<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT
(PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
CONTINUCARE CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CONTINUCARE CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Parties:
(4) Date Filed:
================================================================================
<PAGE> 2
CONTINUCARE CORPORATION
100 SOUTHEAST SECOND STREET, MIAMI, FLORIDA 33131
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 21, 1998
---------------------------
To the Shareholders of Continucare Corporation
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders
(the "Annual Meeting") of Continucare Corporation, a Florida corporation
("Continucare" or the "Company"), will be held at 10:00 a.m., local time, on
Wednesday, January 21, 1998, at the NationsBank Tower, 19th Floor, 100 Southeast
Second Street, Miami, Florida, for the following purposes:
(1) The election of eight members of the Company's Board of
Directors to hold office until the Company's 1998 Annual
Meeting of Shareholders or until their successors are duly
elected and qualified;
(2) To amend the Company's Amended and Restated 1995 Stock Option
Plan; and
(3) The transaction of such other business as may properly come
before the Annual Meeting and any adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on November 17,
1997 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournment(s) or postponement(s)
thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors
Charles M. Fernandez
Chairman of the Board
Miami, Florida
December 26, 1997
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
<PAGE> 3
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
CONTINUCARE CORPORATION
--------------------------------------------
PROXY STATEMENT
--------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Continucare Corporation, a Florida corporation (the
"Company"), of proxies from the holders of the Company's Common Stock, par value
$.0001 per share (the "Common Stock"), for use at the 1997 Annual Meeting of
Shareholders of the Company to be held at 10:00 a.m., local time, on Wednesday,
January 21, 1998, at the NationsBank Tower, 19th Floor, 100 Southeast Second
Street, Miami, Florida, or at any adjournment(s) or postponement(s) thereof (the
"Annual Meeting"), pursuant to the foregoing Notice of Annual Meeting of
Shareholders. The Proxy Statement and the enclosed form of proxy are first
being sent to holders of Common Stock on or about December 26, 1997.
Shareholders should review the information provided herein in
conjunction with the Company's 1997 Annual Report to Shareholders, which
accompanies this Proxy Statement. The Company's principal executive offices are
located at 100 Southeast Second Street, 36th Floor, Miami, Florida 33131 and its
telephone number is (305) 350-7515.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone and facsimile. The Company's
employees will receive no compensation for soliciting proxies other than their
regular salaries. The Company may request banks, brokers and other custodians,
nominees and fiduciaries to forward copies of the proxy material to their
principals and to request authority for the execution of proxies. The Company
may reimburse such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
(1) The election of eight members to the Company's Board of
Directors to hold office until the Company's 1998 Annual
Meeting of Shareholders or until their successors are duly
elected and qualified;
(2) To amend the Company's Amended and Restated 1995 Stock Option
Plan; and
(3) The transaction of such other business as may properly come
before the Annual Meeting, including any adjournments or
postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted for the election of the nominees for director named below and in
favor of the other matters presented. In the event a shareholder specifies a
different choice by means of the enclosed proxy, his shares will be voted in
accordance with the specification so made.
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<PAGE> 4
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on November 17,
1997 as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 11,396,610 shares of Common Stock outstanding. Only the
holders of issued and outstanding shares of Common Stock are entitled to vote at
the Annual Meeting. Shareholders do not have the right to cumulate their votes,
and are entitled to one vote for each share held.
The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum with respect to all matters presented.
Directors will be elected by a plurality of the votes cast by the shares of
Common Stock represented in person or by proxy at the Annual Meeting. Any other
matter that may be submitted to a vote of the shareholders will be approved if
the number of shares of Common Stock voted in favor of the matter exceeds the
number of shares voted in opposition to the matter, unless such matter is one
for which a greater vote is required by law or by the Company's Articles of
Incorporation or Bylaws. If less than a majority of outstanding shares entitled
to vote are represented at the Annual Meeting, a majority of the shares so
represented may adjourn the Annual Meeting to another date, time or place, and
notice need not be given of the new date, time, or place if the new date, time,
or place is announced at the meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions will
be considered as shares present and entitled to vote at the Annual Meeting and
will be counted as votes cast at the Annual Meeting, but will not be counted as
votes cast for or against any given matter.
A broker or nominee holding shares registered in its name, or in the
names of its nominee, which are beneficially owned by another person and for
which it has not received instructions as to voting from the beneficial owner,
has the discretion to vote the beneficial owner's shares with respect to the
election of directors. If a matter has been included in the proxy to which a
broker or nominee would not have discretionary voting power under applicable
American Stock Exchange rules, any broker or nominee "non-votes" would not be
considered as shares entitled to vote on the subject matter and therefore would
not be considered by the inspector when counting votes cast on the matter.
CHANGE OF CONTROL
On August 9, 1996, the Company signed a definitive Agreement and Plan
of Merger (the "Merger Agreement") with Zanart Subsidiary, Inc. ("ZSI"), a
wholly-owned subsidiary of the Company, and Continucare Acquisition Corp.
(formerly known as Continucare Corporation), a Florida corporation ("CAC"). The
Merger Agreement provided for the merger (the "Merger") of ZSI with and into
CAC. Upon the consummation of the Merger, which occurred on September 11, 1996
(the "Closing Date"), and, pursuant to the terms of the Merger Agreement, (i)
each issued and outstanding share of common stock of CAC converted into one
share of common stock of the Company, the separate existence of ZSI terminated
and CAC became a wholly-owned subsidiary of the Company, (ii) the Company agreed
to sell or otherwise dispose of its assets (other than cash) and discharge all
liabilities prior to December 11, 1996 relating to the licensing business of the
Company prior to the Merger and (iii) the Company's Board of Directors and
management became comprised of designees of CAC. On October 8, 1996, the Company
changed its corporate name from "Zanart Entertainment Incorporated" to
"Continucare Corporation". See the "Security Ownership" table set forth below
for certain information concerning the ownership of the new management,
directors and 5% holders of the Company subsequent to the aforementioned change
in control of the Company.
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<PAGE> 5
SECURITY OWNERSHIP
The following table sets forth certain information as of November 17,
1997 concerning the beneficial ownership of the Common Stock by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each of the executive officers, directors and
director nominees who own shares of the Company, (iii) the Company's Named
Executive Officers (as defined hereafter), and (iv) all executive officers and
directors of the Company as a group. All holders listed below have sole voting
power and investment power over the shares beneficially owned by them, except to
the extent such power may be shared with such person's spouse.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) COMMON STOCK(2)
-------------------------------- ----------------------- ---------------
<S> <C> <C>
Charles M. Fernandez 1,666,667(3) 14.6%
100 S.E. Second Street
36th Floor
Miami, FL 33131
Susan Tarbe 60,000(4) *
100 S.E. Second Street
36th Floor
Miami, FL 33131
Arthur M. Goldberg 975,000(5) 8.5
26 Main Street
Chatham, NJ 07928
Dr. Phillip Frost 1,368,333(6) 11.7
4400 Biscayne Boulevard
Miami, FL 33137
Richard B. Frost 363,700(7) 3.2
7700 W. Camino Real
Boca Raton, FL 33433
Mark J. Hanna 364,900(7) 3.2
7700 W. Camino Real
Boca Raton, FL 33433
Elias F. Ghanem 50,000(4) *
150 E. Harmon Street
Las Vegas, NV 89109
Douglas Miller 910,666(8) 8.0
2215 Canterbury Drive
Mechanicsburg, PA 17055
Barry Goldstein 925,667(8) 8.1
1900 N.E. 211th Street
North Miami Beach, FL 33179
Franklin Templeton Group 8,620,690(9) 18.7
777 Mariners Island Blvd.
San Mateo, CA 94404
Pecks Management Partners 1,862,069(9) 14.0
1 Rockerfeller Plaza, Suite 900
New York, NY 10020
IDS American Express 551,724(9) 4.6
IDS Tower, 31st Floor
Minneapolis, MN 55402
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) COMMON STOCK(2)
-------------------------------- ----------------------- ---------------
<S> <C> <C>
Dean Witter Intercapital 551,724(9) 4.6
2 World Trade Center, 72nd Floor
New York, NY 10048
Putnam Investments 551,724(9) 4.6
1 Post Office Square, 12th Floor
Boston, MA 02109
Carret and Company, Inc. 206,897(9) 1.8
40 E. 52nd Street, 9th Floor
New York, NY 10022
All directors and executive 4,915,290 40.7
officers as a group(12 persons)(10)
</TABLE>
- --------------------
* Less than one percent
(1) For purposes of this table, beneficial ownership is computed pursuant to
Rule 13d-3 under the Exchange Act; the inclusion of shares as beneficially
owned should not be construed as an admission that such shares are
beneficially owned for purposes of the Exchange Act. Under the rules of the
Securities and Exchange Commission, a person is deemed to be a "beneficial
owner" of a security he or she has or shares the power to vote or direct
the voting of such security or the power to dispose of or direct the
disposition of such security. Accordingly, more than one person may be
deemed to be a beneficial owner of the same security.
(2) Based on 11,396,610 shares outstanding as of November 17, 1997. Does not
include (i) 83,192 shares issued in connection with a recent acquisition,
and (ii) 2,250,000 shares issued on December 5, 1997 to Strategic
Investment Partners LLC in a private placement.
(3) All of the shares of Common Stock owned beneficially by Mr. Fernandez are
owned of record by the Fernandez Family Limited Partnership. Includes
50,000 shares of Common Stock underlying options granted which are
currently exercisable.
(4) Represents shares of Common Stock underlying options granted which are
currently exercisable.
(5) All of the shares of Common Stock owned beneficially by Arthur M. Goldberg
are owned of record by Sailfish Investments, LLC. The members of Sailfish
Investments, LLC are Mr. Goldberg and the Arthur M. Goldberg Lifetime
Trust. Includes 50,000 shares of Common Stock underlying options granted
which are currently exercisable.
(6) Includes (i) 1,058,333 shares owed beneficially by Frost Nevada Limited
Partnership and (ii) 10,000 shares owned by Dr. Frost individually. Such
number of shares includes 300,000 shares of Common Stock underlying options
granted which are currently exercisable.
(7) Includes 50,000 shares of Common Stock underlying options granted which are
currently exercisable.
(8) Messrs. Miller and Goldstein have each agreed not to sell more than 15,000
shares of Common Stock during any 30-day period.
(9) Represents shares of Common Stock that may be issued upon the conversion of
8% Convertible Subordinated Notes Due 2002 issued by the Company on October
30, 1997.
(10) Includes 675,000 shares of Common Stock underlying options which are
currently exercisable.
-5-
<PAGE> 7
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Eight persons are nominated for election as directors to serve until
the next Annual Meeting of Shareholders and until each director's successor is
duly elected and qualified. Although Management anticipates that all of the
nominees will be able to serve, if any nominee is unable or unwilling to serve
at the time of the Annual Meeting, proxies solicited hereunder will be voted in
favor of the remaining nominees, if any, and for such other persons as may be
designated by the Board of Directors, unless directed by a proxy to do
otherwise.
The following table sets forth certain information as to the persons
nominated for election as directors of the Company at the Annual Meeting.
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
NAME AGE POSITION
-------------------------------- ----- --------------------------------------
<S> <C> <C>
Charles M. Fernandez 35 Chairman of the Board, Chief Executive
Officer and President*
Phillip Frost, M.D. 61 Vice Chairman of the Board*
Richard B. Frost 49 Director*
Mark J. Hanna 49 Director*
Elias F. Ghanem, M.D. 58 Director*
Robert Soros 34 Director*
Lee S. Hillman 42 Director
J. Kenneth Looloian 75 Director
</TABLE>
--------------------
*Biography is set forth below under "Management -- Directors"
LEE S. HILLMAN has served since October 1996, as the President and
Chief Executive Officer of Bally Total Fitness Holding Corporation ("Bally") and
he currently serves as a director of Bally. Additionally, Mr. Hillman was
Treasurer of Bally from April 1991 to October 1996, Executive Vice President of
Bally from September 1995 to October 1996, Senior Vice President of Bally from
April 1991 to September 1995 and Chief Financial Officer of Bally from April
1991 to May 1994. Mr. Hillman was Vice President, Chief Financial Officer and
Treasurer of Bally Entertainment Corporation ("Entertainment") between November
1991 and December 1996 and Executive Vice President of Entertainment between
August 1992 and December 1996. Mr. Hillman also served as Vice
President-Administration of Bally's Grand, Inc. from August 1993 through
February 1997. From October 1989 to April 1991, Mr. Hillman was a partner with
the accounting firm of Ernst & Young LLP.
J. KENNETH LOOLOIAN is an Executive Vice President of Di Giorgio
Corporation, a former partner in Arveron Investment L.P. and a former Executive
Vice President of International Controls Corporation. Mr. Looloian is also a
director of Bally and of Bally's Grand, Inc.
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<PAGE> 8
MANAGEMENT
DIRECTORS
The Directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
----------------------------- ----- --------------------------------------
<S> <C> <C>
Charles M. Fernandez 35 Chairman of the Board, Chief Executive
Officer and President
Phillip Frost, M.D. 61 Vice Chairman of the Board
Arthur M. Goldberg 55 Director
Richard B. Frost 49 Director
Mark J. Hanna 49 Director
Elias F. Ghanem, M.D. 58 Director
Robert Soros 34 Director
</TABLE>
CHARLES M. FERNANDEZ co-founded Continucare in February of 1996 and has
been involved in all aspects of its operations since that time serving as its
Chairman of the Board, President and Chief Executive Officer. Since 1985 and
prior to founding Continucare, Mr. Fernandez was the Executive Vice President
and Director of Heftel Broadcasting Corporation ("HBC"), a public company owning
a network of radio stations. At HBC, Mr. Fernandez was involved in the
acquisition of 17 broadcast companies and played an instrumental role in HBC's
growth in revenues from $4 million in 1985 to approximately $65 million in 1995.
Mr. Fernandez has also been an officer of Bally Entertainment Corporation since
January 1996, where he provides advice concerning growth and acquisitions for
Bally in Florida and Latin America.
PHILLIP FROST, M.D. has served as Vice Chairman of Continucare since
September 1996. Dr. Frost has served, since 1987, as Chairman of the Board and
Chief Executive Officer of IVAX Corporation, a Florida corporation ("IVAX"), the
world's largest generic pharmaceutical manufacturer. He served as IVAX's
President from July 1991 until January 1995. Dr. Frost also serves as Vice
Chairman of the Board of Pan American World Airways, Inc. He was the Chairman of
the Department of Dermatology at Mt. Sinai Medical Center of Greater Miami,
Miami Beach, Florida from 1970 to 1992. Dr. Frost was Chairman of the Board of
Directors of Key Pharmaceutical, Inc. from 1972 to 1986. He is Vice Chairman of
the Board of Directors of North American Vaccine, Inc. ("NAV"), and a director
of Whitman Education Group, which is engaged in proprietary education
("Whitman") and Northrup Grumman. He is a trustee of the University of Miami and
a member of the Board of Governors of the American Stock Exchange. Dr. Frost is
the uncle of Richard B. Frost.
ARTHUR M. GOLDBERG has served as a director of Continucare since
September 1996. Mr. Goldberg has been a director of Bally since 1990, has served
as Chairman of the Board of Directors of Bally since September 1995, and was
Bally's Chief Executive Officer from September 1995 until October 1996. Mr.
Goldberg also serves as Executive Vice President, President -- Gaming Operations
and a director of Hilton Hotels Corporation, and he was Chairman of the Board of
Directors and Chief Executive Officer of Entertainment between October 1990 and
December 1996, and President of Entertainment between January 1993 and December
1996. Mr. Goldberg has been Chairman of the Board of Directors of Bally's Grand,
Inc. since August 1992 and has been its Chief Executive Officer since September
1992. In addition, Mr. Goldberg has been Chairman of the Board of Directors,
President and Chief Executive Officer of Di Giorgio Corporation and a director
of White Rose Foods, Inc., a food distribution company, since 1990. Mr. Goldberg
is also a director of First Union Corporation, a financial services company, and
Managing Partner of Arveron Investments L.P., an investment partnership.
RICHARD B. FROST has served as a Director of Continucare since
September 1996. Mr. Frost has been the Chief Executive Officer and Chairman of
the Board of Directors of Frost Hanna Capital Group, Inc. since February 1996,
its inception. Mr. Frost was the Chief Executive Officer and Chairman of the
Board of Directors of Frost Hanna Mergers
-7-
<PAGE> 9
Group, Inc. ("FH") from its formation in October 1993 until September 1996. Mr.
Frost was the Chief Executive Officer and Chairman of the Board of Directors of
Frost Hanna Acquisition from April 1993 until January 1996. From June 1992 to
May 1994, Mr. Frost held similar positions at Frost Hanna Halpryn until the
merger of Sterling Healthcare, Inc. and Sterling Healthcare Group, Inc. with and
into a wholly-owned subsidiary of Frost Hanna Halpryn (the "Sterling Merger").
From February 1992 through May 1992, Mr. Frost was Regional Director of GKN
Securities Corp., a broker-dealer ("GKN"). Mr. Frost was a Vice President and
Branch Manager of Dean Witter Reynolds.
MARK J. HANNA has served as a Director of Continucare since September
1996. Mr. Hanna has been the President and a member of the Board of Directors of
Frost Hanna Capital Group, Inc. since February 1996, its inception. Mr. Hanna
was the President and a member of the Board of Directors of FH from its
formation on October 1993 until September 1996. Mr. Hanna was the President and
a member of the Board of Directors of Frost Hanna Acquisition from April 1993
until January 1996. Mr. Hanna held similar positions at Frost Hanna Halpryn from
June 1992 until the Sterling Merger in May 1994. From February 1992 through May
1992, Mr. Hanna was a registered representative with GKN. From January 1992
through February 1992, Mr. Hanna was a registered representative with Barron
Chase Securities, Inc. From September 1990 through January 1992, Mr. Hanna was a
registered representative with Prudential Bache Securities, Inc.
ELIAS F. GHANEM, M.D. was appointed to the Board in December 1996. Dr.
Ghanem has been a practicing physician since 1971. Dr. Ghanem created a health
care system in Nevada in 1989. In 1994, Dr. Ghanem expanded his healthcare
products to include a health maintenance organization and a national healthcare
consulting firm.
ROBERT SOROS was appointed to the Board of Directors in December 1996.
Mr. Soros' principal occupation is as a senior investment professional with
Soros Fund Management LLC ("SFM"). He is charged with the oversight of various
private equity and real estate investments made by the Quantum group of funds
and other affiliates of SFM. Prior to joining SFM, Mr. Soros worked in the risk
arbitrage area at Prudential Bache Securities, Inc.
EXECUTIVE OFFICERS
Charles M. Fernandez, who is a director of the Company, is also an
executive officer of the Company. Reference is made to the description of the
business experience of Mr. Fernandez set forth above under
"Management--Directors," which is incorporated herein by reference.
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- ----- --------------------------------------------
<S> <C> <C>
Charles M. Fernandez 35 Chairman of the Board, Chief Executive
Officer and President
Susan Tarbe 41 Executive Vice President and General Counsel
Joseph P. Abood 43 Chief Financial Officer and Treasurer
Steven J. Baldwin 49 Senior Vice President of Physical
Rehabilitation
Norman B. Gaylis, M.D. 47 Senior Vice President, Chief Operating
Officer of Physician Practice Division
Carlis R. Sabinson 53 Vice President of Compliance and Security
</TABLE>
SUSAN TARBE joined Continucare in September 1996 as Executive Vice
President and General Counsel. Prior to joining the Company, Ms. Tarbe was an
Assistant United States Attorney for the Southern District of Florida since
September 1985. During her employment with the United States Attorney's office,
Ms. Tarbe specialized in the area of white-collar criminal offenses, and since
May of 1994 was the Chief of the Economic Crimes Unit. From August 1984 to
August 1985, Ms. Tarbe was a law clerk to the Honorable William M. Hoeveler,
U.S. District Judge for the Southern District of Florida.
-8-
<PAGE> 10
JOSEPH P. ABOOD joined Continucare as its Chief Financial Officer and
Treasurer in October 1997. Prior to joining the Company, Mr. Abood practiced as
an independent consultant since 1994 to various HMO's and hospitals. As a
consultant, Mr. Abood analyzed and implemented managed care financial systems.
Simultaneously, in 1995, Mr. Abood served as an adjunct professor in the area of
finance at the University of Miami School of Business. From 1991 to 1994, Mr.
Abood served as Secretary and Treasurer of Ramsay-HMO, Inc. Mr. Abood is a
certified public accountant and was previously employed by both Ernst & Young
and Deloitte & Touche.
STEVEN J. BALDWIN joined Continucare in September 1997 as Senior Vice
President of Physical Rehabilitation. From 1987 to 1995, Mr. Baldwin served as
Chief Operating Officer and later as President of Pro Rehab, a significant
contract service subsidiary of Continental Medical Systems ("CMS") which had
acquired Pro Rehab. The sale of Pro Rehab to CMS included a non-compete for Mr.
Baldwin which expired June 30, 1997. From December, 1996 to prior to joining
Continucare, Mr. Baldwin served as a rehab consultant for the Presbyterian
Healthcare System in Charlotte, North Carolina. From 1985 to 1987, Mr. Baldwin
functioned in various senior management positions for Nova Care during the
period it completed its initial public offering. From 1983 to 1984, Mr. Baldwin
conducted speech therapy in a sole practice specializing in geriatric care.
NORMAN B. GAYLIS, M.D. joined Continucare in April 1997 upon
consummation of the Arthritis Rehab Acquisition and was appointed the Senior
Vice President, Chief Operating Officer of Physician Practice Division in
October 1997. Dr. Gaylis has been a practicing rheumatologist in Florida for
over twenty years. He is Board certified in rheumatology, and is an Associate
Professor of rheumatology at the University of Miami School of Medicine.
CARLIS R. SABINSON joined Continucare in March 1997 as the Vice
President for Compliance and Security. Prior to joining the Company, Mr.
Sabinson served at the Federal Bureau of Investigation (the "FBI") for over
twenty-six years in various capacities, including serving as the head of the
Economic Crime Program in the FBI's Miami Division and as Supervisor of the
FBI's Civil Rights Program. Mr. Sabinson was also an instructor at the FBI
Academy and FBI liaison to the White House, U.S. Supreme Court, and the U. S.
Department of Justice.
Officers of the Company serve at the pleasure of the Board of
Directors, subject to the terms of any employment agreements with the Company.
See "-Employment Agreements." Except as noted above, there are no family
relationships among any of the Company's executive officers and directors.
DIRECTOR COMPENSATION
The Company's directors do not currently receive any cash compensation
for service on the Board of Directors but may be reimbursed for certain expenses
in connection with attendance at Board of Director meetings or other meetings on
the Company's behalf. The Company's directors are eligible to receive options
under the Company's Stock Option Plan.
COMMITTEES AND MEETINGS
During fiscal year 1997, the Board of Directors held five meetings
which include certain actions by unanimous written consent. Each director
attended at least 75% of the aggregate of (i) the number of such meetings, and
(ii) the number of meetings of Committees of the Board held during fiscal year
1997 during the period of such director's service.
The Compensation Committee currently consists of Messrs. Arthur M.
Goldberg (Chairman), Dr. Phillip Frost and Mark J. Hanna. The Compensation
Committee met once in fiscal year 1997. The primary function of the Compensation
Committee is to review and approve the Company's compensation policies and
practices, propose compensation levels for directors and officers, and propose
changes in the Company's benefit plans.
The Audit Committee is currently composed of Messrs. Charles M.
Fernandez (Chairman), Mark J. Hanna and Richard B. Frost. The Audit Committee
met once during fiscal year 1997. The primary function of the Audit Committee is
to assist the Board of Directors in fulfilling its responsibilities with respect
to the accounting and financial reporting practices of the Company, and to
address the scope and expense of audit and related services provided by the
Company's independent accountants.
-9-
<PAGE> 11
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer and each of the most highly compensated
executive officers of the Company whose total annual salary and bonus,
determined as of the end of the fiscal year ended June 30, 1997, exceeded
$100,000 (the "Named Executive Officers"). No executive officer of the Company's
predecessor was paid in excess of $100,000 in fiscal years 1996 or 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
NO. OF
OTHER SECURITIES
NAME AND FISCAL ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS COMPENSATION
------------------ ---- ---------- --------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Fernandez,
President and Chief
Executive Officer..... 1997 327,880 20,000 36,360(1) -0- -0-
Susan Tarbe, Executive
Vice President and
General Counsel....... 1997 97,000 40,000(2) -0-(3) 100,000 1,118(4)
</TABLE>
- --------------
(1) Includes $13,155 in car allowance and $20,205 in insurance benefits.
(2) Includes a signing bonus in the amount of $2,500 and a bonus paid in
September 1997 for services rendered in fiscal 1997.
(3) The total perquisites and other personal benefits provided is less than 10%
of the total annual salary and bonus to such officer.
(4) Reflects matching contributions to the Company's 401(k) plan which is
earned during fiscal 1997 but not paid until December 31, 1997.
OPTION GRANTS DURING FISCAL 1997
OPTION GRANTS TABLE. The following table sets forth certain information
concerning grants of stock options made during fiscal 1997 to each of the Named
Executive Officers. The Company did not grant any stock appreciation rights in
fiscal 1997.
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS IN 1997
- --------------------------------------------------------------------------------------------------------------
SHARES OF COMMON
STOCK UNDERLYING % OF TOTAL GRANTED
NAME OPTIONS GRANTED TO EMPLOYEES OPTION PRICE ($) EXPIRATION DATE
- --------------------------- ---------------- ------------------ ---------------- ---------------
<S> <C> <C> <C> <C>
Susan Tarbe 100,000 86.9% $5.00 9/23/06
</TABLE>
- ---------------------------
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR END OPTION VALUES
The following table sets forth information with respect to (i) the
number of unexercised options held by the Named Executive Officers as of June
30, 1997, and (ii) the value as of June 30, 1997 of unexercised in-the-money
options. No options were exercised by any of the Named Executive Officers in
1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT JUNE 30, 1997 AT JUNE 30, 1997 ($)(1)
----------------------------------- ------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Susan Tarbe 0 100,000 0 87,500
</TABLE>
- -------------------
(1) Market value of shares covered by in-the-money options on June 30, 1997,
less option exercise price. Options are in-the-money if the market value of
the shares covered thereby is greater than the option exercise price.
-10-
<PAGE> 12
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Charles M.
Fernandez and Susan Tarbe. Mr. Fernandez's employment agreement is for a term of
three years plus one additional year for each year of service and became
effective on September 11, 1996, and provides for an annual base salary of
$350,000 and a bonus of $100,000 payable in 20 equal installments of $5,000 over
the first five years of such agreement. Pursuant to the terms of Mr. Fernandez's
employment agreement, he may receive additional bonuses at the discretion of the
Board. Mr. Fernandez is prohibited from competing with the Company for the
duration of his employment agreement and for a period of two years thereafter
unless he is terminated without cause, and he is additionally prohibited from
disclosing confidential information.
Ms. Tarbe's employment agreement, as amended, is for a term of three years
commencing September 23, 1996, and provides for an annual base salary of
$180,000 and a bonus as may be determined by the Chairman and approved by the
Board. Under the terms of Ms. Tarbe's employment agreement, she received an
option to purchase 100,000 shares of the Company at $5.00 per share. Upon a
change in control of the Company, Ms. Tarbe is entitled to an acceleration of
the remainder of her employment agreement and automatic vesting of any unvested
portion of her aforementioned warrant. Ms. Tarbe is prohibited from competing
with the Company for the duration of her employment agreement and for a period
of ninety days thereafter unless she is terminated without cause, and she is
additionally prohibited from disclosing confidential information.
CERTAIN TRANSACTIONS
During fiscal 1997, the Company was obligated to Charles M. Fernandez
for a note payable in the amount of $599,750 (the "Fernandez Note"). The
Fernandez Note, was paid in full in August 1997. The Fernandez Note bore
interest at 10% per annum and matured on February 12, 1998. Accrued interest and
interest expense related to this note was $60,923 as of and for the period ended
June 30, 1997.
During the 1996 and 1997 fiscal years, the Company received management
fees of $344,000 and $878,000, respectively for managing four facilities owned
by a company that is controlled by Douglas Miller and Barry Goldstein, each of
whom own more than 5% of the Company's Common Stock. In addition, during the
1996 and 1997 fiscal years, the actual costs of expenses incurred by such
company for managerial and administrative services performed by it on behalf of
Continucare was $408,000 and $314,000, respectively. Also, at the time of the
Merger with Zanart, Continucare entered into consulting agreements with two
companies controlled by Messrs. Miller and Goldstein. Under such consulting
agreements, Messrs. Miller and Goldstein were paid consulting fees of $188,000
and $199,000, respectively, during fiscal 1997. All of these arrangements were
terminated during the 1997 fiscal year, at which time the Company redeemed an
aggregate of 1,262,000 shares of Common Stock from Messrs. Miller and Goldstein.
In February 1997, the Company entered into an agreement with Bally
Total Fitness ("Bally"), pursuant to which the Company will establish, subject
to certain conditions, outpatient rehabilitation centers at Bally fitness
centers nationwide. The Company began implementing its February 1997 agreement
with Bally in July 1997. Mr. Goldberg, a director of the Company, and Messrs.
Hillman and Looloian, director nominees of the Company, are affiliates of Bally.
See "Management - Directors" and "Election of Directors."
In April 1997, the Company entered into a Management Services Agreement
with a management company affiliated with Dr. Gaylis, an executive officer of
the Company. Under such agreement, the management company is paid an hourly rate
for services performed (up to a maximum of $200,000, $400,000 and $600,000 for
the 12-month periods ending March 31, 1998, March 31, 1999, and March 31, 2000,
respectively).
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of the Company's outstanding Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Such persons are required by SEC
regulation to furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners have been
satisfied.
-11-
<PAGE> 13
PROPOSAL TO AMEND THE COMPANY'S
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
(PROPOSAL NO. 2)
The Company's Board of Directors has unanimously adopted, subject to
the approval by the Company's shareholders, a resolution to approve an amendment
to the Company's Amended and Restated 1995 Stock Option Plan (the "Stock Option
Plan") increase the number of shares eligible for grant under the Stock Option
Plan from 1,200,000 to 1,750,000. The current text of the Stock Option Plan is
attached hereto as Exhibit A. The material features of the Stock Option Plan are
discussed below, but the description is subject to, and is qualified in its
entirety by, the full text of the Stock Option Plan.
The Stock Option Plan has been amended and restated to increase the
number of shares eligible for grant from 1,200,000 to 1,750,000, and to respond
to certain changes made to Rule 16b-3 ("Rule 16b-3)" of the Exchange Act. The
changes to Rule 16b-3 were announced by the SEC in May 1996, and became
effective as of November 1, 1996. The changes to Rule 16b-3 are designed to
simplify administration of stock option plans. Consistent with the changes to
Rule 16b-3, the proposed amendment provides for the following: (i) providing
that the Compensation Committee is comprised of Outside Directors rather than
Non-Employee Directors, (ii) permitting the grant of options to Non-Employee
Directors in the Stock Option Plan, (iii) permitting the transfer of
Nonqualified Stock Options with the prior written consent of the Compensation
Committee or the Board, (iv) enabling the Board of Directors or the Compensation
Committee to amend, suspend or terminate the Stock Option Plan from time to time
without shareholder approval; provided, however, that any amendment to the Stock
Option Plan shall be subject to the approval of the Company's shareholders if
such shareholder approval is required by any federal or state law or regulation
(including, without limitation, Rule 16b-3 or to comply with Section 162(m) of
the Code) or the rules of any stock exchange or automated quotation system on
which the Common Stock may then be listed or granted. Previously, the Stock
Option Plan could not be amended without shareholder approval if the amendment
would materially (a) increase the benefits accruing to participants under the
Stock Option Plan, (b) increase the number of securities that may be issued
under the Stock Option Plan, or (c) modify the requirements as to eligibility
for participation in the Stock Option Plan.
GENERAL TERMS AND CONDITIONS
The purpose of the Stock Option Plan is to advance the interest of the
Company by providing additional incentives to attract and retain qualified and
competent persons who are key to the Company (including its subsidiaries),
including key employees, officers, directors, independent contractors and
consultants and upon whose efforts and judgment the success of the Company and
such entities is largely dependent, through the encouragement of stock ownership
in the Company by such persons. In furtherance of this purpose, the Stock Option
Plan authorizes (a) the granting of incentive or nonqualified stock options to
purchase Common Stock to key employees, executive officers, directors (whether
or not employees), independent contractors and consultants satisfying the
description above, (b) the provision of loans for the purpose of financing the
exercise of options and the amount of taxes payable in connection therewith, and
(c) the use of already owned Common Stock as payment of the exercise price for
options granted under the Stock Option Plan and other forms of cashless
exercises of options. A total of 1,200,000 shares of Common Stock are currently
reserved for issuance under the Stock Option Plan. As of November 17, 1997,
options to purchase 889,000 shares of Common Stock had been granted under the
Stock Option Plan, exclusive of cancelled options but inclusive of exercised
options.
The Compensation Committee of the Board of Directors, or the Board, if
this proposal is approved by the shareholders at the Annual Meeting, has the
power to determine the terms of options granted to employee directors and all
other eligible participants, including the exercise price, the number of shares
subject to the option and the exercisability thereof. Each option is exercisable
after the period or periods specified in the option agreement, but no option may
be exercisable after the expiration of ten years from the date of grant. In
general, options granted under the Stock Option Plan are not transferable other
than by will or by the laws of descent and distribution, however, Non-Qualified
Stock Option may be transferred with the prior written consent of the Committee
or the Board and provided that the transfer does not violate the provisions of
Rule 16b-3 of the Exchange Act. The Stock Option Plan also
-12-
<PAGE> 14
authorizes the Company to make loans to optionees to enable them to exercise
their options. Such loans must (i) provide for recourse to the optionee, (ii)
bear interest at a rate no less than the prime rate of interest of the Company's
principal lender, and (iii) be secured by the shares of Common Stock purchased.
The Compensation Committee or the Board of Directors has the authority to amend
or terminate the Stock Option Plan, provided that no such action may impair the
rights of the holder of any outstanding option without the written consent of
such holder, and provided further that certain amendments of the Stock Option
Plan are subject to shareholder approval. Unless terminated sooner, the Stock
Option Plan will terminate ten years from its effective date.
Subject to the provisions in any separate employment agreement with an
optionee, the unexercised portion of any option granted to an employee under the
Stock Option Plan shall automatically be terminated (a) three months after the
date on which the optionee's employment is terminated for any reason other than
(i) Cause (as defined in the Stock Option Plan), (ii) mental or physical
disability, or (iii) death; (b) immediately upon the termination of the
optionee's employment for Cause; (c) one year after the date on which the
optionee's employment is terminated by reason of mental or physical disability;
or (d)(i) twelve months after the date on which the optionee's employment is
terminated by reason of the death of the employee, or (ii) three months after
the date on which the optionee shall die if such death shall occur during the
one year period following the termination of the optionee's employment by reason
of mental or physical disability.
To prevent dilution of the rights of a holder of an option, the Stock
Option Plan provides for adjustment of the number of shares for which options
may be granted, the number of shares subject to outstanding options and the
exercise price of outstanding options in the event of any subdivision or
consolidation of shares, any stock dividend, recapitalization or other capital
adjustment of the Company. Provisions governing the effect upon options of a
merger, consolidation or other reorganization of the Company are also included
in the Stock Option Plan.
FEDERAL INCOME TAX EFFECTS
The Stock Option Plan is not qualified under the provisions of Section
401(a) of the Code, nor is it subject to any of the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
Nonqualified Stock Options. On exercise of a nonqualified stock option
granted under the Stock Option Plan, an optionee (other than an officer or
director of the Company) will recognize ordinary income equal to the excess, if
any, of the fair market value on the date of exercise of the option of the
shares of Common Stock acquired on exercise over the exercise price. That income
will be subject to the withholding of Federal income tax. The optionee's tax
basis in those shares will be equal to their fair market value on the date of
exercise of the option, and his holding period for those shares will begin on
that date.
If an optionee pays for shares of Common Stock on exercise of an option
by delivering shares of the Company's Common Stock, the optionee will not
recognize gain or loss on the shares delivered, even if their fair market value
at the time of exercise differs from the optionee's tax basis in them. The
optionee, however, otherwise will be taxed on the exercise of the option in the
manner described above as if he had paid the exercise price in cash. If a
separate identifiable stock certificate is issued for that number of shares
equal to the number of shares delivered on exercise of the option, the
optionee's tax basis in the shares represented by that certificate will be equal
to his tax basis in the shares delivered, and his holding period for those
shares will include his holding period for the shares delivered. The optionee's
tax basis and holding period for the additional shares received on exercise of
the option will be the same as if the optionee had exercised the option solely
in exchange for cash.
The Company will be entitled to a deduction for Federal income tax
purposes equal to the amount of ordinary income taxable to the optionee,
provided that amount constitutes an ordinary and necessary business expense for
the Company and is reasonable in amount, and either the employee includes that
amount in income or the Company timely satisfies its reporting requirements with
respect to that amount.
-13-
<PAGE> 15
Incentive Stock Options. The Stock Option Plan provides for the grant
of stock options that qualify as "incentive stock options" as defined in section
422 of the Code to employees of the Company or its subsidiaries. Under the Code,
an optionee generally is not subject to tax upon the grant or exercise of an
incentive stock option. In addition, if the optionee holds a share received on
exercise of an incentive stock option for at least two years from the date the
option was granted and at least one year from the date the option was exercised
(the "Required Holding Period"), the difference, if any, between the amount
realized on a sale or other taxable disposition of that share and the holder's
tax basis in that share will be long-term capital gain or loss.
If, however, an optionee disposes of a share acquired on exercise of an
incentive stock option before the end of the Required Holding Period (a
"Disqualifying Disposition"), the optionee generally will recognize ordinary
income in the year of the Disqualifying Disposition equal to the excess, if any,
of the fair market value of the share on the date the incentive stock option was
exercised over the exercise price. If, however, the Disqualifying Disposition is
a sale or exchange on which a loss, if realized, would be recognized for Federal
income tax purposes, and if the sales proceeds are less than the fair market
value of the share on the date of exercise of the option, the amount of ordinary
income the optionee recognizes will not exceed the gain, if any, realized on the
sale. If the amount realized on a Disqualifying Disposition exceeds the fair
market value of the share on the date of exercise of the option, that excess
will be short-term or long-term capital gain, depending on whether the holding
period for the share exceeds one year.
An optionee who exercises an incentive stock option by delivering
shares of Common Stock acquired previously pursuant to the exercise of an
incentive stock option before the expiration of the Required Holding Period for
those shares is treated as making a Disqualifying Disposition of those shares.
This rule prevents "pyramiding" the exercise of an incentive stock option (that
is, exercising an incentive stock option for one share and using that share, and
others so acquired, to exercise successive incentive stock options) without the
imposition of current income tax.
For purposes of the alternative minimum tax, the amount by which the
fair market value of a share of Common Stock acquired on exercise of an
incentive stock option exceeds the exercise price of that option generally will
be an item of adjustment included in the optionee's alternative minimum taxable
income for the year in which the option is exercised. If, however, there is a
Disqualifying Disposition of the share in the year in which the option is
exercised, there will be no item of adjustment with respect to that share. If
there is a Disqualifying Disposition in a later year, no income with respect to
the Disqualifying Disposition is included in the optionee's alternative minimum
taxable income for that year. In computing alternative minimum taxable income,
the tax basis of a share acquired on exercise of an incentive stock option is
increased by the amount of the item of adjustment taken into account with
respect to that share for alternative minimum tax purposes in the year the
option is exercised.
Importance of Consulting Tax Adviser. The information set forth above
is a summary only and does not purport to be complete. In addition, the
information is based upon current federal income tax rules and therefore is
subject to change when those rules change. Moreover, because the tax
consequences to any optionee may depend on his or her particular situation, each
optionee should consult his or her tax adviser as to the Federal, state, local
and other tax consequences of the grant or exercise of an option or the
disposition of Common Stock acquired on exercise of an option.
OPTIONS GRANTED UNDER THE STOCK OPTION PLAN
As of November 17, 1997 nonqualified stock options to purchase an
aggregate of 889,000 shares of Common Stock had been granted to approximately 20
persons (including options that have been exercised, but excluding cancelled
options). The options were granted at exercise prices ranging from $5.00 to
$6.75 per share (the fair market value of the Common Stock as of the dates of
grant).
-14-
<PAGE> 16
The table below indicates, as of November 17, 1997, the aggregate
number of options granted under the Stock Option Plan since its inception
(including options that have been exercised but excluding options that have been
cancelled) to the persons and groups indicated.
<TABLE>
<CAPTION>
NUMBER OF
OPTIONS
OPTION GRANTEE GRANTED
- -------------- ----------
<S> <C>
Charles M. Fernandez
Chief Executive Officer, President and Director..................................... 100,000(1)
Susan Tarbe
Executive Vice President and General Counsel........................................ 100,000(2)
All current executive officers as a group (6 persons).................................... 325,000(3)
All current directors who are not executive officers as a group (6 persons).............. 500,000(1)
All persons, other than executive officers and directors (16 persons).................... 64,000(2)
</TABLE>
- --------------------
(1) Options issued at an exercise price of $5.125 per share (the fair market
value of Common Stock on the date of grants).
(2) Options issued at an exercise price of $5.00 per share (the fair market
value of Common Stock on the date of grant).
(3) Options issued at prices ranging from $5.00 to $6.75.
The Compensation Committee believes that options granted under the
Stock Option Plan have been and will be awarded primarily to those persons who
possess a capacity to contribute significantly to the successful performance of
the Company. Because persons to whom grants of options are to be made are to be
determined from time to time by the Compensation Committee in its discretion, it
is impossible at this time to indicate the precise number, name or positions of
persons who will hereafter receive options or the number of shares for which
options will be granted, except (i) to the extent already granted, and (ii) no
one plan participant may be granted more than 500,000 options, subject to
adjustment under certain conditions. VOTE REQUIRED AND RECOMMENDATION
The Compensation Committee of the Board of Directors has approved the
Stock Option Plan as amended in this Proposal No. 2 and is recommending approval
by the shareholders because it believes that the amendment set forth hereinabove
are in the Company's best interests.
The affirmative vote of a majority of the votes of Common Stock present
in person or by proxy at the Annual Meeting and entitled to vote will be
required for approval of the proposal to amend the Stock Option Plan as set
forth hereinabove.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL
TO AMEND THE COMPANY'S 1995 AMENDED AND RESTATED STOCK OPTION PLAN.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Representatives of Deloitte & Touche LLP, the Company's current
independent auditors, are expected to be present at the Annual Meeting and will
be afforded the opportunity to make a statement if they so desire and to respond
to appropriate questions.
The accounting firm of Arthur Andersen LLP ("Arthur Andersen")
represented Zanart as its independent accountants during fiscal years 1995 and
1996 and was dismissed by the Company's Board of Directors on November 15, 1996
as a result of the Merger. During such 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 fiscal years 1995 and 1996 did not contain an
adverse opinion or disclaimer of opinion, and were not qualified or modified as
to uncertainty, audit scope, or accounting principles.
Representatives of Arthur Andersen will not be present at the Annual Meeting.
-15-
<PAGE> 17
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no other business to be presented at the Company's 1997 Annual
Meeting of Shareholders. If any other business should properly come before the
Company's 1997 Annual Meeting of Shareholders, the persons named in the
accompanying proxy will vote thereon as in their discretion they may deem
appropriate, unless they are directed by a proxy to do otherwise.
SHAREHOLDER PROPOSALS
Proposals by holders of the Company's Common Stock which are intended
to be presented at the next annual meeting of shareholders must be received by
the Company for inclusion in the Company's next proxy statement and form of
proxy relating to that meeting no later than August 28, 1998. Such proposals
must also comply in full with the requirements of Rule 14a-8 promulgated under
the Exchange Act.
By Order of the Board of Directors,
Charles M. Fernandez
Chairman of the Board of Directors
Miami, Florida
December 26, 1997
-16-
<PAGE> 18
EXHIBIT A
---------------------------------------
CONTINUCARE CORPORATION
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
---------------------------------------
1. Purpose. The purpose of this Plan is to advance the interests of
Continucare Corporation, a Florida corporation (the "Company"), providing an
additional incentive to attract and retain qualified and competent persons who
are key to the Company (as hereinafter defined), including key employees,
Officers, Directors, independent contractors and consultants, and upon whose
efforts and judgment the success of the Company is largely dependent, through
the encouragement of stock ownership in the Company by such persons.
2. Definitions. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean the stock option committee
appointed by the Board pursuant to Section 13 hereof or, if not appointed, the
Board.
(d) "Common Stock" shall mean the Company's Common Stock, par
value $0.0001 per share.
(e) "Company" shall refer to Continucare Corporation, a
Florida corporation and its subsidiaries.
(f) "Director" shall mean a member of the Board.
(g) "Employee Director" shall mean a member of the Board who
is also an employee of the Company or a Subsidiary.
(h) "Fair Market Value" of a Share on any date of reference
shall be the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding such date, unless the Committee or the Board
in its sole discretion shall determine otherwise in a fair and uniform manner.
For the purpose of determining Fair Market Value, the "Closing Price" of the
Common Stock on any business day shall be (i) if the Common Stock is listed or
admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of Common Stock on such exchange
or reporting system, as reported in any newspaper of general circulation, (ii)
if the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the last
reported sale price of Common Stock on NASDAQ or such system, or (iii) if
neither clause (i) or (ii) is applicable, the mean between the high bid and low
asked quotations for the Common Stock as reported by the National Quotation
Bureau, Incorporated if at least two securities dealers have inserted both bid
and asked quotations for Common Stock on at least five of the ten preceding
days. If neither (i), (ii) or (iii) above is applicable, then Fair Market Value
shall be determined in good faith by the Committee or the Board in a fair and
uniform manner.
(i) "Incentive Stock Option" shall mean an incentive stock
option as defined in Section 422 of the Code.
A-1
<PAGE> 19
(j) "Non-Employee Director" shall mean a member of the Board
who is not an employee of the Company or a Subsidiary.
(k) "Non-Statutory Stock Option" shall mean an Option which is
not an Incentive Stock Option.
(l) "Officer" shall mean the Company's president, principal
financial officer, principal accounting officer (or, if there is no such
accounting officer, the controller), any vice-president of the Company in charge
of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policy-making functions for
the Company. Officers of Subsidiaries shall be deemed Officers of the Company if
they perform such policy-making functions for the Company. As used in this
paragraph, the phrase "policy-making function" does not include policy-making
functions that are not significant. Unless specified otherwise in a resolution
by the Board, an "executive officer" pursuant to Item 401(b) of Regulation S-K
(17 C.F.R. ss. 229.401(b)) shall be only such person designated as an "Officer"
pursuant to the foregoing provisions of this paragraph.
(m) "Option" (when capitalized) shall mean any option granted
under this Plan.
(n) "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
(o) "Outside Director" shall mean a member of the Board who
qualifies as an "outside director" under Code Section 162(m) and the regulations
thereunder and as a "Non-Employee Director" under Rule 16b-3 promulgated under
the Securities Exchange Act.
(p) "Plan" shall mean this Stock Option Plan for the Company.
(q) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(r) "Share(s)" shall mean a share or shares of the Common
Stock.
(s) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. Shares and Options. The Committee or the Board may grant to
Optionees from time to time Options to purchase an aggregate of up to 1,750,000
Shares from authorized and unissued Shares. If any Option granted under the Plan
shall terminate, expire, or be canceled or surrendered as to any Shares, new
Options may thereafter be granted covering such Shares.
4. Incentive and Non-Qualified Options. An Option granted hereunder
shall be either an Incentive Stock Option or a Non-Qualified Stock Option as
determined by the Committee or the Board at the time of grant of such Option and
shall clearly state whether it is an Incentive Stock Option or a Non-Qualified
Stock Option. All Incentive Stock Options shall be granted within 10 years from
the effective date of this Plan.
5. Dollar Limitation. Options otherwise qualifying as Incentive Stock
Options hereunder will not be treated as Incentive Stock Options to the extent
that the aggregate Fair Market Value (determined at the time the Option is
granted) of the Shares, with respect to which Options meeting the requirements
of Code Section 422(b) are exercisable for the first time by any individual
during any calendar year (under all plans of the Company and any Subsidiary as
defined in Code Section 424), exceeds $100,000.
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6. Conditions for Grant of Options.
(a) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee or the
Board, provided such terms are not inconsistent with this Plan or any applicable
law. The Optionees shall be (i) those persons selected by the Committee or the
Board from the class of all regular employees of the Company or its
Subsidiaries, including Employee Directors and Officers who are regular
employees of the Company and (ii) Non-Employee Directors. Any person who files
with the Committee, in a form satisfactory to the Committee, a written waiver of
eligibility to receive any Option under this Plan shall not be eligible to
receive any Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee or the Board shall take
into consideration the contribution the person has made to the success of the
Company or its Subsidiaries and such other factors as the Committee or the Board
shall determine. The Committee or the Board shall also have the authority to
consult with and receive recommendations from officers and other personnel of
the Company and its Subsidiaries with regard to these matters. The Committee or
the Board may from time to time in granting Options under the Plan prescribe
such other terms and conditions concerning such Options as it deems appropriate,
including, without limitation, (i) prescribing the date or dates on which the
Option becomes exercisable, (ii) providing that the Option rights accrue or
become exercisable in installments over a period of years, or upon the
attainment of stated goals or both, or (iii) relating an Option to the continued
employment of the Optionee for a specified period of time, provided that such
terms and conditions are not more favorable to an Optionee than those expressly
permitted herein.
(c) The Options granted to employees under this Plan shall be
in addition to regular salaries, pension, life insurance or other benefits
related to their employment with the Company or its Subsidiaries. Neither the
Plan nor any Option granted under the Plan shall confer upon any person any
right to employment or continuance of employment by the Company or its
Subsidiaries.
(d) Notwithstanding any other provision of this Plan, an
Incentive Stock Option shall not be granted to any person owning directly or
indirectly (through attribution under Section 424(d) of the Code) at the date of
grant, stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company (or of its parent or subsidiary corporation [as
defined in Section 424 of the Code] at the date of grant) unless the option
price of such Option is at least 110% of the Fair Market Value of the Shares
subject to such Option on the date the Option is granted, and such Option by its
terms is not exercisable after the expiration of five years from the date such
Option is granted.
(e) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, the aggregate number of Shares
with respect to which Options may be granted to any one Optionee may not exceed
500,000 subject to adjustment as provided in Section 11(a) hereof.
7. Option Price. The option price per Share of any Option shall be any
price determined by the Committee or the Board but shall not be less than the
par value per Share; provided, however, that in no event shall the option price
per Share of any Incentive Stock Option be less than the Fair Market Value of
the Shares underlying such Option on the date such Option is granted.
8. Exercise of Options. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee or the Board in its sole discretion have
been made for the Optionee's payment to the Company of the amount that is
necessary for the Company or Subsidiary employing the Optionee to withhold in
accordance with applicable Federal or state tax withholding requirements. Unless
further limited by the Committee or the Board in any Option and subject to such
guidelines as the Committee or the Board may establish, the option price of any
Shares purchased shall be paid in cash, by certified or official bank check, by
money order, with Shares by the withholding of
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Shares issuable upon exercise of the Option or by any other form of cashless
exercise procedure approved by the Committee or the Board, or in such other
consideration as the Committee or the Board deems appropriate, or by a
combination of the above. The Committee or the Board in its sole discretion may
accept a personal check in full or partial payment of any Shares. If the
exercise price is paid in whole or in part with Shares, or through the
withholding of Shares issuable upon exercise of the Option, the value of the
Shares surrendered shall be their Fair Market Value on the date the Option is
exercised. The Company in its sole discretion may, on an individual basis or
pursuant to a general program established in connection with this Plan, lend
money to an Optionee, guarantee a loan to an Optionee, or otherwise assist an
Optionee to obtain the cash necessary to exercise all or a portion of an Option
granted hereunder or to pay any tax liability of the Optionee attributable to
such exercise. If the exercise price is paid in whole or part with Optionee's
promissory note, such note shall (i) provide for full recourse to the maker,
(ii) be collateralized by the pledge of the Shares that the Optionee purchases
upon exercise of such Option, (iii) bear interest at the prime rate of the
Company's principal lender, and (iv) contain such other terms as the Board in
its sole discretion shall reasonably require. No Optionee shall be deemed to be
a holder of any Shares subject to an Option unless and until a stock certificate
or certificates for such Shares are issued to such person(s) under the terms of
this Plan. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued,
except as expressly provided in Section 10 hereof.
9. Exercisability of Options. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee or the
Board shall provide in such Option, except as otherwise provided in this Section
9.
(a) The expiration date of an Option shall be determined by
the Committee or the Board at the time of grant, but in no event shall an Option
be exercisable after the expiration of 10 years from the date of grant of the
Option.
(b) Unless otherwise provided in any Option, each outstanding
Option shall become immediately fully exercisable in the event of a "Change in
Control" or in the event that the Committee or the Board exercises its
discretion to provide a cancellation notice with respect to the Option pursuant
to Section 10(b) hereof. For this purpose, the term "Change in Control" shall
mean the approval by the shareholders of the Company of a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or a liquidation or dissolution of the Company or the sale of
all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned).
(c) The Committee or the Board may in its sole discretion
accelerate the date on which any Option may be exercised and may accelerate the
vesting of any Shares subject to any Option.
10. Termination of Option Period.
(a) The unexercised portion of any Option granted to an
Optionee, shall automatically and without notice terminate and become null and
void at the time of the earliest to occur of the following:
(i) three months after the date on which the
Optionee's employment is terminated for any reason other than by reason of (A)
Cause, which, solely for purposes of this Plan, shall mean the termination of
the Optionee's employment by reason of the Optionee's willful misconduct or
gross negligence, (B) a mental or physical disability (within the meaning of
Code Section 22(e)) as determined by a medical doctor satisfactory to the
Committee or the Board, or (C) death;
(ii) immediately upon the termination of the
Optionee's employment for Cause;
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(iii) one year after the date on which the Optionee's
employment is terminated by reason of a mental or physical disability (within
the meaning of Code Section 22(e)) as determined by a medical doctor
satisfactory to the Committee or the Board; or
(iv) (A) twelve months after the date of termination
of the Optionee's employment by reason of death of the Optionee, or (B) three
months after the date on which the Optionee shall die if such death shall occur
during the one year period specified in Subsection 10(a)(iii) hereof.
All references herein to the termination of the Optionee's employment
shall, in the case of an Optionee who is not an employee of the Company or a
Subsidiary, refer to the termination of the Optionee's service with the Company.
(b) The Committee in its sole discretion may by giving written
notice ("cancellation notice") cancel, effective upon the date of the
consummation of any corporate transaction described in Section 9(b) hereof or of
any reorganization, merger, consolidation or other form of corporate transaction
in which the Company does not survive, any Option that remains unexercised on
such date. Such cancellation notice shall be given a reasonable period of time
prior to the proposed date of such cancellation and may be given either before
or after approval of such corporate transaction.
11. Adjustment of Shares.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan, or available for
grant to any person under the Plan, so that the same percentage of the Company's
issued and outstanding Shares shall continue to be subject to being so optioned;
and
(ii) appropriate adjustment shall be made in the
number of Shares and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's issued and
outstanding Shares shall remain subject to purchase at the same aggregate
exercise price.
(b) Subject to the specific terms of any Option, the Committee
or the Board may change the terms of Options outstanding under this Plan, with
respect to the option price or the number of Shares subject to the Options, or
both, when, in the Committee's or the Board's sole discretion, such adjustments
become appropriate so as to preserve but not increase benefits under the Plan.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the number of or
exercise price of Shares then subject to outstanding Options granted under the
Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
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12. Transferability of Options and Shares.
(a) No Incentive Stock Option, and unless the prior written
consent of the Committee or the Board is obtained and the transaction does not
violate the requirements of Rule 16b-3 promulgated under the Securities Exchange
Act no Non-Qualified Stock Option, shall be subject to alienation, assignment,
pledge, charge or other transfer other than by the Optionee by will or the laws
of descent and distribution, and any attempt to make any such prohibited
transfer shall be void. Each Option shall be exercisable during the Optionee's
lifetime only by the Optionee, or in the case of a Non-Qualified Stock Option
that has been assigned or transferred with the prior written consent of the
Committee or the Board, only by the permitted assignee.
(b) Unless the prior written consent of the Committee or the
Board is obtained and the transaction does not violate the requirements of Rule
16b-3 promulgated under the Securities Exchange Act, no Shares acquired by an
Officer or Director pursuant to the exercise of an Option may be sold, assigned,
pledged or otherwise transferred prior to the expiration of the six-month period
following the date on which the Option was granted.
13. Issuance of Shares.
(a) Notwithstanding any other provision of this Plan, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and State laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition of any sale or issuance of Shares upon
exercise of any Option, the Committee or the Board may require such agreements
or undertakings, if any, as the Committee or the Board may deem necessary or
advisable to facilitate compliance with any such law or regulation including,
but not limited to, the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised, that he is acquiring the
Shares to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends endorsed upon the certificate(s) for such Shares that
are, in the opinion of the Committee or the Board, necessary or appropriate to
facilitate compliance with the provisions of any securities law deemed by the
Committee or the Board to be applicable to the issuance and transfer of such
Shares.
14. Administration of the Plan.
(a) The Plan shall be administered by a committee appointed by
the Board (the "Committee") which shall be composed of two or more Directors all
of whom shall be Outside Directors. The membership of the Committee shall be
constituted so as to comply at all times with the applicable requirements of
Rule 16b-3 promulgated under the Securities Exchange Act and Section 162(m) of
the Internal Revenue Code. The Committee shall serve at the pleasure of the
Board and shall have the powers designated herein and such other powers as the
Board may from time to time confer upon it.
(b) The Board may grant Options pursuant to any persons to
whom Options may be granted under Section 5(a) hereof.
(c) The Committee or the Board, from time to time, may adopt
rules and regulations for carrying out the purposes of the Plan. The
determinations by the Committee or the Board and the interpretation and
construction of any provision of the Plan or any Option by the Committee or the
Board, shall be final and conclusive.
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<PAGE> 24
(d) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
15. Withholding or Deduction for Taxes. If at any time specified herein
for the making of any issuance or delivery of any Option or Common Stock to any
Optionee or beneficiary, any law or regulation of any governmental authority
having jurisdiction in the premises shall require the Company to withhold, or to
make any deduction for, any taxes or take any other action in connection with
the issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.
16. Interpretation.
(a) As it is the intent of the Company that the Plan comply in
all respects with Rule 16b-3 promulgated under the Securities Exchange Act
("Rule 16b-3"), any ambiguities or inconsistencies in construction of the Plan
shall be interpreted to give effect to such intention, and if any provision of
the Plan is found not to be in compliance with Rule 16b-3, such provision shall
be deemed null and void to the extent required to permit the Plan to comply with
Rule 16b-3. The Committee or the Board may from time to time adopt rules and
regulations under, and amend, the Plan in furtherance of the intent of the
foregoing.
(b) The Plan shall be administered and interpreted so that all
Incentive Stock Options granted under the Plan will qualify as Incentive Stock
Options under section 422 of the Internal Revenue Code. If any provision of the
Plan should be held invalid for the granting of Incentive Stock Options or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan.
(c) This Plan shall be governed by the laws of the State of
Florida.
(d) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.
(e) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
17. Amendment and Discontinuation of the Plan. The Committee or the
Board may from time to time amend, suspend or terminate the Plan or any Option;
provided, however, that, any amendment to the Plan shall be subject to the
approval of the Company's shareholders if such shareholder approval is required
by any federal or state law or regulation (including, without limitation, Rule
16b-3 or to comply with Section 162(m) of the Internal Revenue Code) or the
rules of any Stock exchange or automated quotation system on which the Common
Stock may then be listed or granted. Except to the extent provided in Sections 9
and 10 hereof, no amendment suspension or termination of the Plan or any Option
issued hereunder shall substantially impair the rights or benefits of any
Optionee pursuant to any Option previously granted without the consent of the
Optionee.
18. Termination Date. The Plan shall terminate on December 31, 2005.
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<PAGE> 25
Appendix B
CONTINUCARE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF
OF THE COMPANY'S BOARD OF DIRECTORS
COMMON STOCK
The undersigned, a holder of Common Stock of Continucare Corporation, a Florida
corporation (the "Company"), hereby appoints Charles M. Fernandez and Susan
Tarbe, and each of them, acting alone, as proxies for the undersigned, each with
full power of substitution, and hereby authorizes them to represent and to vote,
as designated on the reverse side of this proxy card, all of the shares of stock
of the Company held of record by the undersigned at the close of business on
November 17, 1997 at the Annual Meeting of Shareholders of the Company, to be
held on Wednesday, January 21, 1997, at 10:00 a.m., local time, at 100 Southeast
Second Avenue, 19th Floor, Miami, Florida and at any adjournments or
postponements thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND THE
OTHER PROPOSALS SET FORTH.
(1) ELECTION OF CHARLES M. FERNANDEZ, DR. PHILLIP FROST, RICHARD B. FROST, MARK
J. HANNA, DR. ELIAS GHANEM, ROBERT SOROS, LEE S. HILLMAN AND J. KENNETH
LOOLOIAN as directors.
[ ] VOTE FOR all nominees listed above, except vote withheld from
the following nominees (if any):
[ ] VOTE WITHHELD from all nominees listed above.
[ ] ABSTAIN
(2) PROPOSAL to amend the Company's Amended and Restated 1995 Stock Option
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Upon such other matters as may properly come before the Annual Meeting and
any adjournments thereof. In their discretion, the proxies are authorized
to vote upon such other business as may properly come before the Annual
Meeting, and any adjournments or postponements thereof.
(see reverse side)
<PAGE> 26
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED 'FOR' ALL OF THE PROPOSALS.
The undersigned hereby acknowledges receipt of (1)the Notice of Annual Meeting
for the 1997 Annual Meeting, (2) the Proxy Statement and (3)the Company's 1997
Annual Report to Shareholders.
Dated , 1997
-------------------------
----------------------------------
(Signature)
----------------------------------
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name appears and mail it promptly even
though you now plan to attend the meeting. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENVELOPE
PROVIDED.
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
