EXHIBIT A
INVESTMENT AND REGISTRATION RIGHTS AGREEMENT
INVESTMENT AND REGISTRATION RIGHTS AGREEMENT made as of the 5th day of
December 1997, by and between CONTINUCARE CORPORATION, a Florida corporation
(the "Company" or "Continucare"), and STRATEGIC INVESTMENT PARTNERS, LTD., a
Cayman Islands corporation (the "Investor"). Capitalized terms used herein and
not otherwise defined shall have the meaning ascribed to such terms in Section 6
hereof.
WITNESSETH
WHEREAS, the Investor desires to purchase, and Continucare desires to
sell, the Common Stock in the amounts and on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency whereof are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1 1. PURCHASE OF STOCK
1.1 Description of Securities. Continucare has authorized the issuance,
sale and delivery to the Investor on the Closing Date of an aggregate of
2,250,000 shares (the "Securities") of its authorized but unissued common stock,
par value $.0001 per share (the "Common Stock"), for an aggregate purchase price
of $11,250,000.
1.2 Use of Proceeds. The proceeds of the purchase price for the Common
Stock shall be used to finance the working capital needs, including
acquisitions, of Continucare.
1.3 Closing. The closing (the "Closing") of the sale and purchase of
the Securities shall take place on the date hereof or such other date, time and
place as shall be mutually agreed upon by Continucare and the Investor (the
"Closing Date"). At the Closing, Continucare shall instruct its transfer agent
to deliver to the Investor a share certificate for the Securities (with the
appropriate restricted stock legend) against payment of the full purchase price
therefor by Investor to Continucare by wire transfer to an account designated by
Continucare.
SECTION 2 2. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE COMPANY
In order to induce the Investor to enter into this Agreement, the
Company represents and warrants to the Investor the following as of the Closing
Date.
2.1 Organization and Corporate Power. The Company is a corporation duly
organized and validly existing under the laws of the State of Florida.
Continucare has all required corporate power and authority to own its property
and to carry on its businesses as presently conducted. The Company has all
required corporate power and authority to enter into and perform this Agreement,
and to carry out the transactions contemplated hereby, including, without
limitation, the issuance of the Securities.
2.2 Authorization and Non-Contravention. This Agreement is a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy laws
and general principles of equity. The execution, delivery and performance of
this Agreement and the issuance of the Securities, have been duly authorized by
all necessary corporate action of the Company. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby will not (i) violate or conflict with the
Company's charter or bylaws, (ii) conflict with or constitute a breach of any
material agreement to which the Company or any of its subsidiaries are a party,
except where such breach would not have a Material Adverse Effect, or (iii)
violate any applicable law, rule, regulation, judgment, order, writ or decree to
which the Company is subject, except for such violations that would not have a
Material Adverse Effect.
2.3 Capitalization. As of the Closing, and prior to giving effect to
the transactions contemplated hereby, the authorized and issued capital stock of
the Company is as set forth in Schedule 2.3 attached hereto.
2.4 Reports and Financial Statements. The historical financial
statements included in the Incorporated Documents present fairly in all material
respects the financial position of the Company and its consolidated subsidiaries
at the dates indicated and the statement of operations, stockholders' equity and
cash flows of the Company and its consolidated subsidiaries for the periods
specified were prepared in conformity with GAAP applied on a consistent basis
throughout the periods presented except as disclosed therein. Since the date of
the most recent financial statements included in the Incorporated Documents,
there has been no Material Adverse Change.
2.5 Board Appointment. Effective immediately subsequent to the Closing,
the Company shall increase the size of its Board to seven members and fill the
vacancy created by such increase by appointing Xxxxxx Xxxxx to the Board. It is
the intention of the Company (subject to applicable fiduciary obligations) that
Xxxxxx Xxxxx, or his designee, be a director of the Company as long as the
Investor hold 10% or more of the outstanding Common Stock of the Company.
2.6 Incorporated Documents. The Incorporated Documents comply in all
material respects with the requirements of the Exchange Act and do not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
2.7 FIRPTA Matters. Neither the Company nor any subsidiary has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
2.8 Insurance. The Company has in full force and effect medical
malpractice insurance in the amounts set forth on Schedule 2.8.
SECTION 3 3. REGISTRATION RIGHTS
3.1 Shelf Registration. Subject to the limitations set forth in this
Agreement, and upon the written request of the Investor delivered to the
Company, the Company will file a registration statement (the "Shelf Registration
Statement") covering the number of shares of Securities set forth in the written
request of the Investor and thereafter shall use its reasonable efforts to (i)
cause the Shelf Registration Statement to be declared effective as soon as
practicable following such filing, and (ii) maintain such effectiveness (the
"Registration Period") until the earlier of (x) the time at which the Investor
is no longer subject to the volume limitations under Rule 144 of the Securities
Act, (y) such time as all Securities have been sold, or (z) the Securities cease
to be Registrable Securities. Notwithstanding the foregoing, (a) such request by
the Investor cannot be made until April 30, 1998, (b) the Company may delay
filing the registration statement if it determines in good faith that such
registration might interfere with or affect negotiation or completion of a
transactions that is being contemplated by the Company (whether or not a final
decision has been made to undertake such a transaction) or would involve
disclosure obligations that might not be in the best interest of the Company's
shareholders, and (c) the Company shall have the right to prohibit the sale of
the Securities pursuant to the Shelf Registration Statement, upon notice to the
Investor: (i) if in its good faith judgment, the Company would thereby be
required to disclose information not otherwise then required by law to be
publicly disclosed; and (ii) during the period starting with the date 10 days
prior to the Company's estimate of the date of filing of, and ending on a date
90 days after the effective date of, a Company-initiated registration.
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3.2 Registration Procedures. If the Company is required by the
provisions of Section 3.1 to register the Securities, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Shelf Registration
Statement with respect to the Securities and use its best efforts to
cause such Shelf Registration Statement to become and remain effective
for a period of time required for the disposition of the Securities by
the Investor;
(b) prepare and file with the Commission such amendments and
supplements to the Shelf Registration Statement and the prospectus used
in connection therewith as may be necessary to keep such Shelf
Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the sale or other disposition of the
Securities covered by the Shelf Registration Statement until such time
as all of such securities have been disposed of by the Investor;
(c) furnish the Investor such number of copies of a summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents, as the Investor may reasonably request;
(d) use its reasonable efforts to register or qualify the
Securities covered by the Shelf Registration Statement under such other
securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as the Investor shall reasonably request
(provided, however, the Company shall not be obligated to qualify as a
foreign corporation to do business under he laws of any jurisdiction in
which it is not then qualified or to file any general consent to
service or process),and do such other reasonable acts and things as may
be required of it to enable the Investor to consummate the disposition
in such jurisdiction of the securities covered by the Shelf
Registration Statement; and
(e) promptly notify in writing the Investor of the happening
of any event, during the period of distribution, as a result of which
the Shelf Registration Statement includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing (in which case, the Company
shall promptly provide the Investor with revised or supplemental
prospectuses and, if so requested by the Company in writing, the
Investor shall promptly take action to cease making any offers of the
Securities until receipt and distribution of such revised or
supplemental prospectuses).
3.3 Expenses. All expenses incurred in complying with this Agreement,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company shall be paid by the
Company' provided, however, that the Investor (and not the Company) shall be
liable for (i) all fees, discounts and commissions to any underwriter, if any,
and (ii) all fees and disbursements of legal counsel to the Investor, if any.
3.4 Certain Limitations on Registration Rights. The Company's
obligations under this Agreement are also expressly conditioned upon (i) the
Investor furnishing to the Company in writing such information concerning the
Investor and its controlling persons and the terms of the Investor's proposed
offering of Securities as the Company shall reasonably request for inclusion in
the Shelf Registration Statement; and (ii) there not having occurred a material
breach by the Investor of any agreement, covenant, representation or warranty
contained in this Agreement.
3.5 Public Information. During the Registration Period, the Company
shall make generally available to its securityholders the public information
contemplated under Rule 144(c) under the Securities Act.
SECTION 4 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents with respect to the Investor's purchase
of the Securities hereunder that:
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(a) The execution of this Agreement has been duly authorized
by all necessary corporate action on the part of the Investor, has been
duly executed and delivered, and constitutes a valid, binding and
enforceable agreement of the Investor, except as such enforceability
may be limited by bankruptcy laws and general principles of equity.
(b) The Investor is acquiring the Securities for its own
account, for investment, and not with a view to any "distribution"
thereof within the meaning of the Securities Act, and the Investor has
no present or presently contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
distribution thereof.
(c) The Investor understands that because the Securities have
not been registered under the Securities Act, it cannot dispose of any
or all of the Securities unless the relevant shares are subsequently
registered under the Securities Act or exemptions from such
registration are available. The Investor understands that each
certificate representing the Securities will bear the following legend
or one substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"). These
securities have been acquired for investment and not with a
view to distribution or resale, and may not be sold,
mortgaged, pledged, hypothecated or otherwise transferred
without an effective registration statement for such
securities under the Act or an opinion of counsel satisfactory
to the Company is obtained to the effect that an exemption
from such registration requirements is available.
(d) The Investor is sufficiently knowledgeable and experienced
in the making of investments so as to be able to evaluate the risks and
merits of its investment in the Company, and is able to bear the
economic risk of loss of its investment in the Company.
(e) The Investor has been advised that the Securities have not
been and are not being registered under the Securities Act or under the
"blue sky" laws of any jurisdiction and that the Company in issuing the
Securities is relying upon, among other things, the representations and
warranties of the Investor contained in this Section 4.
(f) The Investor acknowledges receipt of the Incorporated
Documents (and any other documents filed with the Commission previously
requested by the Investor) and the Offering Memorandum.
(g) The Investor has been afforded the opportunity to ask
questions of, and receive answers from, the Company and all of its
executed officers and directors and to obtain any additional
information, to the extent that the Company possesses such information
or could have acquired it, necessary to verify the accuracy of the
information contained in any documents delivered to the Investor
concerning the Company and has in general had access to all information
the Investor deemed material to an investment decision with respect to
the acquisition of the Securities.
(h) The Investor is an "accredited investor" as defined in
Rule 501 of Regulation D promulgated under the Securities Act.
SECTION 5 5. INDEMNIFICATION.
5.1 Survival of Representations and Warranties. All representations and
warranties made by each party in this Agreement shall survive the Closing Date
until the filing of the Company's Annual Report on Form 10-K for the
twelve-month period ending June 30, 1998.
5.2 Indemnification by the Company. The Company shall indemnify and
defend and hold harmless the Investor against and with respect to any and all
damages, claims, losses, penalties, liabilities, actions, fines,
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costs and expenses (including, without limitation, reasonable attorney's fees
and expenses) (all of the foregoing hereinafter collectively referred to as a
"Loss"), with respect to the following items: (i) any misrepresentation or
breach of warranty or covenant by the Company under this Agreement; or (ii) any
untrue statement of a material fact contained in the registration statement
referenced in Section 3 hereof, or the omission therefrom of a material fact
necessary to make statements therein, in light of the circumstances under which
they were made, not misleading (other than statements provided by the Investor).
5.3 Indemnification by Investor. The Investor shall indemnify and
defend and hold harmless the Company against any Losses with respect to any
misrepresentation or breach of warranty or covenant by the Investor under this
Agreement.
SECTION 6 6. DEFINITIONS
As used herein, the following terms shall have the following respective
meanings:
Common Stock. "Common Stock" shall have the meaning ascribed
to such term in Section 1.1 hereof.
Closing. "Closing" shall have the meaning ascribed to such
term in Section 1.3 hereof.
Closing Date. "Closing Date" shall have the meaning ascribed
to such term in Section 1.3 hereof.
Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
Company. "Company" shall have the meaning ascribed to such
term in the preamble hereof.
Commission. "Commission" means the Securities and Exchange
Commission.
Continucare. "Continucare" means Continucare Corporation, a
Florida corporation.
Exchange Act. "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
Excluded Issuances. "Excluded Issuances" shall have the
meaning ascribed to such term in Section 2.9 hereof.
GAAP. "GAAP" means generally accepted accounting principles.
Incorporated Documents. "Incorporated Documents" shall mean the
Company's most recent Annual Report on Form 10-KSB filed with the Commission and
each Form 10-QSB Quarterly Report and each Current Report on Form 8-K filed with
the Commission since the end of the fiscal year to which such Annual Report
relates, including any amendments thereto.
Investor. "Investor" shall have the meaning ascribed to such term in
the preamble hereof, together with any permitted assignees or transferees
thereof pursuant to the terms hereof.
Loss. "Loss" shall have the meaning ascribed to such term in Section
5.2 hereof.
Material Adverse Change or Material Adverse Effect. "Material Adverse
Change" or "Material Adverse Effect" shall mean a material adverse effect on the
business or financial condition of the Company and its subsidiaries, taken as a
whole.
Offering Memorandum. "Offering Memorandum" shall mean the certain
Offering Memorandum, dated October 27, 1997, relating to the private placement
of $46,000,000 of 8% Convertible Subordinated Notes due 2002.
Registrable Securities. "Registrable Securities" means the Securities,
provided, that, a Security shall cease to be a Registrable Security when (i) a
registration statement with respect to such Security has been
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declared effective under the Securities Act and such Security has been disposed
of pursuant to the registration statement, (ii) such Security has been sold to
the public pursuant to Rule 144 (or similar provision then in force) under the
Securities Act, or (iii) such Security shall cease to be outstanding.
Registration Period. "Registration Period" shall have the meaning
ascribed to such term in Section 3.1 hereof.
Securities. "Securities" shall have the meaning ascribed to such term
in Section 1.3 hereof.
Securities Act. "Securities Act" means the Securities Act of 1933, as
amended.
Shelf Registration Statement. "Shelf Registration Statement" shall have
the meaning ascribed to such term in Section 3 hereof.
SECTION 7 7. GENERAL
7.1 Amendments, Waivers and Consents. No failure or delay on the part
of any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. The remedies provided for herein are cumulative and
are not exclusive of any remedies that may be available to any party hereto at
law or in equity or otherwise. This Agreement may be amended only with the prior
written consent of the Company and the Investor.
7.2 Governing Law. This Agreement shall be deemed to be a contract made
under, and shall be construed in accordance with, the laws of the State of
Florida, without giving effect to conflicts of laws principles thereof.
7.3 Section Headings. The descriptive headings in this Agreement have
been inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provision thereof or hereof.
7.4 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
7.5 Notices and Demands. Any notice or demand which is required or
provided to be given under this Agreement shall be deemed to have been
sufficiently given and received for all purposes when received and may be
delivered by hand, telecopy, telex or other method of facsimile, certified or
registered mail, postage and charges prepaid, return receipt requested, or by
overnight delivery, in the case of the Investor, to Kaya Flamboyan, Willemstad,
Curacao, N.A., Attention: President, and in the case of Continucare, to
Continucare Corporation, 000 X.X. Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxx, Xxxxxxx
00000, Attention: President.
7.6 Severability. Each provision of this Agreement shall be interpreted
in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be deemed prohibited or invalid under such
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, and such prohibition or invalidity shall not
invalidate the remainder of such provision or the other provisions of this
Agreement.
7.7 Integration. This Agreement, including the exhibits, documents and
instruments referred to herein or therein, constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, including, without
limitation, the letter of intent between the parties hereto in respect of the
transactions contemplated herein.
7.8 Brokers. Each party represents that, except for Xxxxxxx & X.
Xxxxxxxxxxxx, Inc. (the "Broker"), no broker, finder, agent or similar
intermediary has acted on behalf of the Company or the Investor
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in connection with this Agreement or the transactions contemplated hereby. Each
party represents that, other than commissions or fees payable to the Broker
(which commissions and fees shall be the sole responsibility of Continucare),
there are no brokerage commissions, finder's fees or similar fees or commissions
payable in connection with the sale of the Securities.
7.9 Publicity. The Company shall not issue any public release or
announcement concerning this Agreement or the transactions contemplated hereby
that identifies the Investor without the prior consent of the Investor, except
as required by law (in which case, so far as possible, there shall be
consultation between the parties prior to such announcement).
7.10 Expenses. Each party shall bear its own expenses with respect to
the transactions contemplated hereby; provided, that, the Company agrees to pay
the reasonable attorneys fees of counsel to the Investor, up to a maximum amount
of $10,000.
* * * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Investment
and Registration Rights Agreement on the date first written above.
CONTINUCARE CORPORATION
By:/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
STRATEGIC INVESTMENTS
PARTNERS, LTD.
By:/s/ Xxxxxxx X. Xxxx
Attorney-in Fact
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