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EXHIBIT 99.1
December 9, 1999
Continucare Corporation
100 Southeast 2nd Street; 36th Floor
Miami, FL 33131
Attention: General Counsel
American Stock Transfer & Trust Company, as Trustee
40 Wall Street
New York, NY 10005
Attention: Corporate Trust Department
Re: 8% CONVERTIBLE SUBORDINATED NOTES DUE 2002 (THE "SECURITIES"),
ISSUED BY CONTINUCARE CORPORATION (THE "COMPANY")
--------------------------------------------------------------
Gentlemen:
Each of the undersigned (collectively, the "SECURITYHOLDERS")
represents that (i) it is the beneficial owner of the principal amount of
Securities set forth below under its signature block and (ii) set forth below
its signature block is the DTC Participant of such Securityholder for purposes
of the Securities. Each of the Securityholders acknowledges and agrees that the
Trustee may expressly rely on the foregoing representations in connection with
this consent letter and agreement and the First Supplemental Indenture (defined
below). In the aggregate, the undersigned constitute the holders of all of the
Securities outstanding.
Reference is hereby made to that certain Indenture between the Company,
as issuer, and American Stock Transfer & Trust Company, as Trustee (the
"TRUSTEE"), dated as of October 30, 1997 (as the same may heretofore have been
or may hereafter be amended, supplemented or otherwise modified, the
"INDENTURE"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned thereto in the Indenture.
The Company has requested that each of the Securityholders consent to
the execution and delivery of a First Supplemental Indenture, a form of which is
attached hereto as EXHIBIT A (the "FIRST SUPPLEMENTAL INDENTURE"), which will,
among other things, waive payments of interest on the Securities due and owing
by the Company as of April 30, 1999 and October 31, 1999, and reduce the rate at
which the Securities bear interest. In addition, the Company has requested that
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each of the Securityholders agree, subject to the effectiveness of the First
Supplemental Indenture and the accuracy of the warranties of the Company set
forth therein, to convert, no later than twenty (20) days following the date
upon which all of the conditions precedent under the First Supplemental
Indenture have been met (the "EFFECTIVE DATE") and in accordance with the
procedures set forth in Article XV of the Indenture, its pro-rata share of
$31,000,000 principal amount of Securities into fully-paid, nonassessable shares
of Common Stock of the Company at a Conversion Price of $2.00 (the
"CONVERSION").
Pursuant to and in accordance with Article IX of the Indenture, each of
the Securityholders hereby (i) consents to the execution and delivery of the
First Supplemental Indenture by the Company and the Trustee for, among other
things, the purposes described above, and (ii) directs and instructs the Trustee
to execute and deliver the First Supplemental Indenture. In addition, subject to
the effectiveness of the First Supplemental Indenture and the accuracy of the
warranties of the Company set forth therein, each of the Securityholders hereby
agrees to make the Conversion no later than twenty (20) days following the
Effective Date in accordance with and pursuant and subject to the provisions of
Article XV of the Indenture at a Conversion Price of $2.00.
The Securityholders hereby acknowledge that they have received the
advice of counsel regarding this consent letter and agreement, and that no
consideration has or shall be provided in connection with this consent letter
and agreement. The consent of the Securityholders under this consent letter and
agreement shall be irrevocable, and in connection herewith each of the
Securityholders hereby waives any right of revocation it may have under Section
7.5 of the Indenture. This consent letter and agreement may be executed by the
Securityholders and the Company in counterparts.
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Very Truly Yours,
CARRET & COMPANY
By: /s/ Michael A. Nicolais
-----------------------------
Name: Michael A. Nicolais
Title: Consultant
Par Amount: $2,000,000
DTC PARTICIPANT: BT Alex Brown
(#0573)
FRANKLIN VALUEMARK FUND
By: /s/ Matt Avery
-----------------------------
Name: Matt Avery
----------------------------
Title: SVP Portfolio Manager
---------------------------
Par Amount: $9,500,000
DTC PARTICIPANT: Bank of New York
(#901)
FRANKLIN INCOME FUND
By: /s/ Matt Avery
-----------------------------
Name: Matt Avery
----------------------------
Title: SVP Portfolio Manager
---------------------------
Par Amount: $9,500,000
DTC PARTICIPANT: Bank of New York
(#901)
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PECKS MANAGEMENT
PARTNERS LTD.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Par Amount: $0
DTC PARTICIPANT:
----------------
(#______)
AXP BOND FUND, INC.
By: /s/ Fredrick C. Quirsfeld
-----------------------------
Name: Fredrick C. Quirsfeld
---------------------------
Title: Vice President
--------------------------
Par Amount: $2,500,000
DTC PARTICIPANT: US Bank (Trust) National
Association
(#2839)
AXP VARIABLE PORTFOLIO -
BOND FUND
By: /s/ Fredrick C. Quirsfeld
-----------------------------
Name: Fredrick C. Quirsfeld
---------------------------
Title: Vice President
--------------------------
Par Amount: $1,000,000
DTC PARTICIPANT: American Express Trust
Company
(#2146)
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AXP VARIABLE PORTFOLIO - MANAGED FUND
By: /s/ Fredrick C. Quirsfeld
------------------------------------
Name: Fredrick C. Quirsfeld
----------------------------------
Title: Vice President
---------------------------------
Par Amount: $1,000,000
DTC PARTICIPANT: American Express Trust
Company
(#2146)
MORGAN STANLEY DEAN WITTER
CONVERTIBLE SECURITIES TRUST
By: /s/ Ellen Gold
------------------------------------
Name: Ellen Gold
----------------------------------
Title: Vice President Portfolio Manager
---------------------------------
Par Amount: $2,000,000
DTC PARTICIPANT: Bank of New York
(#901)
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DELAWARE STATE EMPLOYEES
RETIREMENT FUND
By: Pecks Management Partners Ltd.
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------------
Name: Robert J. Cresci
-------------------------------
Title: Principal
------------------------------
Par Amount: $8,335,000
DTC PARTICIPANT: Mercantile Safe Deposit
& Trust (#976)
DECLARATION OF TRUST FOR THE DEFINED
BENEFIT PLANS OF ICI AMERICAN
HOLDINGS, INC.
By: Pecks Management Partners Ltd.
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------------
Name: Robert J. Cresci
-------------------------------
Title: Principal
------------------------------
Par Amount: $2,440,000
DTC PARTICIPANT: State Street Bank (#997)
DECLARATION OF TRUST FOR THE DEFINED
BENEFIT PLANS OF ZENECA HOLDINGS, INC.
By: Pecks Management Partners Ltd.
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------------
Name: Robert J. Cresci
-------------------------------
Title: Principal
------------------------------
Par Amount: $1,685,000
DTC PARTICIPANT: State Street Bank (#997)
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THE J.W. MCCONNELL FAMILY
FOUNDATION
By: Pecks Management Partners Ltd.
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------
Name: Robert J. Cresci
-------------------------
Title: Principal
------------------------
Par Amount: $1,040,000
DTC PARTICIPANT: Bank of New York
(#901)
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Acknowledged and Agreed:
CONTINUCARE CORPORATION
By: /s/ Spencer J. Angel
---------------------------
Name: Spencer Angel
-------------------------
Title: President
------------------------
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EXHIBIT A
8%
Convertible Subordinated Notes
due 2002
- --------------------------------------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
dated as of January, 4, 2000
to
INDENTURE
dated as of October 30, 1997
- --------------------------------------------------------------------------------
CONTINUCARE CORPORATION, as Issuer
and
AMERICAN STOCK TRANSFER
& TRUST COMPANY, as Trustee
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THIS FIRST SUPPLEMENTAL INDENTURE to the Indenture (as defined below)
(this "FIRST SUPPLEMENTAL INDENTURE") is dated as of January 4, 2000, 1999, and
is made between Continucare Corporation, a Florida corporation (the "COMPANY")
and American Stock Transfer & Trust Company, a New York corporation, as trustee
(the "TRUSTEE").
RECITALS:
A. Pursuant to an Indenture dated as of October 30, 1997 between the
Company and the Trustee (as the same may heretofore have been or may hereafter
be amended, supplemented or otherwise modified, the "INDENTURE"), the Company
issued its 8% Convertible Subordinated Notes due 2002 (the "SECURITIES").
B. Capitalized terms used herein without definition shall have the
meanings assigned to them in the Indenture.
C. Section 9.2 of the Indenture provides that the Company and the
Trustee, upon the written consent of the holders of each of the then outstanding
Securities, may amend or supplement the Securities and the Indenture.
D. The Company (subject to SECTION 3(c) below) and the Trustee (subject
to SECTION 3(a) below) are duly authorized to execute and deliver this First
Supplemental Indenture pursuant to Article IX of the Indenture.
E. All of the conditions and requirements necessary to make this First
Supplemental Indenture, when duly executed and delivered, a valid and binding
agreement, enforceable in accordance with its terms (subject to the satisfaction
of the conditions set forth in SECTION 3 below), have been performed and
fulfilled.
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NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, it is hereby agreed (subject to the satisfaction of the
conditions set forth in SECTION 3 below and in reliance upon the warranties set
forth in SECTION 4 below) as follows:
1. AMENDMENTS. Pursuant to Section 9.2 of the Indenture, the Indenture
is hereby amended as follows:
(a) The following defined term is hereby added to Section 1.1
of the Indenture in its appropriate alphabetical order:
" "Consent Letter and Agreement" shall mean that certain
Consent Letter and Agreement, dated as of December 9, 1999, between
each of the holders of the Securities, the Company and the Trustee. "
(b) Section 2.6(a) of the Indenture is hereby amended by
adding the following proviso at the end thereof:
" ; PROVIDED that notwithstanding anything to the contrary
contained herein or in the Securities, from November 1, 1999
through and including the Maturity Date, each Security will
bear interest at the rate of 7% per annum. "
(c) The second paragraph of Section 15.1 of the Indenture is
hereby amended and restated as follows:
" The initial Conversion Price is stated in the Securities and
is subject to adjustment as provided in this Article Fifteen.
Notwithstanding anything to the contrary contained herein or
in the Securities, (a) with respect to an aggregate
$31,000,000 in principal amount of the Securities, the
Conversion Price shall be as provided in the Consent Letter
and Agreement, (b) from the date of this First Supplemental
Indenture through and including October 31, 2000, the
Conversion Price shall be equal to $7.25 (the "Interim
Conversion Price"), and (c) from November 1, 2000 through and
including the Maturity Date, the Conversion Price shall be
equal to $2.00 (the "Reduced Conversion Price). The Interim
Conversion Price and the Reduced Conversion Price shall be
subject to adjustment as provided in this Article Fifteen;
PROVIDED that (i) the Interim Conversion Price shall in no
event be greater than $7.25 and (ii) the Reduced Conversion
Price shall in no event be greater than $2.00. "
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2. WAIVERS.
2.1 For purposes of this First Supplemental Indenture, (a) the
"EXISTING EVENT OF DEFAULT" shall mean the Event of Default existing as of the
date of this First Supplemental Indenture under Section 5.1(b) of the Indenture
and arising from the failure by the Company to make the payment of interest on
the Securities due and owing as of April 30, 1999, and (b) the "EXISTING
DEFAULT" shall mean the Default existing as of the date of this First
Supplemental Indenture under Section 3.1 of the Indenture and arising from the
failure by the Company to make the payment of interest on the Securities due and
owing as of October 31, 1999.
2.2 Subject to and upon the terms and conditions hereof, the Trustee
hereby waives the Existing Event of Default, the Existing Default and any Event
of Default which would arise from the Existing Default.
2.3 Except as specifically set forth herein, nothing contained in this
First Supplemental Indenture shall be deemed a waiver of (or otherwise affect
the Trustee's ability to enforce) any other Default or Event of Default,
including, without limitation, any Default or Event of Default arising at any
time after the date of this First Supplemental Indenture.
3. CONDITIONS PRECEDENT. As a condition precedent to the effectiveness
of this First Supplemental Indenture and the terms hereof, each of the following
shall have occurred prior to February 15, 2000:
(a) the Consent Letter and Agreement shall have been executed and
delivered by each of the holders of the outstanding Securities;
(b) the Company shall have procured a loan from a financial
institution, which shall be guaranteed by guarantors reasonably acceptable to
the holders of the Securities and in an amount not less than $3,000,000, upon
terms and conditions reasonably satisfactory to the Company and a majority of
the holders of the Securities;
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(c) in accordance with and to the extent required by the Company's
organizational documents or the Florida Business Corporation Act, this First
Supplemental Indenture and the transactions contemplated hereby shall have been
approved by the holders of the Company's common stock;
(d) this First Supplemental Indenture shall have been executed and
delivered by each of the parties hereto; and
(e) the number of directors on the Company's Board of Directors shall
have been increased to five (5), two (2) of which directors shall have been
designated by the holders of the Securities (the "Holder Directors").
If any of the foregoing conditions precedent has not been satisfied
prior to February 15, 2000, this First Supplemental Indenture shall become null
and void and be of no further force and effect. On the date that is the earlier
of (i) the date upon which each condition precedent set forth in this Section 3
has been satisfied, and (ii) February 15, 2000, the Company shall deliver a
certificate to the Trustee (upon which the Trustee may conclusively rely) which
certifies as to the whether or not each condition precedent set forth in this
Section 3 has been satisfied.
4. WARRANTIES. The Company hereby warrants as of the date hereof that:
(a) Subject to SECTION 3(c), the Company has full power and authority
(including full corporate power and authority) to execute and deliver this First
Supplemental Indenture and to perform its obligations hereunder, and assuming
the due authorization, execution and delivery of this Agreement by the Trustee,
this First Supplemental Indenture constitutes the valid and legally binding
obligation of the Company, enforceable in accordance with its terms and
conditions, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the rights and
remedies of creditors generally and principles of equity;
(b) After giving effect to this First Supplemental Indenture, no
Default or Event of Default (other than the Existing Default and the Existing
Event of Default) has occurred and is continuing; and
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(c) It has entered into a valid and binding agreement with certain
holders of the Securities to promptly increase the number of directors on the
Company's Board of Directors to seven (7), three (3) of which directors shall be
Charles Fernandez, Phillip Frost and Spencer Angel, two (2) of which directors
shall be the Holder Directors, and the final two (2) of which directors shall be
elected by the Company's Board of Directors and approved by the Holder
Directors.
5. RESERVATION OF RIGHTS. The Trustee hereby expressly reserves all
rights granted to the Trustee under the Indenture.
6. FULL FORCE AND EFFECT. As hereby modified, the Indenture shall
remain in full force and effect and is hereby ratified, approved and confirmed
in all respects.
7. COUNTERPARTS. This First Supplemental Indenture may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute the instrument by
signing such counterpart.
8. GOVERNING LAW. THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
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IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized as of the day and the year first-above
written.
CONTINUCARE CORPORATION
By: /s/ Spencer Angel
------------------------------
Name: Spencer Angel
-----------------------------
Title: President
----------------------------
Attest:
/s/ Aimee Rodriguez
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AMERICAN STOCK TRANSFER
& TRUST COMPANY, as Trustee
By: /s/ Herbert J. Lemmer
------------------------------
Name: Herbert J. Lemmer
-----------------------------
Title: Vice President
----------------------------
Attest:
/s/ Susan Silber
- ----------------------------------