CONTINUCARE CORP, DEF 14A, 2000-01-21

CONTINUCARE CORP
DEF 14A, 2000-01-21
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<PAGE> 1
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 | |

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

80 S.W. 8TH STREET, MIAMI, FLORIDA 33131
--------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 14, 2000

--------------------

To the Shareholders of Continucare Corporation:

NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders of
Continucare Corporation, a Florida corporation, will be held at 10:00 a.m.,
local time, on Monday, February 14, 2000, at the Hyatt Regency Miami, 400 S.E.
2nd Avenue, Miami, Florida 33131, for the following purposes:

(1) The election of three members to our Board of Directors to hold
office until Continucare's 2000 Annual Meeting of Shareholders or
until their successors are duly elected and qualified;

(2) To approve the restructuring of our convertible subordinated
notes; 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 January 12,
2000 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

Spencer J. Angel
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHIEF OPERATING OFFICER

Miami, Florida
January 21, 2000

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

1999 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, of
proxies from the holders of our common stock, par value $.0001 per share, for
use at the 1999 Annual Meeting of Shareholders of Continucare to be held at
10:00 a.m., local time, on Monday, February 14, 2000, at Hyatt Regency Miami,
400 S.E. 2nd Avenue, Miami, Florida 33131, or at any adjournment(s) or
postponement(s) thereof, pursuant to the foregoing notice of annual meeting of
shareholders. This proxy statement and the enclosed form of proxy are first
being sent to holders of our common stock on or about January 21, 2000.

Shareholders should review the information provided herein in
conjunction with the Continucare's 1999 annual report to shareholders, which
accompanies this proxy statement. Continucare's principal executive offices are
located at 80 S.W. 8th Street, Miami, Florida 33131 and its telephone number is
(305) 350-7515.

INFORMATION CONCERNING PROXY

The enclosed proxy is solicited on behalf of our 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 Continucare's Secretary at our
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 Continucare 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 Continucare. In addition to the use of mail, our employees may solicit
proxies personally and by telephone and facsimile. Our employees will receive no
compensation for soliciting proxies other than their regular salaries.
Continucare 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. We may reimburse such persons
for their expenses in so doing.

PURPOSES OF THE MEETING

At the annual meeting, our shareholders will consider and vote upon the
following matters:

(1) The election of three members to our board of directors to hold
office until our 2000 annual meeting of shareholders or until
their successors are duly elected and qualified;

(2) To approve the restructuring of our convertible subordinated
notes; 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> 4

OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS

The board of directors has set the close of business on January 12,
2000 as the record date for determining shareholders of Continucare entitled to
notice of and to vote at the annual meeting. As of the record date, there were
14,740,091 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. Shareholders do not have rights of appraisal or
similar rights of dissenters under the Florida Business Corporation Act, with
respect to any of the proposals set forth in this proxy statement.

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 restructuring of the convertible subordinated notes will be approved if
the majority of the votes cast in person or by proxy vote in favor of the
proposal. 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, we 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 27,
1999 concerning the beneficial ownership of the common stock by (i) each person
known by Continucare to be the beneficial owner of more than 5% of the
outstanding common stock, (ii) each of the directors and director nominees who
own our shares, (iii) Named Executive Officers (as defined hereafter), and (iv)
all of our executive officers and directors 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.

2
<PAGE> 5

NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) COMMON STOCK(2)
------------------- ----------------------- ---------------
<S> <C> <C>
Charles M. Fernandez 1,454,167(3) 9.8%
80 S.W. 8th Street
Miami, FL 33131

Spencer J. Angel 200,800(4) 1.4
80 S.W. 8th Street
Miami, FL 33131

Dr. Phillip Frost 2,549,533(5) 16.3
4400 Biscayne Boulevard
Miami, FL 33137

Neil Flanzraich 0 0
4400 Biscayne Boulevard
Miami, FL 33137

Carlos E. Padron 10,000 *
338 Minorca Avenue
Coral Gables, FL 33134

Strategic Investment Partners, Ltd. 2,250,000(6) 15.3
Kaya Flamboyan 9
Willemstad, Curacao
Netherlands Antilles

Franklin Resources, Inc. 2,620,607(7) 15.1
777 Mariners Island Boulevard
San Mateo, CA

Pecks Management Partners Ltd. 1,862,069(7) 11.2
One Rockefeller Plaza
Suite 900
New York, NY

All directors and executive officers 4,214,500(8) 28.2
as a group (6 persons)

</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 14,740,091 shares outstanding as of December 27, 1999.
(3) Includes (i) 1,316,667 shares of Common Stock are owned of record by the
Fernandez Family Limited Partnership, (ii) 27,500 shares held directly by
Mr. Fernandez and (iii) 110,000 shares of Common Stock underlying options
granted that are currently exercisable.
(4) Includes (i) 800 shares held by Arkangel, Inc. and (ii) 200,000 shares
held by Harter Financial, Inc.
(5) Based on the most recent Schedule 13D, includes (i) shares owed
beneficially through Frost Nevada Limited Partnership and Frost-Nevada
Corporation and (ii) 75,000 shares of common stock underlying options
granted that are currently exercisable.
(6) 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.
(7) 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. Share information based on
the most recent Schedule 13G.
(8) Includes 185,000 shares of Common Stock underlying options granted that
are currently exercisable.

In connection with the restructuring of the Company's convertible
subordinated notes as described in Proposal No. 2, Continucare will be issuing
15,500,000 shares of common stock to the noteholders and 3,000,000 shares of
common stock to the guarantors of Continucare's financing. The table above does
not give effect to the issuance of these additional shares. See "Restructuring
Overview" in Proposal No. 2.

3
<PAGE> 6

ELECTION OF DIRECTORS

(PROPOSAL NO. 1)

Three 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 we anticipate 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.

Mr. Charles M. Fernandez, Dr. Phillip Frost and Mr. Spencer J.
Angel are the three persons nominated as directors. Each of the director
nominees is a current member of the board of directors. Biographical
information for the director nominees is set forth under "Management" below.
Neil Flanzraich and Carlos E. Padron, current members of the board of
directors, are not standing for re-election as directors.

MANAGEMENT

The executive officers and directors of Continucare are as follows:
<TABLE>
<CAPTION>

NAME AGE POSITION
- ---- --- ---------
<S> <C> <C>
Spencer J. Angel*................. 33 President, Chief Executive Officer, Chief Operating Officer and
Director

Janet L. Holt..................... 52 Chief Financial Officer

Charles M. Fernandez*............. 37 Chairman of the Board

Phillip Frost, M.D.*.............. 63 Vice Chairman of the Board

Neil Flanzraich................... 56 Director

Carlos E. Padron.................. 34 Director
</TABLE>
- --------------
* Director nominees.

SPENCER J. ANGEL has served as the Company's President and Chief
Executive Officer since the resignation of Mr. Fernandez on November 2, 1999.
Previously he served as the Company's Executive Vice President and Chief
Operating Officer since July 12, 1999, and he served as a member of the Board of
Directors since September 30, 1999. Mr. Angel has served, since 1996, as
director and president of Harter Financial, Inc., a diversified financial
consulting firm. See "Certain Relationships and Related Transactions." In 1999,
Mr. Angel served as president and chief executive officer of Medical Laser
Technologies, Inc., a company that produces digital x-ray picture archiving and
communications systems for cardiac catheterization labs. He was the secretary,
treasurer and director of Autoparts Warehouse, Inc., an auto parts retail and
service company, from September 1997 to January 1999. From December 1994 through
August 1996 Mr. Angel was President of 5 East 41 Check Cashing Corp., a company
engaged in the payroll service and armored car business. From November 1991 to
1994 Mr. Angel was an associate attorney with Platzer, Fineberg & Swergold, a
law firm specializing in corporate financial reorganizations.

JANET L. HOLT, was appointed as the Company's Chief Financial Officer
in January 2000. Previously she served as the Vice President of Finance --
Managed Care Division since she joined the Company in July 1999. Prior to
joining the Company, Ms. Holt served as an audit Senior Manager at Ernst &
Young, LLP since November 1997. From June 1995 to November 1997, Ms. Holt
served as the Internal Auditor for InPhyNet Management, Inc., and she served as
an audit manager with Deloitte & Touche, LLP from 1992 to June 1995.

CHARLES M. FERNANDEZ, the Chairman of the Board, is the president and
chief executive officer of Big City Radio, a New York company that owns and
operates a network of radio stations. Mr. Fernandez co-founded Continucare in
February 1996 and served as its Chairman of the Board, President and Chief
Executive Officer from the Company's inception until November 1, 1999, at which
time he resigned as the 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 a director of IVAX Corporation, a Florida
corporation ("IVAX") since June 1998. From July 1999 until November 1999, Mr.
Fernandez served as the Chairman of Hispanic Internet Holdings, Inc., a Spanish
online service provider that was acquired by Big City Radio in 1999.

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.

4
<PAGE> 7

NEIL FLANZRAICH has served as a director of the Company since the 1998
annual meeting on January 26, 1999. He has served as the Vice Chairman and
President of IVAX since May 1998. From September 1995 to May 1998, Mr.
Flanzraich 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.

CARLOS E. PADRON was appointed as a director in October 1999. He is a
partner with the law firm of Vila, Padron & Carrillo, P.A. and has practiced
with the firm since 1991. Mr. Padron also serves on the board of Caribbean Cigar
Company, S.A., Inter-Continental Cigar Corporation and Transcontinental
Investment, Inc.

Officers serve at the pleasure of the board of directors, subject to
the terms of any employment agreements. See "-Employment Agreements."

BOARD OF DIRECTORS UPON RESTRUCTURING

In connection with the proposed restructuring of our 8% convertible
subordinated notes, as further described in Proposal No. 2 set forth herein,
the board of directors will increase the size of the board to seven, three of
which directors shall be Charles M. Fernandez, Phillip Frost and Spencer Angel,
two of which will be nominees of the noteholders and two of which will be
nominees of the board members with the approval of the directors nominated by
the noteholders. At this time the noteholders have submitted Robert J. Cresci
and Patrick M. Healy as their director nominees. See "Proposal to Approve the
Restructuring of our Convertible Subordinated Notes--Director Nominees of the
Noteholders" for the biographies of these individuals.

DIRECTOR COMPENSATION

Mr. Fernandez receives an annual salary of $50,000 for serving as the
Chairman of the Board of Continucare; however the other directors do not 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 our behalf. Our directors are eligible to
receive options under the Continucare Stock Option Plan.

Mr. Angel receives an annual salary of $250,000 as the President, Chief
Executive Officer and Chief Operating Officer of Continucare. Additionally, he
is eligible to receive a bonus equal to 7% of Continucare's earnings before
interest, taxes, depreciation and amortization in excess of $3 million for the
fiscal year.

See "Executive Compensation and Other Information -- Employment
Agreements."

COMMITTEES AND MEETINGS

During fiscal year 1999, the Board of Directors held eight 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 1999
during the period of such director's service, except for Dr. Elias Ghanem, who
resigned as a director and from the compensation committee in January 1999.

5
<PAGE> 8

The compensation committee currently consists of Dr. Phillip Frost
(Chairman), and Neil Flanzraich. Dr. Elias Ghanem and Mark J. Hanna served on
the compensation committee until their resignations from the board of directors
in January 1999 and February 1999, respectively. Mr. Flanzraich was appointed to
the compensation committee upon Dr. Ghanem's resignation in January 1999. The
compensation committee met once during fiscal year 1999. The primary function of
the compensation committee is to review and approve our compensation policies
and practices, propose compensation levels for directors and officers, and
propose changes in our benefit plans.

The audit committee is currently composed of Dr. Frost (Chairman), Mr.
Flanzraich and Mr. Angel. Mr. Hanna and Richard B. Frost served as members of
the audit committee until their resignations in February 1999. Upon their
resignation, Dr. Frost was appointed to the committee. Mr. Kenneth Looloian, the
former chairman of the audit committee, resigned from the board of directors in
September 1999. Upon his resignation, Dr. Frost was appointed chairman of the
audit committee and Mr. Flanzraich became a member of the committee Mr. Angel
was appointed to this committee in September 1999. The audit committee met once
during fiscal year 1999. 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 Continucare, and to address
the scope and expense of audit and related services provided by our independent
accountants.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Dr. Phillip Frost, Chairman of our compensation committee, is also a
director and executive officer of IVAX Corporation. Mr. Fernandez serves on the
board of directors of IVAX Corporation. During fiscal 1999, Mr. Fernandez served
on the board of directors of Frost Hanna Capital Group, Inc. Mark Hanna,
president and a director of Frost Hanna Capital Group, Inc., served on our
compensation committee in fiscal 1999 until his resignation in February 1999.

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 Continucare and its subsidiaries for the fiscal
years 1997, 1998 and 1999 to or on behalf of (i) the Chief Executive Officer
who was serving at the end of the last fiscal year, (ii) the most highly
compensated executive officers who were serving as executive officers at the
end of the last fiscal year, each of whose total annual salary and bonus,
determined as of the end of the fiscal year ended June 30, 1999, exceeded
$100,000 and (iii) two individuals for whom disclosure would have been
provided, but for the fact that they were not serving as executive officers at
the end of the last fiscal year (collectively, the "Named Executive Officers").

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, 1999 352,782 15,000 (1) -0- -0-
President and Chief 1998 334,547 -0- (1) 100,000 -0-
Executive Officer(2)... 1997 327,880 70,000(7) 36,360(3) -0- -0-

Susan Tarbe, Executive 1999 184,230 -0- (1) 50,000(4)
Vice President and 1998 168,462 -0- (1) -0- 3,167(5)
General Counsel(6)..... 1997 97,000 40,000(7) (1) 100,000 1,118(5)

Norman B. Gaylis, M.D.
Senior Vice President,
Chief Operating 1999 328,846 -0- (1) -0- -0-
Officer of Physician 1998 464,193 -0- (1) 50,000 -0-
Practice Division(8)... 1997 92,094 50,000(9) -0- -0- -0-

Bruce Altman
Chief Financial 1999 104,615 10,000 (1) 62,500 -0-
Officer(10)............
</TABLE>

6
<PAGE> 9
- -------------------

(1) The total perquisites and other personal benefits provided is less than
10% of the total annual salary and bonus to such officer.
(2) Mr. Fernandez resigned as President and Chief Executive Officer in
November 1999.
(3) Includes $13,155 in car allowance and $20,205 in insurance benefits.
(4) Includes a severance payment of $25,000 in August 1999 and a severance
payment of $25,000 in September 1999.
(5) 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.
(6) Mrs. Tarbe joined the Company in September 1996 and resigned in September
1999.
(7) Includes a signing bonus in the amount of $2,500 and a bonus paid in
September 1997 for services rendered in fiscal 1997.
(8) Dr. Gaylis joined the Company in April 1997 and resigned in March 1999.
(9) Represents a bonus paid in fiscal 1998 for services rendered in fiscal
1997.
(10) Mr. Altman joined the Company in October 1998 and resigned in April 1999.

OPTION GRANTS DURING FISCAL 1999

OPTION GRANTS TABLE. The following table sets forth certain information
concerning grants of stock options made during fiscal 1999 to each of the Named
Executive Officers. We did not grant any stock appreciation rights in fiscal
1999.

<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS IN 1999 FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------------------
SHARES OF POTENTIAL REALIZABLE VALUE AT
COMMON STOCK ASSUMED ANNUAL RATES OF STOCK PRICE
UNDERLYING % OF TOTAL APPRECIATION FOR OPTION TERM (1)
OPTIONS GRANTED TO OPTION EXPIRATION -------------------------------------
NAME GRANTED EMPLOYEES PRICE($) DATE 5% 10%
- ---------------------- -------------- ----------- -------- ---------- --------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Fernandez 0 -- -- -- -- --
Susan Tarbe 0 -- -- -- -- --
Norman B. Gaylis, M.D. 0 -- -- -- -- --
Bruce Altman 62,500(2) 38.5%(3) $5.125 7/15/99 201,443 510,496
</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.
(2) Mr. Altman resigned from his position as Chief Financial Officer in April
1999 and his options expired in July 1999.
(3) Based upon 162,500 options granted during fiscal 1999.

AGGREGATED OPTION EXERCISES IN 1999 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, 1999, and (ii) the value as of June 30, 1999 of unexercised in-the-money
options. No options were exercised by any of the Named Executive Officers in
1999.

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT JUNE 30, 1999 AT JUNE 30, 1999 ($)(1)
----------------------------------- -----------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Charles M. Fernandez 110,000 25,000 0 0
Susan Tarbe 80,000 20,000 0 0
Norman B. Gaylis, M.D. 33,334 16,666 0 0
Bruce Altman 31,250 31,250 0 0
</TABLE>

- ------------------
(1) Market value of shares covered by in-the-money options on June 30, 1999,
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.

7
<PAGE> 10

EMPLOYMENT AGREEMENTS

The Company entered into employment agreements with Spencer J. Angel,
Charles M. Fernandez, Susan Tarbe, Norman B. Gaylis and Bruce Altman. Mr.
Angel's employment agreement is for a one year period with additional year
automatic renewals and provides for an annual base salary of $250,000.
Additionally, he is eligible to receive a bonus equal to 7% of Continucare's
earnings before interest, taxes, depreciation and amortization in excess of $3
million for the fiscal year. The agreement may be terminated by either party
with or without cause upon 60 days notice prior to an anniversary date of the
agreement. Pursuant to the terms of his agreement, Mr. Angel is prohibited from
competing with Continucare for a one year period following his termination of
his employment with Continucare. In the event that Mr. Angel is terminated
without cause, Mr. Angel is entitled to his base salary through the end of the
term of the agreement and any unpaid accrued bonus.

Mr. Fernandez's employment agreement was for a term of three years plus
one additional year for each year of service and became effective on September
11, 1996, and provided 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. In June 1999 Mr. Fernandez voluntarily reduced his annual salary
to $275,000. In October 1999 Mr. Fernandez entered into an employment
modification agreement which provided for the further reduction in Mr.
Fernandez's annual salary to $250,000 and a performance bonus for the fiscal
year commencing July 1, 1999, to equal 5% of Continucare's earnings before
interest, taxes, depreciation and amortization ("EBITDA") in excess of $3
million for the fiscal year. His modified employment agreement provides that if
Mr. Fernandez was terminated without cause, Mr. Fernandez was entitled to
receive his base salary for one year after his termination. Pursuant to the
terms of his modified agreement, Mr. Fernandez was prohibited from competing
with Continucare for a period of six months following his termination, unless
terminated without cause. Mr. Fernandez resigned from his position as President
and Chief Executive Officer of Continucare in November 1999 in order to take the
position of president and chief executive officer of Big City Radio, a New York
company that owns and operates a network of radio stations. Upon his
resignation, his employment agreement was modified to provide for an annual
salary of $50,000, payable during his term as Chairman of the Board of
Directors.

Ms. Tarbe's employment agreement, as amended, was effective until
August 24, 2001, and provided 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 was entitled to an acceleration of the remainder of her
employment agreement and automatic vesting of any unvested portion of her
aforementioned option. Ms. Tarbe resigned from Continucare in September 1999 in
order to pursue other business interests, at which time her employment agreement
was terminated. Ms. Tarbe received $50,000 in severance payments.

Dr. Gaylis' employment agreement was for a period of four years
commencing April, 1997, and provided 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 was entitled to annual incentive compensation of 50% of 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 from disclosing confidential information. Dr. Gaylis
resigned from Continucare in March 1999 in order to pursue other business
interests, at which time his employment agreement was terminated.

Mr. Altman's employment agreement was for a period of two years
commencing on August 24, 1998 and provided for an annual base salary of $160,000
and a bonus equal to at least 10% of his base salary and any additional bonus as
may have been determined by the compensation committee. Under the terms of Mr.
Altman's employment agreement, he received an option to purchase 62,500 shares
of common stock at a $5.125 exercise price. Upon a change of control, Mr. Altman
was entitled to an acceleration of the remainder of his employment agreement, up
to a maximum of one year salary and the automatic vesting of the stock option.
Mr. Altman resigned from Continucare in April 1999 in order to pursue other
business interests, at which time his employment agreement was terminated.

8
<PAGE> 11

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 key executives to 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 1999.

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. Due to the Company's financial condition, Mr. Fernandez,
the Company's former President and Chief Executive Officer, voluntarily reduced
his salary. Performance bonuses and stock options grants to executive officers
in prior fiscal years were structured to reinforce the achievement of both short
and long term corporate objectives in addition to fostering a long-term
perspective aligned with that of its shareholders; however, due to Continucare's
financial condition, performance bonuses were not granted in fiscal 1999. The
salaries for each of the Named Executive Officers is set forth in such
executive's employment agreement.

Dr. Phillip Frost, Chairman

Neil Flanzraich

9
<PAGE> 12

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,
1999.

CUMULATIVE TOTAL RETURN
-----------------------------------
6/97 6/98 6/99
--------- ---------- ----------
Continucare Corporation 100 66 55 7
Amex Market Value 100 114 134 150
NASDAQ Health Services 100 97 95 90

CERTAIN TRANSACTIONS

In May 1999 the Company entered into an agreement with Harter
Financial, Inc. ("Harter") to assist it with a financial reorganization and to
represent the Company in negotiating the restructuring of the Notes and a
settlement with the noteholders. As compensation for its services, Harter
received an initial fee of $50,000 on May 18, 1999. On October 18, 1999, the
Board of Directors approved a final compensation package to be paid to Harter
consisting of a cash payment of $150,000 and the issuance of 200,000
unregistered shares of the Company's common stock, which were valued at $112,500
based on the closing price of the Company's stock on the date of grant. Mr.
Angel, the Company's President, Chief Executive Officer and Chief Operating
Officer, is also the president and a 15% shareholder of Harter. However, as of
May 18, 1999, Mr. Angel was not an officer or director of the Company.

In April 1999 the Company sold substantially all of the assets of Rehab
Management Systems, Inc., Integracare, Inc., J.R. Rehab Associates, Inc. and
Continucare Occmed Services, Inc. to Kessler Rehabilitation Services, Inc.
("Kessler") for $5,500,000. Mr. Looloian, a director of the Company during
fiscal 1999, was also a director of Kessler at the time of the sale. To the
Company's knowledge, Mr. Looloian had no financial interest in the Kessler
transaction.

In February 1997, the Company entered into an agreement with Bally
Total Fitness ("Bally"), relating to the establishment of outpatient
rehabilitation centers at Bally fitness centers. During the fiscal year ended
June 30, 1999, the Company earned $381,000 in management fees from Bally and, as
of June 30, 1999, $760,442 was included in accounts receivable for these
services. The Bally agreement was terminated in April 1999. Mr. Looloian, a
director of the Company during fiscal 1999 is an affiliate of Bally. To the
Company's knowledge, Mr. Looloian had no financial interest in the Bally
transaction.

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, including practices (the "Practices') affiliated with Norman G.
Gaylis, M.D., a former executive officer of the Company. In connection with the
acquisition, the Company entered into a management agreement with ZAG Group,
Inc. ("ZAG"). Dr. Gaylis owns a 33.3% interest in ZAG and is an officer of ZAG.

10
<PAGE> 13

Pursuant to the management agreement, ZAG agreed to provide services to
Continucare Physician Practice Management, Inc., a subsidiary of Continucare
(the "Subsidiary"), including the following: (i) manage and monitor the
Subsidiary's inpatient, outpatient and other muscular-skeletal programs and all
operations, policies and procedures relating thereto; (ii) assist with the
recruitment and hiring of clinical and administrative staff for each program
and/or physician practice owned and/or managed by the Subsidiary and monitor the
Subsidiary's personnel needs; (iii) furnish various services and recommendations
related to the fiscal operation of the Subsidiary; (iv) assist the Subsidiary in
working with governmental agencies, third party payors and others to maintain
existing and secure any additional necessary licenses, certification, permits,
approvals, and reimbursement; (v) provide consultation to assist the Subsidiary
in achieving efficient operation and compliance; and (vi) identify acquisition
targets that satisfy the Subsidiary's quality, financial, geographic and other
standards and the negotiation of such acquisitions up to the letter of intent.
In consideration of the management services, the ZAG Group was paid an hourly
rate, not to exceed $200,000 in the aggregate for the 12-month period ended
March 31, 1998, and not to exceed $400,000 in the aggregate for the 12-month
period ended March 31, 1999.

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 September 1998, the Company paid approximately
$2,000,000 to ZAG in connection with an Agreement and Plan of Merger executed
between the Company and ZAG which effectively canceled the put/call agreement.
Cash of $115,000 was paid and the remaining $1,885,000 was paid by issuing
575,000 unregistered shares of the Company's common stock with a fair market
value of approximately $1,600,000 on the date of issuance. However, in the event
that the common stock issued does not have an aggregate fair market value of
approximately $1,885,000 on October 15, 1999, the Agreement and Plan of Merger
provided that the Company shall 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. Based on the current market price of the
Company's common stock, additional consideration of approximately $1,600,000 in
cash, or approximately 2,352,000 shares of the Company's common stock, would
have to be issued. However, as noted below, this additional consideration has
not been paid and is in dispute.

In November 1999, the Company commenced litigation against ZAG and its
affiliated parties alleging breach of fiduciary duties, improper billing, and
seeking return of all consideration previously paid by the Company to ZAG, and
damages, as well as seeking rescission of the Agreement and Plan of Merger. If
the action is unsuccessful Continucare may be required to pay in excess of
$1,600,000 of additional consideration, in the form of either cash or stock,
representing the difference between $1,885,000 and the fair market value of the
575,000 shares of Continucare common stock previously issued to ZAG in
connection with the Agreement and Plan of Merger. In December 1999, ZAG filed a
counter claim against the Company for its alleged right to payment and the
performance by the Company of certain other obligations under the Agreement and
Plan of Merger.

As part of the Company's business rationalization program, in April
1999, the Company transferred to Dr. Gaylis certain of the assets and
liabilities of Continucare Physician Practice Management, Inc.'s ("CPPM")
Specialty Physician Practices. Assets of approximately $60,000 were transferred
in exchange for the assumption of approximately $60,000 in liabilities. These
assets included one physician practice, which operated from two locations (or
25% of the total physician practices held by the Company prior to this
transaction). The physician practice transferred to Dr. Gaylis accounted for
37.3% of the Company's Specialty Physician Practice Division's fiscal 1998
revenue and 21.0% of the Specialty Physician Practice Division's fiscal 1999
total revenue.

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.

11
<PAGE> 14

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.

12
<PAGE> 15

PROPOSAL TO APPROVE THE RESTRUCTURING
OF OUR CONVERTIBLE SUBORDINATED NOTES

(PROPOSAL NO. 2)

Throughout fiscal 1999, we experienced adverse business operations. In
order to avoid having to seek bankruptcy protection and in an effort to gain
financial strength, we undertook a business rationalization program to divest
certain unprofitable operations and close other underperforming subsidiaries.
Additionally, we undertook a financial restructuring program to implement
certain measures and strengthen our financial condition. The most significant
component of the financial restructuring program involves the restructuring of
our 8% convertible subordinated notes due 2002. On December 9, the noteholders
executed a Consent to Supplemental Indenture to restructure the notes. The
Consent and Supplemental Indenture are contingent on a number of factors. This
proposal sets forth information on the notes, the restructuring of the notes and
the terms of the Consent and Supplemental Indenture. The description of the
Consent and Supplemental Indenture contained herein is qualified in its entirety
by reference to the text of the Consent and the First Supplemental Indenture
which is attached as Exhibit A and incorporated herein by reference.

OUR OPERATING HISTORY

We developed and expanded our operations through acquisitions of
healthcare related companies. The expenses and operational challenges associated
with the integration of the acquired businesses and the difficulties in
assimilating the operations of the acquired businesses coupled with the
increased demand of management resources and personnel was detrimental to our
financial stability. The process of integrating functions such as management
information systems, claims administration and billing services, utilization
management of medical services, care coordination and case management, quality
and cost monitoring and physician recruitment, and other aspects of operations,
while managing and often downsizing the entity, presented a significant
challenge to our management.

The continued integration of our acquired businesses and our future
ability to control costs are important to our ongoing financial and operational
performance. The anticipated benefits from several acquisitions were not
achieved, and the operations of the acquired businesses were not successfully
integrated in a timely manner. The process of integrating the acquired
businesses caused the interruption and loss of momentum in the conduct of these
businesses and had a material adverse effect on our operations, financial
results and cash flows.

Throughout fiscal 1999 we experienced adverse business operations. To
strengthen Continucare financially, since the end of calendar 1998, we undertook
a business rationalization program to divest certain unprofitable operations and
close other underperforming subsidiary divisions and a financial restructuring
program to strengthen our financial performance. In connection with the
implementation of our business rationalization program, we sold or closed our
outpatient rehabilitation division, diagnostic imaging division and specialty
physician practices. These divestitures generated net cash proceeds of
approximately $6,700,000 (after the payment of transaction costs and other costs
such as employee-related costs). The business rationalization program has
assisted with the commencement and implementation of our financial restructuring
program and has allowed us to focus our resources on a core business model.

Since December 31, 1998 we have not been in compliance with certain
covenants under the terms of our $5 million credit facility with First Union
National Bank. During April 1999, we used approximately $4.0 million of the net
proceeds of the sale of our rehabilitation subsidiary to reduce the outstanding
balance of the credit facility to $1.0 million. In connection with the payment,
we entered into an amendment to the credit facility, which provided, among other
things, for the repayment of the remaining outstanding principal balance of
approximately $1.0 million to First Union by December 31, 1999. At December 31,
1999, the outstanding balance was approximately $135,000. The Company obtained
a waiver which extended the due date of the remaining balance to February 1,
2000.

13
<PAGE> 16

On April 30, 1999 we defaulted on our semi-annual payment of interest
on our notes. In an effort to avoid bankruptcy and effect a successful
completion of our business rationalization program and financial restructuring,
we negotiated a settlement with the noteholders to address the restructuring of
the notes.

ISSUANCE OF NOTES

We issued 8% convertible subordinated notes due 2002 in the principal
amount of $46,000,000 to qualified institutional buyers and to a limited number
of institutional accredited investors on October 27, 1997. The notes became
convertible into our common stock 60 days following the initial date of issuance
and remain convertible until maturity, unless previously redeemed, at a
conversion price of $7.25 per share, subject to certain adjustments. The
interest on the notes is payable on April 30 and October 31 of each year, and
the interest payments commenced on April 30, 1998. The notes are redeemable in
whole or in part, at our option at any time on or after October 31, 2000. The
notes and the common stock issuable upon the conversion of the notes were
registered on a resale registration statement filed on December 24, 1997.

HISTORY OF NOTES

On April 30, 1999, we defaulted on our semi-annual payment of interest
on the notes. At that time negotiations with an informal committee of the
noteholders commenced. In August 1998 we repurchased $1.0 million of the notes
and in July 1999 we purchased $4.0 million of the notes for approximately
$200,000. We defaulted on our semi-annual payment of interest in October 1999.

In May 1999 we entered into an agreement with Harter Financial, Inc. to
assist us with our financial reorganization and to represent us in negotiating
the restructuring of the notes and a settlement with the noteholders. Mr. Angel
is the president and 15% shareholder of Harter. As compensation for its
services, Harter received an initial fee of $50,000. On September 29, 1999 we
announced an agreement in principle with the noteholders to enter into a
settlement and restructuring agreement with respect to the remaining $41.0
million principal balance and approximately $3.3 million of interest thereon
accrued through October 31, 1999. The Board of Directors approved in October
1999 a final compensation package to be paid to Harter consisting of a cash
payment of $150,000 and of 200,000 shares of the Company's common stock, which
were valued at $112,500 based on the closing price of the Company's common stock
on the date of grant.

On September 29, 1999 we entered into a letter of intent and term sheet
setting forth the terms of the restructuring, and in December 1999, each of the
five noteholders executed a Consent to Supplemental Indenture to restructure the
notes. The Consent and Supplemental Indenture are contingent on a number of
factors. This proposal sets forth information on the notes, the restructuring of
the notes and the terms of the Consent and Supplemental Indenture. The
description of the Consent and Supplemental Indenture contained herein is
qualified in its entirety by reference to the text of the Consent and the First
Supplemental Indenture which are attached as Exhibit A and incorporated herein
by reference.

RESTRUCTURING OVERVIEW

The modification of the securities will eliminate at least 76% of the
notes from our debt structure. We believe this is necessary to best ensure our
long-term viability. We are asking our shareholders to approve the restructuring
of the notes. If the restructuring of the notes is not approved by the
shareholders, we will be unable to continue our operations and may be required
to seek bankruptcy court protection and our shares may be delisted by the
American Stock Exchange.

The restructuring will eliminate $31 million of the remaining $41.0
million principal balance and approximately $3.3 million of interest thereon
accrued through October 31, 1999. The Consent and Supplemental Indenture will
not be fully effective unless and until approved by the shareholders at the
meeting. Additionally, the Supplemental Indenture is conditioned upon
Continucare obtaining a new $3.0 million secured credit facility. The new credit
facility will be guaranteed by third party individual guarantors, and, as
consideration for the guaranty, the guarantors shall be issued an aggregate of
3.0 million shares of our common stock. Such guarantors may be individuals
affiliated with the Company. It is anticipated that we will obtain the credit
facility and the guarantors shall guaranty the credit facility after obtaining
approval of the restructuring by the shareholders at the annual meeting;
however, there can be no assurance that such guaranty will be executed.

14
<PAGE> 17

The restructuring of the notes, pursuant to the terms of the
Supplemental Indenture, include the following:

o conversion of $31 million of the notes, on a pro forma basis,
into 15.5 million (approximately 47% after giving effect for the
3.0 million shares to be issued in connection with the guaranty)
of the issued and outstanding shares of our common stock;

o forgiveness of interest payments through October 31, 1999
(approximately $3.3 million) and waiver of any event of default
resulting from our failure to make the two interest payments in
1999;

o waiver of interest payment default on the remaining $10.0 million
principal balance of notes and reinstatement on our books and
records as a performing non-default loan;

o a reduction of the coupon rate from 8% per annum to 7% per annum
effective as of November 1, 1999 on the remaining $10.0 million
principal balance of the notes;

o reduction of the conversion price from $7.25 to $2 on the $10
million of notes, effective November 1, 2000; and

o increasing the number of directors on our Board by four members,
two of which will be nominees of the noteholders and two of which
will be nominees of the remaining board members.

The restructuring, pursuant to the terms of the Supplemental Indenture,
is contingent upon a number of conditions satisfied prior to February 15, 2000,
including:

o obtaining a loan from a financial institution for at least $3
million; and

o obtaining guarantees from individual guarantors on the $3 million
loan.

Continucare is currently negotiating with financial institutions and
third party guarantors regarding the $3 million line of credit; however, at this
time there are no formal arrangements in place, and Continucare cannot be
certain that the line of credit or the guaranty will be obtained.

DIRECTOR NOMINEES OF THE NOTEHOLDERS

Upon the effectiveness of the restructuring, the board of directors
is contractually obligated to increase the size of the board to seven, three
of which directors shall be Charles Fernandez, Phillip Frost and Spencer Angel,
two of which will be nominees of the noteholders and two of which will be
nominees of the remaining board members with the approval of the directors
nominated by the noteholders. At this time the noteholders have submitted
Robert J. Cresci and Patrick M. Healy as their director nominees.

Since 1990, Mr. Cresci has been a Managing Director of Pecks Management
Partners Ltd., an investment management firm and holder of approximately $13.5
million of Continucare's notes. Mr. Cresci currently serves on the boards of FIS
International, Inc., Sepracor, Inc., Arcadia Financial, Ltd., Aviva Petroleum
Ltd., Film Roman, Inc., Quest Education Corporation, Castle Dental Centers,
Inc., Candlewood Hotel Co., Inc. SeraCare, Inc. and several private companies.

Mr. Healy has served as President/Chief Administrative Officer and as a
member of the Board of Directors for Mayo Health Plan, Inc. since its inception
in June 1996. Previously, Mr. Healy was President/Chief Executive Officer and
member of the Board of Directors for Cleveland Clinic Florida Health Plan from
its inception in 1992 through 1996. Mr. Healy also served as Regional Director
of Operations/Southeast Region and Executive Director Florida/Caribbean for The
Travelers Insurance Company from 1990 through 1992.

15
<PAGE> 18

STRUCTURE OF NOTES

Set forth below are the terms of the current notes and the modified
notes remaining after conversion of $31 million of the notes into 15,500,000
shares of our common stock.

CURRENT STRUCTURE OF NOTES NOTES AFTER RESTRUCTURING
--------------------------------------------------- ---------------------------------
<S> <C> <C>
Securities Offered........... $41.0 million aggregate principal amount of 8% $10 million of notes
Convertible Subordinated Notes due 2002

Interest Payment Dates....... October 31 and April 30 Same, except April 30, 1999
and October 31, 1999
payments were waived.

Maturity..................... October 31, 2002. Same.

Conversion................... The notes are convertible into common stock at any time Same, except, effective
prior to maturity, unless previously redeemed, at a November 1, 2000, the
conversion price of $7.25 per share, subject to conversion price is reduced
adjustment under certain conditions. These adjustments to $2.00.
include (i) dividends (ii) the issuance to all
holders of common stock of rights, warrants or
options entitling them to purchase common stock
at less than the current market value, (iii)
subdivisions or combinations of common stock,
(iv) distributions to holders of common stock
evidences of indebtedness, cash or other
assets, (v) distributions of cash to all
holders of common stock and (vi) purchase of
common stock pursuant to a tender offer in
certain circumstances.

Redemption at Option of
Company................... The notes are redeemable, in whole or in part, at our Same.
option at any time on or after October 31, 2000, at the
redemption prices (expressed as a percentage of the
principal amount) set forth below for the 12-month period
beginning October 31 of the years indicated:

2000 . . . . . . . 104.00%
2001 . . . . . . . 102.00%

and thereafter at 100% of principal amount,
together with accrued interest to the
redemption date.

</TABLE>

16
<PAGE> 19
<TABLE>
<CAPTION>

CURRENT STRUCTURE OF NOTES NOTES AFTER RESTRUCTURING
--------------------------------------------------- ---------------------------------
<S> <C> <C>

Repurchase at Option of
Holders................... If a Repurchase Event occurs, each noteholder will have Same.
the right, subject to certain conditions and
restrictions set fourth below, to require us to
repurchase all outstanding Notes, in whole or
in part, owned by such noteholder at 101% of
their principal amount plus accrued interest,
if any, to the date of repurchase. If a
Repurchase Event were to occur, there is no
assurance that we would have sufficient funds
to pay the repurchase price for all the Notes
tendered by the Holders thereof. The Company's
ability to make such payments may be limited
by its leverage and the terms of its then
existing borrowing and other agreements. A
Repurchase Event is deemed to have occurred if
(i) a person, or group of people, other than
the Company, an employee or director of the
Company, becomes the beneficial owner
entitling the person to more than 50% of the
total voting power of the Company (ii) the
Company sells or transfers substantially all
of its assets, (iii) there is a consolidation
or merger of the Company into another entity
or another entity into the Company, except in
certain circumstances, (iv) a change in the
board of directors of the Company in which the
individuals who constituted the board at the
beginning of the 24-month period, together
with directors approved by a vote of at least
a majority of the directors then in office
cease to constitute a majority of the
directors, and (v) the common stock of the
Company is subject to a "Rule 13e-3"
transaction as defined under the Securities
Exchange Act of 1934, as amended. Provided,
however, that a Repurchase Event shall not be
deemed to have occurred if the daily market
price per share of common stock for any ten
trading days within the period of twenty
consecutive trading days ending immediately
before a repurchase event shall equal or
exceed 120% of the conversion price of the
Notes in effect on such trading days.

Certain Covenants............ The Indenture contains certain covenants that, among Same.
other things, limit our ability to make restricted
payments and to enter into merger and similar
transactions. These covenants are subject to
important exceptions and qualifications.

Subordination................ The Notes are subordinated to all of our existing Same.
and future Senior Indebtedness and will be
effectively subordinated to all indebtedness and
other liabilities of our subsidiaries. Upon any
payment or distribution of assets to creditors upon
any liquidation, dissolution or bankruptcy or
similar proceedings of the Company, the holders of
Senior Indebtedness will be first entitled to
receive payment in full of all amounts due before
the noteholders are entitled to receive any payment
or interest on the notes. The Indenture governing
the Notes does not prohibit us from incurring
additional Indebtedness, including Senior
Indebtedness.

</TABLE>

17
<PAGE> 20
<TABLE>
<CAPTION>

CURRENT STRUCTURE OF NOTES NOTES AFTER RESTRUCTURING
--------------------------------------------------- ---------------------------------
<S> <C> <C>

Registration Rights and Pursuant to a registration rights agreement we filed a Same.
Transfer Restrictions..... shelf registration statement to register the Notes and
the common stock issuable upon conversion
thereof. We agreed to use our best efforts to
maintain the effectiveness of the shelf
registration statement until the second
anniversary of the closing of the sale of the
notes or such shorter period ending when all
the notes and common stock issuable upon the
conversion thereof have been sold thereunder,
except that we are permitted to suspend the use
of the shelf registration statement during
certain periods under certain circumstances.

</TABLE>

ANTICIPATED RESULTS IF RESTRUCTURING IS NOT APPROVED

If we do not complete the restructuring:

o the principal and all accrued and unpaid interest on the notes
will most likely be declared payable in full;

o the $41.0 million principal amount of the notes will continue to
be classified as a current liability on our balance sheet;

o we may experience material adverse effects on our financial
position and operation;

o we may need to file a petition with the bankruptcy court to
reorganize under applicable provisions of the Bankruptcy Code;

o we may lose business if others begin to doubt our ability to
timely satisfy our obligations; and

o we will be unable to invest adequate capital in our business or
make appropriate capital expenditures.

A bankruptcy proceeding initiated in such circumstances, in our
opinion, would be lengthy and perhaps contested and, therefore, could be
expected to result in substantial disruption of business operations. We believe
that in such circumstances our stockholders would most likely suffer a total
loss of their investments, and our noteholders would likely recover no more, and
potentially could recover substantially less than the recovery available through
the restructuring.

SECURITIES LAWS RESTRICTIONS ON NOTES AND COMMON STOCK

The Notes were originally acquired by the Noteholders in connection
with a private placement by the Company on October 30, 1999. The resale of the
Notes (and the shares of common stock to be issuable thereunder) were registered
for resale by the Company pursuant to a registration statement declared
effective by the Securities and Exchange Commission on January 8, 1998. The
Notes, as amended pursuant to the proposed restructuring, and the common stock
issuable thereunder, will be issued pursuant to an exemption under Section 4(2)
of the Securities Act of 1933, as amended (the "Securities Act"). The Notes (and
the shares of common stock to be issuable thereunder) are restricted securities
and have not been registered under the Securities Act or any other applicable
securities law. Such securities may not be offered, sold, pledged or otherwise
transferred except in compliance with the registration requirements of the
Securities Act or any other applicable securities laws.

VOTE REQUIRED AND RECOMMENDATION

If a quorum exists, the number of votes cast favoring the proposal must
exceed the number of votes cast opposing the proposal in order for the
restructuring of the notes as set forth hereinabove to be approved.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL
TO RESTRUCTURE THE NOTES.

18
<PAGE> 21

PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated balance sheet
is based upon the historical financial position of the Company at September 30,
1999. The following unaudited pro forma condensed consolidated statements of
operations for the year ended June 30, 1999 and the three-month period ended
September 30, 1999 give effect to the transactions as if they had occurred on
July 1, 1998. The pro forma adjustments give effect to (a) the issuance of 15.5
million shares of common stock as a result of the conversion of $31 million of
the Notes (b) forgiveness of the accrued interest on the Notes, and (c) the
payment of $150,000 and the issuance of 200,000 shares of the Company's common
stock to Harter Financial Inc. at a price per share of $0.5625, which was the
shares' trading price on the date that the shares were granted (October 18,
1999).

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999

PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS BALANCE
------------- ----------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $2,254,549 (150,000)(3) $2,104,549
Other current assets.................................... 633,732 633,732
----------- -----------
Total current assets................................. 2,888,281 2,738,281
Equipment, furniture and leasehold improvements, net.... 977,399 977,399
Cost in excess of net tangible assets acquired, net
of accumulated amortization of $4,162,597............. 21,700,747 21,700,747
Deferred financing costs, net .......................... 2,151,398 (2,151,398)(4) --
Other assets............................................ 84,418 84,418
----------- -----------
Total assets......................................... $27,802,243 $25,500,845
----------- -----------

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
$(6,680,833)(1)
(22,219,167)(2)
Convertible subordinated notes payable.................. $41,000,000 (12,100,000)(5) --
Interest payable........................................ 3,011,342 (3,006,667)(1) 4,675
Medical claims payable.................................. 6,051,770 6,051,770
Current portion of long-term debt....................... 6,686,129 6,686,129
Other current liabilities............................... 4,737,195 4,737,195
----------- -----------
Total current liabilities............................ 61,486,436 17,479,769
Long-term debt.......................................... 1,656,380 12,100,000 (5) 13,756,380
----------- -----------
Total liabilities.................................... 63,142,816 31,236,149
1,550 (1)
Common stock............................................... 1,455 20 (3) 3,025
9,685,950 (1)
Additional paid in capital................................. 32,910,465 112,480 (3) 42,708,895
22,219,167 (2)
(2,151,398)(4)
Accumulated Deficit........................................ (62,827,792) (262,500)(3) (43,022,523)
Treasury stock............................................. (5,424,701) (5,424,701)
----------- -----------
Total shareholders' deficit.......................... (35,340,573) (5,735,304)
----------- -----------
Total liabilities and shareholders' deficit.......... $27,802,243 $25,500,845
=========== ===========

</TABLE>

19
<PAGE> 22

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(1) Represents issuance of 15,500,000 shares of common stock at $0.625 per
share (the closing price on December 20, 1999), reversal of accrued
interest through September 30, 1999 and reduction in the Notes balance as
a result of the transaction
(2) To reduce the principal balance of the Notes to the total amount of the
Company's expected future cash payments for principal and interest
through the date of the Note's maturity in accordance with Financial
Accounting Standards Board Opinion No. 15, ACCOUNTING BY DEBTORS AND
CREDITORS FOR TROUBLED DEBT RESTRUCTURINGS and recognize the resulting
gain on extinguishment of debt.
(3) To record payment of $150,000 in cash and issuance of 200,000 shares of
common stock at $0.5625 per share (the closing price on October 18, 1999)
to Harter Financial Inc.
(4) To write off the unamortized deferred financing costs related to the Notes
(5) Reclassification of the remaining outstanding balance of the Notes from
current to long-term liabilities.
(6) The unaudited proforma condensed consolidated balance sheet does not
include the effect of issuing 3,000,000 shares of common stock to the
guarantor(s).

20
<PAGE> 23

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (1)
YEAR ENDED JUNE 30, 1999

PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------------ -------------- -----------------
<S> <C> <C> <C>
Revenue............................................ $182,526,752 $182,526,752
Expenses
Medical services................................ 163,237,820 163,237,820
Payroll and employee benefits................... 13,797,555 13,797,555
Provision for bad debts......................... 6,196,384 6,196,384
General and administrative...................... 12,085,046 12,085,046
Write-down of long-lived assets................. 11,717,073 11,717,073
Depreciation and amortization................... 5,791,982 5,791,982
Loss on disposal of subsidiaries................ 15,361,292 15,361,292
------------ ------------
Subtotal...................................... 228,187,152 228,187,152
------------ ------------
Loss from operations............................... (45,660,400) (45,660,400)

3,280,000 (2)
Interest expense................................... (5,145,212) 672,756 (3) (1,192,456)
Other income....................................... 163,869 163,869
------------ ------------
Loss before extraordinary item..................... (50,641,743) (46,688,987)
Extraordinary gain on extinguishment of debt....... 130,977 130,977
------------ ------------
Net (loss)......................................... $(50,510,766) $(46,558,010)
============ ============

Basic and diluted income (loss) per common share:
Loss before extraordinary item.................. $(3.50) $(3.23)
Extraordinary item.............................. $.01 $.01
Net (loss)...................................... $(3.49) $(3.22)
</TABLE>

SEE NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

21
<PAGE> 24

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (1)
THREE MONTHS ENDED SEPTEMBER 30, 1999

PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ------------ ----------
<S> <C> <C> <C>
Revenue......................................... $29,082,493 $29,082,493
Expenses:
Medical services............................. 27,432,190 27,432,190
Payroll and employee benefits................ 1,869,559 1,869,559
General and administrative................... 1,662,213 1,662,213
Depreciation and amortization................ 807,534 807,534
----------- -----------
Subtotal................................... 31,771,496 31,771,496
----------- -----------
Loss from operations............................ (2,689,003) (2,689,003)

820,000 (2)
Interest expense................................ (1,071,145) 168,189 (3) (82,956)
Other income.................................... 298,576 298,576
----------- -----------
Loss before extraordinary item.................. (3,461,572) (2,473,383)
Extraordinary gain on extinguishment of debt.... 3,776,197 3,776,197
----------- -----------
Net income...................................... $314,625 $1,302,814
=========== ===========
Basic and diluted income (loss) per common share:
Loss before extraordinary item............... $(.24) $(.17)
Extraordinary item........................... $.26 $.26
Net income loss.............................. $.02 $.09
</TABLE>

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(1) The unaudited condensed consolidated statements of operations do not
include the recognition of an extraordinary gain on extinguishment of debt
of approximately $19,800,000 including the recognition of approximately
$262,500 in costs associated with the restructuring for payments to Harter
Financial, Inc. consisting of $150,000 in cash and the issuance of 200,000
shares of the Company's common stock. The statements also do not include
the interest expense resulting from the amortization of deferred financing
costs to be recorded upon issuance of 3,000,000 shares of stock to the
guarantor(s).
(2) Removal of interest expense on $41,000,000 of the Notes.
(3) Removal of interest expense recognized on the amortization of deferred
financing costs related to the Notes.

The amounts included herein have not been adjusted for income taxes
because the Company believes it will be able to utilize certain of its net
operating loss carryforwards to offset any income tax liabilities related to the
transactions.

The pro forma condensed consolidated financial information presented
herein does not purport to represent what the Company's results of operations or
financial position would have been had such transactions in fact occurred at the
beginning of the periods presented or to project the Company's results of
operation in any future period. The unaudited pro forma condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and related notes thereto included elsewhere in this proxy.

RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS

Continucare's independent public accountants for the fiscal years ended
June 30, 1998 and 1999 were and for the fiscal year 2000 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.

22
<PAGE> 25

The accounting firm of Deloitte & Touche LLP represented us as our
independent accountants during fiscal year 1997 and was dismissed by
Continucare's Board of Directors on May 6, 1998. During Continucare's two most
recent fiscal years and subsequent interim periods, for which Deloitte & Touche
was our independent auditors, there were no disagreements between Continucare
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 Continucare for the two most recent fiscal years, for which
Deloitte & Touche was Continucare's 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.

INCORPORATION BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this proxy statement. We incorporate by reference the
documents listed below and any future filings made with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act").

(1) Our Annual Report on Form 10-K, as amended by Form 10-K/A, for the fiscal
year ended June 30, 1999;

(2) Our Quarterly Report on Form 10-Q, for the three months ended September
30, 1999; and

(3) All other reports filed by Continucare pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of fiscal year 1999.

We will provide without charge to each person, including any beneficial
owner, to whom a proxy statement is delivered, upon written or oral
request of that person, a copy of any and all of the information that has
been incorporated by reference in this proxy statement (excluding exhibits
unless specifically incorporated by reference into those documents).

OTHER BUSINESS

As of the date of this Proxy Statement, the Board of Directors knows of
no other business to be presented at Continucare's 1999 annual meeting of
shareholders. If any other business should properly come before Continucare's
1999 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.

23
<PAGE> 26

SHAREHOLDER PROPOSALS

Shareholders interested in presenting a proposal for consideration at
our 2000 annual meeting of shareholders may do so by following the procedures
prescribed in Rule 14a-8 promulgated by the Securities and Exchange Act of 1934.
To be eligible for inclusion in our proxy statement and form of proxy relating
to the meeting, shareholder proposals must be received by our Corporate
Secretary no later than September 21, 2000. Any shareholder proposal submitted
other than for inclusion in our proxy materials for that meeting must be
delivered to us no later than December 7, 2000, or such proposal will be
considered untimely. If a shareholder proposal is received after December 7,
2000, we may vote in our discretion as to the proposal all of the shares for
which we have received proxies for the 2000 annual meeting of shareholders.

By Order of the Board of Directors,

Spencer J. Angel
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHIEF OPERATING OFFICER

Miami, Florida
January 21, 2000

24
<PAGE> 27
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, hereby appoints Spencer J. Angel and Raquel Libman, 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 January 12, 2000 at
the Annual Meeting of Shareholders of the Company, to be held on Monday,
February 14, 2000, at 10:00 a.m., local time, at Hyatt Regency Miami, 400 S.E.
2nd Avenue, Miami, Florida 33131 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 AND SPENCER
J. ANGEL, 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 Approve the Restructuring of the Company's Convertible
Subordinated Notes.

[ ] 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> 28

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 1999 Annual Meeting, (2) the Proxy Statement and (3) the Company's 1999
Annual Report to Shareholders.

Dated _________________________ , 2000

______________________________________
(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.