<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
OPTION CARE, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
NOTICE OF 2000 ANNUAL SHAREHOLDERS' MEETING
TO BE HELD MAY 12, 2000
------------------
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Shareholders' Meeting of Option Care,
Inc., a Delaware corporation (the "Company"), will be held at The Northern Trust
Bank, 265 E. Deerpath Road, Lake Forest, Illinois, on Friday, May 12, 2000, at
10:00 a.m. (CST) for the purpose of considering and acting upon the following:
(1) The election of two Directors for terms expiring in 2003;
(2) The ratification and approval of the Option Care, Inc. 2001 Employee
Stock Purchase Plan;
(3) The ratification and approval of and amendment to the Company's Stock
Incentive Plan to increase the number of shares available to be issued
thereunder from 2,000,000 shares to 2,500,000 shares;
(4) The transaction of such other business as may properly be brought before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 17, 2000 are
entitled to notice of and to vote at the Annual Shareholders' Meeting.
We encourage you to read the attached Proxy Statement carefully. Even if you
expect to be present at the meeting, please sign, date and return the enclosed
Proxy as promptly as possible in the accompanying return envelope, for which no
postage is required if mailed in the United States. The mailing of an executed
Proxy will not affect your right to vote in person should you later decide to
attend the Annual Shareholders' Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
CATHY BELLEHUMEUR
Senior Vice President, General Counsel
and Secretary
April 12, 2000
<PAGE>
OPTION CARE, INC.
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
Voting Procedures........................................... 1
Proposal No. 1--Election of Directors....................... 2
Information about the Board of Directors.................... 2
Security Ownership of Certain Beneficial Owners and
Management................................................ 4
Report of Compensation Committee on Executive
Compensation.............................................. 5
Executive Compensation...................................... 8
Stock Performance Graph..................................... 10
Proposal No. 2--Ratification and Approval of the Option
Care, Inc. 2001 Employee Stock Purchase Plan.............. 11
Proposal No. 3--Ratification and Approval of Increase in
Shares Available under the Amended and Restated Stock
Incentive Plan............................................ 13
General Information......................................... 17
Exhibit A--2001 Employee Stock Purchase Plan
</TABLE>
<PAGE>
[LOGO]
100 CORPORATE NORTH, SUITE 212
BANNOCKBURN, ILLINOIS 60015
PROXY STATEMENT
ANNUAL SHAREHOLDERS' MEETING
TO BE HELD MAY 12, 2000
This Proxy Statement contains information related to the Annual
Shareholders' Meeting of Option Care, Inc., a Delaware corporation, to be held
Friday, May 12, 2000, beginning at 10:00 a.m., at The Northern Trust Company,
265 Deerpath Road, Lake Forest, Illinois. The enclosed Proxy is solicited by the
Board of Directors of Option Care, Inc. (the "Company") in connection with the
Annual Meeting and at any and all adjournments thereof. The Company is paying
the costs of solicitation, including the cost of preparing and mailing the
Notice of Annual Shareholders' Meeting and this Proxy Statement. In addition,
the Company will, upon the request of brokers, dealers, banks, voting trustees
and their nominees who are holders of record of shares of the Company's Common
Stock on the record date specified below, bear their reasonable expenses for
mailing copies of this material to the beneficial owners of such shares.
Officers and other regular employees of the Company, who will receive no extra
compensation for their services, may solicit Proxies in person or by telephone
or facsimile. The Proxy Statement and accompanying proxy card are being mailed
to Option Care shareholders on or about April 12, 2000.
VOTING PROCEDURES
The Proxy may be revoked at any time prior to its exercise by giving written
notice of revocation to an officer of the Company, by executing a Proxy bearing
a later date or by attending the meeting and voting in person. Unless so
revoked, properly executed Proxies will be voted in accordance with the
shareholders specifications marked thereon. If no specifications are marked
thereon with respect to one or more proposals, duly executed proxies will be
voted as to such proposals in accordance with the recommendations of the Board
of Directors set forth in this Proxy Statement. Except for the election of
Directors, which shall be by plurality vote, the affirmative vote of the holders
of a majority of the shares present or represented by proxy at the meeting and
entitled to vote on the matter is required for approval of any matter which may
properly come before the meeting, except as otherwise provided by law or the
Company's Certificate of Incorporation or By-Laws.
Shareholders of record on March 17, 2000, are the only persons entitled to
notice of and to vote at the Annual Meeting. As of that date, there were issued
and outstanding 11,686,658 shares of Common Stock, the only voting securities of
the Company. Each shareholder is entitled to one vote for each share held.
Shares subject to abstentions will be treated as shares that are present at the
Annual Meeting for purposes of determining the presence of a quorum and as voted
for purposes of determining the base number of shares voting on a particular
proposal. If a broker or other nominee holder indicates on the Proxy Card that
it does not have discretionary authority to vote the shares it holds of record
on a proposal, those shares will not be considered as present for purposes of
determining a quorum (unless they are voted on another proposal brought before
the meeting) or as voted for purposes of determining the approval of the
shareholders on a particular proposal. Shareholders do not have the right to
cumulate votes in the election of Directors.
1
<PAGE>
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Company's By-Laws authorize the Board of Directors to fix the number of
Directors and currently, the number is fixed at six. The members of the Board of
Directors are divided into three classes with the term of one class expiring
each year. There are two Directors to be elected for terms expiring at the
Company's Annual Meeting in 2003 or until their successors has been duly elected
and qualified. The person named as proxy intends to vote all duly executed
proxies received by the Board of Directors for the election of Dr. John N.
Kapoor and Roger W. Stone, as the two Directors to be elected at the Annual
Meeting. Each of Dr. Kapoor and Mr. Stone is currently a Director of the
Company. The nominees have indicated their willingness to serve as members of
the Board of Directors if elected; however, in case these nominees shall become
unavailable for election to the Board of Directors for any reason not presently
known or contemplated, the person named as Proxy has the discretionary authority
in that instance to vote the Proxy for a substitute nominee designated by the
Board of Directors.
The nominees are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ------------------------------------------
<S> <C> <C>
TERM EXPIRING IN 2003:
John N. Kapoor, Ph.D.................. 56 Chairman of the Board and Director
(Director since 1990)
Roger W. Stone (1) (2) (3) (4)........ 65 Director (Director since 1991)
The present Directors of the Company whose terms will expire after 2000 are as follows:
TERM EXPIRING IN 2001:
Jerome F. Sheldon (1) (2) (3) (4)..... 64 Director (Director since 1991)
James M. Hussey (3) (4)............... 38 Director (Director since 1999)
TERM EXPIRING IN 2002:
James G. Andress (1) (2) (3) (4)...... 61 Director (Director since 1991)
Michael A. Rusnak..................... 44 President, Chief Executive Officer and
Director (Director since 1998)
</TABLE>
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Stock Incentive Plan Committee.
(4) Member of the Corporate Compliance Committee.
INFORMATION ABOUT THE BOARD OF DIRECTORS
- James G. Andress has been a member of the Company's Board of Directors
since November 1991. Mr. Andress is currently Chairman and Chief Executive
Officer of Warner-Chilcott PLC (NASDAQ:WCRX), a pharmaceutical company,
since November 1996. From November 1989 until November 1995, Mr. Andress
served as President, Chief Executive Officer and Chief Operating Officer
of Information Resources, Inc. (NASDAQ:IRIC), a software and information
services company. He currently serves as a Director of the following
companies: Information Resources, Inc. (NASDAQ:IRIC); Allstate Corporation
(NYSE:ALL); The Liposome Company, Inc. (NASDAQ:LIPO); Sepracor, Inc.;
XOMA Ltd. (NASDAQ:XOMA); Favorite Brands International, and
Warner-Chilcott, PLC (NASDAQ:WCRX).
- James M. Hussey has been a member of the Company's Board of Directors
since August 1999. Mr. Hussey currently serves as President and Chief
Executive Officer of NeoPharm (AMEX:NEO), a biopharmaceutical company
specializing in the development and marketing of new and innovative
2
<PAGE>
drugs for the diagnosis and treatment of cancer. Mr. Hussey, in 1994,
formed his own company, Physicians Quality Care (PQC), which was the third
largest IPA management company in Chicago, which he sold in 1998. Prior to
PQC, Mr. Hussey spent over 11 years with Bristol-Myers Squibb (NYSE:BMY),
where he held numerous senior level positions in marketing, sales and new
business development. Mr. Hussey is a graduate of Butler University
College of Pharmacy and a licensed pharmacist. He holds an MBA from the
University of Illinois.
- John N. Kapoor, Ph.D., is currently the Company's Chairman of the Board.
He has been Chairman of the Board of Directors since October 1990. He
served as the Company's Chief Executive Officer from August 1993 to
April 1996 and served as President from August 1993 through October 1993
and from January 1995 through February 1996. Dr. Kapoor also served as
Chief Executive Officer and President from March 1991 to May 1991. In
addition, Dr. Kapoor is President of E. J. Financial Enterprises, Inc., a
position he has held since April 1990. From June 1982 to April 1990,
Dr. Kapoor held several positions with Lyphomed, Inc., including Chairman,
Chief Executive Officer and President. Dr. Kapoor is a Director of
Integrated Surgical Systems, Inc. (NASDAQ:RDOC) and the Chairman of the
Board and Director for Akorn, Inc. (NASDAQ:AKRN) and NeoPharm, Inc.
(AMEX:NEO). Dr. Kapoor received his Ph.D. in medicinal chemistry from the
State University of New York and a B.S. in pharmacy from Bombay
University.
- Michael A. Rusnak has been the Company's President and Chief Executive
Officer since October 1998 and a Director of the Company since
November 1998. From June 1998 to October 1998, Mr. Rusnak was Executive
Vice President and Chief Operating Officer. Prior to that he was Senior
Vice President of the Company and President of Option Care
Enterprises, Inc. from May 1998 to June 1998. Mr. Rusnak was also the
Company's Vice President-Franchise Services from November 1997 to
May 1998. Prior to joining the Company, he was employed by Columbia Home
Care Group, a division of Columbia HCA (NYSE:COL), from October 1996 to
October 1997, as the Senior Vice President of Operations. From 1992 to
1997 he was the Vice President of Operations for Staff Builders
Services, Inc. From 1982 to 1992 he was the Operations Manager for Interim
Systems Corporation. He has a B.S. degree from St. Francis University and
a Nursing and Respiratory degree from Northwestern University/Wesley
Passavant School of Nursing.
- Jerome F. Sheldon has been a member of the Company's Board of Directors
since November 1991. Mr. Sheldon was President and Chief Executive Officer
of Medicine Shoppe International, Inc., a franchisor of retail pharmacies,
from March 1980 to June 1990, a Director of such company from March 1980
to February 1991 and a consultant of such company from July 1990 to
June 1991. Mr. Sheldon is also a Director of the International Franchise
Association and a trustee of the St. Louis College of Pharmacy.
- Roger W. Stone has been a member of the Company's Board of Directors since
November 1991. Mr. Stone was the Chairman of the Board of Directors,
President and Chief Executive Officer of Stone Container Corporation, from
1983 until its merger with Jefferson Smurfit Corporation in November,
1998. From November, 1998 through March, 1999, Mr. Stone was a member of
the Board of Directors, President and Chief Executive Officer of
Smurfit-Stone Container Corporation (NASDAQ:SSCC). Mr. Stone is also a
Director of McDonald's Corporation (NYSE:MCD), Autoliv, Inc. (NYSE:ALV)
and Paperexchange.com.
BOARD MEETINGS
The Company's Board of Directors met four times during 1999. Each Director
attended all 1999 Board and Committee meetings, either in person or through
telephonic means.
3
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing Audit, Compensation, Stock Incentive Plan and
Corporate Compliance Committees of the Board of Directors. The members of these
Committees have been identified above.
- AUDIT COMMITTEE--recommends the selection of independent accountants to
the Board of Directors, reviews the methods used and audits made by the
auditors in connection with the Company's published financial statements
and reviews with the auditors the Company's financial and operating
controls. The Audit Committee also reviews the Company's financial
disclosure documents, material litigation and regulatory proceedings and
other issues relating to potentially significant corporate liability. The
Audit Committee met three times in 1999.
- COMPENSATION COMMITTEE--determines the annual salary, bonus and other
benefits of selected senior officers of the Company and establishes and
reviews, as appropriate, performance standards under compensation programs
for senior officers. The Compensation Committee met once in 1999.
- STOCK INCENTIVE PLAN COMMITTEE--grants stock options under the Company's
Amended and Restated Stock Incentive Plan. The Stock Incentive Plan
Committee met twice in 1999.
- CORPORATE COMPLIANCE COMMITTEE--monitors the Company's adherence to the
Company's corporate compliance program and general corporate policies. The
Corporate Compliance Committee met four times in 1999.
DIRECTOR COMPENSATION
Directors are reimbursed for out-of-pocket expenses incurred in connection
with attendance at Board of Directors and Committee meetings. In addition, at
the beginning of each year, each non-employee Director receives an annual grant
of options to purchase 7,500 shares of the Company's Common Stock at an exercise
price equal to the market price on the date of grant.
THE OPTION CARE, INC. BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
EACH NOMINEE
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities Exchange Act of 1934 requires all executive officers,
Directors and beneficial owners of more than 10% of the Company's Common Stock
to report any changes in the ownership of Common Stock of the Company to the
Securities and Exchange Commission, the Nasdaq Stock Market, Inc. and the
Company.
Based solely upon written representations that no additional reports were
required to be filed in fiscal 1999, the Company believes that all reports were
filed on a timely basis.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company, by (i) each Director of
the Company, (ii) each executive officer of the Company named in the Summary
Compensation Table, (iii) all Directors and executive officers of the Company as
a group, and (iv) each person known by the Company to be the beneficial owner of
more than 5% of the Common Stock of the Company. The information shown assumes
the exercise by each person (or all Directors and executive officers as a group)
of stock options owned by such person which are currently exercisable or are
exercisable within 60 days of March 17, 2000 and the exercise by no other
4
<PAGE>
person of stock options or exchange rights. Except as otherwise noted, the
indicated owners have sole voting and investment power with respect to all
shares shown to be beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES % OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS (2)
- ------------------------ ---------------------- ---------
<S> <C> <C>
James G. Andress............................................ 57,125 *
Cathy Bellehumeur........................................... 63,015 *
James M. Hussey............................................. 5,000 *
John N. Kapoor, Ph.D. (3)................................... 6,241,495 51.9
Rajat Rai................................................... 76,816 *
Michael A. Rusnak........................................... 160,591 *
Jerome F. Sheldon........................................... 57,125 *
Michael A. Siri............................................. 61,145 *
Roger W. Stone.............................................. 77,125 *
All executive officers and Directors as a group (9 persons)
(4)....................................................... 6,799,437 56.5
</TABLE>
- ------------------------
* Less than 1%
(1) Table includes shares issuable pursuant to options which are exercisable
currently or within 60 days after the date of this Proxy of 57,125 each for
Messrs. Andress, Sheldon and Stone and 51,250, 28,238, 75,000 and 18,750 for
Ms. Bellehumeur and Messrs. Rai, Rusnak and Siri, respectively.
(2) The percentage calculations are based upon 11,686,658 shares of Common Stock
issued and outstanding as of March 17, 2000, plus, with respect to each
individual and for all Directors and executive officers as a group, the
number of shares subject to options that may be acquired upon exercise or
conversion within 60 days of March 17, 2000.
(3) Includes 3,136,228 shares owned by EJ Financial/OCI Management, L.P., of
which Dr. Kapoor is the managing general partner, 1,200,000 shares owned by
the EJ Financial Investments II L.P., of which Dr. Kapoor is the managing
general partner, 1,158,621 shares owned by E.J. Financial
Investments III, L.P., of which Dr. Kapoor is the managing general partner,
507,937 shares owned by the Kapoor Family Partnership, L.P., of which
Dr. Kapoor is the sole general partner and 238,709 shares owned by the
John N. Kapoor Trust dated September 20, 1989, of which Dr. Kapoor is the
sole trustee and sole current beneficiary.
(4) Includes 344,613 shares issuable pursuant to options, which are exercisable
currently or within 60 days after March 17, 2000.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was comprised during
1999 of Messrs. Andress, Sheldon and Stone. All Committee members are
non-employee Directors of the Company. All decisions by the Compensation
Committee relating to the compensation of the Company's executive officers are
reviewed by the full Board. In accordance with SEC rules designed to enhance
disclosure of companies' policies toward executive compensation, the following
is a report submitted by the above-listed committee members in their capacity as
the Board's Compensation Committee, addressing the Company's compensation policy
as it related to the named executive officers for 1999.
The report by the Compensation Committee and the Stock Performance Graph
contained in this Proxy Statement shall not be deemed to be incorporated by
reference by any general statement which incorporates by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, and it shall not otherwise be deemed filed under such
Acts.
5
<PAGE>
COMPENSATION POLICY
The goal of the Company's executive compensation policy is to ensure that an
appropriate relationship exists between executive pay and the creation of
shareholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policies
integrate annual base compensation with cash and stock bonuses based upon
corporate performance and individual initiatives and stock options granted under
the Company's Amended and Restated Incentive Plan. Measurement of corporate
performance is primarily based on Company goals and industry performance levels.
Accordingly, in years in which performance goals and industry levels are
achieved or exceeded, executive compensation would be higher than in years in
which performance is below expectations. Annual compensation is designed to
attract and retain qualified executives. All executive officers and management
in general, are also eligible for and participate in an incentive compensation
plan that consists of cash bonuses and stock options.
CHIEF EXECUTIVE OFFICER AND OFFICER COMPENSATION
On January 26, 2000, the Compensation Committee determined based on the
substantial positive financial results achieved by the Company in 1999, the
generation of significant positive operating cash flow, the progress made in
reshaping the Company and the successful negotiations concerning the Company's
debt facility, the base salary for Michael A. Rusnak, President and Chief
Executive Officer of the Company, be increased to $228,000 from $210,000, a
discretionary incentive bonus pay-out equal to 36.7% of base salary or $77,100.
In addition, discretionary incentive bonuses totaling $138,578 were among
Ms. Bellehuemer, Mr. Rai and Mr. Siri.
The Committee also established leadership objectives and goals to be met by
the Company and the named executive officers during 2000. The amount of
discretionary bonus, if any, to be paid out shall be determined by the Board of
Directors based on the achievement by the Company of these certain goals and
objectives. On an annual basis, these goals will be reviewed and reestablished
by the Compensation Committee.
PERFORMANCE MEASURES
In evaluating annual bonuses, the Committee examines earnings per share,
sales growth and operating results as well as subjective factors relating to
performance of management objectives. No specific weight is assigned to any of
these factors. The earnings factors are compared with designated Company
performance goals, prior years' performance and performance of other companies
in the industry. Accordingly, the Company believes it is important that its
performance be compared to that of other specialty pharmaceutical companies in
order to demonstrate the impact of management's objectives and performance.
FISCAL 1999 COMPENSATION
For fiscal 1999, the Company's executive compensation program consisted of
base salary, a cash bonus based upon the performance measurements described
above and stock options. Options are granted based primarily on each such
person's potential contribution to the Company's growth and profitability. The
Committee believes that options and other stock-based performance compensation
arrangements are an effective incentive for managers to create value for
shareholders since the value of an option bears a direct relationship to the
Company's stock price.
Base salary, maximum annual bonus and annual stock option grants for the
Chief Executive Officer and all other executive officers were established by a
combination of objective and subjective factors. Actual bonus payout is
determined by a combination of objective factors, relating to the Company's
performance relative to targets and comparative companies, and subjective
factors, relating to the completion of specific management objectives.
6
<PAGE>
The Company's objective is to obtain a financial performance that achieves
several goals over time including earnings-per-share growth. Earnings per
diluted share increased from a loss of ($0.06) in 1998 to $0.39 in 1999. In
addition, the Company returned to profitability in all four quarters recognizing
progressively greater net income each quarter and growing sales volume. For the
year, the Company achieved a 4.8% growth rate in revenue and a net income amount
of $4.6 million, a $5.3 million increase over last years' loss of ($0.7)
million. Operating cash flow was strong at $7.7 million allowing debt balances
to be reduced from $22.4 million in 1998 to $8.6 million, a decrease of
$13.8 million or 61.6%. In addition, the market price of the Company's stock
rose 81.1% from $1.69 at December 31, 1998 to $3.0625 at December 31, 1999.
Through March 17, 2000, the market price of the Company's stock has risen an
additional 112.2%, to $6.50.
Base salaries are believed to be within the range of those persons holding
comparably responsible positions at other companies, both regionally and
nationally. In addition, other factors are taken into consideration, such as
cost of living increases, competitors' performance, as well as the individual's
past performance and potential with the Company. Bonus compensation is also tied
to performance goals.
The Committee believes that linking executive compensation to corporate
performance results in a better alignment of compensation with corporate goals
and shareholder interest. If performance goals are met or exceeded, resulting in
increased value to shareholders, executives are rewarded commensurately. The
Committee believes that compensation levels during fiscal 1999 adequately
reflect the Company's compensation goals and policies.
James G. Andress
Jerome F. Sheldon
Roger W. Stone
7
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the total compensation paid to Michael Rusnak,
President and Chief Executive Officer and certain of the Company's executive
officers for services rendered for each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENATION
----------------------------
ANNUAL COMPENSATION SECURITIES
----------------------------------------- RESTRICTED UNDERLYING ALL OTHER
NAME & FISCAL OTHER ANNUAL STOCK OPTIONS COMPENSATION
PRINCIPAL POSITIONS YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARDS (#)(1) (SHARES) ($)(2)
- ----------------------- -------- ---------- --------- ---------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael A. Rusnak
(3).................. 1999 $217,145 $77,100 $ -- -- -- / -- $4,800
President and Chief 1998 188,083 -- 54,341 75,294 150,000 / -- 810
Executive Officer
Cathy Bellehumeur...... 1999 168,645 40,764 -- -- -- / -- 4,800
Sr. VP, Secretary, 1998 155,750 -- 6,865 11,765 -- / -- 3,296
Corporate Compliance 1997 149,060 21,094 -- -- 55,000 / -- 5,584
Officer and General
Counsel
Rajat Rai (3).......... 1999 138,009 51,500 -- -- -- / -- 4,140
Chief Operating Officer 1998 94,606 -- 20,594 35,294 97,350 / -- 2,844
Michael A. Siri (3).... 1999 146,250 46,314 -- -- -- / -- 983
Chief Financial Officer 1998 52,661 -- 9,268 15,882 75,000 / -- --
</TABLE>
- --------------------------
(1) Individuals are 100% vested in these shares issued as part of the fiscal
1998 bonus awards. These shares are restricted from being sold or
transferred for a one year period that ended February 4, 2000. The dollar
value of the restricted stock holdings, valued at the closing price on
December 31, 1999 of $3.0625 was $230,588, $36,030, $108,088 and $48,639,
for Mr. Rusnak, Ms. Bellehumeur and Messrs. Rai and Siri, respectively.
(2) Amounts represent Company matching contributions to the Company's 401(k)
plan.
(3) Mr. Rusnak and Mr. Siri became executive officers of the Company in
October 1998. Mr. Rai became an executive officer of the Company in
August 1999.
8
<PAGE>
1999 STOCK OPTION EXERCISES AND YEAR END
OPTION VALUES
The following table sets forth certain information concerning the value of
stock options held as of December 31, 1999.
<TABLE>
<CAPTION>
1999 STOCK OPTION # OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED
EXERCISES AT DECEMBER 31, 1999 IN-THE-MONEY OPTIONS
--------------------------- --------------------------- ---------------------------
NAME SHARES (#) VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ---------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Cathy Bellehumeur.............. -- $-- 47,500 28,750 $145,469 $ 88,047
Rajat Rai...................... -- -- 26,988 73,012 82,651 223,599
Michael A. Rusnak.............. -- -- 62,500 137,500 191,406 421,094
Michael A. Siri................ -- -- 18,750 56,250 57,422 172,266
</TABLE>
- ------------------------
(1) Based upon the closing price of the Company's Common stock of $3.0625 per
share on December 31, 1999, as reported by the Nasdaq National Market.
1999 LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The following table sets forth certain information concerning restricted
stock issued in fiscal 1999:
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
SHARES, UNITS OTHER PERIOD NON-STOCK PRICE-BASED PLANS
OR OTHER RIGHTS UNTIL MATURATION -------------------------------
NAME (#) (1) OR PAYOUT THRESHOLD (#) MAXIMUM (#)
- ---- --------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Cathy Bellehumeur.................... 11,765 February 4, 2000 11,765 11,765
Rajat Rai............................ 35,294 February 4, 2000 35,294 35,294
Michael A. Rusnak.................... 75,294 February 4, 2000 75,294 75,294
Michael A. Siri...................... 15,882 February 4, 2000 15,882 15,882
</TABLE>
- ------------------------
(1) These restricted shares were issued, after receiving shareholder approval,
as part of the 1998 Bonus Award program. These shares are restricted from
being sold until February 4, 2000. Restricted shares were issued in order to
recognize and reward the performance of the Company's management and to
align each management employee's interest in the Company's financial
performance with that of the shareholders.
9
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below sets forth the cumulative total shareholder return on the
Common Stock of the Company ("OPTN") for the five-year period ended
December 31, 1999, with the cumulative total return on the S&P 500 Index
("S&P 500") and the Hambrecht & Quist Healthcare Index ("H&Q Index") over the
same period, assuming the investment of $100 in each on December 31, 1994. Past
financial performance should not be considered to be a reliable indicator of
future performance and investors should not use historical trends to anticipate
results or trends in future periods.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
S&P 500 100 134 161 211 268 320
OPTN 100 159 306 129 79 144
H&Q Index 100 168 173 200 253 280
</TABLE>
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index.............................. 100 134 161 211 268 320
OPTN....................................... 100 159 306 129 79 144
H & Q Index................................ 100 168 173 200 253 280
</TABLE>
10
<PAGE>
PROPOSAL NO. 2--RATIFICATION AND APPROVAL OF THE OPTION CARE, INC.
2001 EMPLOYEE STOCK PURCHASE PLAN
On March 14, 2000, the Board of Directors unanimously adopted, subject to
shareholder's approval, the Option Care, Inc. 2001 Employee Stock Purchase Plan
(the "2001 Plan"). The current employee purchase plan, the 1996 Employee Stock
Purchase Plan, is scheduled to terminate on December 31, 2000. The 2001 Plan
would be effective on January 1, 2001 and may be terminated at any time by the
Company. The full text of the 2001 Plan appears as Exhibit A hereto. The
principal features of the 2001 Plan are outlined below and should be read in
conjunction with Exhibit A.
The purpose of the 2001 Plan is to provide eligible employees of the Company
the opportunity to acquire a proprietary interest in the Company and thereby
provide employees with an additional incentive to contribute to the long-term
profitability and success of the Company. The 2001 Plan is administered by a
committee appointed by the Board of Directors. Acts of a majority of the members
of the administrative committee at a meeting or acts reduced to writing and
signed by all members of the administrative committee, shall be valid acts.
Employees eligible to participate in the 2001 Plan include all employees of
the Company and any of its Subsidiaries, except, however, that no eligible
employee can be granted the right to purchase the Company's Common Stock under
the 2001 Plan if such employee would then own 5% or more of the total combined
voting power or value of all classes of stock of the Company or any of its
Subsidiaries. Employees would be eligible to enroll in the 2001 Plan each
January 1st or July 1st by submitting a completed payroll deduction
authorization form to the administrative committee during the open enrollment
periods. Participants may designate payroll deductions in whole percentages
rounded to the nearest whole cent. The minimum contribution per pay period is
$10, while the maximum contribution is 15% of base pay provided that no employee
may purchase Common Stock in any calendar year having a Fair Market Value in
excess of $25,000, determined as of the Offering Date. Each eligible employee
who makes payroll deductions under the 2001 Plan shall receive an annual account
statement, within 30 days after the purchase of related shares, containing such
information as will be determined by the Company. If an employee terminates his
employment prior to the issuance of shares under the 2001 Plan, the total amount
of cash withheld will be refunded to the employee with no purchase of the
Company's shares.
The share price paid under the 2001 Plan will be determined based on two
Offering Periods. The price for the annual Offering Period will be 85% of the
lessor of the Fair Market Value (as defined in the 2001 Plan) of the Company's
Common Stock on the first day of January and the last day of the following
December. The price for the six-month Offering Period commencing each July will
be the lessor of 85% of the Fair Market Value of the stock on the first day of
July and the last day of the following December. Total shares available to be
purchased under the 2001 Plan may not exceed an aggregate of 1,000,000 shares
(whether unissued, previously issued shares reacquired and held by the Company
or shares acquired in the open market) over the life of the 2001 Plan nor exceed
100,000 unissued shares on an annual basis. Any amount of shares of Common Stock
in excess of the 100,000 unissued share annual limitation may be issued from the
Company's treasury stock or be purchased by the Company on the open market.
The 2001 Plan is intended to qualify as an employee stock purchase plan
under Section 423 of the U.S. Internal Revenue Code of 1986, as amended from
time to time. Under present law, a participant will not be deemed to have
received any compensation for Federal income tax purposes at either the start of
any Offering Period or the subsequent purchase of Common Stock at the end of any
period. Participants will recognize taxable income in the year in which there is
a disposition of the Common Stock purchased under the 2001 Plan. If the stock is
not disposed of until at least two years after the start of the Offering Period
in which the stock was acquired, the participant will realize ordinary income in
the year of disposition equal to the lesser of the amount by which the fair
market value of the stock on the date of disposition exceeds the purchase price
or 15% of the fair market value of the stock on the start date of the Offering
Period in which the stock was acquired and any excess will be eligible for
capital gain treatment. If
11
<PAGE>
the stock is disposed of at any time within two years from the start date of the
Offering Period in which it was acquired, the participant will recognize
ordinary income in the year of disposition equal to the amount by which fair
market value of the stock on the purchase date exceeded the purchase price and
the participant will recognize capital gain or loss on the difference between
the amount realized and the amount paid plus the discount.
If the stock is not disposed of until at least two years after the start of
the purchase period in which the stock was acquired, the Company will receive no
income tax deduction for Federal income tax purposes in connection with the
employee's purchase of shares under the 2001 Plan. If the employee disposes of
the stock of at any time within two years from the start date of the purchase
period in which it was acquired, the Company will receive a deduction for
Federal income tax purposes equal to the ordinary income recognized by the
employee in connection with such disposition.
The approval of the 2001 Plan requires an affirmative vote of a majority of
the Common Stock present and voting at the Annual Meeting. The Board of
Directors strongly urges you to read the 2001 Plan, attached as Exhibit A, in
its entirety for a more detailed explanation of the 2001 Plan.
THE OPTION CARE, INC. BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
2001 EMPLOYEE
STOCK PURCHASE PLAN
12
<PAGE>
PROPOSAL NO. 3--INCREASE IN SHARES AVAILABLE UNDER THE AMENDED AND RESTATED
STOCK INCENTIVE PLAN
On March 14, 2000, the Board of Directors of the Company approved the
restatement of the Option Care, Inc. Amended and Restated Stock Incentive Plan,
(the "Plan"), increasing the number of shares available to be granted under the
Plan from 2,000,000 to 2,500,000.
The stated purpose of the Plan is to aid in maintaining and developing
strong management for the Company capable of assuring the future success of the
Company. The Plan is designed to secure for the Company and its shareholders the
benefits of the incentive inherent in the ownership of shares of the Company by
those employees who are largely responsible for its future growth and financial
success. All Directors and employees of the Company and its subsidiaries and
vendors are eligible to be granted awards under the Plan.
The Board of Directors has proposed that the amendment to the Plan be
submitted to the Company's shareholders for their consideration and approval.
The amendment to the Plan would increase the number of shares authorized for
issuance pursuant to awards that may be made from 2,000,000 shares to 2,500,000
shares. Approval of the amendment to the Plan requires the affirmative vote of a
majority of the votes represented by Common Stock of the Company, which are
present in person or represented by proxy at the Annual Meeting.
PURPOSE OF PROPOSED INCREASE IN AUTHORIZED SHARES
As of the date hereof, only 160,814 shares remain available for awards under
the Plan. Because the Board of Directors desires to continue its use as a
vehicle to compensate non-employee Directors and to compensate and motivate
employees, the Board believes the Plan should be amended to make an additional
500,000 shares available to serve as the basis of future awards thereunder. Upon
shareholder approval, a total of 660,814 shares will be available for future
awards under the Plan.
The following sets forth certain information concerning non-qualified stock
options to purchase shares granted by the Company in 1999:
NEW PLAN BENEFITS
OPTION CARE, INC. AMENDED AND RESTATED STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF
NAME AND POSITION ($) SHARES (#)(3)
- ----------------- ------------ -------------
<S> <C> <C>
Michael A. Rusnak, CEO...................................... $ -- --
Cathy Bellehumeur, Sr. VP, Legal Counsel.................... -- --
Rajat Rai, COO.............................................. -- --
Michael A. Siri, CFO........................................ -- --
Executive Group............................................. -- --
Non-executive Director group (1)............................ -- 46,500
Non-executive officer employee group (2).................... $26,563 55,000
</TABLE>
- ------------------------
(1) The options issued to this group have exercise prices, ranging from $3.38 to
$4.22, which were in excess of the fair market value of the Company's Common
Stock on December 31, 1999 of $3.0625.
(2) 30,000 options issued to this group have an exercise price of $3.38, which
were in excess of the fair market value of the Company's Common Stock on
December 31, 1999 of $3.0625. A total of 25,000 options were issued to a
member of this group at an exercise price of $2.00.
13
<PAGE>
(3) Each of these options become exercisable in increments of 25% per year over
the four years following the Grant Date and expire 10 years from the date on
which they were granted.
DESCRIPTION OF THE PLAN UPON EFFECTIVENESS OF AMENDMENT ADOPTED BY THE BOARD
OF DIRECTORS AND THE SHAREHOLDERS
ADMINISTRATION OF THE PLAN
Under the Plan, the Board of Directors shall designate a committee of two or
more Directors to administer the Plan (the "Committee"). The Committee shall,
subject to the terms of the Plan, establish selection guidelines, select
officers and other employees, Directors, and vendors for participation and
determine the form of grant, either as an incentive award, stock option, stock
appreciation rights or combination thereof. The Committee shall also determine
the form of stock option, the number of shares subject to the grant, the fair
market value of the shares when necessary, the time and conditions of vesting or
exercise and all other terms and conditions of the grant.
All grants and awards under the Plan shall be evidenced by written
agreements between the Company and the eligible recipients. The Committee may
interpret the Plan and establish rules and regulations for the administration of
the Plan, including, without limitation, the imposition of conditions with
respect to competitive employment and provisions accelerating vesting or
exercisability.
INCENTIVE AWARDS
Incentive awards, whether Performance Awards or Fixed Awards (as described
below), may be made to eligible recipients under the Plan in the form of cash,
stock units, shares of Common Stock or any combination of the foregoing.
Performance awards may be made in terms of a stated potential maximum dollar
amount, percentage of compensation or number of units or shares, with the actual
amount, number or percentage to be determined by reference to the level of
achievement of specific objectives over a performance period of one year through
five years, as determined by the Committee.
Fixed awards may be made which are not contingent on the performance of
objectives, but are contingent on the recipient's continuing in the Company's
employ for a period to be specified in the award, which period shall be one year
to ten years from the date of the award.
STOCK OPTIONS
Options to purchase shares of Common Stock of the Company may be granted
under the Plan to such eligible recipients as may be selected by the Committee.
No option shall be exercisable earlier than one year, nor more than ten years
after the date of grant. Options may be exercised during the optionee's
continued employment with, or in the case of a vendor, engagement by, the
Company or service on the Board, as the case may be, and for a period of ninety
days following termination of such employment, engagement or service on the
Board, or such other period of time provided in a relevant employment or
severance agreement between the optionee and the Company. Provided, however,
that if employment or engagement of the optionee by the Company or service on
the Board, as the case may be, shall have terminated by reason of retirement at
or after age 65 or total and permanent disability, than the option may be
exercised for a period of one year following termination of employment,
engagement or service on the Board, or such other period of time provided in a
relevant employment or severance agreement between the optionee and the Company,
but in any event not after the expiration of the term on the option.
The types of stock options which may be awarded under the Plan include
Incentive Stock Options and any other forms of options permitted under the
Internal Revenue Code (the "Code"). An incentive Stock Option entitles the
Participant to purchase shares at an option price not less than the fair market
value of
14
<PAGE>
the Shares on the date of the grant and other forms of options entitle the
eligible recipient to purchase shares at 100% of the fair market value of the
Shares on the date of the grant; provided however that if at any time an option
designated as and intended to be an incentive stock option is otherwise to be
granted pursuant to the Plan, the optionee owns directly or indirectly (within
the meaning of section 424(d) of the Code) shares of Common Stock of the Company
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its parent or subsidiary corporations, if any within the
meaning of section 422(b) (63 of the Code), then the option price shall be not
less than 110% of the fair market value of the Common Stock as of the date the
option is granted, and such option by its terms shall not be exercisable after
the expiration of five (5) years from the date the option is granted.
Each option will be evidenced by an option agreement containing such terms
and conditions consistent with the Plan that are approved by the Committee.
Option agreements may provide for the exercise of an option in whole or in part
from time to time during the term of the option, or in such installments and at
such times as the Committee may determine. Options granted under the Plan are
non-transferable, except in the event of death of an optionee during employment,
engagement or service on the Board, or the retirement of the employee at or
after age 65 or the employee's total and permanent disability. No option may be
exercised after the expiration of its term. The option exercise price is payable
in full upon exercise of an option. No optioner has any of the rights or
privileges of a shareholder of the Company with respect to Shares issuable upon
exercise of an option until certificates representing such Shares have been
issued and delivered to the optioner.
STOCK APPRECIATION RIGHTS ("SAR")
Rights entitling the grantee to receive cash or shares of Common Stock
having a fair market value equal to the appreciation in market value of a stated
number of Common Stock from the date of grant, or in the case of rights granted
in tandem with or by reference to a stock option granted prior to the grant of
such rights, from the date of grant of the related stock option to the date of
exercise, may be granted to such eligible Directors, officers and other
employees as may be selected by the Committee and approved by the Board. Such
right shall not be exercisable unless it shall have been outstanding for at
least six months, nor shall such right be exercisable more than ten years after
the date of grant. A SAR may be exercised during the individual's continued
employment with the Company or service on the Board, as the case may be, and for
a period of ninety days following termination of employment or engagement or
service, or such other period of time provided in a relevant employment or
severance agreement between the individual and the Company, and only within the
original term of the grant. Upon exercise of a right, the grantee shall be paid
the excess of the then fair market value of the number of shares to which the
right relates over the fair market value of such number of shares as of the date
of the grant of the right or of the related stock option, as the case may be.
Such excess shall be paid in cash or shares of Common Stock having a fair market
value equal to such excess or in such combination thereof as the Committee shall
determine.
TERMINATION
The Plan will terminate on April 11, 2007, the tenth anniversary of
shareholder approval of the original Plan, unless sooner terminated by action of
the Board. No further grants will be made under the Plan after termination, but
termination will not affect the rights of any participant under any grants made
prior to termination.
The Plan may be amended or terminated by the Board in any respect except
that no amendment may be made without shareholder approval if such amendment
would cause the Plan to fail to comply with Rule 16b-3 under the Securities
Exchange Act of 1934 (as such Rule 16b-3 may be amended or applicable from time
to time) or any other requirement of applicable law or regulation.
15
<PAGE>
Appropriate adjustments may be made by the Committee in the maximum number
of shares to be issued under the Plan, the maximum number of shares to be issued
pursuant to incentive awards and in the number of shares subject to any option
grant, to give effect to any stock splits, stock dividends and other relevant
changes in capitalization occurring after the effective date of the Plan.
FEDERAL TAX CONSEQUENCES
An optionee will not realize any income, nor will the company be entitled to
a deduction, at the time an Incentive Stock Option is granted under the Plan. If
an optionee does not dispose of the Shares acquired on the exercise of an
Incentive Stock Option within one year after the transfer of such shares to him
and within two years from the date the Incentive Stock Option was granted to
him, then for federal income tax purposes: (a) the participant will not
recognize any income at the time of exercise of his Incentive Stock Option;
(b) the amount by which the fair market value (determined without regard to
short-swing profit restrictions) of the Shares at the time of exercise exceeds
the exercise price is an item of tax preference subject to the alternative
minimum tax on individuals; and (c) the difference between the Incentive Stock
Option price and the amount realized upon the sale of the Shares of the
participant will be treated as long-term capital gain or loss. The Company will
not be entitled to a deduction upon the exercise of an Incentive Stock Option.
Except in the case of a disposition following the death of a participant and
certain other very limited exceptions, if the Shares acquired pursuant to an
Incentive Stock Option are not held for the minimum periods described above, the
excess of the fair market value of the Shares at the time of exercise over the
amount paid for the Shares generally will be taxed as ordinary income to the
participant in the year of disposition. The Company is entitled to a deduction
for federal income tax purposes at the time and in the amount in which income is
taxed to the optioner as ordinary income by reason of the sale of stock acquired
upon the exercise of an Incentive Stock Option.
An optioner will not realize any income at the time a Non-Qualified Stock
Option or a SAR is granted under the Plan, nor will the Company be entitled to a
deduction at any time. Upon exercise of a Non-Qualified Stock Option or a SAR,
the participant will recognize ordinary income: (a) in the case of an exercise
of a Non-Qualified Stock Option (whether the Non-Qualified Stock Option is paid
in cash or by the surrender of previously issued owned Shares), in an amount
equal to the difference between the option price and the fair market value of
the Shares to which the Non-Qualified Stock Option pertains, and (b) in the case
of an exercise of a SAR, in an amount equal to the sum of the fair market value
of the Shares and any cash received on the exercise. In the event that the
participant cannot sell shares acquired on exercise of a Non-Qualified Stock
Option or SAR without incurring liability under Section 16(b) of the Exchange
Act, the taxable event described above will be delayed until six months after
the acquisition of the Shares, or the first day on which the sale of such
property no longer subjects the person to suit under Section 16(b) of the
Exchange Act, whichever is earlier. The Company will be entitled to a tax
deduction in an amount equal to the amount of ordinary income realized by the
optioner.
THE OPTION CARE, INC. BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE PLAN AMENDMENT, WHICH WILL INCREASE THE NUMBER OF SHARES WHICH MAY BE ISSUED
PURSUANT TO AWARDS UNDER THE PLAN FROM 2,000,000 SHARES TO 2,500,000 SHARES.
16
<PAGE>
GENERAL INFORMATION
CERTAIN TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
The Company and EJ Financial Enterprises, Inc., ("EJ") which is 100% owned
by Dr. John N. Kapoor, Chairman of the Board, have entered into a consulting
agreement dated as of January 1, 1991, pursuant to which EJ provides independent
consulting services to the Company. Per an amendment effective October 1, 1999,
EJ receives an annual fee of $175,000, paid monthly, for ongoing consulting
services. Either party may terminate the agreement on any January 1. EJ provides
consulting principally on strategic corporate objectives and operations,
including sales and marketing strategies, growth strategies, and acquisition
opportunities of the Company.
On February 10, 1999, the Company entered into a Reimbursement and Security
Agreement with the John N. Kapoor Trust dated September 20, 1989 (the "Kapoor
Trust"), for the provision of an irrevocable letter of credit (the "LOC") in
favor of BankAmerica Business Credit. Dr. Kapoor, the Company's Chairman and
majority shareholder, is the sole trustee and sole current beneficiary of the
Kapoor Trust. The LOC originally totaled $7,000,000, later reduced to
$5,000,000, then $2,500,000 and then eliminated in total. The LOC provided the
support for additional eligible borrowings under the Company's debt facility. No
amounts were borrowed under the LOC. In exchange for the LOC, the Company paid
an administrative fee to the Kapoor Trust and a monitoring fee to EJ. Total
payments made to the Kapoor Trust were $93,536 and to EJ were $36,000 prior to
the elimination of the LOC. Effective November 1, 1999, the Company and the
Kapoor Trust terminated this agreement.
James M. Hussey, Director, is the President and Chief Executive Officer of
NeoPharm, Inc. Dr. John Kapoor, the Company's Chairman of the Board, is also
Chairman of the Board of NeoPharm. Inc. Mr. Hussey in his capacity as President
and Chief Executive Officer of NeoPharm, Inc. reports directly to Dr. Kapoor in
his capacity as Chairman. Therefore, Mr. Hussey recuses himself from service on
the Audit and Compensation Committees of the Company.
INDEPENDENT ACCOUNTANTS
The Company has selected Ernst & Young, LLP to serve as the Company's
independent accountants. Representatives of that firm will be present at the
Annual Meeting with the opportunity to make a statement if they so desire and to
be available to respond to appropriate questions.
As of December 1, 1998, the Board of Directors of Option Care, Inc. (the
"Registrant"), upon recommendation of its Audit Committee, engaged Ernst & Young
LLP ("E&Y") as the Registrant's independent auditors for the year ending
December 31, 1998. The Board of Directors of the Registrant retained E&Y based
upon the Board's determination that the Registrant would benefit from E&Y's
competitive fee structure. The engagement of E&Y arose from the Registrant's
decision to request proposals for audit services from multiple firms, including
KPMG Peat Marwick LLP ("KPMG").
The KPMG audit reports on the consolidated financial statements of the
Registrant as of and for the two years ended December 31, 1997 did not contain
an adverse opinion or disclaimer of opinion, and were not qualified or modified
as to uncertainty, audit scope or accounting principles. During the two year
period ended December 31, 1997 and through the period ended December 1, 1998,
there were no disagreements between the Registrant and KPMG on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements if not resolved to the satisfaction of
KPMG, would have caused it to make references to the subject matter of such
disagreements in connection with its report.
In its management letter to the audit committee of the Registrant, dated
May 13, 1998, KPMG identified two reportable conditions: (1) excessive turnover
in the Registrant's Chief Financial Officer position and (2) a lack of
segregation of duties between the treasury function and the controller-ship
function of the Registrant. The Registrant believes it has implemented steps to
correct the deficiencies noted, including (1) the hiring of Michael A. Siri as
Chief Financial Officer, who has 22 years experience in accounting and finance
and (2) the Registrant's recent implementation of alternative internal controls
to mitigate the risk of asset misappropriation.
17
<PAGE>
The Registrant has authorized KPMG to respond to any inquiries of E&Y
concerning its audit. During the two years ended December 31, 1997 and through
the dated appointment, E&Y did not provide any consultations to the Registrant
regarding the application of accounting principles to specific transactions or
the type of opinion that they may have rendered on the financial statements.
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the year then ended
December 31, 1999 has been mailed simultaneously to the shareholders of the
Company. Additional copies of such report, as filed with the Securities and
Exchange Commission (excluding exhibits), may be obtained by any shareholder,
without charge, upon written request to: Michael A. Siri, Chief Financial
Officer, Option Care, Inc., 100 Corporate North, Suite 212, Bannockburn,
Illinois 60015.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of shareholders that are intended to be presented at the Company's
2001 Annual Shareholders' Meeting must be received no later than December 14,
2000 to be considered for inclusion in the Company's Proxy Statement and Form of
Proxy relating to that meeting. Such proposals should be addressed to Option
Care, Inc., 100 Corporate North, Suite 212, Bannockburn, Illinois 60015, Attn.:
Secretary.
The By-Laws of the Company provide that shareholder proposals which do not
appear in the Proxy Statement may be considered at a meeting of shareholders
only if written notice of the proposal is received by the Secretary of the
Company not less than 60 days and not more than 90 days before the anniversary
of the prior years' Annual Meeting; provided, however, that, in the event the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the shareholder to be timely must be
delivered not earlier than the close of business on the 90th day prior to such
annual meeting and not later than the 60th day prior to such annual meeting or
the close of business on the 10th day following the day on which public
announcement of the date of such meeting is first made by the Company. Any such
notice of a shareholder proposal by a shareholder to the Secretary of the
Company must be accompanied by (a) a brief description of the business desired
to be brought before the Annual Meeting and the reasons for conducting such
business at the Annual Meeting, (b) the name and address of the shareholder who
intends to present the proposal for a vote, (c) the class and number of shares
of Company Common Stock which are beneficially owned by the shareholder and
(d) a description of any material interest of the shareholder in such business.
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management currently has no intentions to bring before the 2000 Annual
Meeting any matters other than those specified in the notice of the meeting, and
it does not know of any business which persons other than Management intend to
present at the meeting. Should any other matter requiring a vote of the
shareholders properly come before the meeting, the person named in the
accompanying Proxy intends to vote the shares represented by him in accordance
with his best judgment.
By Order of the Board of Directors
Cathy Bellehumeur
Sr. VP, Secretary, Corporate
Compliance Officer
and General Counsel
April 12, 2000
18
<PAGE>
EXHIBIT A
OPTION CARE, INC.
2001 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
OPTION CARE, INC.
2001 EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1--INTRODUCTION............................................................. 1
1.1 Purpose..................................................... 1
1.2 Stock Purchase Plan......................................... 1
1.3 Effective Date and Term..................................... 1
1.4 Participating Subsidiaries.................................. 1
1.5 Stock Subject to Plan....................................... 1
SECTION 2--DEFINITIONS.............................................................. 1
2.1 "Beneficiary"............................................... 1
2.2 "Board"..................................................... 1
2.3 "Code"...................................................... 1
2.4 "Committee"................................................. 1
2.5 "Company"................................................... 1
2.6 "Compensation".............................................. 2
2.7 "Custodian"................................................. 2
2.8 "Effective Date"............................................ 2
2.9 "Employee".................................................. 2
2.10 "Fair Market Value"......................................... 2
2.11 "Offering Date"............................................. 2
2.12 "Offering Period"........................................... 2
2.13 "Option Account"............................................ 2
2.14 "Participating Subsidiary".................................. 2
2.15 "Plan"...................................................... 2
2.16 "Stock"..................................................... 2
2.17 "Subsidiary"................................................ 2
2.18 "Termination Date".......................................... 2
SECTION 3--ENROLLMENT AND CONTRIBUTIONS............................................. 2
3.1 Eligibility for Enrollment.................................. 2
3.2 Enrollment Procedure........................................ 3
3.3 Contributions............................................... 3
3.4 Option Accounts............................................. 4
3.5 No Funding of Accounts...................................... 4
SECTION 4--GRANT AND EXERCISE OF OPTION............................................. 4
4.1 Grant of Options; Terms..................................... 4
4.2 Purchase of Stock; Price.................................... 4
4.3 Option Accounts............................................. 5
4.4 No Interest on Account Balances............................. 5
SECTION 5--TERMINATION OF ENROLLMENT................................................ 5
5.1 Termination of Enrollment................................... 5
5.2 Distributions to Employee................................... 5
5.3 Beneficiaries............................................... 6
SECTION 6--PLAN ADMINISTRATION...................................................... 6
6.1 Committee................................................... 6
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
6.2 Committee Powers............................................ 6
6.3 Committee Actions........................................... 6
6.4 Member Who is Participant................................... 7
6.5 Information Required from Company........................... 7
6.6 Information Required from Employees......................... 7
6.7 Uniform Rules and Administration............................ 7
SECTION 7--AMENDMENT AND TERMINATION................................................ 7
7.1 Amendment................................................... 7
7.2 Termination................................................. 8
7.3 Rights Upon Termination..................................... 8
SECTION 8--GENERAL PROVISIONS....................................................... 8
8.1 No Transfer or Assignment................................... 8
8.2 Equal Rights and Privileges................................. 8
8.3 Rights as Stockholder....................................... 8
8.4 Rights as Employee.......................................... 8
8.5 Costs....................................................... 8
8.6 Application of Funds........................................ 8
8.7 Reports..................................................... 8
8.8 Actions by Company.......................................... 8
8.9 Governmental Approval....................................... 8
8.10 Stockholder Approval........................................ 9
8.11 Applicable Law.............................................. 9
8.12 Gender and Number........................................... 9
8.13 Headings.................................................... 9
</TABLE>
ii
<PAGE>
OPTION CARE, INC.
2001 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1--INTRODUCTION
1.1 PURPOSE. The purpose of the Option Care, Inc. 2001 Employee Stock
Purchase Plan is to provide eligible employees of the Company and its
Subsidiaries the opportunity to acquire a proprietary interest in the Company
and thereby provide employees with an additional incentive to contribute to the
long-term profitability and success of the Company and its Subsidiaries. The
Plan is for the exclusive benefit of eligible employees of the Company and its
Subsidiaries.
1.2 STOCK PURCHASE PLAN. The Plan is a stock purchase plan that is intended
to satisfy all requirements of Section 423 of the Internal Revenue Code of 1986,
as amended. Any provision of the Plan inconsistent with Section 423 of the Code
will, without further act or amendment by the Company, be reformed to comply
with Section 423 of the Code.
1.3 EFFECTIVE DATE AND TERM. The Plan will be effective January 1, 2001,
subject to approval of the Plan by the stockholders of the Company within twelve
months of its adoption by the Board of Directors. The Plan shall continue in
effect until the earlier of the date the Company terminates the Plan or the date
all of the shares of Stock subject to the Plan, as amended from time to time,
are purchased.
1.4 PARTICIPATING SUBSIDIARIES. A Subsidiary of the Company as of the
Effective Date will be deemed to have adopted the Plan for its eligible
Employees as of the Effective Date and any corporation that becomes a Subsidiary
after the Effective Date will be deemed to have adopted the Plan for its
eligible Employees immediately upon becoming a Subsidiary, unless the Company
acts to exclude the Subsidiary and its eligible Employees from participation in
the Plan.
1.5 STOCK SUBJECT TO PLAN.
(a) The Stock subject to purchase under the Plan will be shares of the
Company's authorized but unissued common shares, or previously issued shares
of common Stock reacquired and held by the Company, or common shares
acquired in the market. The number of shares of Stock that may be purchased
under the Plan shall not exceed an aggregate of 1,000,000 shares and not
more than 100,000 unissued shares per annum.
(b) In case of a reorganization, recapitalization, stock split, reverse
stock split, stock dividend, combination of shares, merger, consolidation,
offering of rights or other change in the capital structure of the Company,
the Committee may make such adjustment as it deems appropriate in the
number, kind and purchase price of shares of Stock available for purchase
under the Plan, subject to Section 7.1.
SECTION 2--DEFINITIONS
For purposes of this Plan, the following words and phrases, whether or not
capitalized, have the meanings specified below, unless the context plainly
requires a different meaning:
2.1 "BENEFICIARY" means a person to whom all or a portion of the cash
amounts due to the Employee under this Plan will be paid if the Employee dies
before receiving such cash amounts.
2.2 "BOARD" means the Board of Directors of the Company.
2.3 "CODE" means the Internal Revenue Code of 1986, as amended, and all
regulations thereunder.
2.4 "COMMITTEE" means the individuals appointed by the Board to administer
the Plan.
2.5 "COMPANY" means Option Care, Inc.
1
<PAGE>
2.6 "COMPENSATION" means the total amount paid to an Employee by the Company
or any Participating Subsidiary during the applicable period specified in the
Plan that constitutes wages subject to withholding for purposes of the Federal
Insurance Contribution Act as defined in Section 3121 of the Code, without
regard to the limitations on wages in excess of the applicable wage base, plus
any amounts contributed by the Employee to any plan or plans established by the
Company or Participating Subsidiary in accordance with Section 125 of the Code.
2.7 "CUSTODIAN" means the custodian for the Plan appointed by the Company.
2.8 "EFFECTIVE DATE" means January 1, 2001.
2.9 "EMPLOYEE" means any employee of the Company or a Participating
Subsidiary.
2.10 "FAIR MARKET VALUE" means the fair market value of one share of Stock
as of a particular day, which shall generally be the closing price per share of
Stock on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") on that day, or, if such day is not a trading day, the lower
of the closing price per share on the last preceding and next following trading
days.
2.11 "OFFERING DATE" means the first day of the Offering Period.
2.12 "OFFERING PERIOD" means (i) January 1, 2001 through December 31, 2001
and each calendar year thereafter for which the Committee determines options
shall be granted under the Plan; and (ii) July 1, 2001 through December 31, 2001
and the six month periods commencing on each July 1 thereafter; or such other
period or periods designated by the Committee in its sole discretion.
2.13 "OPTION ACCOUNT" means the Account maintained on behalf of the Employee
under Section 3.4 to which contributions to the Plan are credited and from which
amounts are withdrawn to exercise options on a Termination Date.
2.14 "PARTICIPATING SUBSIDIARY" means a Subsidiary which is participating in
the Plan in accordance with Section 1.4.
2.15 "PLAN" means the Option Care, Inc. 2001 Employee Stock Purchase Plan,
as described in this document and as amended from time to time.
2.16 "STOCK" means the Common Stock ($0.01 par value) of the Company.
2.17 "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time an
option is granted, each of the corporations other than the last corporation owns
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in the chain.
2.18 "TERMINATION DATE" means the last day of an Offering Period.
SECTION 3--ENROLLMENT AND CONTRIBUTIONS
3.1 ELIGIBILITY FOR ENROLLMENT.
(a) An Employee may enroll in the Plan for an Offering Period unless one
of the following applies:
(i) The Employee would, immediately upon enrollment, own directly or
indirectly, or hold options or rights to acquire, an aggregate of five
percent (5%) or more of the total combined voting power or value of all
outstanding shares of all classes of the Company or any Subsidiary,
determined in accordance with Section 423(d) of the Code; or
(ii) The Employee is not employed by the Company or a Participating
Subsidiary on the Offering Date; or
2
<PAGE>
(iii) The terms of the Employee's employment are covered by a
collective bargaining agreement and the applicable union or other
collective bargaining unit has refused to accept the Plan (having been
specifically requested to do so by the Company).
(b) The Committee or its designee will notify an Employee that the
Employee is first eligible to enroll in the Plan and make available to each
eligible Employee the necessary enrollment forms before the Offering Date.
3.2 ENROLLMENT PROCEDURE.
(a) To enroll in the Plan for an Offering Period, an Employee must file
an enrollment form with the Company and elect to make contributions under
the Plan in accordance with Section 3.3. The enrollment form must be
received by the Company by the day preceding the Offering Date, or such
other date as the Committee may specify, and must state the contribution
rate elected by the Employee for the Offering Period.
(b) An Employee whose enrollment in and contributions under the Plan
continue throughout an annual Offering Period will automatically be enrolled
in the Plan for the next annual Offering Period; unless (i) the Employee
files a written notice of withdrawal with the Company before the Offering
Date for the next annual Offering Period in accordance with
Section 5.1(a)(i), or (ii) on the Offering Date for such annual Offering
Period the Employee is in a category described in Section 3.1(a)(i),
(ii) or (iii). The contribution rate for an Employee who is automatically
enrolled for an annual Offering Period pursuant to this Section will be the
contribution rate in effect for the immediately preceding annual Offering
Period, unless the Employee files an amended enrollment form with the
Company prior to the next subsequent annual Offering Period designating a
different contribution rate. No automatic enrollment shall apply for six
month Offering Periods.
(c) An Employee may increase or decrease the contribution rate elected
for an Offering Period during such period or periods during an Offering
Period as the Committee in its sole discretion may determine.
3.3 CONTRIBUTIONS.
(a) To enroll for the first time in the Plan for an Offering Period, an
Employee must elect to make a contribution under the Plan, subject to the
terms and conditions prescribed below, by means of payroll deduction for
each payroll period within the Offering Period.
(b) An Employee may elect to make payroll deduction contributions with
respect to each Offering Period in amounts not less than the greater of
(i) one percent (1%) of Compensation per payroll period and (ii) $10 per
payroll period; and not more than the lesser of (i) fifteen percent (15%) of
Compensation per Offering Period (or such other amount as the Committee may
establish from time to time and communicate to Employees before the Offering
Date) and (ii) a percentage of Compensation for each payroll period that
ensures that the limit on the purchase of shares of Stock specified in
Section 4.1 is not exceeded for the Offering Period. Such an election may
apply independently to annual Offering Periods and six month Offering
Periods.
(c) Payroll deductions will commence with the first payroll period that
begins within the Offering Period and will be made in conformity with the
Company's payroll deduction schedule and practices.
(d) Except as provided in Section 3.2(c) and Section 5.1, an Employee
may elect to increase, decrease or discontinue contributions only as of the
beginning of the first payroll period in an Offering Period by giving
written notice to the Committee at least by the day preceding the Offering
Date, or by such other date as the Committee shall specify.
3
<PAGE>
3.4 OPTION ACCOUNTS. All contributions made by an Employee under the Plan
for an Offering Period will be credited to an Option Account maintained by the
Company or the Custodian on behalf of the Employee for that Offering Period. The
Company will make the credit as soon as practicable after the contributions are
withheld from the Employee's Compensation.
3.5 NO FUNDING OF ACCOUNTS. No cash shall be set aside with respect to an
Option Account until it is credited thereto. Nothing contained in this Plan and
no action taken pursuant to the provisions hereof shall create or be construed
to create a trust of any kind, or a fiduciary relationship between the Company
and any Employee or any other person with respect to an Option Account. Amounts
credited to an Option Account at any time and from time to time shall be the
general assets of the Company. To the extent that any person acquires a right to
receive the benefit of amounts credited to an Option Account, such right shall
be that of an unsecured general creditor of the Company.
SECTION 4--GRANT AND EXERCISE OF OPTION
4.1 GRANT OF OPTIONS; TERMS. Enrollment in the Plan for an Offering Period
will constitute the grant by the Company of an option to purchase shares of
Stock under the Plan during such Offering Period. Enrollment in the Plan
(whether initial or continuing) for each Offering Period will constitute a new
grant of an option to purchase shares of Stock under the Plan. All Employees
granted options shall have the same rights and privileges as required by
Section 423(b)(5) of the Code. Each option will be subject to the following
terms:
(a) The option price will be as specified in Section 4.2.
(b) Except as limited in (e) below, the number of shares of Stock
subject to the option will equal the number of whole and fractional shares
of Stock that can be purchased at the option price specified in Section 4.2
with the aggregate amount credited to the Employee's Option Account for the
Offering Period as of the Termination Date.
(c) The option will be exercised on the Termination Date for the
Offering Period.
(d) The payment by an Employee for the shares of Stock purchased under
an option will be made only through payroll deduction in accordance with
Section 3.3.
(e) The number of shares of Stock that may be purchased in any calendar
year for any Employee (when taken together with all other options held by
such Employee under the Plan and under any other stock purchase plan of the
Company or a Subsidiary at any time during the calendar year in which the
option is granted) shall not exceed twenty five thousand dollars ($25,000)
in Fair Market Value, determined as of the Offering Date of the Offering
Period for such shares.
4.2 PURCHASE OF STOCK; PRICE.
(a) As soon as practicable after the Termination Date of each Offering
Period, the Company or Custodian will apply to the purchase of shares of
Stock the amounts credited to each Employee's Option Account for that
Offering Period as of such Termination Date. The Stock so purchased shall be
allocated to the Option Account for the Employee. The Stock shall be held by
the Custodian on behalf of the Employee and registered in the name of a
nominee.
(b) The option price of each share of Stock purchased as of a
Termination Date shall be the lower of:
(i) Eighty five percent (85%) of the Fair Market Value of the Stock
on the Offering Date for such offering, or
(ii) Eighty five percent (85%) of the Fair Market Value of the Stock
on the Termination Date for such offering.
4
<PAGE>
4.3 OPTION ACCOUNTS.
(a) All whole and fractional shares of Stock purchased on behalf of an
Employee as of a Termination Date shall be credited to such Employee's
Option Account as of such date. Any cash in lieu of fractional share
remaining on distribution of shares or on termination of the Plan shall be
distributed to the Employee. Dividends payable with respect to shares of
Stock credited to the Employee's Option Account will be credited to the
Employee's Option Account and used by the Custodian to purchase additional
shares of Stock on the open market as soon as administratively feasible
following receipt of the dividend payment by the Custodian.
(b) In the event the amount withheld through payroll deductions with
respect to an Offering Period exceeds the option price of the shares
available for purchase for such Employee for that Offering Period, the
excess of the amount so withheld over the option price of the shares so
purchased for the Employee shall be returned to the Employee without
interest.
4.4 NO INTEREST ON ACCOUNT BALANCES. No interest or other earnings will be
credited to any Option Account with respect to (a) amounts credited thereto
during an Offering Period or (b) amounts to be returned to the Employee. Neither
the Committee nor the Company shall have any obligation to invest or otherwise
manage amounts credited to an Option Account, other than to apply such amounts
to the purchase of Stock in accordance with the terms of this Plan.
SECTION 5--TERMINATION OF ENROLLMENT
5.1 TERMINATION OF ENROLLMENT.
(a) An Employee's enrollment in the Plan will terminate under the
following circumstances:
(i) An Employee's enrollment for an Offering Period will terminate as
of the beginning of the payroll period that is at least ten
(10) calendar days after the Employee files with the Company a written
notice of withdrawal of the election to contribute for that Offering
Period;
(ii) An Employee's enrollment will terminate following termination of
employment with the Company and all Participating Subsidiaries;
(iii) An Employee's enrollment will terminate as of the date on which
the Employee would own directly or indirectly, or hold options or rights
to acquire, an aggregate of five percent (5%) or more of the total
combined voting power or value of all outstanding shares of all classes
of the Company or any Subsidiary, determined in accordance with
Section 423(d) of the Code; and
(iv) An Employee's enrollment will terminate upon termination of the
Plan or as of the date the relevant Participating Subsidiary ceases to be
a Subsidiary.
(b) An Employee whose enrollment in the Plan terminates under this
Section, other than by reason of termination of the Plan, may again enroll
in the Plan as of any subsequent Offering Date if the Employee satisfies the
eligibility conditions of Section 3.1 as of such date.
5.2 DISTRIBUTIONS TO EMPLOYEE.
(a) As soon as practicable after an Employee's enrollment in the Plan
terminates under Section 5.1:
(i) If enrollment terminates pursuant to Section 5.1(a)(ii),
(iii) or (iv) prior to the Termination Date of the Offering Period, the
Company will pay to the Employee all cash amounts credited to the
Employee's Option Account as of the date of termination;
(ii) If enrollment terminates pursuant to Section 5.1(a)(i) prior to
the Termination Date of the Offering Period, any payroll deduction
contributions in the Employee's Option Account for
5
<PAGE>
such Offering Period shall be held until such Termination Date and shall
be applied to purchase Stock; and
(iii) If enrollment terminates pursuant to Section 5.1(a)(ii) or
5.1(a)(iv), the Committee will direct the Custodian to distribute to the
Employee certificates representing any whole shares of Stock then
credited to the Employee's Option Account and cash equal to the Fair
Market Value of any fractional share.
(b) If an Employee's enrollment terminates as a result of death, or if
the Employee's death occurs before the Employee receives a distribution
under this Section, all cash amounts payable under this Section to the
Employee will be paid to the Employee's Beneficiary.
(c) An Employee may, from time to time, request distribution with regard
to whole shares of Stock then credited to the Employee's Option Account. The
Custodian shall pay to the Employee cash equal to the Fair Market Value of
any fractional share when all whole shares of Stock have been distributed.
5.3 BENEFICIARIES.
(a) An Employee may designate one or more persons (concurrently,
contingently or successively) to whom cash amounts credited to the Option
Account will be distributed if the Employee dies before receiving complete
payment of such amounts. Any such designation must be made on a form
provided by the Company for this purpose, will be effective on the date
received by the Company and may be revoked by the Employee at any time.
(b) If the Employee fails to designate a Beneficiary or if no designated
beneficiary survives the Employee, then any cash amounts shall be paid to
the Employee's estate.
SECTION 6--PLAN ADMINISTRATION
6.1 COMMITTEE. The Plan will be administered by the Committee.
6.2 COMMITTEE POWERS.
(a) The Committee will have all powers appropriate to administer the
Plan including, but not limited to, the following:
(i) To determine all questions that may arise under the Plan,
including the power to determine the rights or eligibility of Employees
or their Beneficiaries;
(ii) To construe the terms of the Plan and to remedy ambiguities,
inconsistencies or omissions;
(iii) To adopt such rules of procedure and prescribe such forms as it
considers appropriate for the proper administration of the Plan and are
consistent with the Plan;
(iv) To enforce the Plan provisions and the rules of procedure which
it adopts;
(v) To employ agents, attorneys, accountants, actuaries or other
persons, and to allocate or delegate to them such powers, rights and
duties as it considers appropriate for the proper administration of the
Plan.
(b) The Committee will have such further powers and duties as may be
elsewhere specified in the Plan.
6.3 COMMITTEE ACTIONS. The actions of the Committee may be taken at a
meeting by a majority of its members, in writing without a meeting if all
members of the Committee sign such writing or by the use of a conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other and participation in such a
meeting in this manner shall constitute
6
<PAGE>
attendance and presence in person at the meeting of the person or persons so
participating for all purposes. In taking action:
(a) The Committee may allocate authority to a specific member(s) of the
Committee to carry out such duties as the Committee may assign;
(b) A member of the Committee may by writing delegate any or all of
their rights, powers, duties and discretions to any other member of the
Committee, with the consent of the latter;
(c) The Committee may delegate to any agents such duties and powers as
it deems appropriate, by an instrument in writing which specifies which
duties are so delegated and to whom each such duty is so delegated; and
(d) When there is an even division of opinion among the members of the
Committee as to a matter, the Board of Directors of the Company will decide
the matter, provided, however, that no member of the Board of Directors may
vote on such a matter if it concerns such member's individual rights,
privileges or obligations under the Plan.
6.4 MEMBER WHO IS PARTICIPANT. If a member of the Committee is an Employee,
such member may not decide any matter relating to the member's participation or
Option Account or how the Option Account is to be paid to the member that the
member would not have the right to decide in the absence of membership on the
Committee, and no Employee will receive any compensation for services as a
member of the Committee.
6.5 INFORMATION REQUIRED FROM COMPANY. The Company will furnish the
Committee with such data and information as the Committee deems appropriate to
administer the Plan. The records of the Company as to an Employee's Compensation
will be conclusive on all persons unless determined by the Committee to be
clearly incorrect.
6.6 INFORMATION REQUIRED FROM EMPLOYEES. Each person entitled to benefits
under the Plan must furnish the Company from time to time in writing such
person's mailing address, each change of mailing address and such other data and
information as the Committee deems appropriate to administer the Plan. Any
communication, statement or notice mailed with postage prepaid to any person at
the last mailing address filed with the Company will be binding upon such person
for all purposes of the Plan.
6.7 UNIFORM RULES AND ADMINISTRATION. The Committee will administer the Plan
on a nondiscriminatory basis and will apply uniform rules to all persons
similarly situated.
SECTION 7--AMENDMENT AND TERMINATION
7.1 AMENDMENT.
(a) The Company reserves the right to amend the Plan from time to time
subject to the following limitations:
(i) No amendment will be made without the prior approval of the
stockholders of the Company if the amendment will (1) increase the number
of shares of Stock reserved for purchase under the Plan, or
(2) materially modify the eligibility conditions or materially increase
the benefits available under the Plan.
(ii) No amendment will make any change in an option granted
previously and outstanding which adversely affects the rights of an
Employee with respect to such option.
(iii) No amendment will reduce the amount of an Employee's Option
Account balance.
(b) The Company may delegate to the Committee or its officers the power
to amend the Plan as the Company deems appropriate, subject to the
limitations of this Section.
7
<PAGE>
7.2 TERMINATION. The Plan is entirely voluntary on the part of the Company
and the continuance of the Plan shall not be construed as a contractual
obligation of the Company. Accordingly, the Company reserves the right to
terminate the Plan at any time. Unless sooner terminated by the Company, the
Plan shall terminate on the date all of the shares of Stock specified in
Section 1.5(a) are purchased unless additional shares of Stock are authorized
for the Plan by the stockholders of the Company. No option may be granted under
the Plan after the Plan is terminated.
7.3 RIGHTS UPON TERMINATION.
(a) If the Plan terminates, the Committee may elect to terminate all
outstanding options to purchase shares of Stock under the Plan either
immediately or upon completion of the purchase of shares of Stock on the
next following Termination Date.
(b) If the Committee terminates an option to purchase shares of Stock
prior to the expiration of the option, all amounts contributed to the Plan
which remain in an Employee's Option Account will be returned to the
Employee as soon as practicable.
SECTION 8--GENERAL PROVISIONS
8.1 NO TRANSFER OR ASSIGNMENT. The rights of an Employee under the Plan may
not be sold, pledged, assigned or transferred, voluntarily or involuntarily, in
any manner other than by will or the laws of descent and distribution. Any such
attempted sale, pledge, assignment or transfer shall be without effect. An
Employee's rights and all options granted under the Plan shall only be
exercisable during his or her lifetime by such Employee.
8.2 EQUAL RIGHTS AND PRIVILEGES. All Employees who are granted options under
the Plan for the Offering Period will have equal rights and privileges with
respect to such option.
8.3 RIGHTS AS STOCKHOLDER. The grant of an option to purchase shares of
Stock under the Plan will not confer upon an Employee any rights as a
stockholder of the Company with respect to shares of Stock subject to the
option. An Employee will become a stockholder with respect to shares of Stock
subject to an option under the Plan only when the purchase of such shares of
Stock is completed as of a Termination Date.
8.4 RIGHTS AS EMPLOYEE. The Plan is not a contract of employment, and the
grant of an option to purchase shares of Stock under the Plan will not confer
upon any Employee the right to be retained in the employ of the Company or any
Subsidiary.
8.5 COSTS. All costs and expenses incurred in the administration of the Plan
will be paid by the Company and its Subsidiaries. Any brokerage fees for the
sale of shares of Stock by an Employee will be borne by the Employee; provided
that the Company and its Subsidiaries shall pay the brokerage fees for one sale
per Employee if such sale is executed through the Custodian as of a date which
is at least one calendar year after the Termination Date as of which such shares
were purchased.
8.6 APPLICATION OF FUNDS. All proceeds received by the Company from the sale
of Stock under the Plan will be used for general corporate purposes.
8.7 REPORTS. The Company will provide or cause to be provided to each
Employee an annual report of the Employee's contributions under the Plan for
each Plan Year and the shares of Stock purchased with such contributions.
8.8 ACTIONS BY COMPANY. Any action taken by the Company with respect to the
Plan will be by resolution of its Board of Directors or by a person or persons
authorized by resolution of its Board of Directors.
8.9 GOVERNMENTAL APPROVAL. The Plan and any offering or sale made to
Employees under the Plan is subject to any governmental approvals or consents
that are or may become applicable in connection herewith.
8
<PAGE>
8.10 STOCKHOLDER APPROVAL. The Plan is subject to approval by the holders of
a majority of the shares present in person or by proxy and voting at the meeting
at which the Plan is considered and shall not be effective without such
approval.
8.11 APPLICABLE LAW. The Plan will be governed by the laws of the State of
Illinois, without regard to the law of conflicts of such state, to the extent
that federal law does not preempt such laws.
8.12 GENDER AND NUMBER. When the context permits, words in the Plan used in
the masculine gender include the feminine gender, words in the singular include
the plural and words in the plural include the singular.
8.13 HEADINGS. All headings in the Plan are included solely for ease of
reference and do not bear on the interpretation of the text.
The undersigned hereby certifies that this Plan was duly adopted by the
Board on , 2000.
--------------------------------------
Name
--------------------------------------
Title
9
<PAGE>
OPTION CARE, INC.
100 CORPORATE NORTH
SUITE 212
BANNOCKBURN, ILLINOIS 60015
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael A. Siri as Proxy, with the power to
appoint a substitute, and hereby authorizes him to represent and vote, as
designated below, all of the shares of Common Stock of Option Care, Inc. (the
"Company") held as of record by the undersigned or over which the undersigned
had voting power, at the close of business on March 17, 2000 at the Annual
Shareholders' Meeting to be held May 12, 2000 or any adjournment or adjournments
thereof.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1, 2, 3 AND 4 BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. Election of Directors:
<TABLE>
<S> <C> <C> <C>
/ / FOR the nominees listed below (except / / WITHHOLD AUTHORITY to vote
marked to the contrary) for the nominees below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike such nominee's name from the list below.)
</TABLE>
John N. Kapoor
Roger W. Stone
2. Ratification and approval of the Option Care, Inc. 2001 Employee Stock
Purchase Plan
<TABLE>
<S> <C> <C> <C> <C> <C>
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
3. Ratification and approval of and amendment to the Company's Stock Incentive
Plan to increase the number of shares available to be issued thereunder from
2,000,000 shares to 2,500,000 shares.
<TABLE>
<S> <C> <C> <C> <C> <C>
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
4. In his discretion, the Proxy is authorized to vote upon such other business
as may properly come before the meeting.
<TABLE>
<S> <C> <C> <C> <C> <C>
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
-------------------------------------------------------- ,
Dated: 2000
---------------------------------------------------------------------
Signature
---------------------------------------------------------------------
Signature, if held jointly
</TABLE>
Please sign exactly as name appears on stock certificate. When joint tenants
hold shares, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE SIGN, DATE AND MAIL PROMPTLY
