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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 /section/ 240.14a-11(c)
or /section/ 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:
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<PAGE>
CONTINUCARE CORPORATION
100 SOUTHEAST SECOND STREET, MIAMI, FLORIDA 33131
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 26, 1999
--------------------
To the Shareholders of Continucare Corporation:
NOTICE IS HEREBY GIVEN that the 1998 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
Tuesday, January 26, 1999, at the NationsBank Tower, 19th Floor, 100 Southeast
Second Street, Miami, Florida, for the following purposes:
(1) The election of eight members to the Company's Board of
Directors to hold office until the Company's 1999 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 December 11,
1998 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 23, 1998
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>
1998 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 1998 Annual Meeting of
Shareholders of the Company to be held at 10:00 a.m., local time, on Tuesday,
January 26, 1999, 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 23, 1998.
Shareholders should review the information provided herein in
conjunction with the Company's 1998 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 1999 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 (the "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.
<PAGE>
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on December 11,
1998 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 14,606,283 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. Approval
of the amendment to the Company's Plan and 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.
SECURITY OWNERSHIP
The following table sets forth certain information as of December 1,
1998 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 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 1,726,667(3) 11.7%
100 S.E. Second Street
36th Floor
Miami, Florida 33131
Susan Tarbe 80,000(4) *
100 S.E. Second Street
36th Floor
Miami, Florida 33131
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) COMMON STOCK(2)
- ---------------------------------- ------------------------------ --------------------
<S> <C> <C>
Dr. Norman B. Gaylis 226,729(7) 1.5
100 S.E. Second Street
36th Floor
Miami, Florida 33131
Dr. Phillip Frost 2,087,133(5) 14.2
4400 Biscayne Boulevard
Miami, FL 33137
Richard B. Frost 444,700(6) 3.0
7700 W. Camino Real
Boca Raton, FL 33433
Mark J. Hanna 389,900(6) 2.7
7700 W. Camino Real
Boca Raton, FL 33433
J. Kenneth Looloian 77,000(8) *
1380 Outlook Drive West
Mountainside, NJ 07092
Elias F. Ghanem, M.D. 75,000(4) *
150 E. Harmon Street
Las Vegas, NV 89109
Robert Soros 75,000(4) *
888 Seventh Avenue, 33rd floor
New York, NY 10106
Neil Flanzraich 0 *
4400 Biscayne Boulevard
Miami, FL 33137
Strategic Investment Partners, Ltd. 2,250,000(9) 15.4
Kaya Flamboyan 9
Willemstad, Curacao
Netherlands Antilles
Sailfish Investments LLC 882,400 6.0
380 Middlesex Avenue
Carteret, NJ 07008
Bank of New York 3,315,862(10) 22.7
925 Patterson Plank Road
Secaucus, NJ 07094
Mercantile-Safe Deposit 1,149,655(10) 8.2
& Trust Company
766 Old Hammonds Ferry Road
Proxy Unit #230-20
Linthicum, MD 21090
All directors and executive officers 5,226,295 34.1
as a group (12 persons)(11)
</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 14,606,283 shares outstanding as of December 1, 1998.
- 3 -
<PAGE>
(3) Includes (i) 1,616,667 shares of Common Stock are owned of record by the
Fernandez Family Limited Partnership and (ii) 110,000 shares of Common
Stock underlying options granted that are currently exercisable.
(4) Represents shares of Common Stock underlying options granted which are
currently exercisable.
(5) Includes (i) 1,058,333 shares owed beneficially by Frost Nevada Limited
Partnership, (ii) 953,800 shares owned by Dr. Frost individually and (iii)
75,000 shares of Common Stock underlying options granted that are currently
exercisable.
(6) Includes 75,000 shares of Common Stock underlying options granted that are
currently exercisable.
(7) Includes (i) 193,395 shares owned beneficially by Dr. Gaylis and (ii)
33,334 shares of Common Stock underlying options granted that are currently
exercisable.
(8) Includes (i) 2,000 shares owned beneficially by Mr. Looloian and (ii)
75,000 shares of Common Stock underlying options granted that are currently
exercisable.
(9) Based on the most recent Schedule 13D, beneficial ownership of these shares
is shared by (i) Quasar Strategic Partners LDC, (ii) Quantum Industrial
Partners LDC, (iii) QIH Management Advisor, L.P., (iv) QIH Management,
Inc., (v) Soros Fund Management LLC, (vi) Mr. Stanley F. Druckenmiller and
(vii) Mr. George Soros. Mr. George Soros is the father of Mr. Robert Soros.
(10) Represents shares of Common Stock that may be issued upon the conversion
(at a conversion price of $7.25) of 8% Convertible Subordinated Notes due
2002 issued by the Company on October 30, 1997.
(11) Includes 717,500 shares of Common Stock underlying options granted that are
currently exercisable.
- 4 -
<PAGE>
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.
<TABLE>
<CAPTION>
NOMINEES FOR DIRECTORS
NAME AGE POSITION
- -------------------------------- ------- ---------------------------------------------------
<S> <C> <C>
Charles M. Fernandez......... 36 Chairman of the Board, Chief Executive Officer and
President*
Phillip Frost, M.D........... 62 Vice Chairman of the Board*
Richard B. Frost............. 49 Director*
Mark J. Hanna................ 49 Director*
Elias F. Ghanem, M.D......... 59 Director*
Robert Soros................. 35 Director*
J. Kenneth Looloian.......... 76 Director*
Neil Flanzraich.............. 55 Director Nominee
</TABLE>
- -----------------
*Biography is set forth below under "Management."
NEIL FLANZRAICH has served as the Vice Chairman and President of IVAX
Corporation since May 1998. From September 1995 to May 1998, he was a
shareholder and served as Chairman of the Life Sciences Legal Practice at the
law firm of Heller Erhman White & McAuliffe. Prior to his position at the law
firm, Mr. Flanzraich was the Senior Vice President and General Counsel of Syntex
Corporation, an international diversified life science company which was
acquired by Roche Holding, Ltd.
<TABLE>
<CAPTION>
MANAGEMENT
The executive officers and directors of the Company are as follows:
NAME AGE POSITION
- --------------------------------- ------- -----------------------------------------------------
<S> <C> <C>
Charles M. Fernandez......... 36 Chairman of the Board, Chief Executive Officer and
President
Phillip Frost, M.D........... 62 Vice Chairman of the Board
Susan Tarbe.................. 42 Executive Vice President and General Counsel
Bruce Altman................. 46 Senior Vice President and Chief Financial Officer
Steven J. Baldwin............ 50 Senior Vice President of Physical Rehabilitation
and Ancillary Services
</TABLE>
- 5 -
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- ------- -----------------------------------------------------
<S> <C> <C>
Carlis R. Sabinson........... 54 Senior Vice President of Compliance and Security
Norman B. Gaylis, M.D........ 48 Senior Vice President, Chief Operating Officer of
Physician Practice Division
Richard B. Frost............. 49 Director
Mark J. Hanna................ 49 Director
Elias F. Ghanem, M.D......... 59 Director
Robert Soros................. 35 Director
J. Kenneth Looloian.......... 76 Director
Lee S. Hillman............... 43 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, a director of IVAX Corporation, a Florida
corporation ("IVAX") since June 1998 and a director of Frost Hanna Capital
Group, Inc., an investment company, since December 1997.
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, the world's largest generic pharmaceutical
manufacturer. He served as IVAX's President from July 1991 until January 1995.
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.,
Chairman of the Board of Directors of Whitman Education Group, which is engaged
in proprietary education and a director of Northrup Grumman which is in the
aerospace industry. He is Vice Chairman of the Board of Trustees 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 Frost.
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.
BRUCE ALTMAN joined Continucare in August 1998 as Senior Vice President
and Chief Financial Officer. Prior to joining Continucare, Mr. Altman was Vice
President of Finance at John Alden Life Insurance Company, a subsidiary of John
Alden Financial Corp. since June 1989.
STEVEN J. BALDWIN joined Continucare in September 1997 as Senior Vice
President of Physical Rehabilitation and Ancillary Services. 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.
- 6 -
<PAGE>
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.
NORMAN B. GAYLIS, M.D. joined Continucare in April 1997 upon
consummation of the acquisition of the Arthrocare America. 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.
RICHARD B. FROST has served as a Director of Continucare since September
1996. Mr. Frost has been 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 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"). Mr. Frost is the nephew of Dr. Phillip Frost.
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 in 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.
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.
J. KENNETH LOOLOIAN was appointed to the Board of Directors in January
1998. Mr. Looloian is an Executive Vice President of Di Giorgio Corporation, a
former partner of Arveron Investment L.P. and a former Executive Vice President
of International Controls Corporation. Mr. Looloian is also a director of Bally
Total Fitness Holding Corporation ("Bally") and Park Place Entertainment
Company, to be effective upon the consummation of a pending transaction.
LEE S. HILLMAN has served since October 1996, as the President and Chief
Executive Officer of 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. Mr. Hillman also serves as a director of
Holmes Place, Plc., an operator of fitness centers in the United Kingdom. Mr.
Hillman will not stand for reelection to the Board of Directors.
- 7 -
<PAGE>
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 1998, the Board of Directors held four meetings and
took 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 1998
during the period of such director's service.
The Compensation Committee currently consists of Dr. Phillip Frost
(Chairman), Dr. Elias Ghanem and Mark J. Hanna. The Compensation Committee met
once in fiscal year 1998. 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. J. Kenneth Looloian
(Chairman), Mark J. Hanna and Richard B. Frost. The Audit Committee met once
during fiscal year 1998. 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Phillip Frost, Chairman of the Company's Compensation Committee, is
also a director and executive officer of IVAX Corporation. Mr. Fernandez serves
on the Board of Directors of IVAX Corporation. Mr. Fernandez serves on the Board
of Directors of Frost Hanna Capital Group, Inc. Mark J. Hanna, President and a
director of Frost Hanna Capital Group, Inc. serves on the Company's Compensation
Committee.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
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, 1998, exceeded
$100,000 (the "Named Executive Officers"). No executive officer of the Company's
predecessor was paid in excess of $100,000 in fiscal year 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
------------------------------ OTHER NO. OF SECURITIES
NAME AND FISCAL ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS COMPENSATION
- --------------------- ------ ---------- -------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Fernandez, (1)
President and Chief 1998 334,547 (3) 36,360(2) 100,000 -0-
Executive Officer... 1997 327,880 70,000(7) -0- -0-
Susan Tarbe, Executive
Vice President and 1998 168,462 (3) (1) -0- 3,167(4)
General Counsel..... 1997 97,000(5) 40,000(6) (1) 100,000 1,118(4)
</TABLE>
- 8 -
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
------------------------------ OTHER NO. OF SECURITIES
NAME AND FISCAL ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS COMPENSATION
- --------------------- ------ ---------- -------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Norman B. Gaylis, M.D.
Senior Vice President,
Chief Operating Officer 1998 464,193 (3) (1) 50,000 -0-
of Physician Practice 1997(8) 92,094 50,000(7) -0- -0- -0-
Division
</TABLE>
- -------------------
(1) The total perquisites and other personal benefits provided is less than
10% of the total annual salary and bonus to such officer.
(2) Includes $13,155 in car allowance and $20,205 in insurance benefits.
(3) No final determination for bonuses for fiscal 1998 has been made at this
time.
(4) Reflects matching contributions to the Company's 401(k) plan which is
earned during the fiscal year indicated but not paid until the following
fiscal year.
(5) Mrs. Tarbe joined the Company in September 1996.
(6) Includes a signing bonus in the amount of $2,500 and a bonus paid in
September 1997 for services rendered in fiscal 1997.
(7) Represents a bonus paid in fiscal 1998 for services rendered in fiscal
1997.
(8) Dr. Gaylis joined the Company in April 1997.
OPTION GRANTS DURING FISCAL 1998
OPTION GRANTS TABLE. The following table sets forth certain information
concerning grants of stock options made during fiscal 1998 to each of the Named
Executive Officers. The Company did not grant any stock appreciation rights in
fiscal 1998.
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS IN 1998 FISCAL YEAR
- -------------------------------------------------------------------------------------------------------------------
SHARES OF COMMON % OF TOTAL POTENTIAL REALIZABLE VALUE AT ASSUMED
STOCK UNDERLYING GRANTED TO OPTION EXPIRATION ANNUAL RATES OF STOCK PRICE APPRECIATION
NAME OPTIONS GRANTED EMPLOYEES PRICE ($) DATE FOR OPTION TERM (1)
- ------------------- ---------------- ---------- --------- ---------- -----------------------------------------
5% 10%
------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Fernandez 100,000 38.9% $5.25 7/30/07 330,170 836,715
Susan Tarbe 0 -- -- -- -- --
Norman B. Gaylis, M.D. 50,000 19.5 $6.25 1/20/08 196,530 498,045
</TABLE>
- ------------------
(1) The dollar amounts set forth in these columns are the result of
calculations at the five percent and ten percent rates set by the
Securities and Exchange Commission, and therefore are not intended to
forecast possible future appreciation, if any, of the market price of the
Common Stock.
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR END OPTION VALUES
The following table sets forth information with respect to (i) the
number of unexercised options held by the Named Executive Officers as of June
30, 1998, and (ii) the value as of June 30, 1998 of unexercised in-the-money
options. No options were exercised by any of the Named Executive Officers in
1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT JUNE 30, 1998 AT JUNE 30, 1998 ($)(1)
------------------------------- ------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles M. Fernandez 85,000 50,000 0 0
Susan Tarbe 60,000 40,000 0 0
Norman B. Gaylis, M.D. 16,666 33,334 0 0
</TABLE>
- ------------------
(1) Market value of shares covered by in-the-money options on June 30, 1998,
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.
- 9 -
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Charles M.
Fernandez, Susan Tarbe and Norman B. Gaylis. 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. If Mr. Fernandez is
terminated without cause, Mr. Fernandez is entitled to receive his base salary
for a period of three years following the effective date of termination and any
amount of unpaid bonus.
Ms. Tarbe's employment agreement, as amended, is effective until August
24, 2001, and provides for an annual base salary of $185,000 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.
Dr. Gaylis' employment agreement is for a period of four years
commencing April, 1997, and provides for an annual base salary of $450,000
renewable at the sole discretion of the Company, subject to adjustment upon
certain conditions. Under the terms of Dr. Gaylis' employment agreement, Dr.
Gaylis is entitled to annual incentive compensation of 50% of earnings before
interest, taxes, depreciation and amortization ("EBITDA") derived from his
professional services at designated offices where EBITDA is in excess of
$365,000. Dr. Gaylis is prohibited from competing with the Company and
soliciting any employee or contractor of the Company for the duration of his
employment agreement and for a period of two years thereafter. Additionally, Dr.
Gaylis is prohibited form disclosing confidential information.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under rules established by the Securities and Exchange Commission, the
Compensation Committee of the Board of Directors of the Company is required to
provide a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting the Company's executive officers
(including the Named Executive Officers) during the past fiscal year.
GENERAL. The Compensation Committee is comprised of non-employee
directors and is responsible for setting and administering policies that govern
annual compensation of the Company's executive officers, as well as the
Company's stock option plan. The Compensation Committee's general philosophy
with respect to the compensation of the Company's executive officers is to offer
competitive compensation programs designed to attract and retain key executives
critical to the long-term success of the Company and to recognize an
individual's contribution and personal performance. Such compensation programs
include a base salary and an annual performance-based bonus as well as stock
option plans designed to provide long-term incentives. In addition, the
Compensation Committee may recommend the grant of discretionary bonuses to the
Company's executive officers. The Committee did not establish performance
targets or adopt any bonus plan for fiscal 1998.
In establishing the Company's executive compensation program, the
Compensation Committee takes into account current market data and compensation
trends for comparable companies, and gauges achievement of corporate and
individual objectives. The base salaries of the Named Executive Officers have
been fixed at levels which the Compensation Committee believes are competitive
with amounts paid to senior executives with comparable qualifications,
experience and responsibilities. Performance bonuses have been structured to
reinforce the achievement of both short and long term corporate objectives. The
Company utilizes stock options to foster a
- 10 -
<PAGE>
long-term perspective aligned with that of its shareholders. The salaries for
each of the Named Executive Officers is set forth in such executive's employment
agreement.
Dr. Phillip Frost, Chairman
Dr. Elias Ghanem
Mark J. Hanna
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return on the Company's Common Stock against the cumulative total
return of the AMEX Market Value Index and the NASDAQ Health Services Index
for the period of September 11, 1996 (the date a wholly owned subsidiary of the
predecessor to the Company merged with and into Continucare (the "Merger") and
the Company listed its Common Stock on the American Stock Exchange) to
June 30, 1998.
CUMULATIVE TOTAL RETURNS
------------------------------------
9/11/96 6/97 6/98
CONTINUCARE CORPORATION 100.00 65.73 55.24
NASDAQ HEALTH SERVICES 100.00 97.20 94.75
AMEX MARKET VALUE INDEX 100.00 114.06 114.06
- 11 -
<PAGE>
CERTAIN TRANSACTIONS
The Company was obligated to Charles M. Fernandez for a note payable in
the principal amount of $599,750 (the "Fernandez Note"), which was paid in full
in August 1997. The Fernandez Note bore interest at 10% per annum and matured on
February 12, 1998.
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. During fiscal year ended June 30, 1998, the Company earned
$381,000 in management fees from Bally. At June 30, 1998, $359,000 is included
in accounts receivable for these services. Mr. Looloian, a director of the
Company, and Mr. Hillman, a director of the Company during fiscal 1998, are
affiliates of Bally. See "Management--Directors"
On April 10, 1997, the Company, through Continucare Physician Practice
Management, Inc., a wholly owned subsidiary, acquired all of the outstanding
stock of certain arthritis rehabilitation centers and affiliated physician
practices. The acquisitions included the purchase of AARDS, INC. ("AARDS"), a
Florida corporation formerly known as Norman G. Gaylis, M.D., Inc. In connection
with the purchase the Company entered into a management agreement with ZAG
Group, Inc. ("ZAG"). The management agreement, among other things, provided for
ZAG to perform certain services in exchange for specified compensation. In
addition, the Company entered into a put/call agreement with ZAG, which allowed
each of the parties to require the other party, after a two-year period, to
either sell or purchase all the issued and outstanding capital stock of ZAG for
a specified price to be paid in a combination of cash and common stock of the
Company. In August the Company paid approximately $2 million to ZAG in
connection with the cancellation of the put/call agreement of which $115,000 was
paid in cash and the remaining $1,885,000 was paid by issuing 575,000 shares of
the Company's common stock with a fair market value of approximately $1.6
million. In the event that the common stock does not have an aggregate fair
market value of approximately $1,885,000 on October 15, 1999, the Company is
obligated to pay additional cash consideration or issue additional shares of its
common stock so that the aggregate value of the stock issued is approximately
$1,885,000. The management agreement was terminated upon the cancellation of the
put/call agreement. The total amount paid in connection with the cancellation of
the put/call agreement is included in cost in excess of tangible assets acquired
on the accompanying balance sheet and is being amortized over a weighted average
life of 14 years.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 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 with the exception of Form 5s by the directors to report their receipt
of stock options.
- 12 -
<PAGE>
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 1,750,000 to 2,400,000. 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.
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 1,750,000 shares of Common Stock are currently
reserved for issuance under the Stock Option Plan. As of December 1, 1998,
options to purchase 1,854,500 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 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.
- 13 -
<PAGE>
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.
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.
- 14 -
<PAGE>
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 December 1, 1998 nonqualified stock options to purchase an
aggregate of 1,854,500 shares of Common Stock had been granted to approximately
38 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 table below indicates, as of December 1, 1998, 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...................... 135,000(1)
Susan Tarbe
Executive Vice President and General Counsel......................... 100,000(2)
Norman B. Gaylis, M.D.
Senior Vice President, Chief Operating Officer of Practice Division.. 50,000(3)
All current executive officers as a group (6 persons).................... 402,000(4)
All current directors who are not executive officers as a group (6 persons) 600,000(5)
All persons, other than executive officers as a group (24 persons)....... 1,032,500(6)
</TABLE>
- --------------------
(1) Options issued at an exercise price of $5.25 per share for 35,000 options
and $5.125 per share for 100,000 options (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 an exercise price of $6.25 per share.
- 15 -
<PAGE>
(4) Options issued at prices ranging from $5.00 to $6.31.
(5) Options issued at an exercise price of $5.125.
(6) Options issued at prices ranging from $5.125 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
The Company's independent public accountants for the fiscal year ended
June 30, 1998 were and for the fiscal year ended 1999 will be the firm of Ernst
& Young LLP. It is expected that representatives of such firm will (i) attend
the Annual Meeting, (ii) have an opportunity to make a statement if they desire
to do so, and (iii) be available to respond to appropriate questions.
The accounting firm of Arthur Andersen LLP ("Arthur Andersen")
represented the predecessor to Continucare, Zanart Entertainment, Incorporated
("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 of a wholly-owned subsidiary of Zanart with and into
Continucare. 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 the fiscal years ended 1995 and 1996 did not
contain an adverse opinion or a disclaimer of opinion, and were not qualified or
modified as to uncertainty, audit scope, or accounting principles.
The accounting firm of Deloitte & Touche LLP ("Deloitte & Touche")
represented pre-Merger Continucare as its independent accountants during the
period from February 12, 1996 (inception) to June 30, 1996 and was appointed as
the Company's independent accountants by the Board of Directors for fiscal year
1997. During the Company's two most recent fiscal years and subsequent interim
periods, for which Deloitte & Touche was the Company's independent auditors,
there were no disagreements between the Company and Deloitte & Touche 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 Deloitte & Touche, would have caused it to make reference to the
subject matter of the disagreement in connection with its reports. Deloitte &
Touche's reports on the financial statements of the Company for the two most
recent fiscal years, for which Deloitte & Touche was the Company's
- 16 -
<PAGE>
independent auditors, did not contain an adverse opinion or disclaimer of
opinion, and were not qualified or modified as to uncertainty, audit scope,
or accounting principles.
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 1998 Annual
Meeting of Shareholders. If any other business should properly come before the
Company's 1998 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 18, 2000. 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 23, 1998
- 17 -
<PAGE>
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.
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(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.
/section/ 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 2,400,000 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
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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.
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
960,000 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
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amount that is necessary for the Company or Subsidiary employing the Optionee to
withhold in accordance with applicable Federal or state tax withholding
requirements. The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Committee or the Board and may consist of cash, certified or official bank
check, money order, or if and to the extent permitted by the Committee or the
Board, (x) Shares held by the Optionee for at least six (6) months (or such
other Shares as the Company determines will not cause the Company to realize a
financial accounting change), (y) the withholding of Shares issuable upon
exercise of the Option, or (z) by any 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:
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(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;
(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
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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.
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.
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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.
(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.
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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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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, all of the shares of stock of the Company
held of record by the undersigned at the close of business on December 11, 1998
at the Annual Meeting of Shareholders of the Company, to be held on Tuesday,
January 26, 1998, at 10:00 a.m., local time, at 100 Southeast Second Avenue,
19th Floor, Miami, Florida and at any adjournment(s) or postponement(s) thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND THE
OTHER PROPOSALS SET FORTH.
(1) ELECTION OF DIRECTORS CHARLES M. FERNANDEZ, DR. PHILLIP FROST, RICHARD
B. FROST, MARK J. HANNA, DR. ELIAS GHANEM, ROBERT SOROS, J. KENNETH
LOOLOIAN AND NEIL FLANZRAICH as directors.
[ ] VOTE FOR all nominees listed above, except as marked to
the contrary below.
[ ] VOTE WITHHELD from all nominees listed above.
VOTE FOR all nominees listed above, except vote withheld
from the following nominees (if any): _________________
______________________________________________.
(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>
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 1998 Annual Meeting, (2) the Proxy Statement and (3)the Company's 1998
Annual Report to Shareholders.
Dated _________________________ , 1998
_________________________________________
(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.
