Continucare Corporation
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
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o Preliminary
proxy statement
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o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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þ Definitive
proxy statement
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o Definitive
Additional Materials
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o Soliciting
Material under
Rule 14a-12
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Continucare Corporation
(Name of Registrant as Specified In
Its charter)
(Name of Person(s) Filing proxy
statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ
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No fee required.
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o
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1) |
Title of each class of securities to which transaction applies:
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(2) |
Aggregate number of securities to which transaction applies:
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(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4) |
Proposed maximum aggregate value of transaction:
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o
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Fee paid previously with preliminary materials.
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o
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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.
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(1) |
Amount Previously Paid:
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(2) |
Form, Schedule or Registration Statement No.:
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January 8, 2007
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to
attend the Annual Meeting of Shareholders of Continucare
Corporation to be held at its executive offices, 7200 Corporate
Center Drive, Suite 600, Miami, Florida 33126 on Wednesday,
February 7, 2007 at 9:30 a.m. Eastern Standard
Time.
The attached Notice of Annual Meeting and Proxy Statement
describe the matters that we expect to be acted upon at the
Annual Meeting. At the Annual Meeting, you will have an
opportunity to meet management and ask questions.
Whether or not you plan to attend the Annual Meeting, it is
important that your shares be represented. Regardless of the
number of shares you own, please sign and date the enclosed
proxy card and promptly return it to us in the enclosed postage
paid envelope. If you sign and return your proxy card without
specifying your choices, your shares will be voted in accordance
with the recommendations of the Board of Directors contained in
the Proxy Statement.
We look forward to seeing you on February 7, 2007 and urge
you to return your proxy card as soon as possible.
Sincerely,
Richard C. Pfenniger, Jr.
Chairman, Chief Executive Officer and
President
CONTINUCARE
CORPORATION
7200 Corporate Center Drive, Suite 600, Miami, Florida
33126
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on Wednesday, February 7, 2007
To the
Shareholders of Continucare Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of Continucare Corporation, a Florida corporation
(Continucare), will be held at 9:30 a.m., local
time, on Wednesday, February 7, 2007, at the executive
offices of Continucare Corporation, 7200 Corporate Center Drive,
Suite 600, Miami, Florida, 33126, for the following
purposes:
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(1)
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The election of seven members to Continucares Board of
Directors to hold office until Continucares next annual
meeting of shareholders or until their successors are duly
elected and qualified;
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(2)
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The approval of an amendment to Continucares Amended and
Restated 2000 Stock Option Plan (the Plan) to
increase the aggregate number of shares of common stock
authorized for issuance pursuant to the Plan from 7,000,000 to
9,000,000;
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(3)
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The ratification of the appointment of Ernst & Young
LLP as Continucares independent registered public
accounting firm; and
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(4)
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The transaction of such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
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The Board of Directors has fixed the close of business on
January 2, 2007 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
Fernando L. Fernandez
Senior Vice President Finance, Chief
Financial Officer, Treasurer and
Secretary
Miami, Florida
January 8, 2007
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 OF RECORD WHO EXECUTE A PROXY CARD MAY
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON AT THE
MEETING.
TABLE OF CONTENTS
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 (Continucare), of
proxies from the holders of Continucares common stock, par
value $0.0001 per share, for use at the Annual Meeting of
Shareholders of Continucare to be held at 9:30 a.m., local
time, on Wednesday, February 7, 2007, at the executive
offices of Continucare Corporation, 7200 Corporate Center Drive,
Suite 600, Miami, Florida, 33126 or at any adjournments or
postponements thereof, pursuant to the foregoing Notice of
Annual Meeting of Shareholders (the Annual Meeting).
This proxy statement and the enclosed form of proxy are first
being sent to holders of Continucares common stock on or
about January 8, 2007.
Shareholders should review the information provided herein in
conjunction with Continucares annual report to
shareholders, a copy of which accompanies this proxy statement.
Continucares principal executive offices are located at
7200 Corporate Center Drive, Suite 600, Miami, Florida
33126 and its telephone number is
(305) 500-2000.
INFORMATION
CONCERNING YOUR PROXY
The enclosed proxy is solicited on behalf of Continucares
Board of Directors. The giving of a proxy does not preclude the
right of a shareholder of record to vote in person at the Annual
Meeting should any shareholder of record giving the proxy so
desire. Shareholders of record 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
Continucares Secretary at Continucares 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, Continucares employees may solicit proxies
personally, by telephone and by facsimile. Continucares
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. Continucare may
reimburse such persons for their expenses in so doing.
PURPOSES
OF THE MEETING
At the Annual Meeting, Continucares shareholders will
consider and vote upon the following matters:
(1) The election of seven members to Continucares
Board of Directors to hold office until Continucares next
Annual Meeting of Shareholders or until their successors are
duly elected and qualified;
(2) The approval of an amendment to Continucares
Amended and Restated 2000 Stock Option Plan (the
Plan) to increase the aggregate number of shares of
common stock authorized for issuance pursuant to the Plan from
7,000,000 to 9,000,000;
(3) The ratification of the appointment of Ernst &
Young LLP as Continucares independent registered public
accounting firm; and
(4) 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 will be voted FOR the election of
the nominees for director named below, FOR the amendment
of the Plan, and FOR the ratification of the appointment
of Ernst & Young LLP as Continucares independent
registered public accounting firm. In the event that any other
business may properly
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come before the meeting, the shares represented by valid proxies
received pursuant to this solicitation will be voted in the
discretion of the proxy holder. 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.
OUTSTANDING
VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on
January 2, 2007 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
70,003,567 shares of common stock outstanding. Only the
record holders of issued and outstanding shares of common stock
as of the close of business on the record date are entitled to
vote at the Annual Meeting. Shareholders that own their shares
in street name or through a nominee may attend the
meeting but may not grant a proxy or vote at the meeting.
Instead, those shareholders must instruct the record holder of
their shares of common stock how they wish their shares to be
voted. 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. The
amendment of the Plan will be approved, and the appointment of
Ernst & Young LLP as Continucares independent
registered public accounting firm will be ratified, if a
majority of the shares of common stock represented in person or
by proxy at the Annual Meeting vote in favor of the amendment to
the Plan and the ratification of the appointment of
Ernst & Young LLP as Continucares independent
registered public accounting firm, respectively. 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 Continucares
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, Continucare will select one or more
inspectors of election for the meeting. Such inspectors 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. Accordingly, abstentions will have no effect on the
election of directors and will have the same effect as a vote
against the amendment of the Plan and the ratification of the
appointment of Ernst & Young LLP as Continucares
independent registered public accounting firm.
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 owners shares in connection with routine
matters and accordingly may use its discretion to vote with
respect to the election of Directors and the ratification of the
appointment of Ernst & Young LLP as Continucares
independent registered public accounting firm. The approval of
the amendment of the Plan is deemed a non-routine matter by the
American Stock Exchange Company Guide. Accordingly, if a broker
or nominee holding shares does not receive voting instructions
with respect to that proposal from the beneficial owner of such
shares, the broker or nominee will not have discretionary voting
power and any broker or nominee non-votes will 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 OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of
December 20, 2006 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 Continucares directors,
(iii) each executive officer identified
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in the Summary Compensation Table on page 9,
and (iv) all of Continucares current 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 persons spouse. Unless noted
otherwise, the address of each person listed below is 7200
Corporate Center Drive, Suite 600, Miami, Florida 33126.
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Name and Address
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Amount and Nature of
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Percent of
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of Beneficial Owner
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Beneficial Ownership(1)
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Common Stock(2)
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Robert Cresci
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340,000
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(3)
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*
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c/o Pecks Management Partners
Ltd.
One Rockefeller Plaza
Suite 900
New York, NY 10020
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Luis Cruz, M.D.
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6,131,279
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(4)(5)(6)
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8.8
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%
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3233 Palm Avenue
Hialeah, FL 33012
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Neil Flanzraich
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240,000
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(7)
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*
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4400 Biscayne Boulevard
Miami, FL 33137
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Phillip Frost, M.D.
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22,279,801
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(8)
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31.8
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%
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4400 Biscayne Boulevard
Miami, FL 33137
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Fernando L. Fernandez
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252,083
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(9)
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*
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Luis H. Izquierdo
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318,750
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(9)
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*
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Jacob Nudel, M.D.
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140,000
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(10)
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*
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One Isla Bahia Drive
Fort Lauderdale, FL 33316
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Richard C.
Pfenniger, Jr.
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1,465,000
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(11)
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2.1
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%
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Gemma Rosello
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43,750
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(9)
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*
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A. Marvin Strait
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60,000
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(12)
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*
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2 North Cascade Avenue
Suite 1300
Colorado Springs, CO 80903
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Jose M. Garcia, Sr.
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6,131,280
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(5)(6)
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8.8
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%
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Carlos Garcia
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6,131,280
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(5)(6)
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8.8
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%
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Pecks Management Partners
Ltd.
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6,511,584
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(13)
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9.3
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%
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One Rockefeller Plaza
Suite 900
New York, NY 10020
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All directors and executive
officers as a group (10 persons)
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31,270,663
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43.5
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%
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Less than one percent. |
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For purposes of this table, beneficial ownership is computed
pursuant to
Rule 13d-3
under the Securities Exchange Act of 1934, as amended (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. |
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Based on 70,003,567 shares of common stock outstanding as
of December 20, 2006. |
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Includes 140,000 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after December 20, 2006. |
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Luis Cruz, M.D. does not hold any shares of common stock in
his individual name, but rather may be deemed the beneficial
owner of the shares of common stock held by Luis Cruz
Irrevocable Trust A, Luis Cruz Irrevocable Trust B,
Luis Irrevocable Trust C and Luis Cruz Irrevocable
Trust D (the Trusts), of which trusts
Dr. Cruz is the sole trustee. |
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(5) |
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On October 12, 2006, Jose M. Garcia, Sr., Carlos
Garcia and the Trusts (the Group), collectively, as
a group, filed a Schedule 13D with regard to the shares of
common stock beneficially owned by the Group. |
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Includes 417,113 shares of common stock held in escrow. |
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Includes 40,000 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after December 20, 2006. |
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(8) |
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Includes (i) 21,320,488 shares of common stock
beneficially owned through Frost Gamma Investments Trust;
(ii) 819,313 shares of common stock beneficially owned
through Frost Nevada Limited Partnership;
(iii) 100,000 shares of common stock owned directly by
Dr. Frost; and (iv) 40,000 shares of common stock
underlying options that are currently exercisable or exercisable
within 60 days after December 20, 2006. |
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(9) |
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Represents shares of common stock underlying options that are
currently exercisable or exercisable within 60 days after
December 20, 2006. |
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(10) |
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Includes 40,000 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after December 20, 2006. |
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(11) |
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Includes 946,970 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after December 20, 2006. |
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(12) |
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Includes 33,334 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after December 20, 2006. |
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(13) |
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The information set forth herein is based solely on the most
recent Schedule(s) 13G/A filed with the Securities and Exchange
Commission (the SEC) by the entity and, accordingly,
may not reflect its respective holdings as of the date of this
proxy statement. |
ELECTION
OF DIRECTORS
(Proposal No. 1)
Nominees
for Election as Director
Seven persons are nominated for election as directors to serve
until the next Annual Meeting of Shareholders and until each
directors successor is duly elected and qualified.
Although Continucare 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 the names and ages of the
director nominees. Each director nominee is a current director
of Continucare who has been nominated for re-election at the
Annual Meeting.
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Name
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Age
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Richard C.
Pfenniger, Jr.
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51
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Luis Cruz, M.D
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45
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Robert J. Cresci
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63
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Neil Flanzraich
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63
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Phillip Frost, M.D
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70
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Jacob Nudel, M.D
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58
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A. Marvin Strait
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73
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The following is biographical information for the director
nominees.
Richard C. Pfenniger, Jr. has served as one of
Continucares directors since March 2002. In September
2002, Mr. Pfenniger was appointed Chairman of
Continucares Board of Directors. In October 2003, he was
appointed as Continucares Chief Executive Officer and
President. Mr. Pfenniger served as the Chief Executive
Officer and Vice Chairman of Whitman Education Group, Inc. from
1997 through June 2003. From 1994 to 1997, Mr. Pfenniger
served as the Chief Operating Officer of IVAX Corporation, and,
from 1989 to 1994, he served as the Senior Vice President-Legal
Affairs and General Counsel of IVAX Corporation.
Mr. Pfenniger currently serves as a director of GP
Strategies Corporation (corporate education and training) and
Cellular Technical Services Company, Inc. (business software
services).
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Luis Cruz, M.D. has served as one of
Continucares directors since October 2006. In October
2006, Dr. Cruz was appointed Vice Chairman of
Continucares Board of Directors. Prior to joining
Continucare, Dr. Cruz served as an executive officer of
each of Miami Dade Health and Rehabilitation Services, Inc.
(MDHRS), Miami Dade Health Centers, Inc., West
Gables Open MRI Services, Inc., Kent Management Systems, Inc.
(Kent), Pelu Properties, Inc. (Pelu),
Peluca Investments, LLC, and Miami Dade Health Centers One, Inc.
(collectively, the MDHC Companies). Continucare
acquired the MDHC Companies effective October 1, 2006.
Robert J. Cresci has served as one of Continucares
directors since February 2000. He has been a Managing Director
of Pecks Management Partners Ltd., an investment management
firm, since 1990. Mr. Cresci currently serves on the Boards
of Directors of Sepracor, Inc. (pharmaceuticals), Luminex
Corporation (biotechnology), j2 Global Communications, Inc.
(telecommunications), SeraCare Life Sciences, Inc. (life
sciences) and several private companies.
Neil Flanzraich has served as one of Continucares
directors since March 2002. Mr. Flanzraich is a private
investor. From May 1998 until February 2006, he served as the
Vice Chairman and President of IVAX Corporation.
Mr. Flanzraich served as Chairman of the Life Sciences
Legal Practices Group of Heller Ehrman White &
McAuliff, a law firm, from 1995 to 1998. From 1981 to 1994,
Mr. Flanzraich served in various capacities at Syntex
Corporation and as a member of the Corporate Executive
Committee. From 1994 to 1995, after Syntex Corporation was
acquired by Roche Holding Ltd., Mr. Flanzraich served as
Senior Vice President and General Counsel of Syntex (U.S.A.)
Inc., a Roche subsidiary. Mr. Flanzraich was Chairman of
the Board of Directors of North American Vaccine, Inc. from 1989
to 2000. Mr. Flanzraich also currently serves on the Boards
of Directors of Javelin Pharmaceuticals, Inc. (pharmaceuticals),
Neurochem, Inc. (pharmaceuticals), Rae Systems, Inc. (gas
detection and security monitoring systems) and Equity One, Inc.
(real estate).
Phillip Frost, M.D. has served as one of
Continucares directors since January 2004. Dr. Frost
formerly served on Continucares Board of Directors as Vice
Chairman from September 1996 until April 2002. Dr. Frost
presently serves as Vice Chairman of the Board of Directors of
TEVA Pharmaceuticals, Ltd. (pharmaceuticals). He served as the
Chairman of the Board of Directors and Chief Executive Officer
of IVAX Corporation from 1987 to 2006. He served as President of
IVAX Corporation 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 1972 to 1990.
Dr. Frost was Chairman of the Board of Directors of Key
Pharmaceuticals, Inc. from 1972 to 1986. In addition to serving
as a director of TEVA Pharmaceuticals, Ltd., he is also Chairman
of the Board of Directors of Ladenburg Thalmann Financial
Services, Inc. (securities brokerage) and a director of Northrop
Grumman Corporation (aerospace), Castle Brands (import/export)
and Cellular Technical Services (business software services). He
is a member of the Board of Trustees of the University of Miami
and a member of the Board of Governors as well as Co-Vice
Chairman of the American Stock Exchange.
Jacob Nudel, M.D. has served as one of
Continucares directors since October 2002. He is a private
investor who founded MDwerks, Inc., where he served as Chairman
from 2000 to 2005. From 1995 to 2000, Dr. Nudel served as
Chief Executive Officer of Allied Health Group, Inc. From 1992
to 2000, Dr. Nudel also served as Chief Executive Officer
of Florida Specialty Network, Inc.
A. Marvin Strait has served as one of
Continucares directors since March 2004. Mr. Strait
presently practices as a Certified Public Accountant under the
name A. Marvin Strait, CPA. He has practiced in the field of
public accountancy in Colorado for over 40 years. He
presently serves as a member of the Board of Trustees of the
Colorado Springs Fine Arts Center Foundation, the Sam S. Bloom
Foundation, The Penrose-St. Francis Health Foundation and the
Pikes Peak Education Foundation. He also presently serves as a
member of the Board of Directors and Chairman of the Audit
Committee of Sturm Financial Group, Inc., RAE Systems, Inc. and
on the Community Advisory Panel of American National Bank.
Mr. Strait previously served as the Chairman of the Board
of Directors of the American Institute of Certified Public
Accountants (AICPA), as President of the Colorado
Society of Certified Public Accountants and the Colorado State
Board of Accountancy, and serves as a permanent member of the
AICPA Governing Council.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH
OF THE NOMINEES IDENTIFIED ABOVE.
5
Identification
of Executive Officers
The following individuals are Continucares executive
officers:
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Name
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Age
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Position
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Richard C.
Pfenniger, Jr.
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51
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Chairman of the Board, Chief
Executive Officer and President
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Fernando L. Fernandez
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45
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Senior Vice President
Finance, Chief Financial Officer, Treasurer and Secretary
|
Luis H. Izquierdo
|
|
|
51
|
|
|
Senior Vice President
Marketing and Business Development
|
Gemma Rosello
|
|
|
50
|
|
|
Executive Vice
President Operations
|
All officers serve until they resign or are replaced or removed
at the pleasure of the Board of Directors.
The following additional information is provided for the
executive officers shown above who are not directors of
Continucare or nominees for directors.
Fernando L. Fernandez was appointed as Continucares
Senior Vice President Finance, Chief Financial
Officer, Treasurer, and Secretary in June 2004.
Mr. Fernandez, a certified public accountant, served as
Senior Vice President Finance, Chief Financial
Officer, Treasurer, and Secretary of Whitman Education Group,
Inc. from 1996 until 2003. Prior to and since his service at
Whitman Education Group, Inc., Mr. Fernandez served as
Chief Financial Officer of several private investment entities
owned by Phillip Frost, M.D. Prior to 1991,
Mr. Fernandez served as Audit Manager for
PricewaterhouseCoopers LLP (formerly Coopers & Lybrand)
in Miami. Mr. Fernandez serves as a director of IVAX
Diagnostics, Inc. (diagnostic reagents kit).
Luis H. Izquierdo was appointed as Continucares
Senior Vice President Marketing and Business
Development in January 2004. Mr. Izquierdo served as Senior
Vice President and as a member of the Board of Directors for
Neighborhood Health Partnership from 2002 to 2004.
Mr. Izquierdo was Senior Vice President of Marketing and
Sales for Foundation Health, Florida from 1999 through 2001.
From 1997 through 1999, Mr. Izquierdo served as Senior Vice
President and Chief Marketing Officer for Oral Health Services.
From 1995 to 1997, Mr. Izquierdo served as the Vice
President, Corporate Marketing and Sales for Physicians
Corporation of America, and, from 1992 to 1995, he served as the
Senior Vice President, Marketing and Sales for CAC-Ramsay Health
Plans.
Gemma Rosello was appointed as Continucares
Executive Vice President Operations in October 2006.
Ms. Rosello had previously served Continucare as its Senior
Vice President Operations from May 2005. Prior to
joining Continucare, Ms. Rosello was the Vice President of
Health Services for Neighborhood Health Plan from 2003 to 2004.
From 1993 to 2002, she served as the Chief Executive Officer of
Medical Utilization Review Associates, a management service
organization and Apex Health Services which managed Medicare,
Medicaid and commercial full risk contracts with national and
regional payors. Prior to her work in the managed care arena,
Ms. Rosello served as a Chief Operating Officer for an
acute medical/surgical non-profit hospital in Miami, Florida.
CORPORATE
GOVERNANCE
Pursuant to Continucares bylaws and the Florida Business
Corporation Act, Continucares business and affairs are
managed under the direction of the Board of Directors. Directors
are kept informed of Continucares business through
discussions with management, including the Chief Executive
Officer and other senior officers, by reviewing materials
provided to them and by participating in meetings of the Board
of Directors and its committees. The Board of Directors and each
of its committees are authorized to retain financial, legal and
other advisors. The Board of Directors reviews its performance
annually.
Continucare has adopted a Code of Conduct and Ethics applicable
to its directors, officers and employees including its Chief
Executive Officer, Chief Financial Officer and principal
accounting officer. A copy of Continucares Code of Conduct
and Ethics is available on Continucares website at
www.continucare.com. Continucare intends to post amendments to
or waivers from its Code of Conduct and Ethics (to the extent
applicable to its Chief Executive Officer, Chief Financial
Officer or principal accounting officer or to its directors) on
its website. Continucares website is not part of this
proxy statement.
6
Determining
Director Independence
The Board of Directors undertook a review of each
directors independence in December 2006. During this
review, the Board of Directors considered transactions and
relationships between each director or any member of his or her
immediate family and Continucare and its subsidiaries and
affiliates. The Board of Directors also examined transactions
and relationships between directors or their known affiliates
and members of Continucares senior management or their
known affiliates. The purpose of this review was to determine
whether any such relationships or transactions were inconsistent
with a determination that the director is independent under
applicable laws and regulations and the American Stock Exchange
(the AMEX) listing standards. As a result of its
review of the relationships of each of the members of the Board
of Directors, the Board of Directors affirmatively determined
that a majority of Continucares directors, including
Mr. Cresci, Mr. Flanzraich, Dr. Frost,
Dr. Nudel, and Mr. Strait, are independent
directors within the meaning of the listing standards of AMEX
and applicable law. As required by the AMEX, Continucares
independent directors meet at least annually in executive
session without the presence of its non-independent directors or
management.
Committees
of the Board of Directors and Meeting Attendance
During the fiscal year ended June 30, 2006 (Fiscal
2006), the Board of Directors held five meetings and took
certain actions by unanimous written consent. Each director
other than Dr. Nudel attended at least 75% of the aggregate
of (i) the number of such meetings (held during the period
for which he was a director), and (ii) the number of
meetings of committees of the Board of Directors held during
Fiscal 2006. Continucare has no formal policy requiring its
directors to attend its annual meeting of shareholders, but
Messrs. Cresci, Flanzraich, Strait and Pfenniger, attended
Continucares last annual meeting of shareholders.
The Board of Directors has established Audit, Compensation,
Nominating, and Executive Committees. The Board of Directors has
adopted a written charter for each of these four committees.
The Audit
Committee
The Audit Committee currently consists of Mr. Cresci,
Mr. Flanzraich, Dr. Nudel and Mr. Strait
(Chairman). The Board of Directors has determined that all
current members of the Audit Committee are financially
literate, financially sophisticated, and
independent within the meaning of the listing
standards of the AMEX and applicable SEC regulations. The Board
of Directors has determined that Mr. Strait meets the
attributes of an audit committee financial expert
within the meaning of SEC regulations.
The Audit Committee held four meetings during Fiscal 2006. The
duties and responsibilities of the Audit Committee include
(i) recommending to the Board of Directors the appointment
of Continucares independent registered public accounting
firm, (ii) reviewing the plan and scope of audits,
(iii) reviewing Continucares significant accounting
policies and internal controls, and (iv) having general
responsibility for the oversight of all audit related matters.
The Board of Directors adopted an amended and restated written
charter for the Audit Committee. A copy of that charter is
available on Continucares website at www.continucare.com.
A report from the Audit Committee is included at page 12.
The
Compensation Committee
The Compensation Committee currently consists of Mr. Cresci
(Chairman), Dr. Nudel, Mr. Strait and
Mr. Flanzraich. The Board of Directors has determined that
all of the current members of the Compensation Committee are
independent within the meaning of the listing
standards of the AMEX. The Compensation Committee held four
meetings during Fiscal 2006. The Compensation Committee provides
assistance to the Board of Directors in fulfilling its
responsibilities relating to compensation of Continucares
directors and executive officers. It reviews and determines the
compensation of the Chief Executive Officer and determines or
makes recommendations with respect to the compensation of
Continucares other executive officers. It also assists the
Board of Directors in the administration of Continucares
equity-based compensation plans. The Board of Directors adopted
a written charter for the Compensation Committee. A copy of that
charter is available on Continucares website at
www.continucare.com. A report from the Compensation Committee is
included at page 10.
7
The
Nominating Committee
The Nominating Committee currently consists of Dr. Frost
(Chairman), Mr. Cresci, Mr. Flanzraich, Dr. Nudel
and Mr. Strait. The Board of Directors has determined that
all of the current members of the Nominating Committee are
independent within the meaning of the listing
standards of the AMEX. The Nominating Committee is responsible
for identifying and recommending individuals qualified to become
directors and recommending appointments to the committees of the
Board of Directors. The Board of Directors adopted a written
charter for the Nominating Committee. A copy of that charter is
available on Continucares website at www.continucare.com.
The Nominating Committee held one meeting during Fiscal 2006.
The Nominating Committee expects it will generally identify
candidates for director through the business and other
organizational contacts of the directors and management.
Candidates for director will be selected on the basis of the
contributions the Nominating Committee believes that those
candidates can make to the Board of Directors and to management
and on such other qualifications and factors as the Nominating
Committee considers appropriate. In assessing potential new
directors, the Nominating Committee will seek individuals from
diverse professional backgrounds who the Nominating Committee
believes will provide a broad range of experience and expertise.
Director candidates should have a reputation for honesty and
integrity, strength of character, mature judgment and experience
in positions with a high degree of responsibility. In addition
to reviewing a candidates background and accomplishments,
candidates for director nominees will be reviewed in the context
of the current composition of the Board of Directors and the
evolving needs of Continucare. The Nominating Committee will
consider recommendations for director nominees submitted by
shareholders. All such recommendations must be delivered in
accordance with the provisions of Continucares bylaws and
addressed to Continucares Chief Executive Officer who will
forward such shareholder recommendations to the Nominating
Committee for consideration. Continucare also requires that the
members of its Board of Directors be able to dedicate the time
and resources sufficient to ensure the diligent performance of
their duties on Continucares behalf, including attending
Board of Directors and applicable committee meetings. In
addition to identifying and recommending qualified candidates to
serve as directors, the Nominating Committee studies and makes
recommendations to the Board of Directors concerning the size of
the Board of Directors.
The
Executive Committee
The Executive Committee currently consists of Mr. Cresci,
Dr. Frost, Dr. Nudel and Mr. Pfenniger
(Chairman). The Executive Committee is responsible for
exercising certain powers of the full Board of Directors during
intervals between meetings of the full Board of Directors.
Director
Compensation
During Fiscal 2006, Continucares non-employee directors
received an annual cash retainer of $15,000 for their service on
the Board of Directors. In addition, for Fiscal 2006, the
Chairman of each of the Nominating Committee and the
Compensation Committee received an additional cash retainer of
$2,500 and the Chairman of the Audit Committee received an
additional cash retainer of $5,000. Also, each of
Continucares non-employee directors were granted fully
vested options to purchase 20,000 shares of common stock
during Fiscal 2006.
In connection with Continucares acquisition of the MDHC
Companies, effective October 1, 2006, Continucare appointed
Luis Cruz, M.D. to its Board of Directors and entered into
a one-year employment agreement with Dr. Cruz pursuant to
which Dr. Cruz is employed as Vice Chairman of
Continucares Board of Directors at an annual salary of
$225,000. Pursuant to this agreement, Dr. Cruz was granted
options to acquire 100,000 shares of Continucares
common stock at a per share exercise price of $2.59. The options
will vest ratably over a term of four years and have a term of
ten years from the date of the grant.
Communications
with the Board of Directors and Non-Management
Directors
Shareholders who wish to communicate with the Board of
Directors, any individual director or the non-management
directors as a group can write to Continucares Chairman
and Chief Executive Officer, Richard C. Pfenniger, Jr. The
letter should include a statement indicating that the sender is
a shareholder of Continucare. Depending on the subject matter,
an officer of Continucare will either:
|
|
|
|
|
forward the letter to the director or directors to whom it is
addressed;
|
8
|
|
|
|
|
attempt to handle the inquiry directly if it relates to routine
or ministerial matters, including requests for
information; or
|
|
|
|
not forward the letter if it is primarily commercial in nature
or if it is determined to relate to an improper or irrelevant
topic.
|
A member of management will, at each meeting of the Board of
Directors, present a summary of any material, relevant and
proper letters received since the last meeting that were not
forwarded to the Board of Directors and will make those letters
available to the Board of Directors upon request.
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 to or on
behalf of (i) Continucares Chief Executive Officer
during Fiscal 2006, and (ii) the other executive officers
who were serving as executive officers at the end of Fiscal
2006, whose total annual salary and bonus, determined as of the
end of Fiscal 2006, exceeded $100,000 (hereinafter referred to
as the Named Executive Officers).
Mr. Fernandez and Ms. Rosello were not employed by
Continucare during all of the fiscal year ended June 30,
2004 (Fiscal 2004) and June 30, 2005
(Fiscal 2005), respectively. Information regarding
the compensation of Mr. Fernandez and Ms. Rosello set
forth below relates only to the portion of Fiscal 2004 and
Fiscal 2005, respectively, during which they were employed by
Continucare.
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
|
|
|
|
|
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|
Annual Compensation
|
|
|
Compensation
|
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|
|
|
Name and
|
|
Fiscal
|
|
|
Salary
|
|
|
Bonus
|
|
|
Other Annual
|
|
|
No. of Securities
|
|
|
All Other
|
|
Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
Compensation
|
|
|
Underlying Options
|
|
|
Compensation
|
|
|
Richard C. Pfenniger, Jr.,
|
|
|
2006
|
|
|
|
328,327
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
200,000
|
(1)
|
|
|
0
|
|
Chairman of the Board, President
|
|
|
2005
|
|
|
|
313,788
|
|
|
|
80,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
and Chief Executive Officer
|
|
|
2004
|
|
|
|
226,154
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,200,000
|
(2)
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gemma Rosello,
|
|
|
2006
|
|
|
|
197,827
|
|
|
|
75,000
|
|
|
|
(6
|
)
|
|
|
75,000
|
(1)
|
|
|
0
|
|
Executive Vice President-Operations
|
|
|
2005
|
|
|
|
18,938
|
|
|
|
0
|
|
|
|
(6
|
)
|
|
|
100,000
|
(5)
|
|
|
0
|
|
|
|
|
2004
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fernando L. Fernandez,
|
|
|
2006
|
|
|
|
188,769
|
|
|
|
75,000
|
|
|
|
0
|
|
|
|
75,000
|
(1)
|
|
|
0
|
|
Senior Vice President-Finance,
|
|
|
2005
|
|
|
|
180,692
|
|
|
|
37,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Chief Financial Officer, Treasurer
|
|
|
2004
|
|
|
|
9,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
350,000
|
(3)
|
|
|
0
|
|
and Secretary
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Luis H. Izquierdo,
|
|
|
2006
|
|
|
|
214,062
|
|
|
|
50,000
|
|
|
|
(6
|
)
|
|
|
75,000
|
(1)
|
|
|
0
|
|
Senior Vice President-Marketing and
|
|
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2005
|
|
|
|
205,823
|
|
|
|
37,000
|
|
|
|
(6
|
)
|
|
|
0
|
|
|
|
0
|
|
Business Development
|
|
|
2004
|
|
|
|
101,415
|
|
|
|
0
|
|
|
|
(6
|
)
|
|
|
300,000
|
(4)
|
|
|
0
|
|
|
|
|
(1) |
|
Stock options were awarded on December 6, 2005, vesting
ratably over four years. |
|
(2) |
|
1,200,000 stock options were awarded on October 1, 2003,
vesting ratably over three years. |
|
(3) |
|
350,000 stock options were awarded on June 14, 2004,
vesting ratably over three years. |
|
(4) |
|
300,000 stock options were awarded on January 5, 2004,
vesting ratably over three years. |
|
(5) |
|
100,000 stock options were awarded on May 26, 2005, vesting
ratably over four years. |
|
(6) |
|
The total personal benefit provided is less than 10% of the
total annual salary and bonus to such officer. |
9
Option
Grants During Fiscal 2006
The following table sets forth certain information concerning
grants of stock options made during Fiscal 2006 to
Continucares Named Executive Officers. Continucare did not
grant any stock appreciation rights in Fiscal 2006.
Individual
Option Grants in Fiscal 2006
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at Assumed Annual Rates
|
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|
|
Shares of Common
|
|
|
|
|
|
|
|
|
|
|
|
of Stock Price Appreciation
|
|
|
|
Stock Underlying
|
|
|
% of Total Granted
|
|
|
Option
|
|
|
Expiration
|
|
|
for Option Term (1)
|
|
Name
|
|
Options
|
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|
to Employees
|
|
|
Price($)
|
|
|
Date
|
|
|
5%
|
|
|
10%
|
|
|
Richard C. Pfenniger, Jr.,
|
|
|
200,000
|
|
|
|
32
|
%
|
|
$
|
2.42
|
|
|
|
12/06/15
|
|
|
$
|
304,385
|
|
|
$
|
771,371
|
|
Chairman of the Board, President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gemma Rosello
|
|
|
75,000
|
|
|
|
12
|
%
|
|
$
|
2.42
|
|
|
|
12/06/15
|
|
|
$
|
114,144
|
|
|
$
|
289,264
|
|
Executive Vice President-Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fernando L. Fernandez
|
|
|
75,000
|
|
|
|
12
|
%
|
|
$
|
2.42
|
|
|
|
12/06/15
|
|
|
$
|
114,144
|
|
|
$
|
289,264
|
|
Senior Vice President-Finance,
Chief Financial Officer, Treasurer
and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Luis H. Izquierdo
|
|
|
75,000
|
|
|
|
12
|
%
|
|
$
|
2.42
|
|
|
|
12/06/15
|
|
|
$
|
114,144
|
|
|
$
|
289,264
|
|
Senior Vice President-Marketing
and Business Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The dollar amounts set forth in these columns are the result of
calculations at the 5% and 10% rates set by the SEC, and
therefore are not intended to forecast possible future
appreciation, if any, of the market price of the common stock. |
Option
Exercises in 2006 and Year End Option Values
The following table sets forth information with respect to
(i) stock option exercises during Fiscal 2006 by each of
the Named Executive Officers, (ii) the number of
unexercised options held by the Named Executive Officers as of
June 30, 2006, and (iii) the value as of June 30,
2006 of unexercised
in-the-money
options.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
Value of Unexercised
|
|
|
|
Shares
|
|
|
|
|
|
Underlying Unexercised Option at
|
|
|
In-the-Money
Options at
|
|
|
|
Acquired on
|
|
|
Value
|
|
|
June 30, 2006
|
|
|
June 30, 2006(1)
|
|
Name
|
|
Exercise
|
|
|
Realized
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Richard C. Pfenniger, Jr.
|
|
|
303,030
|
|
|
$
|
533,333
|
|
|
|
496,970
|
|
|
|
600,000
|
|
|
$
|
1,138,061
|
|
|
$
|
1,022,000
|
|
Gemma Rosello
|
|
|
0
|
|
|
$
|
0
|
|
|
|
25,000
|
|
|
|
150,000
|
|
|
$
|
6,500
|
|
|
$
|
59,250
|
|
Fernando L. Fernandez
|
|
|
0
|
|
|
$
|
0
|
|
|
|
233,333
|
|
|
|
241,667
|
|
|
$
|
226,333
|
|
|
$
|
152,917
|
|
Luis H. Izquierdo
|
|
|
0
|
|
|
$
|
0
|
|
|
|
200,000
|
|
|
|
175,000
|
|
|
$
|
288,000
|
|
|
$
|
183,750
|
|
|
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(1) |
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Market value of shares covered by
in-the-money
options on June 30, 2006, 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. |
Employment
Agreements
Continucares Named Executive Officers do not have
employment agreements with Continucare and are all employed on
an at will basis.
Compensation
Committee Report on Executive Compensation
Under rules established by the SEC, the Compensation Committee
of the Board of Directors is required to provide a report
explaining the rationale and considerations that led to
fundamental compensation decisions affecting Continucares
executive officers during the past fiscal year.
The Compensation Committee is comprised of non-employee
directors and is responsible for setting and administering
policies that govern annual compensation of Continucares
executive officers, as well as its stock option plans. The
Compensation Committees general philosophy with respect to
the compensation of the executive
10
officers is to offer competitive compensation programs designed
to attract key executives to Continucare and to recognize an
individuals contribution and personal performance. Such
compensation programs include a base salary 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 executive officers.
In establishing Continucares executive compensation
program, the Compensation Committee gauges achievement of
corporate and individual objectives, both on an individual basis
and relative to other companies. In September 2005, the
Compensation Committee increased the annual salary of
Continucares Chief Executive Officer, Richard C.
Pfenniger, Jr., by approximately 5% to $330,000. In setting
his compensation for Fiscal 2006, the Compensation Committee
took into consideration Mr. Pfennigers extensive
business background and experience, his responsibilities, his
contribution to Continucares improved financial
performance and condition, and his expected future contribution
to the success of Continucare.
Performance bonuses and stock options grants to executive
officers are 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
Continucares shareholders. Continucares Board of
Directors approved a Management Incentive Compensation Plan for
Fiscal 2006 that provided for the payment of cash bonuses to
eligible members of Continucares management team,
including its senior executive officers. Under the terms of the
plan, Continucares Board of Directors established a pool
from which any bonuses would be paid in an amount equal to an
established percentage of the amount by which Continucares
pre-tax earnings for Fiscal 2006 exceeded a pre-determined
threshold. Cash bonuses were paid under the plan for Fiscal 2006
in amounts approved by the Compensation Committee. The
Compensation Committee considered the recommendations of our
Chief Executive Officer for awards to individuals other than
himself. For Fiscal 2006, the Compensation Committee awarded
Mr. Pfenniger a bonus of $150,000 under the plan. In
setting the amount of Mr. Pfennigers bonus, the
Compensation Committee considered the same factors considered in
establishing his annual compensation. A similar plan has been
established for the fiscal year ending June 30, 2007. In
addition, during December 2005, Mr. Pfenniger was awarded
options to acquire 200,000 shares of Continucares
common stock at a per share exercise price equal to the closing
price of Continucares common stock on the date of grant.
In making this award, the Compensation Committee considered the
same factors considered in establishing
Mr. Pfennigers annual compensation. The Compensation
Committee also considered the fact that options granted to
Mr. Pfenniger in 2003 in connection with his appointment as
Continucares Chief Executive Officer had all vested and
the Compensation Committee determined that the award of
additional options to Mr. Pfenniger would further
incentivize him to continue to build value for Continucare and
all of its shareholders.
Robert J. Cresci
Neil Flanzraich
Jacob Nudel, M.D.
A. Marvin Strait, C.P.A.
11
Compensation
Committee Interlocks and Insider Participation
Continucares Compensation Committee has four members:
Robert J. Cresci (Chairman), Neil Flanzraich, Jacob
Nudel, M.D. and A. Marvin Strait. There are no interlocking
relationships between members of Continucares Compensation
Committee and the compensation committees of other
companies board of directors.
Audit
Committee Report
The Audit Committee of the Board of Directors is responsible
for, among other things, monitoring:
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the integrity of Continucares financial statements;
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Continucares system of internal controls; and
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the independence, qualifications and performance of
Continucares independent registered public accounting firm.
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The Audit Committee is composed of four non-employee directors
and operates under a written charter adopted and approved by the
Board of Directors. The Board of Directors, in its business
judgment, has determined that each Audit Committee member is
independent as such term is defined by the
applicable listing standards of the AMEX and under
Section 10A(m)(3) of the Exchange Act. Continucare has
identified A. Marvin Strait as an audit committee
financial expert as that term is defined in applicable
regulations of the SEC. The Audit Committee has sole authority
to retain, oversee, and terminate Continucares independent
registered public accounting firm, to approve fees and other
terms of the engagement, and to approve any permitted non-audit
engagements with the independent registered public accounting
firm.
Continucares management is responsible for the
preparation, presentation and integrity of Continucares
financial statements, and Continucares accounting and
financial reporting process, including the system of internal
control, and procedures to assure compliance with applicable
accounting standards and applicable laws and regulations.
Continucares independent registered public accounting firm
is responsible for auditing those financial statements and
expressing an opinion as to their conformity with
U.S. generally accepted accounting principles. The Audit
Committees responsibility is to independently monitor and
review these processes. However, the Audit Committee must rely,
without independent verification, on the information provided to
it and on the representations made by management and the
independent registered public accounting firm. Accordingly,
although the Audit Committee consults with and discusses these
matters and its questions and concerns with management and
Continucares independent registered public accounting
firm, its oversight cannot provide an independent basis to
assure that management has maintained appropriate accounting and
financial reporting principles or appropriate internal control
and procedures consistent with accounting standards and
applicable laws and regulations. Furthermore, the Audit
Committees considerations and discussions cannot assure
that the audit of Continucares financial statements has
been carried out in accordance with U.S. generally accepted
auditing standards, that the financial statements are presented
in accordance with U.S. generally accepted accounting
principles or that Continucares registered public
accounting firm is in fact independent.
In this context, the Audit Committee held four meetings during
Fiscal 2006. The meetings were designed, among other things, to
facilitate and encourage communication among the Audit
Committee, management, and Continucares independent
registered public accounting firm, Ernst & Young LLP.
The Audit Committee discussed with Continucares
independent registered public accounting firm, with and without
management present, the results of their examinations and their
evaluations of Continucares financial statements.
The Audit Committee reviewed and discussed the audited financial
statements for the fiscal year ended June 30, 2006, with
management and Ernst & Young LLP. The Audit Committee
also discussed with Ernst & Young LLP matters required
to be discussed with audit committees under U.S. generally
accepted auditing standards, including, among other things,
matters related to the conduct of the audit of
Continucares financial statements and the matters required
to be discussed by Statement on Auditing Standards No. 61,
as amended (Communication with Audit Committees) by Statement on
Accounting Standards Nos. 89 and 90 and
Rule 2-07
of
Regulation S-X.
The Audit Committees discussions also included a
discussion of the background and experience of the
Ernst & Young LLP audit team assigned to Continucare
and the quality control procedures established by
Ernst & Young LLP.
Ernst & Young LLP has provided to the Audit Committee
the written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions
with Audit Committees), and the Audit
12
Committee discussed with the independent auditors their
independence from Continucare. When considering Ernst &
Young LLPs independence, the Audit Committee considered
whether their provision of services to Continucare beyond those
rendered in connection with their audit and review of
Continucares financial statements was compatible with
maintaining their independence. The Audit Committee also
reviewed, among other things, the nature of the non-audit
services provided and the amount of fees paid to
Ernst & Young LLP for their audit and non-audit
services, both separately and in the aggregate.
Based on the Audit Committees review and its meetings,
discussions and reports, and subject to the limitations on its
role and responsibilities referred to above and in the Audit
Committee Charter, the Audit Committee recommended to the Board
of Directors that Continucares audited financial
statements for the year ended June 30, 2006 be included in
Continucares Annual Report on
Form 10-K.
Robert J. Cresci
Neil Flanzraich
Jacob Nudel, M.D.
A. Marvin Strait, C.P.A.
13
Performance
Graph
Set forth below is a line graph comparing the cumulative total
shareholder return on Continucares common stock against
the cumulative total return of the AMEX Market Value
(U.S. & Foreign) Index and the NASDAQ Health Services
Index for the period of June 30, 2001 to June 30, 2006.
COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG CONTINUCARE CORPORATION, THE AMEX MARKET VALUE (U.S. &
FOREIGN) INDEX,
AND THE NASDAQ HEALTH SERVICES INDEX
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Cumulative Total Return
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6/01
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6/02
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6/03
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6/04
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6/05
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6/06
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CONTINUCARE CORPORATION
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100.00
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59.38
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131.25
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600.00
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765.63
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921.88
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AMEX MARKET VALUE (U.S. &
FOREIGN)
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100.00
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108.89
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115.42
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151.47
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188.18
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231.19
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NASDAQ HEALTH SERVICES
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100.00
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104.19
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98.33
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129.66
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170.38
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159.13
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* |
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$100 invested on
6/30/01 in
stock or index-including reinvestment of dividends. Fiscal year
ending June 30. |
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 Continucares directors and executive officers and
persons who own more than ten percent of Continucares
outstanding common stock, to file with the SEC initial reports
of ownership and reports of changes in ownership of common
stock. Such persons are required by SEC regulation to furnish us
with copies of all such reports they file.
14
To Continucares knowledge, based solely on a review of the
copies of such reports furnished to it and written
representations that no other reports were required, Continucare
believes that all Section 16(a) filing requirements
applicable to Continucares officers, directors and greater
than ten percent beneficial owners were complied with.
Certain
Relationships and Related Transactions
On October 1, 2006, Continucare consummated its acquisition
of the MDHC Companies (the Acquisition). Pursuant to
the terms of the registration rights agreement entered into in
connection with the Acquisition, on December 15, 2006,
Continucare filed a registration statement on
Form S-3
with the SEC with respect to certain shares of
Continucares common stock held by the former principals
and certain former employees and consultants as well as the
former financial adviser of the MDHC Companies, including
Dr. Luis Cruz, Vice Chairman of Continucares Board of
Directors, Mr. Jose Garcia, Continucares Executive
Vice President and Mr. Carlos Garcia, Continucares
President-Diagnostic Division. Continucare will use commercially
reasonable efforts to cause the registration statement to be
declared effective by April 1, 2007 and maintain such
effectiveness until October 1, 2007. The registration
rights agreement also provides that if Continucare, at any time
when shares issued in connection with the Acquisition remain
outstanding, proposes to register any shares of its common stock
under the Securities Act of 1933 (other than by a registration
on
Form S-4,
or any successor form or registrations with regard to conversion
of any of its securities or employee stock options, employee
purchase plans or employee benefit plans), then Continucare will
give the holders of the shares issued in connection with the
Acquisition an opportunity to have their shares registered along
with the shares of stock being registered by Continucare. If the
holders desire for their shares to be registered, then
Continucare will cause such securities to be covered by the
registration statement otherwise proposed to be filed by
Continucare, subject to limited exceptions described in the
registration rights agreement that permit Continucare to delay,
prevent or cut back the number of shares to be registered or
sold.
Upon completion of the Acquisition, Continucare entered into
one-year employment agreements with each of Luis
Cruz, M.D., Jose Garcia and Carlos Garcia, the principal
shareholders of the MDHC Companies. Under these employment
agreements, Dr. Cruz was appointed to Continucares
Board of Directors and is employed as Vice Chairman of the Board
of Directors at an annual salary of $225,000, Mr. Jose
Garcia is employed as Continucares Executive Vice
President at an annual salary of $275,000, and Mr. Carlos
Garcia is employed as Continucares President
Diagnostics Division at an annual salary of $225,000. Pursuant
to the terms of the employment agreements, each of Dr. Cruz
and Messrs. Jose and Carlos Garcia also received options to
acquire 100,000 shares of Continucares common stock
at a per share exercise price of $2.59, the closing price of
Continucares common stock on October 2, 2006. The
options will vest ratably over a term of four years and have a
term of ten years from the date of the grant.
Upon completion of the Acquisition, Continucare became a party
to two lease agreements with certain of the MDHC Companies and
their affiliates. Effective October 1, 2006, Kent assigned
to Continucare a lease agreement between Kent and Pelu dated
May 1, 2006, pursuant to which Continucare leases an
8,000 square foot warehouse in Hialeah, Florida for a
five-year term expiring April 30, 2011 with monthly rent
ranging from $3,031.67 per month during the first year to
$3,412.17 per month during the fifth year. Also effective
October 1, 2006, MDHRS assigned to Continucare a lease
agreement dated January 1, 2000 between MDHRS and
Cruz & Cruz Partnership, an affiliate of Dr. Luis
Cruz, Vice Chairman of Continucares Board of Directors,
pursuant to which Continucare leases a medical clinic from
Cruz & Cruz Partnership for a monthly rent of $32,100.
15
APPROVAL
OF AMENDMENT TO
AMENDED AND RESTATED 2000 STOCK OPTION PLAN
(Proposal No. 2)
In 2000, Continucares shareholders approved
Continucares Amended and Restated 2000 Stock Option Plan
(the Plan) and, in 2004 and 2005, Continucares
shareholders approved amendments to the Plan. At the Annual
Meeting, Continucare is asking its shareholders to approve an
amendment to the Plan which would have the sole effect of
increasing the aggregate number of shares of common stock
authorized for issuance pursuant to the Plan from 7,000,000 to
9,000,000. The Board of Directors and the Compensation Committee
of the Board of Directors each approved the amendment to the
Plan on September 12, 2006.
A copy of the Plan, as proposed to be amended, is attached to
this proxy statement as Appendix A.
Background
and Purpose
The Plan was originally authorized by the Board of Directors on
July 17, 2000 and was approved by Continucares
shareholders at the 2000 Annual Meeting of Shareholders. The
Plan was subsequently amended in 2004 and 2005. The following
summary is qualified in its entirety by reference to the Plan,
as proposed to be amended, which is attached to this proxy
statement as Appendix A.
The purpose of the Plan is to provide an additional incentive to
attract and retain qualified competent persons who provide
services, and upon whose efforts and judgment Continucares
success is largely dependent. Currently, the Plan authorizes,
among other things, the granting of incentive or nonqualified
stock options to purchase Continucares common stock
(collectively, Options) and the granting of
restricted stock awards (Restricted Stock Awards) to
persons selected by the administrators of the Plan from the
class of all of Continucares regular employees, including
officers who are regular employees and directors, independent
contractors, consultants and non-employee directors
(Eligible Recipients).
Administration
of the Plan
The Plan provides that it shall be administered by
Continucares Board of Directors or by a committee
appointed by the Board of Directors which shall be composed of
two or more directors, all of whom shall be outside
directors (as defined in the Plan) in compliance with
Section 162(m) of the tax code. The Board of Directors has
selected the Compensation Committee of the Board of Directors to
administer the Plan.
The Compensation Committee or the Board of Directors, in its
sole discretion, determines the persons to be awarded the
Options or Restricted Stock Awards, the number of shares subject
thereto, in the case of Options, the exercise price and other
terms thereof. In addition, the Compensation Committee or the
Board of Directors has full power and authority to construe and
interpret the Plan, and the acts of the Compensation Committee
or the Board of Directors are final, conclusive and binding on
all interested parties, including Continucares
shareholders, officers and employees, recipients of grants under
the Plan, and all persons or entities claiming by or through
such persons.
The Plan currently limits the aggregate number of shares of
common stock reserved for issuance upon the exercise of options
granted under the Plan to 7,000,000, which amount will be
increased to 9,000,000 if the amendment to the Plan is approved.
As of December 31, 2006, an aggregate of 960,167 shares of
common stock remained available for grant under the Plan.
Continucares shareholders will not have any preemptive
rights to purchase or subscribe for any common stock by reason
of the reservation and issuance of common stock under the Plan.
Shares subject to Restricted Stock Awards and Option grants
under the Plan which expire or are terminated, forfeited or
cancelled without having been exercised or vested in full, shall
be available for further grant under the Plan.
Certain
Terms and Conditions
Stock
Options
All Options granted under the Plan must be evidenced by a
written agreement between Continucare and the grantee. The
agreement will contain such terms and conditions as the
Compensation Committee or the Board of Directors shall
prescribe, consistent with the Plan, including, without
limitation, the exercise price, term and any restrictions on the
exercisability of the Options granted.
16
For any Option granted under the Plan, the exercise price per
share of common stock may be any price determined by the
Compensation Committee or the Board of Directors; however, the
exercise price per share of any incentive stock option may not
be less than the Fair Market Value of the common
stock on the date such incentive stock option is granted. For
purposes of the Plan, the Fair Market Value on any
date of reference is deemed to be the closing price of common
stock on the business day immediately preceding such date,
unless the Compensation Committee or the Board of Directors in
its sole discretion determines otherwise in a fair and uniform
manner. For this purpose, the closing price of common stock on
any business day is (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 AMEX or any
similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing
high bid and low asked quotations for such day of common stock
on such system; or (iii) if neither clause (i) nor
(ii) is applicable, the mean between the high bid and low
asked quotations for common stock as reported by AMEX 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.
The Compensation Committee or the Board of Directors may permit
the exercise price of an Option to be paid for in cash, by
certified or official bank check or personal check, by money
order, with already owned shares of common stock that have been
held by the optionee for at least six months (or such other
shares as Continucare determines will not cause Continucare to
recognize for financial accounting purposes a charge for
compensation expense), by the withholding of shares of common
stock issuable upon exercise of the Option, by delivery of a
properly executed exercise notice together with such
documentation as shall be required by the Compensation Committee
or the Board of Directors (or, if applicable, the broker) to
effect a cashless exercise, or a combination of the above. If
paid in whole or in part with shares of already owned common
stock, the value of the shares surrendered is deemed to be their
Fair Market Value on the date the Option is exercised. The Plan
also authorizes Continucare to 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 the
Option granted thereunder or to pay any tax liability of the
optionee attributable to such exercise. If the exercise price is
paid in whole or part with the optionees promissory note,
such note shall (i) provide for full recourse to the maker,
(ii) be collateralized by the pledge of the share that the
optionee purchases upon exercise of such Option, (iii) bear
interest at the prime rate of Continucares principal
lender or such other rates as the Compensation Committee or the
Board of Directors, as the case may be, shall determine, and
(iv) contain such other terms as the Compensation Committee
or the Board of Directors in its sole discretion shall
reasonably require. Consistent with the Sarbanes-Oxley Act of
2002, directors and executive officers of Continucare may not
finance the exercise of Options through a loan from Continucare,
nor will Continucare guarantee a loan to or facilitate a loan to
any of its directors or executive officers.
The use of already owned shares of common stock applies to
payment for the exercise of an Option in a single transaction
and to the pyramiding of already owned shares in
successive, simultaneous Option exercises. In general,
pyramiding permits an Option holder to start with as little as
one share of common stock and exercise an entire Option to the
extent then exercisable (no matter what the number of shares
subject thereto). By utilizing already owned shares of common
stock, no cash (except for fractional share adjustments) is
needed to exercise an Option. Consequently, the optionee would
receive common stock equal in value to the spread between the
Fair Market Value of the shares subject to the Option and the
exercise price of such Option.
No incentive stock option, and unless the prior written consent
of the Compensation Committee or the Board of Directors is
obtained (which consent may be withheld for any reason) and the
transaction does not violate the requirements of
Rule 16b-3
of the Exchange Act, no non-qualified stock option granted under
the Plan is assignable or transferable, other than by will or by
the laws of descent and distribution. During the lifetime of an
optionee, an Option is exercisable only by him or her, or in the
case of a non-qualified stock option, by his or her permitted
assignee. The expiration date of an Option under the Plan will
be determined by the Compensation Committee or the Board of
Directors at the time of grant, but in no event may such an
Option be exercisable after ten years from the date of grant. An
Option may be exercised at any time or from time to time or only
after a period of time in installments, as the Compensation
Committee or the Board of Directors determines. The Compensation
Committee or the Board of Directors may, in its sole discretion,
accelerate the date on which any Option may be exercised. Each
outstanding Option granted under the Plan may become immediately
fully exercisable in the event of certain
17
transactions, including certain changes in control, certain
mergers and reorganizations, and certain dispositions of
substantially all of Continucares assets.
Unless otherwise provided in the Option agreement, the
unexercised portion of any Option granted under the Plan shall
automatically be terminated (a) three months after the date
on which the optionees employment or service is terminated
for any reason other than (i) Cause (as defined
in the Plan), (ii) mental or physical disability, or
(iii) death; (b) immediately upon the termination of
the optionees employment or service for Cause;
(c) one year after the date on which the optionees
employment or service is terminated by reason of mental or
physical disability; or (d) one year after the date on
which the optionees employment or service is terminated
because of the optionees death, or if later, three months
after the death of the optionee if death occurs during the one
year period following the termination of the optionees
employment by reason of mental or physical disability.
To prevent dilutions of the rights of a holder of an Option, the
Plan provides for appropriate 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 increase or decrease in the number
of issued and outstanding shares of Continucares capital
stock resulting from a stock dividend, a recapitalization or
other capital adjustment. The Compensation Committee or the
Board of Directors has discretion to make appropriate
antidilution adjustments to outstanding Options in the event of
a merger, consolidation or other reorganization of Continucare
or in the event of a sale or other disposition of substantially
all of Continucares assets.
Restricted
Stock Awards
The Compensation Committee or the Board of Directors may, in its
discretion, grant Restricted Stock Awards to Eligible
Recipients. The Compensation Committee or the Board of Directors
will determine at the time of the grant whether the Restricted
Stock Award is a performance-based Restricted Stock Award, the
number of shares of common stock subject to an award, the
vesting schedule applicable to the award and may, in its
discretion, establish other terms and conditions applicable to
the award.
As a general rule, shares of the common stock that are subject
to a Restricted Stock Award will be held by the Compensation
Committee or the Board of Directors for the benefit of the award
recipient until vested and, when vested, will be transferred to
the award recipient. Unless the Compensation Committee or the
Board of Directors determines otherwise with respect to any
Restricted Stock Award, before the shares subject to a
Restricted Stock Award are vested and transferred to the award
recipient, the Compensation Committee or the Board of Directors
will exercise any voting or tender rights in its discretion and
hold and accumulate any dividends or distributions for
distribution at the same time and terms as the underlying
shares. In the alternative, the Compensation Committee or the
Board of Directors may authorize the immediate distribution of
the restricted shares to the award recipient in the form of a
stock certificate bearing a legend containing the applicable
vesting restrictions or the immediate distribution of dividends
paid on the underlying shares.
All Restricted Stock Awards will be subject to a vesting
schedule specified by the Compensation Committee or the Board of
Directors when the award is made. All Restricted Stock Awards
that are unvested at termination of employment will be
forfeited, with the award recipient receiving a refund equal to
the lesser of the Fair Market Value of the unvested shares at
termination of employment or the amount (if any) paid when the
award was made.
At the time of grant of Restricted Stock Awards, the
Compensation Committee or the Board of Directors may designate a
Restricted Stock Award as a performance-based Restricted Stock
Award. If it does so, it shall establish, in addition to or in
lieu of service-based vesting requirements, one or more
performance goals, which must be attained as a condition of
retention of the shares. The performance goal(s) shall be based
on one or more of the following:
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earnings per share;
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net income;
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EBITDA;
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return on equity;
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return on assets;
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stock price;
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strategic business objectives, consisting of one or more
objectives based on meeting specified cost targets, business
expansion goals, goals relating to acquisitions or divestitures,
revenue targets or business development goals; and
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any other performance criteria established by the Compensation
Committee.
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Performance goals may be established on the basis of reported
earnings or cash earnings, and consolidated results or
individual business units and may, in the discretion of the
Compensation Committee or the Board of Directors, include or
exclude extraordinary items
and/or the
results of discontinued operations. Each performance goal may be
expressed on an absolute
and/or
relative basis, may be based on or otherwise employ comparisons
based on internal targets, the past performance of Continucare
(or individual business units)
and/or the
past or current performance of other companies. Attainment of
the performance goals will be measured over a performance
measurement period specified by the Compensation Committee of
the Board of Directors when the award is made.
The Compensation Committee or the Board of Directors will
determine in its discretion whether the award recipient has
attained the goals. If they have been attained, the Compensation
Committee or the Board of Directors will certify that fact in
writing. If the performance goals are not satisfied during the
performance measurement period, the relevant awards will be
forfeited. If the performance goals and any service-based
vesting schedule are satisfied, the award will be distributed
(or any vesting-related legend removed from any stock
certificates previously delivered to the award recipient).
Termination
and Amendment
The Plan will expire on July 17, 2010, and any Option
outstanding on such date will remain outstanding until it
expires or is exercised. The Compensation Committee or the Board
of Directors may amend, suspend or terminate the Plan or any
Option at any time, provided that such amendment shall be
subject to the approval of the shareholders if such shareholder
approval is required by any federal or state law or regulation
(including, without limitation,
Rule 16b-3
of the Exchange Act and Section 162(m) of the tax code) or
the rules of any stock exchange or automated quotation system on
which the common stock may then be listed or granted. Under the
rules of the AMEX, shareholder approval is required for any
material amendment of the Plan. In addition, no amendment,
suspension or termination shall substantially impair the rights
or benefits of any optionee or award recipient, pursuant to any
Option or Restricted Stock Award previously granted, without the
consent of the optionee or award recipient, as the case may be.
Federal
Income Tax Consequences of Options and Restricted Stock
Awards
The Plan is not qualified under the provisions of
Section 401(a) of the tax code, and is not 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 Plan, an
optionee will recognize ordinary income equal to the excess, if
any, of the Fair Market Value on the date of exercise of the
shares of common stock acquired on exercise of the Option over
the exercise price. If the optionee is one of Continucares
employees, that income will be subject to the withholding of
Federal income tax. The optionees 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 Continucares 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 optionees 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
optionees 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 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 optionees
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.
Continucare 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
19
Continucare and is reasonable in amount, and either the employee
includes that amount in income or Continucare timely satisfies
its reporting requirements with respect to that amount.
Incentive Stock Options. The Plan
provides for the grant of stock options that qualify as
incentive stock options as defined in
Section 422 of the tax code. Under the tax 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 holders
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
recognized by the optionee will not exceed the gain, if any,
realized on the sale. If the amount realized on a Disqualifying
Disposition exceeds the Fair Market Value of the share on the
date of exercise of the Option, that excess will be short-term
or long-term capital gain, depending on whether the holding
period for the share exceeds one year.
An optionee who exercises an incentive stock option by
delivering shares of common stock acquired previously pursuant
to the exercise of an incentive stock option before the
expiration of the Required Holding Period for those shares is
treated as making a Disqualifying Disposition of those shares.
This rule prevents pyramiding the exercise of an
incentive stock option (that is, exercising an incentive stock
option for one share and using that share, and others so
acquired, to exercise successive incentive stock options)
without the imposition of current income tax.
For purposes of the alternative minimum tax, the amount by which
the Fair Market Value of a share of common stock acquired on
exercise of an incentive stock option exceeds the exercise price
of that Option generally will be an adjustment included in the
optionees 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 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 optionees 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
adjustment taken into account with respect to that share for
alternative minimum tax purposes in the year the Option was
exercised.
Continucare is not allowed an income tax deduction with respect
to the grant or exercise of an incentive stock option or the
disposition of a share acquired on exercise of an incentive
stock option after the Required Holding Period. However, if
there is a Disqualifying Disposition of a share, Continucare is
allowed a deduction in an amount equal to the ordinary income
included in income by the optionee, provided that amount
constitutes an ordinary and necessary business expense for
Continucare and is reasonable in amount, and either the employee
includes that amount in income or Continucare timely satisfies
its reporting requirements with respect to that amount.
Restricted Stock Awards. The grant of
Restricted Stock Awards under the Plan will not result in
federal income tax consequences to either Continucare or the
award recipient. Once the award is vested and the shares subject
to the Restricted Stock Award are distributed, the award
recipient will generally be required to include in ordinary
income, for the taxable year in which the vesting date occurs,
an amount equal to the Fair Market Value of the shares on the
vesting date. Continucare will generally be allowed to claim a
deduction, for compensation expense, in a like amount. If
dividends are paid on unvested shares held under the Plan, such
dividend amounts will also be included in the ordinary income of
the recipient. Continucare will generally be allowed to claim a
deduction for compensation expense for this amount as well.
In certain cases, a recipient of a Restricted Stock Award that
is not a performance-based Restricted Stock Award may elect to
include the value of the shares subject to a Restricted Stock
Award in income for federal income tax purposes when the
Restricted Stock Award is made instead of when it vests.
20
Section 162
Limitations. Section 162(m) of the tax
code generally disallows a public companys tax deduction
for compensation to covered employees in excess of
$1 million in any tax year. Compensation that qualifies as
performance-based compensation is excluded from the
$1 million deductibility cap, and therefore remains fully
deductible by the company that pays it. Continucare intends that
Options granted to employees whom the Compensation Committee
expects to be covered employees at the time a deduction arises
in connection with such Options, will qualify as such
performance-based compensation, so that such Options
will not be subject to the Section 162(m) deductibility cap
of $1 million. Future changes in Section 162(m) or the
regulations thereunder may adversely affect Continucares
ability to ensure that Options or Restricted Stock Awards under
the Plan will qualify as performance-based
compensation that is fully deductible by Continucare under
Section 162(m).
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 or award
recipient may depend on his particular situation, each optionee
or award recipient 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, the grant of a Restricted Stock
Award or the disposition of the common stock acquired on
exercise of an Option or subject to the Restricted Stock Award.
Option
Grants and Restricted Stock Awards Under the Plan
As of December 31, 2006, nonqualified stock options to
purchase an aggregate of 5,440,884 shares have been granted to
106 employees under the Plan and incentive stock options to
purchase an aggregate of 598,949 shares have been granted to one
employee under the Plan. The Options were granted at exercise
prices ranging from $0.35 to $2.99, in all cases the exercise
price was equal to the closing price of Continucares
common stock on the date of grant. As of the date of this proxy
statement, 960,167 shares remain available for grant under the
Plan. The Board of Directors believes that the Options granted
under the Plan have been and future Option and Restricted Stock
Awards will be awarded primarily to those persons who the
Compensation Committee believes possess a capacity to contribute
significantly to the successful performance of Continucare.
Because persons to whom grants of Options and Restricted Stock
Awards are to be made are to be determined from time to time by
the Compensation Committee or the Board of Directors, it is
impossible at this time to indicate the precise number, name or
positions of persons who will hereafter receive Options or
Restricted Stock Awards or the number of shares for which
Options or Restricted Stock Awards will be granted except to the
extent already granted or which will be the subject of
Restricted Stock Awards.
In addition to the Plan, Continucare also currently maintains
the Continucare Amended and Restated 1995 Stock Option Plan (the
1995 Plan). The 1995 Plan expired on
December 31, 2005, however, Options granted under the 1995
Plan prior to that date will remain outstanding and exercisable
in accordance with their terms after that date, until such
Options are exercised, terminated or expired.
Securities
Authorized For Issuance Under Equity Compensation
Plans
The following table provides information as of December 31,
2006, with respect to all of Continucares equity
compensation plans under which equity securities are authorized
for issuance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
securities to be
|
|
|
|
|
|
|
|
|
|
issued upon
|
|
|
Weighted average
|
|
|
|
|
|
|
exercise of
|
|
|
exercise price of
|
|
|
Number of
|
|
|
|
outstanding
|
|
|
outstanding
|
|
|
securities
|
|
|
|
options, warrants
|
|
|
options, warrants
|
|
|
remaining available
|
|
Plan Category
|
|
and rights
|
|
|
and rights
|
|
|
for future issuance
|
|
|
Plans approved by shareholders
|
|
|
4,777,054
|
|
|
$
|
1.82
|
|
|
|
960,167
|
|
Plans not approved by shareholders
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,777,054
|
|
|
$
|
1.82
|
|
|
|
960,167
|
|
21
Vote
Required and Recommendation
The Board of Directors has approved the amendment to the Plan as
described in this Proposal No. 2 and is recommending
approval by the shareholders because it believes that it is in
the best interest of Continucare. 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 Plan as
described above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENT TO CONTINUCARES AMENDED AND
RESTATED 2000 STOCK OPTION PLAN.
22
RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
CONTINUCARES
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal No. 3)
Continucares independent registered public accounting firm
for Fiscal 2005 and Fiscal 2006 was the firm of Ernst &
Young LLP.
Fees to
Independent Registered Public Accounting Firm for Fiscal 2005
and 2006
Ernst & Young LLP served as the independent registered
public accounting firm for Continucare in Fiscal 2005 and Fiscal
2006. The following tables present fees for professional
services rendered by Ernst & Young LLP for
Continucares audit, annual financial statements, fees for
audit-related services, tax services and all other services.
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
Audit fees
|
|
$
|
423,055
|
|
|
$
|
370,651
|
|
Audit related fees(a)
|
|
|
|
|
|
|
|
|
Tax fees(b)
|
|
|
67,292
|
|
|
|
75,208
|
|
All other fees
|
|
|
3,105
|
|
|
|
4,862
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
493,452
|
|
|
$
|
450,721
|
|
|
|
|
(a) |
|
Audit-related fees consist of assurance and related services
reasonably related to the performance of the audit or review of
Continucares financial statements and are not reported in
the preceding category. |
|
(b) |
|
Tax fees consist of services provided for tax compliance, tax
advice and tax planning. |
All audit related services, tax services and other services were
pre-approved by the Audit Committee, which concluded that the
provision of such services by Ernst & Young LLP was
compatible with the maintenance of that firms independence
in the conduct of its auditing functions. The Audit Committee
must review and pre-approve both audit and permitted non-audit
services provided by the independent auditors and shall not
engage the independent auditors to perform any non-audit
services prohibited by law or regulation. At each Audit
Committee meeting, the Audit Committee receives updates on the
services actually provided by the independent auditors, and
management may present additional services for pre-approval. The
Audit Committee has delegated to the Chairman of the Audit
Committee the authority to evaluate and approve engagements on
behalf of the Audit Committee in the event that a need arises
for pre-approval between regular Audit Committee meetings. If
the Chairman of the Audit Committee so approves any such
engagements, he will report that approval to the full Audit
Committee at the next Audit Committee meeting.
Each year, the independent registered public accounting
firms retention to audit the Companys financial
statements, including the associated fee, is approved by the
Audit Committee before the filing of the preceding years
Annual Report on
Form 10-K.
Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting, will have the opportunity to make
a statement if they desire and will be available to respond to
appropriate questions from shareholders.
Vote
Required and Recommendation
The Board of Directors recommends a vote in favor of the
ratification of the appointment of Ernst & Young LLP as
Continucares independent registered public accounting firm
for the fiscal year ending June 30, 2007. 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 to ratify the appointment of Ernst &
Young LLP. If the appointment is not ratified, the Audit
Committee will select other independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
CONTINUCARES INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
23
OTHER
BUSINESS
As of the date of this proxy statement, the Board of Directors
knows of no other business to be presented at the Annual
Meeting. If any other business should properly come before the
Annual Meeting, 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
Shareholders interested in presenting a proposal for
consideration at Continucares next annual meeting of
shareholders may do so by following the procedures prescribed in
Rule 14a-8
promulgated by the Exchange Act. To be eligible for inclusion in
Continucares proxy statement and form of proxy relating to
that meeting, shareholder proposals must be received by
Continucares Corporate Secretary no later than
September 10, 2007. Any shareholder proposal submitted
other than for inclusion in Continucares proxy materials
for that meeting must be delivered to us no later than
October 10, 2007, or such proposal will be considered
untimely. If a shareholder proposal is received after
September 10, 2007, Continucare may vote in
Continucares discretion as to the proposal all of the
shares for which Continucare has received proxies for that
meeting.
By Order of the Board of Directors,
Fernando L. Fernandez
Senior Vice President Finance, Chief
Financial Officer, Treasurer and Secretary
Miami, Florida
January 8, 2007
24
APPENDIX A
AMENDED
AND RESTATED 2000 STOCK OPTION PLAN
(as Proposed to be Amended)
CONTINUCARE
CORPORATION
AMENDED
AND RESTATED 2000 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is
to advance the interests of CONTINUCARE CORPORATION, a Florida
corporation (the Company), and its Subsidiaries by
providing an additional incentive to attract and retain
qualified and competent persons who provide services to the
Company and its Subsidiaries, and upon whose efforts and
judgment the success of the Company and its Subsidiaries 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 meanings indicated:
(a) Board shall mean the Board of Directors of
the Company.
(b) Code shall mean the Internal Revenue Code
of 1986, as amended from time to time.
(c) Committee shall mean the committee
appointed by the Board pursuant to Section 13(a) hereof,
or, if such committee is not appointed, the Board.
(d) Common Stock shall mean the Companys
Common Stock, par value $.0001 per share.
(e) Company shall mean Continucare Corporation,
a Florida corporation, and its successors or assigns.
(f) Director shall mean a member of the Board.
(g) Effective Date shall mean July 17,
2000.
(h) Fair Market Value of a Share on any date of
reference shall mean the Closing Price (as defined
below) of the Common Stock on the business day immediately
preceding the date of reference, 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 American Stock
Exchange (AMEX), or any similar system of automated
dissemination of quotations of securities prices in common use,
the last reported sale price of Common Stock on such system or,
if sales prices are not reported, the mean between the closing
high bid and low asked quotations for such day of Common Stock
on such system, as reported in any newspaper of general
circulation 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 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
Internal Revenue Code.
(j) Non-Qualified Stock Option shall mean an
Option that is not an Incentive Stock Option.
(k) Officer shall mean the Companys
Chairman of the Board, President, Chief Executive Officer,
principal financial officer, principal accounting officer, 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. If
pursuant to Item 401(b) of
Regulation S-K
(17 C.F.R. § 229.401(b)) the Company identifies a
person as an executive officer, the person so
identified
A-1
shall be deemed an Officer even though such person
may not otherwise be an Officer pursuant to the
foregoing provisions of this paragraph.
(l) Option (when capitalized) shall mean any
option granted under this Plan.
(m) Option Agreement means the agreement
between the Company and the Optionee for the grant of an option.
(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
Section 162(m) of the Internal Revenue Code 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 2000 Stock Option Plan
for the Company.
(q) Securities Exchange Act shall mean the
Securities Exchange Act of 1934, as amended from time to time.
(r) Share shall mean a share of 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 AVAILABLE FOR OPTION
GRANTS. The Committee or the Board may grant to
any Optionee or Optionees from time to time Options to purchase
an aggregate of up to Nine Million (9,000,000) Shares from the
Companys 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.
(a) 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
the 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. Incentive Stock Options may not be
granted to any person who is not an employee of the Company or
any Subsidiary.
(b) 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 Section 422(b) of the
Code are exercisable for the first time by any individual during
any calendar year (under all plans of the Company and its parent
and subsidiary corporations as defined in Section 424 of
the Code), exceeds $100,000.
5. 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. Optionees shall be
(i) those persons selected by the Committee or the Board
from the class of all regular employees of, or persons who
provide consulting or other services as independent contractors
to, the Company or its Subsidiaries, including Directors and
Officers who are regular employees, and (ii) Directors who
are not employees of the Company or of any Subsidiaries.
(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
A-2
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.
6. 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.
7. 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 Optionees payment to the Company of the amount that is
necessary for the Company or Subsidiary employing the Optionee
to withhold in accordance with applicable Federal or state tax
withholding requirements. The consideration to be paid for the
Shares to be issued upon exercise of an Option as well as the
method of payment of the exercise price and of any withholding
and employment taxes applicable thereto, shall be determined by
the Committee or the Board and may in the discretion of the
Committee or the Board consist of: (1) cash,
(2) certified or official bank check, (3) money order,
(4) Shares that have been held by the Optionee for at least
six (6) months (or such other Shares as the Company
determines will not cause the Company to recognize for financial
accounting purposes a charge for compensation expense),
(5) the withholding of Shares issuable upon exercise of the
Option, (6) pursuant to a cashless exercise
procedure, by delivery of a properly executed exercise notice
together with such other documentation, and subject to such
guidelines, as the Board or the Committee shall require to
effect an exercise of the Option and delivery to the Company by
a licensed broker acceptable to the Company of proceeds from the
sale of Shares or a margin loan sufficient to pay the exercise
price and any applicable income or employment taxes, or
(7) in such other consideration as the Committee or the
Board deems appropriate, or by a combination of the above. In
the case of an Incentive Stock Option, the permissible methods
of payment shall be specified at the time the Option is granted.
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,
and/or the
Optionees tax withholding obligation is satisfied, 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 or withheld shall be their Fair Market Value
on the date the Option is exercised. The Committee or the Board
in its sole discretion may, on an individual basis or pursuant
to a general program established in connection with this Plan,
cause the Company to lend money to an Optionee (other than a
Director or Executive Officer of the Company (each within the
meaning of Section 402(a) of the Sarbanes-Oxley Act of
2002, as amended) (each a Prohibited Optionee),
guarantee a loan to an Optionee (other than a Prohibited
Optionee), or otherwise assist an Optionee (other than a
Prohibited Optionee) to obtain the cash necessary to exercise
all or a portion of an Option granted hereunder or to pay any
tax liability of such Optionee attributable to such exercise. If
the exercise price is paid in whole or part with Optionees
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 the
Option, (iii) bear interest at the prime rate of the
Companys principal lender, and (iv) contain such
other terms as the Committee or 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 those Shares are issued to
that person(s) under the terms of this Plan. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in
cash,
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securities or other property) or distributions or other rights
for which the record date is prio r to the date the stock
certificate is issued, except as expressly provided in
Section 10 hereof.
8. EXERCISABILITY OF OPTIONS.
(a) Any Option shall become exercisable in such amounts, at
such intervals and upon such terms as the Committee or the Board
shall provide in the Option Agreement for that Option, provided
that 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 Agreement, and
subject to the Committee or the Boards right to exercise
its discretion to provide a cancellation notice with respect to
the Option pursuant to Section 9(b) hereof, each
outstanding Option shall become immediately fully exercisable in
the event of a Change in Control. For this purpose,
the term Change in Control shall mean: 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
companys then outstanding voting securities, in
substantially the same proportions as their ownership
immediately prior to such reorganization, merger, consolidation
or other transaction, 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 or
previously acquired by the exercise of any Option.
9. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise provided in any Option Agreement, the
unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time of
the earliest to occur of the following:
(i) three months after the date on which the
Optionees employment is terminated other than by reason of
(A) Cause, which, solely for purposes of this Plan, shall
mean the termination of the Optionees employment by reason
of the Optionees willful misconduct or gross negligence,
(B) a mental or physical disability (within the meaning of
Internal Revenue Code Section 22(e)) of the Optionee as
determined by a medical doctor satisfactory to the Committee, or
(C) death of the Optionee;
(ii) immediately upon the termination of the
Optionees employment for Cause;
(iii) twelve months after the date on which the
Optionees employment is terminated by reason of a mental
or physical disability (within the meaning of Section 22(e)
of the Code) as determined by a medical doctor satisfactory to
the Committee or the Board;
(iv) (A) twelve months after the date of termination
of the Optionees employment by reason of the death of the
Optionee, or, if later, (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 9(a)(iii)
hereof; or
(v) the tenth anniversary of the date of grant of the
Option. All references herein to the termination of the
Optionees 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 Optionees service with the Company.
(b) To the extent not previously exercised, (i) each
Option shall terminate immediately in the event of (1) the
liquidation or dissolution of the Company, or (2) any
reorganization, merger, consolidation or other form of corporate
transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such
successor corporation, assumes the Option or substitutes an
equivalent option or right pursuant to Section 10(c)
hereof, and (ii) the Committee or the Board in its sole
discretion may by written notice (cancellation
notice) cancel, effective upon the consummation of any
corporate transaction described in Subsection 8(b) hereof
in which the Company does survive, any Option that remains
unexercised on such date. The Committee or the Board shall give
written notice of any proposed transaction referred to in this
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Section 9(b) a reasonable period of time prior to the
closing date for such transaction (which notice may be given
either before or after approval of such transaction), in order
that Optionees may have a reasonable period of time prior to the
closing date of such transaction within which to exercise any
Options that then are exercisable (including any Options that
may become exercisable upon the closing date of such
transaction). An Optionee may condition his exercise of any
Option upon the consummation of a transaction referred to in
this Section 9(b).
10. 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 that 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 Companys issued and outstanding
Shares shall continue to be subject to being so
optioned; and
(ii) the Board or the Committee may, in its discretion,
make any adjustments it deems appropriate 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
Companys issued and outstanding Shares shall remain
subject to purchase at the same aggregate exercise price.
(b) Unless otherwise provided in any Option Agreement, the
Committee 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 Committees
sole discretion, such adjustments become appropriate so as to
preserve benefits under the Plan.
(c) In the event of a proposed sale of all or substantially
all of the Companys assets or any reorganization, merger,
consolidation or other form of corporate transaction in which
the Company does not survive, where the securities of the
successor corporation, or its parent company, are issued to the
Companys shareholders, then the successor corporation or a
parent of the successor corporation may, with the consent of the
Committee or the Board, assume each outstanding Option or
substitute an equivalent option or right. If the successor
corporation, or its parent, does not cause such an assumption or
substitution to occur, or the Committee or the Board does not
consent to such an assumption or substitution, then each Option
shall terminate pursuant to Section 9(b) hereof upon the
consummation of sale, merger, consolidation or other corporate
transaction.
(d) 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 a direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made to, the number of or
exercise price for Shares then subject to outstanding Options
granted under the Plan.
(e) 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
Companys 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.
11. TRANSFERABILITY OF OPTIONS AND
SHARES.
(a) No Incentive Stock Option, and unless the prior written
consent of the Committee or the Board is obtained (which consent
may be withheld for any reason) 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
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be exercisable during the Optionees 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) 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,
unless the transaction does not violate the requirements of
Rule 16b-3
promulgated under the Securities Exchange Act.
12. 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 to any sale or issuance of Shares upon
exercise of any Option, the Committee or the Board may require
such agreements or undertakings as the Committee or the Board
may deem necessary or advisable to facilitate compliance with
any applicable 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 the Shares that are, in the opinion of the
Committee or the Board, necessary or appropriate to facilitate
compliance with the provisions of any securities laws deemed by
the Committee or the Board to be applicable to the issuance and
transfer of those Shares.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board or, at the
discretion of the Board, by a committee appointed by the Board
(the Committee) which shall be composed of two or
more Directors. The membership of the Committee shall be
constituted so as to comply at all times with the then
applicable requirements for Outside Directors 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 Committee or the Board may grant Options pursuant
to this Plan 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 of the Committee or the Board, and its
interpretation and construction of any provision of the Plan or
any Option Agreement, 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.
14. 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, 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 to take any
other action in connection with the issuance or delivery then to
be made, the issuance or delivery shall be deferred until the
withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have
been taken.
15. INTERPRETATION.
(a) As it is the intent of the Company that the Plan shall
comply in all respects with
Rule 16b-3
promulgated under the Securities Exchange Act
(Rule 16b-3),
any ambiguities or inconsistencies in
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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 and any Option Agreements entered into
pursuant to 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
Code. If any provision of the Plan or any Option Agreement
relating to an Incentive Stock Option should be held invalid for
the granting of Incentive Stock Options or illegal for any
reason, that determination shall not affect the remaining
provisions hereof, but instead the Plan and the Option Agreement
shall be construed and enforced as if such provision had never
been included in the Plan or the Option Agreement.
(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.
16. 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 Companys 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.
17. TERMINATION DATE. The Plan shall
terminate on the 10th anniversary of the Effective Date.
The Plan shall be submitted to the shareholders of the Company
for their approval and adoption.
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CONTINUCARE CORPORATION
7200 CORPORATE CENTER DRIVE, SUITE 600
MIAMI, FLORIDA 33126
ANNUAL MEETING OF SHAREHOLDERS
OF CONTINUCARE CORPORATION
FEBRUARY 7, 2007
PROXY
This Proxy is solicited on behalf of the Board of Directors of Continucare Corporation.
The undersigned hereby appoints Richard C. Pfenniger, Jr. and Fernando L. Fernandez, and each
of them acting alone with the power to appoint his substitute, as proxies to represent the
undersigned and vote as designated on the reverse side, all of the shares of Common Stock of
Continucare Corporation held of record by the undersigned at the close of business on January 2,
2007, at the Annual Meeting of Shareholders to be held on February 7, 2007, and at any adjournment
or postponement thereof.
Please complete, date and sign this Proxy on the reverse side, and mail it promptly in the
enclosed envelope.
(Continued and to be signed on the reverse side)
(continued from reverse side)
The Board of Directors of Continucare Corporation unanimously recommends a vote FOR
all of the nominees for director, FOR the approval of the amendment to Continucare Corporations
Amended and Restated 2000 Stock Option Plan, and FOR the ratification of the appointment of Ernst
& Young LLP as Continucare Corporations independent registered public accounting firm.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE
OR BLACK INK AS SHOWN HERE [X]
1. Election of seven directors.
NOMINEES:
Richard C. Pfenniger, Jr.
Luis Cruz, M.D.
Robert J. Cresci
Neil Flanzraich
Phillip Frost, M.D.
Jacob Nudel, M.D.
A. Marvin Strait
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WITHHOLD AUTHORITY
FOR ALL NOMINEES |
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FOR ALL EXCEPT
(See instructions below) |
INSTRUCTION: To withhold authority to
vote for any individual nominee(s),
mark FOR ALL EXCEPT and write the
nominees name(s) below.
To change the address on your account,
please check the box at right and
indicate your new address in the
address space above. Please note that
changes to the registered name(s) on
the account may not be submitted via
this method. o
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Approval of the amendment to Continucare Corporations Amended and Restated
2000 Stock Option Plan. |
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FOR
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AGAINST
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ABSTAIN |
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Ratification of the appointment of Ernst & Young LLP as Continucare
Corporations independent registered public accounting firm. |
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FOR
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AGAINST
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ABSTAIN |
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In their discretion, the proxy holders are authorized to vote upon such other
matters as may properly come before the meeting or any postponement or
adjournment thereof. |
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE DIRECTORS NAMED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. |
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The undersigned acknowledges receipt of the accompanying Notice of Annual Meeting of
Shareholders and Proxy Statement for the February 7, 2007 meeting.
Signature of Shareholder
_____________________
Date: _________ Signature of Shareholder _____________________
Date: _________
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each shareholder should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.