SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ( X )
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted by
( X ) Definitive Proxy Statement Rule 14a-6(e)(2))
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Metropolitan Health Networks, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
( X ) No fee required.
( ) Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
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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
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( ) Fee paid previously with preliminary materials.
( ) 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
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METROPOLITAN HEALTH NETWORKS, INC.
500 AUSTRALIAN AVENUE SOUTH, SUITE 1000
WEST PALM BEACH, FLORIDA 33401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2001
To the Stockholders of Metropolitan Health Networks, Inc:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders
(the "Annual Meeting") of Metropolitan Health Networks, Inc., a Florida
corporation (the "Company"), will be held at 9:00 a.m., local time, on May 24,
2001 at the Crowne Plaza Hotel, 1601 Belvedere Road, West Palm Beach, Florida,
for the following purposes:
1. To elect seven (7) members to the Company's Board of Directors
to hold office until the Company's 2002 Annual Meeting of
Stockholders or until their successors are duly elected and
qualified;
2. To consider and vote upon a proposal to amend the Company's
Articles of Incorporation to increase the number of authorized
shares of Common Stock from 40,000,000 to 80,000,000.
3. To consider and vote upon a proposed Employee Stock Option
Plan.
4. To ratify the appointment of Kaufman Rossin & Company as the
independent auditors of the Company to serve at the pleasure
of the Board;
5. To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
All stockholders are cordially invited to attend; however, only
stockholders of record at the close of business on April 17, 2001 are entitled
to vote at the Annual Meeting or any adjournments thereof.
A list of stockholders entitled to vote at the Annual Meeting will be
available for examination by any stockholder for the proper purpose during
normal business hours at the offices of the Company for a period of at least ten
(10) days preceding the Annual Meeting.
The Board of Directors recommends that you vote FOR the Board's
nominees for director, the increase in the number of shares, the approval of the
Employee Stock Option Plan and the ratification of the appointment of the
independent auditors.
By Order of the Board of Directors
FRED STERNBERG
Chairman of the Board
West Palm Beach, Florida
April 18, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
2001 ANNUAL MEETING OF STOCKHOLDERS
OF
METROPOLITAN HEALTH NETWORKS, INC.
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PROXY STATEMENT
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INTRODUCTION
The accompanying proxy is solicited by the Board of Directors (the
"Board") of Metropolitan Health Networks, Inc. (the "Company") to be voted at
the Annual Meeting of Shareholders to be held on May 24, 2001 (the "Annual
Meeting"), and any adjournments thereof. When such proxy is properly executed
and returned, the shares it represents will be voted at the meeting as directed.
If no specifications are indicated, the shares will be voted in accordance with
the recommendation of the Board with respect to each matter submitted to the
Company's shareholders for approval. Abstentions and broker non-votes will not
be voted, but will be counted for determining the presence of a quorum and will
have the effect of a negative vote for an increase in the number of authorized
shares. Any stockholder giving a proxy has the power to revoke it prior to its
exercise by notice of revocation the Company in writing, by voting in person at
the Annual Meeting or by execution of a subsequent proxy; provided, however,
that such action must be taken in sufficient time to permit the necessary
examination and tabulation of the subsequent proxy or revocation before the vote
is taken.
The shares entitled to vote at the Annual Meeting consist of shares of
the Company's Common Stock, with each share entitling the holder to one (1)
vote. At the close of business on April 17, 2001, the record date for the Annual
Meeting, there were issued and outstanding 24,462,686 shares of the Company's
Common Stock. This Proxy Statement and the accompanying form of proxy are first
being sent to stockholders on or about April 17, 2001.
In addition to the use of the mails, employees of the Company may make
solicitations by telephone, mailgram, facsimile, telegraph, cable and personal
interview. The Company shall bear all expenses for the solicitation of proxies
and has not retained a solicitation firm.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS
Seven (7) members of the Board will be elected at the Annual Meeting.
Directors elected at the Annual Meeting will serve until the next annual meeting
of shareholders or until their successors are elected and qualified. The eight
nominees receiving the greatest number of votes cast by the holders of the
Common Stock entitled to vote at the Annual Meeting will be elected directors of
the Company (assuming a quorum is present). The Company has no reason to believe
that any nominee of the Board will be unable to serve if elected. A vote FOR the
nominees includes discretionary authority to vote for a substitute nominee named
by the Board if any of the nominees becomes unable or unwilling to serve.
The following persons have been nominated by the Board for election to
the Board of Directors:
NAME AGE TITLE
---- --- -----
Fred Sternberg 60 Chairman and Chief Executive Officer
Michael Cahr (1) (2) 60 Director
Marvin Heiman (1) (2) 55 Director
Michael Earley 45 Director
Karl Sachs (2) 63 Director
Mark K. Gerstenfeld (1) 58 Director
Martin Harrison, MD 48 Director
(1) Member of the Executive Committee
(2) Member of the Audit and Compensation Committee
FRED STERNBERG has been a director and President of the Company since
January 2000. For more than twenty-five years prior thereto, Mr. Sternberg had
been involved in the healthcare industry, taking a dental manufacturing company
public in 1968 and providing consulting services relating to the PPM, MSO & DPM
industries; billings/collections; accounts receivables (AR) financing and mobile
diagnostics companies. Mr. Sternberg has also provided consulting services to
assisted care living facilities and skilled nursing homes.
MICHAEL CAHR has served as a director of the Company since February
2000. He is currently the Chief Executive Officer of IKADEGA a video server
technology company. Prior to joining IKADEGA, he was the Chairman of Allscripts,
Inc. a publicly traded prescription management company from September 1997
through March 1999. At Allscripts he successfully refocused the company to an
Internet-based technology company and raised $20 million, leading to a
successful IPO in 1999. Prior to Allscripts, Mr. Cahr was the Venture Group
Manager for Allstate Venture Capital where he oversaw investments of over $100
million in technology, healthcare services, biotech pharmaceuticals and medical
services. Mr. Cahr received his Bachelor of Arts degree in Economics from
Colgate University and Masters of Business Administration from Farleigh
Dickinson University.
MARVIN HEIMAN has served as a director of the Company since March 2000.
He is President and Chairman of the Board of Sussex Financial Group, Inc. and
Sussex Insurance Group, an asset money manager for hundreds of physicians in the
Chicago area. He also manages group health plans for many physician practices.
From 1970 to 1981 he was President of Curtom Record Company and Division
Vice-President of Curtom/Warner Bros. Record Company from 1975-1978. Mr. Heiman
is a licensed Broker/Dealer with NASD and licensed with the SEC. He is also a
member of the International Association for Financial Planners, Real Estate
Securities Syndication Association, a recognize Platinum member of the
International Association for Financial Planners, AIPAC and a member of the
International Platform Association. Mr. Heiman's biography appears in Who's Who
in America, Who's Who in Finance, Who's Who in Emerging Leaders in America, and
Men of Achievement 1990/91 Cambridge, England. He has also been the recipient of
the American Jewish Committee "Humanitarian" award in 1978. Mr. Heiman is also a
partner in the Chicago White Sox baseball team.
MICHAEL EARLEY has served as a Director of the Company since June 2000.
He is currently President of Collins Associates, an institutional money
management firm. He was previously a principal and owner of Triton Group
Management, Inc., which provided financial and management consulting services to
a variety of clients. From 1986 to 1997, he served in a number of senior
management roles including CEO and CFO of Intermark, Inc. and Triton Group Ltd.;
both publicly traded diversified holding companies. Mr. Earley received
undergraduate degrees in Accounting and Business Administration from the
University of San Diego. From 1978 to 1983, he was an audit and tax staff member
of Ernst & Whinney.
KARL SACHS, CPA has served as a Director of the Company since March
1999. He is a founding partner of the Miami-based public accounting firm of
Sachs & Focaracci, P.A. A certified public accountant for more than 21 years,
Mr. Sachs is a member of the American Institute of Certified Public Accountants,
Personal Financial Planning and Tax Sections; Florida Institute of Certified
Public Accountants; and the National Association of Certified Valuation
Analysts. The firm of Sachs & Focaracci, P.A. serves the financial and tax needs
of its diverse clients in addition to providing litigation support services. Mr.
Sachs is a qualified litigation expert for the U.S. Federal District Court, U.S.
District Court, U.S. Bankruptcy Court and Circuit Courts of Dade and Broward
Counties. He is a graduate of the University of Miami where he received his BS
in Business Administration. He also holds a Series 65 Securities License and a
Life Insurance and Annuity License.
DR. MARTIN HARRISON was appointed as a Director of the Company in
November 2000. He served as an advisor to the Board for the past year. He has
been practicing medicine in South Florida for the past 19 years and specializes
in preventive and occupational medicine. Dr. Harrison completed his
undergraduate training at the University of Illinois and postgraduate and
residency training at Johns Hopkins University, as well as his Masters in Public
Health. Dr. Harrison has also been on the Faculty of both the University and
Medical School. He is currently the owner of H30, Inc. a privately held Research
& Biomedical Company.
MARK GERSTENFELD has served as a Director of the Company since October
1998. In addition, Mr. Gerstenfeld has served from October of 1996 to present as
an advisor to the Company. Since 1986 Mr. Gerstenfeld has served as Vice
President of Sales at Action West in New York, NY. Mr. Gerstenfeld received a
Bachelor or Arts degree from Michigan State University in East Lansing Michigan
and a MBA in marketing and marketing research from City College of New York,
Baruch School of Business.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During the year ended December 31, 2000 the Company's Board of
Directors had fifteen meetings and took action fourteen additional times by
Unanimous Written Consent. Each member of the Board participated in each action
of the Board.
The Executive Committee may exercise the power of the Board of
Directors in the management of the business and affairs of the Corporation at
any time when the Board of Directors is not in session. The Executive Committee
shall, however, be subject to the specific direction of the Board of Directors
and all actions must be by unanimous vote. It is composed of Messrs. Cahr,
Gerstenfeld, and Heiman.
The Audit Committee, which consists of Messrs. Sachs, Cahr and Heiman
reviews the professional services provided by our independent auditors, the
independence of our auditors from our management, our annual financial
statements and our system of internal accounting controls. The Audit Committee
also reviews other matters with respect to our accounting, auditing and
financial reporting practices and procedures as it may find appropriate or may
be brought to its attention. The members of the Audit Committee are all
independent, as defined in the National Association of Securities Dealers'
listing standards. There was 1 meeting of the Audit Committee during 2000.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the financial reporting process, the system
of internal controls, and the audit process. The Audit Committee has not adopted
a written charter, which has been approved by the Board of Directors.
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management, which has primary responsibility for the
financial statements. The Audit Committee has discussed with Kaufman, Rossin &
Company, our independent auditors, the matters that are required to be discussed
by Statement of Auditing Standards No. 61 (COMMUNICATION WITH AUDIT COMMITTEES).
The Audit Committee received from Kaufman, Rossin & Company the written
disclosures required by Independence Standards Board Standard No.1 (INDEPENDENCE
DISCUSSIONS WITH AUDIT COMMITTEES), and discussed with Kaufman, Rossin & Company
their independence.
Based on the review and discussions noted above, the Audit Committee
recommended to the Board of Directors, and the Board has approved, that the
audited financial statements be included in our Annual Report on Form 10-KSB for
the year ended December 31, 2000, for filing with the Securities and Exchange
Commission, and that Kaufman, Rossin & Company be appointed independent auditors
for the Company for 2001.
Submitted by,
AUDIT COMMITTEE:
Karl Sachs
Marvin Heiman
Michael Cahr
DIRECTOR'S COMPENSATION
Directors who are not employees of the Company receive $18,000 per year
as compensation for serving on the Board of Directors. The Directors have
elected to receive this compensation for the present time in stock. Each outside
director also receives 40,000 options upon joining the Board, of which 20,000
vest immediately and the other 20,000 after one year. In addition, the Company
reimburses all Directors for reasonable out-of-pocket expenses incurred in
connection with their attendance at Board of Directors' meetings.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE DIRECTOR NOMINEES.
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE ARTICLES OF
INCORPORATION TO INCREASE AUTHORIZED
COMMON STOCK
On March 12, 2001, the Board of Directors approved a proposal to amend
the Company's Articles of Incorporation to increase the number of authorized
shares of Common Stock from 40,000,000 shares to 80,000,000 shares, and further
decreed that the proposal be submitted to the shareholders with the
recommendation that the amendment be approved. If the proposed amendment is
approved and adopted by the shareholders of Metropolitan Health Networks, Inc.,
the newly authorized shares of Common Stock will have voting and other rights
identical to the currently authorized shares of Common Stock. The text of the
proposed amendment is set forth in Appendix A attached to this Proxy Statement.
Of the 40,000,000 currently authorized shares of Common Stock,
24,462,686 shares were issued and outstanding as of April 17, 2001. As of April
17, 2001, an aggregate of 12.3 million additional shares of Common Stock had
been reserved for issuance as follows: (i) an aggregate of approximately 7.3
million shares of Common Stock issuable in connection with outstanding options
and warrants to purchase shares of Common Stock; (ii) an aggregate of
approximately 2.0 million shares of Common Stock issuable in connection with
options granted or to be granted under the Company's stock option plan, which
agreement is subject to shareholder approval, and (iii) an additional 3.0
million shares of common stock issuable in connection with a financing
transaction.
At this time, the Company has no present plans, understandings, or
agreements for the issuance or use of the proposed additional shares of Common
Stock. Nevertheless, the Board of Directors believes that the proposal is
desirable so that, as the need may arise, the Company will have more financial
flexibility and be able to issue shares of Common Stock, without the expense and
delay of a special shareholders' meeting, in connection with future
opportunities for expanding the business through investments or acquisitions,
equity financing, management incentive and employee benefit plans, and for other
purposes.
Authorized but unissued shares of the Company's Common Stock may be
issued at such times, for such purposes and for such consideration as the Board
of Directors may determine to be appropriate without further authority from the
Company's stockholders, except as otherwise required by applicable corporate law
or stock exchange policies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE ARTICLES OF
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
PROPOSAL 3
APPROVAL OF EMPLOYEE STOCK OPTION PLAN
The Company had previously adopted an Employee Stock Option Plan in
1996. However, no options have been granted under this plan and accordingly, the
Company decided to replace this Plan with the 2001 Stock Option Plan. The Board
of Directors has approved this Plan and now recommends that you approve it. The
following summary describes the basic features of the Plan, however, it is not
complete and, therefore, you should not rely solely on it for a detailed
description of every aspect of the Plan. The text of the Plan is attached as
Appendix B.
The Stock Option Plan Generally
The Board originally adopted the Plan on March 12, 2001. The Plan will
terminate on June 1, 2011. Under the Plan, the Board or the Compensation
Committee may grant stock incentives to key individuals performing services for
Metropolitan, including employees, officers, eligible directors, consultants and
agents. Awards under the Plan may be in the form of incentive stock options and
nonqualified stock options.
Shares Available for the Plan
We presently have 2,000,000 shares of common stock reserved for
issuance under the Plan. The number of shares that can be issued and the number
of shares subject to outstanding options may be adjusted in the event of a stock
split, stock dividends, recapitalization or other similar event affecting the
number of shares of Metropolitan's outstanding common stock.
Plan Administration
The Board or the Compensation Committee will administer the Plan.
Subject to the specific provisions of the Plan, the Board or the Committee
determines award eligibility, timing and the type, amount and terms of the
awards. The Board or the Committee also interprets the Plan, establishes rules
and regulations under the Plan and makes all other determinations necessary or
advisable for the Plan's administration.
Options under the Plan may be either incentive stock options, as
defined under the tax laws, or nonqualified stock options. The per share
exercise price may not be less than the fair market value of Metropolitan common
stock on the date and option is granted. The Board or the Compensation Committee
may specify any period of time following the date of grant during which options
are exercisable, so long as the exercise period is not more than 10 years.
Incentive stock options are subject to additional limitations relating to such
things as employment status, minimum exercise price, length of exercise period,
maximum value of the stock underlying the options and a required holding period
for stock received upon exercise of the option. Only nonqualified options may be
granted to individuals who are not Metropolitan employees.
Upon exercise, the option holder may pay the exercise price in several
ways. He or she can pay: (1) in cash; (2) by delivering previously owned
Metropolitan common stock with a fair market value equal to the exercise price;
or (3) by a combination of these methods.
Expiration of Options
Generally, options granted under the Plan expire on the date determined
by the Board and the Committee at the time of the grant, subject to earlier
expiration as specified in the award agreement if the holder terminates
employment with Metropolitan prior to that date. IRS rules require that
incentive stock options expire no later than two months after the termination of
employment for any reason other than death or disability, or one year after
termination of employment by reason of death or disability, in either case
subject to the normal expiration date of the option. In no event may an option
be exercised after its expiration date. Any unvested portion of an option will
expire immediately upon termination of employment.
Outstanding Options
We cannot determine the number of shares that may be acquired under
stock options that may be awarded under the Plan to participants. There are no
stock appreciation rights under the Plan.
Transferability
Generally, an option may not be sold, assigned or otherwise transferred
during its holder's lifetime, except by will or the laws of descent and
distribution.
Tax Consequences
The following is a summary, based on current law, of some significant
federal income tax consequences of awards under the Plan. Participants are
advised to consult with their own tax advisor regarding the federal, state and
local tax consequences of the grant and exercise of an option.
Participants in the Plan do not recognize taxable income by reason of
the grant or vesting of an option, and Metropolitan does not receive a tax
deduction by reason of either event. At exercise, the federal tax consequences
vary depending on whether the award is an incentive stock option or nonqualified
stock option. Incentive Stock Options
Upon exercise of an incentive stock option, its holder does not
recognize taxable income and Metropolitan does not receive a tax deduction.
However, the excess of the fair market value of Metropolitan common stock on the
date of exercise over the exercise price is an adjustment that increases
alternative minimum taxable income, the base upon which alternative minimum tax
is computed.
If the shares purchased upon the exercise of an incentive stock option
are sold at a gain within two years from the date of grant, or within one year
after the option is exercised, then the difference, with certain adjustments,
between the fair market value of the stock at the date of exercise and the
exercise price will be considered ordinary income. Any additional gain will be
treated as a capital gain. If the shares are sold at a gain after they have been
held at least one year and more than two years after the grant date, any gain
will be treated as a long-term capital gain. Any loss recognized upon a taxable
disposition of the shares generally would be characterized as a capital loss.
Nonqualified Stock Options
Upon exercise of a nonqualified stock option, its holder recognizes
ordinary income in an amount equal to the difference between the fair market
value of Metropolitan common stock at the time of exercise and the exercise
price. Generally, Metropolitan is entitled to a corresponding tax deduction for
compensation income recognized by the holder. Upon the subsequent sale of the
shares acquired in the exercise, the holder will recognize a short-term or
long-term capital gain or loss, depending on the length of time he or she has
held the shares.
Plan Amendment and Termination
The Plan will terminate on June 1, 2011. The Board of Directors may
amend or terminate the Plan at any time. An amendment is subject to shareholder
approval if it increases the number of shares available for issuance under the
Plan, permits the grant of an incentive stock option at an exercise price less
than that set forth in the Plan, changes the class of individuals eligible for
participation in the Plan, or permits the grant of awards after the Plan
termination date.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
EMPLOYEE STOCK OPTION PLAN
PROPOSAL 4
PROPOSAL TO RATIFY THE APPOINTMENT OF KAUFMAN, ROSSIN & CO.
AS INDEPENDENT AUDITORS OF THE COMPANY
The Board of Directors has appointed Kaufman, Rossin & Company as our
independent auditors for the current fiscal year. Kaufman, Rossin & Company has
served as our auditors since 1996. Fees paid to the independent auditors were as
follows: Audit Fees: $130,000 for the audit of the consolidated financial
statements for the fiscal year ended December 31, 2000 and for the review of the
consolidated financial statements included in the Company's quarterly filings on
Form 10-QSB; and Other Fees: $40,000 for audit-related services. Audit related
services generally include fees for business acquisitions, accounting
consultations and SEC registration statements.
The appointment of Kaufman, Rossin & Company as independent auditors of
the Company for the fiscal year ended December 31, 2001 will be ratified.
Although the Board of Directors of the Company is submitting the appointment of
Kaufman, Rossin & Company for shareholder approval, it reserves the right to
change the selection of Kaufman, Rossin & Company as auditors, at any time
during the fiscal year, if it deems such change to be in the best interest of
the Company, even after stockholder approval. Representatives of Kaufman, Rossin
& Company are expected to be present at the Annual Meeting and are expected to
be available to respond to appropriate questions from Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF KAUFMAN, ROSSIN &
COMPANY AS INDEPENDENT AUDITORS OF THE COMPANY.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's directors and executive officers,
and personal who own more than ten percent (10%) of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent (10%) stockholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) beneficial owners have complied with
the Section 16(a) requirements for the period to which this proxy is related.
OPTIONS GRANTED IN LAST FISCAL YEAR
During the year ended December 31, 2000, the Company granted options to
each of the named executive officers as set forth in the table below:
Number of % Of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise or
SARs Employees in Base Price Expiration
Name Granted Fiscal Year ($/Share) Date
- ---- ------- ----------- --------- ----
Fred Sternberg 300,000 52.04% $0.30 01/01/05
Fred Sternberg 360,000 $0.50 01/01/05
Fred Sternberg 125,000 $1.00 12/31/05 - 12/31/09
Fred Sternberg 200,000 $2.00 09/19/05
Fred Sternberg 700,000 $0.75 04/01/06 - 01/01/08
AGGREGATED FISCAL YEAR-END OPTIONS VALUE TABLE
The table below sets forth certain information pertaining to
unexercised stock options held by the Named Executive Officers during the year
ended December 31, 2000:
Number of Value of Unexercised
Unexercised Options In-the-Money
Held at 12/31/00 Options at 12/31/00 1
---------------- ---------------------
Shares Acquired Value
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
(#) ($) (#) (#) ($) ($)
--- --- --- --- --- ---
Fred Sternberg 0 0 885,000 800,000 300,193 81,280
Debbie Finnel 0 0 100,000 100,000 44,380 34,380
David Gartner 0 0 100,000 50,000 54,380 27,190
1 The closing sale price of the Common Stock on December 29, 2000 as
reported by OTCBB was $0.8438 per share. Value is calculated by multiplying
(a) the difference between $0.8438 and the option exercisable price by (b)
the number of shares of Common Stock underlying.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 17, 2001, certain
information with respect to the beneficial ownership of the Company's Common
Stock by (i) each person known to the Company who beneficially owns more than 5%
of the Company's outstanding Common Stock, (ii) each director, (iii) all named
executive officers and (iv) all directors and executive officers as a group.
Unless otherwise indicated, the address for each of the listed beneficial owners
identified is C/O Metropolitan Health Networks, Inc., 500 Australian Avenue
South, Suite 1000, West Palm Beach, Florida 33401. As otherwise noted, all
persons named on the table have sole voting and investment power with respect to
all shares of common stock beneficially owned by them.
Name/Address of Beneficial Ownership Beneficial Ownership
Beneficial Owner Common Stock Common Stock(1)
- ---------------- ------------- ---------------
Martin Harrison, M.D. (2) 5,314,229 18.11%
Fred Sternberg (3) 1,508,850 5.14%
Paul Preste, M.D. (4) 70,449 (11)
Karl Sachs (5) 289,949 1.10%
Mark Gerstenfeld (6) 292,615 1.10%
Michael Cahr (7) 346,726 1.18%
Marvin Heiman 161,751 (11)
Michael Earley (8) 51,635 (11)
David Gartner (9) 100,000 (11)
Debbie Finnel(10) 100,000 (11)
Noel J. Guillama 1,490,666 5.10%
Directors and Executive
Officers as a group
(10 persons) 8,236,204 28.10%
- -------------
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person sixty (60) days from the date of this Proxy Statement.
As of April 17, 2001, there are 24,462,686 shares of Common Stock outstanding.
(2) Includes 20,000 shares issuable upon exercise of options at a price of
$0.91.
(3) Includes (1) 300,000 options to purchase shares at a price of $0.30 per
share, (2) 100,000 options to purchase shares at a price of $0.75 per share, (3)
125,000 options to purchase shares at a price of $1.00 per share (4) 360,000
options to purchase shares at a price of $0.50 per share and (5) 200,000 options
to purchase shares at a price of $2.00 per share. Excludes (1) 100,000 options
to purchase shares at a price of $1.00 per share and (2) 700,000 options to
purchase shares at a price of $0.75 per share, all of which have not yet vested.
(4) Includes 40,000 options to purchase shares at a price of $0.30.
(5) Excludes 25,000 options to purchase shares at a price of $0.30 per share,
which have not yet vested.
(6) Includes (1) 40,000 options to purchase shares at a price of $0.30 per
share, (2) 80,000 options to purchase shares at a price of $0.625, (5) 75,000
options to purchase shares at a price of $0.75 per share. Excludes 50,000
options to purchase shares at a price of $0.75 per share, which have not yet
vested.
(7) Includes 4,000 shares held by Michael Cahr as custodian for his son.
(8) Includes (1) 20,000 options to purchase shares at a price of $0.75 per share
and (2) 25,000 options to purchase shares at a price of $2.00. Excludes 20,000
options to purchase shares at a price of $0.75 per share, which have not yet
vested.
(9) Excludes 50,000 options to purchase shares at a price of $0.30 per share,
which have not yet vested.
(10) Includes 50,000 options to purchase shares at a price of $0.50 per share.
Excludes 100,000 options to purchase shares at a price of $0.50 per share, which
have not yet vested.
(11) Represents less than 1%.
EXECUTIVE COMPENSATION
The following table sets forth compensation information for the
Company's Chief Executive Officer and each of the executive officers that earned
more than $100,000 during the fiscal year ending December 31, 2000.
Long-term
Compensation
Awards
Securities
Other Annual Underlying
Name and Fiscal Salary Bonus Compensation /Options SARs All Other
Principal Position Year $ $ $ (#) Compensation
- ------------------ ---- ------- ------- ------------ ------------------ ------------
Fred Sternberg
Chairman of the Board, 2000 150,000 0 $9,600
President, CEO
Debra Finnel
Chief Operating Officer 2000 132,000 0
David S. Gartner, CPA
Chief Financial Officer 2000 96,557 0 6,000
*The above were not officers in 1999.
EMPLOYMENT AGREEMENTS
Fred Sternberg
In January 2000 the Company entered into an employment agreement,
subsequently amended, with Fred Sternberg, the Company's President, Chief
Executive Officer and a director. The term of the agreement is for five years
from the effective date. The annual salary under the Agreement is $150,000 with
a 10% annual increase. However, effective April 1, 2001 the Board of Directors
has approved an increase in Mr. Sternberg's annual salary to $250,000 per year.
The annual 10% increase remains the same. Mr. Sternberg is also eligible to
receive a discretionary bonus. Additionally, Mr. Sternberg was granted options
to purchase 300,000 shares of Common Stock at $0.30 per share and options to
purchase 360,000 shares of Common stock at $0.50 per share upon the signing of
the Agreement. Additional longevity options were granted at the rate of 25,000
options per year of employment at a price of $1.00 per share. The Agreement also
provides for an additional 700,000 options at $0.75 per share vesting on various
dates over the life of the contract.
The Agreement also provides, among other things, for (i) participation
in any profit-sharing or retirement plan and in other employee benefits
applicable to employees and executives of the Company; (ii) an automobile
allowance of $800 per month and fringe benefits commensurate with the duties and
responsibilities of Mr. Sternberg and (iii) benefits in the event of death or
disability. The Agreement also contains certain non-disclosure and
non-competition provisions.
Under the terms of the Agreement, the Company may terminate the
employment of Mr. Sternberg either with or without cause. If the Agreement is
terminated by the Company without good cause, the Company would be obligated to
continue to pay Mr. Sternberg's salary and current and future bonuses, and Mr.
Sternberg would be entitled to all stock options earned or not yet earned
through the full term of the Agreement.
Debra Finnel
In January 2001, the Company entered into an employment agreement with
Debra Finnel, Chief Operating Officer. The term of the agreement is five years
and calls for an annual salary of $225,000, increasing to $250,000 on July 1,
2001. Ms. Finnel is also eligible to receive a discretionary bonus and has been
granted options to purchase 300,000 shares of Common Stock at $1.00 per share
with vesting over five years.
The Agreement also provides, among other things, for (i) participation
in any profit-sharing or retirement plan and in other employee benefits
applicable to employees and executives of the Company; (ii) an automobile
allowance of $1,500 per month and fringe benefits commensurate with the duties
and responsibilities of Mr. Sternberg and (iii) benefits in the event of death
or disability. The Agreement also contains certain non-disclosure and
non-competition provisions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company had a consulting agreement with Sternco, Inc., an affiliate
of Fred Sternberg that provided for commissions on any acquisition for which
Sternco is or was the introducing party or materially contributed to such
acquisition. Prior to becoming an officer and director of the Company, any and
all obligations under this agreement were satisfied with the payment of $24,000
cash and 160,000 shares of common stock.
In November 2000, the Company loaned Debra Finnel $30,000. The loan has
been treated as an employee advance and will be repaid in 2001.
All future transactions between the Company and any officer, director
or 5% shareholder will be on terms no less favorable than could be obtained from
independent third parties and will be approved by a majority of the independent
disinterested directors of the Company. The Company believes that all prior
affiliated transactions except those identified above were made on terms no less
favorable to the Company than available from unaffiliated parties. Loans, if
any, made by the Company to any officer, director or 5% stockholder, will only
be made for bona fide business purposes.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the 2002 Annual Meeting must be received by
the Company no later than December 31, 2001 in order to have them included in
the proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
Management is not aware of any other matters to be presented for action
at the Meeting. However, if any other matter is properly presented, it is the
intention of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment on such matters.
ANNUAL REPORTS
The Company's 2000 Annual Report to Stockholders, which contains the
Company's Annual Report on Form 10-KSB (without exhibits) and its consolidated
financial statements for the year ended December 31, 2000, accompanies this
proxy statement. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 2000 will also be made available (without exhibits), free of
charge, to interested stockholders upon written request to Investor Relations,
Metropolitan Health Networks, Inc., 500 Australian Avenue South, Suite 1000,
West Palm Beach, Florida 33401.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Fred Sternberg
Fred Sternberg, Chairman & Chief Executive Officer
April 18, 2001
Appendix A
ARTICLES OF AMENDMENT
To The
ARTICLES OF INCORPORATION
Of
METROPOLITAN HEALTH NETWORKS, INC.
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned Directors of METROPOLITAN HEALTH NETWORKS,
INC., a corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida, bearing document number P96000004953,
do hereby certify:
That pursuant to Unanimous Written Consent of the Board of Directors of
said Corporation dated March 12, 2001 and the consent of a majority of
Shareholders of the outstanding common stock of the Corporation at a meeting on
May 24, 2001, which shares voting at such meeting represented a majority of the
total issued and outstanding capital stock of the Corporation entitled to vote.
Therefore, the number of votes cast for the amendment to the Corporation's
Articles of Incorporation was sufficient for approval.
The first two paragraphs of the following Article should be amended to
read:
ARTICLE III - CAPITAL STOCK
The maximum number of shares that this Corporation shall be
authorized to issue and have outstanding at any one time shall be
ninety million (90,000,000) shares which are to be divided as follows:
Eighty million (80,000,000) shares of Common Stock with a par
value of $.001 per share and ten million (10,000,000) shares of
Preferred Stock at a par value of $.001 per share. Series of the
Preferred Stock may be created and issued from time to time, with such
designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as shall be stated
and expressed in the resolution or resolutions providing for the
creation and issuance of such series of preferred stock as adopted by
the Board of Directors pursuant to the authority in this paragraph
given.
IN WITNESS WHEREOF, the undersigned Directors have executed these
Articles of Amendment as of the 24th day of May, 2001
METROPOLITAN HEALTH NETWORKS, INC.
------------------------------------------------
By: Fred Sternberg, President & CEO
APPENDIX B
METROPOLITAN HEALTH NETWORKS, INC.
2001 STOCK OPTION PLAN
ARTICLE I.
PURPOSE AND EFFECTIVE DATE
1.1. Purpose. The purpose of the Plan is to enable the Company to attract,
retain and reward employees, directors and other individuals who are providing
significant services to the Company, by offering such individuals an opportunity
to have a greater proprietary interest in and a closer identity with the Company
and its financial success through the award of Incentive Stock Options and
Nonqualified Stock Options.
1.2. Effective Date. The Plan shall be effective June 1, 2001 (the "Effective
Date") and shall remain in effect until terminated in accordance with Article
VIII; provided, however, in no event may an Incentive Stock Option be granted
under the Plan on or after the tenth anniversary of the Effective Date or the
date the Plan is approved by the Company's stockholders, whichever is earlier.
ARTICLE II.
DEFINITIONS
When used in the Plan and initially capitalized, the following words
and phrases shall have the meanings indicated:
2.1. "Administrator" means the administrator of the Plan determined in
accordance with Section 3.1.
2.2. "Board" means the Board of Directors of the Company.
2.3. "Cause" means, in the reasonable judgment of the Administrator,
(i) the willful and continued failure by the Participant to substantially
perform his or her duties with the Company (other than any such failure
resulting from the Participant's being disabled); (ii) the willful engaging by
the Participant in conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise; (iii) the engaging by the Participant in
egregious misconduct involving serious moral turpitude to the extent that, in
the reasonable judgment of the Board, the Participant's creditability and
reputation no longer conforms to the standard of the Company's employees, or
(iv) the Participant is convicted of a felony. No act, or failure to act, on the
Participant's part shall be deemed "willful" unless done, or omitted to be done,
by the Participant not in good faith and without reasonable belief that the
Participant's action or omission was in the best interest of the Company and its
Subsidiaries. Notwithstanding this Section 2.3, in the event that a Participant
is subject to an employment agreement with the Company, Cause shall have the
same meaning as that set forth in the Participant's employment agreement.
2.4. "Change of Control" means the purchase or other acquisition by any
person, entity or group of persons, within the meaning of section 13(d) or 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act") or any comparable
successor provisions, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either the outstanding
shares of common stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally; the approval by the
stockholders of the Company of a reorganization, merger, or consolidation, in
each case, with respect to which persons who were stockholders of the Company
immediately prior to such reorganization, merger or consolidation 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 Company's then outstanding securities; a liquidation or dissolution
of the Company; or of the sale of all or substantially all of the Company's
assets.
2.5. "Code" means the Internal Revenue Code of 1986, as amended.
2.6. "Common Stock" means the common stock of the Company or such other
class of shares or other securities as may be applicable pursuant to the
provisions of Section 4.2.
2.7. "Company" means Metropolitan Health Networks, Inc. and any
successor thereto.
2.8. "Disabled" or "Disability" means a physical or mental disability
which renders the Participant incapable, after reasonable accommodation, of
performing the duties of his or her position, and the condition, in the opinion
of a physician selected by the Company, is expected to have a duration of not
less than 12 months. In the event of a dispute as to whether the Participant has
a Disability, the Company may refer the same to a licensed practicing physician
of the Company's choice, and the Participant agrees to submit to such tests and
examination as such physician shall deem appropriate. A Participant shall not be
considered Disabled unless the Administrator determines that the Disability
arose prior to such Participant's Termination Date.
2.9. "Eligible Individual" means an employee, or director of the
Company and any other person providing material services to the Company as a
consultant, advisor or independent contractor.
2.10. "Fair Market Value". The Fair Market Value shall be equal to, as
of any date, the price per share of the Common Stock on the applicable stock
exchange. In the event the Common Stock is no longer traded on a stock exchange,
Fair Market Value shall mean the amount determined by the Board using such good
faith valuation methods as it deems appropriate.
2.11. "Incentive Stock Option" means an Option that is intended to
satisfy the requirements of an "incentive stock option" within the meaning of
Code Section 422.
2.12. "Nonqualified Stock Option" means an Option that is not an
Incentive Stock Option.
2.13. "Option" means an option to purchase shares of Common Stock which
is either an Incentive Stock Option or Nonqualified Stock Option.
2.14. "Participant" means an Eligible Individual who is granted an
Option under the Plan pursuant to Article V.
2.15. "Plan" means the Metropolitan Health Networks, Inc. 2001 Stock
Option Plan, as amended from time to time.
2.16. "Related Company" means any company during any period in which it
is a subsidiary corporation (as that term is defined in Code Section 424(f))
with respect to the Company
2.17. "Termination Date" means the date the Participant both ceases to
be an employee of the Company and ceases to perform material services for the
Company, including, but not limited to, advisory or consulting services or
services a member of the Board.
ARTICLE III.
ADMINISTRATION
3.1. Administration. The Board or a compensation committee thereof
shall be the "Administrator" of the Plan and shall have the authority to control
and manage the operation and administration of the Plan; provided, that, the
Board, in its sole discretion, may delegate administration of the Plan to a
committee composed of not fewer than two members of the Board. If administration
is delegated to a committee, references in the Plan to the Administrator shall
be deemed to refer to such committee.
3.2. Authority of Administrator. The Administrator shall have the
authority to approve Eligible Individuals for participation; to construe and
interpret the Plan; to establish, amend or waive rules and regulations for its
administration; and to accelerate the exercisability of any Option or the
termination of any restriction under any Option. Options may be subject to such
provisions as the Administrator shall deem advisable, and may be amended by the
Administrator from time to time; provided that no such amendment may adversely
affect the rights of the holder of an Option without such holder's consent.
3.3. Powers of the Administrator. The Administrator may employ such
legal counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received from any such
counsel or consultant and any computation received from any such consultant or
agent.
3.4. Indemnification. No member of the Board shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option awarded under it. To the maximum extent permitted by applicable law, each
such member shall be indemnified and held harmless by the Company against any
cost or expense (including legal fees) or liability (including any sum paid in
settlement of a claim with the approval of the Company) arising out of any act
or omission to act in connection with the Plan, unless arising out of such
member's own fraud or bad faith. Such indemnification shall be in addition to
any rights of indemnification the members may have as employees of the Company,
as members of the Board or under the by-laws of the Company.
ARTICLE IV.
COMMON STOCK SUBJECT TO THE PLAN
4.1. Common Stock Subject to Plan. The aggregate number of shares of
Common Stock that may be issued under the Plan shall not exceed 2,000,000, as
adjusted in accordance with Section 4.2. Such shares may be authorized but
unissued shares or shares that are currently held or subsequently acquired by
the Corporation as treasury shares. Any shares subject to an Option, which for
any reason expires or terminates without the issuance of Common Stock
(including, if applicable, Common Stock that is not issued because it is
withheld to satisfy tax withholding or the exercise price) shall again be
available for issuance of Options under the Plan.
4.2. Adjustment to Shares. In the event of any merger, consolidation,
reorganization, recapitalization, spinoff, stock dividend, stock split, reverse
stock split, exchange or other distribution with respect to shares of Common
Stock or other change in corporate structure or capitalization affecting the
Common Stock, the type and number of shares of Common Stock which are or may be
subject to Options under the Plan and the terms of any outstanding Options
(including the number of shares subject to the Option and the price at which
they may be purchased) shall be equitably adjusted by the Administrator, in its
sole discretion, to preserve the value of the benefits awarded or to be awarded
to Participants under the Plan; provided, however, in the event of a Change in
Control, the Administrator may substitute awards of equal value for awards under
the Plan or cancel outstanding awards in accordance with Article VI.
ARTICLE V.
OPTION AWARDS
5.1. Eligibility. The Administrator shall determine and designate from
among the Eligible Individuals, those persons who shall be granted Options and
become Participants under the Plan and the number of shares of Common Stock that
shall be subject to each such Option.
5.2. Terms and Conditions of Options. Options granted under the Plan
may be Incentive Stock Options or Nonqualified Stock Options, as determined by
the Administrator; provided, however, that no Incentive Stock Option shall be
awarded to any individual who is not an employee of the Company. To the extent
that an Option designated as an Incentive Stock Option does not satisfy the
requirements of Section 422 of the Code, it shall be treated as a Nonqualified
Stock Option. Each Option granted under the Plan shall be subject to the
following terms and conditions, and such other terms and conditions as the
Administrator deems appropriate.
(a) Exercise Price. The price of each share of Common Stock
subject to an Option shall be determined by the Administrator at the
time the Option is granted and, in the case of an Incentive Stock
Option, shall not be less than the Fair Market Value of a share of
Common Stock on the date the Option is granted.
(b) Vesting of Options. Exercise of an Option is contingent on
satisfaction of the vesting conditions, if any, established by the
Administrator with respect to such Option at the time of grant. Such
conditions may include, but are not limited to, completion of a
specified period of service or achievement of performance goals.
(c) Expiration Date. Unless the Administrator determines
otherwise, Options awarded under the Plan shall expire and no longer be
exercisable on the earliest to occur of:
(i) the ten-year anniversary of the date the Option
was granted;
(ii) if the Participant's Termination Date occurs by
reason of death or Disability, the first anniversary of such
Termination Date;
(iii) if the Participant's Termination Date occurs by
reason of Cause, such Termination Date; or
(iv) if the Participant's Termination Date occurs for
reasons other than death, Disability or Cause, the day which
is 60 days after such Termination Date.
Unless the Administrator determines otherwise, any portion of an Option
which is not exercisable on the Participant's Termination Date for any
reason shall expire on such Termination Date and may not thereafter be
exercised.
(v) Other Terms. Options granted under the Plan may
also be subject to such other provisions (whether or not
applicable to any other Options granted under the Plan) as the
Administrator determines appropriate, including without
limitation, provisions to assist the Participant in financing
the acquisition of Common Stock, provisions for the forfeiture
of, or restrictions on resale or other disposition of Common
Stock acquired under any Option, provisions for the
acceleration of exercisability or vesting of Options,
provisions relating to restrictions on competitive activity,
or provisions to comply with Federal and state securities
laws, or understandings or conditions as to the Participant's
employment in addition to those specifically provided for
under the Plan. 5.3. Rules Applicable to Incentive Stock
Options. In addition to the terms and conditions specified
elsewhere in the Plan, the following rules shall be applicable
to Incentive Stock Options.
5.3 Rules Applicable to Incentive Stock Options. In addition to the
terms and conditions specified elsewhere in the Plan, the following rules shall
be applicable to Incentive Stock OPtions.
(a) Grant Period. An Incentive Stock Option may not be granted
more than ten years after the date the Plan is adopted or approved by
stockholders of the Corporation, whichever is earlier.
(b) Ten Percent-Owner. If a Participant on the date that an
Incentive Stock Option is granted owns, directly or indirectly, within
the meaning of Section 424(d) of the Code, stock representing more than
10% of the voting power of all classes of stock of the Corporation,
then the exercise price per share shall in no instance be less than
110% of the Fair Market Value per share of Common Stock at the time the
Incentive Stock Option is granted, and no Incentive Stock Option shall
be exercisable by such Participant after the expiration of five years
from the date it is granted.
(c) Employee Status. To retain favorable Incentive Stock
Option tax treatment, the Option holder must be an employee of the
Company at all times from the date the Option is granted through a date
that is no more than two months prior to the date it is exercised (or
no more than one year prior to the date it is exercised if the Option
holder terminates employment due to death or Disability). For this
purpose, the first 60 days of an authorized leave of absence (or, if
longer, the period the Participant's right to reemployment is
guaranteed by statute or contract) shall not be deemed to sever the
employment relationship.
(d) Limitations on Dispositions. To retain favorable Incentive
Stock Option tax treatment, Common Stock received upon the exercise of
an Incentive Stock Option may not be disposed of prior to the later of
two years from the date the Incentive Stock Option is granted or one
year from the date the shares of Common Stock are transferred to the
Participant upon exercise of the Incentive Stock Option.
(e) Value of Shares. The aggregate Fair Market Value
(determined at the date of grant) of the Incentive Stock Options
exercisable for the first time by a Participant during any calendar
year shall not exceed $100,000 or any other limit imposed by the Code.
5.4. Exercise of Options. An Option may be exercised in whole or part,
to the extent then exercisable, by filing a written notice with the Secretary of
the Corporation at its corporate headquarters. Such notice shall specify the
number of shares of Common Stock to be purchased and must be accompanied by
payment of the exercise price and applicable withholding taxes. Such payment may
be paid in cash or by check or, in the discretion of the Administrator, by the
delivery (or certification of ownership) of Common Stock then owned by the
Participant, or in any other manner then permitted by the Administrator
including, without limitation, a cashless exercise arrangement to the extent
provided by the Administrator; provided, however, that payment of the exercise
price by delivery of Common Stock then owned by the Participant may be made, if
permitted by the Administrator, only if such payment does not result in a charge
to earnings for financial accounting purposes as determined by the
Administrator.
5.5. Individual Limits on Options. Notwithstanding any other provision
of the Plan to the contrary, no Participant shall receive any Option under the
Plan to the extent that the sum of:
(a) the number of shares of Stock subject to such Option;
(b) the number of shares of Stock subject to all other prior
Options under the Plan during the one-year period ending on the grant
date of the Option; and
(c) the number of shares of Stock subject to all other prior
Options granted to the Participant under other plans or arrangements of
the Company and Related Companies during the one-year period ending on
the grant date of the Option,
would exceed the Participant's Individual Limit under the Plan. Subject to the
provisions of Section 4.2, the determination made under the foregoing provisions
of this Section 5.5 shall be based on the shares subject to the Awards at the
time of grant, regardless of when the Awards become exercisable. Subject to the
provisions of Section 4.2, a Participant's "Individual Limit" shall be 500,000
shares of Stock.
ARTICLE VI.
CHANGE IN CONTROL
In the event of a Change in Control, the Administrator, in its sole
discretion, shall take one or more of the following actions with respect to
outstanding Options under the Plan:
(a) fully vest all Options outstanding under the Plan; or
(b) arrange to have outstanding Options assumed by the
successor entity in the Change in Control or replaced with an option of
equivalent value to purchase stock of such successor entity; or
(c) cancel all outstanding Options as of the effective date of
the Change in Control; provided that notice of such cancellation is
given to Participants and Participants shall either (i) have the right
to exercise all Options prior to the Change in Control, or (ii) have
the right to exercise all Options prior to the Change in Control which
are then exercisable and to receive cash or a cash-based deferred
compensation program of the successor entity of equivalent value with
respect to Options which are not then exercisable.
ARTICLE VII.
GENERAL PROVISIONS
7.1. No Contract of Employment. The Plan does not constitute a contract
of employment, and selection as a Participant will not give any individual the
right to be retained in the employ of the Company as an employee, advisor or
otherwise, nor any right or claim to any benefit under the Plan unless such
right or claim has specifically accrued under the terms of the Plan.
7.2. Stockholder Status. No Option under the Plan shall confer upon the
holder thereof any right as a stockholder of the Company prior to the date on
which shares of Common Stock are registered in his or her name.
7.3. Limitations on Distributions. Notwithstanding any other provision
of the Plan, the Company shall have no liability to deliver any shares of Common
Stock under the Plan or make any other distribution of benefits under the Plan
unless such delivery or distribution would comply with all applicable laws and
the applicable requirements of any securities exchange or similar entity. Prior
to the issuance of any share of Common Stock under the Plan, the Company may
require a written statement that the recipient is acquiring the shares for
investment and not for the purpose or with the intention of distributing the
shares and will not dispose of them in violation of the registration
requirements of the Securities Act of 1933.
7.4. Withholding of Taxes. All distributions and payments under the
Plan are subject to the withholding of all applicable taxes.
7.5. Non-Transferability. Options granted under the Plan are not
transferable except as designated by the Participant by will or by the laws of
descent and distribution. To the extent that a Participant who receives an
Option under the Plan has the right to exercise such Option, the Option may be
exercised during the lifetime of the Participant only the Participant or his or
her guardian or legal representative.
7.6. Successors. All obligations of the Company under the Plan, with
respect to Options granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the business and/or assets of the Company.
7.7. Governing Law. The Plan, and all agreements under the Plan, shall
be construed in accordance with and governed by the laws of the State of
Florida.
7.8. Agreement with Company. At the time an Option is granted to a
Participant under the Plan, the Administrator may require a Participant to enter
into an agreement with the Company in a form specified by the Administrator
agreeing to the terms and conditions of the Plan and to such additional terms
and conditions not inconsistent with the Plan as the Administrator, in its sole
discretion, may prescribe. At the time an Option is exercised, the Administrator
may require the Participant to enter into a stockholders agreement containing
restrictions on the transfer of shares of Common Stock and such other terms and
conditions as the Administrator, in its sole discretion, may determine.
ARTICLE VIII.
AMENDMENT AND TERMINATION
The Board may at any time amend or terminate the Plan, provided that,
subject to Section 4.2 (relating to adjustment of shares), no amendment or
termination may materially adversely affect the rights of any Participant or
beneficiary under any Option granted under the Plan prior to the date such
amendment or termination is adopted by the Board.
METROPOLITAN HEALTH NETWORKS, INC.
500 Australian Avenue South, Suite 1000
West Palm Beach, Florida 33401
PROXY
The undersigned hereby constitutes and appoints Fred Sternberg and/or
__________ as Proxy, with the power to appoint their substitute, and hereby
authorizes them to represent and to vote as designated below, all shares of
common stock of the Company held of record by the undersigned on April 17, 2001,
at the Annual Meeting of Shareholders to be held on May 24, 2001, or any
adjournment thereof.
1. Election of Directors
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed
contrary) below
|_| |_|
Fred Sternberg
Michael Cahr
Marvin Heiman
Michael Earley
Karl Sachs
Mark Gerstenfeld
Martin Harrison, MD
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE PLEASE
DRAW A LINE THROUGH THAT NOMINEE'S NAME)
2. To approve the Amendment to the Articles of Incorporation to Increase
Authorized Common stock of the Corporation.
|_| FOR |_| AGAINST |_| ABSTAIN
3. To approve the Employee Stock Option Plan.
|_| FOR |_| AGAINST |_| ABSTAIN
4. To ratify the appointment of Kaufman, Rossin & Co., independent
certified public accountants, as the Company's auditors for the fiscal
year ending December 31, 2001.
|_| FOR |_| AGAINST |_| ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
This Proxy is solicited on behalf of the Board of Directors of
Metropolitan Health Networks, Inc. This Proxy when properly executed will be
voted in the manner directed herein by the undersigned stockholder. If no
direction is made, this Proxy will be voted FOR the nominees listed in Proposal
1, and FOR Proposals 2, 3 and 4.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
Corporation, please sign in the Corporate name by President or other authorized
officer. If a Partnership, please sign in Partnership name by authorized person.
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Signature
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Signature If Held Jointly
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(Please Print Name)
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Number of Shares Subject to Proxy
Dated: , 2001
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