SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
OPTICARE HEALTH SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, schedule or registration statement No.:
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3) Filing party:
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4) Date Filed:
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OPTICARE HEALTH SYSTEMS, INC.
87 GRANDVIEW AVENUE
WATERBURY, CONNECTICUT 06708
(203) 596-2236
April ___, 2003
To Our Stockholders:
On behalf of the Board of Directors of OptiCare Health Systems, Inc., I
cordially invite you to attend the 2003 Annual Meeting of Stockholders to be
held on Monday, May 19, 2003, at 10:30 a.m., local time, at Montammy Golf Club,
Route 9W, Alpine, New Jersey.
The accompanying Notice of Meeting and Proxy Statement cover the
details of the matters to be presented.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING, I URGE
THAT YOU PARTICIPATE BY COMPLETING AND RETURNING YOUR PROXY AS SOON AS POSSIBLE.
YOUR VOTE IS IMPORTANT AND WILL BE GREATLY APPRECIATED. YOU MAY REVOKE YOUR
PROXY AND VOTE IN PERSON IF YOU DECIDE TO ATTEND THE ANNUAL MEETING.
Cordially,
Dean J. Yimoyines, M.D.
Chairman of the Board and
Chief Executive Officer
OPTICARE HEALTH SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 2003
To Our Stockholders:
You are cordially invited to attend the 2003 Annual Meeting of
Stockholders (the "Meeting"), of OptiCare Health Systems, Inc. (the "Company"),
which will be held on Monday, May 19, 2003, at 10:30 a.m., local time, at
Montammy Golf Club, Route 9W, Alpine, New Jersey, for the following purposes:
1. To elect eight members to serve on the Board of Directors until the
next annual meeting of stockholders and until their successors are
duly elected and qualified (Proposal 1);
2. To approve an amendment to the Company's Certificate of Incorporation,
as amended, to increase from 75,000,000 shares to 125,000,000 shares
the aggregate number of shares of Common Stock authorized to be issued
by the Company (Proposal 2);
3. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 2003 (Proposal
3); and
4. To transact such other business as may properly be brought before the
Meeting.
Stockholders of record at the close of business on March 27, 2003 shall
be entitled to notice of and to vote at the Meeting. A copy of the Annual Report
of the Company for the year ended December 31, 2002 is being mailed to
stockholders along with the attached Proxy Statement.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF
YOU DECIDE TO ATTEND THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS,
Christopher J. Walls
Vice President, General Counsel and Secretary
April ___, 2003
PRELIMINARY COPIES FILED PURSUANT TO RULE 14a - 6(a)
OPTICARE HEALTH SYSTEMS, INC.
87 GRANDVIEW AVENUE
WATERBURY, CONNECTICUT 06708
(203) 596-2236
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 2003
PROXY SOLICITATION AND GENERAL INFORMATION
This Proxy Statement and the enclosed form of proxy (the "Proxy Card")
are being furnished to the holders of (i) the common stock, par value $.001 per
share (the "Common Stock"), of OptiCare Health Systems, Inc., a Delaware
corporation (the "Company"), and (ii) the Company's Series B 12.5% voting
convertible participating preferred stock (the "Series B Preferred Stock," and,
together with the Common Stock, the "Voting Stock") in connection with the
solicitation of proxies by the Board of Directors (the "Board" or "Board of
Directors") of the Company for use at the 2003 Annual Meeting of Stockholders to
be held on Monday, May 19, 2003, at 10:30 a.m., local time, at Montammy Golf
Club, Route 9W, Alpine, New Jersey, and at any adjournment or postponement
thereof (the "Meeting"). The Company intends to release a definitive proxy
statement to its stockholders on or about April 21, 2003.
At the Meeting, holders of Voting Stock will be asked:
1. To elect eight members to serve on the Board of Directors until
the next annual meeting of stockholders and until their successors
are duly elected and qualified (Proposal 1);
2. To approve an amendment to the Company's Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), to
increase from 75,000,000 shares to 125,000,000 shares the
aggregate number of shares of Common Stock authorized to be issued
by the Company (Proposal 2);
3. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31,
2003 (Proposal 3); and
4. To transact such other business as may properly be brought before
the Meeting.
The Board of Directors has fixed the close of business on March 27,
2003 (the "Record Date") as the record date for the determination of
stockholders entitled to notice of and to vote at the Meeting. Each holder of
Common Stock as of the Record Date shall be entitled to one vote for each share
of Common Stock held on all matters to come before the Meeting and may vote in
person or by proxy authorized in writing. Each holder of the Series B
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Preferred Stock shall be entitled to one vote for each share of Common Stock
into which such holder's shares of Series B Preferred Stock are convertible.
Stockholders are requested to complete, sign, date and promptly return
the Proxy Card in the enclosed envelope. Voting Stock represented by properly
executed proxies received by the Company and not revoked prior to the Meeting
will be voted at the Meeting in accordance with instructions contained therein.
If the Proxy Card is signed and returned without instructions, the shares will
be voted FOR the election of each nominee for director named herein (Proposal
1), FOR the approval of the amendment to the Certificate of Incorporation to
increase the authorized Common Stock (Proposal 2) and FOR the ratification of
the appointment of Deloitte & Touche LLP as the Company's independent auditors
for 2003 (Proposal 3). A stockholder who so desires may revoke his proxy at any
time before it is voted at the Meeting by: (i) delivering written notice to the
Company (attention: Corporate Secretary) prior to the Meeting; (ii) duly
executing and delivering a proxy bearing a later date prior to the Meeting; or
(iii) casting a ballot at the Meeting. Attendance at the Meeting will not in and
of itself constitute a revocation of a proxy. The Chairman of the Board and
Chief Executive Officer will announce the closing of the polls during the
Meeting. Proxies must be received prior to the closing of the polls in order to
be counted.
Where a stockholder is not the record holder, such as where the shares
are held through a broker, nominee, fiduciary or other custodian, the
stockholder must provide voting instructions to the record holder of the shares
in accordance with the record holder's requirements in order to ensure the
shares are properly voted.
Stockholders who represent more than 50% of the voting power of the
Voting Stock outstanding must be present or represented by proxy in order to
constitute a quorum to conduct business at the Meeting. A list of eligible
voters will be available at the Meeting.
The Board of Directors knows of no other matters that are to be brought
before the Meeting other than as set forth in the Notice of Meeting and this
Proxy Statement. If any other matters properly come before the Meeting, the
persons named in the enclosed Proxy Card or their substitutes will vote in
accordance with their best judgment on such matters.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
Only stockholders as of the close of business on the Record Date are
entitled to notice of, and to vote at, the Meeting. As of the Record Date, there
were 30,038,990 shares of Common Stock outstanding and entitled to vote, with
each share entitled to one vote, and 32,049,598 shares of common stock issuable
upon conversion of the 3,204,959.8 outstanding shares of Series B Preferred
Stock. Each share of Series B Preferred Stock entitles the holder to one vote
for each of the ten (10) shares of common stock into which it is convertible.
Accordingly, the total number of votes which may be cast at the meeting is
62,088,588.
REQUIRED VOTES
The affirmative vote of a plurality of the votes cast in person or by
proxy is necessary for the election of directors (Proposal 1). The affirmative
vote of a majority of the Voting Stock outstanding and entitled to vote at the
Meeting is necessary for the approval of the amendment to the Certificate of
Incorporation to increase the authorized Common Stock (Proposal 2). The
affirmative vote of a majority of the votes cast in person or by proxy is
necessary for the ratification of the appointment of Deloitte & Touche LLP as
the Company's independent auditors for 2003 (Proposal 3).
Brokers holding shares for beneficial owners must vote those shares
according to the specific instructions they receive from beneficial owners. If
specific instructions are not received, brokers may be precluded from exercising
their discretion, depending on the type of proposal involved. Brokers have
discretionary authority to vote shares for which they do not receive
instructions from beneficial owners on Proposals 1 and 3. Brokers do not have
such discretionary authority with respect to Proposal 2. Shares as to which
brokers have not received instructions from beneficial owners and either do not
have discretionary authority or have not exercised discretionary authority
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are considered "broker non-votes." Broker non-votes will be counted for purposes
of determining whether there is a quorum.
Votes at the Meeting will be tabulated by an inspector of elections
appointed by the Company or the Company's transfer agent. Since the affirmative
vote of a plurality of votes cast is required for the election of directors
(Proposal 1), abstentions, broker non-votes and other unvoted shares will have
no effect on the outcome of such election. Since the affirmative vote of a
majority of the Voting Stock outstanding and entitled to vote at the Meeting is
necessary for the approval of the amendment to the Certificate of Incorporation
to increase the authorized Common Stock (Proposal 2), abstentions, broker
non-votes and other unvoted shares will have the same effect as a negative vote.
Since the affirmative vote of a majority of the votes cast is necessary for the
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for 2003 (Proposal 3), abstentions will have the same
effect as negative votes, but broker non-votes and other unvoted shares will
have no effect on the outcome of the vote.
Palisade Concentrated Equity Partnership, L.P. ("Palisade"), which, as
of the Record Date owned 19,375,000 shares of Common Stock and 2,880,599.5
shares of Series B Preferred Stock, representing in the aggregate 77.6% of the
Voting Stock, has advised the Company that it intends to vote its shares FOR the
approval of Proposals 1, 2 and 3.
PROXY SOLICITATION
The Company will bear the costs of the solicitation of proxies for the
Meeting. Directors, officers and employees of the Company may solicit proxies
from stockholders by mail, telephone, e-mail, personal interview or otherwise.
Such directors, officers and employees will not receive additional compensation
but may be reimbursed for out-of-pocket expenses in connection with such
solicitation. Brokers, nominees, fiduciaries and other custodians have been
requested to forward soliciting material to the beneficial owners of Common
Stock held of record by them, and such custodians will be reimbursed for their
reasonable expenses.
IT IS DESIRABLE THAT AS LARGE A PROPORTION AS POSSIBLE OF THE VOTING
STOCK BE REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND TO BE PRESENT
AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY CARD TO
ENSURE THAT YOUR STOCK WILL BE REPRESENTED. IF YOU ARE PRESENT AT THE MEETING
AND DESIRE TO DO SO, YOU MAY WITHDRAW YOUR PROXY CARD AND VOTE IN PERSON BY
GIVING WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY. PLEASE RETURN YOUR
EXECUTED PROXY CARD PROMPTLY.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of the Record Date, there were 30,038,990 shares of the Company's
Common Stock outstanding and entitled to vote. In addition, there were
3,204,959.8 shares of Series B Preferred Stock outstanding entitled to voting
power equivalent to an aggregate of 32,049,598 shares of Common Stock (i.e., one
vote for each of the ten shares of Common Stock into which a share of Series B
Preferred Stock is convertible). Therefore, as of the Record Date, the aggregate
voting power of the outstanding Common Stock and the outstanding Series B
Preferred Stock which were entitled to notice of, and to vote at, the Meeting is
equivalent to 62,088,588 shares of Common Stock.
The following table sets forth, as of the Record Date, certain
information regarding the beneficial ownership of the outstanding Voting Stock
by: (i) each person who is known by the Company to own 5% or more of any class
of the Company's Voting Stock (the holdings of certain unrelated entities listed
below are based on shareholdings disclosed in their public filings), (ii) each
of the Company's current directors and nominees for the Board of Directors,
(iii) each Named Executive Officer set forth in the Summary Compensation Table
on page 11 and (iv) all of the Company's current executive officers and
directors as a group. Unless otherwise indicated, each of the stockholders shown
in the table below has sole voting and investment power with respect to the
shares beneficially owned. Unless otherwise indicated, the address of each
person named in the table below is c/o OptiCare Health Systems, Inc., 87
Grandview Avenue, Waterbury, Connecticut 06708.
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NAMES OF EXECUTIVE OFFICERS, DIRECTORS, SERIES B
NOMINEES AND 5% STOCKHOLDERS COMMON STOCK (1) PREFERRED STOCK (1) (2)
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SHARES PERCENT SHARES PERCENT
------ ------- ------ -------
Palisade Concentrated Equity Partnership, 48,580,995 82.0% 2,880,599.5 89.9%
L.P. (2, 3)
Dean J. Yimoyines, M.D., Chairman and 4,866,228 14.1% 324,360.3 10.1%
Chief Executive Officer (2, 4)
Nicolas Berggruen (5) 2,454,026 7.6% - -
Eric J. Bertrand, Director (6) 48,635,295 82.1% 2,880,599.5 89.9%
William A. Blaskiewicz, Vice President and 145,868 * - -
Chief Financial Officer (7)
David B. Cornstein, Director (8) 150,000 * - -
Norman S. Drubner, Esq., Director (9) 474,489 1.6% - -
Jason M. Harrold, President, Managed 102,041 * - -
Vision Division (10)
Mark S. Hoffman, Director (11) 48,580,995 82.0% 2,880,599.5 89.9%
Richard L. Huber, Director (12) 150,000 * - -
Clark A. Johnson, Director (13) 186,000 * - -
Melvin Meskin, Director (14) 150,000 * - -
Mark S. Newman, Director (15) 150,000 *
Christopher J. Walls, Esq., Vice President 57,500 * - -
and General Counsel (16)
Lance A. Wilkes, President and Chief 25,000 * - -
Operating Officer (17)
All executive officers and directors as a 55,094,208 85.2% 3,204,959.8 100.0%
group--13 persons. (2,4, 6-17)
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* Less than 1%
(1) As used in this table, a beneficial owner of a security includes any person
who, directly or indirectly, through contract, arrangement, understanding,
relationship or otherwise, has or shares (a) the power to vote, or direct
the voting of, such security or (b) investment power which includes the
power to dispose, or to direct the disposition of, such security. In
addition, a person is deemed to be the beneficial owner of a security if
that person has the right to acquire beneficial ownership of such security
within 60 days. Shares not outstanding but deemed beneficially owned by
virtue of the right of an individual to acquire them within 60 days upon
the exercise of an option are treated as outstanding for purposes of
determining beneficial ownership and the percent beneficially owned by such
individual and for the executive officers and directors as a group. The
percentage of outstanding Common Stock set forth opposite the name of each
stockholder has been determined in accordance with Securities and Exchange
Commission Rule 13d-3(d)(1), without regard to Common Stock acquirable
within 60 days hereafter under options, warrants, and convertible
securities beneficially owned by persons other than such stockholder.
(2) Each share of Series B Preferred Stock entitles the holder to one vote for
each of the ten (10) shares of Common Stock into which it is convertible.
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(3) Common Stock beneficially owned by Palisade Concentrated Equity
Partnership, L.P. ("Palisade") consists of 19,375,000 shares of Common
Stock presently issued and outstanding; 400,000 shares of Common Stock
issuable upon exercise of warrants; and 28,805,995 shares of Common Stock
issuable upon conversion of Series B Preferred Stock. Palisade may cast
48,180,995 votes at the Meeting, which represents 77.6% of the Voting
Stock. The address of Palisade is One Bridge Plaza, Suite 695, Fort Lee, NJ
07024.
(4) Includes 130,000 shares of vested restricted Common Stock and 1,067,000
shares of Common Stock issuable upon the exercise of outstanding options
owned by Dr. Yimoyines. Also includes the following securities held by
Linda Yimoyines, wife of Dr. Yimoyines: 374,925 shares of Common Stock;
3,243,603 shares of Common Stock issuable upon conversion of Series B
Preferred Stock; and 50,000 shares issuable upon exercise of warrants.
Dr. Yimoyines disclaims beneficial ownership of securities held by his
wife. At the Meeting Dr. Yimoyines may cast an aggregate of 130,000
votes, representing 0.2% of the Voting Stock and Ms. Yimoyines may cast
an aggregate of 3,618,528 votes, representing 5.8% of the Voting Stock.
(5) Consists of 2,300,000 shares of Common Stock issuable upon exercise of
warrants held by Medici I Investment Corp. and 154,026 shares of Common
Stock held by Alexander Enterprise Holdings Corp. Mr. Nicholas Berggruen
acts as an investment advisor to both Medici I Investment Corp. and
Alexander Enterprise. Mr. Berggruen disclaims beneficial ownership of such
shares. The address of Alexander Enterprise Holdings Corp. is: c/o Alpha
Investment Management, Inc., 499 Park Ave., 24th Floor, New York, NY 10022.
(6) Common Stock beneficially owned by Mr. Bertrand consists of 54,300 shares
of Common Stock held directly by Mr. Bertrand; 19,375,000 shares of Common
Stock owned by Palisade; 400,000 shares of Common Stock issuable upon
exercise of warrants held by Palisade; and 28,805,995 shares of Common
Stock issuable upon conversion of Series B Preferred Stock owned by
Palisade. Mr. Bertrand is a vice president of Palisade Capital Management,
LLC, an affiliate of Palisade.
(7) Includes 125,868 shares of Common Stock issuable upon the exercise of
outstanding options held by Mr. Blaskiewicz.
(8) Consists of 150,000 shares of Common Stock issuable upon the exercise of
outstanding options held by Mr. Cornstein.
(9) Includes 180,000 shares of Common Stock issuable upon the exercise of
outstanding options held by Mr. Drubner.
(10) Consists of 102,041 shares of Common Stock issuable upon the exercise of
outstanding options held by Mr. Harrold.
(11) Common Stock beneficially owned by Mr. Hoffman consists of 19,375,000
shares of Common Stock owned by Palisade; 400,000 shares of Common Stock
issuable upon exercise of warrants held by Palisade; and 28,805,995 shares
of Common Stock issuable upon conversion of Series B Preferred Stock owned
by Palisade. Mr. Hoffman is a managing director of Palisade Capital
Management, LLC, an affiliate of Palisade.
(12) Consists of 150,000 shares of Common Stock issuable upon the exercise of
outstanding options held by Mr. Huber.
(13) Consists of 186,000 shares of Common Stock held by Mr. Johnson.
(14) Consists of 150,000 shares of Common Stock issuable upon the exercise of
outstanding options held by Mr. Meskin.
(15) Consists of 150,000 shares of Common Stock issuable upon the exercise of
outstanding options held by Mr. Newman.
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(16) Consists of 26,250 shares of vested restricted common stock and 31,250
shares of Common Stock issuable upon the exercise of outstanding options
held by Mr. Walls.
(17) Consists of 25,000 shares of vested restricted common stock held by Mr.
Wilkes.
PROPOSAL 1
ELECTION OF DIRECTORS
The Certificate of Incorporation and the Amended and Restated By-laws
of the Company provide that the number of directors which shall constitute the
whole Board of Directors of the Company shall be fixed and determined by
resolution of the Board of Directors. Our Board currently consists of nine
directors. David Cornstein has decided not to run for reelection at the Meeting.
Accordingly, effective at the time and for the purposes of the Meeting, the
number of directors of the Company, as fixed by the Board of Directors pursuant
to the By-laws of the Company, will be eight.
Directors of the Company are elected annually at the annual meeting of
stockholders. Their respective terms of office continue until the next annual
meeting of stockholders and until their successors have been elected and
qualified in accordance with the Company's By-laws.
Pursuant to a restructure agreement among the Company, Palisade and
Dean J. Yimoyines, M.D. (the Chairman of the Board of Directors and Chief
Executive Officer of the Company), dated as of December 17, 2001, as amended on
January 5, 2002 and January 22, 2002, the Company has agreed that, so long as
Palisade owns more than 50% of the voting power of the Company, it shall have
the right to designate a majority of the Company's Board of Directors. Pursuant
to this provision, Messrs. Bertrand, Hoffman, Johnson, Meskin and Newman have
been nominated by the Board of Directors on the recommendation of Palisade.
Unless otherwise specified on the Proxy Cards, each Proxy Card received
will be voted FOR the election as directors of the eight nominees named below to
serve until the next annual meeting of stockholders and until their successors
shall have been duly elected and qualified. Each of the nominees has consented
to be named a nominee in the Proxy Statement and to serve as a director if
elected. Should any nominee become unable or unwilling to accept a nomination or
election, the proxies named in the enclosed Proxy Card will vote for the
election of an alternate nominee designated by the Board of Directors or will
vote for such lesser number of directors as may be prescribed by the Board of
Directors in accordance with the By-laws of the Company. The Board has no reason
to believe that any nominee will be unable or unwilling to serve.
The following Directors have been nominated for reelection to the
Board:
ERIC J. BERTRAND - Mr. Bertrand, age 30, a current Director who was
first elected on January 25, 2002, is a Vice President of Palisade Capital
Management, LLC, an affiliate of Palisade Concentrated Equity Partnership, L.P.,
where he has held a series of positions of increasing responsibility since 1997.
From 1996 to 1997, Mr. Bertrand held a position with Townsend Frew & Company, a
healthcare-focused investment banking boutique. From 1994 to 1996, he was with
Aetna, Inc.'s private equity group, focusing on middle market leveraged buy-outs
and larger private equity investments. Mr. Bertrand is a Director of several
privately-held companies. He holds a Bachelor of Science in Business
Administration from Bryant College and a Master of Business Administration in
Finance and Entrepreneurship with a certificate in the Digital Economy from New
York University.
NORMAN S. DRUBNER, ESQ. - Mr. Drubner, age 63, a current Director who
was first elected on November 1, 2001, is senior partner in the law firm of
Drubner, Hartley & O'Connor, which he founded in 1971; and is the owner of
Drubner Industrials, a commercial real estate brokerage firm. Mr. Drubner has
been practicing law in Connecticut since 1963, specializing in real estate,
zoning, and commercial transactions. He is a member of the Connecticut Bar and
the
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Waterbury, Connecticut Bar Association. Mr. Drubner has been admitted to
practice before the U.S. District Court, District of Connecticut. He is a former
trustee of Teikyo Post University. Mr. Drubner holds a Bachelor of Arts degree
from Boston University and received his Juris Doctor degree from Columbia
University in 1963.
MARK S. HOFFMAN - Mr. Hoffman, age 42, a current Director who was first
elected on January 25, 2002, is a Managing Director of Palisade Capital
Management, LLC, an affiliate of Palisade Concentrated Equity Partnership, L.P.,
which he joined upon its formation in 1995. He is a Director of Refac, a
publicly-traded company, as well as several privately held companies. Mr.
Hoffman is a graduate of the Wharton School at the University of Pennsylvania.
RICHARD L. HUBER - Mr. Huber, age 66, a current Director who was first
elected on July 16, 2002, is a Senior Director of Kissinger McLarty Associates,
an international advisory partnership led by Henry Kissinger and Mack McLarty;
and is Chief Executive Officer of Norte Sur, a private equity firm targeting
Latin America. Mr. Huber is former Chairman, President and Chief Executive
Officer of Aetna, Inc., the Hartford, CT-based insurance company, which he
joined in 1995. At Aetna, Mr. Huber was responsible for a number of strategic
acquisitions, such as NYLCare, PruCare and USHealthcare, making Aetna the
largest healthcare insurer in the world. Prior to Aetna, Mr. Huber had a 35-year
career in banking, including four years as Vice Chairman and Director of
Continental Bank and senior management positions at Chase Manhattan and
Citibank. Mr. Huber serves as Director of Danielson Holding Company, a
publicly-traded company, and was a member of the Congressional International
Financial Institutions Advisory Commission. He is a former Coast Guard officer
and holds a Bachelor of Arts degree from Harvard College.
CLARK A. JOHNSON - Mr. Johnson, age 71, a current Director who was
first elected on May 21, 2002, is Chairman of PSS World Medical, Inc., a
national distributor of medical equipment and supplies to physicians, hospitals,
nursing homes, and diagnostic imaging facilities. He is a Director of MetroMedia
International Group and Refac, both publicly-traded companies; and several
privately-held companies; is retired Chairman and Chief Executive Officer of
Pier 1 Imports; and is former Executive Vice President and Director of the
Wickes Companies, Inc. Mr. Johnson, who attended the University of Iowa,
completed the Advanced Management Program at the Harvard Business School. He is
former Chairman of the American Business Conference, former trustee of Texas
Christian University and is a former Chief Executive Officer Participant in the
National Conference on Ethics in America.
MELVIN MESKIN - Mr. Meskin, age 58, a current Director who was first
elected on January 25, 2002, is Chairman of the Board of Directors of Refac, a
publicly traded company. He is also former Vice President-Finance-National
Operations of Verizon, the combined Bell Atlantic/GTE telecommunications
company. Mr. Meskin joined New York Telephone in 1970 and held a variety of line
and staff assignments with the company over a 31-year career. In 1994, he was
named Vice President-Finance and Treasurer for NYNEX Telecommunications. When
Bell Atlantic and NYNEX merged, he was appointed Vice President-Finance and
Comptroller of Bell Atlantic. He is also a member of the Board of Trustees of
Nyack (New York) Hospital and the Board of Trustees of the Post Graduate Center
for Mental Health.
MARK S. NEWMAN - Mr. Newman, age 53, a current Director who was first
elected on May 21, 2002, is Chairman of the Board, President and Chief Executive
Officer of DRS Technologies, Inc., a publicly-traded company and a leading
supplier of defense electronics systems to government and commercial customers
worldwide. Mr. Newman joined DRS Technologies in 1973, served many years as its
Chief Financial Officer, was named a Director in 1988, became President and
Chief Executive Officer in 1994, and was elected Chairman of the Board in 1995.
Mr. Newman serves as Vice Chairman of the American Electronics Association, and
as a Director of the New Jersey Technology Council, SSG Precision Optronics and
the Congoleum Corporation where he chairs the Audit Committee. He is a member of
the Board of Governors of the Aerospace Industries Association of America, and
also serves as a member of the Navy League of the United States, the National
Defense Industrial Association, the Association of the U.S. Army, and the
American Institute of Certified Public Accountants, among other professional
affiliations. Mr. Newman holds a Bachelor of Arts degree in Economics from the
State University of New York at Binghamton and a Master of Business
Administration from Pace University. He is also a C.P.A.
DEAN J. YIMOYINES, M.D. - Dr. Yimoyines, age 55, a current Director,
has served as Chairman of the Board
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and Chief Executive Officer of OptiCare Health Systems, Inc. since August 13,
1999. Dr. Yimoyines also served as President of OptiCare Health Systems, Inc.
from August 13, 1999 to June 10, 2002. Dr. Yimoyines is a founder of OptiCare
Eye Health Centers, Inc. and has served as the Chairman, President and Chief
Executive Officer of OptiCare Eye Health Centers, Inc. since 1985. Dr. Yimoyines
has been instrumental in the development and implementation of the business of
OptiCare Eye Health Centers, Inc. for nearly 20 years. He graduated with
distinction from the George Washington School of Medicine. He completed his
ophthalmology residency at the Massachusetts Eye and Ear Infirmary, Harvard
Medical School. Dr. Yimoyines completed fellowship training in vitreoretinal
surgery at the Retina Associates in Boston. He is a graduate of the OPM (Owner /
President Management) program at Harvard Business School and is a Fellow of the
American Academy of Ophthalmology.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR
EACH OF THE ABOVE NAMED DIRECTOR NOMINEES.
INFORMATION CONCERNING MEETINGS OF THE BOARD OF DIRECTORS,
BOARD COMMITTEES AND DIRECTOR COMPENSATION
MEETINGS AND COMMITTEES
During 2002, the Board of Directors held ten (10) meetings and acted by
written consent on six occasions. The Board of Directors has a standing Audit
Committee, a Compensation Committee and an Executive Committee. The Board
previously had a Stock Plan Committee, but this Committee was disbanded in 2001.
The Audit, Compensation and Executive Committees do not meet on a regular basis,
but only as circumstances require. During 2002, all of the directors then in
office attended at least 75% of the total number of meetings of the Board of
Directors and the Committees of the Board of Directors on which they served.
Audit Committee
The functions of the Audit Committee are to recommend to the Board of
Directors the appointment of independent auditors for the Company, to analyze
the reports and recommendations of such auditors and to review the Company's
systems of internal controls. The Audit Committee also monitors the adequacy and
effectiveness of the Company's financial controls and reporting procedures. The
Audit Committee met four times during 2002 and acted by written consent on one
occasion. The Audit Committee is currently comprised of Messrs. Newman
(Chairman), Drubner and Huber. At the beginning of 2002, the Audit Committee
consisted of Messrs. Frederick A. Rice (Chairman), Drubner, Esq. and Raymond W.
Brennan. Mr. Brennan resigned as a director in January 2002, at which time Mr.
Meskin joined the Audit Committee. Mr. Rice resigned as a director on May 21,
2002 at which time Mr. Newman joined the Audit Committee as Chairman. Mr. Meskin
relinquished his seat on the Audit Committee on August 2, 2002 at which time Mr.
Huber joined the Audit Committee. All members of the Audit Committee are
"independent directors" as required by the applicable listing standards of the
American Stock Exchange. The Audit Committee has a charter, which was adopted on
May 24, 2000 and most recently filed with the Securities and Exchange Commission
as Appendix D to the definitive Proxy Statement dated January 4, 2002.
Compensation Committee
The Compensation Committee determines or recommends the compensation of
officers of the Company and approves and authorizes the execution of employment
agreements with officers and employees other than the chief executive officer.
The Compensation Committee met two times during the year ended December 31,
2002. The Compensation Committee currently consists of Messrs. Bertrand,
Cornstein and Johnson (Chairman). At the beginning of 2002, the Compensation
Committee consisted of: Mr. Raymond W. Brennan (Chairman), who resigned from the
Board in January 2002 and whose seat as Chairman of the Compensation Committee
was then taken by Mr. Johnson; Mr. Drubner, who relinquished his seat on the
Compensation Committee on May 21, 2002, and whose seat was taken by Mr.
Bertrand; and Mr. Frederick A. Rice, who resigned as a director on May 21, 2002
and whose seat on the Compensation Committee was taken by Mr. Cornstein.
8
Compensation Committee Interlocks and Insider Participation
Messrs. Bertrand, Brennan, Cornstein, Drubner, Johnson and Rice served
on the Compensation Committee in the year ended December 31, 2002. During 2002,
no executive officer of the Company (i) served as a member of the Compensation
Committee (or other committee of the Board of Directors performing similar
functions or, in the absence of any such committee, the Board of Directors) of
another entity, one of whose executive officers served on the Company's
Compensation Committee, (ii) served as director of another entity, one of whose
executive officers served on the Company's Compensation Committee, or (iii)
served as member of the Compensation Committee (or other committee of the Board
of Directors performing similar functions or, in the absence of any such
committee, the Board of Directors) of another entity, one of whose executive
officers served as a director of the Company.
Executive Committee
The Executive Committee may exercise the powers and authority of the
Board of Directors in the management of the business and affairs of the Company
for operational matters with a monetary impact or exposure of less than $200,000
individually or in the aggregate. The Executive Committee was established on
March 19, 2002, did not meet in 2002, and acted by written consent on one
occasion. The Executive Committee is currently comprised of Mr. Bertrand and Dr.
Yimoyines.
COMPENSATION OF DIRECTORS
Effective January 1, 2003, independent directors of the Company serving
on the Board of Directors as of the first day of the calendar year, receive an
annual non-qualified stock option to purchase 30,000 shares of the Company's
Common Stock pursuant to the Company's Amended and Restated 2002 Stock Incentive
Plan (the "2002 Plan"). Independent directors serving as members of committees
of the Board of Directors during the calendar year receive an annual
non-qualified stock option to purchase 10,000 shares of the Company's Common
Stock pursuant to the Company's Amended and Restated 2002 Stock Incentive Plan.
Options for both Board and committee membership are exercisable starting on the
last calendar day of the calendar year provided the director is still serving on
the Board of Directors at that time at an exercise price equal to the fair
market value of the Common Stock on the date of grant. Directors who are also
employees of the Company do not receive any additional compensation for their
service as directors. On January 25, 2002 and on May 21, 2002, pursuant to the
Company's 2002 Director compensation policy, each of the Company's non-employee
directors then serving received a grant of immediately vested options under the
2002 Plan to acquire 30,000 shares and 150,000 shares, respectively, of Common
Stock at an exercise price equal to the fair market value of the Common Stock on
the date of grant ($0.31 per share and $0.20 per share, respectively, which were
the closing prices of the Company's Common Stock on the American Stock Exchange
on such dates).
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee assists the Board in overseeing and monitoring the
integrity of the Company's financial reporting process, its compliance with
legal and regulatory requirements and the quality of its internal and external
audit processes. The role and responsibilities of the Audit Committee are set
forth in a written Charter, which was adopted by the Board on May 24, 2000 and
most recently filed with the Securities and Exchange Commission as Appendix D to
the definitive Proxy Statement dated January 4, 2002. The Audit Committee
reviews and reassesses the Charter annually and recommends any changes to the
Board for approval. The Audit Committee is responsible for overseeing the
Company's overall financial reporting process. In fulfilling its
responsibilities for the financial statements for 2002, the Audit Committee to
the following actions:
1. The Audit Committee has reviewed and discussed with management the
Company's audited financial statements for the year ended December
31, 2002.
2. The Audit Committee has discussed with Deloitte & Touche LLP, the
Company's independent accountants, the matters required to be
discussed by Statement of Auditing Standards No. 61,
Communications with Audit Committees.
9
3. The Audit Committee has received the written disclosures and the
letter from Deloitte & Touche LLP required by Independence
Standards Board Standard No. 1, Independence Discussions with
Audit Committees, and has discussed with Deloitte & Touche LLP
their independence.
4. Based on the reviews and discussions referred to in paragraphs (1)
through (3) above, the Audit Committee recommended to the Board of
Directors of the Company that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002, for filing with the Securities and
Exchange Commission.
Respectfully submitted,
Norman S. Drubner, Esq.
Richard L. Huber
Mark S. Newman
10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth information
concerning the annual and long-term compensation earned by the Company's chief
executive officer and each of the four other most highly compensated executive
officers of the Company whose annual salary and bonus during 2002 exceeded
$100,000 (collectively, the "Named Executive Officers").
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------- --------------------------------
SECURITIES ALL OTHER
NAME AND RESTRICTED STOCK UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) AWARDS ($) OPTIONS (#) ($) (4)
------------------ ---- ---------- --------- ---------------- ---------- ------------
Dean J. Yimoyines, M.D. 2002 349,423 36,960 - 1,150,000 56,219
Chairman of the Board of 2001 410,000 - - - 35,756
Directors and Chief 2000 410,000 25,000 - - 33,005
Executive Officer
William A. Blaskiewicz 2002 145,000 34,640 - 250,000 12,738
Vice President and 2001 133,462 30,000 - - 2,819
Chief Financial Officer 2000 105,000 - - - 2,100
Jason M. Harrold 2002 175,000 44,000 - 150,000 9,701
President of the Managed 2001 157,692 65,000 - - 2,342
Care Division 2000 122,740 - - 45,000 2,455
Christopher J. Walls (1) 2002 126,923 34,640 4,000(3) 125,000 10,955
Vice President and
General Counsel
Lance A. Wilkes (2) 2002 113,077 81,800 - 1,000,000 7,079
President and
Chief Operating Officer
(1) Mr. Walls was hired as Vice President and General Counsel in February 2002.
His annual base salary for 2002 was $150,000.
(2) Mr. Wilkes was hired as President and Chief Operating Officer in June 2002.
His annual base salary for 2002 was $210,000.
(3) Represents an aggregate of 25,000 shares of restricted common stock valued
at the market price of the Company's Common Stock as of the date of grant.
Vested 25% on March 19, 2003. Vesting 25% on: March 19, 2004; March 19,
2005; and March 19, 2006.
(4) The amounts shown include, for the year ended December 31, 2002: (i)
matching contributions by the Company under a 401(k) retirement savings
plan maintained by the Company for Dr. Yimoyines of $4,000; for Mr.
Blaskiewicz of $3,488; and for Mr. Harrold of $2,985; (ii) insurance
premiums paid by the Company for disability insurance on behalf of Dr.
Yimoyines of $20,537; Mr. Blaskiewicz of $1,143; Mr. Harrold of $980; Mr.
Walls of
11
$976; and Mr. Wilkes of $1,006; (iii) insurance premiums paid by the
Company for health insurance on behalf of Dr. Yimoyines of $5,129; Mr.
Blaskiewicz of $2,750; Mr. Harrold of $1,403; Mr. Walls of $3,778; and Mr.
Wilkes of $2,352; and (iv) insurance premiums paid by the Company for life
insurance on behalf of Dr. Yimoyines of $19,112.
OPTIONS GRANTED IN 2002
INDIVIDUAL GRANTS
--------------------------------------------------------------
NUMBER OF SHARES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE GRANT DATE
OPTIONS GRANTED TO EMPLOYEES IN PRICE EXPIRATION VALUE
NAME (#) FISCAL YEAR ($/SH) DATE ($) (6)
-------------------------------------------------------------------------------------------------------------
Dean J. Yimoyines, M.D. 500,000 (1) 10.6 % 0.15 1/04/12 40,094
150,000 (2) 3.2 % 0.20 5/21/12 16,037
500,000 (3) 10.6 % 0.36 12/20/12 96,225
William A. Blaskiewicz 200,000 (1) 4.2 % 0.15 1/04/12 16,037
50,000 (2) 1.1 % 0.20 5/21/12 5,346
Jason M. Harrold 125,000 (1) 2.6 % 0.15 1/04/12 10,023
25,000 (2) 0.5 % 0.20 5/21/12 2,673
Christopher J. Walls 125,000 (4) 2.6 % 0.16 3/19/12 10,692
Lance A. Wilkes 600,000 (5) 12.7 % 0.26 6/27/12 83,395
200,000 (5) 4.2 % 1.00 6/27/12 11,262
200,000 (5) 4.2 % 2.00 6/27/12 5,494
(1) Vested 25% on March 31, 2002 and January 4, 2003. Vesting 25% on: January
4, 2004; and January 4, 2005.
(2) Vesting 25% on: May 21, 2003; May 21, 2004; May 21, 2005; and May 21, 2006.
(3) Vested 50% on December 20, 2002. Vesting 25% on December 20, 2003; and 25%
on December 20, 2004.
(4) Vested 25% on March 19, 2003. Vesting 25% on: March 19, 2004; March 19,
2005; and March 19, 2006.
(5) Vesting 25 % on: June 27, 2003; June 27, 2004; June 27, 2005; and June 27,
2006.
(6) The estimated values reported are based on the Black-Scholes pricing model
with the following assumptions: risk free interest rate of 3.0%, stock
price volatility of 60%, no dividends and a holding period of five years.
The estimated values are not intended as a forecast of the future
appreciation in the price of the Common Stock. If the Common Stock does not
increase in value above the exercise price of the stock options, then the
grants described in the table will have no value. There is no assurance
that the value realized by an executive will be at or near the values
estimated.
12
AGGREGATE OPTION EXERCISES IN 2002 AND YEAR END OPTION VALUES
The following table contains certain information regarding options to
purchase Common Stock held as of December 31, 2002, by each of the Named
Executive Officers. None of the Named Executive Officers exercised stock options
during 2002.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT 12/31/02 (#) AT 12/31/02 ($) (1)
-------------------------------- --------------------------------
NAME EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
------------------------------------------------------------------ --------------------------------
Dean J. Yimoyines, M.D. 1,030,200 731,250 $62,500 $89,500
William A. Blaskiewicz 113,368 152,500 $23,000 $32,000
Jason M. Harrold 95,791 112,813 $14,375 $18,875
Christopher J. Walls - 125,000 - $27,500
Lance A. Wilkes - 1,000,000 - $72,000
(1) The value of the in-the-money options was calculated as the difference
between the closing price of our Common Stock as reported on the American
Stock Exchange on December 31, 2002 and the exercise price of the options.
REPORT ON EXECUTIVE COMPENSATION
BY THE COMPENSATION COMMITTEE
COMPENSATION POLICY
The policy of the Compensation Committee is to determine or recommend
compensation of the Company's officers reflecting the contribution of such
officers to growth in revenue and earnings, the implementation of strategic
plans consistent with long term growth objectives and the enhancement of
stockholder value. Contributions to the specific corporate and business unit
objectives are evaluated in setting compensation policy, including growth in
revenue and earnings in the Company's three divisions, the development of new
business opportunities and other strategic initiatives. The Company's
compensation program consists of base salary, bonus and long-term incentive
compensation comprised of the award of stock options and restricted stock under
the Company's Amended and Restated 2002 Stock Incentive Plan and its 2003
Incentive Compensation Plan. Compensation decisions, other than base
compensation for executive officers with multi-year contracts, are generally
made on a calendar year basis.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
During the year ended December 31, 2002, Dr. Yimoyines, the Chief
Executive Officer of the Company, received no compensation other than pursuant
to his employment agreement with the Company, which was approved by the
Compensation Committee and the Board of Directors of the Company during 1999.
However, in connection with the Company's Capital Restructuring Transactions,
Dr. Yimoyines agreed in principle to a substantial adjustment to his annual base
salary and guaranteed bonus, which, when later implemented, reduced that salary
and bonus from $410,000 to $335,000.
13
During 2002, the Board of Directors awarded stock options to Dr.
Yimoyines and certain of the other executive officers and key employees of the
Company. The options, which were awarded under terms of the Performance Program
and the Amended and Restated 2002 Stock Incentive Plan and in connection with
the Company's capital restructuring transactions, were intended to: (1) align
executive interest with stockholder interest by creating a direct link between
compensation and stockholder return; (2) assure that executives maintain a
significant long-term interest in the Company's success; and (3) help retain key
employees in a competitive market.
Respectfully submitted,
Eric J. Bertrand
David B. Cornstein
Clark A. Johnson
PERFORMANCE GRAPH
The following graph compares the performance of an investment of
$100.00 in the Company's Common Stock with the performance of an investment of
$100.00 in the CRSP NASDAQ Health Index (a published industry index), and the
American Stock Exchange Composite Index, for the period from August 16, 1999
(the first day on which the Company's Common Stock was publicly traded on the
American Stock Exchange and the first trading day after the closing of the
mergers with PrimeVision Health, Inc. and OptiCare Eye Health Centers, Inc.)
through December 31, 2002. The stock price performance shown on the graph is not
necessarily indicative of future price performance.
[OBJECT OMITTED]
PERIOD ENDING
------------ ---------------------------------------- -------------
8/16/99 12/31/99 12/29/00 12/31/01 12/31/02
------------ ------------- ----------- -------------- -------------
OptiCare Health Systems, Inc. 100.00 50.91 7.27 2.18 5.53
CSRP Index for NASDAQ Health Services 100.00 89.20 122.50 132.40 114.10
AMEX Composite 100.00 112.50 115.17 108.74 105.76
14
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
Key provisions of the employment agreements with the Named Executive
Officers are summarized below.
Dean J. Yimoyines, Chairman and Chief Executive Officer. The Company
entered into an employment agreement with Dr. Yimoyines on August 10, 1999. The
initial term of Dr. Yimoyines' employment agreement was three years, however,
prior to the expiration of the employment agreement and in connection with the
Company's capital restructuring Dr. Yimoyines agreed to an eighteen (18) month
contract term which expires on July 25, 2003. It is the Company's expectation
that Dr. Yimoyines' employment agreement will be amended and extended prior to
its expiration. Under the terms of the agreement, Dr. Yimoyines' annual base
salary and guaranteed bonus was $410,000. However, in connection with the
Company's capital restructuring transactions, Dr. Yimoyines agreed to a
substantial adjustment to his annual base salary which replaced his annual base
salary and guaranteed bonus with a $335,000 base salary. Effective January 1,
2003, his annual base salary was increased to $345,000. Dr. Yimoyines may
receive performance-based bonuses, as determined by the Board of Directors, of
up to 100% of base salary, subject to the achievement of goals established for
each calendar year by the Board of Directors or the Compensation Committee. Dr.
Yimoyines is entitled to a disability benefit consisting of full base salary for
the first six months of a disability, and thereafter 65% of base salary and
performance-based bonus earned as of the date of disability and to a life
insurance policy on his life in the amount of $1,500,000 payable to a
beneficiary designated by Dr. Yimoyines. Additionally, in connection with the
Company's restructuring Dr. Yimoyines agreed that if his employment is
terminated on account of disability or without cause by the Company, he shall
receive a lump sum payment of $500,000. He further agreed if: (a) during the
three year period following a change in control, Dr. Yimoyines' duties are
materially diminished, his principal place of employment is moved more than 50
miles, or his employment is terminated on account of disability or by the
Company without cause or by now-renewal of the agreement, or (b) Dr. Yimoyines
voluntarily terminates his employment during the one year period following a
change in control, then Dr. Yimoyines shall receive severance pay in the amount
of $500,000. If Dr. Yimoyines' employment is not terminated at the Company's
election, then: (1) during the term of the agreement and for a period of 18
months after the date of termination of employment, Dr. Yimoyines shall not
engage in the practice of any branch of ophthalmology or ophthalmic surgery in
any capacity in Connecticut or any portion of any other state where the Company
actively conducts business; and (2) for the 12-month period following
termination, Dr. Yimoyines may not render services to any organization which is
engaged in: (i) researching, developing, marketing or selling any eye wear or
eye care product, process or service or (ii) management of an ophthalmic medical
practice which competes with any of the Company's products, processes or
services.
William A. Blaskiewicz, Vice President, Chief Financial Officer. Mr.
Blaskiewicz' employment agreement began on September 1, 2001, and continues
until terminated by either party. Effective January 1, 2003, his base annual
salary, excluding the cost of certain perquisites, is $150,000. As provided in
the Company's 2003 Incentive Compensation Plan, Mr. Blaskiewicz may receive
discretionary bonuses as authorized by the Board of Directors and as determined
by the Chief Executive Officer. Mr. Blaskiewicz may terminate the agreement for
any reason upon 90 days' notice. It shall be deemed a termination of the
agreement if, during the term of the agreement, the Company: (a) requires Mr.
Blaskiewicz to relocate permanently outside of Connecticut, (b) requires Mr.
Blaskiewicz to render services other than those customarily performed by chief
financial officers or (c) materially increases or decreases his duties or
responsibilities. In the event of a deemed termination, or if the Company
terminates Mr. Blaskiewicz' employment agreement without cause, then he shall
receive: (a) a severance payment equal to his base salary for 12 months from the
date of termination, and (b) payment for any benefits which are required to be
continued under COBRA during the 12 months from the date of termination.
Additionally, during the term of the agreement and for a period of 18 months
after termination, subject to certain exceptions, Mr. Blaskiewicz may not render
services directly or indirectly to any organization that competes with a
product, process or service of the Company.
Jason M. Harrold, President, Managed Vision Division. The Company
entered into an employment agreement with Mr. Harrold on July 1, 2000. The
initial term of this agreement was two years, but it is automatically renewable
for
15
subsequent one year terms unless either party gives the other six months' notice
prior to the renewal date. Pursuant to its terms, on June 30, 2002, Mr.
Harrold's employment agreement was automatically renewed for one year to June
30, 2003. Effective January 1, 2003, Mr. Harrold's annual base salary is
$180,000. As provided in the Company's 2003 Incentive Compensation Plan, Mr.
Harrold may receive discretionary bonuses of up to 100% of base salary, as
authorized by the Board of Directors and as determined by the Chief Executive
Officer and Chief Operating Officer. Mr. Harrold may terminate the agreement
without cause upon six months' notice and the Company may terminate without
cause at any time upon notice. If Mr. Harrold is terminated without cause, he is
entitled to: (a) a lump sum payment of 12 months' base salary, and (b) benefits
for a 12-month period. If Mr. Harrold becomes disabled, he is entitled to full
base salary for the first three months, and, thereafter, as allowed by a
long-term disability policy provided by the Company, 60% of base salary plus
performance-based bonus earned as of the date of disability. During the term of
the agreement and for a period of 18 months after termination, subject to
certain exceptions, Mr. Harrold may not render services directly or indirectly
to any organization which is engaged in: (i) the managed eye care business, (ii)
the optical buying group business, or (iii) the business of owning or managing
the practice of ophthalmologists, optometrists, opticians, ambulatory or
refractive surgery facilities or providing services to such organizations. If,
during the one year period following a change in control of the Company, Mr.
Harrold's duties are materially diminished, his principal place of employment is
moved more than 50 miles, or his employment is terminated by the Company without
cause or by non-renewal of the agreement, he shall receive a lump sum payment
equal to his annual base salary.
Christopher J. Walls, Vice President and General Counsel. The Company
entered into an employment agreement with Mr. Walls on February 18, 2002. The
agreement continues until terminated by either party. Effective January 1, 2003,
Mr. Walls' annual base salary, excluding the cost of certain perquisites, is
$160,000. As provided in the Company's 2003 Incentive Compensation Plan, Mr.
Walls may receive discretionary bonuses as authorized by the Board of Directors
and as determined by the Chief Executive Officer. Following Board of Director
approval, Mr. Walls received, pursuant to the 2002 Stock Incentive Plan, options
to purchase up to 125,000 shares of the Company's Common Stock at an exercise
price of $0.16 per share, which options vest at the rate of 25% per year over
four years commencing March 19, 2003. Mr. Walls also received 25,000 shares of
restricted Common Stock, which shares vest at the rate of 25% per year over four
years commencing March 19, 2003. Mr. Walls may terminate the agreement for any
reason without notice. If the Company terminates Mr. Walls' employment agreement
without cause, then he shall receive: (a) a severance payment equal to his base
salary for 3 months from the date of termination, and (b) payment for any
benefits which are required to be continued under COBRA during such period as is
then mandated by law commencing with the date of termination. If the Company
terminates Mr. Walls' employment agreement without cause or in the event of a
change in control of the Company, Mr. Walls' stock option grant and restricted
stock grant shall become immediately vested.
Lance A. Wilkes, President and Chief Operating Officer. The Company
entered into an employment agreement with Mr. Wilkes on May 21, 2002. The
agreement continues until terminated by either party. Mr. Wilkes' employment
began on June 10, 2002. Effective January 1, 2003, Mr. Wilkes' annual base
salary, excluding the cost of certain perquisites, is $216,000. As provided in
the Company's 2003 Incentive Compensation Plan, Mr. Wilkes may receive
discretionary bonuses as authorized by the Board of Directors and as determined
by the Chief Executive Officer. Following Board of Director approval, Mr. Wilkes
received, pursuant to the Amended and Restated 2002 Stock Incentive Plan,
options to purchase up to 600,000 shares of the Company's Common Stock at an
exercise price of $0.26 per share; options to purchase up to 200,000 shares of
the Company's Common Stock at an exercise price equal to $1.00 per share; and
options to purchase up to 200,000 shares of the Company's Common Stock at an
exercise price equal to $2.00 per share, all of which options vest at the rate
of 25% per year over four years commencing June 27, 2003. If the Company
terminates Mr. Wilkes' employment agreement without cause, then he shall
receive: (a) a severance payment equal to his base salary for three months from
the date of termination, and (b) payment for any benefits which are required to
be continued under COBRA during such period as is then mandated by law
commencing with the date of termination. In the event of a change in control of
the Company, Mr. Wilkes' stock option grant shall become immediately vested.
During the term of the agreement and for a period of 18 months after
termination, subject to certain exceptions, Mr. Wilkes may not render services
directly or indirectly to any organization which is engaged in: (i) the managed
eye care business, (ii) the optical buying group business, or (iii) the business
of managing, owning or affiliating with the practices of ophthalmologists,
optometrists, opticians, ambulatory or refractive surgery facilities or
providing services to such facilities; and shall not, without the prior written
consent of the Company, render services to any
16
individual or organization which is engaged in researching, marketing or selling
any process or service which competes or would compete with a product, process
or service of the Company, its subsidiaries and affiliates.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OPTICARE, P.C. PROFESSIONAL SERVICES AND SUPPORT AGREEMENT
OptiCare Eye Health Centers, Inc. is party to a Professional Services
and Support Agreement, dated December 1, 1995 with OptiCare, P.C., a Connecticut
professional corporation. Dr. Yimoyines, the Chairman of the Board and Chief
Executive Officer of the Company, and a beneficial holder of 14.1% of the
Company's outstanding Voting Stock, is the sole stockholder of OptiCare, P.C.
Pursuant to that agreement, OptiCare, P.C. employs medical personnel and
performs all ophthalmology and optometry services at the Company's facilities in
Connecticut. The Company selects and provides the facilities at which the
services are performed and it is the exclusive provider of all administrative
and support services for the facilities for which OptiCare, P.C. provides
medical personnel and performs all ophthalmology and optometry services pursuant
to this agreement. The Company bills and receives payments for services rendered
by the medical personnel of OptiCare, P.C., which totaled approximately $15.7
million in 2002, and OptiCare P.C. pays its physicians compensation for such
medical services rendered, which totaled approximately $7.3 million in 2002.
These amounts were included in the consolidated revenue and expense,
respectively, of the Company for the year ended December 31, 2002. The Company
paid approximately $7.4 million to OptiCare, P.C. under this agreement in 2002.
The Company owns all the rights to the "OptiCare" name and, under the terms of
the agreement, if the agreement with OptiCare, P.C. is terminated, OptiCare,
P.C. must change its name and discontinue using the OptiCare name. The agreement
expired on December 1, 2002, but automatically renews for successive two year
terms unless either party terminates the agreement at least 180 days before the
next renewal date.
OPTOMETRIC EYE CARE CENTER, P.A.
On August 12, 2002, the Company sold substantially all of the assets
relating to the professional optometry practice locations and retail optical
business it owned or operated in the State of North Carolina to Optometric Eye
Care Center, P.A., a professional association owned by two of the Company's
former officers, Drs. Allan L.M. Barker and D. Blair Harrold. In connection with
the consummation of the sale, Drs. Barker and Harrold resigned their positions
with the Company. The sale price was approximately $5.7 million, consisting of
$4.2 million of cash, a $1.0 million promissory note, due and payable on August
1, 2007, the return of 1.3 million shares of the Company's Common Stock formerly
held by Drs. Barker and Harrold with an estimated fair market value of
approximately $0.4 million and assumption by Optometric Eye Care Center, P.A. of
$0.1 million of certain liabilities. The purchase price and all negotiations
relating to the transaction were on an arm's length basis.
The sale resolved certain differences which had arisen: (a) between the
Company and Optometric Eye Care Center, P.A. relating to the performance by each
of the parties of their obligations under a Professional Services and Support
Agreement, which they had entered into in August 1999; and (b) between
PrimeVision Health, Inc. and Consolidated Eye Care, Inc. (subsidiaries of the
Company) and Optometric Eye Care Center, P.A., and Drs. Barker and Harrold
arising from a Settlement Agreement which those parties had entered into in
April 1999.
The sale was unanimously approved by the North Carolina State Board of
Examiners in Optometry. The sale ended the Company's involvement in certain
regulatory proceedings convened by the North Carolina State Board of Examiners
in Optometry in exercise of its continuing authority to oversee implementation
of a consent order entered in December 1999 with Optometric Eye Care Center,
P.A.
CERTAIN LEASES
The Company, through its subsidiaries, was, during 2002, party to
certain leases with entities in which present or former officers of the Company
have ownership interests. All such leases which were in effect during all or
part of 2002 are listed below.
1. OptiCare Eye Health Centers, Inc. is the tenant under a Lease Agreement
dated September 1, 1995 with O.C. Realty Associates Limited Partnership, as
landlord. The leased premises are located in New Milford,
17
Connecticut and are used for the practice of ophthalmology and optometry
and incidental activities such as the sale of eyeglasses and corrective
lenses. The term of the lease is 15 years. In addition, OptiCare Eye Health
Centers, Inc. has guaranteed the mortgage of O.C. Realty Associates Limited
Partnership, the amount of which was approximately $57,000 as of December
31, 2002. Dean J. Yimoyines, M.D., Chairman of the Board and Chief
Executive Officer of the Company and John Yimoyines, brother of Dr.
Yimoyines each owns a 4.11% interest in O.C. Realty Associates Limited
Partnership. In 2002, OptiCare Eye Health Centers, Inc. paid $50,400 under
the lease.
2. OptiCare Eye Health Centers, Inc. is the tenant under a Lease Agreement
dated September 1, 1995 with French's Mill Associates, as landlord. The
leased premises are located in Waterbury, CT and are used for the practice
of ophthalmology and optometry, an ambulatory surgery center, and
incidental activities such as the sale of eyeglasses and corrective lenses.
The term of the lease is fifteen years. Linda Yimoyines, wife of Dr.
Yimoyines, and John Yimoyines each owns a 14.28% interest in French's Mill
Associates. In 2002, OptiCare Eye Health Centers, Inc. paid $762,819 under
the lease.
3. OptiCare Eye Health Centers, Inc. is the tenant under a Lease dated
September 30, 1997 with French's Mill Associates II, LLP, as landlord. The
leased premises are located in Waterbury, CT and are the location of the
Company's main headquarters. The term of the lease is fifteen years. Linda
Yimoyines and John Yimoyines each owns a 12.5% interest in French's Mill
Associates II, LLP. In 2002, OptiCare Eye Health Centers, Inc. paid
$139,044 under the lease.
4. OptiCare Eye Health Centers, Inc. is also the tenant under a second Lease
Agreement dated September 1, 1995 with French's Mill Associates II, L.L.P.
as landlord. The leased premises are located in Waterbury, CT and are also
part of the Company's main headquarters. The term of the lease is fifteen
years. Linda Yimoyines and John Yimoyines each owns a 12.5% interest in
French's Mill Associates II, LLP. In 2002, OptiCare Eye Health Centers,
Inc. paid $88,503 under the lease.
5. O.N.B. Associates owns approximately a 25% interest in Cross Street Medical
Building Partnership, the landlord under a lease dated March 1, 2001. The
leased premises are located in Norwalk, CT and are used for the practice of
ophthalmology and optometry and incidental activities such as the sale of
eyeglasses and corrective lenses. The term of the lease is five years Linda
Yimoyines and John Yimoyines each owns an 11% interest in O.N.B.
Associates. In 2002, OptiCare Eye Health Centers, Inc. paid $129,400 under
the lease.
6. PrimeVision Health, Inc., as a result of a merger with Cohen Systems, Inc.
(now known as CC Systems), is a tenant under a Lease Agreement with Stephen
Cohen, an officer of the Company, and Bente Jensen, Mr. Cohen's wife. The
leased premises are located in Largo, FL and are used as the office for CC
Systems' operations. The lease term is five years beginning October 1,
1999. In 2002, PrimeVision Health, Inc. paid $29,264 under the lease.
Subsidiaries and affiliates of the Company were, until August 2002,
parties to 17 leases with entities that are owned in part by Drs. D. Blair
Harrold and Allan L.M. Barker, both of whom served as executive officers of the
Company until August 2002. Each of these leases involved the professional
optometry practice locations and retail optical business the Company owned or
operated in the State of North Carolina which were sold to Optometric Eye Care
Center, P.A. in August 2002. In connection with that sale, Optometric Eye Care
Center, P.A. assumed from the Company any obligations the Company or its
subsidiaries or affiliates may have had as lessee under those leases. The leased
premises were used as executive offices, for the practice of optometry and for
the sale of eyeglasses and corrective lenses. For the seven months ended
July 31, 2002, the Company paid an aggregate of $741,137 under
these leases.
A subsidiary of the Company remains a guarantor with respect to two
leases where the lessee is an entity owned by Drs. Harrold and Barker. The
leased premises are used for the practice of optometry and for the sale of
18
eyeglasses and corrective lenses and expire in 2005. Aggregate annual rent under
the leases is $194,392. Each of the guarantees and its underlying lease involved
the professional optometry practice locations and retail optical business the
Company owned or operated in the State of North Carolina which were sold to
Optometric Eye Care Center, P.A. in August 2002. Although, in connection with
that sale, Optometric Eye Care Center, P.A. assumed from the Company any
obligations the Company or its subsidiaries or affiliates may have had as lessee
under those leases, Optometric Eye Care Center, P.A. and the Company were unable
to obtain landlord consent to the assignment of the Company's guarantees with
respect to the leases.
CONSULTING AGREEMENTS
In June 2002, the Company entered into a consulting agreement with
Melvin Meskin, a director of the Company. The consulting agreement expired on
February 28, 2003 and a new agreement was entered into effective March 1, 2003.
As of March 31, 2003, the Company had paid an aggregate of $54,300 to Mr. Meskin
in consideration of consulting services under these agreements.
In April 2001, the Company entered into a consulting agreement with
Morris-Anderson & Associates, Ltd., a consulting firm of which Alan J. Glazer is
a Principal. Mr. Glazer was a director of the Company from November 1, 2001
through January 25, 2002. This consulting agreement ended in June 2002. During
2002, the Company paid $131,845 to Morris-Anderson in consideration of
consulting services under that agreement.
THE CAPITAL RESTRUCTURING LOANS
Linda Yimoyines, wife of Dr. Yimoyines, participated in the Company's
January 2002 capital restructuring by lending the Company $100,000 on a
subordinated basis and purchasing 285,714 shares of Series B Preferred Stock
(convertible into 2,857,140 shares of Common Stock) at a price of $400,000. The
Series B Preferred Stock accrues dividends at an annual rate of 12.5%. The
entire principal amount of the subordinated loan is due to be paid on January
25, 2012. Ms. Yimoyines is entitled to interest at 11.5% per year under the
terms of the loan. With certain exceptions, interest on the loan is payable
currently. In connection with the loan, she received warrants to purchase
125,000 shares of Common Stock of the Company at a price of $0.14 per share. Ms.
Yimoyines exercised these warrants in December 2002.
Messrs. Bertrand and Hoffman, directors of the Company, are also
officers of Palisade Capital Management, LLC, an affiliate of Palisade
Concentrated Equity Partnership, LP ("Palisade"). Palisade, which was, until
January 25, 2002, a holder of approximately 16% of the Common Stock of the
Company and which now holds approximately 77.6% of the voting power of the
Voting Stock of the Company, participated in the capital restructuring by
lending the Company $13.9 million on a subordinated basis and purchasing
2,571,429 shares of Series B Preferred Stock (convertible into 25,714,290 shares
of Common Stock) at a price of $3.6 million. The Series B Preferred Stock
accrues dividends at an annual rate of 12.5%. The entire principal amount of the
loan is due to be paid on January 25, 2012. Palisade is entitled to interest at
11.5% per year under the terms of the loan. With certain exceptions, interest on
the subordinated loan is payable currently. In connection with the loan,
Palisade received warrants to purchase 17,375,000 shares of Common Stock of the
Company at a price of $0.14 per share. Palisade exercised these warrants in
December 2002.
PARTICIPATIONS IN THE ALEXANDER ENTERPRISE BRIDGE LOAN
In January 2001, Dr. Yimoyines participated as a lender in the amount
of $50,000 in an aggregate $500,000 increase (via amendment) in a bridge loan
originally made to the Company in October 2000 in the amount of $2.25 million by
Alexander Enterprise Holdings Corp. Dr. Yimoyines' $50,000 participation was
assigned to his wife, Linda. Ms. Yimoyines was entitled to interest at the
London Interbank Offered Rate plus 2.25% per year under the terms of the loan.
In connection with the loan, Ms. Yimoyines received warrants to purchase 50,000
shares of Common Stock at a price of $0.40 per share. In connection with the
January 2002 capital restructuring, Ms. Yimoyines received 38,646.3 shares of
Series B Preferred Stock, convertible into 386,463 shares of the Company's
Common Stock, as payment in full for the amounts owed to her under the Alexander
Enterprise bridge loan.
19
Palisade also participated as a lender in the amount of $400,000 in the
Alexander Enterprise bridge loan as it was increased in January 2001. Palisade
was entitled to interest at the London Interbank Offered Rate plus 2.25% per
year under the terms of the loan. In connection with the loan, Palisade received
warrants to purchase 400,000 shares of Common Stock at a price of $0.40 per
share. In connection with the January 2002 capital restructuring, Palisade
received 309,170.5 shares of Series B Preferred Stock, convertible into
3,091,705 shares of the Company's Common Stock, as payment in full for the
amounts owed to it under the Alexander Enterprise bridge loan.
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE FROM 75,000,000 SHARES TO 125,000,000 SHARES THE AGGREGATE NUMBER
OF SHARES OF COMMON STOCK AUTHORIZED TO BE ISSUED BY THE COMPANY
The Board of Directors has determined that it is advisable to increase
the Company's authorized Common Stock from 75,000,000 shares to 125,000,000
shares, and has voted to recommend that the Company's stockholders adopt an
amendment to the Company's Certificate of Incorporation effecting the proposed
increase. The full text of the proposed amendment to the Certificate of
Incorporation is attached to this Proxy Statement as Annex A.
As of the Record Date, approximately 30,038,990 shares of Common Stock
were issued and outstanding, approximately 32,049,598 shares of Common Stock
were reserved for issuance upon conversion of the outstanding Series B Preferred
Stock, approximately 9,332,066 shares of Common Stock were reserved for issuance
upon the exercise of outstanding warrants and options granted under the
Company's stock plans and approximately 3,207,725 shares of Common Stock were
reserved for future grants under the Company's stock plans. Accordingly, based
on the 75,000,000 shares of Common Stock that the Company is currently
authorized to issue, a total of approximately 371,621 shares of Common Stock are
still available for future issuance.
The Board of Directors believes it is in the best interests of the
Company to have sufficient additional authorized but unissued shares of Common
Stock available in order to provide flexibility for corporate action in the
future. Management believes that the availability of additional authorized
shares for issuance from time to time in the Board of Directors' discretion in
connection with possible acquisitions of other companies, future financings,
investment opportunities, stock splits or dividends or for other corporate
purposes is desirable in order to avoid repeated separate amendments to the
Certificate of Incorporation and the delay and expense incurred in holding
special meetings of the Company's stockholders to approve such amendments. There
are at present no specific understandings, arrangements or agreements with
respect to any future acquisitions or future financings that would require the
Company to issue a material amount of new shares of its Common Stock. The Board
of Directors believes, however, that the currently available unissued shares do
not provide sufficient flexibility for corporate action in the future.
No further authorization by vote of the Company's stockholders will be
solicited for the issuance of the additional shares of Common Stock proposed to
be authorized, except as might be required by law, regulatory authorities or
rules of the American Stock Exchange or any other stock exchange on which the
Company's shares may then be listed. The issuance of additional shares of Common
Stock could have the effect of diluting existing stockholder earnings per share,
book value per share and voting power.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF
THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE
FROM 75,000,000 SHARES TO 125,000,000 SHARES THE AGGREGATE NUMBER
OF SHARES OF COMMON STOCK AUTHORIZED TO BE ISSUED BY THE COMPANY.
20
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP has audited the financial statements
of the Company for the year ended December 31, 2002. The Board of Directors
desires to continue the services of Deloitte & Touche LLP for the current year
ending December 31, 2003. Accordingly, the Board of Directors will recommend at
the Meeting that the stockholders ratify the appointment by the Board of
Directors of the firm of Deloitte & Touche LLP to audit the financial statements
of the Company for the current year. One or more representatives of that firm
will be present at the Meeting, shall have the opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions. In the event the stockholders do not ratify the appointment of
Deloitte & Touche LLP, the appointment will be reconsidered by the Audit
Committee and the Board of Directors.
AUDIT AND NON-AUDIT FEES
The following table presents fees for professional audit services
rendered by Deloitte & Touche LLP for the audit of the Company's consolidated
financial statements for the years ended December 31, 2001, and December 31,
2002, and fees billed for other services rendered by Deloitte & Touche LLP
during those periods:
2001 2002
----------------- -----------------
Audit fees $ 312,100 $ 343,000
Audit-related fees 101,600 73,988
Tax fees - 3,800
All other fees - -
----------------- -----------------
Total $ 413,700 $ 420,788
================= =================
In the above table, in accordance with new Securities and Exchange
Commission definitions and rules which the Company has elected to adopt for this
Proxy Statement, "audit fees" are fees the Company paid Deloitte & Touche LLP
for professional services for the audit of the Company's consolidated financial
statements included in the Company's Annual Report on Form 10-K and review of
financial statements included in the Company's Quarterly Reports on Form 10-Q,
or for services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements; "audit-related fees" are fees
billed by Deloitte & Touche LLP for assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
financial statements and primarily represent services provided in connection
with the Company's capital restructuring and discontinued operations; "tax fees"
are fees for tax compliance, tax advice, and tax planning; and "all other fees"
are fees billed by Deloitte & Touche LLP to the Company for any services not
included in the first three categories.
The Audit Committee has considered whether the provision of non-audit
services by Deloitte & Touche LLP is compatible with maintaining their
independence and has concluded that it is.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP.
21
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present any other matter for action at the Meeting other than as set
forth in the Notice of Annual Meeting and this Proxy Statement. If any other
matters properly come before the Meeting, it is intended that the shares
represented by the proxies will be voted, in the absence of contrary
instructions, in the discretion of the persons named in the proxy.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
persons who own more than 10% of the Company's capital stock to file with the
Securities and Exchange Commission, the American Stock Exchange and the Company
reports regarding their ownership of the Company's capital stock. Based solely
upon reports and representations submitted by the directors, executive officers
and holders of more than 10% of the Company's capital stock, the Company
believes that all persons filed the required reports during the year ended
December 31, 2002, except for Messrs. Bertrand and Hoffman, each of whom did not
timely file a Form 4 relating to Palisade's exercise of warrants in December
2002.
ANNUAL REPORT
A copy of the Company's 2002 Annual Report to Stockholders is being
mailed to stockholders along with this Proxy Statement. Any stockholder who has
not received a copy of the 2002 Annual Report to Stockholders and wishes to do
so should contact the Company's Corporate Secretary by mail at OptiCare Health
Systems, Inc., 87 Grandview Avenue, Waterbury, Connecticut 06708 or by telephone
at (203) 596-2236.
FORM 10-K
The Company will provide, without charge, to each stockholder as of the
Record Date, on the written request of the stockholder, a copy of the Company's
Annual Report on Form 10-K for the year ended December 31, 2002, including the
financial statements and schedules, as filed with the Securities and Exchange
Commission. Stockholders should direct the written request to the Company's
Corporate Secretary at OptiCare Health Systems, Inc., 87 Grandview Avenue,
Waterbury, Connecticut 06708 or by telephone at (203) 596-2236.
PROPOSALS BY STOCKHOLDERS
Any proposal of a stockholder intended to be presented at the Annual
Meeting of Stockholders to be held in 2004 must be received by the Company no
later than December 22, 2003, to be considered for inclusion in the Proxy
Statement and form of proxy for the 2004 Annual Meeting. Proposals must comply
with Rule 14a-8 promulgated by the Securities and Exchange Commission pursuant
to the Exchange Act. If the Company does not receive notice of any matter to be
considered for presentation at the 2004 Annual Meeting, although not included in
the proxy statement, by March 7, 2004, management proxies may confer
discretionary authority to vote on the matters presented at the 2004 Annual
Meeting by a stockholder in accordance with Rule 14a-4 under the Securities
Exchange Act of 1934, as amended. All stockholder proposals should be sent to
the Company's Corporate Secretary at OptiCare Heath Systems, Inc. 87 Grandview
Avenue, Waterbury, Connecticut 06708.
FOR THE BOARD OF DIRECTORS
Christopher J. Walls
Vice President, General Counsel and Secretary
22
APPENDIX A
----------
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
OPTICARE HEALTH SYSTEMS, INC.
It is hereby certified that:
FIRST: The name of the corporation is OptiCare Health Systems, Inc. (the
"Corporation").
SECOND: The Certificate of Incorporation of the Corporation, as amended to
date, is hereby further amended by striking out subsection (i) of
Article Fourth in its entirety and by substituting in lieu thereof
the following:
"(i) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 130,000,000
shares, consisting of 125,000,000 shares of Common Stock,
$.001 par value per share (the "Common Stock") and 5,000,000
shares of Preferred Stock, $.001 par value per share (the
"Preferred Stock")."
THIRD: The amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware.
EXECUTED, effective as of this ___ day of May, 2003.
OPTICARE HEALTH SYSTEMS, INC.
By: ________________________________
Dean J. Yimoyines, Chairman
A-1
PRELIMINARY COPY FILED PURSUANT TO RULE 14a - 6(a)
OPTICARE HEALTH SYSTEMS, INC.
87 GRANDVIEW AVENUE
WATERBURY, CONNECTICUT 06708
ANNUAL MEETING OF STOCKHOLDERS, MAY 19, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice and Proxy
Statement dated April __, 2003 in connection with the 2003 Annual Meeting of
Stockholders and hereby appoints Dean J. Yimoyines and Christopher J. Walls, as
proxies each with full power to act alone and of substitution, and hereby
authorizes them to appear and vote as designated below, all shares of Common
Stock of OptiCare Health Systems, Inc. held on record by the undersigned on
March 27, 2003 at the Annual Meeting of Stockholders to be held on May 19, 2003
at 10:30 a.m. and any adjournments or postponements thereof and upon any and all
matters which may properly be brought before the meeting or any adjournments or
postponements thereof, thereby and hereby revokes all earlier proxies of the
undersigned.
The undersigned hereby directs this Proxy to be voted:
1. Election of directors:
For the election as directors of all nominees listed below [ ]
(except as marked to the contrary below)
or
WITHHOLD AUTHORITY to vote for all nominees listed below [ ]
Eric J. Bertrand
Norman S. Drubner, Esq.
Mark S. Hoffman
Richard L. Huber
Clark A. Johnson
Melvin Meskin
Mark S. Newman
Dean J. Yimoyines, M.D.
(Instructions: To withhold authority to vote for any of the above listed
nominees, please strike a line through that individual's name.)
2. Approval of the amendment to the Certificate of Incorporation.
For:/ / Against:/ / Abstain:/ /
3. Approval of independent auditors.
For:/ / Against:/ / Abstain:/ /
4. In their discretion, the named proxies may vote on such other business
as may properly come before the Annual Meeting, or any adjournments or
postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH
THE STOCKHOLDER'S SPECIFICATIONS ABOVE. THE PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS TO THE UNDERSIGNED.
Date:___________, 2003
-------------------------
Signature of Stockholder
-------------------------
Signature if held jointly
NOTE: PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. IF SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN OR OTHER REPRESENTATIVE
CAPACITY, PLEASE GIVE FULL TITLE. IF SIGNING ON BEHALF OF A CORPORATION,
PARTNERSHIP OR OTHER LEGAL ENTITY, PLEASE SIGN IN CORPORATE, PARTNERSHIP OR
ENTITY NAME AND GIVE FULL TITLE.