<PAGE> 1
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 sec.240.14a-11(c) or sec.240.14a-12
OPTIMUMCARE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
OPTIMUMCARE CORPORAITON
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2).
/ / $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:
----------------------------------------------------------------------
(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:
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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
OPTIMUMCARE CORPORATION
30011 IVY GLENN DRIVE
LAGUNA NIGUEL, CALIFORNIA 92677
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 5, 1995
- --------------------------------------------------------------------------------
TO THE STOCKHOLDERS OF OPTIMUMCARE CORPORATION:
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of OptimumCare
Corporation (the "Company") will be held at the offices of Bruck & Perry, 1301
Dove Street, Tenth Floor, Newport Beach, California 92660 on December 5, 1995,
at 10:00 a.m. local time, for the following purposes:
1. To elect four directors to hold office until the next annual meeting of
stockholders or until their successors are elected and qualified;
2. To approve the Company's 1994 Stock Option Plan; and
3. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on October 9, 1995 will be
entitled to vote at the meeting. The transfer books of the Company will not be
closed.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. PLEASE
INDICATE ON THE ENCLOSED PROXY WHETHER YOU PLAN TO ATTEND THE MEETING. IN ANY
EVENT, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY TO MAKE SURE THAT
YOUR SHARES ARE REPRESENTED AT THE MEETING. STOCKHOLDERS MAY VOTE IN PERSON IF
THEY ATTEND THE MEETING EVEN THOUGH THEY HAVE EXECUTED AND RETURNED A PROXY.
By Order of the Board of Directors
[sig]
Edward A. Johnson, President
Laguna Niguel, California
October 10, 1995
<PAGE> 3
OPTIMUMCARE CORPORATION
30011 IVY GLENN DRIVE
LAGUNA NIGUEL, CALIFORNIA 92677
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
INTRODUCTION
The Proxy enclosed with this Proxy Statement is furnished in connection with
the solicitation by the Board of Directors of OptimumCare Corporation (the
"Company") of proxies to be used at the Annual Meeting of Stockholders to be
held at 10:00 a.m., local time, on December 5, 1995, at the offices of Bruck &
Perry, 1301 Dove Street, Tenth Floor, Newport Beach, California 92660 ("Annual
Meeting"). The purpose of the Annual Meeting will be (1) to elect four members
of the Board of Directors of the Company to serve until the next Annual Meeting
of Stockholders or until their successors are duly elected and qualified (2) to
approve the Company's 1994 Stock Option Plan and (3) to transact such other
business as may properly come before the meeting.
PERSONS MAKING THE SOLICITATION
The Proxy is solicited on behalf of the Board of Directors of the Company. The
original solicitation will be by mail, the approximate date on which the Proxy
Statement and form of Proxy are first being sent to security holders is October
10, 1995. Following the original solicitation, the Board of Directors expects
that certain individual stockholders will be further solicited through
telephonic or other oral communications made on behalf of the Board of
Directors. The Board of Directors does not intend to use specially engaged
employees or paid solicitors. The Board of Directors intend to solicit
Proxies for shares which are held of record by brokers, dealers, banks or
voting trustees, or their nominees, and may pay the reasonable expenses of such
record holders for completing the mailing of solicitation materials to persons
for whom they hold the shares. All solicitation expenses will be borne by the
Company.
TERMS OF THE PROXY
The enclosed Proxy indicates the matters to be acted upon at the Annual Meeting
and provides a box to be marked to indicate the manner in which the
stockholder's shares are to be voted with respect to such matter. By
appropriately marking the box, a stockholder may specify, with respect to the
matter, whether the Proxy holders shall vote for or against or shall be without
authority to vote the shares represented by the Proxy. The Proxy also confers
upon the holders thereof discretionary voting authority with respect to such
other business as may properly come before the Annual Meeting.
If the Proxy is executed properly and is received by the Proxy holders prior to
the Annual Meeting, the shares represented by the Proxy will be voted. Where a
stockholder specifies a choice with respect to any matter to be acted upon, the
shares will be voted in accordance with
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<PAGE> 4
such specification. Any Proxy which is executed in such a manner as not to
withhold authority to vote for the election of the specified nominees as
directors (see "Matters to be Acted Upon - Election of Directors") shall be
deemed to confer such authority.
A Proxy may be revoked at any time prior to its exercise by giving written
notice of the revocation thereof to Edward A. Johnson, President, OptimumCare
Corporation, 30011 Ivy Glenn Drive, Laguna Niguel, California 92677, by
attending the Annual Meeting and electing to vote in person, or by a duly
executed Proxy bearing a later date.
VOTING SECURITIES
The securities entitled to vote at the Annual Meeting consist of all of the
issued and outstanding shares of the Company's $.001 par value common stock.
The close of business on October 9, 1995 has been fixed by the Board of
Directors of the Company as the record date. Only stockholders of record as of
the record date may vote at the Annual Meeting. As of the record date, there
were 4,923,509 issued and 4,922,009 outstanding shares of the Company's common
stock entitled to vote at the Annual Meeting and approximately 300 holders of
record of the Company's common stock.
VOTING RIGHTS AND REQUIREMENTS
Each stockholder of record as of the record date will be entitled to one vote
for each share of the Company's common stock held as of the record date.
Cumulative voting is permitted in the election of directors. Every stockholder
complying with certain conditions set forth below may cumulate votes and give
one candidate a number of votes equal to the number of directors to be elected
(four) multiplied by the number of votes to which the stockholder's shares are
normally entitled, or distribute the stockholder's votes on the same principle
for one candidate or among the candidates as the stockholder thinks fit. A
stockholder can cumulate votes only if the candidates' names have been placed
in nomination prior to vote and the stockholder has given notice at the
meeting, prior to the voting, of the stockholder's intention to cumulate the
stockholder's votes.
If any one stockholder has given such notice, all stockholders may cumulate
their votes for candidates in nomination.
Discretionary authority by the Board of Directors to cumulate votes represented
by Proxies is solicited by the Board of Directors because, in the event
nominations are made in opposition to the nominees of the Board of Directors,
it is the intention of the persons named in the enclosed Proxy to cumulate
votes represented by Proxies for and to allocate such votes among the
individual nominees in order to assure the election of as many of the nominees
of the Board of Directors as possible.
The presence at the Annual Meeting of the holders of an amount of shares of the
Company's common stock and Proxies representing the right to vote shares of the
Company's common stock in excess of one-half of the number of shares of the
Company's common stock outstanding as of the record date will constitute a
quorum for transacting business. The vote of a majority of the shares
represented at the Annual Meeting, assuming a quorum is present, will be
required to approve all of the matters expected to come before the Annual
Meeting.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of
the Company's common stock as of September 6, 1995, (i) by each person who is
known by the Company to own beneficially more than 5% of the outstanding shares
of common stock; (ii) by each of the Company's directors; and (iii) by all
directors and officers of the Company as a group. Unless otherwise indicated
below, the person or persons named have sole voting and dispositive power.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
AMOUNT & NATURE
OF BENEFICIAL
NAME (1) OWNERSHIP PERCENT OF CLASS
------------------------------- --------------- ----------------
<S> <C> <C>
Edward A. Johnson (2) 633,726 12.1%
Michael S. Callison (3) 406,000 8.1%
Gary L. Dreher (4) 113,800 2.3%
Jon E. Jenett (5) 25,000 *
Dr. Lindsey Rosenwald 282,500 5.8%
All officers and Directors as a
group of (4 persons) (6) 1,178,526 21.8%
</TABLE>
(1) The addresses of these persons are as follows: Mr. Johnson - 24 South
Stonington Road, South Laguna, California 92677; Mr. Callison - 21972
Summerwind Lane, Huntington Beach, CA 92646; Mr. Dreher - 6301 Acacia
Hill Drive, Yorba Linda, CA 92686; Mr. Jenett - 8 South Vista de la Luna,
South Laguna, CA 92677; Dr. Lindsey Rosenwald -375 Park Avenue, Suite
1501, New York, New York 10152.
(2) Includes presently exercisable options to purchase 300,000 shares of
common Stock.
(3) Includes presently exercisable options to purchase 100,000 shares of
common stock.
(4) Includes presently exercisable options to purchase 75,000 shares of
common stock
(5) Includes preliminary exercisable options to purchase 25,000 shares of
common stock.
(6) Includes presently exercisable options to purchase 500,000 shares of
common stock owned by all officers and directors.
* Represents less than 1%
CHANGES IN CONTROL
There are no arrangements known to the Company, the operation of which may at a
subsequent date result in a change in control of the Company.
3
<PAGE> 6
MATTERS TO BE ACTED UPON
ITEM 1: ELECTION OF DIRECTORS
Four directors are to be elected at the Annual Meeting to hold office until the
next Annual Meeting of Stockholders and until their successors have been
elected and qualify.
It is intended that each Proxy, unless otherwise specified, will be voted for
the election to the Board of Directors of each of the four nominees set forth
below. There are no material pending legal proceedings against the four
nominees listed below. In the event all four nominees are elected, there will
be three vacancies on the Board of Directors.
In the event that any of the below listed nominees for director should become
unavailable for election for any presently unforeseen reason, the persons named
in the accompanying Proxy have the right to use their discretion to vote for
any person nominated at the meeting. Proxies cannot be voted for a greater
number of persons than the number of nominees named.
The following table sets forth the name and age of each nominee for director
and the year he was first elected as a director.
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE:
------------------- --- ---------------
<S> <C> <C>
Edward A. Johnson 50 1986
Gary L. Dreher 49 1993
Michael S. Callison 56 1993
Jon E. Jenett 43 1995
</TABLE>
EDWARD A. JOHNSON, PRESIDENT, CHIEF EXECUTIVE OFFICER, CHAIRMAN OF THE BOARD
AND DIRECTOR. Mr. Johnson has been President, Chief Executive Officer, and
Chairman of the Board of the Company since co-founding the Company in November
1986. From August 1985 through July 1986, he was Executive Vice President of
Behavioral Medicine Corporation, a joint venture between The Voluntary Hospital
Association of America and Comprehensive Care Corporation. Mr. Johnson's
duties principally included the development of psychiatric and substance abuse
programs for hospitals throughout the United States. From 1969 until August
1985, Mr. Johnson was employed in various positions with Comprehensive Care
Corporation, a significant provider of management programs for psychiatric
disorders and substance abuse. Mr. Johnson's most recent position at
Comprehensive Care Corporation was the Executive Vice President of Operations.
His principal duties were to develop and implement marketing systems for that
company's programs. Mr. Johnson received an M.S. degree in Psychology from
Colorado State College in 1966 and is licensed in California as a Marriage and
Family Counselor.
GARY L. DREHER, DIRECTOR. Mr. Dreher received his B.S. degree in Microbiology
and Lab Technology from California State University in 1971. For the past four
years, he has served as Vice President of International Sales for Apotex
Scientific, an international distributor network
4
<PAGE> 7
for Esoteric Diagnostic Tests. From 1984 to 1991, he was Vice President of
Sales at Ventrex Laboratories, a manufacturer of Diagnostic Tests for medical
and biotechnology markets.
MICHAEL S. CALLISON, DIRECTOR. Mr. Callison joined the Company in 1990
initially as a sales and marketing consultant. During 1994, he was promoted to
Vice President of Corporate Development where he has been instrumental in
acquiring new management contracts. Mr. Callison received his B.A. degree in
Economics from University of Puget Sound, Tacoma, Washington in 1966. From
1984 to 1990, Mr. Callison was a Senior Account Executive for the Hill-Rom
Company, responsible for marketing hospital patient room furniture.
JON E. JENETT, DIRECTOR. Mr. Jenett received his B.A. degree in Economics from
Harvard College in 1974 and his M.B.A. from Stanford Business School in 1978.
For the past five years, he has served as the Chief Financial Officer of
Mission Electronics Corporation, a wholesale broker of electronic components.
From 1981-1990, he was a partner of Investment Group of Santa Barbara, an
investment fund specializing in small public and private companies.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
No person subject to Section 16 of the Exchange Act failed to file a required
report on a timely basis.
IDENTIFICATION OF EXECUTIVE OFFICERS
Edward A. Johnson has served as the President, Principal Financial Officer and
Chairman of the Board of the Company since November 1986. Additional
information concerning Mr. Johnson is set forth above.
FAMILY RELATIONSHIPS
None.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 1994, there were two meetings of the
Board of Directors. Each director attended all meetings of the Board of
Directors held during the period he was a director. The Board of Directors
does not have standing nominating or compensation committees of the Board of
Directors but did have an Audit Committee whose members were the Board of
Directors, chaired by Gary L. Dreher. There was one meeting of the Audit
Committee during the fiscal year ended December 31, 1994. The principal
function of the Committee is communication with the independent auditors of the
Company.
EXECUTIVE COMPENSATION
The following table sets forth the elements of compensation paid, earned or
awarded for the sole executive officer of the Company. All aspects of
executive compensation are determined by the Board of Directors.
5
<PAGE> 8
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
SUMMARY COMPENSATION TABLE
--------------------------
OTHER
NAME AND ANNUAL RESTRICTED LTIP ALL OTHER
PRINCIPAL COMPEN- STOCK AWARDS OPTIONS/ PAYOUTS COMPENSA-
POSITION YEAR SALARY ($) BONUS ($) SATION ($) ($) SARs (#) ($) TION ($)
--------- ----- ---------- --------- ---------- ------------ -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EDWARD A. 1994 $144,000 $81,213 - - - - $15,791(1)
JOHNSON 1993 154,001 31,811 - - - - 10,791(1)
1992 139,177 13,280 - - - - 8,626(1)
</TABLE>
# - NUMBER OF UNITS
$ - DOLLAR AMOUNTS
(1) - CAR ALLOWANCE AND LIFE INSURANCE PREMIUMS
COMPENSATION PURSUANT TO PLANS
The Company's 1987 Stock Option Plan (the "1987 Plan"), adopted by the Board
of Directors on July 28, 1987, and approved by the stockholders on August 28,
1987, provides for the grant to officers, directors, employees and consultants
of nonqualified stock options and stock options to employees that qualify as
incentive stock options under Section 422A of the Internal Revenue Code of
1986. The 1987 Plan terminates on July 28, 1997.
The purpose of the Plan is to enable the Company to attract and retain
qualified persons as employees, officers and directors and others whose
services are required by the Company, and to motivate such persons by providing
them with an equity participation in the Company. A maximum of 455,000 shares
of the Company's common stock have been reserved for issuance pursuant to the
1987 Plan. Options to purchase 8,000 shares were exercised during fiscal year
ended December 31, 1994. There are currently 361,500 shares subject to option
outstanding under the 1987 Plan. The 1987 Plan is administered by the Board of
Directors, which has, subject to specified limitations, the full authority to
grant options and establish the terms and conditions under which they may be
exercised.
The exercise price of incentive stock options granted under the 1987 Plan is
required to be not less than the fair market value of the common stock on the
date of grant (110% in the case of a greater than 10% stockholder). The
exercise price of nonqualified stock options can be no less than 85% of the
fair market value on the date of grant, although the Company does not intend to
grant any such stock options at less than fair market value. In the discretion
of the Board, the exercise price may be payable in cash, by delivery of a
promissory note or in common stock of the Company.
The options are subject to forfeiture upon termination of employment or other
relationship with the Company except by reason of death or disability and are
nonassignable. Options may be granted for terms up to 10 years (five years in
the case of incentive stock options granted to greater than 10% stockholders).
No optionee may be granted incentive stock options such that
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<PAGE> 9
the fair market value of the options which first become exercisable in any one
calendar year exceeds $100,000. Options granted under the 1987 Plan to
officers, employees or consultants may be exercised only while the optionee is
employed or retained by the Company or within six months after termination of
the employment or consulting relationship by reason of death or permanent
disability, and three months after termination for any other reason.
On December 31, 1991, the Board of Directors granted additional options under
the 1987 Plan to Edward A. Johnson to purchase 27,500 shares and Michael S.
Callison to purchase 25,000 shares. The option exercise price is $ .21 per
share. The options have a five year term and vest immediately. On August 23,
1993, the Board of Directors granted additional options under the 1987 Plan to
Michael S. Callison to purchase 25,000 shares and Gary L. Dreher to purchase
25,000 shares. The option exercise price is $ .30 per share. The options
expire July 28, 1997 and vested immediately upon issuance.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning Options/SARs
granted during 1994 to the named executives:
<TABLE>
<CAPTION>
Potential Realizable Value At
Assumed Annual Rates of Stock Price
Individual Grants Appreciation For Option Term
----------------- -----------------------------------
% of Total
Options/
SARs
Granted to
OPTIONS/ Employees Exercise or Grant Date
SARs in Fiscal Base Price Expiration Present
NAME Granted(#) Year ($/Share) Date 5% ($) 10% ($) Value ($)*
---------- ---------- ---------- --------- ---------- ------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael S.
Callison 50,000 18.18% $.6375 12/20/99 16,000 28,500 17,500
Gary L.
Dreher 50,000 18.18% $.6375 12/20/99 16,000 28,500 17,500
Edward A.
Johnson 50,000 18.18% $.6375 12/20/99 16,000 28,500 17,500
</TABLE>
* Present values were calculated using the Black-Scholes options pricing
model which should not be viewed in any way as a forecast of the future
performance of the Company's stock. The estimated present value of each
stock option is $ .35 based on the following inputs:
<TABLE>
<S> <C>
Stock Price (Fair Market Value) at Grant (12/20/94) $ .75
Exercise Price .6375
Expected Option Term 5 years
Risk-Free Interest Rate 7.5%
Stock Price Volatility 28%
Dividend Yield 0%
</TABLE>
7
<PAGE> 10
The model assumes: (a) an Expected Option Term of 5 years which reflects the
actual life of the option; (b) a Risk-Free Interest Rate that represents the
interest rate on a U.S. Treasury Note with a maturity date corresponding to
that of the Expected Option Term; and (c) Stock Price Volatility is calculated
using quarterly stock prices over the period from January 1, 1994 to December
31, 1994.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table summarizes options and SARs exercised during 1994 and
presents the value of unexercised options and SARs held by the named executives
at fiscal year end:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARs AT OPTIONS/SARs AT
SHARES ACQUIRED ON FISCAL YEAR-END FISCAL YEAR-END
NAME EXERCISE (#) VALUE REALIZED (#)* ($)**
------------------- ------------------ -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Edward A. Johnson 0 0 300,000 242,625
Michael S. Callison 0 0 100,000 64,375
Gary L. Dreher 0 0 75,000 42,375
</TABLE>
* All options are exercisable at fiscal year-end.
** The difference between fair market value at 8/31/95 and the exercise
price.
OTHER COMPENSATION
Included in the table above, Mr. Johnson received on December 31, 1991, five
year options to purchase 222,500 shares of the Company's common stock. The
option exercise price is $ .21 per share. The options have a five year term
and vested immediately upon grant. The shares issuable upon exercise of these
options are subject to certain restrictions. The Company has also obtained
life insurance on the life of Mr. Johnson in the amount of $2,000,000,
$1,000,000 for the benefit of the Company and $1,000,000 for the benefit of
each of his estate.
COMPENSATION OF DIRECTORS
Directors do not receive compensation for their services although they are
entitled to reimbursement for expenses incurred in attending Board meetings.
Gary L. Dreher received $8,000 in professional fees for the marketing of
hospital contracts during 1994.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The entire Board of Directors is responsible for determining the Chief
Executive Officer's compensation. The Board's philosophy has been to offer a
stable base salary plus a monthly bonus based on a percentage of corporate
monthly profits before income taxes.
The committee's approach to base compensation is to offer competitive salaries
in comparison with market practices. However, base salaries have become a
relatively smaller element in the
8
<PAGE> 11
total executive officer compensation package as the Company has introduced
incentive compensation programs which it believes reinforce strategic
performance objectives.
STOCK PERFORMANCE GRAPH
The following graph sets for the cumulative total shareholder return (assuming
reinvestment of dividends) to Company's stockholders during the five-year
period ended December 31, 1994 as well as the U.S. NASDAQ stock market index
and the S&P Hospital Management Index.
The Company does not currently meet the standards required for trading on the
NASDAQ exchange, however the Company believes that the securities traded on
this exchange most closely resemble its market capitalization.
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<PAGE> 12
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
OptimumCare S&P Hospital NASDAQ
Corporation Management Index Market Index
----------- ---------------- ------------
<S> <C> <C> <C>
JAN 1, 1989 100 100 100
DEC 31, 1990 50 104 82
DEC 31, 1991 38 90 129
DEC 31, 1992 19 67 149
DEC 31, 1993 60 100 171
DEC 31, 1994 88 106 165
</TABLE>
Note: The stock performance graph assumes $100 was invested on January 1,
1989.
10
<PAGE> 13
ITEM 2: APPROVAL OF 1994 STOCK OPTION PLAN
On December 20, 1994, the Board of Directors of the Company re-adopted and
approved, subject to obtaining shareholder approval, the Company's 1994 Stock
Option Plan (the "1994 Plan"). The 1994 Plan provides for the grant to
employees, officers, directors, consultants and independent contractors of
non-qualified stock options as well as for the grant of stock options to
employees that qualify as incentive stock options under Section 422A of the
Internal Revenue Code of 1986 ("Code"). The 1994 Plan terminates on December
20, 2004. The purpose of the 1994 Plan is to enable the Company to attract and
retain qualified persons as employees, officers and directors and others whose
services are required by the Company, and to motivate such persons by providing
them with an equity participation in the Company. A maximum of 500,000 shares
of the Company's common stock have been reserved for issuance pursuant to the
1994 Plan.
The 1994 Plan is administered by a committee made up of the members of the
Board of Directors (the "Committee"), which has, subject to specified
limitations, the full authority to grant options and establish the terms and
conditions under which they may be exercised. The exercise price of incentive
stock options granted under the 1994 Plan is required to be not less than the
fair market value of the common stock on the date of grant (110%) in the case
of a greater than 10% shareholder. The exercise price of non-qualified stock
options can be no less than 85% of the fair market value on the date of grant.
Options may be granted for terms of up to ten (10) years (five (5) years in the
case of incentive stock options granted to greater than 10% shareholders). No
optionee may be granted incentive stock options such that the fair market value
of the options which first become exercisable in any one calendar year exceeds
$100,000. If an optionee ceases to be employed by, or ceases to have a
relationship with the Company, such optionee's options expire six (6) months
after termination of the employment or consulting relationship by reason of
death, one (1) year after termination by reason of permanent disability,
immediately upon termination for cause and three (3) months after termination
for any other reason.
In order to exercise an option granted under the 1994 Plan, the optionee must
pay the full exercise price of the shares being purchased. Payment may be made
either: (i) in cash; (ii) at the discretion of the Committee, by delivering
shares of common stock already owned by the optionee and having a fair market
value equal to the applicable exercise price; or (iii) such other consideration
as may be determined by the Committee and permitted by applicable law.
Subject to the foregoing, the Committee has broad discretion to describe the
terms and conditions applicable to options granted under the 1994 Plan. The
Committee may at any time discontinue granting options under the 1994 Plan or
otherwise suspend, amend or terminate the 1994 Plan and may, with the consent
of an optionee, make such modification of the terms and conditions of such
optionee's option as it shall deem advisable; except that the committee shall
have no authority to make any amendment or modifications to the 1994 Plan or
any outstanding option which would: (i) increase the maximum number of shares
which may be purchased pursuant to the options granted under the 1994 Plan,
either in the aggregate or by an optionee; (ii) change the designation of the
class of employees eligible to receive qualified options; (iii) extend the
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<PAGE> 14
term of the 1994 Plan or the maximum option period thereunder; (iv) decrease
the minimum qualified option price or permit reductions of the price at which
shares may be purchased for qualified options granted under the 1994 Plan; or
(v) cause qualified stock options issued under the 1994 Plan to fail to meet
the requirements of incentive stock options under Section 422A of the Code.
Any such amendment or modification shall be effective immediately, subject to
shareholder approval thereof within twelve (12) months before or after the
effective date. No option my be granted during any suspension or after
termination of the 1994 Plan.
The 1994 Plan is designed to meet the requirements of an incentive stock option
plan as defined in Code Section 422A. As a result, an optionee will realize no
taxable income for federal income tax purposes, upon either the grant of an
incentive stock option under the 1993 Plan or its exercise. If no disposition
of the shares acquired upon exercise is made by the optionee within two (2)
years from the date of grant or within one (1) year from the date the shares
are transferred to him, any gain realized upon the subsequent sale of the
shares will be taxable as capital gain. In such case, the Company will be
entitled to no deduction for federal income tax purposes in connection with
either the grant or the exercise of the option. If, however, the optionee
disposes of the shares within the period mentioned above, the optionee will
realize earned income in an amount equal to the excess of the fair market value
of the shares on the date of exercise (or the amount realized on disposition if
less) over the exercise price, and the Company will be allowed a deduction for
a corresponding amount.
The dollar value of Options granted under the 1994 Plan is dependent upon the
market price of the Company's common stock, the exercise price and the vesting
schedule of the Options. The closing bid price of the Company's common stock
as reported by NASDAQ on August 31, 1995 was $1.09. No options to purchase
shares of common stock have been exercised under the 1994 Plan during the
fiscal year ended December 31, 1994. There are currently 225,000 shares
subject to option outstanding under the 1994 plan.
On December 20, 1994, the Board of Directors granted options under the 1994
plan to Edward A. Johnson, Michael S. Callison and Gary L. Dreher to each
purchase 50,000 shares at an exercise price of $.6375 per share. The options
expire December 20, 1999.
On August 8, 1995, the Board of Directors granted options under the 1994 plan
to Jon E. Jenett to purchase 25,000 shares at an exercise price of $.93 per
share. The options expire August 8, 2000.
VOTE REQUIRED
The approval of the 1994 Plan will require the affirmative vote of the holders
of at least a majority of the outstanding shares of the Company's common stock
present or represented at the meeting.
12
<PAGE> 15
ITEM 3: OTHER MATTERS
Except for the matter referred to in the accompanying Notice of Annual Meeting,
the Board of Directors does not intend to present any matter for action at the
Annual Meeting and knows of no matter to be presented at the meeting that is a
proper subject for action by the stockholders. However, if any other matters
should properly come before the meeting, it is intended that votes will be cast
pursuant to the authority granted by the enclosed Proxy in accordance with the
best judgment of the person or persons acting under the Proxy.
13
<PAGE> 16
INDEPENDENT PUBLIC ACCOUNTS
The Company's independent public accountant is Ernst & Young. Representatives
of that firm are expected to be present at the meeting, will have the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions. Ernst & Young has been selected
as the Company's independent public accountants for the fiscal year ending
December 31, 1995.
ANNUAL REPORT
The annual report to stockholders covering the Company's fiscal year ended
December 31, 1994, is being mailed to stockholders with this proxy.
STOCKHOLDER PROPOSALS
From time to time, stockholders may present proposals which may be proper
subjects for inclusion in the Proxy Statement and form of Proxy related to that
meeting. In order to be considered, such proposals must be submitted in
writing on a timely basis. Since the Company anticipates that the next Annual
Meeting of Stockholders will be held on or about August 30, 1996, and that
Proxy material relating to that meeting will be mailed to stockholders on or
about July 15, 1996, stockholders' proposals intended to be included in the
Company's next Annual Meeting of the Stockholders must be received at the
Company's offices, 30011 Ivy Glenn Drive, Laguna Niguel, California 92677, by
no later than March 17, 1996. Any such proposals, as well as any questions
relating thereto, should be directed to the President of the Company.
REQUEST TO RETURN PROXIES PROMPTLY
A Proxy is enclosed for your use. Please mark, date, sign and return the Proxy
at your earliest convenience. The Proxy requires no postage if mailed in the
United States in the postage paid envelope provided. A prompt return of your
Proxy will be appreciated.
By Order of the Board of Directors
Edward A. Johnson, President
October 10, 1995
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<PAGE> 17
OPTIMUMCARE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS: That the undersigned stockholder of
OptimumCare Corporation (the "Company") hereby constitutes and appoints Edward
A. Johnson and Richard H. Bruck, with power of substitution, as attorneys and
proxies, to appear, attend and vote all of the shares of common stock of the
Company standing in the name of the undersigned at the Annual Meeting of
Stockholders of the Company to be held at 1301 Dove Street, 10th Floor, Newport
Beach, California 92660, on December 5, 1995 at 10:00 A.M., local time, and at
any adjournment or adjournments thereof, upon the following:
1. To elect four directors as follows: Edward A. Johnson, Gary L. Dreher,
Michael S. Callison and Jon E. Jenett.
<TABLE>
<S> <C>
[ ] FOR all nominees listed [ ] VOTE WITHHELD
above, except those as to all nominees named above
listed below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
- --------------------------------------------------------------------------------
2. To consider and vote to approve the 1994 Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To vote with discretionary authority on such other business as may
properly come before the meeting.
(To be signed on other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED AND THE PROPOSALS INDICATED AND IN ACCORDANCE WITH THE
DISCRETION OF THE PROXY HOLDERS ON ANY OTHER BUSINESS.
Please mark, date and sign your name exactly as it
appears on the envelope and return this proxy as
promptly as possible in the postage-paid envelope
provided:
DATED:
-------------------------------------------
-------------------------------------------------
(SIGNATURE)
-------------------------------------------------
(SIGNATURE, IF JOINTLY HELD)
-------------------------------------------------
(PRINT NAME HERE)
PLEASE CHECK IF YOU ARE PLANNING
TO ATTEND THE MEETING ____
