Document:

Termination Agreement of Fred Sternberg

 

Exhibit 10.5

October 24, 2003

Mr. Frederick Sternberg

13320 Wrevham Court

Wellington. Fl 33414

This letter commemorates the agreement reached between
Metropolitan Health
Networks, Inc. (“Metcare” or “the Company”) and
you effective July 1, 2003 with
regard to the settlement of your employment contract following your March
6, 2003 resignation as President & CEO. As well , you have agreed to tender your
resignation as Chairman of the Board immediately and as Director to be
effective upon the resolution of the federal investigation and IRS obligations
or next annual meeting, whichever comes first, but in no event later than
December 31, 2003.

In addition, we have agreed as follows:

	1.	 	The Company will review with you any press release announcing your
resignation prior to issuance.
	 
	2.	 	You will be an invited guest to all Board meetings following your
resignations as a Director, including telephonic meetings, and will be
provided all materials provided to the Directors in connection with
those meetings so long as Metcare has any outstanding exposure to the
Internal Revenue Service for unpaid payroll taxes or is subject to the
current U.S. Attorneys Office investigation.
	 
	3.	 	You will continue to receive the indemnification currently afforded
you by the Company under Florida law and protection under the Company’s
D & O policy, and issue a letter to you confirming such
indemnification.
	 
	4.	 	The Company will reimburse you for reasonable legal fees
incurred in defending yourself in matters relating to your role as an Officer and Director
of the Company.
	 
	5.	 	Your access to the Company’s offices and network will be
terminated. You will
be provided temporary use of your Metcare email address and voice
mailbox through year-end.
	 
	6.	 	You will cease direct communication with third parties on Company’s
behalf. All Company-related communications to be directed to Mike
Earley, President & CEO, Debbie Finnel, COO, or David Gartner, CFO.
	 
	7.	 	A settlement amount to include $180,000 plus a cell phone allowance
of $4,500 will be paid you. This sum, $184,500, will be paid monthly
over twelve months

 

 

	 	 	beginning July 1, 2003. Payments will be made
consistent with the Company’s payroll cycle. In addition, you will
receive 300,000 options to purchase common stock of the Company
exercisable at the price of $0.46 per share.
	 
	8.	 	Metcare will continue to pay your Land Rover vehicle lease through
its expiration in early 2004.
	 
	9.	 	The Company will continue your current life and health insurance
benefit through December 2004.
	 
	10.	 	Your note payable to Company will be offset by your accrued
vacation benefit and any unpaid, approved business expenses. The
remaining balance, if any, will be forgiven.
	 
	11.	 	Your existing stock options will remain under their current terms
and conditions.

Please review the above and
indicate your agreement, if appropriate, below.

Sincerely,

/s/ Michael M. Earley

Michael M. Earley

President & CEO

	 	 	 	 	 
	Agreed:

	 	/s/ Frederick Sternberg
	 	Date: 10.24.03
	

	 	
	 	 
	

	 	Frederick SternbergSupplemental Stock Option Plan

 

Exhibit 10.6

METROPOLITAN HEALTH NETWORKS INC.

SUPPLEMENTAL STOCK OPTION PLAN

     Section 1. Purpose. The purpose of the Metropolitan Health Networks Inc.
Supplemental Stock Option Plan (the “Plan”) is to promote the interests of
Metropolitan Health Networks Inc., a Florida corporation (the “Company”), and
any Subsidiary thereof and the interests of the Company’s shareholders by
providing an opportunity to selected employees, officers, directors and
consultants of the Company or any Subsidiary thereof to purchase Common Stock
of the Company. By encouraging such stock ownership, the Company seeks to
attract, retain and motivate such persons and to encourage such persons to
devote their best efforts to the business and financial success of the Company.
It is intended that this purpose will be effected by the granting of
“non-qualified stock options” to acquire the Common Stock of the Company.

     Section 2. Definitions. For purposes of the Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.

     2.1. “Board of Directors” shall mean the Board of Directors of the
Company.

     2.2. “Code” shall mean the Internal Revenue Code of 1986, as amended.

     2.3. “Committee” shall mean the Compensation Committee of the Board of
Directors referred to in Section 5 hereof.

     2.4. “Common Stock” shall mean the Common Stock, $0.001 par value, of the
Company.

     2.5. “Eligible Participant” shall mean any employee, officer, director or
consultant of the Company, employed by, or performing services for, the Company
or any Subsidiary of the Company.

     2.6. “Non-Qualified Option” shall mean the Options granted to the Eligible
Participant pursuant to the Plan that are intended to be, and qualify as,
“non—qualified stock options” as described in Treasury Regulation Section
1.83—7 or any successor regulation thereto.

     2.7. “Option” shall mean any Non—Qualified Option granted to an Eligible
Participant pursuant to the Plan.

     2.8. “Subsidiary of the Company” shall have the meaning set forth in
Section 424(f) of the Code.

     Section 3. Eligibility. Options may be granted to any Eligible
Participant. The Committee shall have the sole authority to select the
Eligible Participant to whom Options are to be granted hereunder. No person
shall have any right to participate in the Plan. Any person

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selected by the Committee for participation during any one period will not
by virtue of such participation have the right to be selected as a Participant
for any other period.

     Section 4. Common Stock Subject to the Plan.

     4.1. Number of Shares. The maximum number of shares of Common Stock for
which Options may be granted under the Plan shall be 8,253,242 shares, subject
to adjustment as provided by Section 7 hereof, and provided such shares of
Common Stock may be validly issued upon exercise pursuant to applicable laws.

     4.2. Reissuance. The shares of Common Stock that may be subject to
Options granted under the Plan may be either authorized and unissued shares or
shares reacquired at any time and now or hereafter held as treasury stock as
the Board of Directors may determine.

     Section 5. Administration of the Plan.

     5.1. Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors (the “Committee”).

     5.2. Grant of Options.

     (a) The Committee shall have the sole authority and discretion under the
Plan (i) to select the Eligible Participants who are to be granted Options
hereunder so long as such Eligible Participants meet the requirements set forth
in the definition of Eligible Participants set forth in this Plan; (ii) to
establish the number of shares of Common Stock that may be issued under each
Option; (iii) to determine the time and the conditions subject to which Options
may be exercised in whole or in part; (iv) to determine the form of the
consideration that may be used to purchase shares of Common Stock upon exercise
of any Option (including the circumstances under which the Employee may pay all
or part of the exercise price by entering into a promissory note with the
Company, or circumstances under which the Company’s issued and outstanding
shares of Common Stock may be used by a Participant to exercise an Option); (v)
to impose restrictions and/or conditions with respect to shares of Common Stock
acquired upon exercise of an Option; (vi) to determine the circumstances under
which shares of Common Stock acquired upon exercise of any Option may be
subject to repurchase by the Company; (vii) to establish a vesting provision
for any Option relating to the time when (or the circumstances under which) the
Option may be exercised by a Participant, including, without limitation,
vesting provisions that may be contingent upon (A) the Company meeting
specified financial goals, (B) a change of control of the Company or (C) the
occurrence of other specified events; (viii) to accelerate the time when
outstanding Options may be exercised; and (ix) to establish any other terms,
restrictions and/or conditions applicable to any Option not inconsistent with
the provisions of the Plan. Notwithstanding anything herein to the contrary,
the Committee shall not and shall not have the power to determine that the form
of consideration that may be used to purchase shares of Common Stock upon
exercise of any Option is a loan that violates the provisions of any applicable
securities laws.

     5.3. Interpretation. The Committee shall be authorized to interpret the
Plan and may, from time to time, adopt such rules and regulations, not
inconsistent with the provisions of the Plan, as it may deem advisable to carry
out the purposes of the Plan.

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     5.4. Finality. The interpretation and construction by the Committee of
any provision of the Plan, any Option granted hereunder or any agreement
evidencing any such Option shall be final and conclusive upon all parties.

     5.5. Voting. Members of the Committee may vote on any matter affecting
the administration of the Plan or the granting of Options under the Plan.

     5.6. Expenses, Etc. All expenses and liabilities incurred by the
Committee in the administration of the Plan shall be borne by the Company. The
Committee may employ attorneys, consultants, accountants or other persons in
connection with the administration of the Plan. The Company, and its officers
and directors, shall be entitled to rely upon the advice, opinions or
valuations of any such persons.

     5.7. Indemnification. Neither the members of the Board of Directors nor
any member of the Committee shall be liable for any act, omission, or
determination taken or made in good faith with respect to the Plan or any
Options granted under it, and members of the Board of Directors and the
Committee shall be entitled to indemnification and reimbursement by the Company
in respect of any claim, loss, damage, or expense (including attorneys’ fees,
the costs of settling any suit, provided such settlement is approved by
independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad faith)
arising therefrom to the full extent permitted by law.

     Section 6. Terms and Conditions of Options.

     6.1. Non-Qualified Options. Unless otherwise provided by the Compensation
Committee, the terms and conditions of each Option granted under the Plan,
which shall be a Non-Qualified Option, shall be as follows:

     (a) Each Non-Qualified Option issued hereunder shall not constitute nor be
treated as an “incentive stock option” as defined in Section 422(b) of the Code
but will be a “non-qualified stock option” for Federal, state and local income
tax purposes. The terms and conditions of any Option granted hereunder need not
be identical to those of any other Non-Qualified Option granted hereunder.

     (b) The option (exercise) price shall be fixed by the Committee and may be
equal to, more than or less than 100% of the fair market value of the shares of
Common Stock subject to the Non-Qualified Option on the date such Non-Qualified
Option is granted, provided, however, that the option (exercise) price shall
not be less than the par value of such shares of Common Stock.

     (c) Each Option shall expire and terminate five (5) years after the
subject Option grant date;

     (d) Each Option shall be exercisable in such amount or amounts, under such
conditions (including provisions governing the rights to exercise such Option),
and at such times or intervals or in such installments as shall be determined
by the Committee in its sole discretion.

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     (e) Options shall not be transferable otherwise than by will or the laws
of descent and distribution, or a domestic relations order, and during an
Eligible Participant’s lifetime an Option shall be exercisable only by the
Eligible Participant or an alternate payee under a domestic relations order.

     (f) To the extent that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by any
Eligible Participant in respect of an Option granted hereunder or in respect of
any shares of Common Stock acquired upon exercise of an Option, the Company
shall deduct from any payments of any kind otherwise due to such Eligible
Participant the aggregate amount of such Federal, state or local taxes required
to be so withheld or, if such payments are insufficient to satisfy such
Federal, state or local taxes, or if no such payments are due or to become due
to such Eligible Participant, then, such Eligible Participant will be required
to pay to the Company, or make other arrangements satisfactory to the Company
(including, with prior Committee approval, use of a promissory note in favor of
the Company) regarding payment to the Company of, the aggregate amount of any
such taxes. All matters with respect to the total amount of taxes to be
withheld in respect of any such compensation income shall be determined by the
Committee in its sole discretion.

     (g) In the event the Eligible Participant leaves the employ of the Company
or ceases performing services for the Company or any Subsidiary of the Company
for any reason including, without limitation, termination, resignation, death,
disability or otherwise, the unvested portion of any Option shall immediately
expire.

     (h) Notwithstanding anything herein to the contrary, the Committee shall
not and shall not have the power to determine that the form of consideration
that may be used to purchase shares of Common Stock upon exercise of any Option
is a loan that violates the provisions of any applicable securities laws.

     Section 7. Adjustments. In the event that, after the adoption of the
Plan, the outstanding shares of the Company’s Common Stock shall be increased
or decreased or changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another corporation
through reorganization, merger or consolidation, recapitalization,
reclassification, stock split, split-up, combination or exchange of shares or
declaration of any dividends payable in Common Stock, the Board of Directors
shall appropriately adjust the number of shares of Common Stock (and the option
price per share) subject to the unexercised portion of any outstanding Option
(to the nearest possible full share).

     Section 8. Effect of the Plan on Employment Relationship. Neither the
Plan nor any Option granted hereunder to an Eligible Participant shall be
construed as conferring upon such Eligible Participant any right to continue in
the employ of (or otherwise provide services to) the Company or any Subsidiary
or Parent thereof, or limit in any respect the right of the Company or any
Subsidiary or Parent thereof to terminate such Eligible Participant’s
employment or other relationship with the Company or any Subsidiary or Parent,
as the case may be, at any time.

     Section 9. Amendment of the Plan. The Committee or Board of Directors
may amend or suspend the Plan or any portion thereof at any time, provided such
amendment is made with shareholder approval if such approval is necessary to
comply with any tax or regulatory

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requirement. The Committee in its sole discretion may amend the Plan so as
to conform with local rules and regulations subject to any provisions to the
contrary specified herein.

     Section 10. Amendment of an Option. In its sole and complete discretion,
the Committee may at any time amend any Option for the following reasons: (i)
additions and/or changes to the Code, any federal or state securities law, or
other law or regulations applicable to the Option, are made, and such additions
and/or changes have some effect on the Option, or (ii) any other event not
described in clause (i) occurs and the Eligible Participant gives his or her
consent to such amendment.

     Section 11. Exemption from Computation of Compensation for Other
Purposes. By acceptance of an applicable Option, subject to the conditions of
such Option, each Eligible Participant shall be considered in agreement that
all shares sold or awarded and all Options granted under this Plan shall be
considered special incentive compensation and will be exempt from inclusion as
“wages” or “salary” in pension, retirement, life insurance, and other employee
benefits arrangements of the Company, except as determined otherwise by the
Company. In addition, each beneficiary of a deceased Eligible Participant
shall be in agreement that all such Options will be exempt from inclusion in
“wages” or “salary” for purposes of calculating benefits of any life insurance
coverage sponsored by the Company.

     Section 12. Listing, Registration and Other Legal Compliance. No Options
or shares of the Common Stock shall be required to be issued or granted under
the Plan unless legal counsel to the Company shall be satisfied that such
issuance or grant will be in compliance with all applicable federal and state
securities laws and regulations and any other applicable laws or regulations.
The Committee may require, as a condition of any payment or share issuance,
that certain agreements, undertakings, representations, certificates, and/or
information, as the Committee may deem necessary or advisable, be executed or
provided to the Company to assure compliance with all such applicable laws or
regulations. Any certificates for shares of Common Stock delivered under the
Plan may be subject to such stock-transfer orders and such other restrictions
as the Committee may deem advisable under the rules, regulations, or other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable federal or state
securities law. In addition, if, at any time specified herein (or in any
Agreement or otherwise) for (a) the making of any Option, or the making of any
determination, (b) the issuance or other distribution of Common Stock, or (c)
the payment of amounts to or through an Eligible Participant with respect to
any Option, any law, rule, regulation, or other requirement of any governmental
authority or agency shall require the Company, any affiliate, or any Eligible
Participant (or any estate, designated beneficiary, or other legal
representative thereof) to take any action in connection with any such
determination, any such shares to be issued or distributed, any such payment,
or the making of any such determination, as the case may be, shall be deferred
until such required action is taken.

     Section 13. Rights as Shareholder. No Eligible Participant or
beneficiary shall be deemed a shareholder of the Company nor have any rights as
such with respect to any shares to be provided under the Plan until he or she
has become the holder of such shares.

     Section 14. Construction of the Plan. The Plan, and its rules, rights,
agreements and regulations, shall be governed, construed, interpreted and
administered solely in accordance with

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the laws of the state of Washington. In the event any provision of the
Plan shall be held invalid, illegal or unenforceable, in whole or in part, for
any reason, such determination shall not affect the validity, legality or
enforceability of any remaining provision, portion of provision or the Plan
overall, which shall remain in full force and effect as if the Plan had been
absent the invalid, illegal or unenforceable provision or portion thereof

     Section 15. Termination of the Plan. The Committee may terminate the
Plan at any time. Unless the Committee shall theretofore have terminated the
Plan, the Plan shall terminate on December 31, 2010 . No Option may be granted
hereunder after termination of the Plan. The termination or amendment of the
Plan shall not alter or impair any rights or obligations under any Option
theretofore granted under the Plan.

     Section 16. Effective Date of the Plan. The Plan shall be effective as
of May 1, 1999.

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