<PAGE> 1
As filed with the Securities and Exchange Commission on November 26, 1996
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CONTINUCARE CORPORATION
(Exact name of registrant as specified in its charter)
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FLORIDA 59-2716023
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
100 SOUTHEAST SECOND STREET, 36TH FLOOR
MIAMI, FLORIDA 33131
(305) 350-7515
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-----------------
CHARLES M. FERNANDEZ
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
CONTINUCARE CORPORATION
100 SOUTHEAST SECOND STREET, 36th FLOOR
MIAMI, FLORIDA 33131
(305) 350-7515
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies of communications to:
REBECCA R. ORAND, ESQUIRE
GREENBERG, TRAURIG, HOFFMAN,
LIPOFF, ROSEN & QUENTEL, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
TELEPHONE: (305) 579-0557
FACSIMILE: (305) 579-0717
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APPROXIMATE DATE OF COMMENCEMENT OF
PROPOSED SALE TO THE PUBLIC: From time to time
after this Registration Statement becomes
effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED
AMOUNT MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE (1) PRICE (1) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.0001 par value 8,500,000 shares $10.25 $87,125,000 $26,401.52
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee and
pursuant to Rule 457(c), based on the closing price for the
Registrant's Common Stock on November 22, 1996, as reported by the
American Stock Exchange.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
SUBJECT TO COMPLETION
DATED NOVEMBER 26, 1996
8,500,000 SHARES
[LOGO]
COMMON STOCK
---------------------
This Prospectus relates to an aggregate of 8,500,000 shares (the
"Shares") of Common Stock, par value $.0001 per share (the "Common Stock"), of
Continucare Corporation, a Florida corporation (the "Company" or "Continucare"),
proposed to be sold from time to time by certain shareholders of the Company
(the "Selling Shareholders"). See "Selling Shareholders." The Company will not
receive any proceeds from the sale of the Shares by the Selling Shareholders.
The Company has registered the Shares under the Securities Act of 1933,
as amended (the "Securities Act"), for sale by the Selling Shareholders. See
"Selling Shareholders." The Selling Shareholders may from time to time sell all
or a portion of the Shares offered hereby in one or more transactions in the
over-the-counter market, on the American Stock Exchange ("AMEX"), on any
exchange on which the Common Stock may then be listed, in negotiated
transactions or otherwise, or a combination of such methods of sale, at market
prices prevailing at the time of sale or prices related to such prevailing
market prices or at negotiated prices. The Selling Shareholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Shareholders and/or purchasers of
the Shares for whom they may act as agent (which compensation may be in excess
of customary commissions). The Selling Shareholders and any participating
broker-dealers may be deemed to be "underwriters" as defined in the Securities
Act. Neither the Company nor the Selling Shareholders can presently estimate the
amount of commissions or discounts, if any, that will be paid by the Selling
Shareholders on account of their sales of the Shares from time to time. The
Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including certain liabilities under the Securities Act.
See "Plan of Distribution."
The Common Stock is quoted on the AMEX under the symbol "CNU." On
November 22, 1996, the closing price of the Common Stock on the AMEX was $10.25
per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES
OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROSPECTUS IS NOVEMBER __, 1996
<PAGE> 3
SUMMARY
On August 9, 1996, Zanart Entertainment Incorporated, a Florida
corporation ("Zanart"), signed a definitive Agreement and Plan of Merger (the
"Merger Agreement") with Zanart Subsidiary, Inc. ("ZSI"), a wholly-owned
subsidiary of Zanart, and Continucare Corporation, a Florida corporation.
Pursuant to the Merger Agreement, on September 11, 1996 (the "Closing Date"),
ZSI merged (the "Merger") with and into Continucare Corporation. Upon the
consummation of the Merger, and pursuant to the terms of the Merger Agreement,
(i) each issued and outstanding share of common stock of Continucare Corporation
converted into one share of Zanart common stock, par value $.0001 per share (the
"Common Stock"), the separate existence of ZSI terminated and Continucare
Corporation became a wholly-owned subsidiary of Zanart, (ii) Zanart agreed to
sell or otherwise dispose of its assets (other than cash) and discharge all
liabilities relating to Zanart's existing licensing business prior to December
11, 1996 and (iii) Zanart's Board of Directors and management became comprised
of designees of Continucare Corporation. On October 8, 1996, Zanart changed its
corporate name to "Continucare Corporation." All references herein to Zanart and
the Zanart Business refer to the historical licensing operations of Zanart
before giving effect to the Merger, and all references to Continucare or the
Company and the Continucare or the Company Business refer to the mental and
physical rehabilitation health care business of Continucare and its subsidiaries
prior to and after giving effect to the Merger.
CONTINUCARE BUSINESS
Continucare develops and manages mental and physical rehabilitation
health care programs that offer a continuum of mental and physical
rehabilitation health services ranging from partial hospitalization care to day
treatment and outpatient services. Continucare offers a comprehensive mental
health care product line by providing the following types of services to general
acute care and psychiatric hospitals, community mental health centers ("CMHCs")
and comprehensive outpatient rehabilitation facilities ("CORFs"): clinical
development, marketing, financial management, operational oversight, human
resources support, quality assurance and outcome measurement. Through its
ability to organize and provide such services Continucare is able to develop and
manage for its clients the series of mental and physical rehabilitation health
care programs that comprise a continuum of mental and physical rehabilitation
health care services.
At November 1, 1996, Continucare had management contracts with five
general acute care hospitals, one free-standing psychiatric hospital, 16 CMHCs
and one CORF. As of such date, 22 of such contracts were in operation covering
various treatment programs.
Continucare's strategy is to (i) continue to develop all elements of
the continuum of mental health and physical rehabilitation services provided to
existing and new clients, (ii) aggressively pursue new management contracts for
the provision of mental and physical health services, (iii) emphasize its
outcome measurement system ("Outcome Measurement System") as an additional
service and (iv) expand the types of services offered by it to include physical
and medical rehabilitation services, home health services and primary care
services.
ZANART BUSINESS
Zanart designs, publishes, packages and markets wall decor and
collectible art which incorporate popular images from motion pictures,
television and animation. Zanart's products include framed art, matted prints,
lithographs and serigraphs, calendars, posters, blueprints, movie and television
card portfolio sets and animation sericels which are produced pursuant to
licensing or other agreements with entertainment companies. The images for the
printed products are provided to Zanart by the licensor or designed by Zanart,
and the products are printed, manufactured and framed for Zanart by
manufacturers according to Zanart's instructions and specifications. Zanart's
product line consists of over 200 individual products. Zanart's products are
sold through retail chain stores, independent retail stores, catalogs and a
television shopping network. The future of Zanart's licensing business is
subject to the terms of the Merger Agreement as described above.
----------------------
Continucare's executive offices are located at 100 Southeast Second
Street, 36th Floor, Miami, Florida 33131. Continucare's telephone number is
(305) 350-7515.
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<PAGE> 4
RISK FACTORS
An investment in the Common Stock offered hereby involves certain
risks. Prospective purchasers should carefully consider the following factors,
in addition to the other information contained in this Prospectus, when
evaluating the Company and its business before making an investment decision.
This Prospectus contains certain statements of a forward-looking nature relating
to future events or the future financial performance of the Company. Prospective
investors are cautioned that such statements are only predictions and that
actual events or results may differ materially. In evaluating such statements,
prospective investors should specifically consider the various factors
identified in this Prospectus, including the matters set forth below, which
could cause actual results to differ materially from those indicated by such
forward-looking statements.
Limited Operating History. Continucare has been involved in its current
business since February 1996, and has had limited operations to date. The
Company's prospects must be considered in light of the risks, delays, expenses
and difficulties frequently encountered in connection with an early-stage
business in a highlyregulated, competitive environment. No assurance can be
given that the Company will successfully implement any of its plans in a timely
or effective manner or whether the Company will be able to generate significant
revenues or continue to operate profitably.
Shares Eligible for Future Sale. Future sales of Common Stock in the
public market could adversely affect the market price of the Common Stock.
Continucare currently has 11,202,983 shares of Common Stock outstanding,
assuming no exercise of currently outstanding options and warrants. Pursuant to
the Merger Agreement, in addition to the shares of Common Stock offered hereby,
the Company has registered 920,000 shares of Common Stock issuable upon exercise
of Series A Warrants. Although there is presently a public market for the Common
Stock, there can be no assurance (and it is not presently likely) that such
market will have sufficient trading activity to permit holders of Common Stock
to sell their shares in desired amounts, or at desired prices, or that such
market will be sustained, and sales of substantial amounts of shares is likely
to have a material adverse effect on the market price for the shares of Common
Stock. Pursuant to the Merger Agreement, in addition to the shares of Common
Stock offered hereby, the Company will register an aggregate of 530,000 shares
of Common Stock issuable upon exercise of outstanding Representative Unit
Purchase Options, Representative Warrants and options.
Risks Relating to Acquisition Strategy. The Company has expanded and
intends to continue to expand its operations through acquisitions of health
related companies. The Company continually engages in evaluations of potential
acquisitions; however, there are currently no definitive agreements, letters of
intent or agreements in principle with respect to any material acquisition. In
implementing this acquisition strategy, the Company will compete with other
potential acquirors, some of which may have greater financial or operational
resources than the Company. Competition for acquisitions may intensify due to
the ongoing consolidation in the health care industry, which may increase the
costs of capitalizing on such opportunities. Consummation of acquisitions could
result in the incurrence or assumption by the Company of additional indebtedness
and the issuance of additional equity. The issuance of shares of Common Stock
for an acquisition may result in dilution to shareholders. The financial
performance of the Company is and will continue to be subject to various risks
associated with the acquisition of businesses, including the expenses associated
with the integration of the acquired businesses, difficulties in assimilating
the operations of the acquired businesses and diversion of management resources.
Also, as the Company enters into new geographic markets, the Company will be
required to comply with laws and regulations of states that differ from those in
which the Company's operations are currently conducted. There can be no
assurance that the Company will be able to effectively establish a presence in
these new markets. While many of the expenses arising from the Company's efforts
in these areas may have a negative effect on operating results until such time,
if at all, as these expenses are offset by increased revenues, there can be no
assurance that the Company will be able to implement its acquisition strategy,
or that this strategy will ultimately be successful.
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Potential Volatility. There has been significant volatility in the
market price of securities of health care companies that often has been
unrelated to the operating performance of such companies. The Company believes
that certain factors, such as legislative and regulatory developments, quarterly
fluctuations in the actual or anticipated results of operations of the Company,
lower revenues or earnings in the financial results of the Company than those
anticipated by securities analysts, the overall economy and the financial
markets, could cause the price of the Common Stock to fluctuate substantially.
Reimbursement Considerations. The Company receives fees for its
services directly from its client hospitals and CMHCs. The Company's clients
receive reimbursement under either the Medicare or Medicaid programs or payments
from insurers, self-funded benefit plans or other third-party payors for mental
health and physical rehabilitation services provided by programs managed by the
Company. As a result, the availability of such reimbursement or payment could
have a significant impact on the decisions of the Company's existing and
prospective clients to offer mental and physical rehabilitation health services.
The Medicare and Medicaid programs are subject to statutory and
regulatory changes, retroactive and prospective rate adjustments, administrative
rulings and funding restrictions, any of which could have the effect of limiting
or reducing reimbursement levels to hospitals or CMHCs for mental health and
physical rehabilitation services provided by programs managed by the Company.
Because a substantial portion of the patients of the programs managed by the
Company are covered by Medicare, any changes which limit or reduce Medicare
reimbursement levels could have a material adverse effect on the Company's
clients and, in turn, on the Company. The Company cannot predict whether any
changes to such governmental programs will be adopted or, if adopted, the
effect, if any, that such changes will have on the Company. In addition, a
limited number of the Company's management contracts require the Company to
refund a portion of its fee if either Medicare denies reimbursement for an
individual patient treatment or if the fee paid to the Company is disallowed as
a reimbursable cost. Also, Medicare retrospectively audits cost reports of
client hospitals, CMHCs and CORF upon which Medicare reimbursement for services
rendered in the programs managed by the Company is based. Accordingly, at any
time, the Company could be subject to refund obligations to such clients for
prior period cost reports that have not been audited and settled at the date
hereof. Any significant decrease in Medicare reimbursement levels, the
imposition of significant restrictions on participation in the Medicare program,
or the disallowance by Medicare of any significant portion of the client
hospitals', CMHCs' and CORF's costs, including the fees paid or payable to the
Company, where the Company has a reimbursement denial repayment obligation,
could adversely affect the Company. There can be no assurance that hospitals,
CMHCs and CORFs, which offer health programs now or hereafter managed by the
Company will satisfy the requirements for participation in the Medicare or
Medicaid programs.
Payors, including Medicare and Medicaid, are attempting to manage
costs, resulting in declining amounts paid or reimbursed to hospitals for the
services provided. As a result, the Company anticipates that the number of
patients served by hospitals on a per diem, episodic or capitated basis will
increase in the future. There can be no assurance that if amounts paid or
reimbursed to hospitals, CMHCs and CORFs decline, it will not adversely affect
the Company.
At November 1, 1996, the Company managed 16 full-service mental health
programs. The Company's clients are reimbursed by Medicare for a substantial
majority of the partial hospitalization services provided by such programs. The
Health Care Financing Administration ("HCFA") has recently advised fiscal
intermediaries who process Medicare reimbursements to review more closely
partial hospitalization mental health programs. As a result, some fiscal
intermediaries have initiated focused medical reviews of partial hospitalization
mental health programs. There can be no assurance as to the effects of any
focused medical review that hereafter may be conducted of programs managed by
the Company.
Reliance on Key Customers; Related Party Issues. At November 1, 1996,
the Company had management contracts with five general acute care hospitals
directly or indirectly owned by ORNDA Healthcorp ("ORNDA").
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<PAGE> 6
Although these hospitals collectively accounted for less than 10% of the
combined net revenues of the Company through June 30, 1996, this percentage is
expected to increase. The termination or non-renewal of all or a substantial
part of the management contracts with hospitals owned by ORNDA could adversely
affect the Company's business, financial condition or results of operations.
Medicare regulations limit reimbursement for mental health and other
health care charges paid to related parties. A party is considered "related" to
a provider if it is deemed to be controlled by the provider. One test for
determining control for this purpose is whether the percentage of the total
revenues of the party received from services rendered to the provider is so high
that it effectively constitutes control. It is possible that such regulations
could limit the number of management contracts that the Company could have with
a particular client.
Increased Scrutiny of Health Care Industry. The health care industry
has in general been the subject of increased government and public scrutiny in
recent years, which has focused on the appropriateness of the care provided,
referral and marketing practices and other matters. Increased media and public
attention has recently been focused on the mental health services industry in
particular as a result of allegations of fraudulent practices related to the
nature and duration of patient treatments, illegal remuneration and certain
marketing, admission and billing practices by certain mental health providers.
The alleged practices have been the subject of federal and state investigations,
as well as other legal proceedings. The Company is unable to predict the effect
that publicity in general about the mental health services industry might have
on the Company. There can be no assurance that the acute care hospitals, CMHCs
and CORFs, which offer health care programs now or hereafter managed by the
Company, will not be subject to federal and state review or investigation from
time to time.
Contract Terms and Renewals. The revenues of the Company are derived
from management contracts with general acute care and psychiatric hospitals,
CMHCs and a CORF. These contracts have initial terms of 3 to 15 years and many
have automatic renewal terms subject to termination by either party.
Substantially all of the Company's management contracts may be terminated by
either party without cause upon advance notice of between 30 and 180 days
depending on the particular contract. In addition, such contracts generally
provide for early termination either by the client hospital, CMHC or CORF for
"cause." The continued success of the Company is subject to its ability to renew
or extend existing management contracts and obtain new management contracts.
Contract renewals and extensions are likely to be subject to competing proposals
from other contract management companies as well as consideration by certain
hospitals to convert their mental health programs from independently managed
programs to programs operated internally or to terminate their mental health
programs in order to reassign patient beds for other health care purposes. There
can be no assurance that any hospital, CMHC or CORF will continue to do business
with the Company following expiration of its management contract or earlier if
the related management contract is terminated either with or without cause. In
addition, any changes in the Medicare program which have the effect of limiting
or reducing reimbursement levels for health services provided by programs
managed by the Company could result in the early termination of existing
management contracts and would adversely affect the ability of the Company to
renew or extend existing management contracts and to obtain new management
contracts. The termination or non-renewal of a material number of management
contracts could result in a significant decrease in the Company's revenues and
could have a material adverse effect on the Company's business, financial
condition or results of operations.
Government Regulation. The federal government and all states in which
the Company operates regulate certain aspects of the mental health and physical
rehabilitation services provided by programs managed by the Company. In
particular, the development and operation of hospital facilities is subject to
federal, state and local licensure and certification laws. Hospital facilities
are subject to periodic inspection by governmental and other authorities to
assure compliance with the standards established for continued licensure under
state law and certification under the Medicare and Medicaid programs. Many
states have adopted certificate of need or similar health planning laws that
generally require state agency approval of certain new health care services or
capital expenditures. A client's failure to obtain or renew any required
regulatory approvals or licenses could prevent
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<PAGE> 7
such hospital, CMHC or CORF from offering mental and physical rehabilitation
health services or receiving Medicare and Medicaid payments.
The Company is subject to federal and state laws that prohibit certain
direct and indirect payments intended to induce or encourage the referral of
patients to, or the recommendation of, a particular provider of items or
services. In addition, certain federal and state laws have recently been enacted
to prohibit physician referrals for certain "designated health services"
rendered to patients by a physician who has certain financial relationships with
the provider. Although the Company believes that its contractual arrangements
with its client hospitals, CMHCs, CORF and medical directors comply with such
laws, there can be no assurance that its activities will not be challenged by
regulatory authorities.
Dependence on Key Personnel. The Company's success is materially
dependent upon its executive officers and members of its management team, the
loss of one or more of whom could adversely affect the Company. The Company
has procured $2 million of "key-man" life insurance on Charles M. Fernandez,
the Company's Chairman, President and Chief Executive Officer. The Company's
success and growth strategy also depend on its ability to attract and retain
qualified clinical, management, marketing and other personnel. The Company
competes with general acute care hospitals and other health care providers for
the services of psychiatrists, psychologists, social workers, therapists and
other clinical personnel. Demand for such clinical personnel is high and they
are often subject to competing offers. There can be no assurance that the
Company will continue to be able to attract and retain the qualified personnel
necessary for its business.
Health Care Reform. Federal and state governments have recently focused
significant attention on health care reform intended to control health care
costs and to improve access to medical services for uninsured individuals. These
proposals include cutbacks to the Medicare and Medicaid programs and steps to
permit greater flexibility in the administration of Medicaid. It is uncertain at
this time what legislation on health care reform may ultimately be enacted or
whether other changes in the administration or interpretation of governmental
health care programs will occur. There can be no assurance that future health
care legislation or other changes in the administration or interpretation of
governmental health care programs will not have a material adverse effect on the
Company's business, prospects, financial condition or results of operations.
Competition. The mental and physical rehabilitation health contract
management services industry is highly competitive. The Company's competitors
include several national companies as well as many regional and local companies,
some of which have, or may obtain, greater financial and other resources than
the Company. In addition, the Company's current and prospective clients may
choose to operate mental and physical rehabilitation health programs themselves
rather than contract with the Company. Furthermore, general acute care
hospitals, the primary market for the Company's services, compete for patients
with other providers of mental and physical rehabilitation health services,
including freestanding psychiatric hospitals. The inability of the Company or
its client hospitals, CMHCs and CORF to compete effectively could have a
material adverse effect on the Company's business, financial condition or
results of operations.
Insurance. Continucare carries general liability, comprehensive
property damage, malpractice, workers' compensation and other insurance
coverages that management considers adequate for the protection of Continucare's
assets and operations. There can be no assurance, however, that the coverage
limits of such policies will be adequate. A successful claim against Continucare
in excess of its insurance coverage could have a material adverse effect on
Continucare.
Zanart Business. On May 18, 1995, Zanart consummated an initial public
offering of 920,000 units (each comprised of one share of Common Stock and one
warrant exercisable for one share of Common Stock at a price of $6.00) offered
at a price of $6.00 per unit. In connection with the Merger and prior to
December 11, 1996, Zanart has agreed to sell or otherwise dispose of its assets
(other than cash) and discharge all of its
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<PAGE> 8
liabilities relating to Zanart's existing licensing business. Following the
Merger, the Company will continue to be subject to certain business, financial
and legal risks relating to Zanart's activities prior to the Merger.
RECENT DEVELOPMENTS
MERGER TRANSACTION
Pursuant to the Merger, on September 11, 1996, ZSI merged with and into
Continucare Corporation. Each share of pre-Merger Continucare common stock
issued and outstanding immediately prior to the Closing Date was converted on
the Closing Date into one share of Common Stock. Under the terms of the Merger
Agreement, Zanart agreed to sell or otherwise dispose of its assets (other than
cash) and discharge all liabilities relating to Zanart's existing licensing
business prior to December 11, 1996. In addition, upon the consummation of the
Merger (i) Zanart's existing Board of Directors and management resigned and (ii)
Zanart's new Board of Directors and management became comprised of Continucare
designees.
The Merger Agreement contains various customary representations and
warranties of the parties thereto, and includes a post closing adjustment
provision requiring the issuance of a certain number of additional shares (the
"Additional Shares") of Common Stock to the holders of pre-Merger Continucare
common stock immediately prior to the Closing Date in the event that the Closing
Cash Balance (as such term is defined in the Merger Agreement) of Zanart is less
than $2,000,000 on December 12, 1996.
Prior to the Merger, Continucare Corporation effectuated the private
sale of an aggregate of 3,300,000 shares of pre-Merger Continucare common stock
which was completed on August 29, 1996. Further, Zanart agreed to register under
the Securities Act of 1933, as amended, (i) an aggregate of 1,462,500 shares of
Common Stock to be issued upon exercise of outstanding warrants and options,
(ii) the 8,300,000 shares of Common Stock issued in connection with the Merger,
and (iii) the Additional Shares.
EXPIRATION OF SERIES A WARRANTS
On November 15, 1996, the Company's Board of Directors accelerated the
expiration date of the Company's currently issued and outstanding Series A
Warrants (the "Warrants") to December 20, 1996 (the "Expiration Date").
Accordingly, each such Warrant not exercised on or before the Expiration Date
shall become void, and all rights thereto and all rights in respect thereof
shall cease on the Expiration Date. The Warrants are exercisable at a price of
$6.00 per share for each underlying share of Common Stock and relate to an
aggregate of 920,000 shares of Common Stock. See "Risk Factors -- Shares
Eligible for Future Sale."
CHANGE IN ACCOUNTANTS
The accounting firm of Arthur Andersen LLP ("Arthur Andersen")
represented the Company as its independent accountants during fiscal years 1995
and 1996 and was dismissed by the Company's Board of Directors on November 15,
1996. During the Company's two most recent fiscal years and subsequent interim
period, there were no disagreements between the Company and Arthur Andersen on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Arthur Andersen, would have caused it to make reference
to the subject matter of the disagreement in connection with its reports. Arthur
Andersen's reports on the financial statements of the Company for the two most
recent fiscal years did not contain an adverse opinion or disclaimer of opinion,
and were not qualified or modified as to uncertainty, audit scope, or accounting
principles. The Company's Board of Directors has appointed Deloitte & Touche LLP
as the Company's independent accountants for fiscal year 1997.
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<PAGE> 9
USE OF PROCEEDS
The Company will receive no proceeds from the sale of any or all of the
Shares of Common Stock being offered by the Selling Shareholders.
Expenses expected to be incurred by the Company in connection with this
offering are estimated to be approximately $91,000.
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<PAGE> 10
SELLING SHAREHOLDERS
Of the 8,500,000 Shares of Common Stock offered hereby, (i) 3,300,000
shares were acquired by certain of the below-identified Selling Shareholders
from Continucare Corporation in connection with its August 29, 1996 private
placement, (ii) 5,000,000 shares of Common Stock were held by certain of the
below-identified Continucare Corporation shareholders prior to the Merger, and
(iii) 200,000 additional Shares of Common Stock are anticipated to be issued pro
rata among the holders of pre-Merger Continucare common stock pursuant to the
terms of the Merger Agreement. Unless otherwise indicated, the following table
sets forth certain information with respect to the ownership of the Company's
Common Stock by each Selling Shareholder as of November 15, 1996, based on
information available to the Company.
<TABLE>
<CAPTION>
NUMBER OF
OWNERSHIP OF SHARES SHARES OWNERSHIP OF SHARES OF
NAME AND ADDRESS OF COMMON STOCK OFFERED COMMON STOCK
OF SELLING SHAREHOLDER PRIOR TO OFFERING** HEREBY** AFTER OFFERING***
- ------------------------------------ -------------------------- -------------- ----------------------------
SHARES PERCENTAGE SHARES PERCENTAGE
------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Angel, Rita 30,000 * 30,000 0 -
9 East 79th Street
New York, New York 10021
Armen Partners, L.P. 40,000 * 40,000 0 -
630 Fifth Avenue, #918
New York, New York 10111
Barr, Wallace R. 5,000 * 5,000 0 -
3 Fischer Road
Linwood, New Jersey 08221
Befeler, George 43,500 * 43,500 0 -
6395 S.W. 120th Street
Miami, Florida 33156
Bonavolonta, Jules 25,000 * 25,000 0 -
1 Lockhaven Court
Bedminster, New Jersey 07921
Cuervo, Mario S. 120,000 1.0% 120,000 0 -
7500 S.W. 8th Street, #307
Miami, Florida 33144
Delgado, Luis 40,000 * 40,000 0 -
3816 Matheson Avenue
Coconut Grove, Florida 33133
Dodson, Mark 5,000 * 5,000 0 -
510 East Pelham Drive
Smithville, New Jersey 08201
Fernandez, Charles M. (1) 1,626,767 14.5% 1,626,667 100 *
100 S.E. Second Street
36th Floor
Miami, Florida 33131
Fernandez Serna, Gabino 20,000 * 20,000 0 -
Cto. Juristas # 41
Satelite, Edo. Mex 53100
Fernandez, Miguel B. 20,000 * 20,000 0 -
125 Gavilan Avenue
Coral Gables, Florida 33143
First, Richard S. 5,000 * 5,000 0 -
19355 Turnberry Way, #9-B
Aventura, FL 33180
Freistat, Warren(2) 175,000 1.5% 175,000 0 -
Freistat & Associates, CPA
16211 Northeast 18th Avenue
N. Miami Beach, Florida 33162
Frost, Bernice and Joel 7,500 * 7,500 0 -
6874 Villas Drive West
Boca Raton, Florida 33433-5041
Frost, Joel P. 15,000 * 15,000 0 -
2408 N.W. 26th Street
Boca Raton, Florida 33431
Frost, M.D., Manuel 25,000 * 25,000 0 -
6874 Villas Drive West
Boca Raton, Florida 33433-5041
</TABLE>
- 9 -
<PAGE> 11
<TABLE>
<CAPTION>
NUMBER OF
OWNERSHIP OF SHARES SHARES OWNERSHIP OF SHARES OF
NAME AND ADDRESS OF COMMON STOCK OFFERED COMMON STOCK
OF SELLING SHAREHOLDER PRIOR TO OFFERING** HEREBY** AFTER OFFERING***
- ------------------------------------ -------------------------- -------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Frost Nevada Ltd. Partnership (3) 1,458,333 12.7% 925,000 533,333 4.7%
4400 Biscayne Blvd.
Miami, Florida 33137
Frost, Richard B. (4) 306,000 2.7% 100,000 206,000 1.8%
6727 Giralda Circle
Boca Raton, Florida 33433
Goldman, Michael S. & Denise 5,000 * 5,000 0 -
9078 Cavatina Place
Boynton Beach, Florida 33437
Goldstein, Barry (5) 1,626,667 14.5% 1,626,667 0 *
1900 N.E. 211th Street
North Miami Beach, Florida 33179
Greenberg, Patty 12,500 * 12,500 0 -
1925 Brickell Avenue, #1912
Miami, Florida 33129
Hanna, Mark J. (6) 307,000 2.7% 100,000 207,000 1.8%
3800 S. Ocean Drive
Apt. 612A
Hollywood, Florida 33019
Hartzmark, Lee 20,000 * 20,000 0 -
30100 Chagrin Boulevard
Suite 210
Pepper Pike, Ohio 44124
Herrera, Jorge & Nora 10,000 * 10,000 0 -
S. Bayshore Drive
Miami, Florida 33131
Highfalls, Ltd. 43,500 * 43,500 0 -
c/o 3049 N.E. 163rd Street
N. Miami Beach, Florida 33160
Hirt, Fred D. 10,000 * 10,000 0 -
Mount Sinai Medical Center
4300 Alton Road
5th Floor Warner Building
Miami Beach, Florida 33140
Hsiao, Jane H. 40,000 * 40,000 0 -
3210 Hunter Road
Ft. Lauderdale, Florida 33331
Hyman, Alan & Joan 17,500 * 17,500 0 -
533 W. 47th Street
Miami Beach, Florida 33140
Hyman, Mark & Alan 5,000 * 5,000 0 -
2362 N.E. 197th Street
Miami, Florida 33180
Hyman, Mark & Freyda 10,000 * 10,000 0 -
2362 N.E. 197th Street
Miami, Florida 33180
Jimenez, Pedro L. 10,000 * 10,000 0 -
14001 S.W. 22nd Street
Miami, Florida 33175
Martinez, Roberto 25,000 * 25,000 0 -
and Suzel M. Vazquez
1221 Brickell Avenue
Miami, Florida 33131
Mates, Sharon 12,500 * 12,500 0 -
5610 Wisconsin Avenue
Chevy Chase, Maryland 20815
Merrill Lynch, Pierce, Fenner & 25,000 * 25,000 0 -
Smith, Cust. FBO Emanuel Pearlman
BASIC
151 E. 79th Street, Apt. 5
New York, New York 10021
Miller, Douglas (7) 1,616,666 14.4% 1,616,666 0 -
303 Egret Lane
Ft. Lauderdale, Florida 33327
</TABLE>
- 10 -
<PAGE> 12
<TABLE>
<CAPTION>
NUMBER OF
OWNERSHIP OF SHARES SHARES OWNERSHIP OF SHARES OF
NAME AND ADDRESS OF COMMON STOCK OFFERED COMMON STOCK
OF SELLING SHAREHOLDER PRIOR TO OFFERING** HEREBY** AFTER OFFERING***
- ------------------------------------ -------------------------- -------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Murphy, Bernard 25,000 * 25,000 0 -
380 Middlesex Avenue
Carteret, New Jersey 07008
Palin, Michael 95,500 * 95,500 0 -
740 Park Avenue
New York, New York 10021
Pfenniger, Richard C. 5,000 * 5,000 0 -
6490 S.W. 106th Street
Miami, Florida 33156
PLH Holdings, Inc. 150,000 1.3% 150,000 0 -
c/o Arturo Alvarez
Alvarez, Armas & Borron, P.A.
255 University Drive
Coral Gables, Florida 33134
Politan, Nicholas H. 25,000 * 25,000 0 -
U.S. District Court for the
District of New Jersey
P.O. Box 999
Newark, New Jersey 07101-0999
Rodriguez, Pedro A. 70,000 * 70,000 0 -
680 Lake Road
Bay Point, Florida 33137
Sailfish Investments LLC (8) 925,000 8.2% 925,000 0 -
380 Middlesex Avenue
Carteret, New Jersey 07008
Saks, David 20,000 * 20,000 0 -
2 Knollwood Road
Woodcliffe Lake, New Jersey 07675
Jacqueline Simkin (9) 102,500 * 40,000 62,500 *
Simkin Management, Inc.
200 S.E. First Street
Suite 703
Miami, Florida 33131
Smith, Jr., Hershel F. 30,000 * 30,000 0 -
15600 S.W. 288th Street
Suite 100
Homestead, Florida 33033
Sosa, Maria T. (10) 2,500 * 2,500 0 -
888 Brickell Key Drive
#1012
Miami, Florida 33131
United Trustco Ltd., 30,000 * 30,000 0 -
RBC Dominion Securities
1501 McGill College Ave.
Suite 2150
Montreal Quebec H3A3M8
Weintraub, Michael 20,000 * 20,000 0 -
200 S.E. 1st Street
Suite 901
Miami, Florida 33131
Wolf, Marie V. 30,000 * 30,000 0 -
P.O. Box 150 (Sutton Drive)
New Vernon, New Jersey 07976
Worthington Associates, Inc. 15,000 * 15,000 0 -
302 Egret Lane
Ft. Lauderdale, Florida 33327
</TABLE>
- --------------------
* Less than 1%.
** Does not include the Additional Shares.
*** Assumes that all Shares held by the Selling Shareholder are sold pursuant
to this offering and that no other shares of Common Stock are acquired or
disposed of by the Selling Shareholders prior to the termination of this
offering. Because the Selling Shareholders may sell all, some or none of
their Shares
- 11 -
<PAGE> 13
or may acquire or dispose of other shares of Common Stock, no reliable
estimate can be made of the aggregate number of Shares that will be sold
pursuant to this offering or the number or percentage of shares of Common
Stock that each Selling Shareholder will own upon completion of this
offering.
(1) Charles M. Fernandez has been Continucare's Chairman of the Board,
President and Chief Executive Officer since its inception in February
1996, and has held the same such positions with the Company since
September 1996. Includes 10,000 shares owned by the wife of Mr. Fernandez.
(2) Warren Freistat currently owns six CMHCs which are under contract with
Continucare for the receipt of management services.
(3) Dr. Phillip Frost, who beneficially owns the shares of Common Stock held of
record by Frost Nevada Limited Partnership, has been Vice Chairman of the
Board of the Company since September 1996. Ownership includes currently
exercisable options to purchase 250,000 shares of Common Stock.
(4) Richard B. Frost has been a Director of the Company since September 1996.
(5) Includes 10,000 shares held by Barry Goldstein's wife and two daughters.
Barry Goldstein served as Executive Vice President of Continucare prior
from its inception in February 1996 until the consummation of the Merger
and has been a consultant to Continucare since the Merger. Mr. Goldstein
has agreed not to sell more than 80,000 shares of Common Stock during any
30-day period.
(6) Mark J. Hanna has been a Director of the Company since September 1996.
(7) Douglas Miller served as President of Continucare from its inception in
February 1996 until the consummation of the Merger and has been a
consultant to Continucare since the Merger. Mr. Miller has agreed not to
sell more than 80,000 shares of Common Stock during any 30-day period.
(8) Arthur M. Goldberg, who beneficially owns the shares of Common Stock held
of record by Sailfish Investments LLC, has been a Director of the Company
since September 1996.
(9) Jacqueline Simkin served as a Director of the Company from May 1995 through
May 1996. Ownership includes currently exercisable options to purchase
27,500 shares of Common Stock.
(10) Maria Sosa has been Continucare's Chief Accounting Officer since June 1996.
PLAN OF DISTRIBUTION
The Selling Shareholders may from time to time sell all or a portion of
the Shares offered hereby in one or more transactions in the over-the-counter
market, on the AMEX, on any exchange on which the Common Stock may then be
listed, in negotiated transactions or otherwise, or a combination of such
methods of sale, at market prices prevailing at the time of sale or prices
related to such prevailing market prices or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Shareholders
and/or purchasers of the Shares for whom they may act as agent (which
compensation may be in excess of customary commissions). In connection with such
sales, the Selling Shareholders and any broker-dealers or agents participating
in such sales may be deemed to be underwriters as that term is defined under the
Securities Act. Neither the Company nor the Selling Shareholders can presently
estimate the amount of commissions or discounts, if any, that will be paid by
the Selling Shareholders on account of their sales of the Shares from time to
time.
Under the securities laws of certain states, the Shares may be sold in
such states only through registered or licensed broker-dealers or pursuant to
available exemptions from such requirements. In addition, in certain states the
Shares may not be sold therein unless the Shares have been registered or
qualified for sale in such state or an exemption from such requirement is
available and satisfied.
Continucare will pay certain expenses in connection with this offering,
estimated to be approximately $91,000 but will not pay for any underwriting
commissions and discounts, if any, or counsel fees or expenses of the Selling
Shareholders. Continucare has agreed to indemnify the Selling Shareholders,
their directors, officers, agents and representatives, and any underwriters,
against certain liabilities, including certain liabilities under the Securities
Act.
The Selling Shareholders and other persons participating in the
distribution of the Shares offered hereby are subject to the applicable
requirements of Rule 10b-6 promulgated under the Exchange Act in connection with
sales of the Shares.
- 12 -
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
On August 9, 1996, Zanart signed a Merger Agreement with ZSI, a
wholly-owned subsidiary of Zanart, and Continucare Corporation. Pursuant to the
Merger Agreement, on September 11, 1996, ZSI merged with and into Continucare
Corporation. Upon consummation of the Merger, and pursuant to the terms of the
Merger Agreement, (i) each issued and outstanding share of common stock of
Continucare Corporation converted into one share of Zanart Common Stock, the
separate existence of ZSI terminated and Continucare Corporation became a
wholly-owned subsidiary of Zanart, (ii) Zanart agreed to sell or otherwise
dispose of its assets (other than cash) and discharge all liabilities relating
to Zanart's existing licensing business prior to December 11, 1996 and (iii)
Zanart's Board of Directors and management became comprised of designees of
Continucare Corporation.
THE FOLLOWING TABLE AND DISCUSSION RELATE TO THE OPERATIONS OF CONTINUCARE FOR
THE PERIODS INDICATED.
RESULTS OF OPERATION
The discussion in this section relates to the operations of Continucare
for the period from February 12, 1996 (inception) to June 30, 1996 and the three
months ended September 30, 1996, and should be read in conjunction with the
audited consolidated financial statements of Continucare Corporation and notes
thereto and the unaudited pro forma financial statements and notes thereto
appearing elsewhere in this Prospectus.
Overview
Continucare Corporation was incorporated on February 12, 1996 in the
State of Florida. Continucare develops and manages mental and physical
rehabilitation health care programs that offer a continuum of mental and
physical rehabilitation health services ranging from partial hospitalization
care to day treatment and outpatient services. Continucare offers a
comprehensive mental health care product line by providing the following types
of services to general acute care and psychiatric hospitals, CMHCs and CORFs:
clinical development, marketing, financial management, operational oversight,
human resources support, quality assurance and outcome measurement.
Effective May 1, 1996, Continucare, through a subsidiary, acquired
certain assets, contracts and liabilities of a company that provided billing and
collection services and of a company that provided permanent, long-term and
short-term employee leasing to physicians, community hospitals, community mental
health centers and partial hospitalization programs, in return for 25% ownership
in the subsidiary to the common owner of the two acquired companies. The
transactions were accounted for under the purchase method.
<TABLE>
<CAPTION>
PERCENTAGE OF
FOR THE TOTAL REVENUES PERCENTAGE OF
PERIOD FROM FOR THE PERIOD FOR THE TOTAL REVENUES
FEBRUARY 12, FROM FEBRUARY QUARTER FOR THE QUARTER
1996 12, 1996 ENDED ENDED
(INCEPTION) TO (INCEPTION) TO SEPTEMBER SEPTEMBER 30,
JUNE 30, 1996 JUNE 30, 1996 30, 1996 1996
------------ -------------- ------------ ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues $2,507,063 100.0% $2,923,446 100.0%
------------ -------------- ------------ ---------------
Expenses
Payroll and employee benefits 973,412 38.8 1,367,910 46.8
</TABLE>
- 13 -
<PAGE> 15
<TABLE>
<S> <C> <C> <C> <C>
Provision for bad debt 242,664 9.7 226,211 7.7
Professional fees 203,625 8.1 189,740 6.5
General and administrative 54,430 2.2 44,555 1.5
Depreciation and amortization 362 - 7,160 -
------------ -------------- ------------ ---------------
Total expenses 1,474,493 58.8 1,835,576 6.3
------------ -------------- ------------ ---------------
Income from operations 1,032,570 41.2 1,087,870 37.2
------------ -------------- ------------ ---------------
Other income (expenses)
Interest (23,204) (0.9) 17,152 0.6
Minority interest (32,686) (1.3) (79,047) (2.7)
------------ -------------- ------------ ---------------
Other income (expenses) (55,890) (2.2) (61,895) (2.1)
------------ -------------- ------------ ---------------
Income before taxes 976,680 39.0 1,025,975 35.1
Provision for income taxes 332,071 13.2 381,717 13.1
------------ -------------- ------------ ---------------
Net income $644,609 25.7% $644,258 22.0%
============ ============== ============ ===============
Earnings before interest, taxes, depreciation and
amortization (EBITDA) $1,000,245 39.9% 1,016,000 34.8%
============ ============== ============ ===============
</TABLE>
Quarter Ended September 30, 1996
As previously noted, pre-Merger Continucare commenced operations on
February 12, 1996. Accordingly, no comparative data is available for the three
month period ending September 30, 1995. Further, management does not believe
that its results for the quarter ended September 30, 1996 are indicative of the
Company's future performance. Accordingly, the Company has limited its
discussions with respect to this area.
Revenues
Total revenues were approximately $2,923,000 for the quarter ended
September 30, 1996. Revenues from the employee leasing operations and the
billing service, for which certain assets, contracts and liabilities were
acquired effective May 1, 1996, are included in the revenues of the entire
current period. In addition, the current period includes the opening of two
hospital based programs for which the management fees are based on the actual
costs incurred in the management of the programs as well as a markup to cover
overhead and, on August 26, 1996, the Company entered into a letter of intent to
purchase a CORF. The purchase agreement was consummated on November 12, 1996.
Under the terms of the letter of intent, the Company provided management
services to the CORF for a fee of $30,000 per month from the date of the letter
of intent until the Closing Date (as defined in the related purchase agreement).
Fees earned under this arrangement account for approximately 1% of total
revenues for the quarter ended September 30, 1996.
Expenses
Payroll and employee benefits were approximately $1,368,000 for the
three month period ended September 30, 1996, 46.8% of total revenues. Of total
consolidated payroll and employee benefits, approximately $972,000 or 71.0% was
payroll and benefits paid to employees of the employee leasing operation.
Continucare's provision for bad debt for the quarter ended September
30, 1996 was approximately $226,000, or 7.7% of total revenues.
- 14 -
<PAGE> 16
Professional fees were approximately $190,000 in the current quarter.
Total professional fees for the quarter ended September 30, 1996 include
$105,000 under a subcontract agreement with a third-party.
General and administrative expenses ("SG&A") were approximately $45,000
for the quarter ended September 30, 1996. As a percentage of total revenues,
SG&A was approximately 1.5%. For the quarter ended September 30, 1996, SG&A was
comprised of expenses such as rent, utilities and supplies.
Interest
Net interest income for the quarter ended September 30, 1996 was
approximately $17,000 and is primarily attributable to interest earned on the
$6,600,000 raised by the Company as a result of the Private Placement that took
place in August 1996.
Minority Interest
Minority interest, which was approximately $79,000 for the quarter
ended September 30, 1996, represents a 25% interest held by a third party in the
net income of a subsidiary of Continucare.
Provision for Income Taxes
The provision for income taxes was $382,000 as a result of income
before taxes for the quarter ended September 30, 1996 of approximately
$1,026,000. The provision for income taxes was calculated at a rate of
approximately 37% which equals the statutory federal income tax rate.
Net Income
Continucare had net income of approximately $644,000 for the quarter
ended September 30, 1996. As a percentage of total revenues, net income was 22%
of total revenues for the quarter ended September 30, 1996.
Earnings Before Interest, Taxes, Depreciation and Amortization
EBITDA is not presented as an alternative to operating results or cash
flow from operations as determined by generally accepted accounting principles
("GAAP"), but rather to provide additional information related to the ability of
Continucare to meet current trade obligations and debt service requirements.
EBITDA should not be considered in isolation from, or construed as having
greater importance than, GAAP operating income or cash flows from operations as
a measure of an entity's performance.
EBITDA was approximately $1,016,000 for the quarter ended September 30,
1996.
February 12, 1996 (inception) to June 30, 1996
Revenues
Continucare derives its revenues primarily from fixed-fee contracts for
the provision of certain management services to client hospitals and CMHC's.
Continucare's revenues for the period from February 12, 1996 (inception) to June
30, 1996 were approximately $2,507,000, of which $1,688,000 were derived from
such management agreements.
Continucare also recognizes revenues from its employee leasing services
and its billing services. These operations were obtained by a subsidiary of
Continucare on May 1, 1996 through the acquisition of certain contracts, assets
and liabilities. Revenues received for its employee leasing services for the
period from May 1,
- 15 -
<PAGE> 17
1996 to June 30, 1996 were approximately $527,000. Revenues from its billing
operations for the same period were approximately $292,000.
Expenses
Payroll and employee benefits for the period from February 12, 1996
(inception) to June 30, 1996 were approximately $973,000, or 38.8% of total
revenues. Of total consolidated payroll and employee benefits, approximately
$542,000 or 56%, was payroll and benefits paid to the employees of the employee
leasing operations.
Continucare's provision for bad debt for the period from February 12,
1996 (inception) to June 30, 1996 was approximately $243,000, or 9.7% of total
revenues.
Professional fees are comprised primarily of legal and audit fees. In
addition, total professional fees for the period from February 12, 1996
(inception) to June 30, 1996 of $204,000 included approximately $70,000 under a
subcontract agreement with a third-party.
General and administrative expenses ("SG&A") were approximately
$54,000, 2.2% of total revenues, for the period from February 12, 1996
(inception) to June 30, 1996 and were comprised primarily of costs such as rent,
public relations and travel.
Interest
Interest expense was approximately $23,000, or less than 1% of total
revenues, for the period from February 12, 1996 (inception) to June 30, 1996 and
was comprised primarily of interest on a note payable to a shareholder (the
"Shareholder Note"). The Shareholder Note bears interest at 10% per annum and is
due, in full, on February 12, 1998.
Minority Interest
Minority interest was approximately $33,000, or 1.3% of total revenue.
The minority interest represents a 25% interest held by a third party in the net
income of a subsidiary of Continucare.
Provision for Income Taxes
The provision for income taxes for the period from February 12, 1996
(inception) to June 30, 1996 was approximately $332,000, 13.2% of total
revenues, and was calculated at a rate of approximately 34% which equals the
statutory federal income tax rate.
Net Income
Continucare had net income of approximately $645,000 for the period
from February 12, 1996 (inception) to June 30, 1996.
Earnings Before Interest, Taxes, Depreciation and Amortization
EBITDA is not presented as an alternative to operating results or cash
flow from operations as determined by Generally Accepted Accounting Principles
("GAAP"), but rather to provide additional information related to the ability of
Continucare to meet current trade obligations and debt service requirements.
EBITDA should not be considered in isolation from, or construed as having
greater importance than, GAAP operating income or cash flows from operations as
a measure of an entity's performance.
- 16 -
<PAGE> 18
EBITDA was approximately $1,000,000 for the period from February 12,
1996 (inception) to June 30, 1996, or approximately 39.9% of total revenues.
Liquidity and Capital Resources
The Company has historically financed its operations from operating
cash flow. For the three month period then ended, the Company's operating cash
flow was approximately $570,000.
The Company's working capital was approximately $10,593,000, with a
current ratio of 6.4 to 1, at September 30, 1996. The Company's working capital
and current ratio at June 30, 1996 were $2,019,000 and 3.6 to 1, respectively.
The improvement in working capital and the current ratio are due to cash
generated by the Company from the Private Placement of 3,300,000 shares in
August 1996 (the "Private Placement"), the cash received from pre-Merger Zanart
as a result of the Merger in September 1996, and current assets generated from
operations.
The Company anticipates that the funds raised through the Private
Placement and the cash received from pre-Merger Zanart as a result of the
Merger, together with cash flow generated by operations, will be used to make
strategic acquisitions in order to grow its operations and pursue its business
strategy. Based upon current expectations, the Company believes that cash flow
from operations will be sufficient to meet its working capital requirements
through the end of the current fiscal year, although there can be no assurance
that it will be able to do so.
- 17 -
<PAGE> 19
LEGAL MATTERS
The validity of the Shares being offered hereby is being passed upon
for the Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
1221 Brickell Avenue, Miami, Florida 33131.
EXPERTS
Zanart's financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have, where indicated,
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
The financial statements incorporated in this Prospectus by reference
from the Company's Annual Report on Form 10-KSB/A for the period from February
12, 1996 (inception) to June 30, 1996, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference, and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied (at prescribed rates) at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and
at the following regional offices of the Commission: Seven World Trade Center,
Suite 1300, New York, New York 10048; 3475 Lenox Road, N.E., Suite 1000,
Atlanta, Georgia 30326-7232; and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Quotations relating to the Company's Common Stock and Series A
Warrants appear on the American Stock Exchange ("AMEX") and reports, proxy
statements and other information concerning the Company can also be inspected at
the offices of the AMEX, 86 Trinity Place, New York, New York 10006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect
to the Shares offered hereby. This Prospectus, which is a part of the
Registration Statement, does not contain all the information set forth in,
or annexed as exhibits to, such Registration Statement, certain portions of
which have been omitted pursuant to rules and regulations of the Commission.
For further information with respect to the Company and the Shares, reference
is hereby made to such Registration Statement, including the exhibits thereto.
Copies of the Registration Statement, including exhibits, may be obtained from
the aforementioned public reference facilities of the Commission upon payment
of the fees prescribed by the Commission, or may be examined without charge at
such facilities. The Registration Statement may also be obtained through the
Commission's Internet address at "http://www.sec.gov." Statements contained
herein concerning any document filed as an exhibit are not necessarily complete
and, in each instance, reference is made to the copy of such document filed as
an exhibit to the Registration Statement. Each such statement is qualified in
its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 0-21910) with
the Commission are incorporated herein by reference: (1) the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1995 and the Company's
Annual Report on Form 10-KSB, as amended, for the fiscal year ended June 30,
1996; (2)
- 18 -
<PAGE> 20
the Company's Quarterly Report on Form 10-QSB for the quarter ended September
30, 1996; (3) the Company's Schedule 14C dated and filed with the Commission on
November 18, 1996, (4) the Company's Current Report on Form 8-K dated August 9,
1996 and September 11, 1996 and (5) the Company's Registration Statement on Form
8-A filed September 4, 1996, registering the Company's Common Stock and Series A
Warrants under Section 12(b) of the Exchange Act. All documents filed by the
Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act subsequent to the date hereof and prior to the termination of
the offering of the Common Stock registered hereby shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing such documents. Any statements contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that the
statement contained herein or in any other subsequently filed document which
also is, or is deemed to be, incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. The Company will provide without charge to each person to whom this
Prospectus is delivered, upon a written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference into this
Prospectus (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents). Request for such
copies should be delivered to Maria T. Sosa, Continucare Corporation, 100
Southeast Second Street, 36th Floor, Miami, Florida 33131.
- 19 -
<PAGE> 21
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND
ANY INFORMATION OR REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SHARES DESCRIBED IN THE COVER PAGE HEREOF, OR AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES OFFERED HEREBY IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-------------------------
================================================================================
================================================================================
8,500,000 SHARES
CONTINUCARE CORPORATION
COMMON STOCK
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
NOVEMBER_____, 1996
================================================================================
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant estimates that its expenses in connection with
the offering described in this registration statement will be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............................................. $26,401
Legal fees and expenses.......................................................................... 35,000
Accounting fees and expenses..................................................................... 20,000
Miscellaneous.................................................................................... 10,000
-------
Total................................................................................... $91,401
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant has authority under Section 607.0850 of the Florida
Business Corporation Act to indemnify its directors and officers to the extent
provided for in such statute. The Registrant's Amended and Restated Articles of
Incorporation provide that the Registrant shall indemnify and may insure its
officers and directors to the fullest extent permitted by law.
The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Florida law. In addition, each
director will continue to be subject to liability for (a) violations of criminal
laws, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful, (b) deriving an
improper personal benefit from a transaction, (c) voting for or assenting to an
unlawful distribution and (d) willful misconduct or conscious disregard for the
best interests of the Registrant in a proceeding by or in the right of the
Registrant to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder. The statute does not affect a director's
responsibilities under any other law, such as the federal securities laws. The
effect of the foregoing is to require the Registrant to indemnify the officers
and directors of the Registrant for any claim arising against such persons in
their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to,the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being registered
hereunder, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-1
<PAGE> 23
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
3.1 The Registrant's Articles of Incorporation (Exhibit 3.1) (1)
3.2 The Registrant's Bylaws (incorporated by reference from the Registrant's Registration Statement on
Form SB-2, Securities Act File No. 33-88580, filed with the Commission on January 17, 1995)
4.1 Form of certificate evidencing shares of Common Stock (Exhibit 4.1) (1)
4.2 Form of Series A Warrant (Exhibit 4.2) (1)
5 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.
10.1 Employment Agreement between the Company and Charles M. Fernandez dated as of September 11,
1996. (Incorporated by reference from the Registrant's Form 10-KSB filed with the Commission on
September 30, 1996)
10.2 Employment Agreement between the Company and Susan Tarbe dated as of September 23, 1996. (Incorporated
by reference from the Registrant's Form 10-KSB/A filed with the Commission on October 17, 1996.
10.3 Consulting Agreement between the Registrant and Barry Goldstein dated
September 11, 1996
10.4 Consulting Agreement between the Registrant and Douglas Miller dated
September 11, 1996
23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. (included in its opinion in
Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Arthur Andersen LLP
24 Reference is made to the Signatures section of this Registration Statement for the Power of Attorney
contained therein
</TABLE>
(1) Incorporated by reference from the indicated exhibit to the
Registrant's Post Effective Amendment No. 1 to Registration Statement
on Form SB-2 on Form S-3 filed with the Commission on October 29,
1996.
ITEM 17. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to include
any additional or changed material information on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the end
of the offering.
II-2
<PAGE> 24
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, State of Florida on this 22nd day of November,
1996.
CONTINUCARE CORPORATION
By:/s/Charles M. Fernandez
------------------------------------------------
Charles M. Fernandez,
Chairman, Chief Executive Officer and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Charles M. Fernandez his true and
lawful attorney-in-fact, who acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including any post-effective
amendments, to this Registration Statement, and to file the same, with exhibits
thereto, and other documents to be filed in connection therewith, including any
registration statement pursuant to Rule 462 under the Securities Act, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact or his substitute, acting alone, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE Title Date
--------- ----- ----
<S> <C> <C>
/s/ Charles M. Fernandez Chairman, Chief Executive November 22, 1996
- ---------------------------------------------- Officer and President (Principal
Charles M. Fernandez Executive Officer)
/s/ Phillip Frost, M.D. Vice Chairman November 22, 1996
- ----------------------------------------------
Phillip Frost, M.D.
/s/ Susan Tarbe Executive Vice President and November 22, 1996
- ----------------------------------------------
Susan Tarbe General Counsel
/s/ Maria T. Sosa Chief Accounting Officer November 22, 1996
- ---------------------------------------------- (Principal Accounting Officer)
Maria T. Sosa
/s/ Arthur M. Goldberg Director November 22, 1996
- ----------------------------------------------
Arthur M. Goldberg
/s/ Richard Frost Director November 22, 1996
- ----------------------------------------------
Richard Frost
/s/ Mark Hanna Director November 22, 1996
- ----------------------------------------------
Mark Hanna
/s/ Michael Piercey, M.D. Director November 22, 1996
- ----------------------------------------------
Michael Piercey, M.D.
</TABLE>
II-3
<PAGE> 1
EXHIBIT 5
November 25, 1996
Continucare Corporation
100 Southeast Second Street
Miami, Florida 33131
Re: Form S-3 Registration Statement
Ladies and Gentlemen:
On the date hereof, Continucare Corporation, a Florida corporation (the
"Company"), sent for filing with the Securities and Exchange Commission a
Registration Statement on Form S-3 (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to the sale by certain selling shareholders (the "Selling Shareholders")
of up to 8,300,000 shares (the "Current Shares") of the Company's Common Stock,
par value $.0001 per share (the "Common Stock"), plus an additional 200,000
shares (the "Additional Shares") of Common Stock to be received by the Selling
Shareholders in accordance with the terms of that certain Agreement and Plan of
Merger dated August 9, 1996 by and among the Company, Zanart Entertainment
Corporation and Continucare Acquisition Corp. (the "Merger Agreement"). We have
acted as special counsel to the Company in connection with the preparation and
filing of the Registration Statement.
<PAGE> 2
Continucare Corporation
November 25, 1996
Page 2
- ------------------------------
In connection therewith, we have examined and relied upon the original
or a copy, certified to our satisfaction, of (i) the Amended and Restated
Articles of Incorporation and the Bylaws of the Company; (ii) actions of the
Board of Directors of the Company authorizing the offering and the preparation
of the Registration Statement and related matters; (iii) the Registration
Statement and exhibits thereto; and (iv) such other documents and instruments as
we have deemed necessary for the expression of opinions herein contained. In
making the foregoing examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies. As to various questions of fact material to
this opinion, we have relied, to the extent we deem reasonably appropriate, upon
representations or certificates of officers or directors of the Company and upon
documents, records and instruments furnished to us by the Company, without
independently checking or verifying the accuracy of such documents, records and
instruments.
Based upon the foregoing examination, we are of the opinion that (i)
the Current Shares to be sold by the Selling Shareholders pursuant to the
Registration Statement have been duly authorized and validly issued and are
fully paid and nonassessable and (ii) assuming the issuance of the Additional
Shares is in accordance with the terms of the Merger Agreement, the Additional
Shares to be sold by the Selling Shareholders pursuant to the Registration
Statement will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving such consent, we do not admit that we come within the category of persons
whose consent is required by Section 7 of the Act or the rules and regulations
of the Commission thereunder.
Sincerely,
GREENBERG, TRAURIG, HOFFMAN,
LIPOFF, ROSEN & QUENTEL, P.A.
<PAGE> 1
EXHIBIT 10.4
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made and entered into as of
the 11th day of September, 1996, to be effective as of September 11, 1996, (the
"effective" date) by and between Continucare Corporation, a Florida corporation
("Company"), and Business Development Resources, Inc., a Florida corporation
(the "Consultant").
RECITALS
A. The Board of Directors of the Company (the "Board") believes
that the Consultant can contribute its expertise and services to the growth and
success of the Company.
B. The Board has determined that this Consulting Agreement will
reinforce and encourage the Consultant's devotion of its expertise and services
to the Company.
C. The Consultant is willing to make its services and expertise
available to the Company on the terms and conditions hereinafter set forth.
D. In consideration for this Agreement, and as a material
inducement for the Company to enter into this Agreement, and as part of the
merger of the Company, Consultant is willing to enter into certain restrictions
regarding the ownership of stock in the Company as hereinafter set forth.
AGREEMENT
NOW, THEREFORE, it is agreed as follows:
1. Appointment of Consultant; Supervision. The Company appoints
the Consultant and the Consultant accepts appointment upon the terms and
subject to the conditions provided in this Agreement as a consultant to the
Company's business, including any other corporations or other entities
hereafter formed or acquired by the Company to engage in such business. The
activities of the Consultant to be performed under this Agreement shall be
subject to the supervision of the Chairman of the Board and the Board and the
policies of the Board in effect from time to time.
2. Duties of Consultant. The Consultant shall render consulting
services to the Company as reasonably requested by the Company and as agreed to
by the Consultant from time to time with respect to business development and
acquisitions. The Consultant shall render its services in adherence to the
Compliance Program of the Company and all applicable state and federal laws.
The Consultant shall make periodic reports to the Board and senior management
of the Company with respect to the consulting services provided hereunder. The
Consultant shall (i) give the Company the benefit of its special knowledge,
skill, contacts and business expertise, (ii) keep reasonably informed as to the
operations of the Company's business, and (iii) promote the Company's financial
welfare.
2.1 Performance of Duties of Consultant. All services performed by
Consultant shall be performed by Barry Goldstein, or a designee approved in
writing by the Company, prior to the appointment of such designee.
3. Other Terms and Benefits. The Company acknowledges and agrees
that (i) the Consultant shall devote as much time as requested by the Company
to the affairs of the Company in accordance with Section 2 and (ii) subject to
material compliance with the provisions of this Agreement, the Consultant shall
<PAGE> 2
have the right to be employed by or render consulting services to other
persons, or engage in the business of consulting for its own account, so long
as it does not compete with the business of the Company.
4. Reimbursement of Expenses; Independent Contractor. The
Company agrees to provide appropriate office space to the Consultant at a
location in South Florida chosen by the Company. All expenses incurred by the
Consultant in the performance of its duties under and during the term of this
Agreement shall be for the account of, on behalf of, and at the expense of, the
Company only if approved in writing by the Company prior to the time that the
expenses are incurred. The Consultant shall not be obligated to make any
advances to or for the account of the Company or to pay any sums nor shall the
Consultant be obligated to incur any liability or obligation for the account of
the Company. The Consultant shall be an independent contractor, and nothing
contained in this Agreement shall be deemed or construed to (i) create a
partnership or joint venture between the Company or any of its Affiliates and
the Consultant or any of his Affiliates, or (ii) constitute the Consultant as
an employee, officer or agent of the Company or any other entity. The
Consultant agrees to file all tax returns and pay all taxes arising out of his
payments pursuant to this Agreement and to indemnify the Company for any
failure on his part to do so.
5. Consulting Fee. As compensation for the services to be
performed hereunder, the Company shall pay the Consultant, semi-monthly, at a
rate of Three Hundred Thirty-Two Thousand and No/Cents Dollars [$332,000.00]
per annum.
5.1 Cost of Living Increase. Commencing September 11, 1997, and
each Anniversary Date thereafter during the Term, the Consulting Fee shall be
increased, but shall not be decreased, by that percentage by which the Consumer
price Index (All Items less Shelter), Urban Wage earners and Clerical Workers,
for the Miami, Florida area published by the United States government (the
"Index") for the immediately preceding calendar year exceeds such Index for the
next preceding calendar year. If publication of the Index is discontinued, the
parties hereto shall accept comparable statistics on the cost of living for the
Miami, Florida area as computed and published by an agency of the United States
government or, if no such agency computes and publishes such statistics, by any
regularly published national financial periodical that does compute and publish
such statistics.
6. Term. This Agreement shall commence as of the Effective Date
and shall remain in effect for a period of three (3) years from the Initial
Term. Upon termination of this Agreement, all materials in the Consultant's
possession which contain Confidential Information (as defined in Section 7
below), and all other materials or equipment of the Consultant, shall be
returned to the Company, whether or not such Confidential Information or other
materials or equipment were developed by the Company or by the Consultant in
connection with the performance of his services hereunder.
6.1 Renewal. The Company agrees to give Consultant ninety (90)
days notice prior to renewal of this agreement.
7. Protection of Confidential Information; Non-Competition. The
Consultant agrees that his services hereunder are of a special, unique,
extraordinary and intellectual character, and his position with the Company
places the Consultant in a position of confidence and trust with partners,
customers, suppliers and consultants of the Company. The Consultant further
acknowledges that the performance of the Consultant's duties and
responsibilities under this Agreement may require the disclosure to the
Consultant of confidential information and trade secrets of the Company (such
as, without limitation, strategies, projections, marketing plans, budgets and
policies). The Consultant and the Company agree that, in the course of
engagement hereunder, the Consultant will continue to develop a personal
relationship with the Company's partners, suppliers and customers and a
knowledge of such partners', suppliers' and customers' affairs and requirements
which may constitute the Company's primary and only contact with such partners,
suppliers or
-2-
<PAGE> 3
customers. The Consultant consequently agrees that it is reasonable and
necessary for the protection of the goodwill and business of the Company that
the Consultant make the covenants contained herein and that the covenants are
given as an integral part of and incident to the transactions contemplated by
this Agreement. Accordingly, the Consultant agrees as follows:
(a) Trade Secrets. The Consultant agrees not to reveal
to any person, association or company, or use or otherwise exploit for the
Consultant's own benefit or for the benefit of anyone other than the Company,
whether during or after the termination of the Consultant's duties as a
Consultant, any of the Confidential Information (as defined below) concerning
the organization, business or finances of the Company or any of its affiliates
so far as they have come or may come to the Consultant's knowledge at any time,
except as may be required in the ordinary course of performing the Consultant's
duties as a consultant of the Company, and the Consultant shall keep secret all
matters entrusted or known to the Consultant and shall not use or attempt to
use any such Confidential Information in any manner which may injure or cause
loss or may be calculated to injure or cause loss whether directly or
indirectly to the Company or its affiliates. "Confidential Information" shall
include, without limitation, any patent applications, "know-how," trade
secrets, customer lists, details of the Company's financial or other
information, consulting contracts, pricing policies, operational methods
specific to the Company, marketing plans or strategies specific to the Company,
product development techniques or plans, procurement and sales activities,
promotion and pricing techniques, credit, financial and other data concerning
customers, business acquisition plans or any portion or phase of any scientific
or technical information, ideas, discoveries, designs, computer programs
(including source or object codes), processes, procedures, formulas or
improvements of the Company, whether or not in written or tangible form, and
whether or not registered, and including all memoranda, notes, plans, reports,
records, documents and other evidence thereof.
(b) Non-Competition. While providing services as
described in this Agreement to the Company, and for a period of two years
following the termination of Consultant's Agreement hereunder, (other than a
termination without cause, as contemplated in Section 8.1 hereof), the
Consultant shall not, directly or indirectly, engage in or have any interest in
any sole proprietorship, partnership, corporation or business or any other
person or entity (whether as an employee, officer director, partner, agent
security holder, creditor, consultant or otherwise) that directly or indirectly
engages primarily in the healthcare business (the "Business") in competition
with the Company or its "affiliates" (as such term is defined in Rule 12b-2 as
promulgated under the Securities Exchange Act of 1934, as amended) or
otherwise similar to the business of the Company and its affiliates in Florida
or in any other state in which the Company and/or its affiliates are conducting
business at the time of termination.
(c) Equitable Relief. The Consultant agrees that the
restrictions contained in this Agreement, including this Section 7, are
reasonable and necessary protections of the legitimate interests of the
Company, that any breach of this Agreement by the Consultant could cause
irreparable damage to that in the event of such breach the Company shall have,
in addition to any and all remedies of law, the right to an injunction,
specific performance or other equitable relief to prevent the violation of the
Consultant's obligations hereunder without the necessity of posting a bond.
(d) Independent Covenant. The provisions of this Section
7 are deemed an independent agreement, valid consideration for which is
acknowledged and received by the Consultant, and will be enforceable regardless
of any breach by the Company of the provisions of this Agreement.
(e) Survival. The obligations of the Consultant under
this Section 7 shall survive the termination of this Agreement.
8. Termination.
8.1 Termination Without Cause By The Company. The Company shall
at all times have the right to terminate the Consultant's engagement without
cause upon 30 days' prior written notice to the Consultant; however, the
Company agrees to pay to the Consultant the remainder of its Consulting Fee,
consisting of the Initial Term, as described in Section 5, on a semi-monthly
basis through the end of the Initial Term.
8.2 Termination For Cause By The Consultant. The Company shall,
at all times, have the right upon written notice to the Consultant, to
terminate the Consultant's employment hereunder for "Cause" (as hereinafter
defined). For the purpose of this Agreement, the term "Cause" shall mean
subject to Section 2 of this Agreement (i) the willful failure or refusal of
the Consultant to perform the duties or render the services assigned to him
from time to time by the Company; (ii) the conviction of the Consultant, or
Barry Goldstein,
-3-
<PAGE> 4
in connection with a felony; (iii) the association, directly or indirectly of
the Consultant, or Barry Goldstein, for his profit or financial benefit, with
any person, firm, partnership association, entity or corporation that competes
in any material way with the Company; (iv) the disclosing or using of any
material trade secret or confidential information of the Company at any time by
the Consultant except as required in connection with his duties to the Company;
(v) failure of the Consultant to adhere to the Compliance program of the
Company and all applicable state and federal laws (vi) Barry Goldstein fails to
own 100% of the outstanding shares of the Consultant with anyone other than
Patricia Goldstein, (vii) the death or catastrophic disability of Barry
Goldstein, or (viii) the breach by the Consultant of the terms and conditions
of this Agreement and the failure of the Consultant to cure such breach within
five (5) days written notice to the Consultant. Upon any termination pursuant
to this Section 8, the Consultant shall be entitled to the compensation
referred to in Section 5 above to the date of termination, and the Company
shall have no further liability hereunder, subject, however, to the provisions
of Section 4.
8.3 Termination By The Consultant. The Consultant shall, at all
times, have the right to terminate the Consultant's engagement hereunder upon
180 days' prior written notice to the Company. Upon any termination pursuant
to this Section 8.3, the Consultant shall be entitled to the compensation
referred to in Section 5 above to the date of termination, and the Company
shall have no further liability hereunder, subject however, to the provisions
of Section 4.
9. Severability. The parties hereby agree that each provision
herein shall be treated as a separate and independent clause, and the
unenforceability of any one clause shall in no way impair the enforceability of
any of the other clauses herein. Moreover, if one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively
broad as to scope, activity or subject so as to be unenforceable at law, such
provision or provisions shall be construed by the appropriate judicial body by
limiting and reducing it or them, so as to be enforceable to the extent
compatible with the applicable law as it shall then be in effect.
10. Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction hereof.
11. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original but all of which shall constitute
but one and the same instrument. One or more counterparts of this Agreement
may be delivered via telecopier, with the intention that they shall have the
same effect as an original counterpart hereof.
12. Assignment. Consultant may not assign, transfer, pledge,
encumber or otherwise dispose of this Agreement or any of its respective rights
or obligations hereunder, without the written consent of the Company which may
be denied in the absolute discretion of the Company. This Agreement shall
inure to the benefit of the Company and its successors and assigns and persons
acquiring, whether by merger, consolidation, purchase of assets or stock or
otherwise, all or substantially all of the Company's assets.
13. Amendment; Entire Agreement. This Agreement may not be
changed orally but only by an agreement in writing making specific reference to
this Agreement and agreed to by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought. This Agreement
embodies the entire agreement and understanding of the parties hereto
concerning the subject matter of this Agreement, and supersedes and replaces
all prior agreements and replaces all prior agreements, understandings and
commitments with respect to such subject matter.
14. Litigation. All disputes arising in connection with this
Agreement shall be finally settled under the Rules of the American Arbitration
Association (the "Rules") by three (3) arbitrators appointed in accordance with
said Rules. Any such arbitration shall be held pursuant to the laws of the
State of Florida unless the parties hereto mutually agree in writing upon some
other location for arbitration. The arbitrators shall not be empowered to
award punitive, exemplary and/or consequential damages to any party. There
shall be no consolidation of this arbitration with any other dispute or
proceeding involving third parties. The provisions of this Agreement shall
prevail in case of inconsistency between the Rules and this Agreement.
15. Stock. As further consideration for the company's appointment
of the Consultant, the Consultant agrees that Barry Goldstein will not sell an
amount of stock of the Company in excess of eighty thousand (80,000) shares
within any thirty (30) day period of time. If Company is sold, merged or upon
a change of control, or subsequent public offering, Barry Goldstein will be
subject to the same rights and restrictions as a founding shareholder or insider
under SEC rules.
-4-
<PAGE> 5
16. Notices. All notices, demands, consents, approvals and
requests given by either party to the other hereunder shall be in writing and
shall be personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, to the parties at the following addresses:
If to the Company: If to the Consultant:
Continucare Corporation Barry Goldstein
100 Southeast Second Street 1900 N. E. 211 Street
Miami, FL 33131 North Miami Beach, FL 33179
Any party may at any time change its or his respective address by sending
written notice to the other party of the change in the manner hereinabove
prescribed.
17. Access to Records. In the event any governmental agency or
its duly authorized representative is entitled to access to any books,
documents, papers and records of the Consultant involving transactions
pertaining to this Agreement, the Consultant agrees to make the same available
for inspection in accordance with the terms and requirements of applicable laws
and regulations.
18. Indemnification. The Consultant agrees to indemnify and
hold the Company harmless from any claims, liabilities, judgments, losses,
costs, penalties, damages and expenses (including reasonable attorneys' fees)
suffered or incurred by the Company as a result of the services provided by the
Consultant hereunder (the "Damages"). The Company shall have the right to
offset the Damages against the payments due to the Consultant hereunder.
19. Attorneys' Fees. In the event that a suit for the
collection of any damages resulting from or for the injunction of any action
constituting a breach of any of the terms or provisions of this Agreement, then
the prevailing party shall pay all reasonable costs, fees (including reasonable
attorneys' fees) and expenses of the non-prevailing party.
20. Non Waiver. The failure by any party to exercise any
right, remedy or elections herein contained or permitted by law shall not
constitute or be construed as a waiver or relinquishment for the future
exercise of such right, remedy or election, but the same shall continue and
remain in full force and effect.
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CONTINUCARE CORPORATION
By /s/ Charles M. Fernandez
--------------------------------------
Charles M. Fernandez
Chief Executive Officer
Continucare Corporation
By /s/ Barry Goldstein By /s/ Barry Goldstein
---------------------------------- --------------------------------------
Barry Goldstein, Barry Goldstein
Personally as to Section 15, Stock President
----- Business Development Resources
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<PAGE> 1
EXHIBIT 10.5
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made and entered into as of
the 11th day of September, 1996, to be effective as of September 11, 1996,
(the "effective" date) by and between Continucare Corporation, a Florida
corporation ("Company"), and Operational Consultants, Inc., a Florida
Corporation (the "Consultant").
Recitals
A. The Board of Directors of the Company (the "Board") believes
that the Consultant can contribute its expertise and services to the growth and
success of the Company.
B. The Board has determined that this Consulting Agreement will
reinforce and encourage the Consultant's devotion of its expertise and services
to the Company.
C. The Consultant is willing to make its services and expertise
available to the Company on the terms and conditions hereinafter set forth.
D. In consideration for this Agreement, and as part of the merger
of the Company, Consultant is willing to enter into certain restrictions
regarding the ownership of stock in the Company as hereinafter set forth.
AGREEMENT
NOW, THEREFORE, it is agreed as follows:
1. Appointment of Consultant; Supervision. The Company appoints
the Consultant and the Consultant accepts appointment upon the terms and
subject to the conditions provided in this Agreement as a consultant to the
Company's business, including any other corporations or other entities
hereafter formed or acquired by the Company to engage in such business. The
activities of the Consultant to be performed under this Agreement shall be
subject to the supervision of the Chairman of the Board and the Board and the
policies of the Board in effect from time to time.
2. Duties of Consultant. The Consultant shall render consulting
services to the Company as reasonably requested by the Company and as agreed to
by the Consultant from time to time with respect to overall operational
oversight of clinical, marketing, community outreach, and
facility/program-based financial management. The Consultant shall render its
services in adherence to the Compliance Program of the Company and all
applicable state and federal laws. The Consultant shall make periodic reports
to the Board and senior management of the Company with respect to the
consulting services provided hereunder. The Consultant shall (i) give the
Company the benefit of its special knowledge, skill, contacts and business
expertise, (ii) keep reasonably informed as to the operations of the Company's
business, and (iii) promote the Company's financial welfare.
2.1 Performance of Duties of Consultant. All services
performed by Consultant shall be performed by Douglas Miller, or a designee
approved in writing by the Company, prior to the appointment of such designee.
3. Other Terms and Benefits. The Company acknowledges and agrees
that (i) the Consultant shall devote as much time as requested by the Company
to the affairs of the Company in accordance with Section 2 and (ii) subject to
material compliance with the provisions of this Agreement, the Consultant shall
have the right to be employed by or render consulting services to other
persons, or engage in the business of consulting for its own account, so long
as it does not compete with the business of the Company.
4. Reimbursement of Expenses; Independent Contractor. The
Company agrees to provide appropriate office space to the Consultant. All
expenses incurred by the Consultant in the performance of its duties under and
during the term of this Agreement shall be for the account of, on behalf of,
and at the expense of, the Company only if approved in writing by the Company
prior to the time that the expenses are
<PAGE> 2
S-3
incurred. The Consultant shall not be obligated to make any advances to or for
the account of the Company or to pay any sums nor shall the Consultant be
obligated to incur any liability or obligation for the account of the Company.
The Consultant shall be an independent contractor, and nothing contained in
this Agreement shall be deemed or construed to (i) create a partnership or
joint venture between the Company or any of its Affiliates and the Consultant
or any of his Affiliates, or (ii) constitute the Consultant as an employee,
officer or agent of the Company or any other entity. The Consultant agrees to
file all tax returns and pay all taxes arising out of his payments pursuant to
this Agreement and to indemnify the Company for any failure on his part to do
so.
5. Consulting Fee. As compensation for the services to be
performed hereunder, the Company shall pay the Consultant, semi-monthly, at a
rate of Three Hundred Twenty-Five Thousand and No/Cents Dollars [$325,000] per
annum.
5.1 Cost of Living Increase. Commencing September 11, 1997, and
each Anniversary Date thereafter during the Term, the Consulting Fee shall be
increased, but shall not be decreased, by that percentage by which the Consumer
price Index (All Items less Shelter), Urban Wage earners and Clerical Workers,
for the Miami, Florida area published by the United States government (the
"Index") for the immediately preceding calendar year exceeds such Index for the
next preceding calendar year. If publication of the Index is discontinued, the
parties hereto shall accept comparable statistics on the cost of living for the
Miami, Florida area as computed and published by an agency of the United States
government or, if no such agency computes and publishes such statistics, by any
regularly published national financial periodical that does compute and publish
such statistics.
6. Term. This Agreement shall commence as of the Effective Date
and shall remain in effect for a period of three (3) years from the Initial
Term. Upon termination of this Agreement, all materials in the Consultant's
possession which contain Confidential Information (as defined in Section 7
below), and all other materials or equipment of the Consultant, shall be
returned to the Company, whether or not such Confidential Information or other
materials or equipment were developed by the Company or by the Consultant in
connection with the performance of his services hereunder.
7. Protection of Confidential Information; Non-Competition. The
Consultant agrees that his services hereunder are of a special, unique,
extraordinary and intellectual character, and his position with the Company
places the Consultant in a position of confidence and trust with partners,
customers, suppliers and consultants of the Company. The Consultant further
acknowledges that the performance of the Consultant's duties and
responsibilities under this Agreement may require the disclosure to the
Consultant of confidential information and trade secrets of the Company (such
as, without limitation, strategies, projections, marketing plans, budgets and
policies). The Consultant and the Company agree that, in the course of
engagement hereunder, the Consultant will continue to develop a personal
relationship with the Company's partners, suppliers and customers and a
knowledge of such partners', suppliers' and customers' affairs and requirements
which may constitute the Company's primary and only contact with such partners,
suppliers or customers. The Consultant consequently agrees that it is
reasonable and necessary for the protection of the goodwill and business of the
Company that the Consultant make the covenants contained herein and that the
covenants are given as an integral part of and incident to the transactions
contemplated by this Agreement. Accordingly, the Consultant agrees as follows:
(a) Trade Secrets. The Consultant agrees not to reveal
to any person, association or company, or use or otherwise exploit for the
Consultant's own benefit or for the benefit of anyone other than the Company,
whether during or after the termination of the Consultant's duties as a
Consultant, any of the Confidential Information (as defined below) concerning
the organization, business or finances of the Company or any of its affiliates
so far as they have come or may come to the Consultant's knowledge at any time,
except as may be required in the ordinary course of performing the Consultant's
duties as a consultant of the Company, and the Consultant shall keep secret all
matters entrusted or known to the Consultant and shall not use or attempt to
use any such Confidential Information in any manner which may injure or cause
loss or may be calculated to injure or cause loss whether directly or
indirectly to the Company or its affiliates. "Confidential Information" shall
include, without limitation, any patent applications, "know-how," trade
secrets, customer lists, details of the Company's financial or other
information, consulting contracts, pricing policies, operational methods
specific to the Company, marketing plans or strategies specific to the Company,
product development techniques or plans, procurement and sales activities,
promotion and pricing techniques, credit, financial and other data concerning
customers, business acquisition plans or any portion or phase of any scientific
or technical information, ideas, discoveries, designs, computer programs
(including source or object codes), processes, procedures, formulas or
improvements of the Company, whether or not in written or tangible form, and
whether or not registered, and including all memoranda, notes, plans, reports,
records, documents and other evidence thereof.
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<PAGE> 3
(b) Non-Competition. While providing services as
described in this Agreement to the Company, and for a period of two years
following the termination of Consultant's Agreement hereunder, (other than a
termination without cause, as contemplated in Section 8.1 hereof) the
Consultant shall not, directly or indirectly, engage in or have any interest in
any sole proprietorship, partnership, corporation or business or any other
person or entity (whether as an employee, officer director, partner, agent
security holder, creditor, consultant or otherwise) that directly or indirectly
engages primarily in the healthcare business (the Business") in competition
with the Company or its "affiliates" (as such term is defined in Rule 12b-2 as
promulgated under the Securities Exchange Act of 1934, as amended) or otherwise
similar to the business of the Company and its affiliates in Florida or in any
other state in which the Company and/or its affiliates are conducting business
at the time of termination.
(c) Equitable Relief. The Consultant agrees that the
restrictions contained in this Agreement, including this Section 7, are
reasonable and necessary protections of the legitimate interests of the
Company, that any breach of this Agreement by the Consultant could cause
irreparable damage to that in the event of such breach the Company shall have,
in addition to any and all remedies of law, the right to an injunction,
specific performance or other equitable relief to prevent the violation of the
Consultant's obligations hereunder without the necessity of posting a bond.
(d) Independent Covenant. The provisions of this Section
7 are deemed an independent agreement, valid consideration for which is
acknowledged and received by the Consultant, and will be enforceable regardless
of any breach by the Company of the provisions of this Agreement.
(e) Survival. The obligations of the Consultant under
this Section 7 shall survive the termination of this Agreement.
8. Termination.
8.1 Termination Without Cause By The Company. The Company shall
at all times have the right to terminate the Consultant's engagement without
cause upon 30 days' prior written notice to the Consultant; however, the
Company agrees to pay to the Consultant the remainder of its Consulting Fee,
consisting of the Initial Term, as described in Section 5, on a semi-monthly
basis through the end of the Initial Term.
8.2 Termination For Cause By The Consultant. The Company shall,
at all times, have the right upon written notice to the Consultant, to
terminate the Consultant's employment hereunder for "Cause" (as hereinafter
defined). For the purpose of this Agreement, the term "Cause" shall mean
subject to Section 2 of this Agreement (i) the willful failure or refusal of
the Consultant to perform the duties or render the services assigned to him
from time to time by the Company; (ii) the conviction of the Consultant, or
Douglas Miller, in connection with a felony; (iii) the association, directly
or indirectly of the Consultant, or Douglas Miller, for his profit or
financial benefit, with any person, firm, partnership association, entity or
corporation that competes in any material way with the Company; (iv) the
disclosing or using of any material trade secret or confidential information of
the Company at any time by the Consultant except as required in connection with
his duties to the Company; (v) failure of the Consultant to adhere to the
Compliance program of the Company and all applicable state and federal laws
(vi) Douglas Miller fails to own 100% of the outstanding shares of the
Consultant with anyone other than Holly Miller, (vii) the death or catastrophic
disability of Douglas Miller, or (viii) the breach by the Consultant of the
terms and conditions of this Agreement and the failure of the Consultant to
cure such breach within five (5) days written notice to the Consultant. Upon
any termination under this Section 8.2, the Consultant shall be entitled to the
compensation referred to in Section 5 above to the date of termination, and the
Company shall have no further liability hereunder, subject, however, to the
provisions of Section 4.
8.3 Termination By The Consultant. The Consultant shall, at all
times, have the right to terminate the Consultant's engagement hereunder upon
180 days' prior written notice to the Company. Upon any termination pursuant
to this Section 8.3, the Consultant shall be entitled to the compensation
referred to in Section 5 above to the date of termination, and the Company
shall have no further liability hereunder, subject, however, to the provisions
of Section 4.
9. Severability. The parties hereby agree that each provision
herein shall be treated as a separate and independent clause, and the
unenforceability of any one clause shall in no way impair the enforceability of
any of the other clauses herein. Moreover, if one or more of the provisions
contained in this
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<PAGE> 4
Agreement shall for any reason be held to be excessively broad as to scope,
activity or subject so as to be unenforceable at law, such provision or
provisions shall be construed by the appropriate judicial body by limiting and
reducing it or them, so as to be enforceable to the extent compatible with the
applicable law as it shall then be in effect.
10. Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction hereof.
11. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original but all of which shall constitute
but one and the same instrument. One or more counterparts of this Agreement
may be delivered via telecopier, with the intention that they shall have the
same effect as an original counterpart hereof.
12. Assignment. Consultant may not assign, transfer, pledge,
encumber or otherwise dispose of this Agreement or any of its respective rights
or obligations hereunder, without the written consent of the Company which may
be denied in the absolute discretion of the Company. This Agreement shall
inure to the benefit of the Company and its successors and assigns and persons
acquiring, whether by merger, consolidation, purchase of assets or stock or
otherwise, all or substantially all of the Company's assets.
13. Amendment; Entire Agreement. This Agreement may not be
changed orally but only by an agreement in writing making specific reference to
this Agreement and agreed to by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought. This Agreement
embodies the entire agreement and understanding of the parties hereto
concerning the subject matter of this Agreement, and supersedes and replaces
all prior agreements and replaces all prior agreements, understandings and
commitments with respect to such subject matter.
14. Litigation. All disputes arising in connection with this
Agreement shall be finally settled under the Rules of the American Arbitration
Association (the "Rules") by three (3) arbitrators appointed in accordance with
said Rules. Any such arbitration shall be held pursuant to the laws of the
State of Florida unless the parties hereto mutually agree in writing upon some
other location for arbitration. The arbitrators shall not be empowered to
award punitive, exemplary and/or consequential damages to any party. There
shall be no consolidation of this arbitration with any other dispute or
proceeding involving third parties. The provisions of this Agreement shall
prevail in case of inconsistency between the Rules and this Agreement.
15. Stock. As further consideration for the company's appointment
of the Consultant, the Consultant agrees that Douglas Miller or his affiliates
will not sell an amount of stock of the Company in excess of eighty thousand
(80,000) shares within any thirty (30) day period of time. If Company is sold,
merged or upon a change of control, or subsequent public offering, Douglas
Miller will be subject to the same rights and restrictions as a founding
shareholder or insider under SEC rules.
16. Notices. All notices, demands, consents, approvals and
requests given by either party to the other hereunder shall be in writing and
shall be personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, to the parties at the following addresses:
If to the Company: If to the Consultant:
Continucare Corporation Doug Miller
100 Southeast Second Street 303 Egret Lane
Miami, FL 33131 Ft. Lauderdale, FL 33327
Any party may at any time change its or his respective address by sending
written notice to the other party of the change in the manner hereinabove
prescribed.
17. Access to Records. In the event any governmental agency or
its duly authorized representative is entitled to access to any books,
documents, papers and records of the Consultant involving transactions
pertaining to this Agreement, the Consultant agrees to make the same available
for inspection in accordance with the terms and requirements of applicable laws
and regulations.
18. Indemnification. The Consultant agrees to indemnify and
hold the Company harmless from any claims, liabilities, judgments, losses,
costs, penalties, damages and expenses (including reasonable attorneys' fees)
suffered or incurred by the Company as a result of the services provided by the
Consultant hereunder (the "Damages"). The Company shall have the right to
offset the Damages against the payments due to the Consultant hereunder.
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<PAGE> 5
20. Attorneys' Fees. In the event that a suit for the collection
of any damages resulting from or for the injunction of any action constituting
a breach of any of the terms or provisions of this Agreement, then the
prevailing party shall pay all reasonable costs, fees (including reasonable
attorneys' fees) and expenses of the non-prevailing party.
21. Non Waiver. The failure by any party to exercise any right,
remedy or elections herein contained or permitted by law shall not constitute
or be construed as a waiver or relinquishment for the future exercise of such
right, remedy or election, but the same shall continue and remain in full force
and effect.
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CONTINUCARE CORPORATION
By: /s/ Charles M. Fernandez
-----------------------------------
Charles M. Fernandez
Chief Executive Officer
Continucare Corporation
By: /s/ Douglas Miller By: /s/ Douglas Miller
----------------------------------- -----------------------------------
Douglas Miller Douglas Miller
Personally as to Section 15, Stocks President
------ Operational Consultant
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<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Continucare Corporation on Form S-3 of our report dated August 9, 1996, except
for paragraphs six through eleven of Note 11, as to which the date is
October 2, 1996, appearing in the Annual Report on Form 10-KSB-A of Continucare
Corporation for the period ended June 30, 1996 and to the reference to us under
the heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Miami, Florida
November 22, 1996
<PAGE> 1
EXHIBIT 23.3
ARTHUR
ANDERSEN
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountas, we hereby consent to the incorporation by
reference in this Form S-3 registration statement of our report dated
September 17, 1996 included in Zanart Entertainment Incorporated Form 10-KSB
for the year ended June 30, 1996 and to all references to our Firm included
in this registration statement.
/s/ Arthur Anderson, LLP
----------------------------
ARTHUR ANDERSEN LLP
Los Angeles, California
November 21, 1996
