ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
METROPOLITAN HEALTH NETWORKS, INC.
Pursuant to Section 607.10025 of the Business Corporation Act of the
State of Florida, the undersigned President of METROPOLITAN HEALTH NETWORKS,
INC., a corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida ("Corporation"), bearing document number
P96000004953, does hereby certify that the following is a true and correct copy
of resolutions duly adopted by the Board of Directors of the Company (the "Board
of Directors") by unanimous written consent dated July 28, 1997, which
constituted all requisite action on the part of the Company for adoption of such
resolutions.
WHEREAS, the Articles of Incorporation of the Corporation
authorizes 10,000,000 shares of preferred stock, par value $.001 per share, of
which no shares are issued and outstanding.
WHEREAS, the Board of Directors is authorized at any time and
from time to time, to provide for the issuance of shares of preferred stock in
one or more series, with such voting powers, full or limited, or without voting
powers, and with such designations, preferences and relations, participating,
optional or other special rights, qualifications, limitations or restrictions
thereof.
WHEREAS, the Board of Directors desires, pursuant to its
authority as aforesaid, to designate a new series of preferred stock, set the
number of shares constituting such series and fix the rights, preferences,
privileges and restrictions of such series.
Roxanne K. Beilly, Esq., FL Bar # 851450
Atlas, Pearlman, Trop & Borkson, P.A.
200 E Las Olas Blvd., Suite 1900
Ft. Lauderdale, FL 33301
(954) 763-1200
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
hereby designates a new series of preferred stock and, in accordance therewith,
Article III entitled, "Capital Stock" of the Articles of Incorporation of this
Corporation is revised to include the number of shares constituting such series
and the rights, preferences, privileges and restrictions relating to such series
as follows:
C. Series A Preferred Stock.
1. Designation and Number of Shares. The Preferred Stock shall
be designated "Series A Convertible Stock" of a par value of $.001 per
share, and the number of shares constituting the Series A Preferred
Stock shall be 30,000 shares.
2. Dividend Rights. Holders of the Series A Preferred Stock
shall be entitled to receive, when and as declared by the Board of
Directors out of funds legally available therefor, and the Company
shall pay, cumulative dividends at the rate per share, as a percentage
of the stated value of $100.00 per share ("Stated Value") equal to 10%
percent per annum ("Initial Dividends"), payable, in cash or shares of
Common Stock (subject to the terms and conditions hereof) at the option
of the Company quarterly in arrears, but in no event later than
conversion applicable to such share of Series A Preferred Stock.
Dividends on the Series A Preferred Stock shall be calculated on the
basis of a 360-day year, shall accrue daily commencing the date of
issuance and shall be deemed to accrue on such date whether or not
earned or declared and whether or not there are profits, surplus or
other funds of the Company legally available for the payment of
dividends.
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The party that holds the Series A Preferred Stock of record on an
applicable record date for any dividend payment will be entitled to
receive such dividend payment and any other accrued and unpaid
dividends which accrued prior to such dividend payment date, without
regard to any sale or disposition of such Series A Preferred Stock
subsequent to the applicable record date but prior to the applicable
dividend payment date. Except as otherwise provided herein, if at any
time the Company pays less than the total amount of dividends then
accrued on account of the Preferred Stock, such payment shall be
distributed ratably among the holders of the Preferred Stock based upon
the number of shares held by each holder.
3. Conversion.
(a) Each share of Series A Preferred Stock shall be
convertible into shares of Common Stock at the Conversion Ratio (as
defined herein) at the option of the holder in whole or in part as at
any time, commencing seven months after the date of issuance.
"Conversion Ratio" means, at any time, a fraction, of which the
numerator is Stated Value plus accrued but unpaid dividends (including
any accrued but unpaid interest thereon) but only to the extent not
paid in shares of Common Stock in accordance with the terms hereof, and
of which the denominator is the Conversion Price at such time. The
holder shall effect conversions by surrendering the certificate or
certificates representing the shares of Series A Preferred Stock to be
converted to the legal counsel for the Company, with a copy thereof to
the Company,
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together with the form of conversion notice attached hereto as Exhibit
A (the "Conversion Notice"), provided, however, that the holder shall
not convert more than 7,500 shares of Series A Preferred Stock in any
one quarter. Each Conversion Notice shall specify the number of shares
of Series A Preferred Stock to be converted and the date on which such
conversion is to be effected, which date may not be prior to the date
the holder delivers such Conversion Notice by facsimile (the
"Conversion Date"). If no Conversion Date is specified in a Conversion
Notice, the Conversion Date shall be the date that the Conversion
Notice is delivered. Each Conversion Notice, once given, shall be
irrevocable. If the holder is converting less than all shares of Series
A Preferred Stock represented by the certificate or certificates
tendered by the holder with the Conversion Notice, or if a conversion
hereunder cannot be effected in full for any reason, the Company shall
convert up to the number of shares of Series A Preferred Stock which
can be so converted and shall promptly deliver to such holder a
certificate for such number of shares as have not been converted.
Notwithstanding anything to the contrary contained herein, the Company
shall have the right to deny conversion of the Series A Preferred
Stock, at which time the holder shall be entitled to receive and the
Company shall pay additional cumulative dividends at the rate per share
(as a percentage of the Stated Value) equal to 5% per annum, and
together with the Initial Dividend rate, to equal fifteen (15%) percent
per annum payable under the same terms as the Initial Dividends. No
fractional share or scrip representing a fractional share
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will be issued upon conversion of the Series A Preferred Stock. In the
event of any reclassification, merger, consolidation or change of
shares of the Series A Preferred Stock and/or the Common Stock of the
Corporation, the Corporation shall make adjustments to the conversion
ratio which shall be as nearly equivalent to that stated above as may
be practical.
(b) The conversion price for each share of Series A Preferred
Stock (the "Conversion Price") in effect on any Conversion Date shall
be the lesser of (a) 85% of the average closing bid price of the Common
Stock reported by the principal exchange on which the Common Stock is
traded, the NASDAQ Small Cap Market or any other exchange the Common
Stock is then traded, for the ten (10) trading days immediately
preceding the Conversion Date, or (b) $6.00.
(c) The Company covenants that it will at all times reserve
and keep available out of its authorized and unissued Common Stock
solely for the purpose of issuance upon conversion of Preferred Stock
and payment of dividends on Preferred Stock, each as herein provided,
free from preemptive rights or any other actual contingent purchase
rights of persons other than the holders of Preferred Stock, not less
than such number of shares of Common Stock as shall (subject to any
additional requirements of the Company as to reservation of such shares
set forth in the Purchase Agreement) be issuable upon the conversion of
all outstanding shares of Preferred Stock and payment of dividends
hereunder. The Company covenants that all shares of Common Stock
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that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid, nonassessable and freely tradeable.
(d) The Conversion Price will be subject to adjustment in
certain events, including (i) the issuance of capital stock as a
dividend or distribution on Common Stock, (ii) subdivision,
combinations, reverse stock splits and reclassification of the Common
Stock, (iii) the fixing of a record date for the issuance to all
holders of Common Stock of rights or warrants entitling them (for a
period expiring within 45 days of such record date) to subscribe for
Common Stock and (iv) the fixing of a record date for the distribution
to all holders of Common Stock of evidence of indebtedness or assets
(other than cash dividends) of the Corporation or subscription rights
or warrants (other than those referred to above).
(e) Shares of Series A Preferred Stock converted into Common
Stock shall be canceled and shall have the status of authorized but
unissued shares of undesignated preferred stock.
4. Redemption. The Company shall have the right, exercisable
at any time upon 10 trading days notice to the holders of the Series A
Preferred Stock given at any time after the expiration of two years
after the date of issuance to redeem, from funds legally available
therefor at the time of such redemption, all or any portion of the
shares of Series A Preferred Stock which have not previously been
converted or redeemed, at a price equal to 105% of the product of (i)
the number
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of shares of Preferred Stock then held by the holder, and (ii) the
Stated Value.
5. Voting Rights. Except as provided by law, the Series A
Preferred Stock shall not be entitled to vote on matters submitted to a
vote of the shareholders of the Corporation. Unless the vote or consent
of the holders of a greater number of shares is required by law, the
consent of the holders of at least a majority of all of the Series A
Preferred Stock at the time outstanding shall be necessary to change,
alter or revoke the rights and preferences conferred on the Series A
Preferred Stock by the Articles of Incorporation or to adopt any
amendment to the Articles of Incorporation materially adversely
affecting the rights of the holders of the Series A Preferred Stock.
6. Liquidation Rights. In the event of any liquidation,
dissolution or winding up of the Corporation, holders of the Series A
Preferred Stock shall be entitled to receive, after due payment or
provision for payment for the debts and other liabilities of the
Corporation, a liquidating distribution before any distribution may be
made to holders of Common Stock of the Corporation. The holders of the
Series A Preferred Stock outstanding shall be entitled to receive an
amount equal to the Stated Value, plus declared dividends to the date
of the final distribution, whether or not such liquidation, dissolution
or winding up is voluntary or involuntary on the part of the
Corporation.
7. Miscellaneous. The Series A Preferred Stock has no
preemptive rights. The Corporation reserves the right to issue up to an
additional
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9,970,000 shares of preferred stock, representing the balance of the
authorized preferred stock, with designations and preferences as the
Board of Directors shall determine. The Series A Preferred Stock and
the Common Stock into which such Series A Preferred Stock is
convertible, when issued will be legally issued, fully paid and
non-assessable.
IN WITNESS WHEREOF, the undersigned, being the President of
this Corporation, has executed these Articles of Amendment as of July
29, 1997.
METROPOLITAN HEALTH NETWORKS, INC.
By: /s/ Noel J. Guillama
----------------------------------------
Noel J. Guillama, Chairman and President
By: /s/ Donald Cohen
----------------------------------------
Donald Cohen, Secretary
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EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert shares of Preferred Stock)
The undersigned hereby elects to convert the number of shares of Series A
Convertible Preferred Stock indicated below, into shares of Common Stock, par
value $.01 per share (the "Common Stock"), of Metropolitan Health Networks, Inc.
(the "Company") according to the conditions hereof, as of the date written
below. If shares are to be issued in the name of a person other than
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.
Conversion calculations:
___________________________________________________
Date to Effect Conversion
___________________________________________________
Number of shares of Preferred Stock to be Converted
___________________________________________________
Number of shares of Common Stock to be Issued
___________________________________________________
Applicable Conversion Price
___________________________________________________
Signature
___________________________________________________
Name
___________________________________________________
Address
The Company undertakes to promptly upon its receipt of this conversion notice
(and, in any case prior to the time it effects the conversion requested hereby),
notify the converting holder by facsimile of the number of shares of Common
Stock outstanding on such date and the number of shares of Common Stock which
would be issuable to the holder if the conversion requested in this conversion
notice were effected in full, whereupon, if the Company determines that such
conversion would result in it owning in excess of 4.9% of the outstanding shares
of Common Stock on such date, the Company shall convert up to an amount equal to
4.9% of the outstanding shares of Common Stock and issue to the holder one or
more certificates representing shares of Preferred Stock which have not been
converted as a result of this provision.
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