UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 16, 2006
METROPOLITAN HEALTH NETWORKS, INC.
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of incorporation)
0-28456 65-0635748
(Commission file number) (I.R.S. Employer Identification No.)
250 Australian Avenue South, Suite 400
West Palm Beach, FL 33401
(Address of principal executive offices, including zip code)
(561) 805-8500
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
On October 18, 2006, Metropolitan Health Networks, Inc. (the "Company")
announced the appointment of Mr. Robert J. Sabo to the position of Chief
Financial Officer. Mr. Sabo is expected to join the Company in that role on
November 9, 2006.
Mr. Sabo has entered into an Employment Agreement (the "Employment
Agreement") with the Company, effective as of November 9, 2006. The Employment
Agreement has an initial term of one year and is automatically renewable for
successive one-year terms, unless terminated in accordance with the terms of the
agreement. The Employment Agreement provides for an annual base salary of
$250,000 and the Company's Compensation Committee and Board of Directors has
approved a grant of 200,000 options to purchase common stock to be issued to Mr.
Sabo upon commencement of his employment with the Company. The options will vest
over four years and have an exercise price equal to the closing price of the
Company's common stock on the American Stock Exchange on November 8, 2006.
The Employment Agreement provides for an automobile allowance in the
amount of $800 per month, a telephone allowance in the amount of $250 per month,
four weeks of vacation, participation in all benefit plans offered by the
Company to its executives and the reimbursement of reasonable business expenses.
Either party may terminate the Employment Agreement at any time. In the
event that Mr. Sabo (i) is terminated by the Company without cause, (ii) dies or
becomes disabled or (iii) terminates his employment for good reason, he will be
entitled to reimbursement of all unreimbursed expenses incurred prior to the
date of termination, payment of unused vacation days and payment of his then
annual base salary and benefits for a period of one year following the
termination.
The Employment Agreement also contains non-disclosure, non-solicitation
and non-compete restrictions. The non-solicitation and non-compete restrictions
survive for a period of two years and one year, respectively, following the date
of the termination of Mr. Sabo's employment with the Company.
The foregoing description of the Employment Agreement is qualified in its
entirety by reference to such agreement, filed as Exhibit 10.1 hereto, which is
hereby incorporated by reference herein.
Section 5 - Corporate Governance and Management
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
As anticipated, on October 16, 2006, the Company accepted the resignation
of David S. Gartner from his role as the Company's Chief Financial Officer. The
resignation was tendered pursuant to the Transition and Severance Agreement the
Company entered into with Mr. Gartner on August 18, 2006. The Company has
appointed Mr. Michael Earley, its Chief Executive Officer, to serve as the
acting Chief Financial Officer until Mr. Sabo commences his employment with the
Company.
From November, 2003 to October, 2006, Mr. Sabo, 55, served as the Chief
Financial Officer of Hospital Partners of America ("HPA"), a privately held
healthcare services company. At HPA, Mr. Sabo was involved in the successful
completion of several hospital acquisitions that led to the operational and
financial growth of HPA. Prior to joining HPA, Mr. Sabo was employed by Ernst &
Young for over 30 years in a variety of positions. Most recently, from January,
1999 until June, 2003, Mr. Sabo served as the Market Leader for Ernst & Young's
Health Science Practice in both North Carolina and South Carolina. From 1985
until 1998, Mr. Sabo served as a Partner at Ernst & Young where he led the
Managed Care Practice for the State of Florida. Mr. Sabo's experience with
health care related practices includes, among others, serving as audit partner
for publicly and privately held companies, assisting clients with accounting and
securities reporting issues, implementing Sarbanes Oxley regulations and
preparing annual and quarterly financial reports.
Please see Item 1.01 "Entry into a Material Definitive Agreement" above,
incorporated herein by reference, for a description of the material terms of Mr.
Sabo's Employment Agreement with the Company.
A press release announcing the appointment of the Company's new Chief
Financial Officer and Mr. Gartner's resignation is attached hereto as Exhibit
99.1 and incorporated herein by reference.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
10.1 Employment Agreement, made and entered into as of November 9,
2006, by and between Robert J. Sabo and Metropolitan Health Networks, Inc.
99.1 Press Release dated October 18, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 20, 2006
METROPOLITAN HEALTH NETWORKS, INC.
By: /s/ Roberto Palenzuela
-----------------------------
Roberto Palenzuela
Secretary and General Counsel