710,000 in settlement.
The Company is unable to separate the amounts paid on behalf of Mr. Nicol
in connection with defending and settling this litigation from amounts
paid by the Company on its own behalf and amounts paid on behalf of the
other former directors.

<PAGE>

Performance Graph

The following is a line graph comparing the Company's total
stockholder returns to those of The New York Stock Exchange Composite
Index, a Comparable Company Index (including the Company, Community
Psychiatric Centers and Ramsay Health Care Inc.) and a Prior Comparable
Company Index (including the companies listed in the Comparable Company
Index and National Medical Enterprises) for each year in the period from
June 1, 1989 and ending May 31, 1994. The Comparable Company Index no
longer includes National Medical Enterprises because management believes
that the nature of the business conducted by this company is no longer
sufficiently similar to that of the Company to justify comparing its
performance with that of the Company. Total return values were calculated
based on cumulative total return, assuming the value of the investment in
the Company's Common Stock and in each index was $100 and that all
dividends were reinvested.

[INSERT PERFORMANCE GRAPH]

CompCare 100 24.10 28.92 15.66 6.63 5.42

Comparable Co. Index 100 79.09 105.82 34.54 31.05 46.79

Prior Comparable Co. Index 100 104.96 140.35 74.29 54.49 91.92

NYSE Composite 100 114.85 127.63 141.06 157.43 166.57
/TABLE
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION

This section of the proxy statement discloses the compensation earned by the
Company's Chief Executive Officer and its other executive officers whose total
salary and bonus for fiscal 1994 exceeded $100,000 (together, these persons are
sometimes referred to as the "named executives"). The graph includes the
compensation earned by Richard C. Peters, who served as Chief Executive Officer
of the Company until May 6, 1994, and by Chriss W. Street served as Chief
Executive Officer since Mr. Peters' resignation. The chart reflects only the
portion of Mr. Street's $150,000 annual salary earned during fiscal 1994.

<TABLE>
<CAPTION>
Table I. - Summary Compensation Table

OTHER SECUR- ALL
ANNUAL ITIES LONG OTHER
COMPEN- RE- UNDER- TERM COMPEN-
SATION STRICTED LYING INCEN- SATION
(FY'93 & STOCK OPTIONS TIVE (FY'93 &
FISCAL SALARY BONUS '94 ONLY) AWARDS SARS PAYOUTS '94 ONLY)
NAME AND POSITION YEAR ($) ($) ($) (#) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chriss W. Street (1) 1994 10,424 0 0 0 0 0 0
Chairman & Chief
Executive Officer

Richard C. Peters (1) 1994 156,127 0 0 0 0 0 9,831 (3)
President & Chief 1993 107,145 (2) 0 0 0 0 0 0
Executive Officer 1992 97,112 0 0 0 10,000 0

Robert H. Osburn (4) 1994 149,292 0 0 0 0 0 0
Senior Vice President 1993 138,531 0 0 0 0 0 0
Government Relations 1992 63,077 0 0 0 30,000 0

Fred C. Follmer (5) 1994 144,971 0 0 0 0 0 315 (6)
Chief Operating Officer 1993 54,241 0 0 0 500,000 0 0
& Chief Financial Officer

Stephen J. Toth (7) 1994 16,143 0 0 0 0 0 115,440 (8)
Executive Vice President 1993 106,861 0 0 0 0 0 104 (6)
Staff Support Services 1992 100,000 0 0 0 20,000 0 0

Kerri Ruppert 1994 116,273 0 0 0 0 0 549 (6)
Vice President, Chief 1993 99,751 0 0 0 0 0 87 (6)
Accounting Officer & 1992 87,000 0 0 0 10,000 0 0
Secretary
</TABLE>

_________________________

(1) Mr. Street was named Interim Chief Executive Officer of the Company
effective May 10, 1994 following the resignation of his
predecessor, Richard C. Peters, and was appointed Chief Executive
Officer of the Company on June 21, 1994. Mr. Street was not
employed by the Company prior to that date. Accordingly, amounts
shown for Mr. Street only reflect compensation that he earned from
May 6, 1994 through the end of fiscal 1994, and amounts shown for
Mr. Peters reflect compensation earned through May 6, 1994.

(2) From August 1, 1992 until December 31, 1992, Mr. Peters served the
Company pursuant to two separate written consulting agreements.
The amount reflected as salary for fiscal 1993 includes $58,587
which was paid under the consulting agreements to Mr. Peters as
follows: $54,087 in consulting fees and expenses and $4,500 of
office rent.

(3) Includes severance payments of $9,231 and $600 in Company matching
contributions to Mr. Peters' 401(k) Plan account.

(4) Mr. Osburn was employed by the Company from October 1, 1991 to
August 19, 1994.

(5) Mr. Follmer was not employed by the Company prior to 1993.

(6) Represents amounts contributed by the Company to the indicated
person's 401(k) Plan account.

(7) Mr. Toth resigned from the Company effective July 8, 1993.

(8) Includes severance payments of $106,154 and $9,286 distributed from
Mr. Toth's Financial Security Plan Account.

<PAGE>
Table II - Options Held at May 31, 1994

This table presents information regarding the number of unexercised
options held by the Company's named executives at May 31, 1994. None of
the Company's named executives were granted or exercised options for any
shares of the Company's Common Stock in fiscal 1994, nor were any stock
appreciation rights granted or held by such persons during fiscal 1994.
None of the options shown below were "in-the-money" at May 31, 1994.

NUMBER OF
SECURITIES UNDERLYING
OPTIONS AT FY-END
(#)

NAME EXERCISABLE/UNEXERCISABLE
------------------ -------------------------

Mr. Street 0/0 (1)

Mr. Peters (2) 6,667/0

Mr. Osburn (3) 20,000/10,000

Mr. Follmer 125,000/375,000

Mr. Toth (4) 0/0

Ms. Ruppert 11,667/3,333

________________________

(1) On August 25, 1994, Mr. Street was granted: (i) an option to
purchase 250,000 shares of Common Stock at an exercise price of
$0.75 per share (fair market value on the date of grant); (ii) an
option to purchase 125,000 shares at an exercise price of $1.00 per
share; and (iii) an option to purchase 125,000 shares at an
exercise price of $1.50 per share. The option described in clause
(i) vested immediately, while the options described in clauses (ii)
and (iii) vest on August 25, 1996 and August 25, 1997,
respectively.

(2) Mr. Peters resigned from the Company effective May 6, 1994, thereby
forfeiting all options that had not vested as of that date.

(3) Mr. Osburn resigned from the Company effective August 19, 1994.

(4) Mr. Toth resigned from the Company effective July 8, 1993, thereby
forfeiting options to purchase 17,082 shares that had not vested as
of that date.

Executive Termination Arrangements

On July 8, 1993, Stephen Toth resigned from his position as an
Executive Vice President of the Company and pursuant to the terms of an
Executive Employment Agreement was paid one year's severance in the amount
of $100,000. In January 1994, the Company settled a dispute with Mr. Toth
regarding his entitlement to options to acquire 5,000 shares of RehabCare
common stock by paying him a lump sum of $16,000.

On May 6, 1994, Richard C. Peters resigned from his position as
President and Chief Executive Officer of the Company. The Company paid
him $40,000 in severance over a 90-day period and continued his health
insurance coverage during that time.

PROPOSAL 4 - ADOPTION OF THE COMPREHENSIVE CARE CORPORATION
DIRECTORS' STOCK OPTION PLAN

On September 27 , 1994, the Board of Directors approved the
Comprehensive Care Corporation Directors' Stock Option Plan (the "Directors'
Plan"), the full text of which is set forth in Appendix C to this Proxy
Statement. All share figures set forth herein take into account the effect
of the Company's one-for-ten reverse stock split because the Directors' Plan
will not become effective until after the effective date of the reverse stock
split.

The purpose of the Directors' Plan is to give the Company increased
flexibility in providing equity-based incentive compensation to its non-
employee directors, to promote the acquisition of Common Stock by the
Company's non-employee directors, upon whose judgment and ability the Company
relies to attain its long-term growth and development, and to provide a means
to attract and retain well-qualified directors. If approved by the
stockholders, the Directors' Plan would be effective as of the date of the
1994 Annual Meeting of Stockholders (the "Effective Date").

The terms of the Directors' Plan provides for the grant of only
nonqualified stock options. The Directors' Plan is not subject to ERISA, nor
is it qualified under Code Section 401(a).

The Board of Directors has reserved 200,000 shares of Common Stock for
issuance pursuant to awards that may be made under the Directors' Plan. All
non-employee directors of the Company are eligible to participate in the
Directors' Plan. It is currently estimated that approximately four
individuals are eligible to participate in the Directors' Plan, although six
individuals will be eligible to participate if Proposal 1 is not approved.

The Directors' Plan provides for the grant of nonqualified stock
options to non-employee directors as follows:

(1) each individual serving as a non-employee director as of the
Effective Date will be granted, as of the Directors' Plan's
effective date, a nonqualified stock option to purchase 10,000
shares of Common Stock;

(2) each individual who first becomes a non-employee director on
or after the Effective Date, whether through election at an
annual meeting of the Company's stockholders or through
appointment by the Board of Directors, will be granted, at the
time of such election or appointment, a nonqualified stock
option to purchase 10,000 shares of Common Stock (paragraphs
(1) and (2) herein being collectively referred to as "Initial
Grants"); and

(3) commencing with the 1995 annual meeting of the Company's
stockholders, each individual who at each annual meeting of
the Company's stockholders remains a non-employee director
will receive an additional nonqualified stock option to
purchase 2,500 shares of Common Stock (hereafter referred to
as "Annual Grants").

Each nonqualified stock option will be exercisable at a price equal
to the Common Stock's fair market value as of the date of grant, and may be
exercised to the extent it has become vested. The fair market value of a
share of Common Stock as of September 27 , 1994 was $ 0.625 .

Initial Grants will vest annually in 25% increments on the
first anniversary of the date of grant , provided the individual is still
a director on those dates. Annual Grants will become 100% vested as of the
first annual meeting of the Company's stockholders following the date of
grant, provided the individual is still a director as of that date. An
optionee who ceases to be a director shall forfeit that portion of the option
attributable to such vesting dates on and after the date he or she ceases to
be a director.

Once exercisable, each option remains exercisable until the tenth
anniversary of the date on which it was granted. An optionee may pay the
exercise price in cash, in shares of Common Stock previously owned by the
optionee, or by a cashless exercise through a broker.

Awards of nonqualified stock options under the Directors' Plan are
nontransferable except by will or the laws of descent and distribution. In
the event of or anticipation of a merger, consolidation or other
reorganization of the Company or tender offer for shares of Common Stock, the
Committee may make such adjustments with respect to such awards and take such
other action as it deems necessary or appropriate to reflect such merger,
consolidation, reorganization or tender offer, including, without limitation,
the substitution of new awards, the termination or adjustment of outstanding
awards, the acceleration of awards or the removal of restrictions on
outstanding awards. The number of shares of Common Stock reserved for
issuance under the Directors' Plan is subject to adjustment in the event of
stock split, stock dividends, recapitalizations and similar events.

The Board may amend or terminate the Directors' Plan without the
approval of the stockholders, but may condition any amendment on stockholder
approval if the Board believes it is necessary or advisable to comply with
any applicable tax or regulatory requirement. Notwithstanding the foregoing,
in no event may the Board of Directors amend the provisions of the Directors'
Plan that relate to the options which will be granted thereunder more than
once every six months, other than to comport with changes in the Code, ERISA,
or the rules thereunder. No termination or amendment of the Directors' Plan
without the consent of the holder of an award shall adversely affect the
rights of that participant.

No options have yet been granted under the Directors' Plan. The
"named executives", executive group, and non-executive officer employee group
of the Company are not eligible to participate in the Directors' Plan. The
group of current non-executive directors will receive options to purchase an
aggregate of 40,000 shares (60,000 shares if Proposal 1 is not adopted) of
Common Stock as of the Effective Date. The dollar value of these options
cannot be calculated because the exercise price will not be set until the
Effective Date, which is after the date this proxy statement is printed. If
the Directors' Plan had been effective and Initial Grants had been granted
as of November 17, 1993, the date of the 1993 Annual Meeting of Stockholders,
and if the current non-executive directors had received Initial Grants under
the Directors' Plan as of November 17, 1993, the current non-executive
directors would have received nonqualified stock options to purchase a total
of 60,000 shares of Common Stock with an aggregate "dollar value" of $45,000
(based on the $0.75 per share fair market value of the Company's Common Stock
on November 17, 1993).

Federal Income Tax Consequences. The following discussion outlines
generally the federal income tax consequences of participation in the
Directors' Plan. Individual circumstances may vary these results. The
federal income tax law and regulations are frequently amended, and each
participant should rely on his or her own tax counsel for advice regarding
federal income tax treatment under the Directors' Plan.

A participant will not recognize income upon the grant of a
nonqualified stock option. At the time the participant exercises a
nonqualified option or portion thereof, he or she will recognize compensation
taxable as ordinary income in an amount equal to the excess of the fair
market value of the Common Stock on the date the option is exercised over the
price paid for the Common Stock, and the Company will then be entitled to a
corresponding deduction.

All payments pursuant to the Plan shall be subject to federal income
tax withholding.

Stockholder Approval. The Board seeks stockholder approval for the
following reasons: (1) certain of the Company's directors are subject to
Section 16 of the Securities Exchange Act of 1934. If the Directors' Plan
is not approved by the stockholders, Directors' Plan awards made to the
directors may be deemed "purchases" of Common Stock for purposes of the
short-swing profit recovery provision of Section 16; (2) Internal Revenue
Code Section 162(m) restricts the deductibility of compensation in excess of
certain limits paid to certain Company executives if not approved by
stockholders. The Board of Directors seeks stockholder approval of the
Directors' Plan so that the Company will have greater flexibility to design
and implement equity-based incentive awards to its non-employee directors.

The Board of Directors recommends that stockholders vote
FOR the adoption of the Comprehensive Care Corporation Directors' Stock
Option Plan.

PROPOSALS 5 AND 6 - AMENDMENT OF THE COMPREHENSIVE
CARE CORPORATION 1988 INCENTIVE STOCK OPTION AND
1988 NONSTATUTORY STOCK OPTION PLANS

The Comprehensive Care Corporation 1988 Incentive Stock Option and
1988 Nonstatutory Stock Option Plans (the "Incentive Stock Option Plan" and
the "Nonstatutory Stock Option Plan," respectively, and collectively, the
"Option Plans") were adopted by the Board of Directors and approved by the
Company's stockholders effective as of February 3, 1988. The Option Plans,
as amended, are set forth in Appendix D to this Proxy Statement.

Subject to stockholder approval, the Board of Directors has approved
amendments (the "Amendments") to the Option Plans to increase the number of
shares of Common Stock that may be issued pursuant thereto. As the result
of the reverse stock split approved by the stockholders of the Company, the
maximum aggregate number of shares reserved for issuance under the Option
Plans will be reduced from 1,900,000 to 190,000. The Board of Directors now
wishes to amend each of the Option Plans to increase the number of shares
reserved for future grants under the Incentive Stock Option Plan to 500,000
on a post-split basis (Proposal 5) and to increase the number of shares
reserved for future grants under the Nonstatutory Stock Option Plan to
200,000 on a post-split basis (Proposal 6).

The Option Plans also provide that of the maximum aggregate number of
shares of Common Stock reserved for issuance under the Option Plans, 50,000
post-split shares of Common Stock will be reserved for issuance to directors.
If Proposal 4 is adopted by the stockholders, the Board intends to amend the
Nonstatutory Stock Option Plan to eliminate directors from the group of
persons eligible to participate in such plan.

The purpose of the Option Plans is to promote growth and profitability
of the Company by providing, through the ownership of shares of Common Stock,
incentives to attract and retain highly talented persons to provide
managerial and administrative services to the Company and its affiliates, and
to motivate such persons to use their best efforts on behalf of the Company
and its affiliates. The Board of Directors believes that the Amendments will
permit the Company to better pursue the goals of the Option Plans and,
accordingly, has unanimously approved and recommends a vote in favor of the
Amendments to the Option Plans.

The terms of the Option Plans provide for the grant of both incentive
stock options as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and nonstatutory (hereinafter "nonqualified") stock
options. The Option Plans are not subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), nor are they qualified under Code
Section 401(a). The Company intends that all incentive stock options granted
and to be granted under the Incentive Stock Option Plan will comply with Code
Section 422.

The Option Plans are administered by the Board of Directors, which may
in turn appoint a committee to administer the Option Plans and exercise all
of the powers, duties and discretion of the Board under the Option Plans.
The Board of Directors may from time to time remove members from or add
members to the committee and may fill vacancies thereon. The Option Plans
currently provide that the Board may limit committee membership to persons
who are "disinterested" within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1984, as amended (the "Exchange Act") for purposes of
complying with applicable securities laws. The Compensation Committee of the
Board of Directors (the "Committee") has been delegated the authority to
administer the Option Plans.

Persons eligible to receive options pursuant to the Incentive Stock
Option Plan are employees of the Company and its affiliates. Persons
eligible to receive options pursuant to the Nonstatutory Stock Option Plan
are employees, directors, advisers and consultants of the Company and its
affiliates. It is currently estimated that approximately 500 individuals are
eligible to participate in the Option Plans.

The Committee has the authority to designate participants, grant
options and determine the terms and conditions of the options granted to the
Option Plans. Each option must be evidenced by an agreement containing the
terms and conditions of the Option.

Each option granted pursuant to the Option Plans will have an exercise
price of no less than the fair market value of the Common Stock as of the
date of grant; provided, however, that the exercise price of an incentive
stock option held by a person who owns more than 10% of the Company's
outstanding Common Stock shall be no less than 110% of the fair market value
of the Common Stock as of the date of grant. The fair market value of a
share of Common Stock as of September 27 , 1994 is $ 0.625 .

An optionee may pay the exercise price by cashier's check or such
other means as deemed acceptable by the Company. In the discretion of the
Committee, payment may be made in shares of Common Stock previously owned by
the optionee.

Each option shall become exercisable in such increments and at such
times as the Committee shall provide in each option agreement. Except as
provided below, once exercisable, each nonqualified stock option remains
exercisable until the tenth anniversary from the date of grant and each
incentive stock option remains exercisable until the fifth anniversary from
the date of grant. If an optionee's employment by the Company terminates for
any reason (other than death or total disability), the unvested portion of
the option shall expire and become unexercisable as of the employment
termination date. If a director's directorship terminates for any reason
(other than death or total disability), the unvested portion of the option
shall expire and become unexercisable as of the directorship termination
date. The vested portion of the option shall expire and become unexercisable
within such period of time as the Committee may determine, but no more than
three months from the date of the termination of employment or directorship.
In the event the optionee's employment or directorship terminates by reason
of death or disability, the unexercised vested portion of the option shall
expire and become unexercisable as of the earlier of one year from the date
of optionee's termination, or the option's termination date. In the event
an optionee's employment or directorship terminates "for cause" (as defined
in the Option Plans), then all options granted pursuant to the Option Plans,
whether vested or unvested, shall expire and become unexercisable as of the
date of termination.

Options granted pursuant to the Option Plans are nontransferable
except by will or the laws of descent and distribution. Upon the dissolution
or liquidation of the Company, or upon the reorganization, merger, or
consolidation of the Company with one or more corporations as a result of
which the Company goes out of existence or becomes a subsidiary of another
corporation, or upon the sale of substantially all of the Company's property,
the Option Plans shall terminate and any outstanding options shall terminate
unless provision is made for the continuance of the Option Plans and for the
assumption of the options granted thereunder, and for the substitution of new
options covering the securities of a successor employer corporation.

The Board of Directors may amend or terminate the Option Plans without
stockholder approval, but certain types of amendments, which are specified
under the Option Plans, must be conditioned on stockholder approval.

Federal Income Tax Consequences. The following discussion outlines
generally the federal income tax consequences of participation in the Option
Plans. Individual circumstances may vary these results. The federal income
tax law and regulations are frequently amended, and each participant should
rely on his or her own tax counsel for advice regarding federal income tax
treatment under the Option Plans.

A participant will not recognize income upon the grant or exercise of
an incentive stock option. Instead, the optionee will be taxed at the time
he or she sells the Common Stock purchased pursuant to the option. The
optionee will be taxed on the difference between the price paid for the stock
and the amount for which he or she sells the stock. If the optionee does not
sell the stock prior to two years from the date of grant of the option and
one year from the date the stock is issued to the optionee, the gain will be
capital gain, and the Company will get no deduction. If the optionee sells
the stock at a gain prior to that time, the difference between the amount the
optionee paid for the stock and the lesser of the fair market value on the
date of exercise or the amount for which the stock is sold will be taxed as
ordinary income and the Company will be entitled to a corresponding
deduction; if the stock is sold for an amount in excess of the fair market
value on the date of exercise, the excess of amount will be taxed as a
capital gain. If the optionee sells the stock for less than the amount he
or she paid for the stock prior to the one- or two-year periods indicated,
no amount will be taxed as ordinary income and the loss will be taxed as a
capital loss. Exercise of an incentive stock option may subject an optionee
to, or increase an optionee's liability for, the alternative minimum tax.

Stockholder Approval. The Board seeks stockholder approval because
the Option Plans may not be amended for the purposes of increasing the
maximum aggregate number of shares reserved for issuance under the Option
Plans without stockholder approval. The Board of Directors seeks stockholder
approval of the Amendments so that the Company will have greater flexibility
to design and implement equity-based incentive awards to its employees,
directors, advisers and consultants.

The Board recommends that stockholders vote
FOR the Amendments to the Comprehensive Care Corporation
Incentive and Nonstatutory Stock Option Plans.

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen & Co., independent public accountants, audited the
consolidated financial statements of the Company for the fiscal year ended
May 31, 1994. Representatives of this firm are expected to be present at the
stockholders' meeting and will have the opportunity to make a statement if
they desire to do so. Representatives of this firm also will be available
to respond to questions from stockholders. Independent public accountants
for the year ending May 31, 1995 will be selected by the Board of Directors
after a review and recommendations to the Board of Directors by the audit
committee.

KPMG Peat Marwick were previously the principal accountants for the
Company. On November 4, 1992, that firm resigned. In connection with the
audit of the fiscal year ended May 31, 1992, and the subsequent interim
period through November 4, 1992, there were no disagreements with KPMG Peat
Marwick on any matter of accounting principles or practices, financial
statement disclosure or audit scope or procedures, which disagreements if not
resolved to their satisfaction would have caused them to make reference in
connection with their opinion to the subject matter of the disagreement.

The audit report of KPMG Peat Marwick on the consolidated financial
statements of the Company and subsidiaries as of and for the fiscal year
ended May 31, 1992 did not contain any adverse opinion or disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope or
accounting principles, except that the auditors' report of KPMG Peat Marwick
as of and for the fiscal year ended May 31, 1992 contained two separate
paragraphs that stated that:

"As discussed in Note 16 to the consolidated financial
statements, the Company is currently undergoing a payroll tax
audit by the Internal Revenue Service ("IRS") for calendar
years 1983 through 1991. The IRS asserted that certain
physicians and psychologists engaged as independent
contractors by the Company should have been treated as
employees for payroll tax purposes and has issued an
assessment claiming additional taxes due on that basis.
Management believes that its treatment of the independent
contractors is consistent with IRS guidelines and established
industry practice. Management has filed a protest to the
assessment and intends to defend vigorously the claims made by
the IRS related to this issue. Also, as discussed in Note 16
to the consolidated financial statements, on August 15, 1991,
the Company, along with others, were named in a stockholder
complaint filed in the District Court related to the
terminated reorganization with First Hospital Corporation.
Management intends to defend vigorously the claims related to
this issue. The ultimate outcome of these matters cannot
presently be determined. Accordingly, no provision for any
liability that may result upon resolution of these matters has
been recognized in the accompanying consolidated financial
statements."

"The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 2 to the consolidated financial
statements, the Company incurred significant recurring losses
and has a substantial portion of its senior secured debt due
on November 15, 1992. The potential need for additional
financing to repay debt as it comes due and finance the
Company's anticipated working capital requirements during
fiscal 1993 raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans in
regard to these matters are described in Notes 2 and 18. The
consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty."

ANNUAL REPORT

The 1994 Annual Report to Stockholders, including consolidated
financial statements for the fiscal year ended May 31, 1994 and the Company's
annual report on Form 10-K (without exhibits thereto), has been mailed with
this proxy statement. The Company will provide copies of exhibits to the
annual report on Form 10-K, but will charge a reasonable fee per page to any
requesting stockholder. Stockholders may make such request in writing to the
Secretary of the Company, 16305 Swingley Ridge Drive, Suite 100,
Chesterfield, Missouri 63017.

OTHER MATTERS

The Board of Directors knows of no other matters to be brought before
the annual meeting. However, if any other business properly comes before the
meeting, the persons named in the accompanying form of proxy will vote or
refrain from voting thereon in accordance with their judgment pursuant to the
discretionary authority given them in the proxy.

<PAGE>
<PAGE>
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING

Stockholder proposals to be submitted for inclusion in the 1995 proxy
materials and consideration at the 1995 annual meeting of stockholders must
be received by the Company not later than June 10 , 1995. Such
proposals should be directed to the Secretary of the Company, 16305 Swingley
Ridge Drive, Suite 100, Chesterfield, Missouri 63017.

By Order of the
Board of Directors,

Kerri Ruppert
Secretary
October 7 , 1994
Chesterfield, Missouri

<PAGE>
<PAGE>
Appendix A

Text of Proposed Amendment to Section 3.2a of the Company's Bylaws

The Board of Directors recommends that the stockholders amend the
Bylaws of the Company in the following manner:

By deleting the first sentence of Section 3.2 of the Bylaws in its
entirety and replacing it with the following:

"Effective as of the date of the 1994 Annual Meeting of
Stockholders, the number of directors of the Company shall be
fixed at five. The number of directors may thereafter be
changed by the affirmative vote of at least two-thirds of the
members of the Board of Directors or by the affirmative vote
of at least 80% of the votes entitled to be cast by the
holders of all outstanding shares of voting stock of the
Company, voting together as a class. Directors shall be
elected by a plurality of the shares of stock present in
person or represented by proxy at the meeting and entitled to
vote on the election of directors."
<PAGE>
<PAGE>
Appendix B

Text of Proposed Article Nine of the Company's Certificate of
Incorporation

NINTH: At the 1994 Annual Meeting of Stockholders, the directors shall
be divided into three (3) classes, designated as Class I, Class II and Class
III. Each class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the entire Board of Directors.
At the 1994 Annual Meeting of Stockholders, Class I directors shall be
elected for a three-year term, Class II directors for a two-year term and
Class III director s for a one-year term. At each succeeding
Annual Meeting of Stockholders beginning in 1995, successors to the class of
directors whose term expires at that Annual Meeting of Stockholders shall be
elected for a three-year term. If the number of directors has changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly as equal as possible, and any
additional director of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with
the remaining term of that class, unless otherwise required by law, but in
no case shall a decrease in the number of directors for a class shorten the
term of an incumbent director.

Notwithstanding any other provisions of the Certificate of
Incorporation or the Bylaws (and notwithstanding the fact that a lesser
percentage for separate class votes for certain actions may be permitted by
law, by the Certificate of Incorporation or by the Bylaws), the affirmative
vote of the holders of not less than 80% of the votes entitled to be cast by
the holders of all then outstanding shares of voting stock, voting together
as a single class, will be required to amend or repeal any provision of the
Certificate of Incorporation or the Bylaws to the extent that such action is
inconsistent with the purpose of this Article Nine; provided, however, that
the provisions of this paragraph shall not apply to amendments of the Bylaws
or Certificate of Incorporation that are recommended by not less than two-
thirds of the members of the Board of Directors.

<PAGE>
Appendix C

Comprehensive Care Corporation Directors' Stock Option Plan<PAGE>
<PAGE>
COMPREHENSIVE CARE CORPORATION
DIRECTORS' STOCK OPTION PLAN

SECTION 1 DEFINITIONS

1.1 Definitions. Whenever used herein, the masculine pronoun shall
be deemed to include the feminine, and the singular to include the plural,
unless the context clearly indicates otherwise, and the following capitalized
words and phrases are used herein with the meaning thereafter ascribed:

(a) "Board of Directors" means the board of directors of the
Company.

(b) "Change in Control" means any event that pursuant to the
Company's Certificate of Incorporation, as amended from time to time,
requires the affirmative vote of the holders of not less than eighty percent
(80%) of the Voting Stock (as defined therein); provided, however, that no
event shall constitute a Change of Control if approved by the Board of
Directors a majority of whom are present Directors and new Directors. For
purposes of the preceding sentence, the term "present Directors" means
individuals who as of the date this Plan is adopted were members of the Board
of Directors and the term "new Directors" means any Director whose election
by the Board of Directors in the event of vacancy or whose nomination for
election was approved by a vote of at least three-fourths of the Directors
then still in office who are present Directors and new Directors; provided
that any Director initially elected to the Board of Directors solely to avoid
or settle a threatened or actual proxy contest shall in no event be deemed
to be a new Director.

(d) "Committee" means the committee appointed by the Board
of Directors to administer the Plan or, in the absence of appointment of such
committee, the Board of Directors.

(e) "Company" means Comprehensive Care Corporation, a
Delaware corporation.
(f) "Director" means any individual who is a member of the
Board.

(g) "Effective Date" means the date the Plan is approved by
the stockholders of the Company.

(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.

(i) "Fair Market Value" with regard to a date means the
closing price of the Stock on the last trading date prior to that date as
reported by the New York Stock Exchange (or, if applicable, as reported by
any other national securities exchange selected by the Committee on which the
shares of Stock are then actively traded).

(j) "Option" means a non-qualified stock option granted
under the Plan to buy shares of Stock.

(k) "Participant" means an individual who, pursuant to Plan
Section 2.4, is eligible to participate in the Plan.

(l) "Plan" means the Comprehensive Care Corporation
Directors' Stock Option Plan.

(m) "Stock" means the Company's common stock, $.10 par
value.

SECTION 2 THE STOCK OPTION PLAN

2.1 The Purpose of the Plan. The Plan is intended to (a) provide
incentive to non-employee Directors of the Company to stimulate their efforts
toward the continued success of the Company and to manage the business of the
Company in a manner that will provide for the long-term growth and
profitability of the Company; (b) encourage stock ownership by non-employee
Directors by providing them with a means to acquire a proprietary interest
in the Company; and (c) provide a means of obtaining and rewarding non-
employee Directors.

2.2 Stock Subject to the Plan. Subject to adjustment in accordance
with Section 7.1, 200,000 shares of Stock (the "Maximum Plan Shares") are
hereby reserved exclusively for issuance pursuant to Options. At no time
shall the aggregate of (a) shares of Stock issuable pursuant to outstanding
Options; and (b) shares of Stock issued pursuant to Options exceed the
Maximum Plan Shares; for this purpose, the outstanding Options and shares of
stock issued in respect of Options shall be computed consistent with Rule
16b-3(a)(1) as promulgated under the Exchange Act. If an Option expires or
terminates for any reason without being exercised in full, the unpurchased
shares subject to such Option shall again be available for purposes of the
Plan.

2.3 Administration of the Plan. The Plan shall be administered by
the Committee. Subject to the provisions of the Plan, the Committee shall
have full and conclusive authority to interpret the Plan; to prescribe, amend
and rescind rules and regulations relating to the Plan; to determine the
terms and provisions of the respective Stock Option Agreements consistent
with the provisions of the Plan and to make all other determinations
necessary or advisable for the proper administration of the Plan. The
Committee's decisions shall be final and binding on all Participants. The
Plan shall be interpreted in view of the intention that the grant and
exercise of Options are intended to qualify as exempt transactions under Rule
16b-3 under the Exchange Act.

2.4 Eligibility. Any member of the Board of Directors who is not
an employee of the Company shall be a Participant.

SECTION 3 TERMS AND CONDITIONS OF OPTIONS

3.1 Number of Option Shares. A Participant shall be granted
Options as follows:

(a) Each individual who is serving as a non-employee
Director as of the Plan's Effective Date, will be granted, as of the
Plan's Effective Date, an option to purchase 10,000 shares of Stock.

(b) Each individual who first becomes a non-employee
Director on or after Effective Date, whether through election at an
annual meeting of the Company's stockholders or through appointment
by the Board, will be granted, at the time of such election or
appointment, an Option to purchase 10,000 shares of Stock.

(c) Commencing with the 1995 annual meeting of the Company's
stockholders, each individual who at that time remains as a non-
employee Director will receive an additional grant of an Option to
purchase 2,500 shares of Stock.

3.2 Type of Option. Options shall be non-qualified stock options.

3.3 Exercise Price. The Exercise Price for a share of Stock
subject to a Option shall be the Fair Market Value (determined as of the date
of grant) of a share of Stock.

3.4 Option Term. Each Option, once exercisable, shall remain
exercisable until the tenth anniversary of the date of grant.
Notwithstanding the foregoing:

(a) Except as provided in Subsection (b) hereof, should a
Participant cease to be a Director for any reason (other than death)
while holding an Option granted pursuant to this Plan, then such
Participant shall have a six- month period following the date of such
cessation of Board membership in which to exercise such Option for any
or all of the shares of Stock for which the Option has become
exercisable at the time the Participant ceases to be a Director.

(b) Should a Participant die while serving as a Director or
during the six-month period following the date of the Participant's
cessation of Board service (as described in Subparagraph (a) above),
then the Option may be subsequently exercised, for any or all of the
shares of Stock for which the Option is exercisable at the time of the
Optionee's death, by the personal representative of the Optionee's
estate or by the person or persons to whom the Option is transferred
pursuant to the Optionee's will or in accordance with the laws of
descent and distribution. Any such exercise, however, must occur
within 12 months after the date of the Optionee's death.

(c) In no event shall any grant of Option pursuant to the
Plan remain exercisable after the tenth anniversary of the Option's
date of grant. Upon the expiration of the applicable exercise period
in accordance with Subparagraphs (a) and (b) above or (if earlier)
upon the expiration of the ten year option term, the Option shall
terminate and cease to be exercisable.

3.5 Exercisability. Each Option may be exercised for that
percentage of shares of Stock subject to the Option as to which the Option
has become vested, reduced by that number of shares of Stock subject to the
Option which have been previously exercised.

(a) With respect to Options granted pursuant to Plan
Sections 3.1(a) and (b), the Option shall vest in 25% increments on
each "Vesting Date," provided the Participant is still a Director on
the Vesting Date. For purposes of this Subsection (a), the term
Vesting Date shall mean each one year anniversary of the date of
grant .

(b) With respect to Options granted pursuant to Plan Section
3.1(c), the Option shall become 100% vested as of the first annual
meeting of the Company's stockholders held after the date of grant,
provided the Participant is still a Director on that date.

3.6 Payment. Payment for all shares of Stock purchased pursuant
to the exercise of an Option shall be made in any form or manner authorized
by the Committee in the Stock Option Agreement, including, but not limited
to, (i) cash, (ii) by delivery to the Company of a number of shares of Stock
which have been owned by the holder for at least six months prior to the date
of exercise having an aggregate Fair Market Value of not less than the
product of the Exercise Price multiplied by the number of shares the
Participant intends to purchase upon exercise of the Option on the date of
delivery; or (iii) in a cashless exercise through a broker. The holder of
an Option, as such, shall have non of the rights of a stockholder.

3.7 Nonassignability. Options shall be transferable or assignable
except by will or by the laws of descent and distribution. Such Options
shall be exercisable, during the Participant's lifetime, only by the
Participant; except, in the event of the Participant's disability, in which
case, such Options shall be exercisable by the Participant's legal
representative. In the event of the death of the Participant, such Options
shall be exercisable by the legal representatives of the Participant's estate
or if no legal representative has been appointed, by the successor in
interest determined under the Participant's will.

3.8 Option Agreement. Each Option shall be evidenced by a Stock
Option Agreement which shall incorporate the terms of the Plan.

SECTION 4 GENERAL PROVISIONS

4.1 Changes in Capitalization; Merger; Liquidation.

(a) The number of shares of Stock reserved for the grant
of Options; the number of shares of Stock reserved for issuance upon the
exercise or payment, as applicable, of each outstanding Option; and the
Exercise Price of each outstanding Option shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Stock
resulting from a subdivision or combination of shares or the payment of a
stock dividend in shares of Stock to holders of outstanding shares of Stock
or any other increase or decrease in the number of shares of Stock
outstanding effected without receipt of consideration by the Company.

(b) In the event of or anticipation of a merger,
consolidation or other reorganization of the Company or tender offer for
shares of Stock, the Committee may make such adjustments with respect to
awards and take such other action as it deems necessary or appropriate to
reflect such merger, consolidation, reorganization or tender offer, including
without limitation, the substitution of new awards, the termination or
adjustment of outstanding awards, the acceleration of awards or the removal
of restrictions on outstanding awards. Any adjustment pursuant to this
Section 4.1 may provide, in the Committee's discretion, for the elimination
without payment therefor of any fractional shares that might otherwise become
subject to any Option, but shall not otherwise diminish the then value of the
Option.

(c) The existence of the Plan and the Options granted
pursuant to the Plan shall not affect in any way the right or power of the
Company to make or authorize any adjustment, reclassification, reorganization
or other change in its capital or business structure, any merger or
consolidation of the Company, any issue of debt or equity securities having
preferences or priorities as to the Stock or the rights thereof, the
dissolution or liquidation of the Company, any sale or transfer of all or any
part of its business or assets, or any other corporate act or proceeding.

4.2 Right to Remove Director. Nothing in the Plan or in any Stock
Option Agreement shall confer upon any Participant the right to continue as
a member of the Board of Directors or affect the right of the Company to
terminate a Participant's directorship at any time.

4.3 Restrictions on Delivery and Sale of Shares; Legends. Each
Option is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification
of the shares covered by such Option upon any securities exchange or under
any state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Option or the purchase or delivery of
shares thereunder, the delivery of any or all shares pursuant to such Option
may be withheld unless and until such listing, registration or qualification
shall have been effected. If a registration statement is not in effect under
the Securities Act of 1933 or any applicable state securities laws with
respect to the shares of Stock purchasable or otherwise deliverable under
Options then outstanding, the Participant shall, as a condition of exercise
of any Option or as a condition to any other delivery of Stock pursuant to
an Option, represent, in writing, that the shares received pursuant to the
Option are being acquired for investment and not with a view to distribution
and agree that the shares will not be disposed of except pursuant to an
effective registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such requirement
under the Securities Act of 1933 and any applicable state securities laws.
The Company may include on certificates representing shares delivered
pursuant to an Option such legends referring to the foregoing representations
or restrictions or any other applicable restrictions on resale as the
Company, in its discretion, shall deem appropriate.

4.4 Non-alienation of Benefits. Other than as specifically
provided with regard to the death of a Participant, no benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge; and any attempt to do so shall be
void. No such benefit shall, prior to receipt by the Participant, be in any
manner liable for or subject to the debts, contracts, liabilities,
engagements or torts of the Participant.

4.5 Termination and Amendment of the Plan. The Board of Directors
at any time may amend or terminate the Plan without stockholder approval;
provided, however, that the Board of Directors may condition any amendment
on the approval of stockholders of the Company if such approval is necessary
or advisable with respect to tax, securities or other applicable laws.
Notwithstanding the foregoing, in no event shall the Board of Directors amend
the provisions of the Plan that relate to Options more than once every six
months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, or the rules thereunder. No
termination, modification or amendment of the Plan, without the consent of
a Participant who has been awarded an Option shall adversely affect the
rights of that Participant under such Option.

4.6 Stockholder Approval. The Plan shall be submitted to the
stockholders of the Company for their approval at the next annual meeting to
the Company's stockholders after the adoption of the Plan by the Board of
Directors of the Company.

4.7 Choice of Law. The laws of the State of California shall
govern the Plan, to the extent not preempted by federal law.

4.8 Effective Date of Plan. The Plan shall become effective on the
Effective Date.

COMPREHENSIVE CARE CORPORATION

By: /s/ Chriss W. Street

Title: Chairman and Chief Executive Officer

ATTEST:

/s/ Kerri Ruppert
Secretary

[CORPORATE SEAL]

<PAGE>
Appendix D

Comprehensive Care Corporation 1988 Incentive Stock Plan and
1988 Nonstatutory Stock Option Plan

<PAGE>
COMPREHENSIVE CARE CORPORATION
1988 INCENTIVE STOCK OPTION
AND
1988 NONSTATUTORY STOCK OPTION
PLANS

ARTICLE 1.

PURPOSE OF PLANS AND PLAN DOCUMENT

1.1 Purpose. The purpose of the Plan is to promote the growth and
profitability of the Company by providing, through the ownership of Shares,
incentives to attract and retain highly talented persons to provide
managerial and administrative services to the Company and other Participating
Companies and to motivate such persons to use their best efforts on behalf
of the Company and other Participating Companies.

1.2 Combines Plan Document. This Plan document is intended to
implement and govern the following two separate stock plans of the Company:

(i) The 1988 Comprehensive Care Corporation Incentive Stock Option
Plan; and

(ii) The 1988 Comprehensive Care Corporation Nonstatutory Stock
Option Plan.

Unless specified otherwise, all provisions of this Plan document relate
equally to both the Incentive Stock Option Plan and the Nonstatutory Stock
Option Plan, which Plans are condensed into one Plan document solely for
purposes of administrative convenience and are not intended to constitute
tandem plans.

ARTICLE 2

DEFINITIONS
For the purposes of the Plan, the following terms shall have the
meanings set forth in this Article 2:

2.1 Accrued Installment. The term "Accrued Installment" shall mean
any vested installment of an Option.

2.2 Board. The term "Board" shall mean the Board of Directors of the
Company.

2.3 Committee. The term "Committee" shall mean a committee appointed
by the Board pursuant to Section 3.4 and constituting not less than three
members of the Board.

2.4 Company. The term "Company" shall mean Comprehensive Care
Corporation, a Delaware corporation or any successor thereof.

2.5 Disinterested Person. The term "Disinterested Person" shall mean
any person as defined in Rule 16b-3 of the Securities and Exchange Commission
promulgated under the Exchange Act.

2.6 Effective Date. The term "Effective Date" shall mean February 3,
1988.

2.7 Eligible Person.

(a) For the purposes of the Incentive Stock Option Plan, the term
"Eligible Person" shall mean any employee of any Participating Company.

(b) For the purposes of the Nonstatutory Stock Option Plan, the
term "Eligible Person" shall mean any employee, director, adviser, or
consultant of any Participating Company.

2.8 Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

2.9 Fair Market Value. The term "Fair Market Value" when used with
respect to the determination of the option price of Options shall mean the
average of the high and low prices of Shares (if the Shares are exchange-
traded or traded on the NASDAQ national market system) or the average of the
bid and asked price of Shares (if the Shares are traded in any other over-
the-counter market), in all cases on the date of the grant of the Option.
In the event that the Shares are traded in the over-the-counter market and
an Option is granted on a date on which there is no bid or asked price of
Shares, the fair market value of Shares on the date of the grant shall be
deemed to be the average of the bid and asked prices on the next preceding
day on which there is such an average for such Shares. In all other cases,
the fair market value of Shares shall be determined on such basis as the
Board in good faith shall determine, without regard to any restriction other
than a restriction which, by its terms, will never lapse.

2.10 Incentive Stock Option. The term "Incentive Stock Option" shall
mean any Option intended to satisfy the requirements under I.R.C.
Section 422(b) as an incentive stock option which qualifies for special tax
treatment under I.R.C. Section 421.

2.11 Incentive Stock Option Plan. The term "Incentive Stock Option
Plan" shall mean the stock option plan of the Company set forth herein and
which provides for the granting of Incentive Stock Options.

2.12 I.R.C. The term "I.R.C." shall mean the Internal Revenue Code of
1986, as it may be amended from time to time.

2.13 Nonstatutory Stock Option. The term "Nonstatutory Stock Option"
shall mean any Option granted under the Nonstatutory Stock Option Plan.

2.14 Nonstatutory Stock Option Plan. The term "Nonstatutory Stock
Option Plan" shall mean the stock option plan of the Company set forth herein
and which provides for the granting of Options that do not qualify as
Incentive Stock Options.

2.15 Option. The term "Option" shall mean an option to acquire Shares
granted under the Plans.

2.16 Optionee. The term "Optionee" shall mean an Eligible Person who
has been granted Options.

2.17 Parent Corporation. The term "Parent Corporation" shall mean a
corporation as defined in I.R.C. Section 424(e).

2.18 Participating Companies. The term "Participating Companies" shall
mean the Company and any Parent Corporation or Subsidiary Corporation.

2.19 Plan. The terms "Plan" or "Plans" refer collectively to the
Incentive Stock Option Plan and the Nonstatutory Stock Option Plan unless a
specific reference to either is indicated.

2.20 Restricted Shareholder. The term "Restricted Shareholder" shall
mean an Optionee granted an Incentive Stock Option who, at the time the
Incentive Stock Option is granted, owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company,
with stock ownership determined in light of the attribution rules of I.R.C.
Section 424(d).

2.21 Shares. The term "Shares" shall mean shares of the Company's
authorized Common Stock, $.10 par value, and may be unissued shares or
treasury shares purchased for purposes of the Plans.

2.22 Subsidiary Corporation. The term "Subsidiary Corporation" shall
mean a corporation as defined in I.R.C. Section 424(f).

2.23 Termination Date. The term "Termination Date" shall mean
February 3, 1998.

2.24 Total Disability. The term "Total Disability" shall mean a total
and permanent disability as that term is defined in I.R.C. Section 22(e)(3).

ARTICLE 3

ADMINISTRATION OF PLAN

3.1 Administration by Board. The Plan shall be administered by the
Board. The Board shall have full and absolute power and authority in its
sole discretion to (i) determine which Eligible Persons shall receive
Options, (ii) determine the time when Options shall be granted,
(iii) determine the terms and conditions, not inconsistent with the
provisions of the Plan, of any Option granted hereunder, (iv) determine the
number of Shares which may be issued upon exercise of the Options, and
(v) interpret the provisions of the Plan and any Option granted under the
Plan.

3.2 Rules and Regulations. The Board may adopt such rules and
regulations as the Board may deem necessary or appropriate to carry out the
purposes of the Plan and shall have authority to do everything necessary or
appropriate to administer the Plan.

3.3 Binding Authority. All decisions, determinations, interpretations,
or other actions by the Board shall be final, conclusive, and binding on all
Eligible Persons, Optionees, Participating Companies, and any successors in
interest to any such parties.

3.4 Administration by Committee.

(a) The Board in its sole discretion may from time to time
appoint a Committee to administer the Plan and exercise all of the powers,
authority, and discretion of the Board under the Plan. The Board may from
time to time remove members from, or add members to, the Committee, and
vacancies on the Committee shall be filled by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration
of the Plan.

(b) In establishing the Committee, the Board may but need not
require each member of the Committee to be a Disinterested Person, and the
Board may but is not required to take such other actions as are deemed
necessary or advisable to conform the Plan to the requirements of Rule 16b-3
promulgated under the Exchange Act.

(c) The Committee shall report to the Board the names of Eligible
Persons granted Options, the number of Shares covered by each Option, and the
terms and conditions of each such Option.

ARTICLE 4

NUMBER OF SHARES AVAILABLE FOR GRANT

4.1 Maximum Aggregate Number of Shares. The maximum aggregate number
of Shares which may be optioned and sold under the Plans is 1,900,000 plus
the number of Shares issued upon exercise of Options which are reacquired by
the Company upon the exercise of Options. In the event that Options granted
under the Plans shall for any reason terminate, lapse, be forfeited, or
expire without being exercised, the Shares subject to such unexercised
Options shall again be available for granting under this Plan.

4.2 Aggregate Limitations with Respect to the Participation of
Directors in the Plans. The maximum aggregate number of Shares which may be
optioned and sold to directors of the Company under the Plans is 500,000 plus
the number of Shares issued upon exercise of Options which are reacquired
from directors by the Company upon the exercise of Options. In the event
that Options granted under this limitation shall for any reason terminate,
lapse, be forfeited, or expire without being exercised, the Shares subject
to such unexercised Options shall again be available for granting under this
Section 4.2.

4.3 Allocation of Shares to Incentive Stock Option Plan and
Nonstatutory Stock Option Plan. The number of Shares which may be optioned
and sold under the Incentive Stock Option Plan shall be 1,500,000 plus the
number of Shares issued upon exercise of Options which are reacquired by the
Company upon the exercise of Options, and the number of Shares which may be
optioned and sold under the Nonstatutory Stock Option Plan shall be 400,000
plus the number of Shares issued upon exercise of Options which are
reacquired by the Company upon the exercise of Options.

ARTICLE 5

TERM OF PLANS

The Plans shall be effective as of the Effective Date and shall
terminate on the Termination Date. No Option may be granted hereunder after
the Termination Date.

ARTICLE 6

OPTION TERMS

6.1 Form of Option Agreement. Any Option granted under the Plans
shall be evidenced by an agreement ("Option Agreement") in such form as the
Board, in its discretion, may from time to time approve. Any Option
Agreement shall contain such terms and conditions as the Board may deem
necessary or appropriate and which are not inconsistent with the provisions
of the Plans.

6.2 Grant Limitations on Incentive Stock Options. For Options granted
under the Incentive Stock Option Plan, the aggregate Fair Market Value
(determined at the time the Option is granted) of the Shares for which
Incentive Stock Options are exercisable for the first time by an Eligible
Person under this Plan and any other plan of any Participating Company shall
not exceed $100,000 in any calendar year; provided, however, unless required
otherwise by applicable Income Tax Regulations or other legal authority
deemed sufficient by the Board, the foregoing $100,000 limitation shall be
applied without taking into account the value of any stock subject to
Incentive Stock Options granted prior to January 1, 1987, notwithstanding
that all or any portion of such Options first become exercisable on or after
January 1, 1987; and, provided further, if any such pre-1987 Incentive Stock
Options are required to be taken into account in applying said $100,000
limitation, any Incentive Stock Option granted hereunder on or after
January 1, 1987 (herein a "post-1986 ISO") shall be split into an Incentive
Stock Option portion and a Nonstatutory Stock Option portion to the extent
necessary (if at all) to allow the maximum possible portion of any post-1986
ISO to qualify under said $100,000 limitation provided hereunder.

6.3 Option Exercise Price. The option exercise price for Shares to
be issued under the Plans shall be determined by the Board in its sole
discretion, but in no event shall the option exercise price be less than the
Fair Market Value of the Shares. In the case of an Incentive Stock Option,
if on the date of the grant of the Option the Optionee is a Restricted
Shareholder, the option exercise price shall be not less than 110 percent of
the Fair Market Value of the Shares on the date of grant. The date of grant
shall be deemed to be the date on which the Board authorizes the grant of the
Option, unless a subsequent date is specified in such authorization.

6.4 Vesting and Exercisability of Options. Subject to the limitations
set forth herein and/or in any applicable Option Agreement entered into
hereunder, Options granted under the Plans shall vest and be exercisable in
accordance with the rules set forth in this Section 6.4:

(a) General. Subject to the other provisions of this
Section 6.4, Options shall vest and become exercisable at such times and in
such installments as the Board shall provide in each individual Option
Agreement. Notwithstanding the foregoing, the Board may in its sole
discretion accelerate the time at which an Option or installment thereof may
be exercised. Unless otherwise provided in this Section 6.4 or in the Option
Agreement pursuant to which an Option is granted, an Option may be exercised
when Accrued Installments accrue as provided in such Option Agreement and at
any time thereafter until, and including, the day before the Option
Termination Date.

(b) Termination of Options. All installments of an Option shall
expire and terminate on such date as the Board shall determine ("Option
Termination Date"), which in no event shall be later than 10 years from the
date such Option was granted and, in the case of an Incentive Stock Option
granted to a Restricted Shareholder, the Option shall by its terms not be
exercisable after the expiration of five years from the date such Option was
granted.

(c) Termination of Employment or Directorship Other Than by Death
or Total Disability. In the event that the employment of an Optionee with
a Participating Company is terminated for any reason (other than death or
Total Disability), any installments under an Option held by such Optionee
which have not accrued as of the employment termination date shall expire and
become unexercisable as of the employment termination date. In the event
that an Optionee who is a Director terminates his or her directorship for any
reason other than death or Total Disability, any installments under an Option
held by such Optionee which have not accrued as of the directorship
termination date shall expire and become unexercisable as of the directorship
termination date. In the event that Optionee's employment or directorship
with the Company is terminated "for cause" (as defined herein), then all
Options granted hereunder to such terminated Optionee, whether vested or not,
shall expire and become unexercisable as of the effective date of the
termination of employment or directorship of the Optionee. "For cause" shall
mean by reason of gross negligence, willful misconduct, or a habitual neglect
by Optionee in carrying out his or her duties to the Company. All Accrued
Installments as of the employment termination date and/or the directorship
termination date shall remain exercisable only within such period of time as
the Board may determine, but in no event shall any Accrued Installments
remain exercisable for a period in excess of three months following the
employment or directorship termination date or for a period in excess of the
original Option Termination Date, whichever is earlier. For purposes of the
Plans, an Optionee who terminates as an employee or director of any
Participating Company shall not be deemed to have terminated his or her
employment or directorship (which shall be applicable) if after such
termination such Optionee remains an employee or director (which shall be
applicable) of any Participating Company.

(d) Leave of Absence. In the case of any employee on an approved
leave of absence, the Board may make such provision respecting continuance
of the Option as the Board deems appropriate, except in no event shall an
Option be exercisable after the original Option Termination Date.

(e) Death or Total Disability of Optionee While Employed. In the
event that the employment and/or directorship of an Optionee with a
Participating Company is terminated by reason of death or Total Disability,
any unexercised Accrued Installments of Options granted hereunder to such
Optionee shall expire and become unexercisable as of the earlier of:

(i) The applicable Option Termination Date, or

(ii) The first anniversary of the date of termination of
employment and/or directorship of such Optionee by reason of the Optionee's
death or Total Disability. Any such Accrued Installments of a deceased
Optionee may be exercised prior to their expiration only by the person or
persons to whom the Optionee's Option rights pass by will or by laws of
descent and distribution. Any Option installments under such a deceased or
disabled Optionee's Option that have not accrued as of the date of the
employee's termination of employment and/or director's termination of
directorship due to death or Total Disability shall expire and become
unexercisable as of said employment and/or directorship termination date.

(f) Termination of Affiliation of Participating Company.
Notwithstanding the foregoing provisions of this Section, in the case of an
Optionee who is an employee or director of a Participating Company other than
the Company, upon an Affiliation Termination (as defined herein) of such
Participating Company such Optionee shall be deemed (for all purposes of the
Plans) to have incurred a termination of his or her employment or
directorship (whichever may be applicable) for reasons other than death or
Total Disability, with such termination to be deemed effective as of the
effective date of said Affiliation Termination. As used herein the term
"Affiliation Termination" shall mean, with respect to a Participating
Company, the termination of such Participating Company's status as a
Participating Company (as defined herein) with respect to the Company.

(g) Options Granted to Directors. Notwithstanding any provision
to the contrary herein, Options granted to directors may be exercised only
after the expiration of one year from the date such Option is granted.

6.5 Exercise of Options. An Option may be exercised in accordance
with this Section 6.5 as to all or any portion of the Shares covered by an
Accrued Installment of the Option from time to time during the applicable
option period, except that an Option shall not be exercisable with respect
to fractions of a Share. Options may be exercised, in whole or in part, by
giving written notice of exercise to the Company, which notice shall specify
the number of Shares to be purchased and shall be accompanied by payment in
full of the purchase price in accordance with Section 6.6. An Option shall
be deemed exercised when such written notice of exercise has been received
by the Company. No Shares shall be issued until full payment has been made
and the Optionee has satisfied such other conditions as may be required by
the Plans, as may be required by applicable law, rules, or regulations, or
as may be adopted or imposed by the Board. Until the issuance of stock
certificates, no right to vote or receive dividends or any other rights as
a shareholder shall exist with respect to optioned Shares notwithstanding the
exercise of the Option. No adjustment will be made for a dividend or other
rights for which the record date is prior to the date the stock certificate
is issued except as provided in Section 6.9(a).

6.6 Payment of Option Exercise Price.

(a) Except as otherwise provided in Section 6.6(b), the entire
option exercise price shall be paid at the time the Option is exercised by
cashier's check or such other means as deemed acceptable by the Company.

(b) In the discretion of the Board, an Optionee may elect to pay
for all or some of the Optionee's Shares with Shares previously acquired and
owned at the time of exercise by the Optionee, subject to all restrictions
and limitations or applicable laws, rules, and regulations and subject to the
satisfaction of any conditions the Board may impose, including but not
limited to the making of such representations and warranties and the
providing of such other assurances that the Board may require with respect
to the Optionee's title to the Shares used for payment of the exercise price.
Such payment shall be made by delivery of certificates representing Shares,
duly endorsed or with duly signed stock power attached, such Shares to be
valued at the average of the high and low prices of Shares (if the Shares are
exchange-traded or traded on the NASDAQ national market system) or the
average of the bid and asked prices of the Shares (if the Shares are traded
in any other over-the-counter market) on the day immediately preceding the
day notice of exercise is received by the Company or, if such Shares are not
then listed on an exchange or NASDAQ, or if there is no such average of the
bid and asked prices on such day, on such basis as the Board shall determine.

6.7 Options Not Transferable. Options granted under the Plans may not
be sold, pledged, hypothecated, assigned, encumbered, gifted, or otherwise
transferred or alienated in any manner, either voluntarily or involuntarily
by operation of law, other than as permitted under the I.R.C. and applicable
securities laws, by will or the laws of descent and distribution, or pursuant
to a qualified domestic relations order as defined by the I.R.C. or Title I
of the Employee Retirement Income Security Act, or the rules thereunder
("Qualified Domestic Relations Order"), and may be exercised during the
lifetime of an Optionee only by such Optionee or the holder pursuant to a
Qualified Domestic Relations Order.

6.8 Restrictions on Issuance of Shares.

(a) No Shares shall be issued or delivered upon exercise unless
and until there shall have been compliance with all applicable requirements
of the Securities Act of 1933, all applicable listing requirements of any
national securities exchange on which Shares are then listed, and any other
requirement of law or of any regulatory body having jurisdiction over such
issuance and delivery. The inability of the Company to obtain any required
permits, authorizations, or approvals necessary for the lawful issuance and
sale of any Shares hereunder on terms deemed reasonable by the Board shall
relieve the Company, the Board, and any Committee of any liability in respect
of the nonissuance or sale of such Shares as to which such requisite permits,
authorizations, or approvals shall not have been obtained.

(b) As a condition to the granting or exercise of any Option, the
Board may require the person receiving or exercising such Option to make any
representation and/or warranty to the Company as may be required under any
applicable law or regulation, including but not limited to a representation
that the Option and/or Shares are being acquired only for investment and
without any present intention to sell or distribute each Option and/or Shares
if such a representation is required under the Securities Act of 1933 or any
other applicable law, rule, or regulation.

(c) The exercise of Options under the Plans is conditioned on
approval of the Plans by the vote or written consent of the holders of a
majority of the outstanding shares of the Company's Common Stock within
twelve months of the adoption of the Plans. In the event such shareholder
approval is not obtained within such time period, any Options granted
hereunder shall be void.

6.9 Option Adjustments.

(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number or
kind of shares of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, or reverse stock split, upon
authorization of the Board an appropriate and proportionate adjustment shall
be made in the number or kind of shares, and the per-share option price
thereof, which may be issued in the aggregate and to individual Optionees
under the Plans; provided, however, that no such adjustment need be made if,
upon the advice of counsel, the Board determines that such adjustment may
result in the receipt of federally taxable income to holders of Options
granted hereunder or the holders of Common Stock or other classes of the
Company's securities. Except to the extent necessary to the qualification
of an Option as an Incentive Stock Option under I.R.C. Section 422, the
adjustments authorized hereunder with respect to any outstanding Options
shall be made by means of appropriate adjustments to the number of Shares (or
other securities) and the option exercise price therefor under the
unexercised portions of such outstanding Options but without changing the
aggregate exercise price applicable to said unexercised portions.

(b) Upon the dissolution or liquidation of the Company, or upon
a reorganization, merger, or consolidation of the Company with one or more
corporations as a result of which the Company goes out of existence or
becomes a subsidiary of another corporation, or upon a sale of substantially
all of the Company's property or more than 80 percent of its then outstanding
capital stock to another corporation ("Terminating Transaction"), the Plans
shall terminate and any Options theretofore granted hereunder shall terminate
unless provision be made in writing in connection with such transaction for
the continuance of the Plans and for the assumption of the Options
theretofore granted, or for the substitution for such Options of new options
covering the securities of a successor employer corporation, or an affiliate
thereof, with appropriate adjustments as to the number and kind of securities
and prices, in which event the Plans and the Options theretofore granted
shall continue or be replaced, as the case may be, in the manner and under
the terms so provided. If the Plans and the unexercised Options shall
terminate pursuant to the foregoing sentence, all persons then entitled to
exercise any unexercised portions of the Options then outstanding shall have
the right, at such time immediately prior to the consummation of the
Terminating Transaction as the Company shall designate, to exercise their
Options to the full extent not theretofore exercised, including any
installments which have not yet become Accrued Installments. In the event
that the Options shall continue or be replaced after the occurrence of a
Terminating Transaction as provided above, such Options shall become fully
vested and become exercisable as to all installments thereof to and including
the Termination Date thereof, in the event the Optionee's employment with the
Company and its successor and all affiliates of the Company and such
successor terminates for any reason (other than termination by the Company
or such successor for good cause) at any time within two years after the
Terminating Transaction has been completed.

(c) Adjustments under this Section 6.9 shall be made by the Board
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding, and conclusive. No fractional shares of
Common Stock shall be issued under the Plans for any such adjustment.

6.10 Taxes. The Board shall make such provisions and take such steps
as it deems necessary or appropriate for the withholding of any federal,
state, local, and other tax required by law to be withheld with respect to
the grant or exercise of an Option under the Plans, including, but without
limitation, the deduction of the amount of any such withholding tax from any
compensation or other amounts payable to an Optionee by any of the
Participating Companies, or requiring an Optionee (or the Optionee's
beneficiary or legal representative) as a condition of granting or exercising
an Option to pay to any of the Participating Companies any amount required
to be withheld, or to execute such other documents as the Board deems
necessary or desirable in connection with the satisfaction of any applicable
withholding obligation.

6.11 Legends on Options and Stock Certificates. Each Option Agreement
and each certificate representing Shares acquired upon exercise of an Option
shall be endorsed with all legends, if any, required by applicable federal
and state securities laws to be placed on the Option Agreement and/or the
certificate. The determination of which legends, if any, shall be placed
upon Option Agreements and/or said Shares shall be made by the Board in its
sole discretion and such decision shall be final and binding.

ARTICLE 7

AMENDMENT OR TERMINATION OF PLAN

7.1 Board Authority. The Board may amend, alter, and/or terminate the
Plans at any time; provided, however, that unless required by applicable law,
rule, or regulation the Board shall not amend the Plans in the following
respects without the approval of shareholders holding a majority interest in
the Company:

(i) To increase the maximum number of Shares available for grant
under the Plans;

(ii) To provide for the administration of the Plan other than by
the Board or a Committee;

(iii)To change the manner of determining the option exercise
price;

(iv) To change the classes of Eligible Persons or Participating
Companies; or

(v) To extend the maximum Option period or the term of the Plans.

7.2 Limitation on Board Authority. The Board may amend the terms of
any Option previously granted, prospectively or retroactively, and may amend
the Plans in accordance with the provisions of Section 7.1; provided,
however, that unless required by applicable law, rule, or regulation, no
amendment of the Plans or of any Option Agreement shall affect in a material
and adverse manner Options granted prior to the date of any such amendment
without the consent of any Optionee holding any such affected Options.

7.3 Substitution of Options. In the Board's discretion, the Board
may, with an Optionee's consent, substitute Nonstatutory Stock Options for
outstanding Incentive Stock Options, and any such substitution shall not
constitute a new Option grant for the purposes of the Plan and shall not
require a revaluation of the Option exercise price for the substituted
Option. Any such substitution may be implemented by an amendment to the
applicable Option Agreement or in such other manner as the Board in its
discretion may determine.

ARTICLE 8

GENERAL PROVISIONS

8.1 Availability of Plans. A copy of the Plans shall be delivered to
the Secretary of the Company and shall be shown by the Secretary to any
Eligible Person making reasonable inquiry concerning the Plans.

8.2 Notice. Any notice or other communication required or permitted
to be given pursuant to the Plan or under any Option Agreement must be in
writing and may be given by registered or certified mail, and if given by
registered or certified mail, shall be determined to have been given and
received when a registered or certified letter containing such notice,
properly addressed with postage prepaid, is deposited in the United States
mails; and, if given otherwise than by registered or certified mail, it shall
be deemed to have been given when delivered to and received by the party to
whom addressed. Notice shall be given to Eligible Persons at their most
recent addresses shown in the Company's records. Notice to the Company shall
be addressed to the Company at the address of the Company's principal
executive offices, to the attention of the Secretary of the Company.

8.3 Titles and Headings. Titles and headings of sections of the Plan
are for convenience of reference only and shall not affect the construction
of any provision of the Plan.

8.4 Governing Law. The Plan shall be governed by, interpreted under,
and construed and enforced in accordance with the internal laws, and not the
laws pertaining to conflicts or choice of laws, of the State of California
applicable to agreements made and to be performed wholly within the State of
California.
<PAGE>
<PAGE>
COMPREHENSIVE CARE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON NOVEMBER 14, 1994

The undersigned hereby appoints Chriss W. Street and Fred C. Follmer,
or either of them, proxies, with power of substitution to vote the shares of
common stock of comprehensive Care Corporation which the undersigned is
entitled to vote at the annual meeting of stockholders on November 14, 1994,
and any adjournment thereof, as follows:

1. Proposal 1: Proposal to amend the Company's Bylaws to set the number of
directors at five.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Proposal 2: Proposal to amend the Company's Certificate of Incorporation
to establish a classified Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal 3: Election of Directors:
[ ] FOR the election as directors any or all of the following:
Class I: Nominees for a 3-year term expiring in 1997:
William H. Boucher and J. Marvin Feigenbaum
Class II: Nominees for a 2-year term expiring in 1996:
Rudy R. Miller and Chriss W. Street
Class III: Nominees for a 1-year term expiring in 1995:
W. James Nicol, Harvey G. Felsen* and Howard S. Groth*
*To serve only in the event Proposal 1 is not approved.

[ ] WITHHOLD AUTHORITY to elect any nominee listed above.
(Instructions: T withhold authority to vote for any particular nominee, draw
a line through his name above. To cumulate your votes (you are entitled to
as many votes as equals the number of shares you hold, multiplied by the
number of directors to be elected), indicate on the line below, the name(s)
of the nominee(s) and the number of votes to be cast in his, her or their
favor. You may cast all your votes for a single nominee, or you may
distribute them among any two or more of them, as you see fit. Unless you
indicate otherwise in the space below, the designated proxies are authorized
to distribute your votes in their discretion so as to elect by cumulative
voting the maximum number of the above nominees, whose names are not lined
out.)---------------------------------------------------------------------
(Continued and to be signed and dated on the other side.)

4. Proposal 4: Proposal to adopt the Comprehensive Care Corporation
Directors' Stock Option Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal 5: Proposal to amend the 1988 Incentive Stock Option Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Proposal 6: Proposal to amend the 1988 Nonstatutory Stock Option Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. With discretionary power in the transaction of such other business as
may
properly come before the meeting.

This proxy, properly executed, will be voted as directed hereon. If no
direction is made, this proxy will be voted FOR all nominees in Proposal 1.
The proxies may vote in their discretion as to other matters which may
properly come before the meeting.

Dated: -------,1994. ----------------------------------------
Signature

----------------------------------------
Signature (if held jointly)
Title or authority (if applicable)

NOTE: Please sign exactly as name appears hereon. If shares are registered
in more than one name, the signature of all persons are required. A
corporation should sign in its full corporate name by a duly authorized
officer, stating his or her title. Trustees, guardians, executors and
administrators should sign in their official capacity, giving their full
title as such. If a partnership, please sign in the partnership name by an
authorized person.

Please mark, sign, date and return this proxy promptly, using the enclosed
envelope. No postage required if mailed in the United States of America.