OMNI NUTRACEUTICALS, PRES14A, 1999-11-26

OMNI NUTRACEUTICALS
PRES14A, 1999-11-26
FABRICATED PLATE WORK (BOILER SHOPS)

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SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[X] Preliminary Proxy Statement

[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

[ ] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

OMNI NUTRACEUTICALS, INC.
(Name of Registrant as Specified in Its Charter)

N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

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

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

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

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

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

(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:

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PRELIMINARY PROXY STATEMENT

OMNI NUTRACEUTICALS, INC.

NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL
MEETING OF SHAREHOLDERS

To the Shareholders of Omni Nutraceuticals, Inc.:

Notice is hereby given that a Special Meeting in Lieu of Annual Meeting of
the Shareholders of Omni Nutraceuticals, Inc., a Utah corporation ("Omni
Nutraceuticals" or the "Company"), will be held on December 17, 1999, at 10:00
a.m., Pacific Standard Time, at the offices of the Company at 5310 Beethoven
Avenue, Los Angeles, CA 90066, for the following purposes:

1. To ratify an amendment to Article III of the Company's Bylaws
eliminating Section 3.14 providing for an Executive Committee of the Board
of Directors;

2. To elect Mr. Santo P. Panzarella to the Board of Directors of Omni
Nutraceuticals as a Class III director;

3. To ratify amendments to the Long Term Stock Incentive Plan of Omni
Nutraceuticals increasing the number of shares of Common Stock that may be
awarded under the Plan to 4,500,000, including 1,000,000 shares that may be
granted to non-employee directors, and increasing, and amending the terms
of, one-time stock option grants to new non-employee directors;

4. To ratify the selection of Arthur Anderson LLP, independent public
accountants, as Omni Nutraceuticals' independent auditors for the fiscal
year 1999; and

5. To transact such other business as may properly come before the meeting
and at any adjournment or postponement thereof.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ABOVE
PROPOSALS, EACH OF WHICH IS DESCRIBED IN MORE DETAIL IN THE ACCOMPANYING PROXY
STATEMENT.

ONLY SHAREHOLDERS OF RECORD AS OF THE CLOSE OF BUSINESS ON NOVEMBER 5, 1999
ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE MEETING AND AT ANY ADJOURNMENT OR
POSTPONEMENT THEREOF. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY, DATE AND SIGN
IT, AND RETURN IT PROMPTLY IN THE STAMPED ENVELOPE WHICH IS INCLUDED WITH THESE
MATERIALS. IN THE EVENT YOU DO ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW
YOUR PROXY AND VOTE IN PERSON. THE ATTENDANCE AT AND/OR VOTE OF EACH SHAREHOLDER
AT THE MEETING ARE IMPORTANT, AND EACH SHAREHOLDER IS ENCOURAGED TO ATTEND OR
SUBMIT A PROXY.

By Order of the Board of Directors

Corey Fischer, Secretary

Los Angeles, California
[Proxy Statement date] 1999

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PROXY STATEMENT

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

OMNI NUTRACEUTICALS, INC.
5310 Beethoven Avenue
Los Angeles, CA 90066
(310) 253-5305
December [__], 1999

INTRODUCTION

This Proxy Statement and the enclosed Proxy are furnished in connection
with the solicitation of Proxies by the Board of Directors of Omni
Nutraceuticals, Inc., a Utah corporation ("Omni Nutraceuticals" or the
"Company"), for use at the Special Meeting in Lieu Annual Meeting of
Shareholders ("Meeting") to be held on December 17, 1999 at 10:00 a.m. local
time, or at any adjournment or postponement thereof, for the purposes set forth
herein and in the accompanying Notice of Special Meeting in Lieu of Annual
Meeting of Shareholders. The Meeting will be held at Omni Nutraceuticals'
headquarters at 5310 Beethoven Avenue, Los Angeles, CA 90066.

These Proxy solicitation materials are being mailed on or about
December __, 1999, to all shareholders of record as of the close of business on
November 5, 1999, the record date, who are entitled to vote at the Meeting.
Omni Nutraceuticals' 1998 Annual Report to Shareholders was previously mailed
to Shareholders on or about August 15, 1999. Each share held on the record
date entitles the registered holder to one vote at the Annual Meeting. As of
November 5, 1999 there were 27,248,141 shares of Omni Nutraceuticals' common
stock, par value $.01 per share ("Common Stock"), issued and outstanding.

If the form of Proxy accompanying this Proxy Statement is properly
executed, dated and returned to Omni Nutraceuticals, the shares represented by
the Proxy will be voted at the Meeting in accordance with shareholder(s)
directions. If the Proxy is signed and returned without any directions given,
the shares will be voted in accordance with the recommendations of the Board of
Directors as described in this Proxy Statement. Any shareholder giving a Proxy
may revoke the Proxy, at any time before it is voted at the Meeting, by
delivering a written notice of revocation to the Secretary of Omni
Nutraceuticals, by submitting a subsequently executed and dated Proxy or by
attending the Meeting and voting in person. Attendance at the Meeting by a
shareholder who has given a Proxy will not have the effect of revoking it unless
the shareholder gives written notice of revocation thereof before the Proxy is
voted. The Chairman of the Meeting will announce the closing of the polls during
the Meeting, and all Proxies must be received prior to the closing of the polls
in order to be counted.

The costs of the solicitation of Proxies will be borne by Omni
Nutraceuticals. In addition to the use of the mail, Proxies may be solicited
personally or by telephone or facsimile by officers, directors and regular
employees of Omni Nutraceuticals without additional compensation. Omni
Nutraceuticals may also request banks and brokers to solicit their customer(s)
who have a beneficial interest in the Common Stock registered in the name of

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nominees and will reimburse such banks and brokers for their reasonable
out-of-pocket expenses.

The presence in person or by Proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting constitutes a
quorum for the transaction of business.

PROPOSAL 1

At a meeting held on October 7, 1999, the Board of Directors adopted a
resolution approving an amendment to Article III of Omni Nutraceuticals' Bylaws
to delete therefrom Section 3.14 in its entirety.

Section 3.14 of the Bylaws currently provides for a three person Executive
Committee comprised of the Chairman of the Board, the President and Chief
Executive Officer and the Class III director. The Committee has all the powers
of the Board when it is not in session except for the power to: (i) adopt an
annual budget for the Company; (ii) issue securities; (iii) sell a material
portion of the Company's assets; (iv) change the business of the Company; (v)
review any indebtedness (other than ordinary trade payables); (vi) authorize any
business combination, recapitalization or reorganization of the Company; (vii)
declare and pay dividends; (viii) amend the Company's Articles of Incorporation
or Bylaws; or (ix) authorize any other matter which under applicable law is
required to be determined by the Board.

The Committee was first established in connection with the merger of Irwin
Naturals with and into 4Health, Inc. which resulted in Mr. Klee Irwin, the
resulting majority shareholder of the Company, becoming Chief Executive Officer.
In light of his resignation as an officer of Omni Nutraceuticals and the overall
small number of directors who comprise the Board, the Board unanimously
determined that the Executive Committee no longer served any valid business
purpose and, accordingly, should be abolished.

VOTE REQUIRED

The affirmative votes cast by at least 80% of the shares of Common Stock
issued and outstanding on the record date is required for approval of Proposal
1. Under the rules of the New York Stock Exchange, which are generally observed
by brokers that are not members of such Exchange as well as those that are,
brokers that hold shares in street or nominee names for a customer do not have
the authority to vote on items such as the Proposal 1 when they have not
received instructions from beneficial owners. Therefore, brokers that do not
receive instruction from beneficial owners are not entitled to vote on the
Proposal (a so-called "broker non-vote"). Accordingly, under Utah Law, a broker
non-vote, as well as abstentions, while effective to establish a quorum, will
have the same effect as a vote against the Proposal. Messrs. Duncan and Irwin,
who on the record date beneficially owned 19,933,594 shares of Common Stock in
the aggregate representing approximately 73.3% of the issued and outstanding
shares, have indicated their intention to vote in favor of the Proposal.

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THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE RATIFICATION OF THE
AMENDMENT TO THE BYLAWS.

PROPOSAL 2

ELECTION OF DIRECTORS

Pursuant to Omni Nutraceuticals' Articles of Incorporation, as amended, the
Board of Directors is divided into three Classes, the terms of which expire
successively over a three-year period. At each Annual Meeting of Shareholders,
successors to directors whose terms expire at the Meeting are elected for
three-year terms. Omni Nutraceuticals is the surviving corporation of the merger
(the "Merger") of Irwin Naturals, a California corporation, with and into
4Health, Inc., a Utah corporation, effective June 30, 1998. During 1998, prior
to the Merger, Omni Nutraceuticals' Board of Directors was comprised of R.
Lindsey Duncan, Cheryl Wheeler, Rockwell D. Schutjer and Steven B. Beckman.
Subsequent to the Merger, the Board of Directors of Omni Nutraceuticals was
comprised of R. Lindsey Duncan, Klee Irwin, Jonathan Diamond, and Clarke Keough.
Mr. Keough resigned effective June 30, 1999 and was replaced by James Jeffs. At
a meeting of the Board of Directors on June 30, 1999, Mr. Louis Mancini was
elected as a Class III director to fill an existing vacancy. Mr. Jeffs resigned
as director effective July 15, 1999. At a meeting of the Board of Directors held
on October 7, 1999, the vacancy created by Mr. Jeff's resignation was filled by
Mr. Andrew Vollero. At the same meeting Mr. Louis Mancini resigned as a Class
III director and the vacancy created by his resignation was filled by Mr. Santo
P. Panzarella. The terms of Mr. Jonathan Diamond and Mr. Vollero, both Class II
directors, ends at the Annual Meeting of Shareholders in 2000; the terms of
Messrs. R. Lindsey Duncan and Klee Irwin, Class I directors, end at the Annual
Meeting of Shareholders in 2001; and the term of Mr. Panzarella, currently the
sole Class III director, ends at the Meeting. Mr. Panzarella is currently up for
election at the Meeting to hold office until the Annual Meeting of Shareholders
in 2002, and until his successor has been elected and has qualified.

The Board of Directors recommends that the shareholders elect the nominee
named below as the Class III director of Omni Nutraceuticals for a term expiring
at the Annual Meeting of Shareholders in 2002 and until his successor has been
elected and qualified. It is intended that the persons named as proxies in the
enclosed form of Proxy will vote the Proxies received by them for the election
of the nominee named below. The nominee has indicated a willingness to serve,
but in case the nominee is not a candidate at the Annual Meeting, for reasons
not presently known to Omni Nutraceuticals, the proxies named in the enclosed
form of Proxy shall vote for a substitute nominee to be selected by the Class II
directors.

CLASS III DIRECTOR

SANTO P. PANZARELLA
Age: 60

Since 1984, Mr. Panzarella has been Chairman of St. Paul Capital, a private
investment firm that has holdings in stocks, bonds and real estate. Mr.
Panzarella was the founder and President of Science Dynamics, a network computer
service company in the healthcare field until its acquisition by McDonnell
Douglas in 1984. Mr. Panzarella has served as board member of

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Science Dynamics Corporation, Entertainment Corporation of America, RKO
Pictures, McDonnell Douglas Physicians Systems Inc. and Tactek (formerly RCA
Land Mobile Communications, Inc.). Mr. Panzarella has a Master's Degree from
California State University at Fullerton in electrical engineering.

IRWIN VOTING AGREEMENT

Pursuant to an agreement entered into among the Company, Mr. and Mrs.
Irwin, the majority shareholders of the Company, and Mr. R. Lindsey Duncan,
Chairman of the Board and the second largest shareholder of the Company (the
"Voting Agreement"), the parties agreed, among other matters, that Mr. Irwin
will have the right to nominate one Class I and one Class II director and Mr.
Duncan shall also have the right to nominate one Class I and one Class II
director, for election to the Board, and such shareholders would then each vote
for a nominee for Class III director nominated by the two Class II directors.
The intent of their agreement was that the Board be comprised of a majority of
non-employee directors (exclusive of Messrs. Duncan and Irwin). As part of the
Voting Agreement, Mr. Irwin also agreed that until October 8, 2004, without
Board approval, he would not seek to engage in a "change in control" transaction
involving the Company (which is defined to be a transaction of a nature that
would be required to be reported in response to item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended) and would not seek involvement in the management of the Company (other
than as a director). Mr. Irwin also agreed that he would not seek to modify or
terminate Mr. Duncan's employment agreement and would vote to re-elect Mr.
Duncan upon the expiration of his term as a Class I director. Correspondingly,
Mr. Duncan agreed that he would vote his shares to re-elect Mr. Irwin upon the
expiration of his term as a Class I director. Finally, Mr. Irwin agreed that he
would not seek to modify or terminate Mr. Mancini's (or such other person as Mr.
Duncan may designate to take Mr. Mancini's place) employment agreement. See the
discussion of the Company's existing employment agreements in the section
entitled "Management and Executive Compensation in 1998- Employment Agreements
and Severance Benefits."

The intent of the Voting Agreement is to limit, until October 8, 2004, Mr.
Irwin's absolute ability, as the majority shareholder, to control the Company,
by insuring some measure of independent management of the Company. Mr.
Panzarella was nominated by Messrs. Vollero and Diamond, the Company's Class II
directors, in accordance with the terms of the Voting Agreement.

VOTE REQUIRED

The affirmative vote of a majority of the votes cast at the Meeting is
required for the election of the above-named nominee as a director. Abstentions
and broker non-votes will not be included in determining the number of votes
cast. Messrs. Duncan and Irwin have both agreed to vote their respective shares
favor of the nominee.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE NOMINEE

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CONTINUING DIRECTORS

The terms of the following directors of Omni Nutraceuticals do not expire
at the 1999 Annual Meeting of the Shareholders. The following information is
provided for informational purposes.

CLASS I DIRECTORS

R. LINDSEY DUNCAN
Age: 37

Mr. Duncan has been its Chairman of the Board and director of Omni
Nutraceuticals since 1993 and is a naturopathic doctor (N.D.) and a nutritionist
certified by the National Institute of Nutritional Education (C.N.). Since the
mid-1980s, he has owned, operated, and been the principal nutritionist of the
Home Nutrition Clinic, Santa Monica, California. In 1988, Mr. Duncan began
formulating his own nutritional supplements and in 1993, organized 4health,
Inc., a California corporation and a predecessor of Omni Nutraceuticals. Mr.
Duncan is a member of the National Nutritional Foods Association, the American
Herbal Products Association, and the Herb Research Foundation and was a finalist
in Ernst & Young's national "1996 Entrepreneur of the Year." Mr. Duncan makes
numerous appearances on prime time national and regional television and radio
programs such as ABC, CBS, NBC, CNN, CNBC, and more. He is regularly featured in
national and international magazines.

KLEE IRWIN
Age: 34

Mr. Irwin served as the President and Chief Executive Officer of Omni
Nutraceuticals from June 30, 1998 until April 20, 1999. Prior to June 30, 1998,
Mr. Irwin served as the President and Chief Executive Officer of Irwin Naturals,
which he founded in 1995. Prior to his involvement in Irwin Naturals, beginning
in 1989, Mr. Irwin served as a vice president of sales and marketing and general
manager of Helsneva Labs, a division of Pantron I Corp., a privately held
consumer products company. Mr. Irwin is currently the Chief Executive Officer
and a Director of HealthZone.com, the Company's e-commerce subsidiary.

CLASS II DIRECTORS

JONATHAN V. DIAMOND
Age: 41

Jonathan Diamond has served as the Chairman and Managing Partner of J.
Diamond Group, L.P., a media and entertainment investment partnership from
January 1993 through June 1995, and as Vice Chairman of N2K Inc., a media and
entertainment company from June 1995 to March 1999. Mr. Diamond is currently
Chairman of CDNow, a media and entertainment company and a successor by way of
merger of N2K Inc., a position he has held since March 1999.

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ANDREW VOLLERO, JR.
Age: 63

Mr. Vollero is an independent general management consultant and private
investor specializing in the small business area since 1970. During that period,
Mr. Vollero has worked with over 100 companies, mostly privately held and in
non-high tech industries. Since 1994, Mr. Vollero has served as a Board member
of AC International, A.C. Vroman, Inc., Vroman Real Estate Ventures, Magnum Air
and Rahn Industries. Mr. Vollero is a graduate of Yale and Harvard Business
School.

PROPOSAL 3

AMENDMENTS TO THE LTSIP

The Board has approved amendments to Omni Nutraceuticals' Long Term Stock
Incentive Plan (the "LTSIP") (i) to increase the number of shares of Common
Stock issuable under the LTSIP, (ii) to increase the allotment of those shares
authorized for issuance in connection with awards to directors, including
non-employee directors, and (iii) to increase and amend the terms of the
one-time stock option grants to new in-coming non-employee directors.

Omni Nutraceuticals' long-term success depends upon its ability to attract,
retain and encourage dedicated, competent and resourceful key employees and
persons willing to serve as directors of the Company. To further these goals,
the Board of Surgical Technologies, Inc. (a predecessor of the Company) adopted
and the shareholders approved the LTSIP on March 8, 1996. The purpose of the
LTSIP is to direct the attention and efforts of participating employees to the
long-term performance of Omni Nutraceuticals and its subsidiaries, by relating
incentive compensation to the achievement of long-term corporate economic
objectives.

PROPOSED AMENDMENTS

Currently, the total number of shares of Common Stock authorized for
issuance under the LTSIP is 1,625,000. As of November 17, 1999, 1,625,000 shares
of Common Stock had been granted in connection with either options or other
awards under the LTSIP and no shares remained available for grant. The proposed
amendments (collectively, the "Proposed Amendment") would increase the number of
shares of Common Stock authorized for issuance under the LTSIP by 2,875,000
shares from 1,625,000 to 4,500,000 and proportionally increase the allotment of
those shares authorized for issuance in connection with awards to directors from
1,225,000 to 3,392,308, of which a maximum of 1,000,000 will be available for
award to non-employee directors.

The LTSIP also currently provides for one-time grants of non-qualified
stock options covering 5,000 shares to non-employee directors, upon taking
office, vesting one-half upon completion of one year of service and one-half
upon the completion of two years of service, exercisable at 100% of the fair
market value of the Common Stock on the date of grant. The Proposed Amendment
would increase these one-time option grants to cover 150,000 shares of Common
Stock, of which 30,000 shares would vest upon completion of service as a
director each year during the first five years of the ten-year option term. The
option would be exercisable at 125% of the fair market value of the Common Stock
on the date of grant and the exercise price would be increased by $1.00 on each
of the first five anniversaries of the date of grant.

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Under the LTSIP, shares of Common Stock and options to purchase such
shares, which are tendered in connection with the exercise of options to
purchase Common Stock, would be available for issuance under new awards. If any
shares issued as restricted stock or otherwise subject to forfeiture rights are
reacquired by Omni Nutraceuticals pursuant to such rights, or if any award is
canceled, terminates or expires unexercised, any shares of Common Stock that
would otherwise have been issuable pursuant thereto also will be available for
issuance under new awards.

SUMMARY OF LTSIP

The following is a description of the principal additional features of the
LTSIP, as amended. This description is qualified in its entirety by reference to
the LTSIP, as proposed to be amended, a copy of which is attached as Exhibit A
to the Proxy statement.

The LTSIP authorizes the LTSIP Administration Committee to grant incentive
stock options ("ISO") and non-qualified stock options ("NSOs"), including reload
options ("ROs") (i.e., the granting of additional options, where an employee
exercises an option with previously owned stock, covering the number of shares
tendered as part of the exercise price), restricted stock awards ("RSAs") (i.e.,
stock awarded to an employee that is subject to forfeiture in the event of a
premature termination of employment, failure of Omni Nutraceuticals to meet
certain performance objectives, or other conditions), performance units ("PUs")
(i.e., share-denominated units credited to the employee's account for delivery
or cash-out at some future date based upon performance criteria to be determined
by the LTSIP Administration Committee), and "tax withholding" (i.e., where the
employee has the option of having Omni Nutraceuticals withhold shares on
exercise of an award to satisfy tax withholding requirements).

The LTSIP Administration Committee develops administration guidelines from
time to time, which define eligibility criteria, the types of awards to
employees, and the value of such awards. Specific terms of each award, including
minimum performance criteria, which must be met to receive payment, will be
provided in individual award agreements granted each award recipient. Key
employees and other individuals who the LTSIP Administration Committee deems may
provide a valuable contribution to the success of Omni Nutraceuticals and its
affiliates will be eligible to participate under the LTSIP. Award agreements
will also contain change-in-control provisions.

Under the LTSIP, the LTSIP Administration Committee shall determine the
option price of all NSOs and ISOs; provided, however, in the case of ISOs, the
option price shall not be less than the fair market value of the Common Stock on
the date of grant. Such "fair market value" is the average of the high and low
prices of a share of the Common Stock traded on the relevant date, as reported
on a national securities exchange or an automated quotation system on which
Common Stock is then traded, or, in the event such Common Stock is not listed on
an exchange or quoted on an automated quotation system, the average of the
highest bid and the lowest asked price quoted by a member firm of the National
Association of Securities Dealers, Inc.

FEDERAL INCOME TAX EFFECTS

The following is a general summary of the principal federal income tax
effects under current law to LTSIP award recipients and Omni Nutraceuticals in
connection with the various awards which may be granted with respect to such
awards.

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1. An NSO (including for this purpose, an RO), is a right to purchase
a specified number of shares of Common Stock at a fixed option price over a
specified period of time. An optionee will realize no income for federal
income tax purposes upon grant of an NSO under the LTSIP, but will
recognize income upon the exercise of the NSO in an amount equal to the
excess of the fair market value of the shares received upon exercise over
the option price of such shares. Omni Nutraceuticals will be entitled to a
deduction for federal income tax purposes in the same year as, and in an
amount equal to, the income recognized by the optionee. The optionee's
adjusted basis for the shares of Common Stock received upon exercise will
be the fair market value on the date of exercise.

2. An ISO is a right to purchase a fixed option price, over a period
not to exceed 10 years, a specified number of shares of Common Stock that
complies with section 422A of the Code. An optionee who receives an ISO
under the LTSIP will recognize no income for federal income tax purposes
upon either the grant or the exercise of the ISO. Income will be taxable to
the optionee upon the sale of the shares acquired. In general, the adjusted
basis for the shares of Common Stock received upon exercise will be the
option price paid with respect to such shares. Omni Nutraceuticals will not
be entitled to a deduction upon the exercise of an ISO. However, if the
shares are sold within a period which is before the later of two years from
the date of the grant of the ISO or one year from the date of exercise, the
optionee will recognize compensation income in an amount equal to the
lesser of the excess of the fair market value on the date of exercise over
the option exercise price, or the excess of the price received upon sale
over the option exercise price, and the Omni Nutraceuticals would be
entitled to corresponding deduction. The amount by which the fair market
value of the shares of Common Stock received upon the exercise of an ISO
exceeds the exercise price is an item of tax adjustment under the Code and
is therefore included in the alternative minimum taxable income.

3. An RSA is Common Stock that is transferred subject to risk
forfeiture under certain circumstances and restrictions on transfer of
ownership. RSAs may be made with or without cash payment by the employees.
An employee who receives a grant of restricted stock who does not elect to
be taxed at the time of grant will not recognize income upon an award of
shares of Common Stock, and Omni Nutraceuticals will not be entitled to a
deduction until the termination of the restrictions. Upon such termination,
the employee will recognize ordinary income in an amount equal to the fair
market value of the Common Stock at that time (less any amount paid by the
employee for such shares), and Omni Nutraceuticals will be entitled to a
deduction in the same amount. However the employee may elect to recognize
ordinary income in the year the restricted stock is granted in amount equal
to the fair market value of the shares at that time, determined without
regard to the restrictions. In that event, Omni Nutraceuticals will be
entitled to a deduction in such year and in the same amount. Any gain or
loss recognized by the employee upon subsequent disposition of the stock
would be capital in nature.

4. A PU is a promise by the Omni Nutraceuticals to make payment to the
employee contingent upon the achievement of one or more performance
targets. PUs are payable in cash or shares of Common Stock. For PUs, cash
plus the fair market value of any Common Stock received as payment under
the LTSIP will be considered ordinary income to the employee in the year in
which paid, and Omni Nutraceuticals will be entitled to a deduction in the
same year and in the same amount.

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The foregoing summary of the proposed LTSIP is qualified in its entirety
by reference to the specific provisions of the LTSIP, the full text of which,
as proposed to be amended, is set forth as Exhibit A hereto.

CONDITIONAL GRANTS OF OPTIONS

A total of 2,498,000 ISOs and NSOs have been granted in 1998 and 1999 to
the following persons in the following amounts, conditional upon a receipt of
shareholder approval of the Proposed Amendment: R. Lindsey Duncan (600,000
shares); Louis Mancini (1,600,000 shares) and other employees (348,000 shares).
The options are ten-year options and have exercise prices ranging from $2.00 per
share to $6.50 per share, subject to adjustment.

VOTE REQUIRED

The affirmative vote of a majority of the shares of Common Stock
outstanding on the record date is required for the approval of the Proposed
Amendment. Broker non-votes, as well as abstentions, while effective to
establish a quorum, will have the same effect as a vote against the Proposal.
Pursuant to the Voting Agreement, Messrs. Duncan and Irwin will vote in favor of
the Proposed Amendment.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE PROPOSED AMENDMENT TO THE LTSIP

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PROPOSAL 4

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors, acting upon the recommendation of the Audit
Committee, has appointed the firm of Arthur Andersen, LLP, independent public
accountants, as independent auditors to make an examination of the accounts of
Omni Nutraceuticals for fiscal year 1999. Arthur Andersen, LLP has audited the
accounts and records of Omni Nutraceuticals since 1997.

It is anticipated that a representative of Arthur Andersen, LLP will be in
attendance at the Meeting in order to answer appropriate questions from the
shareholders and, if they so desire, to make a statement to the shareholders.

Ratification of this appointment requires that the number of votes cast in
favor of ratification exceed the number of votes cast opposing ratification.
Only votes cast for or against ratification will be counted. Abstentions and
broker non-votes will not change the number of votes cast for or against the
proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS.

12
<PAGE>

SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
OF OMNI NUTRACEUTICALS

The following table includes information as of November 17, 1999 concerning
the beneficial ownership of the holdings of Common Stock by (i) all persons who
are known by Omni Nutraceuticals to hold five percent or more of the outstanding
shares of Common Stock, (ii) each of the directors of Omni Nutraceuticals, (iii)
each executive officer of Omni Nutraceuticals, and (iv) all directors and
executive officers of Omni Nutraceuticals as a group. Except as otherwise
indicated, all shares are owned directly, and the persons named in the table
have sole voting and investing power with respect to shares shown as
beneficially owned by them.

SHARES OWNED
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY PERCENT
- ----------------------------------------------- ---------------- ---------
<S> <C> <C>
PRINCIPAL SHAREHOLDERS
- ----------------------
R. Lindsey Duncan 6,594,682 23.1%
5310 Beethoven Avenue
Los Angeles, CA 90066 (1)(2)

Klee and Margareth Irwin 14,341,941 50.3%
7825 Veragua Drive
Playa del Ray, CA 90293

DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------
R. Lindsey Duncan(4) See Above

Klee Irwin (4)(5) See Above

Jonathan V. Diamond(2)(3) 42,500 *

Andrew Vollero(2)(3) 25,000 *

Santo P. Panzarella(2)(3) 25,000 *

Louis Mancini (2)(6) 600,000 2.1%

All officers and directors as a group (7 people) 21,629,123 74.9%
</TABLE>

- ---------------------------------
*Less than 1%

(1) Includes 405,439 shares of Common Stock owned by Cheryl Duncan, Mr. Duncan's
wife. Mr. Duncan disclaims ownership of such shares.
(2) Includes options, which are presently exercisable.
(3) Became a director of Omni Nutraceuticals effective October 8, 1999.
(4) Served as an executive officer of Omni Nutraceuticals during 1998 and
appears in the Summary Compensation Table.
(5) Resigned as an officer of Omni Nutraceuticals effective April 20, 1998.
(6) Became Chief Operating Officer on October 19, 1998 and Chief Executive
Officer on April 21, 1999. Resigned as a director effective October 8, 1999.

13
<PAGE>

MANAGEMENT AND EXECUTIVE COMPENSATION IN 1998

MANAGEMENT OF OMNI NUTRACEUTICALS

During 1998, prior to the Merger, Omni Nutraceuticals' Board of Directors
was comprised of R. Lindsey Duncan, Cheryl Wheeler, Rockwell D. Schutjer and
Steven B. Beckman. Subsequent to the Merger, the Board of Directors of Omni
Nutraceuticals was comprised of R. Lindsey Duncan, Klee Irwin, Jonathan Diamond,
and Clark Keogh, who resigned on June 30, 1998. He was replaced by James Jeffs,
who resigned effective July 15,1999. On June 30, 1999 Mr. Louis Mancini was
elected as a Class III director filling an existing vacancy. On October 7, 1999
(effective October 8, 1999), Mr. Vollero was elected to fill the vacancy created
by Mr. Jeff's resignation. On the same day Mr. Mancini resigned as a Class III
director and Mr. Santo P. Panzarella was elected to fill vacancy created
thereby. The Board of Directors met six (6) times during 1998 for regular Board
of Directors Meetings. All directors attended 100% of the aggregate of (i) the
total number of Meetings of the Board of Directors held while they were members
and (ii) the total number of Meetings held by all Committees of the Board of
Directors on which they served as members. In addition, on several occasions,
the Board of Directors gave their unanimous written consent on issues involving
normal corporate business. The Board of Directors has three standing committees,
the Audit Committee, the Compensation Committee, and the Long-Term Stock
Incentive Plan Administration Committee ("LTSIP Administration Committee").
During 1998, the Audit Committee and the LTSIP Administration Committee were
composed of Messrs. Crosland and Beckman prior to the Merger and Messrs. Diamond
and Jeffs thereafter. The Audit Committee did not meet during 1998, the
functions of such committee being performed by the Board of Directors as a
whole. The LTSIP Administration Committee met throughout 1998 as needed to grant
stock options. The LTSIP Administration Committee is responsible for overseeing
Omni Nutraceuticals' Long-Term Stock Incentive Plan (the "LTSIP") including,
subject to the express terms of the LTSIP, making awards, interpreting the
LTSIP, amending and rescinding rules and other duties related to the proper
implementation of the LTSIP. During 1998, the Compensation Committee was
composed of Messrs. Duncan and Irwin. The Compensation Committee met once in
1998. The primary responsibility of the Compensation Committee is to establish
and review the compensation policies of Omni Nutraceuticals, including those for
executives. During 1998, Omni Nutraceuticals did not have a nominating
committee, the functions of such a committee being performed by the Board of
Directors as a whole.

The LTSIP currently provides that upon assuming office, each non-employee
director will be granted a non-qualified option to acquire 5,000 shares of
Common Stock at an exercise price equal to 100% of the fair market value on the
date of grant. One-half of the grant will become exercisable upon completion of
one year of service as a director and the remaining balance upon completion of
two years of service as a director. All options have a five-year expiration
term. The number of shares covered by, and terms of these one-time grants to new
non-employee directors are proposed to be amended. (See Proposal 3.) In
addition, Mr. Mancini has been granted at various times since October 18, 1998,
a total of 1,600,000 options, exercisable at prices ranging from $2.50 to $6.00
per share and vesting at various times over the next four years.

On June 30, 1998, Messrs. Diamond and Jeffs each received 5,000 options
exercisable at $6.94 per share. In addition, Messrs. Diamond and Jeffs were
granted by the Board options to purchase additional 20,000 shares each upon
becoming directors. Half of these shares were vested on June 30, 1999 and the
other half will be vested on June 30, 2000. Messrs. Jeffs and

14
<PAGE>

Diamond were each granted options to acquire a further 150,000 shares of Common
Stock, on June 30, 1999, exercisable at prices ranging from $2.50 to $6.50 per
shares. All of Mr. Jeff's options expired unexercised upon Mr. Jeff's
resignation as a director.

All of Mr. Irwin's options expired unexercised on July 20, 1999, in
accordance with the provisions of the LTSIP, in connection with his resignation
as an employee of the Company.

Messrs. Vollero and Panzarella will each be entitled to receive 150,000
options under the LTSIP as proposed to be amended.

Directors do not receive compensation for attending Meetings of the Board
of Directors. Directors are reimbursed for their reasonable travel and lodging
expenses incurred attending Meetings.

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table shows, for the year ending December 31, 1998, the cash
compensation paid by Omni Nutraceuticals, as well as certain other compensation
paid or accrued for the year, to R. Lindsey Duncan, Omni Nutraceuticals'
Chairman of the Board, Klee Irwin, Omni Nutraceuticals' President and Chief
Executive Officer from July 1, 1998 until April 20, 1999 and Rockwell Schutjer,
the former Manager of the Surgical Technologies division whose employment was
terminated on July 15, 1999 (the "Named Individuals"). No other executive
received total cash compensation exceeding $100,000 during 1998.

SUMMARY COMPENSATION

LONG TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------------------------------
RESTRICTED SECURITIES ALL
STOCK UNDERLYING LTIP OTHER
NAME AND POSITION YEAR SALARY BONUS OTHER AWARD OPTIONS PAYOUTS COMPENSATION

- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. Lindsey Duncan,
Chairman of the Board 1998 $192,219 $0 $0 $0 50,000 $0 $0
1997 150,000 0 0 0 401,252 0 0
1996 150,000 0 0 0 331,034 0 0

Klee Irwin, President
and Chief
Executive
Officer(1) 1998 $175,000 0 0 0 50,000 0 0
1997 0 0 0 0 0 0 0
1996 0 0 0 0 0 0 0

Rockwell Schutjer,
Manager, Surgical
Technologies(2) 1998 $122,163 0 0 0 0 0 0
1997 80,000 0 0 0 0 0 0
1996 80,000 0 0 0 132,500 0 0
</TABLE>

15
<PAGE>

(1) Omni Nutraceuticals did not employ Mr. Irwin before July 1, 1998. Mr. Irwin
resigned his position as President and Chief Executive Officer of Omni
Nutraceuticals on April 20, 1999. Mr. Irwin's options have expired
unexercised.

(2) Mr. Schutjer's employment with Omni Nutraceuticals ceased on July 15, 1999.
Mr. Schutjer's options have expired unexercised.

OPTION GRANTS

The following table presents information with respect to the Named
Individuals concerning the exercise of options during 1998 and unexercised
options held as of December 31, 1998.

POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
------------------------------------------------------------------- ---------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS STOCK
UNDERLYING GRANTED TO PRICE ON
OPTIONS/SARS EMPLOYEES IN EXERCISE GRANT EXPIRATION
GRANTED FISCAL YEAR PRICE DATE DATE 0% 5% 10%
--------------- ---------------- ---------- ---------- ------------ --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. Lindsey
Duncan (1) 50,000 3% $6.9375 $7.06 06/30/03 $6,125 $126,054 $278,361
K. Irwin(2) 50,000 3% 6.9375 $7.06 06/30/03 $6,125 $126,054 $178,361

</TABLE>

(1) Mr. Duncan's options were cancelled on April 23, 1999.
(2) Mr. Irwin's options expired unexercised on July 20, 1999.

OPTION EXERCISES AND HOLDINGS

The following table presents information with respect to the Named
Individuals concerning the exercise of options during 1998 and unexercised
options held as of November 17, 1999:

16
<PAGE>

AGGREGATED OPTION EXERCISES AND YEAR END OPTION VALUES

NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
OCTOBER 15, 1999 OCTOBER 15, 1999(1)
---------------------------------------------------------------
SHARES VALUE
NAME EXERCISED(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. Lindsey Duncan 0 $0 1,003,029 33,334 $0 $0

Klee Irwin(2) 0 $0 $0 $0 $0 $0
</TABLE>

(1) Based on the closing market price of $1.94 per share for Common Stock as of
November 17, 1999.
(2) Mr. Irwin resigned his position as President and Chief Executive Officer of
Omni Nutraceuticals on April 20, 1999. All his exercisable options have
expired unexercised.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

R. Lindsey Duncan, Chairman of the Board, and Klee Irwin, the former
President and Chief Executive Officer, of Omni Nutraceuticals, each served on
the Compensation Committee of the Board of Directors during 1998. There were no
Compensation Committee interlocks between the Company and any other entity
during the fiscal year ended December 31, 1998.

REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors has responsibility for
making recommendations regarding compensation policy for Omni Nutraceuticals,
including executives. The Compensation Committee's overall goal is to provide a
strong link among shareholder value, company performance, and executive
compensation. An additional goal is to promote long-term growth and development
for Omni Nutraceuticals by attracting and retaining qualified and talented
executives. The following report shall not be deemed incorporated by reference
into any filing under the Securities Exchange Act of 1933 or the Securities
Exchange Act of 1934.

Omni Nutraceuticals uses various compensation surveys, including industry
and regional specific surveys, to develop its compensation strategy and plans.
The Compensation Committee also refers to such surveys for executive
compensation, including that of the Chairman of the Board and Chief Executive
Officer.

There is no set policy for adjusting base salary or bonuses subsequent to
initial employment. Such adjustments in the past have occurred due to changes in
job skills, performance, and competitive salary information.

Omni Nutraceuticals' current stock option plan includes executives,
managers and key employees. Stock options are granted periodically by the LTSIP
Administration Committee of the Board of Directors. The Long-Term Stock
Incentive Plan allows the grant of options, both

17
<PAGE>

incentive and non-qualified. Historically, the LTSIP Administration Committee
has granted non-qualified options. For executives, the options are usually
granted with one fourth vesting after each year of service with Omni
Nutraceuticals. Pricing of the options generally begins at the fair market price
on the date of grant for the options vested after one year and increases $1.00
per share for each additional year of service.

The compensation of Mr. Irwin, Chief Executive Officer of Omni
Nutraceuticals' executives and senior officers for 1998 is shown in the Summary
Compensation table. The Compensation Committee believes that Mr. Duncan's and
Mr. Irwin's compensation adequately reflects their performance as Omni
Nutraceuticals' Chairman of the Board and President and Chief Executive Officer,
respectively.

The Compensation Committee has reviewed Omni Nutraceuticals' compensation
plans with regard to the deduction limitations under the Omnibus Budget
Reconciliation Act of 1993 (the "Act") and the final regulations interpreting
the Act which have recently been adopted by the Internal Revenue Service and the
Department of the Treasury. Based on this review, the Committee has determined
that Omni Nutraceuticals' LTSIP, as previously approved by shareholders, meets
the requirements for deductibility under the Act. The Committee believes that no
tax deduction will be lost as a result of Section 162(m) on compensation paid to
Company executives in 1998. The Committee may authorize compensation in the
future that results in amounts above the limit if it determines that such
compensation is in the best interests of the Company. In addition, the
limitation may affect future grants of stock options.

R. Lindsey Duncan
Klee Irwin
Members of the Compensation Committee

EMPLOYMENT AGREEMENTS AND SEVERANCE BENEFITS

Upon the consummation of the Merger, both Mr. R. Lindsey Duncan and Mr.
Klee Irwin entered into substantially similar three-year employment agreements
with Omni Nutraceuticals. Mr. Duncan is employed as Chairman of the Board and as
a member of the Executive Committee with all duties and responsibilities
normally associated with this position. Mr. Irwin was employed as the Chief
Executive Officer and as a member of the Executive Committee with all duties and
responsibilities normally associated with this position until April 20, 1999. On
that date, Mr. Irwin resigned, as Chief Executive Officer of Omni Nutraceuticals
and his employment agreement was terminated effective April 20, 1999. In
connection with his resignation the Board of Directors appointed him as Chief
Executive Officer of HealthZone.com, the Company's wholly owned e-commence
subsidiary ("HealthZone"). In October of 1998 (as revised in June 1999), Omni
Nutraceuticals entered into an agreement to hire Mr. Louis Mancini as President
and Chief Operating Officer and, subsequently, Chief Executive Officer.

These employment agreements provide for: (i) annual salaries of
$225,000, and $300,000 for Messrs. Duncan and Mancini, respectively; (ii) the
right for Mr. Duncan to receive an annual bonus equal to 2% of the
consolidated earnings before income taxes in excess of $6,000,000 and the
right for Mr. Mancini to receive an annual bonus of 2% of earnings before
depreciation, interest, individual taxes and amortization above six (6),
eight (8), twelve (12) and fourteen (14) million dollars for the years
1999-2002, respectively; and (iii) the right to participate

18
<PAGE>

in all retirement and welfare, benefit, fringe, perquisite and other plans and
programs applicable generally to other key executives in effect at any time. In
addition, all the above are entitled to reimbursement for their reasonable
business expenses.

Under his terminated employment agreement Mr. Irwin received an annual
salary of $350,000 and the right to the same annual bonus and to participate in
the same retirement and welfare, benefit, fringe, perquisite and other plans and
programs as Mr. Duncan. See "Irwin Settlement Agreement" below.

RELATED PARTY TRANSACTIONS

From January 1, 1997 through June 30, 1998, Omni Nutraceuticals made
distributions totaling $1,682,000 ($579,000 in 1997 and $1,103,000 in 1998) to
Mr. and Mrs. Irwin, the S Corporation shareholders of Irwin Naturals. These
distributions were for tax liabilities to be paid by the S Corporation
shareholders attributable to their respective S Corporation income. See "Irwin
Settlement Agreement" below.

As of September 30, 1999, Omni Nutraceuticals has receivables from its
Chief Executive Officer and former Chief Executive Officer in the amounts of
$219,000 and $330,000, respectively. The loan to the former Chief Executive
Officer bears interest at 8% per annum and is payable on demand. Principal and
interest accruing at a rate of 8% per annum due under the loan to the Chief
Executive Officer is forgiven based on continued employment at the rate of 50
percent at December 1999 and the remaining 50 percent at December 31, 2000,
otherwise the balance of such loan is payable in full upon termination of
employment prior to such target dates.

In June and October 1998, Omni Nutraceuticals entered into the
above-described employment agreements with the Chairman of the Board and its
current President and Chief Executive Officer.

IRWIN SETTLEMENT AGREEMENT

On October 8, 1999, the Company and Mr. Klee Irwin entered into a
settlement agreement (the "Settlement Agreement") in order to resolve certain
mutual claims that had arisen between the Company and Mr. Irwin. Among the
principal terms of the settlement were the following:

- The Company agreed to provide Mr. Irwin with the following severance
benefits: (a) a monthly payment in the same amount that he received
under his former employment agreement, for the period commencing
October 1, 1999 until the earlier of (i) April 16, 2000 or (ii) the
sale, merger, bankruptcy or other transaction involving HealthZone
which results in HealthZone being capitalized at more than $1,700,000;
(b) continued coverage for Mr. Irwin and members of his immediate
family under the Company's health insurance plans, and (c) the
continued provision of an automobile until November 22, 1999.

- Mr. Irwin agreed to assume the defense of a claim asserted by the
former shareholders of Health & Vitamin Express, Inc. ("HVE"), a
company acquired by HealthZone in February 1999, and in connection
therewith agreed to indemnify the Company from

19
<PAGE>

any uninsured liability associated therewith except that the Company
agreed, upon Mr. Irwin's written instructions, to issue up to 363,636
shares of common stock to the former HVE shareholders in settlement of
their claim.

- Mr. Irwin agreed to reimburse the Company for any excess tax payments
made on his and his wife's behalf since October 17, 1997 attributable
to all periods prior to the merger of Irwin Nationals with and into
4Health, Inc.

- Mr. Irwin agreed to fund substantially all the net operating losses of
HealthZone pending its spin-off or sale by means of purchases of
shares of HealthZone common stock at a price per share based upon a
base valuation (as adjusted) for HealthZone of $3,500,000, until at
least $280,000 in aggregate common stock purchases have been made,
after which such price per share shall be based upon the greater of
such base valuation (as adjusted) or HealthZone's then market value.

- Mr. Irwin agreed that he would guarantee a market value for the
Company's ownership interest in HealthZone of $2.3 million as of one
year after a spin-off of HealthZone or October 8, 2001, and further
agreed that he would place in escrow 1,022,222 shares of his common
stock as security for such guarantee at such time as the Company first
filed a registration statement with the Securities and Exchange
Commission relating to the proposed spin-off of HealthZone.

- The Company, HealthZone and Mr. Irwin entered into a Tax Allocation
and Indemnification Agreement pursuant to which the Company and
HealthZone allocated certain tax liabilities and attributes between
themselves and HealthZone indemnified the Company for any liability
associated with the spin-off not qualifying as a tax free transaction
under Section 355 of the Internal Revenue Code of 1986, as amended,
with Mr. Irwin guaranteeing HealthZone's indemnification obligation in
the event of its bankruptcy.

- The Company and Mr. Irwin issued mutual releases and indemnified each
other against certain claims. As security for his indemnification
obligations Mr. Irwin placed in escrow with Wells Fargo Bank 1,000,000
shares of his common stock, 500,000 shares of which would be released
on December 31, 1999 (in the absence of any claims for indemnification
asserted by the Company) and the balance would be released on March
31, 2000 (in the absence of any claims for indemnification asserted by
the Company).

- The Company granted Mr. Irwin a "call" option on the Company's shares
of HealthZone for the greater of $2.3 million or HealthZone's market
value commencing March 31, 2000 if the spin-off is not consummated
before then.

- Mr. Irwin granted the Company a "put" option on its shares of
HealthZone for $2.3 million commencing June 1, 2000 if the spin-off is
not consummated before then or the Company's shares of HealthZone are
not sold for at least $2,300,000.

20
<PAGE>

- The Company agreed to bear the first $100,000 in expenses incurred by
the Company attributable to the spin-off and HealthZone agreed to bear
all documented and reasonable costs and expenses incurred by the
Company in excess of such $100,000, payment of such excess costs to be
personally guaranteed by Mr. Irwin.

- In connection with the Settlement Agreement, Mr. and Mrs. Irwin, Mr.
Duncan and the Company entered into a Voting Agreement described in
"Irwin Voting Agreement" above.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Pursuant to Section 16(a) of the Securities Exchange Act of 1934, and
related regulations of the Securities and Exchange Commission, executive
officers, directors and 10% shareholders of Omni Nutraceuticals are required to
file reports on Form 3, 4 and 5 of their beneficial holdings and transactions in
the Common Stock. Based solely on the Company's review of the copies of their
reports received and written representations from such persons who did not file
an annual report with the Securities and Exchange Commission (Form 5) that no
annual report was due, the Company believes that during 1998, all such reports
were filed in a timely manner.

STOCK PERFORMANCE

The graph below presents a comparison of the cumulative shareholder return
of the Common Stock over the period July 17, 1996 to December 31, 1998 with the
cumulative total return over the same period for The Nasdaq Stock Market - U.S.
Companies Total Return Index and a peer group represented by the Nasdaq
Pharmaceutical Stocks Total return Index (SIC code 283). Both indexes were
prepared for Nasdaq by the Center for Research in Security Prices. The graph
below compares the cumulative total return of the Common Stock over the July 17,
1996 to December 31, 1998 period assuming a $100 investment on July 17, 1996 and
assuming reinvestment of all dividends. The Common Stock commenced trading on
the Nasdaq National Market tier of The Nasdaq Stock Market under the stock
symbol HHHH on July 17, 1996. Prior to that date, Omni Nutraceuticals was known
as Surgical Technologies, Inc. with stock trading under the symbol SGTI. On
August 20, 1999, Irwin Naturals/4Health, Inc. changed its name to Omni
Nutraceuticals, Inc. and its stock symbol was changed to OMNT. The prior market
performance history of Surgical has not been included herein because it does not
reflect the results of the merger or the changed nature of Omni Nutraceuticals'
business since the merger. The graph is based on daily total return figures from
July 17, 1996 and month-end figures from July 30, 1996 through December 31,
1998.

21
<PAGE>

[CHART]

- ------------------------------------------------------------------------------------------------------------------------
Quarter End Values
- ------------------------------------------------------------------------------------------------------------------------
7/17/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Omni Nutraceuticals $100.00 $78.95 $57.90 $58.55 $61.84 $50.66 $53.95 $ 48.68 $ 74.35 $ 52.63 $ 50.00
- ------------------------------------------------------------------------------------------------------------------------
Nasdaq US Index 100.00 113.16 118.73 112.29 132.88 155.35 145.69 170.39 175.04 158.12 205.12
- ------------------------------------------------------------------------------------------------------------------------
Nasdaq 100.00 113.64 110.25 104.70 113.03 126.80 113.92 125.14 115.81 109.25 144.82

Pharmaceutical

Index
- ------------------------------------------------------------------------------------------------------------------------

</TABLE>

22
<PAGE>

OTHER MATTERS

The Board of Directors of Omni Nutraceuticals knows of no matters other
than the foregoing to be brought before the Meeting. However, the enclosed Proxy
gives discretionary authority in the event that any additional matters should be
presented.

The Annual Report of Omni Nutraceuticals for the fiscal year ended December
31, 1998 was previously mailed to shareholders on or about August 15, 1999 and
contains Omni Nutraceuticals' financial statements for the year ended December
31, 1998. A copy of the Annual Report to Shareholders and the Form 10-K, the
Annual Report filed by Omni Nutraceuticals with the Securities and Exchange
Commission, will be furnished without charge to any shareholder who requests it
in writing from the Secretary of Omni Nutraceuticals at the address noted on the
first page of this Proxy Statement.

SHAREHOLDER PROPOSALS

The rules of the Securities and Exchange Commission permit shareholders of
the Company, after timely notice to the Company, to present proposals for
shareholder action in the Company's proxy statement and proxy relating to the
2000 Annual Meeting of Shareholders which is currently scheduled to be held in
the last week of May, 2000. If any shareholder intends to present a proposal for
consideration at the 2000 Annual Meeting of Shareholders, such proposal must be
received by the Secretary of Omni Nutraceuticals on or before January 14, 2000
for inclusion in Omni Nutraceuticals' proxy statement for such Meeting. In order
to be included in the proxy statement and proxy such shareholder proposal must
meet the requirements of Securities and Exchange Commission Rule 14a-8 under the
Securities Exchange Act of 1934, as amended.

THE ENCLOSED PROXY SHOULD BE COMPLETED, DATED, SIGNED AND RETURNED IN THE
ENCLOSED POSTAGE-PAID ENVELOPE, PROMPT MAILING OF THE PROXY WILL BE APPRECIATED.

By Order of the Board of Directors

Corey Fischer
Secretary

23
<PAGE>

EXHIBIT A

OMNI NUTRACEUTICALS, INC.

LONG-TERM STOCK INCENTIVE PLAN

1. PURPOSE. The purpose of the Omni Nutraceuticals, Inc. Long-Term Stock
Incentive Plan (the "Plan") is to promote the interests of Omni Nutraceuticals,
Inc. ("Omni") and its shareholders by strengthening the ability of the Company
(as hereinafter defined) to attract and retain directors, officers, and key
employees, and certain other individuals whom the Company deems can render a
valuable contribution to the direction and success of the Company's efforts by
helping create an entrepreneurial environment in which such individuals are
encouraged to maximize shareholder value. The Plan permits the granting of
Incentive Stock Options, Nonqualified Stock Options, Reload Options, Restricted
Stock, and Performance Units, all as hereinafter defined.

2. DEFINITIONS; CONSTRUCTION.

(a) As used in the Plan the defined terms "Plan", and "Company" shall
have the meanings ascribed to them above and the following defined
terms shall have the following meanings:

(i) "Affiliate" shall mean any parent corporation or subsidiary
corporation of Omni as defined in sections 425(e) and (f) of
the Code as the same may be in effect from time to time.

(ii) "Agreement" shall mean an agreement between the Company and a
participant setting forth the terms and conditions of an
Award.

(iii) "Award" shall mean an Incentive Stock Option, Nonqualified
Stock Option, Reload Option, Restricted Stock or Performance
Unit as described in and granted under the Plan.

(iv) "Board" shall mean the Board of Directors of Omni.

(v) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

(vi) "Committee" shall mean the Administration Committee of the
Board, as the same may be constituted from time to time.

(vii) "Common Stock" shall mean shares of capital stock of Omni
designated as "Common Stock" pursuant to Omni's Articles of
Incorporation.

(viii) "Company" shall mean Omni and its Affiliates.

(ix) "Fair Market Value" shall mean the average of the highest and
lowest quoted selling price of a share of Common Stock as
reported on the composite tape for securities listed on such
national securities exchange on

1
<PAGE>

which the Common Stock is then listed for trading as may be
designated by the Committee or in the event that the Common
Stock is not listed for trading on a national securities
exchange but is quoted on an automated quotation system, on
such automated quotation system, or in the event that the
Common Stock is not quoted on an automated quotation
system, the average of the highest bid and lowest asked
price of share of Common Stock as quoted by a member firm
of the National Association of Securities Dealers, Inc., in
any such case on the valuation date or, if there were no
sales on the valuation date, the average of the highest and
the lowest quoted selling prices or bid and asked prices as
reported on said composite tape or automated quotation
system or by such member firm, as the case may be, for the
most recent day during which a sale occurred.

(x) "Incentive Stock Option" shall mean an option granted
pursuant to the provisions of this Plan that meets the
requirements of section 422 of the Code, as the same may be
in effect from time to time.

(xi) "Non Employee Director" shall mean any member of the Board
of the Company who is not also an employee of Company.

(xii) "Nonqualified Stock Option" shall mean any option granted
pursuant to the provisions of the Plan that is not an
Incentive Stock Option.

(xiii) "Performance Unit" shall mean a grant described in section
8.

(xiv) "Reload Option" shall mean any Nonqualified Stock Option
granted pursuant to the provisions of section 6(i).

(xv) "Restricted Stock" shall mean any stock delivered subject
to the restrictions set forth in section 7.

(xvi) "Stockholder Employee" shall mean, any employee owning
stock (using the attribution rules of section 425(d) of the
Code, as the same may be in effect from time to time)
possessing more than 10% of the total combined voting power
of all classes of stock the Company or any of its
Affiliates.

(b) References in the Plan to sections are to sections of the Plan unless
otherwise indicated. The words "hereof," "herein," "hereunder," and
comparable terms refer to the entirety of the Plan and not to any
particular section or other subdivision hereof. Words in the singular
include the plural and vice versa. Words in the masculine gender shall
include the feminine and neuter and vice versa. The word "or" is not
exclusive. The word "including" shall be deemed to mean "including,
without limitation." The section headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the Plan.

3. STOCK AVAILABLE UNDER THE PLAN. The stock subject to Awards shall be Common
Stock. Subject to adjustment as provided in section 9, the total number of
shares of Common Stock with respect to which Awards may be granted may equal
but shall not exceed 4,500,000 shares;

2
<PAGE>

(provided, however, the maximum number of shares that may be available for
Awards to directors of the Company under this Plan shall be limited to
3,392,308; and, provided, further, that the maximum number of shares that
shall be available for Awards to Non-employee Directors is limited to
1,000,000). For purposes of computing the number of shares of Common Stock
available for Awards at any time, there shall be debited against the total
number of shares (i) the number of shares of Common Stock issuable upon
exercise of any options, (ii) the number of shares of Restricted Stock
awarded, and (iii) and the maximum number of shares of Common Stock that may
be issued under Performance Unit Awards. Any shares represented by Awards
which are canceled, forfeited, terminated or expire unexercised shall again
be available for grant and issuance under the Plan.

4. PARTICIPANTS. Persons eligible for Awards under the Plan shall be limited to
such key employees of the Company, including directors of the Company, who
have substantial responsibility in the direction and management of the
company and certain other individuals who, while not employees of the
Company, are identified by the Committee or the Board as persons who can
render a valuable contribution to the direction and success of the Company's
efforts. Except in the case of Non-employee Directors, the Committee shall
have the sole discretion to select those persons eligible for Awards.
Non-employee Directors shall be eligible to participate in the Plan only to
the extent provided in section 5.

5. NON-EMPLOYEE DIRECTOR AWARDS.

(a) Upon assuming office, each Non-employee Director shall be granted a
Nonqualified Stock Option to acquire 150,000 shares of Common Stock at an
exercise price equal to 125% of the Fair Market Value of such Common
Stock on the date of grant, increasing by $1.00 effective on the
completion of each of the next five years of service.

(b) The Nonqualified Stock Options to be granted to all Non-employee
Directors upon assuming office shall become exercisable one-fifth upon
completion of each year of service as a director for the first five years
after such Option is granted (subject to the provisions of section 10)
and shall expire ten years from the date the Option is granted (the
"Option Period"), unless ended sooner due to termination of service or
death or disability of the optionee or if fully exercised prior to the
end of such Option Period. If the directorship of an optionee is
terminated within the Option Period for any reason other than (i) death
or disability or (ii) on account of any act of (1) fraud or intentional
misrepresentation, or (2) embezzlement, misappropriation or conversion
of assets or opportunities of the Company (any such act resulting in the
automatic termination of the Option), the Option may be exercised, to the
extent the optionee was able to do so at the date of termination of the
directorship, within three months (or such longer period as the Board may
determine, but not to exceed one year) after such termination (if
otherwise within the Option Period), whether or not one year of service
as a director has elapsed, by the executor or administrator of the estate
of the optionee, or by the legal representative of an incapacitated
director, or by the person or persons who shall have acquired the Option
directly from the optionee by a bequest or pursuant to the laws of
descent or distribution or pursuant to a qualified domestic relations
order.

3
<PAGE>

(c) The Nonqualified Stock Options granted to Non-employee Directors
shall be exercisable in the manner provided in section 6(d); shall be
non-transferable except as provided in section 6(f); shall not confer any
rights as a stockholder as provided in section 6(j); and shall not give
rise to any right to receive fractional shares as provided in section
6(k).

6. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the Plan shall
be evidenced by Agreements in such form, not inconsistent with the Plan, as the
Committee shall determine. The following terms and conditions shall apply to all
Incentive Stock Options, Nonqualified Stock Options and Reload Options.

(a) OPTION PRICE. The Committee shall determine the option price of
all Nonqualified Stock Options and all Incentive Stock Options;
provided, however, in case of Incentive Stock Options, the option
price shall not be less than the Fair Market Value of the Common
Stock on the date the Option is granted and, provided further,
that in the case of an individual who is a Stockholder Employee on
the date of grant, the option price of an Incentive Stock Option
shall be at least 110% of the then Fair Market Value of the Common
Stock.

(b) OPTION TERM. The Committee shall determine the expiration date of
a Nonqualified Stock Option and an Incentive Stock Option;
provided however, in the case of Incentive Stock Options, the term
shall expire not later than one day prior to the end of ten years
after the date the option was granted, and, provided, further,
that Incentive Stock Options granted to employees who are
Stockholder Employees on the date of grant shall expire no later
than one day prior to the end of five years after the date of
grant. Options may terminate earlier as provided herein.

(c) EXERCISE OF OPTIONS. The Committee shall determine when Incentive
Stock Options and Nonqualified Stock Options are exercisable, in
whole or in part, provided, however, that under no circumstances
will an option be exercisable within six months (or such greater
or lesser period prescribed or permitted by any applicable rule
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including without limitation Rule 16(b)-3),
as in effect from time to time, from its date of grant. Options
may be exercised at an earlier date as provided herein.

(d) MANNER OF EXERCISE. Each Agreement shall specify whether, upon
exercise of Options, shares of Common Stock shall be paid for in
full with (i) cash (including a certified or official bank check
or the equivalent acceptable to Omni), (ii) the equivalent Fair
Market Value of shares of Common Stock, properly endorsed, (iii)
the equivalent fair market value of any other property acceptable
to Omni, or (iv) any combination of (i), (ii), or (iii). Options
may be exercised by written notice to Omni in the manner provided
in the applicable Agreement, accompanied by payment of the
exercise price in the manner provided in the applicable Agreement
or in such other manner as may be acceptable to the Committee, in
its absolute discretion In the event the Common Stock issuable
upon exercise of an option is not registered under the Securities
Act of 1933, as amended (the "Securities Act"), then Omni will
require that the registered owner deliver an investment
representation in form acceptable to Omni and its counsel and Omni
will place a legend on the certificate for such Common Stock
restricting the transfer of the same.

4
<PAGE>

(e) LIMITATION ON AMOUNT. In the case of Incentive Stock Options only,
no employees may be granted Incentive Stock Options to the extent
the aggregate Fair Market Value (as of the date of grant) of the
Common Stock subject to Incentive Stock Options that are first
exercisable during any calendar year exceeds $100,000.

(f) NON-TRANSFERABILITY. All options granted under this Plan shall be
non-assignable and non-transferable otherwise than by will or by
the laws of descent and distribution or pursuant to a qualified
domestic relations order. During the lifetime of the optionee, the
option is exercisable only by him, or, in the case of his
incapacity, by his legal representative.

(g) TERMINATION OF EMPLOYMENT. In the case of Nonqualified Stock
Options, the Committee shall determine the applicable provisions
for death, disability and termination of employment. In the case
of Incentive Stock Options, (i) on termination of an optionee's
employment with the Company other than by reason death or
disability, the optionee shall have the right to exercise his then
outstanding Incentive Stock Options within three months of such
termination to the extent he was entitled to exercise the same
immediately prior to termination; and (ii) on termination of
employment by reason of death or disability within the meaning of
section 22(e)(3) of the Code, as the same may be in effect from
time to time, the optionee, his estate, personal representative,
or beneficiary shall have the right to exercise his then
outstanding Incentive Stock Options at any time within 12 months
from the date of death or termination of employment by reason of
disability for the full number of shares subject to Incentive
Stock Options at the date of termination of employment by reason
of death or disability, irrespective of any vesting provisions
except in the first sentence of section 6(c) above.

(h) TIME OF GRANT. The grant of an option shall occur only when a
written Agreement shall have been duly executed and delivered by
or on behalf of Omni and the employee to whom the option is
granted.

(i) RELOAD OPTIONS. If the applicable Agreement so provides or upon
the approval of the Committee at the time of exercise of an
Option, in the event an optionee exercises a Nonqualified Stock
Option by payment of all or a portion of the exercise price with
shares of Common Stock which the optionee has owned for at least
six months, the optionee may receive a Reload Option in the form
of a new Nonqualified Stock Option to purchase a number of shares
of Common Stock equal to the number of shares of Common Stock used
in payment of the exercise price of the original option.

(j) NO STOCKHOLDER RIGHTS. Nothing contained in the Plan or in any
Agreement shall be construed to confer upon the holder of any
option the right to vote or to receive dividends or subscription
rights, or to consent or to receive notice as a stockholder in
respect of the meetings of stockholders of Omni or the election of
directions of Omni or any other matter, or any other rights
whatsoever as a stockholder of Omni.

(k) NO FRACTIONAL SHARES. Omni shall not be required to issue
fractional shares of Common Stock upon exercise of any options.

5
<PAGE>

7. RESTRICTED STOCK. Except as otherwise provided herein, the Committee shall
have the sole discretion to determine the restrictions that shall apply to
each award of Restricted Stock hereunder (including, without limitation, the
time and manner of voting, provisions applicable on death, disability or by
the grantee). Any such restrictions shall be embodied in the applicable
Agreement and in a legend placed on the certificate for Restricted Stock. As
soon as practicable following a grant of Restricted Stock, Omni shall
transfer to the name of the grantee any and all awarded shares. A certificate
or certificates for all shares of Restricted Stock registered the name of a
grantee shall be promptly drawn and held for the grantee by Omni. The grantee
shall thereupon be a stockholder and shall have all the rights of a
stockholder with respect to such shares, including the right to vote and
receive all dividends or other distributions made or paid with respect to
such shares. As the restrictions specified by the Committee and as set forth
in the applicable Agreement are released, a certificate (without the legend
described above) for the number of shares with respect to which restrictions
have been released will be delivered to the grantee as soon as practicable.
Any new, additional, or different securities, cash, or other property the
grantee may become entitled to receive shall be subject to he same
restrictions applicable to the Restricted Stock with respect to which such
new, additional, or different securities or property are received. Shares of
Restricted Stock may not be sold, exchanged, transferred, pledged,
hypothecated, or otherwise disposed of until such time as the stated
restrictions lapse.

8. PERFORMANCE UNITS. The Committee may grant Performance Units entitling the
holder to receive a fixed or variable number of share-denominated units
subject to such conditions of vesting and time of payment as the Committee
may determine and as set forth in the applicable Agreement. Performance Units
may be paid in cash or in a combination of cash and shares of Common Stock,
as the Committee shall determine. Such Performance Units shall represent an
unsecured and unfunded promise to pay the Fair Market Value of the shares of
Common Stock represented by the Units and the holder shall have no rights
other than as a general creditor of the Company. Performance Units may not be
sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of
except as provided in the applicable Agreement.

9. RECAPITALIZATION OR REORGANIZATION

(a) The aggregate number of shares of Common Stock for which Awards
may be granted under the Plan, the number of shares covered by
outstanding Awards and Awards to be granted to Directors and
Non-employee Directors, and the exercise price per share for each
outstanding option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common
Stock resulting from the subdivision or consolidation of shares,
or the payment of a stock dividend after the effective date of the
Plan, or other increase or decrease in such shares effected
without receipt of consideration by Omni; provided, however, that
any adjustment to Awards resulting in the right to receive
fractional shares shall be eliminated.

(b) If Omni shall at any time merge or consolidate with or into
another corporation, the holder of each Award will thereafter
receive, upon exercise or transfer of shares, the securities or
property to which a holder of an equivalent number of shares of
Common Stock would have been entitled upon such merger or
consolidation as may be necessary to assure that the provisions
this Plan shall thereafter be applicable, as nearly as reasonably
may be, in relation to any securities or property thereafter
deliverable. A sale of all or substantially all of the assets of
Omni for a consideration (apart from the assumption of
obligations)

6
<PAGE>

consisting primarily of securities shall be deemed a merger or
consolidation for the foregoing purposes.

10. CHANGE IN CONTROL. Notwithstanding any provision in the Plan to the
contrary, but subject to the first sentence of section 6(c) hereof, (i) each
option granted under the Plan shall become immediately exercisable in whole
or in part, at the election of the optionee, (ii) the restrictions
applicable to each share of Restricted Stock shall immediately lapse, and
(iii) payment of Performance Units shall be immediately due upon the
occurrence of an event which constitutes a change in control of Omni. For
purposes of this section 10, a "change in control of Omni" shall mean a
change in control of a nature that would be required to be reported in
response to Item 1 of Form 8-K promulgated under the Exchange Act or a sale
of all or substantially of all the assets of the Company; provided that,
without limitation, such a change in control shall be deemed to have
occurred if:

(a) any "person" (as such term in used in sections 13(d) and 14(d) of
the Exchange Act), other than Omni or any person who on the
effective date of the Merger is an officer or director of Omni, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act, as such Rule is in effect from time to time),
directly or indirectly of securities of Omni representing 30% or
more of the combined voting power of Omni's then outstanding
securities, unless such a person owns, directly or indirectly, as
of such effective date of the Merger, more than 25% of the
combined voting power of Omni's then outstanding securities, in
which case, if any such person (a "Major Stockholder") becomes the
beneficial owner, directly or indirectly, of 33-1/3% or more of
the combined voting power of Omni's then outstanding securities
(otherwise than pursuant to the Merger); provided, further,
however, that acquisition of 33-1/3% or more of such combined
voting power shall not constitute a "change in control of Omni" if
(1) such combined voting power does not exceed 37-1/2% or more of
the combined voting power of Omni's then outstanding securities,
or (2) either (i) any such increase in a Major Stockholder's
beneficial ownership results from redemption or purchase by Omni
of its securities, or (ii) the Board, by vote of a majority of the
full Board, in good faith, determines (hereinafter referred to as
a "Determination") both (X) that such acquisition does not
constitute, in fact, a change in control of Omni and (Y) that such
Major Stockholder does not and cannot then control Omni; or (iii)
any such shares were acquired in the Merger; and

(b) during any period of two consecutive years prior to the date of
such Determination, individuals who at the beginning of such
period constituted the Board cease for any reason to constitute a
least a majority thereof, unless the election of such director who
was not a director at the beginning of such period has been
approved in advance by directors representing at least a majority
of the directors then in office who were directors at the
beginning of the Period.

11. ADMINISTRATION

(a) The Plan shall be administered by the Committee. The Committee
shall consist of a least two (2) directors, appointed by the
Board, who are "disinterested persons" within the meaning of Rule
16b-3(c)(2)(i) promogulated under the Exchange Act, as such Rule
or any other comparable Rule may be in effect from time to time,
such that during the one

7
<PAGE>

year period prior to becoming a member of such Committee and
during such service as a Committee member, respectively, he will
not have been granted and will not be granted options, Restricted
Stock, Performance Units, or other equity securities of the
Company under any other plan of the Company, except pursuant to a
"formula plan" as defined in Rule 16b-3(c)(2)(ii) promogulated
under the Exchange Act, as such Rule or any other comparable Rule
may be in effect from time to time (including, for this purpose,
an Award pursuant to Section 5). The Board may from time to time
remove members from or add members to the Committee. Vacancies in
the Committee, however, caused, shall be filled by the Board. The
Committee shall select one of its members chairman and shall hold
meetings at such time and places as it may determine. The
Committee may appoint a secretary and, subject to the provisions
of the Plan and to policies determined by the Board, may make such
rules and regulations for the conduct of its business as it shall
deem advisable. A majority of the Committee shall constitute a
quorum. All actions of the Committee shall be take by a majority
of its members. Any action may be taken by a written instrument
signed by a least a majority of the members or at a meeting
conducted by means of telephone or similar communications
equipment pursuant to which all persons participating in the
meeting can hear each other, and action so taken shall be as fully
effective as if it had been taken at a meeting duly called and
held.

(b) Subject to the express terms and conditions of the Plan, the
Committee shall have full power to make Awards, to construe or
interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it and to make all other determinations
necessary or advisable for its administration.

(c) Except as otherwise provided herein, the Committee may determine
which persons shall be granted Awards and the number of shares
subject to Awards and the time at which Awards shall be made.

(d) The Committee shall report to the Board the names of persons
granted Awards, the number of shares involved, and the terms and
conditions of each Award.

(e) No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan or any option or award and service on the Committee shall
constitute service as a director, entitling such Committee member
to indemnification and reimbursement for such service to the same
extent as for service rendered as a director.

12. TAX WITHHOLDING. The Committee may require any person entitled to receive
payment in respect of an Award to remit to the Company, prior to such
payment, an amount sufficient to satisfy any Federal, state or local tax
withholding requirements. The Committee shall also have the exclusive right
to permit an individual to satisfy, in whole or in part, such obligation to
remit taxes by directing the Company to withhold shares of Common Stock that
would otherwise be received by such individual, pursuant to such rules as
the Committee may determine from time to time in compliance with the
provisions of Rule 16b-3(e) promulgated under the Exchange Act, as such Rule
or any other comparable Rule may be in effect from time to time.

8
<PAGE>

13. EFFECTIVE DATE AND TERMINATION. This Plan shall become effective immediately
on adoption by the Board. However, any Awards under the Plan shall be
conditioned on the approval of the Plan within 12 months after adoption by
the Board by holders of a majority of the issued and outstanding shares of
Common Stock in attendance, in person, or by proxy at a meeting of
shareholder. This Plan shall terminate on March 1, 2006, but the Board of
Directors may terminate the Plan at any time prior thereto. Termination of
the Plan shall not alter or impair, without the consent of the optionee or
grantee, any of the rights or obligations and any Award made under the Plan.

14. AMENDMENTS. The Board may from time to time alter, amend, suspend or
discontinue the Plan; provided, however, that no such action of the Board
may alter the provision of the Plan so as to alter any outstanding Awards to
the detriment of the optionee or grantee without his consent, and, no
amendment to the Plan shall be made without stockholder approval which shall
(i) increase (except as provided in section 9) the total number of shares
reserved for issuance pursuant to the Plan; (ii) change the class of
individuals entitled to participate under the Plan; or (iii) withdraw the
administration of the Plan from a committee consisting of at least two
"disinterested persons" as defined in section 11(a). The Committee may from
time to time, alter, amend, cancel, or terminate any outstanding award, in
any manner not inconsistent with the Plan; provided, however, that no such
action of the Committee may alter, amend, cancel, or terminate an Award to
the detriment of the optionee or grantee without his consent, including (i)
to change the date or dates as of which an Award become exercisable, is
deemed earned, or becomes non-forfeitable, or (ii) to cancel and reissue an
Award under such different terms and conditions as the Committee determined
appropriate. The provisions of section 5 of the Plan may not be amended more
than once every six months except to comport with changes to the Code, the
Employee Retirement Income Security Act, or the rules thereunder.
Notwithstanding anything in the Plan to the contrary, the Board shall have
the power to amend the Plan to conform the Plan to all applicable
requirements of law.

15. NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to receive
grants of Awards under the Plan. Neither the Plan, the grant of Awards under
the Plan, or any action taken or omitted to be taken under the Plan shall be
deemed to create or confer on any employee any right to be retained in the
employ of the Company or to interfere with or to limit in any way the right
of the Company to terminate the employment of such individual at any time.

16. REGISTRATION. There shall be no obligation or duty for Omni to register
under the Securities Act or any state securities law at any time the Awards
that may be granted hereunder or the Common Stock that may be issuable upon
grant or exercise of such Awards. Omni shall not be required be issue or
deliver any shares of stock prior to completion of such registration or
other qualification of such shares under any state or Federal law, rule, or
regulation as Omni shall determine to be necessary or desirable.

9
<PAGE>

OMNI NUTRACEUTICALS, INC.
(A UTAH CORPORATION)

COMMON STOCK PROXY
FOR THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD DECEMBER 3, 1999

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints R. Lindsey Duncan and Louis Mancini, and
either of them, attorneys and proxies, with full power of substitution, and
authorizes them to vote all shares of Common Stock, $.01 par value ("Common
Stock") of Omni Nutraceuticals, Inc. (the "Company") held of record by the
undersigned on November 5, 1999, at the Special Meeting in Lieu of Annual
Meeting of Shareholders to be held at the Company's offices located at 5310
Beethoven Avenue, Los Angeles, CA 90066, on Friday December 17, 1999 at
10:00 AM, Pacific Standard Time, and any adjournments thereof, on the
matters set forth on the reverse side.

THE MATTERS TO BE VOTED UPON, THE INSTRUCTIONS AND
A SPACE FOR YOUR VOTE AND SIGNATURE
ARE SET FORTH BELOW

PLEASE VOTE, SIGN AND RETURN PROMPTLY.

If this proxy is properly executed, the shares of Common Stock represented
thereby will be voted in accordance with the instructions on this proxy. IF NO
INSTRUCTIONS ARE GIVEN, SUCH SHARES WILL BE VOTED FOR THE RATIFICATION OF THE
DELETION OF SECTION 3.14 FROM THE COMPANY'S BYLAWS; FOR THE ELECTION OF THE
NOMINEE FOR DIRECTOR; FOR THE RATIFICATION OF THE AMENDMENTS TO THE COMPANY'S
LONG TERM STOCK INCENTIVE PLAN INCREASING THE NUMBER OF SHARES AVAILABLE FOR
GRANT THEREUNDER TO 4,500,000, INCLUDING 1,000,000 FOR NON-EMPLOYEE DIRECTORS,
AND INCREASING AND AMENDING THE TERMS OF THE ONE-TIME OPTION GRANTS TO NEW
NON-EMPLOYEE DIRECTORS; FOR THE RATIFICATION OF THE SELECTION OF ARTHUR ANDERSON
LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDED DECEMBER 31,
1999, AND IN THE DISCRETION OF THE PROXIES UPON ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.

Proposal 1. The ratification of an amendment to Article III of the
Company's Bylaws eliminating Section 3.14 providing for an
Executive Committee of the Board of Directors;

[ ] FOR

[ ] AGAINST

[ ] ABSTAIN

Proposal 2. The election of Mr. Santo P. Panzarella as a Class III
director to serve a three-year term until the 2002 Annual
Meeting of Shareholders, and until his successor has been
elected and qualified;

[ ] FOR THE NOMINEE

[ ] WITHHOLD VOTE FOR THE NOMINEE

1
<PAGE>

Proposal 3. The ratification of amendments to the Company's Long Term
Stock Incentive Plan to increase the number of shares of
Common Stock that may be awarded under the Plan to 4,500,000
shares with proportional increases to the number of shares of
Common Stock that can be awarded to officers and directors
including an increase to 1,000,000 shares that may be awarded
to non-employee directors, and increasing the number of shares
covered by the one-time option grants to new non-employee
directors to 150,000 shares and amending the terms of such
options;

[ ] FOR

[ ] AGAINST

[ ] ABSTAIN

Proposal 4. The ratification of the appointment of Arthur Anderson LLP as
the Company's independent auditors for the fiscal year ended
December 31, 1999;

[ ] FOR

[ ] AGAINST

[ ] ABSTAIN

And, in their discretion, upon such other matters as may
properly come before the Meeting or any adjournment or adjournments thereof.

Receipt is acknowledged of the Proxy Statement dated December [__], 1999.

THIS PROXY MUST BE MARKED, DATED AND SIGNED BY THE STOCKHOLDER(S) EXACTLY AS
HIS, HER OR ITS NAME APPEARS HEREON, AND RETURNED PROMPTLY IN THE ENCLOSED
ENVELOPE. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC., SHOULD GIVE FULL TITLE AS
SUCH. IF THE SIGNER IS A CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY A DULY
AUTHORIZED OFFICER. IF SHARES ARE HELD BY JOINT TENANTS OR AS COMMUNITY
PROPERTY, BOTH SHOULD SIGN.

SIGNATURE:
- ------------------------------

DATE:
- ------------------------------

I PLAN TO ATTEND THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF SHAREHOLDERS:

Yes [ ] No [ ]

YOUR VOTE IS IMPORTANT!