<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or 14a-12
</TABLE>
COMPREHENSIVE CARE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[COMPCARE LOGO]
November 3, 1999
Dear Comprehensive Care Corporation Stockholder:
On behalf of the Board of Directors and management of your Company, I
cordially invite you to attend our Annual Meeting of Stockholders of
Comprehensive Care Corporation (the "Company"), and any adjournments or
postponements thereof, on Friday, December 10, 1999 at 9:00 a.m., Central
Standard Time, at the regional office of the Company, located at 1010 N.
Orchard, Suite 9, Boise, Idaho 83705.
I urge you to attend the Annual Meeting to give us an opportunity to meet
you personally and to answer any questions you may have.
I hope that you will be able to attend the Annual Meeting in person.
Whether or not you plan to attend the Annual Meeting, please sign and promptly
return the enclosed proxy card in the return postage paid envelope provided.
I look forward to seeing you at the Annual Meeting of Stockholders.
Sincerely,
/s/ CHRISS W. STREET
Chriss W. Street
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
COMPREHENSIVE CARE CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY, DECEMBER 10, 1999
To the Stockholders of Comprehensive Care Corporation:
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
Comprehensive Care Corporation (the "Company") will be held at the regional
office of the Company, located at 1010 N. Orchard, Suite 9, Boise, Idaho 83705
on Friday, December 10, 1999 at 9:00 a.m. Central Standard Time, and any
adjournments or postponements thereof for the following purposes:
1. To elect one Class II director to serve until the year 2002 Annual
Meeting of Stockholders and until his successor is elected and
qualified; and
2. 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 October 29, 1999 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 offices of the
Company.
By Order of the Board of Directors,
/s/ COURTNEY WATSON
Courtney Watson
Secretary
November 3, 1999
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> 4
COMPREHENSIVE CARE CORPORATION
4200 WEST CYPRESS STREET SUITE 300
TAMPA, FLORIDA 33607
(813) 876-5036
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 10, 1999
The Board of Directors of Comprehensive Care Corporation (the "Company")
solicits your proxy for use at the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") to be held on Friday, December 10, 1999 at 9:00 a.m., Central
Standard Time, at the regional office of the Company located at 1010 N. Orchard,
Suite 9, Boise, Idaho 83705 and any adjournments or postponements thereof. This
Proxy Statement and the accompanying form of proxy are first being mailed on or
about November 3, 1999. Following this mailing, certain officers and employees
of the Company may solicit proxies by mail, telephone, telecopy, or in person,
without additional compensation. 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 solicitation costs, if any, 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
election as a Class II director of the nominee specified herein. 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 Annual Meeting and voting in
person. Attendance at the Annual Meeting will not by itself revoke a proxy.
Only stockholders of record at the close of business on October 29, 1999
are entitled to notice of, and to vote at, the Annual Meeting. As of that date,
3,817,812 shares of common stock, $.01 par value per share ("Common Stock"),
were outstanding and held of record by stockholders. 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, or 1,908,907 votes, 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.
Except as set forth in the next paragraph, approval of any other matter that may
properly come before the Annual 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 Annual Meeting, while broker non-votes will have no
effect on any matter presented. If authority to vote for the nominee 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> 5
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
October 29, 1999, 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 such securities 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.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
---------------- ----------------- --------
<S> <C> <C>
Chriss W. Street(1)................................. 318,011 8.3%
Mary Jane Johnson(2)................................ 10,000 *
Robert J. Landis(3)................................. 66,125 1.7%
William H. Boucher(4)............................... 100 *
J. Marvin Feigenbaum(4)............................. 250 *
A. Richard Pantuliano(4)............................ 5,000 *
All executive officers and directors as a group (6
persons)(5)....................................... 399,486 10.5%
</TABLE>
- ---------------
(1) Includes 12,260 shares held directly and 256,251 shares subject to options
that are presently exercisable or exercisable within 60 days of 10/29/99.
Also includes 49,500 vested shares under a Restricted Stock Agreement over
which the holder has the sole voting power. Does not include 146,250 shares
subject to options which are not exercisable within 60 days of the 10/29/99
record date.
(2) Includes 10,000 shares subject to options that are presently exercisable or
exercisable within 60 days of the record date. Does not include 85,000
shares subject to options which are not exercisable within 60 days of the
10/29/99 record date.
(3) Includes 500 shares held directly and 65,625 shares subject to options that
are presently exercisable. Does not include 75,000 shares subject to options
which are not exercisable within 60 days of the 10/29/99 record date.
(4) Served as a director until April 1999.
(5) Includes a total of 18,110 shares held directly, 331,876 shares subject to
outstanding options that are presently exercisable or exercisable within 60
days of the 10/29/99 record date, and 49,500 shares of restricted stock over
which the holder has sole voting power. Does not include 306,250 shares
subject to options which are not exercisable within 60 days of the 10/29/99
record date.
PROPOSAL 1 - ELECTION OF ONE CLASS II DIRECTOR
The number of members that comprise the entire Board of Directors is three
in number, of which one is a Class I director; one is a Class II director; and
one is a Class III director. The three classes serve staggered three-year terms.
Directors for each class are elected at the Annual Meeting of Stockholders held
in the year in which the term for such class expires and serve for three years.
Ms. Mary Jane Johnson is the Class I director whose term expires at the year
2000 Annual Meeting. Mr. Chriss W. Street is the Class II director whose term
expires at the 1999 Annual Meeting. Mr. Robert Landis is the Class III director
whose term expires at the year 2001 Annual Meeting. All current directors are
employees of the Company and, therefore, do not receive any compensation for
serving on the Board of Directors of the Company.
It is the intention of the persons named as proxies to vote their proxies
for the election of Chriss W. Street as a Class II director. Mr. Street is
currently Chairman, President and Chief Executive Officer, and has consented to
continue to serve as a director if elected.
2
<PAGE> 6
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE NOMINEE LISTED BELOW.
CLASS II: NOMINEE FOR A THREE-YEAR TERM EXPIRING AT THE YEAR 2002
ANNUAL MEETING OF STOCKHOLDERS
Chriss W. Street (Age 49)
Mr. Street has been employed by the Company as Chairman, President and
Chief Executive Officer since 1994. Mr. Street is a Class II director whose term
expires at the 1999 Annual Meeting. Mr. Street served on the Stock Option
Committee of the Board of Directors of Nu-Tech Bio-Med, Inc. until his
resignation on March 1, 1999, a company in which Mr. Feigenbaum is Chairman,
President, and Chief Executive Officer. In June 1996, Mr. Street joined the
Board of Directors of Fruehauf Trailer Corporation. On October 7, 1996, Fruehauf
Trailer Corporation filed for relief under Chapter 11 of the United States
Bankruptcy Code and subsequently, Mr. Street was named Chairman, President, and
Chief Executive Officer. Fruehauf Trailer Corporation has been operating as a
debtor in possession since October 1996, but filed a Plan of Reorganization on
July 28, 1998. The Plan became effective October 27, 1998 and Mr. Street
currently serves as Trustee for The End of the Road Liquidating Trust. Mr.
Street is the founder and principal of Chriss Street & Company, an investment
banking corporation specializing in corporate reorganization, factoring and
securities trading. Mr. Street served as a board member of the Orange County
Employee's Retirement System between February 1996 and December 1997. Mr. Street
served as a member of the Board of Directors of StreamLogic Corporation
(formerly known as Micropolis Corporation), from February 1996 to May 1997. Mr.
Street is a graduate of the University of California, Irvine and the Stanford
Business School Executive Program.
THE FOLLOWING ARE INCUMBENT DIRECTORS WHOSE TERMS
ARE NOT EXPIRING AT THE 1999 ANNUAL MEETING
Mary Jane Johnson RN, MBA, (age 49)
Ms. Johnson has been employed by the Company since August 1996 and was
appointed Executive Vice President Clinical Operations in September 1997. In
August 1998, Ms. Johnson was appointed to the position of Chief Executive
Officer for the Company's principal subsidiary, CompCare. In July 1999, Ms.
Johnson was appointed to the position of Chief Operating Officer of
Comprehensive Care Corporation. On April 23, 1999, Ms. Johnson was appointed a
Class I director to fill a vacancy created by reason of a resignation of J.
Marvin Feigenbaum. Her term expires at the year 2000 Annual Meeting. Ms. Johnson
served as Executive Director for Merit Behavioral Care from 1993 to 1996. Ms.
Johnson, a Registered Professional Nurse, has a Bachelors Degree in Nursing from
the State University of New York and a Masters Degree in Business Administration
from Adelphi University.
Robert J. Landis, CPA, MBA (age 40)
Mr. Landis has served as Executive Vice President, Chief Financial Officer,
and Treasurer since July 1998. On April 23, 1999, Mr. Landis was appointed a
Class III director to fill a vacancy created by reason of a resignation of A.
Richard Pantuliano. His term expires at the year 2001 Annual Meeting. Mr. Landis
served as Treasurer of Maxicare Health Plans, Inc., a health maintenance
organization from November 1988 to July 1998. Mr. Landis, a Certified Public
Accountant, received a Bachelors Degree in Business Administration from the
University of Southern California and a Masters Degree in Business
Administration from California State University at Northridge.
BOARD MEETINGS AND DIRECTORS' COMPENSATION
During the fiscal year ended May 31, 1999, the Board of Directors of the
Company held 11 meetings in person or by telephone. In addition, the Board of
Directors took actions by written consent on 6 occasions.
3
<PAGE> 7
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.
During Fiscal 1999, each non-employee director was compensated at the rate
of $1,333 per month of service. In addition, each non-employee director was
compensated at the rate of $1,000 for each Board meeting attended and $500 for
each Board meeting conducted telephonically in which they participated. Each
non-employee director was also compensated at the rate of $1,200 for each
committee meeting attended. Chairpersons of committees created by the Board of
Directors were compensated at the rate of $3,000 per annum. The Vice Chairman of
the Board was compensated an additional $1,500 per month of service. In addition
to their board fees for the current year of service, Messrs. William Boucher, J.
Marvin Feigenbaum and A. Richard Pantuliano were each paid a $25,000 honorarium
upon their resignation. None of the current directors have received any
compensation for serving in such capacity.
BOARD COMMITTEES
Audit Committee
Until the resignations of Messrs. William Boucher, J. Marvin Feigenbaum and
A. Richard Pantuliano (all of whom were non-employee directors), the Company's
audit committee consisted of Messrs. Feigenbaum, Pantuliano and Boucher. The
committee's responsibilities include the review of the report of the auditors'
findings following the close of the audit and the submittal of 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 three times during Fiscal 1999. The
current Board of Directors functions as an audit committee, although it does not
include any non-employee director.
Compensation Committee
Until the resignations of Messrs. William Boucher, J. Marvin Feigenbaum and
A. Richard Pantuliano (all of whom were non-employee directors), the Company's
compensation committee consisted of Messrs. Feigenbaum, Pantuliano and Boucher.
The Committee made recommendations regarding all of the compensation of the
Company's executives during Fiscal 1999. The Board of Directors did not
materially disagree with any such recommendations. The current Board of
Directors functions as a compensation committee, although it does not include
any non-employee director.
REPORT REGARDING COMPENSATION OF EXECUTIVE OFFICERS
OF COMPREHENSIVE CARE CORPORATION
The following discussion relates to the compensation committee while it was
composed of Messrs. William Boucher, J. Marvin Feigenbaum and A. Richard
Pantuliano until their resignations on April 23, 1999.
OVERVIEW AND PHILOSOPHY
The Committee used a compensation program policy that would enable the
Company to attract and retain outstanding executives in the healthcare industry
that would assist the Company in meeting its long-range objectives, thereby
serving the interests of the Company's stockholders. The Committee's
compensation-related decisions in Fiscal 1999 primarily involved awarding its
executives base salaries designed to compensate those executives fairly and
competitively.
The Committee approved compensation objectives and policy for all employees
and determines compensation amounts, including cash compensation, incentive
compensation, and stock option grants, for the Company's executive officers.
4
<PAGE> 8
The Committee met to review both cash and non-cash compensation for each
executive, and solicited and analyzed periodic reports from external consultants
regarding the appropriateness of compensation levels and decisions. The
Company's primary objective is to maximize stockholder value over time by
developing a comprehensive business strategy coupled with general compensation
policies and practices that are linked to and consistent with the Company's
defined business strategy.
The Company's overall pay philosophy is to provide rewards that (1) are
linked to both Company performance and individual performance, (2) align
employee interests with the interests of its stockholders, (3) are sufficient to
attract and retain needed high-quality employees, and (4) provide a mix of cash
and potential stock ownership tied to the long-term as well as immediate
business strategy.
EXECUTIVE OFFICER COMPENSATION
The key principles used by the Committee in structuring compensation
targets and packages of executive officers and key management are as follows:
- Long-term and at risk focus so that a significant portion of executive
pay is focused toward the long-term strategic objectives, with the
realization of rewards only as an extension of shareholder interests.
- Management development -- support of compensation opportunity structures
to attract and retain individuals who can maximize the creation of
stockholder value, and motivate employees to attain Company and
individual objectives.
- Equity at risk -- linking of corporate performance and individual
rewards, to instill ownership.
- Recognition of individual contributions as well as overall Company
results toward identified business results.
- Competitive position of both base salary and total compensation with the
healthcare industry.
The Committee used these principles to review and approve appropriate
changes of compensation policy and packages.
COMPONENTS OF EXECUTIVE COMPENSATION
The components of executive compensation at Comprehensive Care Corporation
include (1) base salaries, (2) annual incentive bonuses, (3) incentives, and (4)
other broad-based compensation plans.
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 were established by the
Committee in conjunction with recommendations by the Company's senior management
and are pursuant to individual employee agreements negotiated with each
individual officer, and are not linked to Company or individual performance
objectives. Base salaries are intended to be maintained at or slightly above the
median 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.
Increases in base salary are intended to be annual as provided for in the
individual employment agreements. From time to time, salary increases may be
made to reflect changes in an executive's skills, knowledge and experience,
increase in duties and responsibilities, and extraordinary demands on time
during the preceding fiscal year. Aggregate growth is designed to be competitive
with industry trends and reflective of the overall performance of the Company.
5
<PAGE> 9
ANNUAL INCENTIVE BONUSES
In the case of Mr. Chriss Street, Mr. Robert Landis and Ms. Mary Jane
Johnson, annual bonuses (if any) are respective to their employment agreements.
In the case of Mr. Street, Mr. Landis and Ms. Johnson, the annual incentive
bonus can be up to $100,000, $60,000, and $75,000, respectively.
In the case of all other key employees, the Company sought to adopt an
annual incentive bonus program that would increase total cash compensation based
upon objective improvements of the Company's results of operations. In Fiscal
1999, the Company adopted a new annual incentive bonus program for executive
officers and key members of management. At the start of each fiscal year, the
Committee, in consultation with senior management, establishes target levels of
corporate performance. This target is then translated to a threshold and maximum
level of performance with a target opportunity for each executive officer based
upon their level of responsibility, potential contribution of the success of the
Company, and competitive practices. The target opportunity consists of both the
Company's financial performance (net profit) and individual objectives tied to
strategic project activity. The individual's actual award is determined at the
end of the fiscal year based upon an assessment of both Company and individual
performance. Participation is restricted to assistant vice president's and
above.
INCENTIVES
Incentives are in the form of stock options granted at fair market value.
Key management are provided an initial grant at the time of hire or appointment
and again reviewed annually for additional grants to replenish vested and
exercised shares. The Company provides long-term incentives to its executives
through established programs designed to encourage executives to acquire and
hold shares of Common Stock of the Company. The timing and number of options
granted under the Company's stock option plan 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.
In the case of Mr. Street, Mr. Landis and Ms. Johnson, stock options are
pursuant to their employment agreements.
FISCAL 1999 CHIEF EXECUTIVE OFFICER COMPENSATION
During Fiscal 1999, Chriss W. Street served as Chief Executive Officer of
the Company. Mr. Street was initially appointed Interim Chief Executive Officer
on May 6, 1994 and was appointed Chief Executive Officer 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
and his position with The End of the Road Trust, the Board has allowed him to
divide his time between the Company and these other activities. This report
discusses the principles applicable to Chief Executive Officer compensation
generally as well as specific considerations relating to the compensation
awarded Mr. Street.
The Committee was of the belief that Mr. Street's compensation as Chief
Executive Officer appropriately reflected his outstanding performance during his
tenure with the Company in face of the condition of the Company and challenges
which he inherited upon initially joining the Company. Under Mr. Street's
leadership the Company refocused its marketing efforts toward managed care,
successfully recruited Senior Management, and restructured its existing business
units.
In determining Mr. Street's base salary, annual bonuses and equity grants,
the Committee considered the Company's overall performance and Mr. Street's
individual performance as characterized in the same measures described above for
determining executive compensation. The Committee also considered the
compensation received by Chief Executive Officers of other health care
companies, as well as incentives awarded to executives for superior performance.
Mr. Street's Employment Agreement was renewed effective June 1, 1998 for a
period of three years and six months. Per the renewed agreement, Mr. Street's
salary is $300,000 per annum. Coincident with his new employment agreement, Mr.
Street was awarded an aggregate of 100,000 stock options, subject to the terms
of the Company's 1995 Stock Option Plan. On December 14, 1998, the Board of
Directors approved the
6
<PAGE> 10
re-pricing of stock option grants for executive officers, subject to each
executive returning his options for cancellation. Mr. Street elected to return
the 100,000 options granted during Fiscal 1999 and, as a result, the Fiscal 1999
grant was reduced from 100,000 to 75,000 options. In addition, on July 2, 1999,
Mr. Street was awarded a stock option grant for 125,000 shares, vesting 50% in
six months and 50% is one year. Mr. Street is eligible to receive an annual
bonus based on earnings performance. Mr. Street did receive a discretionary
bonus of $80,000 for Fiscal 1999.
STAY BONUSES AND CHANGE IN CONTROL PROVISION
Subsequent to the resignations of William Boucher, J. Marvin Feigenbaum and
A. Richard Pantuliano, and in an effort to hold the management team together for
the benefit of the Company and it's shareholders, the Board, as presently
constituted, awarded a stay bonus of $225,000 to Chriss Street, $150,000 to Mary
Jane Johnson and $125,000 to Robert Landis, not payable unless each remains
employed by the Company through December 31, 2000. In addition, provision was
made for certain payments in the event of "change of control" . Chriss Street
would be entitled to the greater of his base salary for the unexpired portion of
the term of his agreement or two times the sum of his prevailing base salary.
Mary Jane Johnson and Robert Landis would be entitled to 12 months salary plus a
pro-rata portion of their Incentive Bonus at target for the period of the
beginning of the fiscal year through date of termination.
On May 24, 1999, the Board adopted a resolution to further clarify change
in control. On July 2, 1999, in light of contract developments, the Board of
Directors adopted several resolutions affecting the retention of the executive
officers of the Company. Included in these resolutions were additional stock
option grants, a stay bonus retention program, and a revision in the calculation
to determine annual bonuses.
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 $1.0 million
per executive officer. Qualifying performance-based incentive compensation,
however, would be both deductible and excluded for purposes of calculating the
$1.0 million base. The Board of Directors has determined that no portion of
anticipated compensation payable to any executive officer in 1999 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 $1.0 million
threshold is not likely to be an issue for the Company to address in the
foreseeable future.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1999, recommendations and administrative decisions regarding
the compensation of the Company's executives were made by the compensation
committee of the Board of Directors, which was comprised entirely of persons who
are not officers or employees of the Company. Mr. Feigenbaum, Mr. Boucher, and
Mr. Pantuliano served on the compensation committee until their resignations in
April, 1999.
Mr. Street is a director of the Company and served on the stock option
committee of the Board of Directors of Nu-Tech Bio-Med, Inc. until his
resignation on March 1, 1999. Mr. Feigenbaum, the Company's Vice-Chairman and
also the chairman of the compensation committee until his resignation on April
20, 1999, is also the Chairman of Nu-Tech Bio-Med, Inc.
7
<PAGE> 11
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, PMR Corporation, Magellan Health Services,
and Horizon Health Corp.) for each year in the period from June 1, 1995 and
ended May 31, 1999.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.
ASSUMES $100 INVESTED ON JUNE 1, 1994
ASSUMES DIVIDENDS REINVESTED
GRAPH FIVE FISCAL YEARS ENDED MAY 31, 1999
<TABLE>
<CAPTION>
COMPREHENSIVE CARE
CORPORATION COMPARABLE CO. INDEX NYSE COMPOSITE
------------------ -------------------- --------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 126.67 68.71 114.94
1996 164.44 101.58 146.56
1997 248.89 118.52 183.19
1998 180.00 114.23 238.34
1999 8.89 36.25 267.59
</TABLE>
8
<PAGE> 12
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 1999 exceeded $100,000 (together, these
persons are sometimes referred to as the "named executives").
TABLE I -- SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------------
OTHER RESTRICTED
ANNUAL STOCK
SALARY BONUS COMPENSATION AWARD(S)
FY NAME POSITION ($) ($) ($) ($)
-- ---- -------- ------- ------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
1999 Chriss W. Street Chairman of the Board of 300,861 80,000 5,831(1) --
Directors(13,14),
1998 Chriss W. Street President(13,14) 264,263 -- 6,000(1) --
and Chief Executive
1997 Chriss W. Street Officer(13) 245,192 15,947 5,837(1) 589,919(2)
1999 Mary Jane Johnson Executive Vice President and 146,930 50,000 -- --
1998 Mary Jane Johnson Chief Operating Officer(13), 110,040 20,000 -- --
Chief Executive Officer(14),
1997 Mary Jane Johnson and 97,125(5) 5,000 -- --
Director(13,14)
Executive Vice
1999 Robert Landis President(13), 139,408(9) 45,000 32,967(8) --
Chief Financial
1998 Robert Landis Officer(13,14), -- -- -- --
1997 Robert Landis Treasurer(13,14), and -- -- -- --
Director(13)
1999 Joni Cummings Executive Vice President of 121,142 -- 50,024(7) --
1998 Joni Cummings Business Development(13)(15) 100,025 -- 18,412(6) --
1997 Joni Cummings 76,949 -- 24,308(6) --
1999 H.G. Whittington Executive Vice President 35,000(10) 15,000 -- --
1998 H.G. Whittington and National Medical 148,995 20,000 -- --
1997 H.G. Whittington Director(14) 50,468(11) -- -- --
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
SECURITIES LONG-TERM
UNDERLYING INCENTIVE ALL OTHER
OPTIONS/SARS PAYOUTS COMPENSATION
FY (#) ($) ($)
-- ------------ --------- ------------
<S> <C> <C> <C>
1999 217,501(17) -- 906(12)
1998 120,000 -- 76,998(3)
1997 25,000 -- 229,508(4)
1999 20,000 -- 1,051(12)
1998 37,000 -- 1,012(12)
1997 3,000 -- 331(12)
1999 153,125(16) -- --
1998 -- -- --
1997 -- -- --
1999 14,250 -- --
1998 17,000 -- --
1997 3,000 -- --
1999 -- -- --
1998 19,000 -- --
1997 1,000 -- --
</TABLE>
- ---------------
(1) Represents a car allowance paid by the Company and in accordance with Mr.
Street's employment agreement.
(2) In September 1995, the Board of Directors granted and issued to its
President and Chief Executive Officer 100,000 Restricted Shares of its
Common Stock, $0.01 par value. The Restricted Shares are subject to vesting
at the rate of 5,000 Restricted Shares over a 20-year period. The vesting
is subject to acceleration upon the occurrence of certain events as
described below. As of May 31, 1997, 49,500 Restricted Shares were vested
and 50,500 were unvested, with the holder having sole voting power. On
December 16, 1997, the Company, with the consent of Chriss W. Street,
terminated a grant of the remaining unvested shares originally granted in
September 1995. Coincident with this transaction the Company implemented a
new program to grant Mr. Street 120,000 options of Common Stock at a price
of $6.6875. The options are fully vested, non-incentive stock options,
exercisable on and after June 17, 1998, and through December 19, 2002,
regardless of whether Mr. Street's employment with the Company continues
through that date.
(3) Represents $75,873 of a one-time bonus for taxes payable due to the
acceleration of Restricted Shares and $1,125 in amounts contributed to Mr.
Street's 401(k) Plan Account.
(4) Represents $227,589 of a one-time bonus for taxes payable due to the
acceleration of Restricted Shares and $1,919 in amounts contributed to Mr.
Street's 401(k) Plan Account.
(5) Between August 1, 1996, and January 25, 1997, Ms. Johnson served as an
independent consultant to the Company for which she received an aggregate
compensation of $53,000.
(6) Represents commissions paid to Ms. Cummings.
(7) Represents severance paid to Ms. Cummings.
(8) Represents moving expenses paid to Mr. Landis.
(9) Mr. Landis was employed by the Company on July 2, 1998.
(10) Dr. Whittington ceased to be an executive officer of the Company on August
15, 1998.
9
<PAGE> 13
(11) Dr. Whittington was employed on January 13, 1997. Accordingly, amounts
shown for Dr. Whittington reflect compensation that he earned from his date
of hire through the end of Fiscal 1997.
(12) Represents amounts contributed by the Company to the indicated person's
401(k) Plan Account.
(13) Comprehensive Care Corporation.
(14) Comprehensive Behavioral Care, Inc., Principal Subsidiary of the Company.
(15) Ms. Cummings ceased being an Executive Officer of the Company on April 16,
1999.
(16) Includes 87,500 options issued at $10.00 per share that were cancelled and
repriced at $4.00 per share on December 14, 1998.
(17) Includes $100,000 of options issued at $6.00 per share that were cancelled
and repriced at $4.00 per share on December 14, 1998.
10
<PAGE> 14
TABLE II -- OPTIONS HELD AT MAY 31, 1999
The following tables present information regarding the number of
unexercised options held by the Company's named executives at May 31, 1999.
There were no options exercised by the Company's named executives during Fiscal
1999. No stock appreciation rights were granted or held by such persons during
Fiscal 1999.
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE VALUE
---- ------------ ---------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Chriss W. Street........... 117,501(1) 21.4% $ 4.00 12/14/2008 $2.33
100,000(2) 18.2% $ 6.00 09/14/2008 $2.17
Mary Jane Johnson.......... 20,000(1) 3.6% $ 4.00 12/14/2008 $2.33
Robert J. Landis........... 65,625(1) 12.0% $ 4.00 12/14/2008 $2.33
87,500(2) 15.9% $10.00 07/02/1998 $5.82
</TABLE>
- ---------------
(1) On December 14, 1998, the Company's Board of Directors approved the
re-pricing of stock option grants for Executive Officers, subject to each
Executive Officer returning his or her old options for cancellation.
(2) Represents original options granted under the 1995 Incentive Stock Option
Plan during Fiscal 1999. These options were cancelled on December 14, 1998
The fair value as of the date of grant, calculated using the Black-Scholes
method is based on assumptions about future interest rates, stock price
volatility and dividend yield. There is no assurance that these assumptions will
prove to be true in the future. The actual value, if any, that may be realized
by each individual will depend upon the market price of the Common Stock on the
date of exercise.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND AGGREGATED FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN
UNEXERCISED THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES VALUE FY END(#) FY END ($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#)(1) ($) UNEXERCISABLE(2) UNEXERCISABLE
---- -------------- -------- ---------------- ---------------
<S> <C> <C> <C> <C>
Chriss W. Street(1)................. -- -- 235,000/42,501 0/0
Mary Jane Johnson................... -- -- 0/20,000 0/0
Robert J. Landis.................... -- -- 0/65,625 0/0
</TABLE>
- ---------------
(1) Exercisable options include options for 24,000 and 16,000 shares granted in
the Company's 1988 Incentive Stock Option and Non-statutory Plans at $6.25
per share and options for 120,000 and 75,000 shares granted in the Company's
1995 Incentive Stock Option Plan at $6.6875 and $4.00 respectively.
(2) Unexercisable options represent options reissued during Fiscal 1999.
11
<PAGE> 15
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET PRICE ORIGINAL
SECURITIES OF STOCK AT EXERCISE OPTION TERM
UNDERLYING TIME OF PRICE AT NEW REMAINING AT
OPTIONS/SARS REPRICING OR TIME OF EXERCISE DATE OF
REPRICED OR AMENDMENT REPRICING OR PRICE REPRICING OR
NAME DATE AMENDED (#)(1) ($) AMENDMENT ($) AMENDMENT(2)
---- ---------- -------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Chriss W. Street........ 12/14/1998 100,000 $4.00 $ 6.0000 $4.00 9.75
12/14/1998 25,000 $4.00 $ 7.8750 $4.00 7.69
12/14/1998 20,000 $4.00 $ 8.0000 $4.00 6.23
12/14/1998 20,000 $4.00 $10.0000 $4.00 6.23
12/14/1998 20,000 $4.00 $12.0000 $4.00 6.23
Mary Jane Johnson....... 12/14/1998 37,000 $4.00 $10.8750 $4.00 8.73
12/14/1998 3,000 $4.00 $13.8750 $4.00 8.30
Robert J. Landis........ 12/14/1998 87,500 $4.00 $10.0000 $4.00 9.55
</TABLE>
- ---------------
(1) On December 14, 1998, the Company's Board of Directors approved the
re-pricing of stock option grants for Executive Officers, subject to each
Executive Officer returning his or her old options for cancellation. For
every two options cancelled under the 1988 Incentive Stock Option and
Non-statutory Stock Option Plans, one option was reissued under the 1995
Incentive Stock Option Plan. For every four options cancelled under the 1995
Incentive Stock Option Plan, three new options were reissued. All reissued
options are subject to the provisions of the 1995 Plan, including vesting in
accordance with the Company's vesting policy. The exercise price of the
reissued options equals the December 14, 1998, closing price of $4.00.
(2) The stated term equals the remaining life in years.
EMPLOYMENT AGREEMENTS WITH EXECUTIVES
On September 14, 1998, the Company entered into an employment agreement
with Mr. Chriss W. Street that has a term expiring on November 30, 2001. Mr.
Street's employment agreement as amended provides for a salary at the rate of
$300,000 per annum and includes a performance based bonus of up to a target
amount of $100,000 in connection with the Company's Annual Management Bonus Plan
("MBP Plan"). In addition, Mr. Street is provided with health insurance and
other benefits and a policy of life insurance. He also receives an auto
allowance of $600 per month and reimbursement for expenses incurred on behalf of
the Company and in connection with the performance of his duties. The agreement
obligates the Company to use its best efforts to cause Mr. Street to continue to
be elected as a Class II director, and as Chairman of its Board of Directors.
The agreement provides that the Company procure Directors and Officers Liability
Insurance in an amount not less than $1.0 million. Mr. Street's employment
agreement provides that in the event of a change of control of the Company as
defined and amended by the Board of Directors on May 24, 1999, Mr. Street will
be paid a severance benefit equal to the greater of (i) the balance of his base
salary for the remainder of the unexpired term of his agreement or (ii) two
times the sum of Mr. Street's then prevailing base salary. Mr. Street will
receive a stay bonus of $225,000 provided he remains employed by the Company
through December 31, 2000.
In September 1995, the Board of Directors granted and issued to Mr. Street
100,000 Restricted Shares of its Common Stock, $0.01 par value. The Restricted
Shares were subject to vesting at the rate of 5,000 Restricted Shares per fiscal
year over a 20-year period. The vesting of the restricted shares was subject to
acceleration upon the occurrence of certain events. During fiscal years prior to
Fiscal 1999, certain objective non-discretionary conditions for acceleration
related to the vesting of 49,500 Restricted Shares granted to the CEO were
achieved. Based on increases in the fair market value of the Company's Common
Stock, the Company provided for compensation expenses of $0.5 million for the
acceleration of 37,000 Restricted Shares; to be earned in the fiscal year ended
May 31, 1997. In addition, the estimated bonus payments for income taxes as
provided for in the employment agreement were approximately $0.2 million during
Fiscal 1997. As of
12
<PAGE> 16
December 16, 1997, 49,500 Restricted Shares were vested and 50,500 were
unvested, with the holder having sole voting power. The Company, with the
consent of Chriss W. Street, terminated a grant of the 50,500 remaining,
unvested shares. Coincident with this transaction, the Company implemented a new
program to grant Mr. Street 120,000 options of common stock at a price of
$6.6875. These options are fully vested, non-incentive stock options,
exercisable on and after June 17, 1998 and through December 19, 2002, regardless
of whether Mr. Street's employment with the Company continues through that date.
In addition Mr. Street was awarded a stock option grant for 125,000 shares on
July 2, 1999 vesting 50% in six months and 50% is one year.
On July 2, 1999, the Company entered into an employment agreement with Ms.
Mary Jane Johnson. Ms. Johnson's employment agreement provides for a salary at
the rate of $175,000 per annum and includes a performance-based bonus of up to a
target amount of $75,000 in connection with the Company's MB Plan. In addition,
Ms. Johnson is provided with health insurance and other benefits and a policy of
life insurance. Ms. Johnson's employment agreement provides that in the event of
a change of control of the Company as defined and amended by the Board of
Directors on May 24, 1999, Ms. Johnson will receive a severance benefit equal to
12 months salary and a pro-rata portion of her target Incentive Bonus calculated
from the beginning of the fiscal year through date of termination. Ms. Johnson
will receive a stay bonus of $150,000 provided she remains employed by the
Company through December 31, 2000.
On September 14, 1998, the Company entered into an employment agreement
with Mr. Robert J. Landis that has a term expiring on January 2, 2000. Mr.
Landis' employment agreement as amended provides for a salary at the rate of
$150,000 per annum and a performance-based bonus of up to a target amount of
$60,000 in connection with the Company's MBP Plan. In addition, Mr. Landis is
provided with health insurance and other benefits and a policy of life
insurance. Mr. Landis' employment agreement provides that, in the event of a
change in control of the Company as defined, Mr. Landis will be paid a severance
benefit equal to the greater of (i) the balance of his base salary for the
remainder of the unexpired term of his agreement or (ii) twelve (12) months base
salary, together with his incentive bonus. Mr. Landis will receive a stay bonus
of $125,000 provided he remains employed by the Company through December 31,
2000.
On December 14, 1998, the Company's Board of Directors approved the
re-pricing of stock option grants for Executive Officers, subject to each
executive Officer returning his or her old options for cancellation. Mr. Street,
Ms. Johnson, and Mr. Landis elected to reprice 185,000, 40,000, and 87,500,
respectively, of their unvested options from prior year agreements.
INDEMNIFICATION AGREEMENT
In connection with the Company's indemnification program for executive
officers and directors, Mr. Street, Ms. Johnson, and Mr. Landis, as well as
eight former directors and nine former executive officers, are entitled to
indemnification and are beneficiaries of the officers and directors
indemnification trust (as defined below).
Upon written demand for payment by the person designated in the Trust
Agreement as Beneficiary Representative accompanied by a "Notice of
Qualification" (as defined below), the Trustee shall pay the person designated
in the Trust Agreement ("Underwriter") to administer the payments to the
accounts of Indemnitees an amount not greater than the balance, if any, of the
specified bookkeeping account ("Account") recorded by the Trustee for each
Indemnitee. A "Notice of Qualification" is a written statement by the
Beneficiary Representative which (i) states the date and action on which the
policyholder is obligated to Indemnitee(s) under the terms of the
Indemnification Agreement, (ii) certifies that, pursuant to the terms of the
Indemnification Agreement, the Indemnitees are entitled to payment thereunder as
a result of the investigation, claim, action, suit or proceeding, and (iii)
states the amount of the payment to which the Underwriter is entitled. Upon the
receipt of a demand, the Trustee shall promptly inform the Company of such
receipt, by courier delivery to the Company, of written notice thereof. Subject
to any contrary order issued by a court of competent jurisdiction, a payment
made pursuant to this Section may be made without the approval or direction of
the Company, and shall be made despite any direction to the contrary by the
Company. Prior to the time amounts are to be paid to the Underwriter or his
designee from the Trust Fund as
13
<PAGE> 17
described above, Indemnitees have no preferred claim or beneficial ownership
interest in trust funds, and their rights are merely unsecured contractual
rights.
The Company considers it desirable to provide each Indemnitee with
specified assurances that the Company can and will honor the Company's
obligations under the Indemnification Agreements, including a policy of
insurance to provide for directors and officers liability coverage.
STOCK OPTION PLANS
1995 INCENTIVE PLAN
The Company has a 1995 Incentive Stock Option ("ISO") Plan (the "1995
Plan"). The 1995 Plan provides for the granting of options to eligible employees
and consultants to the Company. Options granted as incentive stock rights, stock
options, stock appreciation rights, limited stock appreciation rights and
restricted stock grants under the 1995 Plan may qualify as an ISO under Section
422A of the Internal Revenue Code. Options for ISO's may be granted for terms up
to ten years and are generally exercisable in cumulative increments of 50% each
year. Effective July 2, 1999, the vesting schedule of new grants issued under
the plan shall be 50% starting six months after the date of grant and the
remaining 50% starting one year after the date of grant. Options for NSO's may
be granted for terms of up to 13 years. Options for ISO's must equal or exceed
the fair market value of the shares on the date of grant, and 65% in the case of
other options. The 1995 Plan also provides for the full vesting of all
outstanding options under certain change of control events. The maximum number
of shares authorized for issuance under the 1995 Plan is 1,000,000.
On December 14, 1998, the Company's Board of Directors approved the
re-pricing of stock option grants for Executive Officers, subject to each
executive Officer returning his or her old options for cancellation. For every 2
options surrendered for cancellation under the 1988 Incentive Stock Option and
Nonstatutory Stock Option Plans, one option was reissued from the 1995 Incentive
Stock Option Plan. For every four options surrendered for cancellation under the
1995 Stock Option Plan, three new options were reissued subject to the Company's
usual stock option grants. In September 1995, the Board of Directors granted and
issued to its President and Chief Executive Officer, 100,000 Restricted Shares
of its Common Stock, $0.01 par value. Such grant of Restricted Shares was issued
from the Company's 1995 Incentive Plan and was ratified by the stockholders at
the 1995 Annual Meeting. The Restricted Shares were subject to vesting at the
rate of 5,000 shares per fiscal year (the "Annual Vested Shares") over a 20-year
period. The vesting of the Restricted Shares was subject to acceleration upon
the occurrence of certain events of acceleration. As of December 16, 1997,
49,500 Restricted Shares were vested and 50,500 were unvested, with the holder
having sole voting power. The Company, with the consent of Chriss W. Street,
terminated a grant of the remaining unvested shares originally granted in
September 1995. Coincident with this transaction, the Company implemented a new
program to grant Mr. Street 120,000 options of common stock at a price of
$6.6875. These options are fully vested, non-incentive stock options,
exercisable on and after June 17, 1998 and through December 19, 2002, regardless
of whether Mr. Street's employment with the Company continues through that date.
NON-EMPLOYEE DIRECTOR PLAN
The Company has a non-qualified stock option plan for its outside directors
(the "Directors' Plan"). The Directors' Plan provides for the Company to grant
to each non-employee director options as follows: (1) each individual serving as
a non-employee director as of the effective date were granted a non-qualified
stock option to purchase 10,000 shares of Common Stock ("Initial Grant"); (2)
each individual who first becomes a non-employee director on or after the
effective date, will be granted, at the time of such election or appointment a
non-qualified stock option to purchase 10,000 shares of Common Stock ("Initial
Grant"); (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
non-qualified stock option to purchase 2,500 shares of Common Stock. Commencing
with the 1996 annual meeting, the number of options awarded annually to all
non-employee directors was increased from 2,500 shares to 5,000 shares and
provided for an annual grant of special service options to the Vice Chairman of
the Board of 3,333 shares and to each committee chairman of 8,333 shares and
each committee member of 2,500 shares. In addition, each
14
<PAGE> 18
non-employee director will automatically be granted an option to purchase 10,000
shares upon joining the Board of Directors and options to purchase 5,000 shares
on the date of the annual meeting. Each non-qualified stock option is
exercisable at a price equal to the Common Stock's fair market value as of the
date of grant. Initial grants vest annually in 25 percent increments beginning
on the first anniversary of the date of grant, provided the individual is still
a director on those dates. Annual grants will become 100 percent 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 or after the date he or she ceases to be a
director. The maximum number of shares authorized for issuance under the
Directors' Plan is 250,000.
CERTAIN TRANSACTIONS
For information relating to Employment Agreements with executive officers,
stock options, stay bonuses and other compensations, see "Report Regarding
Compensation of Executive Officers of Comprehensive Care Corporation" and
Employment Agreements with Executive Officers.
INDEPENDENT AUDITORS
Effective May 17, 1999, the Company engaged Richard A. Eisner & Company,
LLP ("RAE") as independent accountants to audit its financial statements for the
fiscal year ending May 31, 1999. The engagement of RAE was in lieu of Ernst &
Young, LLP ("E&Y"), who was dismissed by the Company on May 17, 1999. E&Y had
audited the Company's financial statements for each of the two most recent
fiscal years, and with respect to which had included in its reports a "going
concern" uncertainty and, for the fiscal year ended May 31, 1998, included an
explanatory paragraph regarding the Company's change in the method used for
estimating its claims liability.
The Company has not, during its two preceding fiscal years and any
subsequent interim periods, had any dispute or disagreement with E&Y on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which if not resolved to the satisfaction of E&Y
would have caused E&Y to make reference to the matter in their report.
The engagement of RAE in lieu of E&Y was prompted by economic
considerations and was concurred to by the Board of Directors of the Company.
ANNUAL REPORT
The 1999 Annual Report to Stockholders, including consolidated financial
statements for the fiscal year ended May 31, 1999 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, 4200 West Cypress Street, Tampa, Florida 33607.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
1999 Annual Meeting. However, if any other business properly comes before the
Annual 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.
15
<PAGE> 19
STOCKHOLDER PROPOSALS FOR YEAR 2000 ANNUAL MEETING
Stockholder proposals to be submitted for inclusion in the year 2000 proxy
materials and consideration at the year 2000 Annual Meeting of Stockholders must
be received by the Company not later than April 10, 2000. Such proposals should
be directed to the Secretary of the Company, 4200 West Cypress Street Suite 300,
Tampa, Florida 33607.
By Order of the Board of Directors,
/s/ COURTNEY WATSON
Courtney Watson
Secretary
November 3, 1999
Tampa, Florida
16
<PAGE> 20
COMPREHENSIVE CARE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS ON DECEMBER 10, 1999
The undersigned hereby appoints Chriss W. Street and Courtney Watson, 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 1999 Annual Meeting of Stockholders on December 10, 1999, and any
adjournment thereof, as follows:
1. PROPOSAL 1: Election of Director:
[ ] FOR the election as a director the following:
Class II: Nominee for a 3-year term expiring in the year 2002:
Chriss W. Street
[ ] WITHHOLD AUTHORITY to elect the nominee listed above.
2. With discretionary power in the transaction of such other business as may
properly come before the annual meeting.
<PAGE> 21
THIS PROXY, PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREON. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. THE PROXIES MAY VOTE
IN THEIR DISCRETION AS TO OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE 1999
ANNUAL MEETING.
Dated: , 1999.
-----------------------------------
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.
