<PAGE> 1
As filed with the Securities and Exchange Commission on July 25, 1996
Registration No. 33-________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
OPTIMUMCARE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 33-0218003
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30011 Ivy Glenn Drive, Suite 219, Laguna Niguel, California 92677
(Address of Principal Executive Offices) (Zip Code)
1987 STOCK OPTION PLAN
(Full title of the plan)
Edward A. Johnson
3001 Ivy Glenn Drive, Suite 219
Laguna Niguel, California 92677
(Name and address of agent for service)
(714) 495-1100
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
Proposed
maximum Proposed maximum
Title of securities Amount to be offering prices aggregate offering Amount of
to be registered registered per share(1) price(1) registration fee
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 751,500 shs.(2) $.21-$.96875 $353,650.50 $121.95
$.001 par value
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based upon the exercise prices of 624,000 outstanding options which are
being registered hereby pursuant to Rule 457(h) under the Securities
Act of 1933, as amended and based upon the average of the bid and asked
prices as of July 23, 1996 for purposes of computing the registration
fee on shares underlying 127,500 options not yet granted in accordance
with Rules 457(h) and 457(c).
(2) Includes 430,000 shares issuable upon exercise of stock options which
are a part of the 1987 Stock Option Plan and 321,500 shares issuable to
employees of the Company upon exercise of non-qualified stock options,
which are not part of the 1987 Stock Option Plan.
<PAGE> 2
CROSS-REFERENCE SHEET
REQUIRED BY RULE 404(c)
Part I. Information Required In The Section 10(a) Prospectus.
<TABLE>
<CAPTION>
Item No. Caption in Prospectus
- -------- ---------------------
<S> <C>
1. Plan Information.................... Description of the 1987 Stock Option Plan
2. Registrant Information and Employee
Plan Annual Information............. Available Information
</TABLE>
<PAGE> 3
PROSPECTUS
OPTIMUMCARE CORPORATION
Common Stock
This Prospectus relates to shares of the Common Stock, $.001 par value
("Common Stock"), of OptimumCare Corporation (the "Company") which have been
issued from time to time by the Company to employees, officers, directors,
consultants and independent contractors upon their exercise of stock options
granted under the 1987 Stock Option Plan, to Edward A. Johnson pursuant to the
Stock Option Agreement dated October 17, 1988, as amended (the "E. Johnson Stock
Option") and to Joseph H. Dadourian, Teri L. Jolin and Margaret M. Minnick, each
pursuant to a separate Non-Qualified Stock Option Agreement dated April 24,
1996.
--------------------------
1987 STOCK OPTION PLAN
AND OTHER NON-PLAN OPTIONS
--------------------------
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
The date of this Prospectus is July 19, 1996.
<PAGE> 4
AVAILABLE INFORMATION
The Company undertakes to provide without charge to each person to whom
a prospectus is delivered, upon the written or oral request of such person, a
copy of any or all documents which have been or may be incorporated by reference
into the Company's Registration Statement on Form S-8 other than exhibits to
such documents (unless such exhibits specifically are incorporated by reference
therein). Requests for such copies should be directed to Edward A. Johnson,
President, OptimumCare Corporation, 30011 Ivy Glenn Drive, Suite 219, Laguna
Niguel, California 92677; Telephone (714) 495-1100.
(ii)
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE COMPANY............................................................... 1
DESCRIPTION OF THE 1987 STOCK OPTION PLAN................................. 1
Introduction.............................................................. 1
General Purpose........................................................... 1
Shares Available.......................................................... 1
Administration............................................................ 2
Eligibility............................................................... 2
Grants of Options......................................................... 2
Exercise of Options....................................................... 2
Non-transferability....................................................... 3
Termination of Employment................................................. 3
Death or Disability....................................................... 3
Duration, Amendment and Termination....................................... 3
Participants; Options Outstanding......................................... 3
FEDERAL INCOME TAX CONSEQUENCES........................................... 4
ISO's Under the 1987 Plan................................................. 4
NSO's Under the 1987 Plan................................................. 6
Exercise of Options Through Use of Previously Acquired
Common Stock of the Company............................................. 6
OTHER NON-PLAN OPTIONS.................................................... 7
RESTRICTIONS ON RESALE.................................................... 7
LEGAL MATTERS............................................................. 7
EXPERTS................................................................... 7
</TABLE>
(iii)
<PAGE> 6
THE COMPANY
OptimumCare Corporation (the "Company") was incorporated in
California on November 25, 1986 and was reincorporated in Delaware on June 29,
1987. In mid-1987, the Company commenced the development and marketing of health
care facility-based programs ("Programs") to be managed by the Company for the
treatment of depression and certain other mental health disorders
("PsychPrograms"), as well as programs for alcohol and drug abuse ("Treatment
Programs"). The Company contracts to establish Programs at a host health care
facility and recruits and trains the staff needed to operate the Programs
including a medical director, a program director, a psychologist, a chief
therapist and one or more counselors or social workers. The host health care
facility provides a specified number of beds for the Program, as well as all
other support services required for the operation of the Program, including
nursing, dietary, housekeeping, billing and other administrative functions.
The Company's executive offices are located at 30011 Ivy Glenn
Drive, Suite 219, Laguna Niguel, California 92677; telephone number (714)
495-1100.
DESCRIPTION OF THE 1987 STOCK OPTION PLAN
Introduction
The summary of the 1987 Stock Option Plan ("1987 Plan"), included below
highlights the principal features of that plan and is qualified in its entirety
by reference to the 1987 Plan and the form of agreement to be received by the
Company from those individuals who are granted options (the "Option Agreement"),
copies of which are available from the Company's Secretary. The 1987 Plan is not
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
General Purpose
On July 18, 1987, the Board of Directors of the Company originally
adopted the 1987 Plan to provide officers, directors, employees, consultants and
independent contractors with an opportunity to acquire, maintain and increase a
proprietary interest in the Company and thus encourage those employees to
continue their employment with the Company. Options granted under the 1987 Plan
were designed either as incentive stock options ("ISO's") under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") or as nonstatutory
stock options ("NSO's").
Shares Available
The 1987 Stock Option Plan originally permitted the grant of options to
acquire 455,000 shares of Common Stock of which 25,000 shares have previously
been acquired upon exercise of options. A total of 302,500 shares of Common
Stock are currently issuable upon exercise of outstanding options granted under
the 1987 Plan, which may be authorized but unissued shares or shares reacquired
by the Company at any time. There are currently 127,500 shares available for the
grant of further options under the 1987 Plan.
If an option granted under the 1987 Plan is not exercised prior to its
expiration or otherwise terminates, the shares which are subject to that option
will be available for the grant of further options under the 1987 Plan.
The number of shares of Common Stock reserved for issuance under the
1987 Plan is subject to equitable adjustments for any recapitalizations,
mergers, consolidations, stock dividends, split-ups, combinations, exchanges or
any other similar changes which may be required to prevent dilution. Similarly,
the Stock Option Committee which administers the 1987 Plan (the "Option
Committee"), in its sole discretion, may adjust the number of shares a selected
optionee is permitted to acquire if any
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<PAGE> 7
event occurs prior to that employee's exercise of an option granted pursuant to
the 1987 Plan which causes an increase or decrease in the amount of outstanding
capital stock.
Administration
The 1987 Plan is administered by the Option Committee, which consists
of all of the members of the Company's Board of Directors. The Option Committee
has the authority to determine who will receive options, the times those
selected persons will receive and may exercise all or any part of those options
and the number of shares to be subject to each option.
Eligibility
Only officers, employees and directors who are also employees of the
Company or any subsidiary are eligible to receive grants of ISO's. Officers,
employees and directors (whether or not they are also employees) of the Company
or any subsidiary, as well as consultants, independent contractors or other
service providers of the Company or any subsidiary are eligible to receive
grants of NSO's.
Grants of Options
Options granted under the 1987 Plan entitle optionees to purchase
shares of Common Stock at the exercise price specified in the Option Agreement.
The 1987 Plan does not specify any maximum or minimum amount of options which
may be granted to any optionee. However, no options shall be granted such that
the aggregate fair market value (at the time options are granted) of the stock
subject to all stock options granted to an optionee which are first exercisable
during the same calendar year exceeds $100,000. Options may be granted for a
term up to ten (10) years.
Exercise of Options
The exercise price for each share which an optionee is entitled to
purchase under an ISO may not be less than one hundred percent (100%) of the
average fair market value of a share of Common Stock on the date of grant of the
option; provided, however, that the exercise price shall not be less than one
hundred ten percent (110%) of the fair market value of a share of Common Stock
on the date of grant in the case of an individual owning more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any parent or subsidiary. The Option Committee determines the fair market
value of shares for this purpose.
The exercise price per share which an optionee is entitled to purchase
under an NSO shall be determined by the Option Committee but shall not be less
than eighty-five percent (85%) of the fair market value per share of a share of
Common Stock on the date of grant.
The consideration to be paid for the shares to be issued upon exercise
of an ISO or NSO, including the method of payment, shall be determined by the
Option Committee and may consist of promissory notes, shares of the Common Stock
of the Company or such other consideration and method of payment as may be
permitted under applicable state and federal laws. Although, ISO's and NSO's
granted under the 1987 Plan authorize the Board of Directors of the Company to
permit an optionee to use shares of Common Stock of the Company to purchase
shares upon exercise of an ISO or NSO, the Board of Directors does not intend to
permit any non-employee of the Company to do so in order to avoid variable
accounting treatment in accordance with FASB 123 which became effective in
October 1995. It is anticipated that this policy will continue in effect until
such time as the 1987 Plan has been amended to provide that any shares so
acquired must be held for six months prior to any disposition thereof.
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<PAGE> 8
Non-transferability
Options granted under the 1987 Plan are not transferable, otherwise
than by will or the laws of descent and distribution. During the lifetime of an
optionee, options are exercisable only by such optionee.
Termination of Employment
If an optionee ceases to be employed by, or ceases to have a
relationship with, the Company or any subsidiary for any reason other than
cause, death or disability, all options granted to such optionee under the 1987
Plan will terminate not later than three (3) months thereafter.
Death or Disability
If an optionee ceases to be employed by, or ceases to have a
relationship with, the Company or any subsidiary by reason of death, such
optionee's options may be exercised by the executor or administrator of such
optionee's estate or heir within the six (6) months following the date of that
optionee's death to the extent that the deceased optionee might have exercised
the options at the date of death, except in no case shall an option be
exercisable more than ten years after grant.
In the event of termination of employment or relationship with the
Company or any subsidiary due to disability (as defined in Section 22(e)(3) of
the Code), an optionee will have the right, during the one (1) year period
following the date of such termination, to purchase all or any part of the
shares of Common Stock which such optionee would have been entitled to purchase
if exercised on the date of such termination, except in no case shall an option
be exercisable more than ten (10) years after grant.
Duration, Amendment and Termination
Unless previously terminated, the 1987 Plan will terminate on July 28,
1997 and no options may be granted after that date under the 1987 Plan (although
options granted before termination and exercisable afterwards will not be
affected). The Option Committee may at any time and from time to time modify,
amend, suspend or terminate the 1987 Plan. However, except in certain limited
circumstances, the Option Committee may not increase the maximum number of
shares which may be purchased pursuant to options granted under the 1987 Plan,
either in the aggregate or by an optionee; change the designation of the class
of employees eligible to receive ISO's; extend the term of the 1987 Plan or the
maximum option period thereunder; decrease the minimum ISO exercise price or
permit reductions of the price at which shares may be purchased for ISO's; or
cause ISO's issued under the 1987 Plan to fail to meet the requirements of
incentive stock options under Section 422A of the Code. No termination or
amendment of the 1987 Plan may terminate an option or adversely affect an
optionee's rights without the optionee's consent.
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<PAGE> 9
Participants; Options Outstanding
As of June 1, 1996, eight individuals held options to purchase an
aggregate of 302,500 shares of Common Stock under the 1987 Plan. The following
table sets forth information concerning the number of shares for which options
were outstanding as of such date.
<TABLE>
<CAPTION>
EXERCISE
ISO PRICE
NAME OF DATE OF OR NO. OF PER EXPIRATION
GRANTEE GRANT NSO SHARES SHARE TOTAL PRICE DATES
- -------------------------------- --- ------ -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Randy 09/28/89 NSO 16,640 $.66 $10,982.40 09/28/96
Glicksman
Edward A. 12/31/91 ISO 27,500 $.21 $ 5,775.00 12/30/96
Johnson
Randy 12/31/91 NSO 8,360 $.21 $1,755.60 12/30/96
Glicksman
Michael 12/31/91 ISO 25,000 $.21 $ 5,250.00 12/30/96
Callison
Paul Berlin 08/09/93 NSO 100,000 $.30 $30,000.00 08/08/98
Michael 08/26/93 ISO 25,000 $.30 $ 7,500.00 08/25/98
Callison
Gary Dreher 08/26/93 ISO 25,000 $.30 $ 7,500.00 08/25/98
Amy Cramer 11/01/93 ISO 25,000 $.375 $ 9,375.00 10/31/98
Helen Tvelia 11/01/93 ISO 25,000 $.375 $ 9,375.00 10/31/98
Les Harman 01/01/94 ISO 25,000 $.67 $16,750.00 12/31/03
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
ISO's Under the 1987 Plan
Grant and Exercise of ISO's. In general, an optionee realizes no income
upon the grant of 1987 Plan ISO's (assuming these options qualified as
"incentive stock options" under the Code when they were granted) or upon the
exercise of ISO's. But see, "Alternative Minimum Tax," below. The amount paid by
the optionee for the Common Stock received pursuant to the exercise of ISO's
will generally constitute his basis (or cost) for tax purposes. The holding
period for such Common Stock generally begins on the date the optionee exercises
ISO's. See below for a discussion of the exceptions to these general rules when
the optionee uses previously acquired stock of the Company to exercise ISO's.
Alternative Minimum Tax. Although no income is realized upon the
exercise of ISO's, Section 56(b)(3) of the Code provides that the excess of the
fair market value on the date of exercise of the Common Stock acquired pursuant
to such exercise over the option price is an item of tax adjustment. As such,
the exercise of ISO's may result in the optionee being subject to the
"Alternative Minimum Tax" for the year ISO's are exercised. The "Alternative
Minimum Tax" is calculated on a taxpayer's adjusted gross income, subject to
special adjustments, plus specified items of tax preference minus specified
itemized deductions. The resulting amount is the alternative minimum taxable
income.
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<PAGE> 10
The item of alternative minimum tax adjustment resulting from the
exercise of ISO's is eliminated if the shares are disposed of in a
"disqualifying disposition" -- that is, within one year of exercise or two years
from the date of the option grant. Alternative Minimum Tax incurred by reason of
the exercise of the ISO does not result, for regular income tax purposes, in an
increase in basis of the shares acquired upon exercise. However, for the years
after 1986, the alternative minimum tax attributable to the exercise of an ISO
may be applied as a credit against regular tax liability in a subsequent year,
subject to certain limitations. The gain recognized upon a sale or exchange of
shares acquired through the exercise of the ISO's will be limited to the excess
of the amount received in the sale or exchange over the fair market value of the
shares at the time the ISO was exercised.
The application of the Alternative Minimum Tax for each optionee will
depend on such optionee's total income and deductions for the year of exercise.
As such, the extent to which, if any, the tax adjustment item generated by the
exercise of ISO's in conjunction with any other tax adjustment items or
alternative minimum tax adjustments may result in an Alternative Minimum Tax
liability for any optionee cannot be determined. Accordingly, each optionee
should consult his own tax counsel to determine the potential impact of the
Alternative Minimum Tax on his exercise of ISO's.
Holding Requirements of ISO's. The Code requires that the optionee
remain an employee of the Company or its subsidiaries at all times during the
period beginning on the date that the ISO's are granted and ending on the day
three (3) months (or one (1) year in the case of permanent and total disability)
before the date that each ISO is exercised. Under the 1987 Plan, upon
termination of employment for any reason other than cause, death or disability
the options terminate three (3) months after the termination date unless by
their terms the options terminate earlier. If termination occurs as a result of
disability, the options will expire one (1) year after such termination unless
they expire before that date by their terms Under the 1987 Plan, upon the
termination of employment for cause, the ISO's expire thirty (30) days after
termination unless by their terms the options terminate earlier. Therefore, if
the options constituted incentive stock options at grant, permissible exercises
after termination automatically meet the employment requirements.
In order for an optionee exercising ISO's to qualify for the income tax
free treatment set forth in the preceding section such optionee must not dispose
of the Common Stock acquired pursuant to the exercise of ISO's within two (2)
years from the date the ISO's were granted, nor within one (1) year after the
exercise of ISO's. If the optionee meets these employment and holding
requirements, any future gain or loss realized and recognized from the sale or
exchange of the Common Stock should be long-term capital gain or loss, if the
stock is held as a capital asset. If the optionee disposes of the shares of
Common Stock acquired upon exercise of an ISO within two years from the granting
of options or one year after the exercise of options (collectively, an "early
disposition"), any gain will constitute, in the year of disposition, ordinary
compensation income to the extent of the excess of the fair market value of the
Common Stock on its acquisition date over the price paid for it by the optionee.
Any additional gain will be treated as capital gain. If the optionee disposes of
the shares of Common Stock at a loss, such loss will be a capital loss.
For purposes of this section, the transfer of Common Stock by reason of
the optionee's death does not constitute a disposition of the Common Stock. In
addition, the transferee of the Common Stock is not subject to the holding and
employment requirements.
If an optionee dies while holding unexercised ISO's, his estate or
other recipient ("Recipient") may exercise the ISO's in the same manner as the
optionee except that the exercise period is changed as follows. The Recipient
may exercise the ISO's for six (6) months following the optionee's death to the
extent that the deceased optionee might have exercised the ISO's at the tune of
death, except in no case shall an option be exercisable more than ten (10) years
after grant. The Recipient is not subject to the ISO holding requirements set
forth above, although the Recipient is subject to the general rules relating to
the determination of long or short-term gains, i.e., the Recipient must hold the
Common Stock for at
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<PAGE> 11
least six months to get long-term capital gain. The cost basis of such Common
Stock includes a proportionate share of the basis of options.
If the Recipient disposes of options instead of exercising them, the
incentive stock option rules discussed herein have no application. The
Recipient-transferor will recognize either long or short-term capital gain or
loss and the purchaser will not be subject to any of these rules.
NSO's Under the 1987 Plan
In general, an optionee who receives an NSO realizes income either at
the date of grant or at the date of exercise, but not at both. Unless the NSO
has a "readily ascertainable fair market value" at the date of grant, the
optionee recognizes no income on the date of grant and the compensatory aspects
are held open until the NSO is exercised. In this case, upon exercise, the
optionee will have compensation income to the extent of the difference between
the fair market value of the stock at the tune of exercise and the exercise
price paid by the optionee.
An NSO is deemed to have a "readily ascertainable fair market value" if
(a) the NSO's are actively traded on an established market or (b) the fair
market value can be measured with reasonable accuracy which means that (i) the
NSO's are transferable, (ii) the NSO's are exercisable immediately in full,
(iii) the NSO's and underlying stock are not subject to restrictions which have
a significant effect on the NSO's value and (iv) the fair market value of the
"option privilege" is readily ascertainable.
Exercise of Options Through Use of Previously Acquired Common Stock of the
Company
Under the 1987 Plan, in some circumstances an optionee may be allowed
to use previously acquired Common Stock to exercise both ISO's and NSO's. Such
previously acquired Common Stock may include Common Stock acquired pursuant to
an earlier partial exercise of options. Generally the Internal Revenue Service
(the "Service") recognizes that an exchange of Common Stock for other Common
Stock does not constitute a taxable disposition of any shares of Common Stock.
The Service treats such exchanges as two transactions. First, to the extent of
the number of previously acquired shares of Common Stock, a share for share
exchange occurs with each new share of Common Stock ("Carryover shares")
succeeding to the cost basis and holding period of the old shares of Common
Stock. Second, the remaining new shares of Common Stock are deemed acquired at a
zero cost with their holding period commencing on the date of acquisition
("Noncarryover shares").
The foregoing rules generally apply to the use of previously acquired
Common Stock to acquire Common Stock under the 1987 Plan. An optionee may use
Common Stock owned at the date options are exercised to acquire Common Stock
upon exercise of the options. However, despite a "carryover" holding period, all
of the new shares of Common Stock are still subject to the holding requirements
discussed above. If optionee disposes of such Common Stock acquired pursuant to
the exercises of ISO's before the later of two years from the granting or one
year from exercise, an early disposition occurs first to the extent of the
Noncarryover shares and then to the extent of the Carryover shares.
In addition, if an optionee uses Common Stock acquired through a
previous partial exercise of options ("First Stock") to acquire new Common Stock
through an exercise of options ("Second Stock") before the First Stock has met
the above holding requirements, the First Stock will be treated as having been
disposed of in an early disposition. Therefore, the optionee will have to
recognize ordinary compensation to the excess of the fair market value of the
First Stock on its acquisition dates over its price paid. Despite the early
disposition, any excess gain is not recognized, but is deferred and carried over
to the Second Stock. If the First Stock is used to acquire other Common Stock
which is not subject to the 1987 Plan, no early disposition will generally occur
and the tax free exchange rules may apply.
The discussion regarding the Federal income tax consequences of the
1987 Plan is intended only as a broad discussion of the general rules applicable
to the grant and exercise of options and the
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<PAGE> 12
acquisition and disposition of Common Stock acquired pursuant to the exercise of
options. Specific situations may be subject to different rules and may result in
different tax consequences. Each optionee is strongly urged to consult his or
her own tax advisor with specific reference to the optionee's tax situation.
OTHER NON-PLAN OPTIONS
Edward A. Johnson, the President of the Company, was granted options to
purchase 222,500 shares of Common Stock on December 31, 1991 (the "E. Johnson
Option") exercisable until December 31, 1996 at an exercise price of $.21 per
share. Mr. Johnson is vested as to the right to purchase all 222,500 shares
under the E. Johnson Option. The E. Johnson Option permits Mr. Johnson to
exercise the options by the tender of cash or shares of Common Stock with
equivalent value.
Joseph H. Dadourian, Teri L. Jolin and Margaret M. Minnick, employees
of the Company's subsidiary, Optimum Care Source, LLC, a California limited
liability company, were each granted options to purchase 33,000 shares of Common
Stock on April 24, 1996 at an exercise price of $.92 per share, 26,640 of which
are exercisable until April 23, 2001 and 6,660 of which are exercisable until
April 24, 2002.
RESTRICTIONS ON RESALE
The Company is subject to Section 16(b) of the Securities Exchange Act
of 1934, as amended. Section 16(b) permits recovery by the Company of any profit
realized by any officer or director of the Company from any purchase and sale,
or sale and purchase, of Common Stock within any period of less than six months.
For purposes of Section 16(b), the grant of an option, but not its exercise, is
deemed to be a purchase of Common Stock. Affiliates of the Company who acquire
shares of Common Stock of the Company pursuant to an option described in this
prospectus will not be able to resell such shares of Common Stock in reliance
upon this prospectus. Accordingly, affiliates of the Company exercising options
must insure that any resale of shares of the Company's Common Stock acquired
upon exercise complies with an available exemption from the registration
provisions of the Federal securities law, such as Rule 144 under the Securities
Act of 1933, as amended.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered
hereby are being passed upon for the Company by Bruck & Perry, A Professional
Corporation.
EXPERTS
The financial statements and financial statement schedule of the
Company appearing in the Company's Annual Report (Form 10-K) for the year ended
December 31, 1995, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given the authority of such firm as experts in
accounting and auditing.
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<PAGE> 13
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Company incorporates by reference into this Registration Statement:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
3. The description of the Company's Common Stock, $.001 par value,
contained in the Company's Registration Statement on Form S-18 filed under the
Securities Act of 1933, as amended, Registration No. 33-16313-LA, including any
amendments or reports filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all of the securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated by reference herein
as set forth above shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
Item 4. Description of Securities.
Inapplicable.
Item 5. Interests of Named Experts and Counsel.
See "Legal Matters" in the Prospectus. The information therein is
incorporated herein by this reference.
Item 6. Indemnification of Directors and Officers.
DELAWARE STATUTES
Section 145 of the Delaware General Corporation Law, as amended,
provides for the indemnification of the Company's officers, directors, employees
and agents under certain circumstances as follows:
II-1
<PAGE> 14
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of this section, or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
II-2
<PAGE> 15
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLES OF INCORPORATION
Article VII of the Company's Certificate of Incorporation provides for
the indemnification of the Company's directors under certain circumstances as
follows:
To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or may hereafter be amended, a director of this
corporation shall not be liable to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.
II-3
<PAGE> 16
BYLAWS
The Company's Bylaws provide for the indemnification of the Company's
directors, officers, employees, or agents under certain circumstances as
follows:
7.1 Authorization For Indemnification. The Corporation shall indemnify,
in the manner and to the full extent permitted by law, any person (or the
estate, heirs, executors, or administrators of any person) who was or is a party
to, or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
7.2 Advance of Expenses. Costs and expenses (including attorneys' fees)
incurred by or on behalf of a director or officer in defending or investigating
any action, suit, proceeding or investigation may be paid by the Corporation in
advance of the final disposition of such matter, if such director or officer
shall undertake in writing to repay any such advances in the event that it is
ultimately determined that he is not entitled to indemnification. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate. Notwithstanding the
foregoing, no advance shall be made by the Corporation if a determination is
reasonably and promptly made by the Board by a majority vote of a quorum of
disinterested directors, or (if such a quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs) by independent legal
counsel in a written opinion, or by the stockholders, that, based upon the facts
known to the Board or counsel at the time such determination is made, (a) the
director, officer, employee or agent acted in bad faith or deliberately breached
his duty to the Corporation or its stockholders, and (b) as a result of such
actions by the director, officer, employee or agent, it is more likely than not
that it will ultimately be determined that such director, officer, employee or
agent is not entitled to indemnification.
7.3 Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or as a member of any committee or similar
body against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article or applicable law.
7.4 Non-exclusivity. The right of indemnity and advancement of expenses
provided herein shall not be deemed exclusive of any other rights to which any
person seeking indemnification or advancement of expenses from the Corporation
may be entitled under any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. Any agreement for
indemnification of or advancement of expenses
II-4
<PAGE> 17
to any director, officer, employee or other person may provide rights of
indemnification or advancement of expenses which are broader or otherwise
different from those set forth herein.
Item 7. Exemption from Registration Claimed.
Inapplicable.
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
4.1 Specimen of Common Stock Certificate. (Incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-18, File No. 33-16313-LA.)
4.2 Restated Certificate of Incorporation. (Incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1989.)
4.3 Bylaws of the Company. (Incorporated by reference to the
Company's Registration Statement on Form S-18, File No.
33-16313-LA.)
5.1 Opinion of Bruck & Perry re: legality of shares.
23.1 Consent of Bruck & Perry.
23.2 Consent of Ernst & Young LLP.
99.1 1987 Stock Option Plan including Forms of Incentive Stock
Option Agreement and Non-Qualified Stock Option Agreement.
99.2 Stock Option Agreement dated December 31, 1991 between the
Company and Edward A. Johnson, as amended.
99.3 Non-Qualified Stock Option Agreement dated April 24, 1996
between the Company and Joseph H. Dadourian.
99.4 Non-Qualified Stock Option Agreement dated April 24, 1996
between the Company and Teri L. Jolin.
99.5 Non-Qualified Stock Option Agreement dated April 24, 1996
between the Company and Margaret M. Minnick.
</TABLE>
Item 9. Undertakings.
A. The undersigned registrant hereby undertakes to file during any
period in which offers or sales of the securities are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed or
any material change to such information set forth in the Registration Statement.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
II-5
<PAGE> 18
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-6
<PAGE> 19
SIGNATURES
The Registrant
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Laguna Niguel, State of California, on June 26, 1996.
OPTIMUMCARE CORPORATION,
a Delaware corporation
By: /s/ EDWARD A. JOHNSON
-------------------------------
Edward A. Johnson, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ EDWARD A. JOHNSON President, Chief Executive Officer, Principal June 26, 1996
- ----------------------- Financial Officer* and Director
EDWARD A. JOHNSON
/s/ MICHAEL S. CALLISON Director June 26, 1996
- -----------------------
MICHAEL S. CALLISON
/s/ GARY L. DREHER Director June 27, 1996
- -----------------------
GARY L. DREHER
/s/ JON E. JENETT Director June 26, 1996
- -----------------------
JON E. JENETT
</TABLE>
* The Principal Financial Officer is also the Principal Accounting Officer.
II-7
<PAGE> 20
LIST OF EXHIBITS FOR FORM S-8
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
5.1 OPINION OF BRUCK & PERRY RE:
RE: LEGALITY OF SHARES
23.1 CONSENT OF BRUCK & PERRY
23.2 CONSENT OF ERNST & YOUNG LLP.
99.1 1987 STOCK OPTION PLAN, INCLUDING
FORMS OF INCENTIVE STOCK OPTION
AGREEMENT AND NON-QUALIFIED
STOCK OPTION AGREEMENT.
99.2 STOCK OPTION AGREEMENT DATED
OCTOBER 17, 1988 BETWEEN THE
COMPANY AND EDWARD A. JOHNSON,
AS AMENDED.
99.3 NON-QUALIFIED STOCK OPTION AGREEMENT
DATED APRIL 24, 1996 BETWEEN THE
COMPANY AND JOSEPH H. DADOURIAN.
99.4 NON-QUALIFIED STOCK OPTION AGREEMENT
DATED APRIL 24, 1996 BETWEEN THE
COMPANY AND TERI L. JOLIN.
99.5 NON-QUALIFIED STOCK OPTION AGREEMENT
DATED APRIL 24, 1996 BETWEEN THE
COMPANY AND MARGARET M. MINNICK.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[BRUCK & PERRY LETTERHEAD]
July 24, 1996
FILE NO.
64570.18
OptimumCare Corporation
30011 Ivy Glenn Drive
Suite 219
Laguna Niguel, CA 92677
Re: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
As counsel for OptimumCare Corporation, a Delaware corporation (the
"Company"), we have examined its Restated Certificate of Incorporation, Bylaws
and such other corporate records, documents and proceedings, and such questions
of law as we have deemed relevant for the purpose of this opinion. We have also,
as such counsel, examined the Registration Statement on Form S-8 of the Company
as filed with the Securities and Exchange Commission, covering the registration
under the Securities Act of 1933, as amended, of a total of 751,500 shares of
$.001 par value common stock ("Common Stock"), including the exhibits and form
of Prospectus (the "Prospectus") filed therewith, and any amendments thereto
(collectively, the "Registration Statement").
Upon the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly authorized and validly existing in
good standing under the laws of the State of Delaware, with all requisite power
to conduct the business described in the Registration Statement.
2. The Company has an authorized capitalization as set forth in Part
II, Item 3 of the Registration Statement.
3. The shares of the Company's Common Stock registered pursuant to the
Registration Statement have been duly and validly authorized and, subject to the
payment therefor pursuant to the terms contemplated in the final Prospectus,
such shares of Common Stock will be duly and validly issued as fully paid and
non-assessable securities of the Company.
<PAGE> 2
OptimumCare Corporation
July 24, 1996
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
BRUCK & PERRY
A Professional Corporation
<PAGE> 1
EXHIBIT 23.1
CONSENT OF BRUCK & PERRY
With regard to the Form S-8 Registration Statement to be filed with the
Securities and Exchange Commission by OptimumCare Corporation, a Delaware
corporation, we hereby consent to the use of our name under the section entitled
"Legal Matters" in the Prospectus which is a part of said Form S-8 Registration
Statement.
BRUCK & PERRY,
A Professional Corporation
Newport Beach, California
July 19, 1996
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement Form S-8 No. 33_______ pertaining to the 1987 Stock
Option Plan of OptimumCare Corporation and to the incorporation by reference
therein of our report dated March 18, 1996, with respect to the financial
statements and schedule of OptimumCare Corporation included in its Annual Report
(Form 10-K) for the year ended December 31, 1995, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Orange County, California
July 18, 1996
<PAGE> 1
EXHIBIT 99.1
OPTIMUMCARE CORPORATION
1987 STOCK OPTION PLAN
1. PURPOSE. The purpose of the OptimumCare Corporation 1987 Stock
Option Plan (the "Plan") is to strengthen OptimumCare Corporation, a Delaware
corporation ("Corporation"), by providing to employees, officers, directors,
consultants and independent contractors of the Corporation or any of its
subsidiaries (including dealers, distributors,and other business entities or
persons providing services on behalf of the Corporation or any of its
subsidiaries) added incentive for high levels of performance and unusual efforts
to increase the earnings of the Corporation. The Plan seeks to accomplish this
purpose by enabling specified persons to purchase shares of the common stock of
the Corporation, thereby increasing their proprietary interest in the
Corporation's success and encouraging them to remain in the employ or service of
the Corporation.
2. CERTAIN DEFINITIONS. As used in this Plan, the following words and
phrases shall have the respective meanings set forth below, unless the context
clearly indicates a contrary meaning:
2.1 "Board of Directors": The Board of Directors of the
Corporation.
2.2 "Committee": The Committee consisting of the Board of
Directors.
2.3 "Fair Market Value Per Share": The fair market value per
share of the Shares as determined by the Committee in good faith. The Committee
is authorized to make
1
<PAGE> 2
its determination as to the fair market value per share of the Shares on the
following basis: (i) if the Shares are traded only otherwise than on a
securities exchange and are not quoted on the National Association of Securities
Dealers' Automated Quotation system ("NASDAQ"), but are quoted in the "pink
sheets" published by the National Daily Quotation Bureau, the greater of (a) the
average of the mean between the average daily bid and average daily asked prices
of the Shares during the thirty (30) day period preceding the date of grant of
an Option, as quoted in the "pink sheets" published by the National Daily
Quotation Bureau, or (b) the mean between the average daily bid and average
daily asked prices of the Shares on the date of grant, as published in such
"pink sheets;" (ii) if the Shares are traded only otherwise than on a securities
exchange and are quoted on NASDAQ, the greater of (a) the average of the mean
between the closing bid and closing asked prices of the Shares during the thirty
(30) day period preceding the date of grant of an Option, as reported by the
Wall Street Journal and (b) the mean between the closing bid and closing asked
prices of the Shares on the date of grant of an Option, as reported by the Wall
Street Journal; (iii) if the Shares are admitted to trading on a securities
exchange, the greater of (a) the average of the daily closing prices of the
Shares during the ten (10) trading days preceding the date of grant of an
Option, as quoted in the Wall Street Journal, or (b) the daily closing price of
the Shares on the date of grant of an Option, as quoted in the Wall Street
Journal, or (iv) if the Shares are traded only otherwise than as described in
(i), (ii) or (iii) above, or if the Shares are not publicly traded, the value
determined by the Committee in good faith based upon the fair market value as
determined by completely independent and well qualified experts.
2.4 "Option": A stock option granted under the Plan.
2
<PAGE> 3
2.5 "Incentive Stock Option": An Option intended to qualify
for treatment as an incentive stock option under Code Sections 421 and 422A, and
designated as an Incentive Stock Option.
2.6 "Non-qualified Option": An Option not qualifying as an
Incentive Stock Option.
2.7 "Optionee": The holder of an Option.
2.8 "Option Agreement": The document setting forth the terms
and conditions of each Option.
2.9 "Shares": The shares of common stock of the Corporation.
2.10 "Code": The Internal Revenue Code of 1986, as amended.
2.11 "Subsidiary": Any corporation of which fifty percent
(50%) or more of total combined voting power of all classes of stock of such
corporation is owned by the Corporation or another Subsidiary (as so defined).
3. ADMINISTRATION OF PLAN.
3.1 In General. This Plan shall be administered by the
Committee. Any action of the Committee with respect to administration of the
Plan shall be taken pursuant
3
<PAGE> 4
to (i) a majority vote at a meeting of the Committee (to be documented by
minutes), or (ii) the unanimous written consent of its members.
3.2 Authority. Subject to the express provisions of this Plan,
the Committee shall have the authority to: (i) construe and interpret the Plan,
decide all questions and settle all controversies and disputes which may arise
in connection with the Plan and to define the terms used therein; (ii)
prescribe, amend and rescind rules and regulations relating to administration of
the Plan; (iii) determine the purchase price of the Shares covered by each
Option and the method of payment of such price, individuals to whom, and the
time or times at which, Options shall be granted and exercisable and the number
of Shares covered by each Option, (iv) determine the terms and provisions of the
respective Option Agreements (which need not be identical); (v) determine the
duration and purposes of leaves of absence which may be granted to participants
without constituting a termination of their employment for purposes of the Plan;
and (vi) make all other determinations necessary or advisable to the
administration of the Plan. Determinations of the Committee on matters referred
to in this Section 3 shall be conclusive and binding on all parties howsoever
concerned. With respect to Incentive Stock Options, the Committee shall
administer the Plan in compliance with the provisions of Code Section 422A as
the same may hereafter be amended from time to time. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option.
4. ELIGIBILITY AND PARTICIPATION.
4.1 In General. Only officers, employees and directors who are
also employees of the Corporation or any Subsidiary shall be eligible to receive
grants of
4
<PAGE> 5
Incentive Stock Options. Officers, employees and directors (whether or not they
are also employees) of the Corporation or any Subsidiary, as well as
consultants, independent contractors or other service providers of the
Corporation or any Subsidiary shall be eligible to receive grants of
Non-qualified Options. Within the foregoing limits, the Committee, from time to
time, shall determine and designate persons to whom Options may be granted. All
such designations shall be made in the absolute discretion of the Committee and
shall not require the approval of the shareholders. In determining (i) the
number of Shares to be covered by each Option, (ii) the purchase price for such
Shares and the method of payment of such price (subject to the other sections
hereof), (iii) the individuals of the eligible class to whom Options shall be
granted, (iv) the terms and provisions of the respective Option Agreements, and
(v) the times at which such Options shall be granted, the Committee shall take
into account such factors as it shall deem relevant in connection with
accomplishing the purpose of the Plan as set forth in Section 1. An individual
who has been granted an Option may be granted an additional Option or Options if
the Committee shall so determine. No Option shall be granted under the Plan
after July 28, 1997, but Options granted before such date may be exercisable
after such date.
4.2 Certain Limitations. In no event shall Incentive Stock
Options be granted to an Optionee such that the sum of (i) aggregate fair market
value (determined at the time the Incentive Stock Options are granted) of the
Shares subject to all Options granted under the Plan which are exercisable for
the first time during the same calendar year, plus (ii) the aggregate fair
market value (determined at the time the options are granted) of all stock
subject to all other incentive stock options granted to such Optionee by the
Corporation, its parent and Subsidiaries which are exercisable for the first
time
5
<PAGE> 6
during such calendar year, exceeds One Hundred Thousand Dollars ($100,000). For
purposes of the immediately preceding sentence, fair market value shall be
determined as of the date of grant based on the Fair Market Value Per Share as
determined pursuant to Section 2.3.
5. AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
5.1 Shares. Subject to adjustment as provided in Section 5.2
below, the total number of Shares to be subject to Options granted pursuant to
this Plan shall not exceed 455,000 Shares. Shares subject to the Plan may be
either authorized but unissued shares or shares that were once issued and
subsequently reacquired by the Corporation; the Committee shall be empowered to
take any appropriate action required to make Shares available for Options
granted under this Plan. If any Option is surrendered before exercise or lapses
without exercise in full or for any other reason ceases to be exercisable, the
Shares reserved therefore shall continue to be available under the Plan.
5.2 Adjustments. As used herein, the term "Adjustment Event"
means an event pursuant to which the outstanding Shares of the Corporation are
increased, decreased or changed into, or exchanged for a different number or
kind of shares or securities, without receipt of consideration by the
Corporation, through reorganization, merger, recapitalization, reclassification,
stock split, reverse stock split, stock dividend, stock consolidation or
otherwise. Upon the occurrence of an Adjustment Event, (i) appropriate and
proportionate adjustments shall be made to the number and kind of shares and
exercise price for the shares subject to the Options which may thereafter be
granted under this Plan,
6
<PAGE> 7
(ii) appropriate and proportionate adjustments shall be made to the number and
kind of and exercise price for the shares subject to the then outstanding
Options granted under this Plan, and (iii) appropriate amendments to the Option
Agreements shall be executed by the Corporation and the Optionees if the
Committee determines that such an amendment is necessary or desirable to reflect
such adjustments. If determined by the Committee to be appropriate, in the event
of an Adjustment Event which involves the substitution of securities of a
corporation other than the Corporation, the Committee shall make arrangements
for the assumptions by such other corporation of any Options then or thereafter
outstanding under the Plan. Notwithstanding the foregoing, such adjustment in an
outstanding Option shall be made without change in the total exercise price
applicable to the unexercised portion of the Option, but with an appropriate
adjustment to the number of shares, kind of shares and exercise price for each
share subject to the Option. The determination by the Committee as to what
adjustments, amendments or arrangements shall be made pursuant to this Section
5.2, and the extent thereof, shall be final and conclusive. No fractional Shares
shall be issued under the Plan on account of any such adjustment or arrangement.
6. TERMS AND CONDITIONS OF OPTIONS.
6.1 Intended Treatment as Incentive Stock Options. Incentive
Stock Options granted pursuant to this Plan are intended to be "incentive stock
options" to which Code Sections 421 and 422A apply, and the Plan shall be
construed and administered to implement that intent. If all or any part of an
Incentive Stock Option shall not be an "incentive stock option" subject to
Sections 421 or 422A of the Code, such Option shall nevertheless be valid and
carried into effect. All Options granted under this Plan shall be
7
<PAGE> 8
subject to the terms and conditions set forth in this Section 6 (except as
provided in Section 5.2) and to such other terms and conditions as the Committee
shall determine to be appropriate to accomplish the purpose of the Plan as set
forth in Section 1.
6.2 Amount and Payment of Exercise Price.
6.2.1 Exercise Price. The exercise price per Share
for each Share which the Optionee is entitled to purchase under a Non-qualified
Option shall be determined by the Committee but shall not be less than
eighty-five percent (85%) of the Fair Market Value Per Share on the date of the
grant of the Non-qualified Option. The exercise price per Share for each Share
which the Optionee is entitled to purchase under an Incentive Stock Option shall
be determined by the Committee but shall not be less than the Fair Market Value
Per Share on the date of the grant of the Incentive Stock Option; provided,
however, that the exercise price shall not be less than one hundred ten percent
(110%) of the Fair Market Value Per Share on the date of the grant of the
Incentive Stock Option in the case of an individual then owning (within the
meaning of Code Section 425(d)) more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation or of its
parent or Subsidiaries.
6.2.2 Payment of Exercise Price. The consideration to
be paid for the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Committee and may consist of
promissory notes, shares of the common stock of the Corporation or such other
consideration and method of payment for the Shares as may be permitted under
applicable state and federal laws.
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<PAGE> 9
6.3 Exercise of Options.
6.3.1 Each Option granted under this Plan shall be
exercisable at such times and under such conditions as may be determined by the
Committee at the time of the grant of the Option and as shall be permissible
under the terms of the Plan; provided, however, in no event shall an Option be
exercisable after the expiration of ten (10) years from the date it is granted,
and in the case of an Optionee owning (within the meaning of Code Section
425(d)), at the time an Incentive Stock Option is granted, more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Corporation or of its parent or Subsidiaries, such Incentive Stock Option shall
not be exercisable later than five (5) years after the date of grant.
6.3.2 An Optionee may purchase less than the total
number of Shares for which the Option is exercisable, provided that a partial
exercise of an Option may not be for less than One Hundred (100) Shares and
shall not include any fractional shares.
6.4 Non-transferability of Options. All Options granted under
this Plan shall be nontransferable, either voluntarily or by operation of law,
otherwise than by will or the laws of descent and distribution, and shall be
exercisable during the Optionee's lifetime only by such Optionee.
6.5 Effect of Termination of Employment or Other Relationship.
The effect of termination of an Optionee's employment or other relationship with
the Corporation on such Optionee's rights to acquire Shares shall be as follows:
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<PAGE> 10
6.5.1 Termination for Other than Disability, Cause,
or Death. If an Optionee ceases to be employed by, or ceases to have a
relationship with, the Corporation for any reason other than for disability,
cause, or death, such Optionee's Options shall expire not later than three (3)
months thereafter. During such three (3) month period and prior to the
expiration of the Option by its terms, the Optionee may exercise any Option
granted to him, but only to the extent such Options were exercisable on the date
of termination of his employment or relationship and except as so exercised,
such Options shall expire at the end of such three (3)-month period unless such
Options by their terms expire before such date. The decision as to whether a
termination for a reason other than disability, cause or death has occurred
shall be made by the Committee, whose decision shall be final and conclusive,
except that employment shall not be considered terminated in the case of sick
leave or other bona fide leave of absence approved by the Corporation.
6.5.2 Disability. If an Optionee ceases to be
employed by, or ceases to have a relationship with, the Corporation by reason of
disability (within the meaning of Code Section 22(e)(3)), such Optionee's
Options shall expire not later than one (1) year thereafter. During such one (1)
year period and prior to the expiration of the Option by its terms, the Optionee
may exercise any Option granted to him, but only to the extent such Options were
exercisable on the date the Optionee ceased to be employed by, or ceased to have
a relationship with, the Corporation by reason of disability and except as so
exercised, such Options shall expire at the end of such one (1)-year period
unless such Options by their terms expire before such date. The decision as to
whether a termination by reason of disability has occurred shall be made by the
Committee, whose decision shall be final and conclusive.
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<PAGE> 11
6.5.3 Termination for Cause. If an Optionee's
employment by, or relationship with, the Corporation is terminated for cause,
such Optionee's Option shall expire immediately, provided, however, the
Committee may, in its sole discretion, within thirty (30) days of such
termination, waive the expiration of the Option by giving written notice of such
waiver to the Optionee at such Optionee's last known address. In the event of
such waiver, the Optionee. may exercise the Option only to such extent, for such
time, and upon such terms and conditions as if such Optionee had ceased to be
employed by, or ceased to have a relationship with, the Corporation upon the
date of such termination for a reason other than disability, cause, or death.
Termination for cause shall include termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith or any conduct detrimental to the interests of the
Corporation. The determination of the Committee with respect to whether a
termination for cause has occurred shall be final and conclusive.
6.5.4 Death of an Optionee. If the Optionee ceases to
be employed by, or ceases to have a relationship with, the Corporation by reason
of death, such Optionee's Options shall expire not later than six (6) months
thereafter. During such six (6)-month period and prior to the expiration of the
Option by its terms, such Option may be exercised by his executor or
administrator or the person or persons to whom the Option is transferred by will
or the applicable laws of descent and distribution, but only to the extent such
Options were exercisable on the date Optionee ceased to be employed by, or
ceased to have a relationship with, the Corporation by reason of death.
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<PAGE> 12
6.6 Withholding of Taxes. As a condition to the exercise, in
whole or in part, of any Options the Board of Directors may in its sole
discretion require the Optionee to pay, in addition to the purchase price of the
Shares covered by the Option an amount equal to any Federal, state or local
taxes that may be required to be withheld in connection with the exercise of
such Option.
6.7 No Rights to Continued Employment or Relationship. Nothing
contained in this Plan or in any Option Agreement shall obligate the Corporation
to employ or have another relationship with any Optionee for any period or
interfere in any way with the right of the Corporation to reduce such Optionee's
compensation or to terminate the employment of or relationship with any Optionee
at any time.
6.8 Time of Granting Options. The time an Option is granted,
sometimes referred to herein as the date of grant, shall be the day the
Corporation executes the Option Agreement; provided, however, that if
appropriate resolutions of the Committee indicate that an Option is to be
granted as of and on some prior or future date, the time such Option is granted
shall be such prior or future date.
6.9 Privileges of Stock Ownership. No Optionee shall be
entitled to the privileges of stock ownership as to any Shares not actually
issued and delivered to such Optionee. No Shares shall be purchased upon the
exercise of any Option unless and until, in the opinion of the Corporation's
counsel, any then applicable requirements of any laws or governmental or
regulatory agencies having jurisdiction and of any exchanges upon which the
stock of the Corporation may be listed shall have been fully complied with.
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<PAGE> 13
6.10 Securities Laws Compliance. The Corporation will
diligently endeavor to comply with all applicable securities laws before any
Options are granted under the Plan and before any Shares are issued pursuant to
Options. Without limiting the generality of the foregoing, the Corporation may
require from the Optionee such investment representation or such agreement, if
any, as counsel for the Corporation may consider necessary or advisable in order
to comply with the Securities Act of 1933 as then in effect, and may require
that the Optionee agree that any sale of the Shares will be made only in such
manner as is permitted by the Committee. The Committee in its discretion may
cause the Shares underlying the Options to be registered under the Securities
Act of 1933, as amended, by the filing of a Form S-8 Registration Statement
covering the Options and Shares underlying such Options. Optionee shall take any
action reasonably requested by the Corporation in connection with registration
or qualification of the Shares under federal or state securities laws.
6.11 Option Agreement. Each Incentive Stock Option and
Non-qualified Option granted under this Plan shall be evidenced by the
appropriate written Stock Option Agreement ("Option Agreement") executed by the
Corporation and the Optionee in a form substantially the same as the appropriate
form of Option Agreement attached as Exhibit I or II hereto (and made a part
hereof by this reference) and shall contain each of the provisions and
agreements specifically required to be contained therein pursuant to this
Section 6, and such other terms and conditions as are deemed desirable by the
Committee and are not inconsistent with the purpose of the Plan as set forth in
Section 1.
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<PAGE> 14
7. PLAN AMENDMENT AND TERMINATION.
7.1 Authority of Committee. The Committee may at any time
discontinue granting Options under the Plan or otherwise suspend, amend or
terminate the 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, provided that, except as permitted under the provisions of
Section 5.2, the Committee shall have no authority to make any amendment or
modification to this Plan or any outstanding Option thereunder which would: (i)
increase the maximum number of shares which may be purchased pursuant to Options
granted under the Plan, either in the aggregate or by an Optionee (except
pursuant to Section 5.2), (ii) change the designation of the class of the
employees eligible to receive Incentive Stock Options, (iii) extend the term of
the Plan or the maximum Option period thereunder; (iv) decrease the minimum
Incentive Stock Option price or permit reductions of the price at which shares
may be purchased for Incentive Stock Options granted under the Plan, or (v)
cause Incentive Stock Options issued under the Plan to fail to meet the
requirements of incentive stock options under Code Section 422A. An amendment or
modification made pursuant to the provisions of this Section 7 shall be deemed
adopted as of the date of the action of the Committee effecting such amendment
or modification and shall be effective immediately, unless otherwise provided
therein, subject to approval thereof (1) within twelve (12) months before or
after the effective date by shareholders of the Corporation holding not less
than a majority vote of the voting power of the Corporation voting in person or
by proxy at a duly held shareholders meeting when required to maintain or
satisfy the requirements of Code Section 422A with respect to Incentive Stock
Options, and (2) by any appropriate governmental agency. No Option may be
granted during any suspension or after termination of the Plan.
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<PAGE> 15
7.2 Ten (10)-Year Maximum Term. Unless previously terminated
by the Committee, this Plan shall terminate on July 28, 1997, and no Options
shall be granted under the Plan thereafter.
7.3 Effect On Outstanding Options. Amendment, suspension or
termination of this Plan shall not, without the consent of the Optionee, alter
or impair any rights or obligations under any Option theretofore granted.
8. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of July 28,
1987, the date the Plan was adopted by the Board of Directors, subject to the
approval of the Plan by the affirmative vote of a majority of the issued and
outstanding Shares of common stock of the Corporation represented and voting at
a duly held meeting at which a quorum is present within twelve (12) months
thereafter. The Committee shall be authorized and empowered to make grants of
Options pursuant to this Plan prior to such approval of this Plan by the
shareholders; provided, however, in such event the Option grants shall be made
subject to the approval of this Plan and such Option grants by the shareholders
in accordance with the provisions of this Section 8.
9. MISCELLANEOUS PROVISIONS.
9.1 Exculpation and Indemnification. The Corporation shall
indemnify and hold harmless the Committee from and against any and all
liabilities, costs and expenses incurred by such persons as a result of any act,
or omission to act, in connection with the performance of such persons' duties,
responsibilities and obligations under the Plan, other
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<PAGE> 16
than such liabilities, costs and expenses as may result from the gross
negligence, bad faith, willful conduct and/or criminal acts of such persons.
9.2 Governing Law. The Plan shall be governed and construed in
accordance with the laws of the State of California and the Code.
9.3 Compliance with Applicable Laws. The inability of the
Corporation to obtain from any regulatory body having jurisdiction authority
deemed by the Corporation's counsel to be necessary to the lawful issuance and
sale of any Shares upon the exercise of an Option shall relieve the Corporation
of any liability in respect of the non-issuance or sale of such Shares as to
which such requisite authority shall not have been obtained.
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<PAGE> 17
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT ("Agreement") is entered into as
of , 19 , by and between OPTIMUMCARE CORPORATION, a Delaware
corporation ("Corporation"), and ("Optionee").
R E C I T A L S
A. On July 30, 1987, the Board of Directors of the Corporation adopted,
subject to the approval of the Corporation's shareholders, the OptimumCare
Corporation 1987 Stock Option Plan (the "Plan").
B. Pursuant to the Plan, on , the Board of Directors
of the Corporation acting as the Plan Committee ("Committee") authorized
granting to Optionee options to purchase shares of the common stock of the
Corporation ("Shares") for the term and subject to the terms and conditions
hereinafter set forth.
A G R E E M E N T
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
otherwise clearly requires, terms with initial capital letters used herein shall
have the meanings assigned to such terms in the Plan.
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<PAGE> 18
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, options
("Options") to purchase all or any part of _____ Shares, upon and subject to the
terms and conditions of the Plan, which is incorporated in full herein by this
reference, and upon the other terms and conditions set forth herein.
3. OPTION PERIOD. The Options shall be exercisable at any time during
the period commencing on the following dates (subject to the provisions of
Section 18) and expiring on the date __________ (___) years from the date of
grant, unless earlier terminated pursuant to Section 7:
Number of Options Exercisable On or After
----------------- -----------------------
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Corporation of the election to purchase and of the
number of Shares Optionee elects to purchase, such notice to be accompanied by
such other executed instruments or documents as may be required by the Committee
pursuant to this Agreement, and unless otherwise directed by the Committee,
Optionee shall at the time of such exercise tender the purchase price of the
Shares he has elected to purchase. An Optionee may purchase less than the total
number of Shares for which the Option is exercisable, provided that a partial
exercise of an Option may not be for less than One Hundred (100) Shares. If
Optionee shall not purchase all of the Shares which he is entitled to purchase
under the Options, his right to purchase the remaining unpurchased Shares shall
continue until
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<PAGE> 19
expiration of the Options. The Options shall be exercisable with respect of
whole Shares only, and fractional Share interests shall be disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be $____
per Share.
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased. Provided, however, the Board of Directors may, in its sole
discretion, permit payment by the Corporation of the purchase price in whole or
in part with Shares. If the Optionee is so permitted, and the Optionee elects to
make payment with Shares, the Optionee shall deliver to the Corporation
certificates representing the number of Shares in payment for new Shares, duly
endorsed for transfer to the Corporation, together with any written
representations relating to title, liens' and encumbrances, securities laws,
rules and regulatory compliance, or other matters, reasonably requested by the
Board of Directors. The value of Shares so tendered shall be their Fair Market
Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF EMPLOYMENT. If an Optionee's employment or
other relationship with the Corporation (or a Subsidiary) terminates, the effect
of the termination on the Optionee's rights to acquire Shares shall be as
follows:
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<PAGE> 20
7.1 Termination for Other than Disability, Cause or Death. If
an Optionee ceases to be employed by, or ceases to have a relationship with, the
Corporation or a Subsidiary for any reason other than for disability, cause or
death, such Optionee's Options shall expire not later than three (3) months
thereafter. During such three (3)-month period and prior to the expiration of
the Option by its terms, the Optionee may exercise any Option granted to him,
but only to the extent such Options were exercisable on the date of termination
of his employment or relationship and except as so exercised, such Options shall
expire at the end of such three (3)-month period unless such Options by their
terms expire before such date. The decision as to whether a termination for a
reason other than disability, cause or death has occurred shall be made by the
Committee, whose decision shall be final and conclusive, except that employment
shall not be considered terminated in the case of sick leave or other bona fide
leave of absence approved by the Corporation.
7.2 Disability. If an Optionee ceases to be employed by, or
ceases to have a relationship with, the Corporation or a Subsidiary by reason of
disability (within the meaning of Code Section 22(e)(3)), such Optionee's
Options shall expire not later than one (1) year thereafter. During such one
(1)-year period and prior to the expiration of the Option by its terms, the
Optionee may exercise any Option granted to him, but only to the extent such
Options were exercisable on the date the Optionee ceased to be employed by, or
ceased to have a relationship with, the Corporation or Subsidiary by reason of
disability. The decision as to whether a termination by reason of disability has
occurred shall be made by the Committee, whose decision shall be final and
conclusive.
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7.3 Termination for Cause. If an Optionee's employment by, or
relationship with, the Corporation or a Subsidiary is terminated for cause, such
Optionee's Option shall expire immediately; provided, however, the Committee
may, in its sole discretion, within' thirty (30) days of such termination, waive
the expiration of the Option by giving written notice of such waiver to the
Optionee at such Optionee's last known address. In the event of such waiver, the
Optionee may exercise the Option only to such extent, for such time, and upon
such terms and conditions as if such Optionee had ceased to be employed by, or
ceased to have a relationship with, the Corporation or a Subsidiary upon the
date of such termination for a reason other than disability, cause or death.
Termination for cause shall include termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith or any conduct detrimental to the interests of the
Corporation or a Subsidiary. The determination of the Committee with respect to
whether a termination for cause has occurred shall be final and conclusive.
7.4 Death of an Optionee. If an Optionee ceases to be employed
by, or ceases to have a relationship with, the Corporation by reason of death,
Optionee's Options shall expire not later than six (6) months thereafter. During
such six (6) month period and prior to the expiration of the Option by its
terms, such Options may be exercised by his executor or administrator or the
person or persons to whom the Option is transferred by will or the applicable
laws of descent and distribution, but only to the extent such Options were
exercisable on the date Optionee ceased to be employed by, or ceased to have a
relationship with, the Corporation or a Subsidiary by reason of death.
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<PAGE> 22
8. NON-TRANSFERABILITY OF OPTIONS. The Options shall not be
transferable, either voluntarily or by operation of law, otherwise than by will
or the laws of descent and distribution and shall be exercisable during the
Optionee's lifetime only by Optionee.
9. ADDITIONAL RESTRICTIONS REGARDING DISPOSITIONS OF SHARES. The Shares
acquired pursuant to the exercise of Options shall be subject to the
restrictions set forth in Exhibit "A" attached hereto and incorporated herein as
if fully set forth.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the
term "Adjustment Event" means an event pursuant to which the outstanding Shares
of the Corporation are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise. Upon the occurrence of an Adjustment
Event, (i) appropriate and proportionate adjustments shall be made to the number
and kind and exercise price for the shares subject to the Options, and (ii)
appropriate amendments to this Agreement shall be executed by the Corporation
and Optionee if the Committee determines that such an amendment is necessary or
desirable to reflect such adjustments. If determined by the Committee to be
appropriate, in the event of an Adjustment Event which involves the substitution
of securities of a corporation other than the Corporation, the Committee shall
make arrangements for the assumptions by such other corporation of the Options.
Notwithstanding the foregoing, any such adjustment to the Options shall be made
without change in the total exercise price applicable to the unexercised portion
of the Options, but
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<PAGE> 23
with an appropriate adjustment to the number of shares, kind of shares and
exercise price for each share subject to the Options. The determination by the
Committee as to what adjustments, amendments or arrangements shall be made
pursuant to this Section 10, and the extent thereof, shall be final and
conclusive. No fractional Shares shall be issued on account of any such
adjustment or arrangement.
11. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing
contained in this Agreement shall obligate the Corporation to employ or have
another relationship with Optionee for any period or interfere in any way with
the right of the Corporation to reduce Optionee's compensation or to terminate
the employment of or relationship with Optionee at any time.
12. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
granted, sometimes referred to herein as the "date of grant," shall be
__________.
13. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to
the privileges of stock ownership as to any Shares not actually issued and
delivered to Optionee. No Shares shall be purchased upon the exercise of any
Options unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
14. SECURITIES LAWS COMPLIANCE. The Corporation will diligently
endeavor to comply with all applicable securities laws before any stock is
issued pursuant to the
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<PAGE> 24
Options. Without limiting the generality of the foregoing, the Corporation may
require from the Optionee such investment representation or such agreement, if
any, as counsel for the Corporation may consider necessary in order to comply
with the Securities Act of 1933 as then in effect, and may require that the
Optionee agree that any sale of the Shares will be made only in such manner as
is permitted by the Committee. The Committee may in its discretion cause the
Shares underlying the Options to be registered under the Securities Act of 1933
as amended by filing a Form S-8 Registration Statement covering the Options and
the Shares underlying the Options. Optionee shall take any action reasonably
requested by the Corporation in connection with registration or qualification of
the Shares under federal or state securities laws.
15. INTENDED TREATMENT AS INCENTIVE STOCK OPTIONS. The Options granted
herein are intended to be "incentive stock options" to which Sections 421 and
422A of the Internal Revenue Code of 1986, as amended from time to time ("Code")
apply, and shall be construed to implement that intent. If all or any part of
the Options shall not be subject to Sections 421 and 422A of the Code, the
Options shall nevertheless be valid and carried into effect.
16. PLAN CONTROLS. The Options shall be subject to and governed by the
provisions of the Plan. All determinations and interpretations of the Plan made
by the Committee shall be final and conclusive.
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<PAGE> 25
17. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
18. CONDITIONS TO OPTIONS.
18.1 Compliance with Applicable Laws. THE CORPORATION'S
OBLIGATION TO ISSUE SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS IS
EXPRESSLY CONDITIONED UPON THE COMPLETION BY THE CORPORATION OF ANY REGISTRATION
OR OTHER QUALIFICATION OF SUCH SHARES UNDER ANY STATE AND/OR FEDERAL LAW OR
RULINGS OR REGULATIONS OF ANY GOVERNMENTAL REGULATORY BODY, OR THE MAKING OF
SUCH INVESTMENT REPRESENTATIONS OR OTHER REPRESENTATIONS AND UNDERTAKINGS BY THE
OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION IN ORDER TO COMPLY WITH
THE REQUIREMENTS OF ANY EXEMPTION FROM ANY SUCH REGISTRATION OR OTHER
QUALIFICATION OF SUCH SHARES WHICH THE COMMITTEE SHALL, IN ITS SOLE DISCRETION,
DEEM NECESSARY OR ADVISABLE. SUCH REQUIRED REPRESENTATIONS AND UNDERTAKINGS MAY
INCLUDE REPRESENTATIONS AND AGREEMENTS THAT THE OPTIONEE OR ANY PERSON ENTITLED
TO EXERCISE THE OPTION (i) IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION AND
(ii) AGREES TO HAVE PLACED UPON THE FACE AND REVERSE OF ANY CERTIFICATES A
LEGEND SETTING FORTH ANY REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN
TO THE COMMITTEE OR A REFERENCE THERETO.
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<PAGE> 26
18.2 SHAREHOLDER APPROVAL OF PLAN. IF THE OPTIONS GRANTED
HEREBY ARE GRANTED PRIOR TO APPROVAL OF THE PLAN BY THE SHAREHOLDERS OF THE
CORPORATION PURSUANT TO SECTION 8 OF THE PLAN, THE GRANT OF THE OPTIONS MADE
HEREBY IS EXPRESSLY CONDITIONED UPON AND SUCH OPTIONS SHALL NOT BE EXERCISABLE
UNTIL THE APPROVAL OF THE PLAN BY THE SHAREHOLDERS OF THE CORPORATION IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 8 OF THE PLAN.
18.3 Maximum Exercise Period. Notwithstanding any provision of
this Agreement to the contrary, the Options shall expire no later than ten years
from the date hereof or five years if, as of the date hereof, the Optionee owns
or is considered to own by reason of Code Section 425(d) more than of the total
combined voting power of all classes of stock of the Corporation or any
Subsidiary or parent corporation of the Corporation.
19. MISCELLANEOUS.
19.1 Binding Effect. This Agreement shall bind and inure to
the benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
19.2 Further Acts. Each party agrees to perform any further
acts and execute and deliver any documents which may be necessary to carry out
the provisions of this Agreement.
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19.3 Amendment. This Agreement may be amended at any time by
the written agreement of the Corporation and the Optionee.
19.4 Syntax. Throughout this Agreement, whenever the context
so requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
19.5 Choice of Law. The parties hereby agree that this
Agreement has been executed and delivered in the State of California and shall
be construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to have
been jointly prepared by the parties and the parties hereby expressly agree that
any uncertainty or ambiguity existing herein shall not be interpreted against
either of them.
19.6 Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
19.7 Notices. All notices and demands between the parties
hereto shall be in writing and shall be served either by registered or certified
mail, and such notices or demands shall be deemed given and made forty-eight
(48) hours after the deposit thereof
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<PAGE> 28
in the United States mail, postage prepaid, addressed to the party to whom such
notice or demand is to be given or made, and the issuance of the registered
receipt therefor. If served by telegraph, such notice or demand shall be deemed
given and made at the time the telegraph agency shall confirm to the sender,
delivery thereof to the addressee. All notices and demands to Optionee or the
Corporation may be given to them at the following addresses:
If to Optionee:
If to Corporation: OptimumCare Corporation
30011 Ivy Glenn Drive
Laguna Niguel, California 92677
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
19.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
this Agreement supersedes all prior and contemporaneous agreements and
understandings of the parties, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. No supplement, modification or
waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall constitute a waiver of any other provision hereof (whether
or not similar) nor shall such waiver constitute a continuing waiver.
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19.9 Attorneys' Fees. In the event that any party to this
Agreement institutes any action or proceeding, including, but not limited to,
litigation or arbitration, to preserve, to protect or to enforce any right or
benefit created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first set forth above.
"CORPORATION"
OPTIMUMCARE CORPORATION,
A Delaware Corporation
By:____________________________________
Edward A. Johnson, President
"OPTIONEE"
________________________________________
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NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is entered into
as of , 19 , by and between OPTIMUMCARE CORPORATION, a
Delaware corporation ("Corporation"), and ("Optionee").
A. On July 30, 1987, the Board of Directors of the Corporation adopted,
subject to the approval of the Corporation's shareholders, the OptimumCare
Corporation 1987 Stock Option Plan (the "Plan").
B. Pursuant to the Plan, on , the Board of Directors
of the Corporation acting as the Plan Committee ("Committee") authorized
granting to Optionee options to purchase shares of the common stock of the
Corporation ("Shares") for the term and subject to the terms and conditions
hereinafter set forth.
A G R E E M E N T
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
otherwise clearly requires, terms with initial capital letters used herein shall
have the meanings assigned to such terms in the Plan.
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<PAGE> 31
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, options
("Options") to purchase all or any part of ___________________ Shares, upon and
subject to the terms and conditions of the Plan, which is incorporated in full
herein by this reference, and upon the other terms and conditions set forth
herein.
3. OPTION PERIOD. The Options shall be exercisable at any time during
the period commencing on the following dates (subject to the provisions of
Section 18) and expiring on the date ____________________ (__) years from the
date of grant, unless earlier terminated pursuant to Section 7:
Number of Options Exercisable On or After
----------------- -----------------------
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Corporation of the election to purchase and of the
number of Shares Optionee elects to purchase, such notice to be accompanied by
such other executed instruments or documents as may be required by the Committee
pursuant to this Agreement, and unless otherwise directed by the Committee,
Optionee shall at the time of such exercise tender the purchase price of the
Shares he has elected to purchase. An Optionee may purchase less than the total
number of Shares for which the Option is exercisable, provided that a partial
exercise of an Option may not be for less than One Hundred (100) Shares. If
Optionee shall not purchase all of the Shares which he is entitled to purchase
under the Options, his right to purchase the remaining unpurchased Shares shall
continue until
2
<PAGE> 32
expiration of the Options. The Options shall be exercisable with respect of
whole Shares only, and fractional Share interests shall be disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be $____
per Share.
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased. Provided, however, the Board of Directors may, in its sole
discretion, permit payment by the Corporation of the purchase price in whole or
in part with Shares. If the Optionee is so permitted, and the Optionee elects to
make payment with Shares, the Optionee shall deliver to the Corporation
certificates representing the number of Shares in payment for new Shares, duly
endorsed for transfer to the Corporation, together with any written
representations relating to title, liens and encumbrances, securities laws,
rules and regulatory compliance, or other matters, reasonably requested by the
Board of Directors. The value of Shares so tendered shall be their Fair Market
Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF EMPLOYMENT. If an Optionee's employment or
other relationship with the Corporation (or a Subsidiary) terminates, the effect
of the termination on the Optionee's rights to acquire Shares shall be as
follows:
3
<PAGE> 33
7.1 Termination for Other than Disability, Cause or Death. If
an Optionee ceases to be employed by, or ceases to have a relationship with, the
Corporation or a Subsidiary for any reason other than for disability, cause or
death, such Optionee's Options shall expire not later than three (3) months
thereafter. During such three (3) month period and prior to the expiration of
the Option by its terms, the Optionee may exercise any Option granted to him,
but only to the extent such Options were exercisable on the date of termination
of his employment or relationship and except as so exercised, such Options shall
expire at the end of such three (3) month period unless such Options by their
terms expire before such date. The decision as to whether a termination for a
reason other than disability, cause or death has occurred shall be made by the
Committee, whose decision shall be final and conclusive, except that employment
shall not be considered terminated in the case of sick leave or other bona fide
leave of absence approved by the Corporation.
7.2 Disability. If an Optionee ceases to be employed by, or
ceases to have a relationship with, the Corporation or a Subsidiary by reason of
disability (within the meaning of Code Section 22(e)(3)), such Optionee's
Options shall expire not later than one (1) year thereafter. During such one (1)
year period and prior to the expiration of the Option by its terms, the Optionee
may exercise any Option granted to him, but only to the extent such Options were
exercisable on the date the Optionee ceased to be employed by, or ceased to have
a relationship with, the Corporation or Subsidiary by reason of disability. The
decision as to whether a termination by reason of disability has occurred shall
be made by the Committee, whose decision shall be final and conclusive.
4
<PAGE> 34
7.3 Termination for Cause. If an Optionee's employment by, or
relationship with, the Corporation or a Subsidiary is terminated for cause, such
Optionee's Option shall expire immediately; provided, however, the Committee
may, in its sole discretion, within thirty (30) days of such termination, waive
the expiration of the Option by giving written notice of such waiver to the
Optionee at such Optionee's last known address. In the event of such waiver, the
Optionee may exercise the Option only to such extent, for such time, and upon
such terms and conditions as if such Optionee had ceased to be employed by, or
ceased to have a relationship with, the Corporation or a Subsidiary upon the
date of such termination for a reason other than disability, cause or death.
Termination for cause shall include termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith or any conduct detrimental to the interests of the
Corporation or a Subsidiary. The determination of the Committee with respect to
whether a termination for cause has occurred shall be final and conclusive.
7.4 Death of an Optionee. If an Optionee ceases to be employed
by, or ceases to have a relationship with, the Corporation by reason of death,
Optionee's Options shall expire not later than six (6) months thereafter. During
such six (6)-month period and prior to the expiration of the Option by its
terms, such Options may be exercised by his executor or administrator or the
person or persons to whom the Option is transferred by will or the applicable
laws of descent and distribution, but only to the extent such Options were
exercisable on the date Optionee ceased to be employed by, or ceased to have a
relationship with, the Corporation or a Subsidiary by reason of death.
5
<PAGE> 35
8. NON-TRANSFERABILITY OF OPTIONS. The Options shall not be
transferable, either voluntarily or by operation of law, otherwise than by will
or the laws of descent and distribution and shall be exercisable during the
Optionee's lifetime only by Optionee.
9. ADDITIONAL RESTRICTIONS REGARDING DISPOSITIONS OF SHARES. The Shares
acquired pursuant to the exercise of Options shall be subject to the
restrictions set forth in Exhibit "A" attached hereto and incorporated herein as
if fully set forth.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the
term "Adjustment Event" means an event pursuant to which the outstanding Shares
of the Corporation are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise. Upon the occurrence of an Adjustment
Event, (i) appropriate and proportionate adjustments shall be made to the number
and kind and exercise price for the shares subject to the Options, and (ii)
appropriate amendments to this Agreement shall be executed by the Corporation
and Optionee if the Committee determines that such an amendment is necessary or
desirable to reflect such adjustments. If determined by the Committee to be
appropriate, in the event of an Adjustment Event which involves the substitution
of securities of a corporation other than the Corporation, the Committee shall
make arrangements for the assumptions by such other corporation of the Options.
Notwithstanding the foregoing, any such adjustment to the Options shall be made
without change in the total exercise price applicable to the unexercised portion
of the Options, but
6
<PAGE> 36
with an appropriate adjustment to the number of shares, kind of shares and
exercise price for each share subject to the Options. The determination by the
Committee as to what adjustments, amendments or arrangements shall be made
pursuant to this Section 10, and the extent thereof, shall be final and
conclusive. No fractional Shares shall be issued on account of any such
adjustment or arrangement.
11. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing
contained in this Agreement shall obligate the Corporation to employ or have
another relationship with Optionee for any period or interfere in any way with
the right of the Corporation to reduce Optionee's compensation or to terminate
the employment of or relationship with Optionee at any time.
12. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
granted, sometimes referred to herein as the "date of grant," shall be
____________________________.
13. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to
the privileges of stock ownership as to any Shares not actually issued and
delivered to Optionee. No Shares shall be purchased upon the exercise of any
Options unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
14. SECURITIES LAWS COMPLIANCE. The Corporation will diligently
endeavor to comply with all applicable securities laws before any stock is
issued pursuant to the
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<PAGE> 37
Options. Without limiting the generality of the foregoing, the Corporation may
require from the Optionee such investment representation or such agreement, if
any, as counsel for the Corporation may consider necessary in order to comply
with the Securities Act of 1933 as then in effect, and may require that the
Optionee agree that any sale of the Shares will be made only in such manner as
is permitted by the Committee. The Committee may in its discretion cause the
Shares underlying the Options to be registered under the Securities Act of 1933
as amended by filing a Form S-8 Registration Statement covering the Options and
the Shares underlying the Options. Optionee shall take any action reasonably
requested by the Corporation in connection with registration or qualification of
the Shares under federal or state securities laws.
15. INTENDED TREATMENT AS NON-QUALIFIED STOCK OPTIONS. The Options
granted herein are intended to be non-qualified stock options described in U.S.
Treasury Regulation ("Treas. Reg.") Section 1.83-7 to which Sections 421 and
422A of the Internal Revenue Code of 1986, as amended from time to time
("Code") do not apply, and shall be construed to implement that intent. If all
or any part of the Options shall not be described in Treas. Reg. Section 1.83-7
or be subject to Sections 421 and 422A of the Code, the Options shall
nevertheless be valid and carried into effect.
16. PLAN CONTROLS. The Options shall be subject to and governed by the
provisions of the Plan. All determinations and interpretations of the Plan made
by the Committee shall be final and conclusive.
8
<PAGE> 38
17. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
18. CONDITIONS TO OPTIONS.
18.1 Compliance with Applicable Laws. THE CORPORATION'S
OBLIGATION TO ISSUE SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS IS
EXPRESSLY CONDITIONED UPON THE COMPLETION BY THE CORPORATION OF ANY REGISTRATION
OR OTHER QUALIFICATION OF SUCH SHARES UNDER ANY STATE AND/OR FEDERAL LAW OR
RULINGS OR REGULATIONS OF ANY GOVERNMENTAL REGULATORY BODY, OR THE MAKING OF
SUCH INVESTMENT REPRESENTATIONS OR OTHER REPRESENTATIONS AND UNDERTAKINGS BY THE
OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION IN ORDER TO COMPLY WITH
THE REQUIREMENTS OF ANY EXEMPTION FROM ANY SUCH REGISTRATION OR OTHER
QUALIFICATION OF SUCH SHARES WHICH THE COMMITTEE SHALL, IN ITS SOLE DISCRETION,
DEEM NECESSARY OR ADVISABLE. SUCH REQUIRED REPRESENTATIONS AND UNDERTAKINGS MAY
INCLUDE REPRESENTATIONS AND AGREEMENTS THAT THE OPTIONEE OR ANY PERSON ENTITLED
TO EXERCISE THE OPTION (i) IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION AND
(ii) AGREES TO HAVE PLACED UPON THE FACE AND REVERSE OF ANY CERTIFICATES A
LEGEND SETTING FORTH ANY REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN
TO THE COMMITTEE OR A REFERENCE THERETO.
9
<PAGE> 39
18.2 Shareholder Approval of Plan. IF THE OPTIONS GRANTED
HEREBY ARE GRANTED PRIOR TO APPROVAL OF THE PLAN BY THE SHAREHOLDERS OF THE
CORPORATION PURSUANT TO SECTION 8 OF THE PLAN, THE GRANT OF THE OPTIONS MADE
HEREBY IS EXPRESSLY CONDITIONED UPON AND SUCH OPTIONS SHALL NOT BE EXERCISABLE
UNTIL THE APPROVAL OF THE PLAN BY THE SHAREHOLDERS OF THE CORPORATION IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 8 OF THE PLAN.
18.3 Maximum Exercise Period. NOTWITHSTANDING ANY PROVISION OF
THIS AGREEMENT TO THE CONTRARY, THE OPTIONS SHALL EXPIRE NO LATER THAN TEN (10)
YEARS FROM THE DATE HEREOF.
19. MISCELLANEOUS.
19.1 Binding Effect. This Agreement shall bind and inure to
the benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
19.2 Further Acts. Each party agrees to perform any further
acts and execute and deliver any documents which may be necessary to carry out
the provisions of this Agreement.
19.3 Amendment. This Agreement may be amended at any time by
the written agreement of the Corporation and the Optionee.
10
<PAGE> 40
19.4 Syntax. Throughout this Agreement, whenever the context
so requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
19.5 Choice of Law. The parties hereby agree that this
Agreement has been executed and delivered in the State of California and shall
be construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to have
been jointly prepared by the parties and the parties hereby expressly agree that
any uncertainty or ambiguity existing herein shall not be interpreted against
either of them.
19.6 Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
19.7 Notices. All notices and demands between the parties
hereto shall be in writing and shall be served either by registered or certified
mail, and such notices or demands shall be deemed given and made forty-eight
(48) hours after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made, and
the issuance of the registered receipt therefor. If served by telegraph, such
notice or demand shall be deemed given and made at the time the
11
<PAGE> 41
telegraph agency shall confirm to the sender, delivery thereof to the addressee.
All notices and demands to Optionee or the Corporation may be given to them at
the following addresses:
If to Optionee:
If to Corporation: OptimumCare Corporation
30011 Ivy Glenn Drive
Laguna Niguel, California 92677
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
19.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
this Agreement supersedes all prior and contemporaneous agreements and
understandings of the parties, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. No supplement, modification or
waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall constitute a waiver of any other provision hereof (whether
or not similar) nor shall such waiver constitute a continuing waiver.
19.9 Attorneys' Fees. In the event that any party to this
Agreement institutes any action or proceeding, including, but not limited to,
litigation or arbitration, to preserve,
12
<PAGE> 42
to protect or to enforce any right or benefit created by or granted under this
Agreement, the prevailing party in each respective such action or proceeding
shall be entitled, in addition to any and all other relief granted by a court or
other tribunal or body, as may be appropriate, to an award in such action or
proceeding of that sum of money which represents the attorneys' fees reasonably
incurred by the prevailing party therein in filing or otherwise instituting and
in prosecuting or otherwise pursuing or defending such action or proceeding,
and, additionally, the attorneys' fees reasonably incurred by such prevailing
party in negotiating any and all matters underlying such action or proceeding
and in preparation for instituting or defending such action or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first set forth above.
"CORPORATION"
OPTIMUMCARE CORPORATION,
A Delaware Corporation
By:________________________________
Edward A. Johnson, President
"OPTIONEE"
___________________________________
13
<PAGE> 1
EXHIBIT 99.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is entered into as of
December 31, 1991, by and between OPTIMUMCARE CORPORATION, a Delaware
corporation ("Corporation"), and EDWARD A. JOHNSON ("Optionee").
R E C I T A L S
A. On December 31, 1991, the Board of Directors of the Corporation
approved the issuance of this Agreement.
A G R E E M E N T
It is hereby agreed as follows:
1. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, options
("Options") to purchase all or any part of 222,500 Shares of its common stock,
and upon the other terms and conditions set forth herein.
2. OPTION PERIOD. The Options shall be fully exercisable (subject to
the provisions of Section 11) and expiring on the date five (5) years from the
date of grant.
3. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Corporation of the election to purchase and of the
number of
-1-
<PAGE> 2
Shares Optionee elects to purchase, such notice to be accompanied by such other
executed instruments or documents as may be required by the Committee pursuant
to this Agreement, and unless otherwise directed by the Committee, Optionee
shall at the time of such exercise tender the purchase price of the Shares he
has elected to purchase. An Optionee may purchase less than the total number of
Shares for which the Option is exercisable, provided that a partial exercise of
an Option may not be for less than One Hundred (100) Shares. If Optionee shall
not purchase all of the Shares which he is entitled to purchase under the
Options, his right to purchase the remaining unpurchased Shares shall continue
until expiration of the Options. The Options shall be exercisable with respect
of whole Shares only, and fractional Share interests shall be disregarded.
4. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be $.21 per
Share.
5. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased. Provided, however, the Board of Directors may, in its sole
discretion, permit payment by the Corporation of the purchase price in whole or
in part with Shares. If the Optionee is so permitted, and the Optionee elects to
make payment with Shares, the Optionee shall deliver to the Corporation
certificates representing the number of Shares in payment for new Shares, duly
endorsed for transfer to the Corporation, together with any written
representations relating to title, liens and encumbrances, securities laws,
rules and
-2-
<PAGE> 3
regulatory compliance, or other matters, reasonably requested by the Board of
Directors. The value of Shares so tendered shall be their Fair Market Value Per
Share on the date of the Optionee's notice of exercise.
6. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
granted, sometimes referred to herein as the "date of grant," shall be December
31, 1991.
7. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
privileges of stock ownership as to any Shares not actually issued and delivered
to Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
8. SECURITIES LAWS COMPLIANCE. The Corporation will diligently endeavor
to comply with all applicable securities laws before any stock is issued
pursuant to the Options. Without limiting the generality of the foregoing, the
Corporation may require from the Optionee such investment representation or such
agreement, if any, as counsel for the Corporation may consider necessary in
order to comply with the Securities Act of 1933 as then in effect, and may
require that the Optionee agree that any sale of the Shares will be made only in
such manner as is permitted by the Committee. The Committee may in its
discretion cause the Shares underlying the Options to be registered under the
Securities Act of 1933 as amended by filing a Form S-8 Registration Statement
covering the Options
-3-
<PAGE> 4
and the Shares underlying the Options. Optionee shall take any action reasonably
requested by the Corporation in connection with registration or qualification of
the Shares under federal or state securities laws.
9. SHARES SUBJECT TO LEGEND. All certificates issued to represent
Shares purchased upon exercise of the Options shall bear the following legend:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, and
have been issued in reliance upon an exemption from the
requirement for such registration for non-public offerings.
Accordingly, the sale, transfer, pledge, hypothecation or
other disposition of the securities evidenced hereby or any
portion thereof or interest therein may not be accomplished in
the absence of an effective opinion of counsel satisfactory in
form and substance to the Company to the effect that such
registration is not required."
10. CONDITIONS TO OPTIONS.
10.1 Compliance with Applicable Laws. The Corporation's
obligation to issue shares of its common stock upon exercise of the options is
expressly conditioned upon the completion by the corporation of any registration
or other qualification of such shares under any state and/or federal law or
rulings or regulations of any governmental regulatory body, or the making of
such investment representations or other representations and
-4-
<PAGE> 5
undertakings by the optionee or any person entitled to exercise the option in
order to comply with the requirements of any exemption from any such
registration or other qualification of such shares which the Committee shall, in
its sole discretion, deem necessary or advisable. Such required representations
and undertakings may include representations and agreements that the optionee or
any person entitled to exercise the option (i) is not purchasing such shares for
distribution and (ii) agrees to have placed upon the face and reverse of any
certificates a legend setting forth any representations and undertakings which
have been given to the committee or a reference thereto.
11. MISCELLANEOUS.
11.1 Binding Effect. This Agreement shall bind and inure to
the benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
11.2 Further Acts. Each party agrees to perform any further
acts and execute and deliver any documents which may be necessary to carry out
the provisions of this Agreement.
11.3 Amendment. This Agreement may be amended at any time by
the written agreement of the Corporation and the Optionee.
11.4 Syntax. Throughout this Agreement, whenever the context
so requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
-5-
<PAGE> 6
11.5 Choice of Law. The parties hereby agree that this
Agreement has been executed and delivered in the State of California and shall
be construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to have
been jointly prepared by the parties and the parties hereby expressly agree that
any uncertainty or ambiguity existing herein shall not be interpreted against
either of them.
11.6 Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
11.7 Notices. All notices and demands between the parties
hereto shall be in writing and shall be served either by registered or certified
mail, and such notices or demands shall be deemed given and made forty-eight
(48) hours after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made, and
the issuance of the registered receipt therefor. If served by telegraph, agency
shall confirm to the sender, delivery thereof to the addressee. All notices and
demands to Optionee may be at the address which is carried on the Corporation's
books and records. All notices and demands to the Corporation may be given at
the principal office of the Corporation in California. Such parties may
designate in writing from time to time such other place or places that such
notices and demands may be given.
11.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
this Agreement
-6-
<PAGE> 7
supersedes all prior and contemporaneous agreements and understandings of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
11.9 Attorneys' Fees. In the event that any party to this
Agreement institutes any action or proceeding, including, but not limited to,
litigation or arbitration, to preserve, to protect or to enforce any right or
benefit created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first set forth above.
"CORPORATION"
OPTIMUMCARE CORPORATION,
A Delaware corporation
By: /s/
----------------------------------------
Edward A. Johnson, President
"OPTIONEE"
By: /s/
----------------------------------------
EDWARD A. JOHNSON
-8-
<PAGE> 9
EXHIBIT A
The securities evidenced by this certificate have not been registered under the
Securities Act of 1933, as amended, and have been issued in reliance upon an
exemption from the requirements for such registration for non-public offerings.
Accordingly, the sale, transfer, pledge, hypothecation or other disposition of
the securities evidenced hereby or any portion thereof or interest therein may
not be accomplished in the absence of an effective registration statement under
that act or an opinion of counsel satisfactory in form and substance to the
Company to the effect that such registration is not required.
-9-
<PAGE> 1
EXHIBIT 99.3
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is entered into as of this
24th day of April, 1996 by and between OPTIMUMCARE CORPORATION, a Delaware
corporation ("Corporation"), and JOSEPH H. DADOURIAN ("Optionee").
A G R E E M E N T
It is hereby agreed as follows:
1. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, options
("Options") to purchase all or any part of Thirty-Three Thousand (33,000)
Shares, upon and subject to the terms and conditions set forth herein.
2. OPTION PERIOD. The Options shall be exercisable at any time during
the period commencing on the following dates (subject to the provisions of
Section 10) and expiring on the following dates:
<TABLE>
<CAPTION>
Number of Options Exercisable Effective Expiration Date
----------------- --------------------- ---------------
<S> <C> <C>
6,660 April 24, 1997 April 23, 2001
6,660 April 24, 1998 April 23, 2001
6,660 April 24, 1999 April 23, 2001
6,660 April 24, 2000 April 23, 2001
6,660 April 24, 2001 April 23, 2002
</TABLE>
3. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Corporation of the election to purchase and of the
number of
1
<PAGE> 2
Shares Optionee elects to purchase, such notice to be accompanied by such other
executed instruments or documents as may be required by the Corporation pursuant
to this Agreement. Optionee shall at the time of such exercise tender the
purchase price of the Shares Optionee has elected to purchase. Optionee may
purchase less than the total number of Shares for which the Option is
exercisable, provided that a partial exercise of an Option may not be for less
than One Hundred (100) Shares. If Optionee shall not purchase all of the Shares
which Optionee is entitled to purchase under the Options, Optionee's right to
purchase the remaining unpurchased Shares shall continue until expiration of the
Options. The Options shall be exercisable with respect of whole Shares only, and
fractional Share interests shall be disregarded.
4. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be $.92 per
Share, which is eighty five percent (85%) of the fair market value per share on
the date of the grant of the Options as determined in good faith by the Board of
Directors of the Corporation.
5. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number
2
<PAGE> 3
or kind of shares or securities, without receipt of consideration by the
Corporation, through reorganization, merger, recapitalization, reclassification,
stock split, reverse stock split, stock dividend, stock consolidation or
otherwise. Upon the occurrence of an Adjustment Event, (i) appropriate and
proportionate adjustments shall be made to the number and kind and exercise
price for the shares subject to the Options, and (ii) appropriate amendments to
this Agreement shall be executed by the Corporation and Optionee if the
Corporation determines that such an amendment is necessary or desirable to
reflect such adjustments. The determination by the Corporation as to what
adjustments, amendments or arrangements shall be made pursuant to this Section
6, and the extent thereof, shall be final and conclusive. No fractional Shares
shall be issued on account of any such adjustment or arrangement.
7. NO RIGHTS TO CONTINUED RELATIONSHIP. Nothing contained in this
Agreement shall obligate the Corporation to have any relationship with Optionee
for any period or interfere in any way with the right of the Corporation to
terminate the relationship with Optionee at any time.
8. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
granted, sometimes referred to herein as the "date of grant," shall be April 18,
1996.
9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
privileges of stock ownership as to any Shares not actually issued and delivered
to Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws,
3
<PAGE> 4
or governmental or regulatory agencies having jurisdiction, and of any exchanges
upon which the stock of the Corporation may be listed shall have been fully
complied with.
10. SECURITIES LAWS COMPLIANCE. The Corporation will diligently
endeavor to comply with all applicable securities laws before any stock is
issued pursuant to the Options. Without limiting the generality of the
foregoing, the Corporation may require from the Optionee such investment
representation or such agreement, if any, as counsel for the Corporation may
consider necessary in order to comply with the Securities Act of 1933 as then in
effect, and may require that the Optionee agree that any sale of the Shares will
be made only in such manner as is permitted by the Corporation. The Corporation
shall cause the Shares underlying the Options to be registered under the
Securities Act of 1933 as amended by filing a Form S-8 Registration Statement
(or other applicable form) covering the Options and the Shares underlying the
Options. Optionee shall take any action reasonably requested by the Corporation
in connection with registration or qualification of the Shares under federal or
state securities laws.
11. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
12. COMPLIANCE WITH APPLICABLE LAWS. THE CORPORATION'S OBLIGATION TO
ISSUE SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS IS EXPRESSLY
CONDITIONED UPON THE COMPLETION BY THE CORPORATION OF ANY REGISTRATION OR OTHER
QUALIFICATION OF SUCH
4
<PAGE> 5
SHARES UNDER ANY STATE AND/OR FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY
GOVERNMENTAL REGULATORY BODY, OR THE MAKING OF SUCH INVESTMENT REPRESENTATIONS
OR OTHER REPRESENTATIONS AND UNDERTAKINGS BY THE OPTIONEE OR ANY PERSON ENTITLED
TO EXERCISE THE OPTION IN ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION
FROM ANY SUCH REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE
CORPORATION SHALL, IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH
REQUIRED REPRESENTATIONS AND UNDERTAKINGS MAY INCLUDE REPRESENTATIONS AND
AGREEMENTS THAT THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION (i)
IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION AND (ii) AGREES TO HAVE PLACED
UPON THE FACE AND REVERSE OF ANY CERTIFICATES A LEGEND SETTING FORTH ANY
REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN TO THE CORPORATION OR A
REFERENCE THERETO.
13. MISCELLANEOUS.
13.1 Binding Effect. This Agreement shall bind and inure to
the benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
13.2 Further Acts. Each party agrees to perform any further
acts and execute and deliver any documents which may be necessary to carry out
the provisions of this Agreement.
5
<PAGE> 6
13.3 Amendment. This Agreement may be amended at any time by
the written agreement of the Corporation and the Optionee.
13.4 Syntax. Throughout this Agreement, whenever the context
so requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
13.5 Choice of Law. The parties hereby agree that this
Agreement has been executed and delivered in the State of California and shall
be construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to have
been jointly prepared by the parties and the parties hereby expressly agree that
any uncertainty or ambiguity existing herein shall not be interpreted against
either of them.
13.6 Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
13.7 Notices. All notices, requests, demands, and other
communications given, or required to be given pursuant to the terms of this
Agreement shall be in writing and may be delivered in person (by hand,
messenger, or other confirmable form of
6
<PAGE> 7
delivery), or be sent by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows, or by Federal Express or other nationally
recognized overnight courier service, addressed as follows, or by facsimile
transmission, to the following respective numbers, followed by a copy being
delivered in person, by mail, or by overnight courtier as specified herein:
If to Optionee: Joseph H. Dadourian
244 St. Albans Avenue
South Pasadena, CA 91030
If to Corporation: OptimumCare Corporation
30011 Ivy Glenn Drive, Suite 219
Laguna Niguel, California 92677
Either party may, by written notice to the other, specify a different address or
numbers for notice purposes. Any notice sent to the party to whom it is
addressed in accordance with this paragraph will be deemed to have been given
(i) when received, if personally delivered; (ii) if sent by registered or
certified mail, return receipt requested, upon the date of delivery shown on the
receipt card, or if no date is shown, the postmark thereon; (iii) if sent via
Federal Express or other nationally recognized overnight courier, one (1)
business day after deposit with such overnight courier; or (iv) if sent by
facsimile transmission, on the day on which it is sent, if receipt of
transmission is confirmed by telephone. If notice is received on a Saturday,
Sunday or legal holiday, it will be deemed to have been given and received on
the next following business day.
13.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
this Agreement
7
<PAGE> 8
supersedes all prior and contemporaneous agreements and understandings of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
13.9 Attorneys' Fees. In the event that any party to this
Agreement institutes any action or proceeding, including, but not limited to,
litigation or arbitration, to preserve, to protect or to enforce any right or
benefit created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have entered into this Agreement
as of the date first set forth above.
"CORPORATION"
OPTIMUMCARE CORPORATION,
a Delaware corporation
By: /s/ Edward A. Johnson
--------------------------------
Edward A. Johnson, President
"OPTIONEE"
/s/ Joseph H. Dadourian
-----------------------------------
JOSEPH H. DADOURIAN
9
<PAGE> 1
EXHIBIT 99.4
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is entered into as of this
24th day of April, 1996 by and between OPTIMUMCARE CORPORATION, a Delaware
corporation ("Corporation"), and TERI L. JOLIN ("Optionee").
A G R E E M E N T
It is hereby agreed as follows:
1. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, options
("Options") to purchase all or any part of Thirty-Three Thousand (33,000)
Shares, upon and subject to the terms and conditions set forth herein.
2. OPTION PERIOD. The Options shall be exercisable at any time during
the period commencing on the following dates (subject to the provisions of
Section 10) and expiring on the following dates:
<TABLE>
<CAPTION>
Number of Options Exercisable Effective Expiration Date
----------------- --------------------- ---------------
<S> <C> <C>
6,660 April 24, 1997 April 23, 2001
6,660 April 24, 1998 April 23, 2001
6,660 April 24, 1999 April 23, 2001
6,660 April 24, 2000 April 23, 2001
6,660 April 24, 2001 April 23, 2002
</TABLE>
3. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Corporation of the election to purchase and of the
number of
1
<PAGE> 2
Shares Optionee elects to purchase, such notice to be accompanied by such other
executed instruments or documents as may be required by the Corporation pursuant
to this Agreement. Optionee shall at the time of such exercise tender the
purchase price of the Shares Optionee has elected to purchase. Optionee may
purchase less than the total number of Shares for which the Option is
exercisable, provided that a partial exercise of an Option may not be for less
than One Hundred (100) Shares. If Optionee shall not purchase all of the Shares
which Optionee is entitled to purchase under the Options, Optionee's right to
purchase the remaining unpurchased Shares shall continue until expiration of the
Options. The Options shall be exercisable with respect of whole Shares only, and
fractional Share interests shall be disregarded.
4. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be $.92 per
Share, which is eighty five percent (85%) of the fair market value per share on
the date of the grant of the Options as determined in good faith by the Board of
Directors of the Corporation.
5. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number
2
<PAGE> 3
or kind of shares or securities, without receipt of consideration by the
Corporation, through reorganization, merger, recapitalization, reclassification,
stock split, reverse stock split, stock dividend, stock consolidation or
otherwise. Upon the occurrence of an Adjustment Event, (i) appropriate and
proportionate adjustments shall be made to the number and kind and exercise
price for the shares subject to the Options, and (ii) appropriate amendments to
this Agreement shall be executed by the Corporation and Optionee if the
Corporation determines that such an amendment is necessary or desirable to
reflect such adjustments. The determination by the Corporation as to what
adjustments, amendments or arrangements shall be made pursuant to this Section
6, and the extent thereof, shall be final and conclusive. No fractional Shares
shall be issued on account of any such adjustment or arrangement.
7. NO RIGHTS TO CONTINUED RELATIONSHIP. Nothing contained in this
Agreement shall obligate the Corporation to have any relationship with Optionee
for any period or interfere in any way with the right of the Corporation to
terminate the relationship with Optionee at any time.
8. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
granted, sometimes referred to herein as the "date of grant," shall be April 18,
1996.
9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
privileges of stock ownership as to any Shares not actually issued and delivered
to Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws,
3
<PAGE> 4
or governmental or regulatory agencies having jurisdiction, and of any exchanges
upon which the stock of the Corporation may be listed shall have been fully
complied with.
10. SECURITIES LAWS COMPLIANCE. The Corporation will diligently
endeavor to comply with all applicable securities laws before any stock is
issued pursuant to the Options. Without limiting the generality of the
foregoing, the Corporation may require from the Optionee such investment
representation or such agreement, if any, as counsel for the Corporation may
consider necessary in order to comply with the Securities Act of 1933 as then in
effect, and may require that the Optionee agree that any sale of the Shares will
be made only in such manner as is permitted by the Corporation. The Corporation
shall cause the Shares underlying the Options to be registered under the
Securities Act of 1933 as amended by filing a Form S-8 Registration Statement
(or other applicable form) covering the Options and the Shares underlying the
Options. Optionee shall take any action reasonably requested by the Corporation
in connection with registration or qualification of the Shares under federal or
state securities laws.
11. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
12. COMPLIANCE WITH APPLICABLE LAWS. THE CORPORATION'S OBLIGATION TO
ISSUE SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS IS EXPRESSLY
CONDITIONED UPON THE COMPLETION BY THE CORPORATION OF ANY REGISTRATION OR OTHER
QUALIFICATION OF SUCH
4
<PAGE> 5
SHARES UNDER ANY STATE AND/OR FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY
GOVERNMENTAL REGULATORY BODY, OR THE MAKING OF SUCH INVESTMENT REPRESENTATIONS
OR OTHER REPRESENTATIONS AND UNDERTAKINGS BY THE OPTIONEE OR ANY PERSON ENTITLED
TO EXERCISE THE OPTION IN ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION
FROM ANY SUCH REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE
CORPORATION SHALL, IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH
REQUIRED REPRESENTATIONS AND UNDERTAKINGS MAY INCLUDE REPRESENTATIONS AND
AGREEMENTS THAT THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION (i)
IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION AND (ii) AGREES TO HAVE PLACED
UPON THE FACE AND REVERSE OF ANY CERTIFICATES A LEGEND SETTING FORTH ANY
REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN TO THE CORPORATION OR A
REFERENCE THERETO.
13. MISCELLANEOUS.
13.1 Binding Effect. This Agreement shall bind and inure to
the benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
13.2 Further Acts. Each party agrees to perform any further
acts and execute and deliver any documents which may be necessary to carry out
the provisions of this Agreement.
5
<PAGE> 6
13.3 Amendment. This Agreement may be amended at any time by
the written agreement of the Corporation and the Optionee.
13.4 Syntax. Throughout this Agreement, whenever the context
so requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
13.5 Choice of Law. The parties hereby agree that this
Agreement has been executed and delivered in the State of California and shall
be construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to have
been jointly prepared by the parties and the parties hereby expressly agree that
any uncertainty or ambiguity existing herein shall not be interpreted against
either of them.
13.6 Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
13.7 Notices. All notices, requests, demands, and other
communications given, or required to be given pursuant to the terms of this
Agreement shall be in writing and may be delivered in person (by hand,
messenger, or other confirmable form of
6
<PAGE> 7
delivery), or be sent by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows, or by Federal Express or other nationally
recognized overnight courier service, addressed as follows, or by facsimile
transmission, to the following respective numbers, followed by a copy being
delivered in person, by mail, or by overnight courtier as specified herein:
If to Optionee: Teri L. Jolin
11328 Elderwood Street
Los Angeles, CA 90049
If to Corporation: OptimumCare Corporation
30011 Ivy Glenn Drive, Suite 219
Laguna Niguel, California 92677
Either party may, by written notice to the other, specify a different address or
numbers for notice purposes. Any notice sent to the party to whom it is
addressed in accordance with this paragraph will be deemed to have been given
(i) when received, if personally delivered; (ii) if sent by registered or
certified mail, return receipt requested, upon the date of delivery shown on the
receipt card, or if no date is shown, the postmark thereon; (iii) if sent via
Federal Express or other nationally recognized overnight courier, one (1)
business day after deposit with such overnight courier; or (iv) if sent by
facsimile transmission, on the day on which it is sent, if receipt of
transmission is confirmed by telephone. If notice is received on a Saturday,
Sunday or legal holiday, it will be deemed to have been given and received on
the next following business day.
13.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
this Agreement
7
<PAGE> 8
supersedes all prior and contemporaneous agreements and understandings of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
13.9 Attorneys' Fees. In the event that any party to this
Agreement institutes any action or proceeding, including, but not limited to,
litigation or arbitration, to preserve, to protect or to enforce any right or
benefit created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have entered into this Agreement
as of the date first set forth above.
"CORPORATION"
OPTIMUMCARE CORPORATION,
a Delaware corporation
By: /s/ Edward A. Johnson
--------------------------------
Edward A. Johnson, President
"OPTIONEE"
/s/ Teri L. Jolin
-----------------------------------
TERI L. JOLIN
9
<PAGE> 1
EXHIBIT 99.5
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is entered into as of this
24th day of April, 1996 by and between OPTIMUMCARE CORPORATION, a Delaware
corporation ("Corporation"), and MARGARET M. MINNICK ("Optionee").
A G R E E M E N T
It is hereby agreed as follows:
1. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, options
("Options") to purchase all or any part of Thirty-Three Thousand (33,000)
Shares, upon and subject to the terms and conditions set forth herein.
2. OPTION PERIOD. The Options shall be exercisable at any time during
the period commencing on the following dates (subject to the provisions of
Section 10) and expiring on the following dates:
<TABLE>
<CAPTION>
Number of Options Exercisable Effective Expiration Date
----------------- --------------------- ---------------
<S> <C> <C>
6,660 April 24, 1997 April 23, 2001
6,660 April 24, 1998 April 23, 2001
6,660 April 24, 1999 April 23, 2001
6,660 April 24, 2000 April 23, 2001
6,660 April 24, 2001 April 23, 2002
</TABLE>
3. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Corporation of the election to purchase and of the
number of
1
<PAGE> 2
Shares Optionee elects to purchase, such notice to be accompanied by such other
executed instruments or documents as may be required by the Corporation pursuant
to this Agreement. Optionee shall at the time of such exercise tender the
purchase price of the Shares Optionee has elected to purchase. Optionee may
purchase less than the total number of Shares for which the Option is
exercisable, provided that a partial exercise of an Option may not be for less
than One Hundred (100) Shares. If Optionee shall not purchase all of the Shares
which Optionee is entitled to purchase under the Options, Optionee's right to
purchase the remaining unpurchased Shares shall continue until expiration of the
Options. The Options shall be exercisable with respect of whole Shares only, and
fractional Share interests shall be disregarded.
4. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be $.92 per
Share, which is eighty five percent (85%) of the fair market value per share on
the date of the grant of the Options as determined in good faith by the Board of
Directors of the Corporation.
5. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number
2
<PAGE> 3
or kind of shares or securities, without receipt of consideration by the
Corporation, through reorganization, merger, recapitalization, reclassification,
stock split, reverse stock split, stock dividend, stock consolidation or
otherwise. Upon the occurrence of an Adjustment Event, (i) appropriate and
proportionate adjustments shall be made to the number and kind and exercise
price for the shares subject to the Options, and (ii) appropriate amendments to
this Agreement shall be executed by the Corporation and Optionee if the
Corporation determines that such an amendment is necessary or desirable to
reflect such adjustments. The determination by the Corporation as to what
adjustments, amendments or arrangements shall be made pursuant to this Section
6, and the extent thereof, shall be final and conclusive. No fractional Shares
shall be issued on account of any such adjustment or arrangement.
7. NO RIGHTS TO CONTINUED RELATIONSHIP. Nothing contained in this
Agreement shall obligate the Corporation to have any relationship with Optionee
for any period or interfere in any way with the right of the Corporation to
terminate the relationship with Optionee at any time.
8. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
granted, sometimes referred to herein as the "date of grant," shall be April 18,
1996.
9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
privileges of stock ownership as to any Shares not actually issued and delivered
to Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws,
3
<PAGE> 4
or governmental or regulatory agencies having jurisdiction, and of any exchanges
upon which the stock of the Corporation may be listed shall have been fully
complied with.
10. SECURITIES LAWS COMPLIANCE. The Corporation will diligently
endeavor to comply with all applicable securities laws before any stock is
issued pursuant to the Options. Without limiting the generality of the
foregoing, the Corporation may require from the Optionee such investment
representation or such agreement, if any, as counsel for the Corporation may
consider necessary in order to comply with the Securities Act of 1933 as then in
effect, and may require that the Optionee agree that any sale of the Shares will
be made only in such manner as is permitted by the Corporation. The Corporation
shall cause the Shares underlying the Options to be registered under the
Securities Act of 1933 as amended by filing a Form S-8 Registration Statement
(or other applicable form) covering the Options and the Shares underlying the
Options. Optionee shall take any action reasonably requested by the Corporation
in connection with registration or qualification of the Shares under federal or
state securities laws.
11. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
12. COMPLIANCE WITH APPLICABLE LAWS. THE CORPORATION'S OBLIGATION TO
ISSUE SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS IS EXPRESSLY
CONDITIONED UPON THE COMPLETION BY THE CORPORATION OF ANY REGISTRATION OR OTHER
QUALIFICATION OF SUCH
4
<PAGE> 5
SHARES UNDER ANY STATE AND/OR FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY
GOVERNMENTAL REGULATORY BODY, OR THE MAKING OF SUCH INVESTMENT REPRESENTATIONS
OR OTHER REPRESENTATIONS AND UNDERTAKINGS BY THE OPTIONEE OR ANY PERSON ENTITLED
TO EXERCISE THE OPTION IN ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION
FROM ANY SUCH REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE
CORPORATION SHALL, IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH
REQUIRED REPRESENTATIONS AND UNDERTAKINGS MAY INCLUDE REPRESENTATIONS AND
AGREEMENTS THAT THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION (i)
IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION AND (ii) AGREES TO HAVE PLACED
UPON THE FACE AND REVERSE OF ANY CERTIFICATES A LEGEND SETTING FORTH ANY
REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN TO THE CORPORATION OR A
REFERENCE THERETO.
13. MISCELLANEOUS.
13.1 Binding Effect. This Agreement shall bind and inure to
the benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
13.2 Further Acts. Each party agrees to perform any further
acts and execute and deliver any documents which may be necessary to carry out
the provisions of this Agreement.
5
<PAGE> 6
13.3 Amendment. This Agreement may be amended at any time by
the written agreement of the Corporation and the Optionee.
13.4 Syntax. Throughout this Agreement, whenever the context
so requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
13.5 Choice of Law. The parties hereby agree that this
Agreement has been executed and delivered in the State of California and shall
be construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to have
been jointly prepared by the parties and the parties hereby expressly agree that
any uncertainty or ambiguity existing herein shall not be interpreted against
either of them.
13.6 Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
13.7 Notices. All notices, requests, demands, and other
communications given, or required to be given pursuant to the terms of this
Agreement shall be in writing and may be delivered in person (by hand,
messenger, or other confirmable form of
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delivery), or be sent by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows, or by Federal Express or other nationally
recognized overnight courier service, addressed as follows, or by facsimile
transmission, to the following respective numbers, followed by a copy being
delivered in person, by mail, or by overnight courtier as specified herein:
If to Optionee: Margaret M. Minnick
531 Vallombrosa
Pasadena, CA 91107
If to Corporation: OptimumCare Corporation
30011 Ivy Glenn Drive, Suite 219
Laguna Niguel, California 92677
Either party may, by written notice to the other, specify a different address or
numbers for notice purposes. Any notice sent to the party to whom it is
addressed in accordance with this paragraph will be deemed to have been given
(i) when received, if personally delivered; (ii) if sent by registered or
certified mail, return receipt requested, upon the date of delivery shown on the
receipt card, or if no date is shown, the postmark thereon; (iii) if sent via
Federal Express or other nationally recognized overnight courier, one (1)
business day after deposit with such overnight courier; or (iv) if sent by
facsimile transmission, on the day on which it is sent, if receipt of
transmission is confirmed by telephone. If notice is received on a Saturday,
Sunday or legal holiday, it will be deemed to have been given and received on
the next following business day.
13.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
this Agreement
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supersedes all prior and contemporaneous agreements and understandings of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
13.9 Attorneys' Fees. In the event that any party to this
Agreement institutes any action or proceeding, including, but not limited to,
litigation or arbitration, to preserve, to protect or to enforce any right or
benefit created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
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IN WITNESS WHEREOF, the parties have entered into this Agreement
as of the date first set forth above.
"CORPORATION"
OPTIMUMCARE CORPORATION,
a Delaware corporation
By: /s/ Edward A. Johnson
--------------------------------
Edward A. Johnson, President
"OPTIONEE"
/s/ Margaret M. Minnick
-----------------------------------
MARGARET M. MINNICK
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